Exhibit No. 99
| CONTACT: | REGIS CORPORATION: | |
|
| Mark Fosland – Vice President, Finance | |
|
| 952-806-1707 | |
|
| Alex Forliti – Director, Finance-Investor Relations | |
|
| 952-806-1767 | |
For Immediate Release
REGIS REPORTS FOURTH QUARTER 2009 RESULTS
-Fourth Quarter Operational Earnings of $0.59 per Share-
MINNEAPOLIS, August 20, 2009 — Regis Corporation (NYSE:RGS), the global leader in the $170 billion hair care industry, today reported financial results for its fourth fiscal quarter and fiscal year ended June 30, 2009. The Company reported a fourth quarter net loss of $0.11 per diluted share. However, these results include several non-operational items which, on a net overall basis, reduced the reported earnings per diluted share by $0.70. The largest of these non-operational items relates to a $27.8 million, or $0.65 per diluted share, non-cash write-down of its 30 percent ownership interest in Provalliance, the largest operator and franchisor of hair salons on the European continent. The Company announced on July 6, 2009 that it may incur a write-down of this investment as a result of the downturn in the European economy. Absent non-operational items, the Company’s fourth quarter operational earnings were $0.59 per diluted share, up from the $0.55 per diluted share of operational earnings in the comparable period a year ago. A reconciliation of reported earnings to operational earnings is included in today’s press release and a more comprehensive reconciliation is available on the Company’s website at www.regiscorp.com.
On July 6, 2009, the Company reported fourth quarter consolidated total same-store sales declined 4.0 percent. In addition, the Company reported that revenues for the fourth quarter ended June 30, 2009 decreased 2.5 percent to $625 million compared to $641 million in the fourth quarter of fiscal 2008.
“Our fourth quarter operational earnings were better than expected, primarily due to disciplined expense control,” commented Paul D. Finkelstein, Chairman and Chief Executive Officer. “As a result of the difficult economy, we continue to see a frugal customer whose visitation patterns have lengthened. Accordingly, this was the first time in the Company’s 87-year history that we ended the year with negative same-store sales. We are highly confident that customer visitation will eventually anniversary and normalize due to the predictable, replenishment nature of our business. We are strategically well- positioned with 85 percent of our salon portfolio, including Supercuts and SmartStyle, offering value-based, affordable hair care services.”
Mr. Finkelstein continued, “I am extremely pleased with our focus and execution during these difficult economic times. Operationally, we have been very successful in increasing our average ticket and improving gross margins. In addition, we exceeded our debt reduction goal. In the last nine months of fiscal 2009, total debt was reduced by $173 million from $807 million to $634 million. Our debt reduction was the result of reducing overhead expenses, efficiently managing working capital and international cash balances, and reducing our capital expenditures for new stores and acquisitions.”
Mr. Finkelstein concluded by commenting on fiscal 2010 and the recent equity and convertible offerings. “Our view on fiscal 2010 has not changed. We still see same-store sales in a range of negative 3.0 percent to positive 1.0 percent and we expect same-store sales to improve throughout the fiscal year, with the first quarter being the most challenging. In July, we took a significant step in strengthening our balance sheet when we raised $336 million with the successful completion of a 13.2 million share common stock offering and a $172.5 million convertible senior notes offering. The net proceeds from
these offerings were used to pay down debt. Concurrently, we also were able to successfully modify our existing debt covenants. These transactions effectively re-equitized our balance sheet, improved our leverage ratios and significantly reduced the risk associated with our debt covenants.”
In connection with the modification of debt covenants and the pre-payment of debt, the Company will report in the first quarter of fiscal 2010, a pre-tax charge of approximately $18 million for make-whole premiums and other fees. In addition, the Company also expects to record lease termination and professional fees of approximately $3.4 million, on a pre-tax basis, related to the Company’s previously announced plan to close up to 80 underperforming locations in the United Kingdom.
Regis Corporation will host a conference call discussing fourth quarter results today, August 20, 2009 at 10 a.m., Central time. Interested parties are invited to listen by logging on to www.regiscorp.com or dialing 877-941-1848. A replay of the call will be available later that day. The replay phone number is 800-406-7325, access code 4119600#.
