Mail Stop 0407
December 13, 2004
Via U.S. Mail and Fax
Mr. Randy L. Pearce
Executive Vice President
Chief Financial and Administrative Officer
Regis Corporation
7201 Metro Boulevard
Edina, MN 55439
RE: Regis Corporation
Form 10-K for the fiscal year ended June 30, 2004
Filed September 17, 2004
Form 10-Q for the quarter ended September 30, 2004
File No. 0-11230
Dear Mr. Pearce:
We have reviewed the above referenced filings and have the
following comments. We have limited our review to only the issues
addressed below and will make no further review of your documents.
As such, all persons who are responsible for the adequacy and
accuracy of the disclosure are urged to be certain that they have
included all information required pursuant to the Securities
Exchange
Act of 1934. Where indicated, we think you should revise your
documents in response to these comments. If you disagree, we will
consider your explanation as to why our comment is inapplicable or
a
revision is unnecessary. Please be as detailed as necessary in
your
explanation. In some of our comments, we may ask you to provide
us
with supplemental information so we may better understand your
disclosure. After reviewing this information, we may or may not
raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form 10-K for the fiscal year ended June 30, 2004
Income Statement, page 49
1. In accordance with Rule 5-03 of Regulation S-X, revise your
consolidated statement of operations so that product sales related
to
Company-owned salons and product sales related to Franchise
revenues
are combined into one line item.
Note 1 - Business Description and Summary of Significant
Accounting
Policies
Recent Accounting Pronouncements, page 56
2. You indicate that franchise entities are not within the scope
of
this interpretation because they are businesses as defined by FIN
46(R). However, paragraph 4h of FIN 46(R) states four conditions
that may exist which would disallow an entity from being excluded
from the provisions of FIN 46(R) because the entity is a business.
For the cases in which you had a financing agreement with the
franchisee, explain to us in detail how you determined that none
of
the four conditions of paragraph 4h existed and provide us with
the
evaluation that you prepared (as disclosed on page 56). When
preparing your response, please address how you considered within
your evaluation the following franchisee relationships:
* On page 66, you indicate within your Future Minimum Lease
Payments
table that you have reimbursable franchisee leases
* On page 66, you disclose that the Company is the guarantor on
certain equipment lease agreements between the franchisee and
leasing
companies.
* On page 68, you indicate that the Company has a franchise stock
purchase plan available to substantially all franchisee employees.
Note 3 - Acquisitions, page 60
3. You indicate that the majority of the purchase price of your
acquisitions is accounted for as goodwill rather than identifiable
intangible assets, which stems from the value associated with the
walk-in customer base of the acquired hair salon brand. Explain
to
us how you determined that the value of the walk-in customer base
should be allocated to goodwill rather than either the hair salon
brand or the lease agreements that allow the salons to operate in
the
particular locations. Refer to SFAS 141, which states that an
intangible asset shall be recognized as an asset apart from
goodwill
if it arises from contractual or other legal rights. Paragraph
A14
of SFAS 141 lists tradenames (brand names) and lease agreements as
intangible assets that meet the contractual-legal criterion which
require that they be recognized apart from goodwill. Also note the
observations of the FASB Board in paragraphs B172 and B173.
Note 11- Segment Information, page 72
4. Explain to us how you determined that your franchise business
and
your company-owned salons business are not separate operating
segments. Refer to paragraph 10 of SFAS 131 for guidance. If you
have determined that they are separate operating segments and have
aggregated them into one reportable segment, tell us how you
determined that you met the criteria for aggregation in paragraph
17
of SFAS 131, including the requirement that the segments have
similar
economic characteristics.
Form 10-Q for the period ended September 30, 2004
5. Please comply with all of the above comments as applicable.
* * * *
As appropriate, please amend your Forms 10-K and 10-Q and
respond to these comments within 10 business days or tell us when
you
will provide us with a response. You may wish to provide us with
marked copies of the amendment to expedite our review. Please
furnish a cover letter with your amendment that keys your
responses
to our comments and provides any requested supplemental
information.
Detailed cover letters greatly facilitate our review. Please file
your cover letter on EDGAR. Please understand that we may have
additional comments after reviewing your amendment and responses
to
our comments.
You may contact Adam Washecka, Staff Accountant, at (202)
824-
5569 or Robert S. Littlepage, Jr., Accounting Branch Chief, at
(202)
942-1947 if you have questions regarding comments on the financial
statements and related matters. Please contact me at (202) 942-
1990
with any other questions.
Sincerely,
Larry Spirgel
Assistant Director
??
??
??
??
Mr. Randy L. Pearce
Regis Corporation
December 13, 2004
Page 3