UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended December 24, 1998
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _____ to _____.
COMMISSION FILE NUMBER: 0-24466
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-0945858
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 Industrial Boulevard NE
Minneapolis, MN 55413
(Address of principal executive offices)
(612) 331-8500
(Registrant's telephone number, including area code)
Check whether the registrant: (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days
Yes _X_ No___
On February 5, 1999, the registrant had 3,990,769 outstanding shares of
common stock, $.10 par value.
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Statements of Earnings for the Quarter Ended
December 24, 1998 and December 25, 1997
Condensed Consolidated Statements of Financial Position at December 24,
1998 and September 24, 1998
Condensed Consolidated Statements of Cash Flows for the Quarter Ended
December 24, 1998 and December 25, 1997
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
Exhibit 2.1 Agreement and Plan of Merger between Regis Corporation, Regis
Merger Sub, Inc. and The Barbers, Hairstyling for Men & Women,
Inc. dated January 25, 1999
Exhibit 10.1 Form of Cost Cutters Family Hair Care Franchise Agreement
Exhibit 10.2 Form of Cost Cutters Family Hair Care Development Agreement
Exhibit 10.3 Form of We Care Hair Franchise Agreement
Exhibit 10.4 Form of We Care Hair Development Agreement
Exhibit 10.5 Form of City Looks Salons International Franchise Agreement
Exhibit 10.6 Form of City Looks Salons International Development Agreement
Exhibit 99.1 Press Release
Exhibit 27 Financial Data Schedule
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
FIRST QUARTER F1999
(UNAUDITED)
Three Months Ended
December 24, December 25,
1998 1997
------------- -------------
REVENUES
Franchise Royalties $ 2,150,143 $ 1,889,429
Franchise Fees 226,636 330,500
Company-Owned Salons 1,793,239 1,332,704
Beauty Products & Equipment 2,722,920 2,661,215
Other 230,791 222,980
------------- -------------
Total Revenues 7,123,729 6,436,828
COSTS & EXPENSES
Franchise Operations
Salaries & Benefits 542,135 553,305
General & Administrative 356,458 402,375
------------- -------------
Total 898,593 955,680
------------- -------------
Company-Owned Salons
Salaries & Benefits 942,677 689,241
General & Administrative 452,387 327,364
Cost of Products & Services 362,135 242,063
------------- -------------
Total 1,757,199 1,258,668
------------- -------------
Distribution & General Administration
Salaries & Benefits 901,372 797,716
General & Administrative 905,256 816,475
Cost of Products & Equipment 2,053,204 2,090,946
------------- -------------
Total 3,859,832 3,705,137
------------- -------------
OPERATING INCOME 608,105 517,343
OTHER INCOME (EXPENSE)
Interest Income 63,361 52,786
Interest Expense (26,966) (54,119)
Net Gain on Disposal of Assets 150 --
------------- -------------
INCOME BEFORE INCOME TAXES 644,650 516,010
INCOME TAX EXPENSE 264,000 217,000
------------- -------------
NET INCOME $ 380,650 $ 299,010
============= =============
AVERAGE SHARES OUTSTANDING 3,978,750 3,891,146
============= =============
BASIC EARNINGS PER SHARE $ 0.10 $ 0.08
============= =============
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 4,427,753 4,297,793
============= =============
DILUTED EARNINGS PER SHARE $ 0.09 $ 0.07
============= =============
See notes to condensed consolidated financial statements.
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
December 24, September 24,
1998 1998
------------- -------------
ASSETS (Unaudited) (Note 1)
Current assets:
Cash $ 2,867,984 $ 2,931,376
Trade receivable, less allowance for doubtful 3,114,599 2,693,108
accounts of $410,000 in December 1998 and
$400,000 in September 1998
Notes receivable 498,081 398,585
Inventories held for resale 2,108,232 2,166,420
Prepaid expenses 123,267 111,682
Deferred income taxes 419,000 419,000
------------- -------------
Total current assets 9,131,163 8,720,171
Notes receivable, less current portion and allowance for
doubtful notes of $200,000 in December 1998 and
$200,000 in September 1998 829,334 975,394
Property, equipment and leasehold impovements, at cost:
Equipment 2,975,260 2,807,858
Leasehold improvements 1,012,700 1,012,700
------------- -------------
3,987,960 3,820,558
Less accumulated depreciation 2,463,697 2,370,837
------------- -------------
Net property, equipment and leasehold improvements 1,524,263 1,449,721
Investment in franchise contracts, less accumulated
amortization of $628,766 in December 1998 and
$563,741 in September 1998 2,351,610 2,416,635
Deferred income taxes 417,000 417,000
Other assets 376,976 353,191
------------- -------------
Total assets $ 14,630,346 $ 14,332,112
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 191,743 $ 187,576
Accounts payable 479,292 858,097
Deferred franchise fees 83,376 60,500
Committed advertising 1,255,011 1,087,310
Accrued compensation and related payroll taxes 958,472 1,187,813
Other accrued expenses 402,538 264,853
Income taxes payable 285,663 101,983
------------- -------------
Total current liabilities 3,656,095 3,748,132
Long term debt and capital lease obligations 987,675 1,036,866
Deferred franchise fees 298,250 298,250
Deferred compensation 383,624 363,857
Shareholders' equity:
Common stock 398,319 397,524
Additional paid in capital 502,144 463,894
Retained earnings 8,404,239 8,023,589
------------- -------------
Total shareholder's equity 9,304,702 8,885,007
------------- -------------
Total liabilities and shareholders' equity $ 14,630,346 $ 14,332,112
============= =============
Note 1: The balance sheet at September 24, 1998 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. Certain fiscal 1998 items have been
reclassified to conform with the fiscal 1999 presentation.