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, 2009, the Company owned, franchised or held ownership interests in over 12,900 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. Regis also maintains a 49 percent ownership interest in Intelligent Nutrients, a business that provides a wide variety of certified organic products for health and beauty. 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 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, 2008. 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)
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
as of June 30, 2009 and 2008
(In thousands, except per share data)
|
| June 30, |
| ||||
|
| 2009 |
| 2008 |
| ||
ASSETS |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 42,538 |
| $ | 127,627 |
|
Receivables, net |
| 44,935 |
| 37,824 |
| ||
Inventories |
| 158,570 |
| 212,468 |
| ||
Deferred income taxes |
| 22,086 |
| 15,954 |
| ||
Income tax receivable |
| 47,164 |
| 12,512 |
| ||
Other current assets |
| 37,693 |
| 38,766 |
| ||
Total current assets |
| 352,986 |
| 445,151 |
| ||
|
|
|
|
|
| ||
Property and equipment, net |
| 391,538 |
| 481,851 |
| ||
Goodwill |
| 764,422 |
| 870,993 |
| ||
Other intangibles, net |
| 126,961 |
| 144,291 |
| ||
Investment in and loans to affiliates |
| 211,400 |
| 247,102 |
| ||
Other assets |
| 45,179 |
| 46,483 |
| ||
|
|
|
|
|
| ||
Total assets |
| $ | 1,892,486 |
| $ | 2,235,871 |
|
|
|
|
|
|
| ||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Long-term debt, current portion |
| $ | 55,454 |
| $ | 230,224 |
|
Accounts payable |
| 62,394 |
| 69,693 |
| ||
Accrued expenses |
| 156,638 |
| 207,605 |
| ||
Total current liabilities |
| 274,486 |
| 507,522 |
| ||
|
|
|
|
|
| ||
Long-term debt and capital lease obligations |
| 578,853 |
| 534,523 |
| ||
Other noncurrent liabilities |
| 236,287 |
| 217,640 |
| ||
Total liabilities |
| 1,089,626 |
| 1,259,685 |
| ||
|
|
|
|
|
| ||
Shareholders’ equity: |
|
|
|
|
| ||
Common stock, $0.05 par value; issued and outstanding 43,881,364 and 43,070,927 common shares at June 30, 2009 and 2008, respectively |
| 2,194 |
| 2,153 |
| ||
Additional paid-in capital |
| 151,394 |
| 143,265 |
| ||
Accumulated other comprehensive income |
| 50,477 |
| 101,973 |
| ||
Retained earnings |
| 598,795 |
| 728,795 |
| ||
|
|
|
|
|
| ||
Total shareholders’ equity |
| 802,860 |
| 976,186 |
| ||
|
|
|
|
|
| ||
Total liabilities and shareholders’ equity |
| $ | 1,892,486 |
| $ | 2,235,871 |
|
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REGIS CORPORATION (NYSE: RGS)
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(In thousands, except per share data)
|
| (Unaudited) |
| Year Ended |
| ||||||||
|
| 2009 |
| 2008 |
| 2009 |
| 2008 |
| ||||
Revenues: |
|
|
|
|
|
|
|
|
| ||||
Service |
| $ | 466,544 |
| $ | 491,731 |
| $ | 1,833,958 |
| $ | 1,862,490 |
|
Product |
| 128,438 |
| 137,703 |
| 523,968 |
| 551,286 |
| ||||
Product sold to Premier (1) |
| 19,641 |
| — |
| 32,237 |
| — |
| ||||
Royalties and fees |
| 10,123 |
| 11,104 |
| 39,624 |
| 67,615 |
| ||||
|
| 624,746 |
| 640,538 |
| 2,429,787 |
| 2,481,391 |
| ||||
Operating expenses: |
|
|
|
|
|
|
|
|
| ||||
Cost of service |
| 261,339 |
| 278,799 |
| 1,044,719 |
| 1,062,559 |
| ||||
Cost of product |
| 58,483 |
| 65,683 |
| 250,801 |
| 264,391 |
| ||||
Cost of product sold to Premier (1) |
| 19,641 |
| — |
| 32,237 |
| — |
| ||||
Site operating expenses |
| 44,570 |
| 43,853 |
| 190,456 |
| 184,769 |
| ||||
General and administrative |
| 71,774 |
| 77,422 |
| 291,661 |
| 321,563 |
| ||||
Rent |
| 87,946 |
| 95,374 |
| 347,792 |
| 361,476 |
| ||||
Depreciation and amortization |
| 33,484 |
| 29,798 |
| 115,655 |
| 113,293 |
| ||||
Goodwill impairment |
| — |
| — |
| 41,661 |
| — |
| ||||
Lease termination costs |
| 2,896 |
| — |
| 5,732 |
| — |
| ||||
Total operating expenses |
| 580,133 |
| 590,929 |
| 2,320,714 |
| 2,308,051 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating income |
| 44,613 |
| 49,609 |
| 109,073 |
| 173,340 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other income (expense): |
|
|
|
|
|
|
|
|
| ||||
Interest expense |
| (8,986 | ) | (10,784 | ) | (39,768 | ) | (44,279 | ) | ||||
Interest income and other, net |
| 2,948 |
| 2,099 |
| 9,461 |
| 8,173 |
| ||||
Income from continuing operations before income taxes and equity in (loss) income of affiliated companies |
| 38,575 |
| 40,924 |
| 78,766 |
| 137,234 |
| ||||
Income taxes |
| (12,942 | ) | (16,501 | ) | (41,950 | ) | (54,182 | ) | ||||
Equity in (loss) income of affiliated companies, net of income taxes |
| (29,988 | ) | 159 |
| (29,846 | ) | 849 |
| ||||
(Loss) income from continuing operations |
| $ | (4,355 | ) | $ | 24,582 |
| $ | 6,970 |
| $ | 83,901 |
|
|
|
|
|
|
|
|
|
|
| ||||
(Loss) income from discontinued operations, net of tax |
| (199 | ) | (1,501 | ) | (131,436 | ) | 1,303 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net (loss) income |
| $ | (4,554 | ) | $ | 23,081 |
| $ | (124,466 | ) | $ | 85,204 |
|
|
|
|
|
|
|
|
|
|
| ||||
Net income per share: |
|
|
|
|
|
|
|
|
| ||||
Basic: |
|
|
|
|
|
|
|
|
| ||||
(Loss) income from continuing operations |
| $ | (0.10 | ) | $ | 0.58 |
| $ | 0.16 |
| $ | 1.94 |
|
(Loss) income from discontinued operations, net of tax |
| (0.00 | ) | (0.04 | ) | (3.06 | ) | 0.03 |
| ||||
Net (loss) income per share, basic (2) |
| $ | (0.11 | ) | $ | 0.54 |
| $ | (2.90 | ) | $ | 1.97 |
|
Diluted: |
|
|
|
|
|
|
|
|
| ||||
(Loss) income from continuing operations |
| $ | (0.10 | ) | $ | 0.57 |
| $ | 0.16 |
| $ | 1.92 |
|
(Loss) income from discontinued operations, net of tax |
| (0.00 | ) | (0.03 | ) | (3.05 | ) | 0.03 |
| ||||
Net (loss) income per share, diluted (2) |
| $ | (0.11 | ) | $ | 0.54 |
| $ | (2.89 | ) | $ | 1.95 |
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average common and common equivalent shares outstanding: |
|
|
|
|
|
|
|
|
| ||||
Basic |
| 43,000 |
| 42,709 |
| 42,897 |
| 43,157 |
| ||||
Diluted |
| 43,000 |
| 43,073 |
| 43,026 |
| 43,587 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
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 will supply product to Premier at cost for a transition period of approximately six months following the date of the sale, with possible extension to not more than eleven months.
(2) Total is a recalculation; line items calculated individually may not sum to total.
-more-
REGIS CORPORATION (NYSE: RGS)
SELECTED CASH FLOW DATA
(In thousands)
|
| Year Ended |
| ||||
|
| 2009 |
| 2008 |
| ||
|
|
|
|
|
| ||
Net cash provided by operating activities |
| $ | 188,064 |
| $ | 222,383 |
|
Net cash used in investing activities |
| (115,511 | ) | (266,029 | ) | ||
Net cash used in financing activities |
| (148,307 | ) | (11,004 | ) | ||
Effect of exchange rate changes on cash and cash equivalents |
| (9,335 | ) | (2,508 | ) | ||
Decrease in cash and cash equivalents |
| (85,089 | ) | (57,158 | ) | ||
Cash and cash equivalents: |
|
|
|
|
| ||
Beginning of year |
| 127,627 |
| 184,785 |
| ||
End of year |
| $ | 42,538 |
| $ | 127,627 |
|
-more-
REGIS CORPORATION (NYSE: RGS)
Salon / School / Hair Restoration Center Counts and Revenues
SYSTEM-WIDE LOCATIONS: |
| June 30, |
| June 30, |
|
|
|
|
|
|
|
Company-owned salons |
| 7,981 |
| 8,582 |
|
Franchise salons |
| 2,045 |
| 2,163 |
|
Company-owned hair restoration centers |
| 62 |
| 57 |
|
Franchise hair restoration centers |
| 33 |
| 35 |
|
Ownership interest locations |
| 2,804 |
| 2,714 |
|
Total, system-wide |
| 12,925 |
| 13,551 |
|
SALON LOCATION SUMMARY
NORTH AMERICAN SALONS: |
| June 30, |
| June 30, |
|
REGIS SALONS |
|
|
|
|
|
Open at beginning of period |