See notes to condensed consolidated financial statements.
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
December 24, December 25,
1998 1997
------------- -------------
OPERATING ACTIVITIES
Net income $ 380,650 $ 299,010
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 157,884 116,345
Provision for losses on accounts and notes receivable 42,973 66,835
Gain on sales of property and equipment (150) --
Stock compensation 35,895 20,400
Changes in operating assets and liabilities:
Decrease (increase) in:
Accounts and notes receivable (417,900) (401,230)
Inventories held for resale 58,188 (117,557)
Prepaid expenses (11,585) 6,390
Other assets (23,785) (15,820)
(Decrease) increase in:
Payables and accrued expenses (282,993) (86,416)
Deferred franchise fees 22,876 47,500
Income taxes payable 183,680 37,736
------------- -------------
Net cash provided by (used in) operating activities 145,733 (26,807)
INVESTING ACTIVITIES
Proceeds from sale of property and equipment 150 --
Capital expenditures (167,401) (79,967)
Investment in franchise contracts -- --
------------- -------------
Net cash used in investing activities (167,251) (79,967)
FINANCING ACTIVITIES
Principle payments on long-term debt (45,024) (59,516)
Proceeds from issuance of stock options 3,150 9,480
------------- -------------
Net cash used in financing activities (41,874) (50,036)
------------- -------------
Net decrease in cash and cash equivalents (63,392) (156,810)
Cash and cash equivalents at beginning of period 2,931,376 2,789,933
------------- -------------
Cash and cash equivalents at end of period $ 2,867,984 $ 2,633,123
============= =============
CASH PAID DURING PERIOD FOR:
Interest $ 26,966 $ 54,119
Taxes $ 80,320 $ 179,264
See notes to condensed consolidated financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-QSB and
Article 10 of Regulation S-X. Accordingly, they do not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting solely of normal recurring accruals) considered necessary for a fair
presentation of results have been included. Operating results for the three
months ended December 24, 1998, are not necessarily indicative of the results
that may be expected for the year ended September 30, 1999. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report for the fiscal year ended
September 24, 1998.
NOTE B - EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share as defined by the Statement of Financial Accounting Standards
No. 128, EARNINGS PER SHARE:
Quarter Ended
-------------
December 24, December 25,
1998 1997
---- ----
Numerator:
Net Income $ 380,650 $ 299,010
============ ============
Denominator:
Denominator for basic earnings
per share - weighted average
shares 3,978,750 3,891,146
Effect of dilutive stock options and
warrants 449,003 406,647
------------ ------------
Denominator for diluted earnings
per share - adjusted weighted
average shares 4,427,753 4,297,793
============ ============
Basic earnings per share $ 0.10 $ 0.08
============ ============
Diluted earnings per share $ 0.09 $ 0.07
============ ============
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The Company is engaged in the business of franchising three different
hair care salon concepts that provide hair care services and products for men,
women, and children. Most franchises do business under the names "Cost Cutters
Family Hair Care(R)" ("Cost Cutters"), "City Looks Salons International(R)"
("City Looks"), or "We Care Hair(R)" ("We Care Hair"). The Company also has a
limited number of franchises operating under the names "The Barbers, Hairstyling
for Men & Women(R)", "Family Haircut Stores(R)" and "The Hair Performers(R)".
The Company currently sells only franchises in Cost Cutters, City Looks and We
Care Hair.
The Company had 979 franchised and company-owned salons in operation as
of December 24, 1998, compared to 962 at December 25, 1997. The Company
primarily earns revenue through its franchise operations from initial franchise
fees, franchise royalties, and sales of beauty products and equipment to the
franchisees.