| 1,078 |
| 1,099 |
|
Salons constructed |
| 20 |
| 14 |
|
Acquired |
| 23 |
| 4 |
|
Less relocations |
| (14 | ) | (11 | ) |
Salon openings |
| 29 |
| 7 |
|
Conversions |
| — |
| 1 |
|
Salons closed |
| (36 | ) | (29 | ) |
Total, Regis Salons |
| 1,071 |
| 1,078 |
|
|
|
|
|
|
|
MASTERCUTS |
|
|
|
|
|
Open at beginning of period |
| 615 |
| 629 |
|
Salons constructed |
| 14 |
| 7 |
|
Acquired |
| — |
| — |
|
Less relocations |
| (10 | ) | (6 | ) |
Salon openings |
| 4 |
| 1 |
|
Conversions |
| — |
| — |
|
Salons closed |
| (17 | ) | (15 | ) |
Total, MasterCuts Salons |
| 602 |
| 615 |
|
|
|
|
|
|
|
TRADE SECRET (4) |
|
|
|
|
|
Company-owned salons: |
|
|
|
|
|
Open at beginning of period |
| 674 |
| 613 |
|
Salons constructed |
| 10 |
| 16 |
|
Acquired |
| — |
| 65 |
|
Franchise buybacks |
| — |
| 5 |
|
Less relocations |
| (4 | ) | (11 | ) |
Salon openings |
| 6 |
| 75 |
|
Conversions |
| — |
| 5 |
|
Salons sold |
| (655 | ) | — |
|
Salons closed |
| (25 | ) | (19 | ) |
Total company-owned salons |
| — |
| 674 |
|
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|
| June 30, |
| June 30, |
|
|
|
|
|
|
|
Franchise salons: |
|
|
|
|
|
Open at beginning of period |
| 106 |
| 19 |
|
Salons constructed |
| 1 |
| 2 |
|
Acquired |
| — |
| 93 |
|
Less relocations |
| — |
| (1 | ) |
Salon openings |
| 1 |
| 94 |
|
Franchise buybacks |
| — |
| (5 | ) |
Divisional reclassification (4) |
| (43 | ) | — |
|
Salons sold |
| (57 | ) | — |
|
Salons closed |
| (7 | ) | (2 | ) |
Total franchise salons |
| — |
| 106 |
|
|
|
|
|
|
|
Total, Trade Secret Salons |
| — |
| 780 |
|
|
|
|
|
|
|
SMARTSTYLE/COST CUTTERS IN WAL-MART |
|
|
|
|
|
Company-owned salons: |
|
|
|
|
|
Open at beginning of period |
| 2,212 |
| 2,000 |
|
Salons constructed |
| 71 |
| 207 |
|
Acquired |
| — |
| — |
|
Franchise buybacks |
| 24 |
| 12 |
|
Less relocations |
| (2 | ) | (3 | ) |
Salon openings |
| 93 |
| 216 |
|
Conversions |
| — |
| — |
|
Salons closed |
| (5 | ) | (4 | ) |
Total company-owned salons |
| 2,300 |
| 2,212 |
|
|
|
|
|
|
|
Franchise salons: |
|
|
|
|
|
Open at beginning of period |
| 146 |
| 151 |
|
Salons constructed |
| 1 |
| 7 |
|
Acquired |
| — |
| — |
|
Less relocations |
| — |
| — |
|
Salon openings |
| 1 |
| 7 |
|
Conversions |
| — |
| — |
|
Franchise buybacks |
| (24 | ) | (12 | ) |
Salons closed |
| (1 | ) | — |
|
Total franchise salons |
| 122 |
| 146 |
|
|
|
|
|
|
|
Total, SmartStyle/Cost Cutters in Wal-Mart Salons |
| 2,422 |
| 2,358 |
|
|
|
|
|
|
|
SUPERCUTS |
|
|
|
|
|
Company-owned salons: |
|
|
|
|
|
Open at beginning of period |
| 1,132 |
| 1,094 |
|
Salons constructed |
| 27 |
| 33 |
|
Acquired |
| — |
| 3 |
|
Franchise buybacks |
| 6 |
| 38 |
|
Less relocations |
| (2 | ) | (6 | ) |
Salon openings |
| 31 |
| 68 |
|
Conversions |
| (2 | ) | — |
|
Salons closed |
| (47 | ) | (30 | ) |
Total company-owned salons |
| 1,114 |
| 1,132 |
|
- more -
|
| June 30, |
| June 30, |
|
Franchise salons: |
|
|
|
|
|
Open at beginning of period |
| 997 |
| 990 |
|
Salons constructed |
| 51 |
| 71 |
|
Acquired (2) |
| — |
| — |
|
Less relocations |
| (7 | ) | (6 | ) |
Salon openings |
| 44 |
| 65 |
|
Conversions |
| 1 |
| — |
|
Franchise buybacks |
| (6 | ) | (38 | ) |
Salons closed |
| (14 | ) | (20 | ) |
Total franchise salons |
| 1,022 |
| 997 |
|
|
|
|
|
|
|
Total, Supercuts Salons |
| 2,136 |
| 2,129 |
|
|
|
|
|
|
|
PROMENADE |
|
|
|
|
|
Company-owned salons: |
|
|
|
|
|
Open at beginning of period |
| 2,399 |
| 2,223 |
|
Salons constructed |
| 36 |
| 33 |
|
Acquired |
| 71 |
| 135 |
|
Franchise buybacks |
| 53 |
| 95 |
|
Less relocations |
| (16 | ) | (8 | ) |
Salon openings |
| 144 |
| 255 |
|
Conversions |
| 1 |
| (5 | ) |
Salons closed |
| (94 | ) | (74 | ) |
Total company-owned salons |
| 2,450 |
| 2,399 |
|
|
|
|
|
|
|
Franchise salons: |
|
|
|
|
|
Open at beginning of period |
| 914 |
| 1,008 |
|
Salons constructed |
| 40 |
| 49 |
|
Acquired |
| — |
| — |
|
Less relocations |
| (7 | ) | (5 | ) |
Salon openings |
| 33 |
| 44 |
|
Conversions |
| — |
| — |
|
Divisional reclassification (4) |
| 43 |
| — |
|
Franchise buybacks |
| (53 | ) | (95 | ) |
Salons closed |
| (36 | ) | (43 | ) |
Total franchise salons |
| 901 |
| 914 |
|
|
|
|
|
|
|
Total, Promenade |
| 3,351 |
| 3,313 |
|
|
|
|
|
|
|
INTERNATIONAL SALONS (1) |
|
|
|
|
|
Company-owned salons: |
|
|
|
|
|
Open at beginning of period |
| 472 |
| 481 |
|
Salons constructed |
| 4 |
| 15 |
|
Acquired |
| — |
| 25 |
|
Franchise buybacks |
| — |
| — |
|
Less relocations |
| (1 | ) | (1 | ) |
Salon openings |
| 3 |
| 39 |
|
Conversions |
| — |
| 1 |
|
Affiliate joint ventures (3) |
| — |
| (40 | ) |
Salons closed |
| (31 | ) | (9 | ) |
Total company-owned salons |
| 444 |
| 472 |
|
- more -
|
| June 30, |
| June 30, |
|
Franchise salons: |
|
|
|
|
|
Open at beginning of period |
| — |
| 1,574 |
|
Salons constructed |
| — |
| 50 |
|
Acquired (2) |
| — |
| — |
|
Less relocations |
| — |
| — |
|
Salon openings |
| — |
| 50 |
|
Conversions |
| — |
| 3 |
|
Franchise buybacks |
| — |
| — |
|
Affiliate joint ventures (3) |
| — |
| (1,587 | ) |
Salons closed |
| — |
| (40 | ) |
Total franchise salons |
| — |
| — |
|
|
|
|
|
|
|
Total, International Salons |
| 444 |
| 472 |
|
|
|
|
|
|
|
TOTAL SYSTEM-WIDE SALONS: |
|
|
|
|
|
Company-owned salons: |
|
|
|
|
|
Open at beginning of period |
| 8,582 |
| 8,139 |
|
Salons constructed |
| 182 |
| 325 |
|
Acquired |
| 94 |
| 232 |
|
Franchise buybacks |
| 83 |
| 150 |
|
Less relocations |
| (49 | ) | (46 | ) |
Salon openings |
| 310 |
| 661 |
|
Conversions |
| (1 | ) | 2 |
|
Affiliate joint ventures (3) |
| — |
| (40 | ) |
Salons sold |
| (655 | ) | — |
|
Salons closed |
| (255 | ) | (180 | ) |
Total company-owned salons |
| 7,981 |
| 8,582 |
|
|
|
|
|
|
|
Franchise salons: |
|
|
|
|
|
Open at beginning of period |
| 2,163 |
| 3,742 |
|
Salons constructed |
| 93 |
| 179 |
|
Acquired (2) |
| — |
| 93 |
|
Less relocations |
| (14 | ) | (12 | ) |
Salon openings |
| 79 |
| 260 |
|
Conversions |
| 1 |
| 3 |
|
Franchise buybacks |
| (83 | ) | (150 | ) |
Affiliate joint ventures (3) |
| — |
| (1,587 | ) |
Salons sold |
| (57 | ) | — |
|
Salons closed |
| (58 | ) | (105 | ) |
Total franchise salons |
| 2,045 |
| 2,163 |
|
|
|
|
|
|
|
Total Salons |
| 10,026 |
| 10,745 |
|
|
|
|
|
|
|
HAIR RESTORATION CENTERS: |
|
|
|
|
|
Company-owned hair restoration centers: |
|
|
|
|
|
Open at beginning of period |
| 57 |
| 49 |
|
Salons constructed |
| 8 |
| 3 |
|
Acquired |
| — |
| — |
|
Franchise buybacks |
| 2 |
| 6 |
|
Less relocations |
| (5 | ) | (1 | ) |
Salon openings |
| 5 |
| 8 |
|
Conversions |
| — |
| — |
|
Sites closed |
| — |
| — |
|
Total company-owned hair restoration centers |
| 62 |
| 57 |
|
- more -
|
| June 30, |
| June 30, |
|
Franchise hair restoration centers: |
|
|
|
|
|
Open at beginning of period |
| 35 |
| 41 |
|
Salons constructed |
| — |
| 2 |
|
Acquired |
| — |
| — |
|
Less relocations |
| — |
| (2 | ) |
Salon openings |
| — |
| — |
|
Franchise buybacks |
| (2 | ) | (6 | ) |
Sites closed |
| — |
| — |
|
Total franchise hair restoration centers |
| 33 |
| 35 |
|
|
|
|
|
|
|
Total Hair Restoration Centers |
| 95 |
| 92 |
|
|
|
|
|
|
|
Ownership interest locations |
| 2,804 |
| 2,714 |
|
|
|
|
|
|
|
Grand Total, System-wide |
| 12,925 |
| 13,551 |
|
(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) Represents European operating subsidiaries contributed to Franck Provost Salon Group.
(4) On February 16, 2009, the Company announced the completion of the sale of its Trade Secret retail product division to Premier Salons Beauty, Inc. As a result of this transaction, the Company reports 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.