The Company operates on a 52/53 week year basis. The fiscal year 1999
includes 53 weeks of operation and 1998 includes 52 weeks of operations.
RESULTS OF OPERATIONS
REVENUES: The Company's total revenues were $7,123,729 for the first quarter of
fiscal 1999, an increase of $686,901 or 10.7% over the first quarter of the
previous year. Franchise royalties totaled $2,150,143 for the first quarter of
fiscal 1999, which is an increase of 13.8% over the comparable period for the
previous year. This increase was due to an increase in per store sales by
franchised salons as well as an increase in the number of salons in operation in
fiscal 1999 as compared to fiscal 1998. Franchise fee revenue (initial franchise
fees) decreased $103,864 or 31.4% to $226,636 for the first quarter of fiscal
1999. The decrease in franchise fee revenue was due to a decrease in the number
of new salons opened during the comparable periods. A total of 18 franchised and
two company-owned salons opened in the first quarter of fiscal 1999 compared to
31 new franchised salons in the first quarter of the previous year. Revenue from
company-owned salons was $1,793,239 for the first quarter, an increase of 34.6%
over the first quarter of the previous year. The increase in revenue from
company-owned salons is due primarily to the addition of nine new company-owned
salons opened over the last twelve months and sales growth at salons opened in
previous years. Beauty product and equipment sales for the first quarter of
fiscal 1999 were $2,722,920, an increase of $61,705 or 2.3% from the first
quarter of the previous year. Beauty product sales increased 16.4%, however
equipment sales decreased 18.2% because of fewer openings of new salons versus
the first quarter of last year.
COSTS & EXPENSES - FRANCHISE OPERATIONS: Total franchise operations expenses
were $898,593 for the first quarter of fiscal 1999. This was a decrease of 6.0%
from the first quarter of fiscal 1998. Several factors contributed to this
reduction in expenses. There was a decrease in franchise sales commissions paid
due to the decrease in the number of franchised salons opened during the
quarter. Some staff positions were repositioned to administrative departments.
Travel, vehicle and printing costs were also less than the prior year.
COSTS & EXPENSES - COMPANY-OWNED SALONS: The Company presently owns and operates
32 salons: 31 operate as Cost Cutters salons and one operates as a City Looks.
25 of the Cost Cutters operate inside Wal-Mart Supercenters. This compares to 23
salons open during the first quarter of the prior fiscal year. First quarter
operating costs for the Company-owned salons were $1,757,199 as compared to
$1,258,668 for the first quarter of the previous year, an increase of 39.6%.
This increase was primarily due to an increase in the number of salons in
operation and an increase in the direct costs associated with increased sales of
services and beauty products.
COSTS & EXPENSES - DISTRIBUTION AND GENERAL ADMINISTRATION: Total operating
expenses for distribution and general administration for the first quarter of
fiscal 1999 were $3,859,832 which is a increase of $154,695 or 4.2% from the
first quarter of the prior year. The first quarter cost of products and
equipment sold was $2,053,204 versus a prior year cost of $2,090,946, a decrease
of 1.8%. Margins on the sale of products and equipment were 24.6% versus 21.4%
the previous year. The increase in margins is primarily due to changes in
product mix: more beauty products and less equipment. Salaries and benefits were
$901,372 for the first quarter of fiscal 1999 versus $797,716 for the first
quarter of fiscal 1998, an increase of 13.0%. This increase was due
to increases in staff size and an average increase in salaries of 4.0%. General
and administrative expenses for the first quarter increased by $88,781 or 10.9%
from the previous year to $905,256. This increase was due to increased
depreciation costs associated with the Company's new distribution center and
professional fees incurred in a secondary stock offering. This stock offering
was announced in September 1998 and withdrawn in January 1999.
OPERATING INCOME: Operating income was $608,105 for the first quarter of fiscal
1999 as compared to $517,343 for the comparable period of the prior year, an
increase of 17.5%. Operating income as a percent of revenue was 8.5% for the
first quarter of fiscal 1999 versus 8.0% for the comparable period of the
previous fiscal year.
INTEREST INCOME AND EXPENSE: Interest income was $63,361 for the first quarter
of fiscal 1999, which is an increase of $10,575 or 20.0% from the interest
income of the first quarter of fiscal 1998. Interest expense was $26,966 for the
first quarter of fiscal 1999 compared to $54,119 for the comparable period of
fiscal 1998. This decrease in interest expense was due to early repayment of
long-term debt associated with the acquisition of We Care Hair.