- more -
REVENUES BY CONCEPT:
|
| For the Periods Ended June 30, |
| ||||||||||
|
| Three Months |
| Twelve Months |
| ||||||||
(Dollars in thousands) |
| 2009 |
| 2008 |
| 2009 |
| 2008 |
| ||||
North American salons: |
|
|
|
|
|
|
|
|
| ||||
Regis |
| $ | 114,198 |
| $ | 127,379 |
| $ | 474,964 |
| $ | 514,219 |
|
MasterCuts |
| 41,587 |
| 43,752 |
| 170,338 |
| 175,974 |
| ||||
SmartStyle |
| 134,729 |
| 132,590 |
| 529,782 |
| 507,349 |
| ||||
Supercuts (1) |
| 80,537 |
| 79,964 |
| 310,913 |
| 305,104 |
| ||||
Promenade (1)(6) |
| 171,745 |
| 157,362 |
| 631,701 |
| 581,542 |
| ||||
Other (2) |
| — |
| — |
| — |
| 5,558 |
| ||||
Total North American salons (5) |
| 542,796 |
| 541,047 |
| 2,117,698 |
| 2,089,746 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
International salons (1)(3) |
| 45,975 |
| 63,753 |
| 171,569 |
| 256,063 |
| ||||
Hair restoration centers (1) |
| 35,975 |
| 35,738 |
| 140,520 |
| 135,582 |
| ||||
Consolidated revenues |
| $ | 624,746 |
| $ | 640,538 |
| $ | 2,429,787 |
| $ | 2,481,391 |
|
|
|
|
|
|
|
|
|
|
| ||||
Percent change from prior year |
| (2.5 | )% | 3.6 | % | (2.1 | )% | 4.6 | % | ||||
|
|
|
|
|
|
|
|
|
| ||||
Same-store sales (decrease) increase (4) |
| (4.0 | )% | 1.7 | % | (3.1 | )% | 1.5 | % |
(1) Includes aggregate franchise royalties and fees of $10.1 and $11.1 million for the three months ended June 30, 2009 and 2008, respectively, and $39.6 and $67.6 million for the twelve months ended June 30 2009 and 2008, respectively. North American salon franchise royalties and fees represented 93.8 and 91.2 percent of total franchise revenues in the three months ended June 30, 2009 and 2008, respectively, and 93.7 and 58.6 percent of total franchise revenues in the twelve months ended June 30, 2009 and 2008, respectively.
(2) On August 1, 2007, the Company contributed 51 of its accredited cosmetology schools to Empire Education Group, Inc. Accordingly, revenue growth was negatively impacted as a result of the deconsolidation. For the twelve months ended June 30, 2008, the results of operations for the month ended July 31, 2007 for the accredited cosmetology schools are reported in the North American salons segment. The Company retained ownership of its one North America and four United Kingdom Sassoon schools. Subsequent to August 1, 2007 results of operations for the Sassoon schools are included in the respective North American and international salon segments.
(3) On January 31, 2008, the Company deconsolidated the results of operations of its European franchise salon operations. Accordingly, revenue growth was negatively impacted as a result of the deconsolidation.
(4) Salon same-store sales increases or decreases 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 increases are the sum of the same-store sales increases 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 increase in salon revenues attributable to its organic growth (new salon construction and same-store sales growth) versus growth from acquisitions.
(5) 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 reflect Trade Secret as a discontinued operation.
(6) Premier Salons Beauty, Inc. (Premier) purchased Trade Secret, Inc. from Regis Corporation on February 16, 2009. The agreement included a provision that Regis Corporation will supply product to Premier at cost for a transition period of approximately six months following the date of the sale, with possible extension to not more than eleven months. For the three and twelve months ended June 30, 2009, the Company generated revenue of $19.6 and $32.2 million, respectively, in product sold to Premier, which represented 3.1 and 1.3 percent of consolidated revenues, respectively.
- more -
FINANCIAL INFORMATION BY SEGMENT:
Financial information concerning the Company’s salon, school and hair restoration businesses is shown in the following tables.
|
| For the Three Months Ended June 30, 2009(1)(3) |
| |||||||||||||
|
| Salons |
| Hair |
| 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 (2) |
| 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 (2) |
| 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 (loss) income of affiliated companies |
| $ | 80,246 |
| $ | (5,476 | ) | $ | 6,835 |
| $ | (43,030 | ) | $ | 38,575 |
|
(1) 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 reflect Trade Secret as a discontinued operation.
(2) Premier Salons Beauty, Inc. (Premier) purchased Trade Secret, Inc. from Regis Corporation on February 16, 2009. The agreement included a provision that Regis Corporation will supply product to Premier at cost for a transition period of approximately six months following the date of the sale, with possible extension to not more than eleven months.
(3) On January 31, 2008, the Company merged its continental European franchise operations with the Franck Provost Salon Group.
- more -
|
| For the Three Months Ended June 30, 2008(1)(2) |
| |||||||||||||
|
| Salons |
| Hair |
| Unallocated |
|
|
| |||||||
(Dollars in thousands) |
| North America |
| International |
| Centers |
| Corporate |
| Consolidated |
| |||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
| |||||
Service |
| $ | 428,518 |
| $ | 46,954 |
| $ | 16,259 |
| $ | — |
| $ | 491,731 |
|
Product |
| 102,402 |
| 16,799 |
| 18,502 |
| — |
| 137,703 |
| |||||
Royalties and fees |
| 10,127 |
| — |
| 977 |
| — |
| 11,104 |
| |||||
|
| 541,047 |
| 63,753 |
| 35,738 |
| — |
| 640,538 |
| |||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
| |||||
Cost of service |
| 245,195 |
| 24,700 |
| 8,904 |
| — |
| 278,799 |
| |||||
Cost of product |
| 52,132 |
| 8,302 |
| 5,249 |
| — |
| 65,683 |
| |||||
Site operating expenses |
| 38,605 |
| 3,884 |
| 1,364 |
| — |
| 43,853 |
| |||||
General and administrative |
| 30,922 |
| 6,000 |
| 8,407 |
| 32,093 |
| 77,422 |
| |||||
Rent |
| 76,195 |
| 16,667 |
| 2,005 |
| 507 |
| 95,374 |
| |||||
Depreciation and amortization |
| 18,646 |
| 3,698 |
| 2,613 |
| 4,841 |
| 29,798 |
| |||||
Goodwill impairment |
| — |
| — |
| — |
| — |
| — |
| |||||
Lease termination costs |
| — |
| — |
| — |
| — |
| — |
| |||||
Total operating expenses |
| 461,695 |
| 63,251 |
| 28,542 |
| 37,441 |
| 590,929 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating income (loss) |
| 79,352 |
| 502 |
| 7,196 |
| (37,441 | ) | 49,609 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
| |||||
Interest expense |
| — |
| — |
| — |
| (10,784 | ) | (10,784 | ) | |||||
Interest income and other, net |
| — |
| — |
| — |
| 2,099 |
| 2,099 |
| |||||
Income (loss) from continuing operations before income taxes and equity in income of affiliated companies |
| $ | 79,352 |
| $ | 502 |
| $ | 7,196 |
| $ | (46,126 | ) | $ | 40,924 |
|
(1) 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 reflect Trade Secret as a discontinued operation.
(2) On January 31, 2008, the Company merged its continental European franchise operations with the Franck Provost Salon Group.
- more -
|
| For the Twelve Months Ended June 30, 2009(1)(3) |
| |||||||||||||
|
| Salons |
| Hair |
| 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 | ) | 23,871 |
| (144,945 | ) | 109,073 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
| |||||
Interest expense |
| — |
| — |
| — |
| (39,768 | ) | (39,768 | ) | |||||
Interest income and other, net |
| — |
| — |
| — |
| 9,461 |
| 9,461 |
| |||||
Income (loss) from continuing operations before income taxes and equity in income(loss) of affiliated companies |
| $ | 275,628 |
| $ | (45,481 | ) | $ | 23,871 |
| $ | (175,252 | ) | $ | 78,766 |
|
(1) 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 reflect Trade Secret as a discontinued operation.
(2) Premier Salons Beauty, Inc. (Premier) purchased Trade Secret, Inc. from Regis Corporation on February 16, 2009. The agreement included a provision that Regis Corporation will supply product to Premier at cost for a transition period of approximately six months following the date of the sale, with possible extension to not more than eleven months.
(3) On January 31, 2008, the Company merged its continental European franchise operations with the Franck Provost Salon Group.
- more -
|
| For the Twelve Months Ended June 30, 2008(1)(2)(3) |
| |||||||||||||
|
| Salons |
| Hair |
| Unallocated |
|
|
| |||||||
(Dollars in thousands) |
| North America |
| International |
| Centers |
| Corporate |
| Consolidated |
| |||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
| |||||
Service |
| $ | 1,635,238 |
| $ | 165,379 |
| $ | 61,873 |
| $ | — |
| $ | 1,862,490 |
|
Product |
| 414,909 |
| 67,078 |
| 69,299 |
| — |
| 551,286 |
| |||||
Royalties and fees |
| 39,599 |
| 23,606 |
| 4,410 |
| — |
| 67,615 |
| |||||
|
| 2,089,746 |
| 256,063 |
| 135,582 |
| — |
| 2,481,391 |
| |||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
| |||||
Cost of service |
| 939,242 |
| 89,617 |
| 33,700 |
| — |
| 1,062,559 |
| |||||
Cost of product |
| 208,705 |
| 35,702 |
| 19,984 |
| — |
| 264,391 |
| |||||
Site operating expenses |
| 165,185 |
| 14,410 |
| 5,174 |
| — |
| 184,769 |
| |||||
General and administrative |
| 121,345 |
| 37,143 |
| 30,941 |
| 132,134 |
| 321,563 |
| |||||
Rent |
| 295,659 |
| 56,571 |
| 7,313 |
| 1,933 |
| 361,476 |
| |||||
Depreciation and amortization |
| 73,755 |
| 10,969 |
| 10,289 |
| 18,280 |
| 113,293 |
| |||||
Goodwill impairment |
| — |
| — |
| — |
| — |
| — |
| |||||
Lease termination costs |
| — |
| — |
| — |
| — |
| — |
| |||||
Total operating expenses |
| 1,803,891 |
| 244,412 |
| 107,401 |
| 152,347 |
| 2,308,051 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating income (loss) |
| 285,855 |
| 11,651 |
| 28,181 |
| (152,347 | ) | 173,340 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
| |||||
Interest expense |
| — |
| — |
| — |
| (44,279 | ) | (44,279 | ) | |||||
Interest income and other, net |
| — |
| — |
| — |
| 8,173 |
| 8,173 |
| |||||
Income (loss) from continuing operations before income taxes and equity in income of affiliated companies |
| $ | 285,855 |
| $ | 11,651 |
| $ | 28,181 |
| $ | (188,453 | ) | $ | 137,234 |
|
(1) On August 1, 2007, the Company contributed substantially all of its accredited cosmetology schools to Empire Education Group, Inc. For the year ended June 30, 2008 the results of operations for the month ended July 31, 2007 are reported in the North American salons segment. The Company retained ownership of its one North America and four United Kingdom Vidal Sassoon schools. Subsequent to August 1, 2007 results of operations for the Vidal Sassoon schools are included in the respective North American and international salon segments.
(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 reflect Trade Secret as a discontinued operation.
(3) On January 31, 2008, the Company merged its continental European franchise operations with the Franck Provost Salon Group. For the year ended June 30, 2008, the results of operations for the seven months ended January 31, 2008 are reported in the International salon segment.
- more -
REGIS CORPORATION (NYSE: RGS)
NON-GAAP FINANCIAL MEASURES (Unaudited)
The Company’s press release announcing results of operations for the three month period ended June 30, 2009 includes references to the following “non-GAAP financial measures” as defined by Regulation G of the Securities and Exchange Commission:
· The Company reported a fourth quarter loss of $0.11 per diluted share. However, these results included several non-operational items which, on a net overall basis, reduced the reported earnings per diluted share by $0.70.
· Absent non-operational items, the Company’s fourth quarter operational earnings were $0.59 per diluted share, up from the $0.55 per diluted share of operational earnings in the comparable period a year ago.
Non-GAAP Diluted Net Income per Share
The table below is provided to assist the reader’s understanding of the three month period ended June 30, 2009. The Company believes that adjusted net income per diluted share from operations, a non-GAAP financial measure, is a useful basis to compare the Company’s results against, because unusual items during the three month period ended June 30, 2009, impacted the Company’s reported net income (see “Adjustments” in table below). The presentation below reconciles as reported net income per diluted share (U.S. GAAP amounts) to adjusted net income per diluted share from operations. The adjusted net income per diluted share information should not be construed as an alternative to reported results under U.S. GAAP.
|
| Three Months Ended |
| Three Months Ended |
| ||
|
| June 30, 2009 |
| June 30, 2008 |
| ||
|
| (Dollars) |
| (Dollars) |
| ||
Diluted net (loss) income per share, as reported (U.S. GAAP) |
| $ | (0.106 | ) | $ | 0.536 |
|
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| ||
Adjustments: |
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|
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| ||
Provalliance impairment (1) |
| $ | 0.647 |
| $ | — |
|
Lease termination costs (2) |
| 0.045 |
| — |
| ||
Fixed asset write-offs (3) |
| 0.045 |
| 0.019 |
| ||
Workers’ compensation (4) |
| (0.050 | ) | (0.045 | ) | ||
Trade Secret discontinued operations (5) |
| 0.005 |
| 0.035 |
| ||
|
|
|
|
|
| ||
Diluted net income per share from operations, adjusted |
| $ | 0.586 |
| $ | 0.545 |
|
(1) The three month period ended June 30, 2009 included a $27.8 million pre-tax non-cash impairment charge related to the Company’s investment in Provalliance.
(2) The three month period ended June 30, 2009 included a $2.9 million pre-tax expense associated with lease termination costs as part of the July 2008 store closing plan of up to 160 underperforming company-owned salons and the June 2009 store closing plan of up to 80 underperforming company-owned salons in the United Kingdom.
(3) The three month periods ended June 30, 2009 and 2008 included $2.9 and $1.4 million, respectively, in pre-tax non-cash fixed asset write-offs associated with the planned store closures of up to 80 and 160 underperforming salons, respectively.
(4) Each of the three month periods ended June 30, 2009 and 2008 included a $3.2 million benefit related to an unplanned adjustment to prior years’ workers’ compensation and insurance claim reserves.
(5) The three month period ended June 30, 2009 included a $0.2 million pre-tax charge primarily related to a write-off of inventory. The three month period ended June 30, 2008 included a $3.2 million pre-tax non-cash fixed asset write-off associated with the planned Trade Secret store closures, a $0.2 million benefit related to Trade Secret’s portion of the unplanned adjustment to prior years’ workers’ compensation and insurance claim reserves, and a $1.5 million net loss from Trade Secret operations.
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