INCOME TAXES: The Company's effective tax rates for the first quarter of fiscal
1999 and fiscal 1998 were 41.0% and 42.1%, respectively. The Company anticipates
that the rate for the balance of fiscal 1999 will be approximately 41%.
NET INCOME: The Company's net income for the first quarter of 1999 was $380,650
or $.09 per diluted share. This was an increase of $81,640 or 27.3% over the
first quarter of fiscal 1998 net income and an increase of $.02 per diluted
share.
LIQUIDITY AND CAPITAL RESOURCES: The Company has generally been able to produce
sufficient cash from operations to support the routine expansion of its
business, and expects to continue to do the same in fiscal 1999. The Company
expects capital expenditures during fiscal 1999 to be approximately $1,000,000
to $1,500,000, primarily due to the addition of new company-owned salons,
investments in computer upgrades and routine replacement of office equipment.
The Company currently has a line of credit in the amount of $1,500,000, which
carries an interest rate at the bank's prime rate, which expires June 30, 1999.
In addition, the Company also has a term loan with this same lender. The loan
carries an interest rate of 8.82% and had a balance of $1,179,418 at December
24, 1998.
Management believes that cash generated from operating activities, together with
available funds from its operating line of credit or replacement financing will
be sufficient to fund its anticipated operations, capital expenditures and
required debt repayments for the foreseeable future.
YEAR 2000
The Year 2000 issue focuses on whether computer systems will properly
recognize date-sensitive information in the Year 2000 and beyond. Many installed
computer systems and software products are coded to accept only two digit
entries in the date code field. As the Year 2000 approaches, these code fields
will need to accept four digit entries to distinguish years beginning with "19"
from those beginning with "20." This inability to recognize or properly treat
the Year 2000 may cause systems to process financial and operational information
incorrectly. As a result, in the next year, computer systems and/or software
products used by many companies may need to be upgraded to comply with such Year
2000 requirements. The Company is dependent on computer processing in its
business activities and the Year 2000 issue creates risk for the Company from
unforeseen problems in the Company's computer system and from third parties with
whom the Company does business. The failure of the Company's computer system
and/or third parities computer systems from unforeseen problems could have a
material adverse effect on the Company's ability to conduct its business.
The Company is in the process of conducting an assessment of its
computer hardware and software for Year 2000 compliance. The Company does not
have a scheduled completion date for this assessment, but it anticipates that
all necessary upgrades and corrections necessitated by the results of this
assessment will be completed before January 1, 2000. As part
of this assessment, the Company is also examining whether it needs to develop
contingency plans related to Year 2000 issues. The Company does not currently
have any such contingency plans. The Company believes that the results of this
assessment will indicate that the Company's primary computer system is Year 2000
compliant. The Company also believes that the results of this assessment will
require the company to upgrade certain of its computer hardware and software to
replace obsolete equipment and to ensure that all such hardware and software is
Year 2000 compliant. The Company anticipates that the aggregate costs of this
upgrade will be $500,000 to $1,000,000 and that such costs will be incurred
during the next two fiscal years. If the Company encounters any unanticipated
delays in, or costs associated with the upgrading or replacement of this system,
or if this assessment indicates that the Company's primary computer is not Year
2000 compliant, the Company may incur additional costs.
The Company has completed an assessment of its non-information
technology systems. As a result of this assessment, the Company is in the
process of replacing its phone system in order to insure that it is Year 2000
compliant. The estimated cost of this phone system replacement is $60,000. If
the Company encounters any unanticipated delays in, or costs associated with the
upgrading or replacement of this system, the Company may incur additional costs.
As part of its assessment of its computer hardware and software for
Year 2000 compliance, the Company has also contacted each of its vendors and
suppliers who provide computer hardware and software products to the Company on
a regular basis with regard to Year 2000 compliance. The Company has received
assurances from these vendors and suppliers that the hardware and software
currently being purchased by the Company from these vendors and suppliers is
Year 2000 compliant. The Company is in the process of developing procedures to
test hardware and software products previously purchased from these vendors and
suppliers to determine if those products are Year 2000 compliant. As an
additional part of this assessment, the Company intends to contact its
significant vendors and suppliers of products other than computer hardware and
software regarding their Year 2000 compliance. The failure to be Year 2000
compliant by any of the Company's significant vendors and suppliers could result
in an interruption in or a failure of, certain normal business activities or
operations of the Company. Such failures could materially and adversely affect
the Company's business, results of operations, and financial condition. Due to
the general uncertainty inherent in the Year 2000 problem, resulting from the
uncertainty of the Year 2000 readiness of the Company's significant vendors and
suppliers, the Company is unable to determine at this time whether the
consequences of Year 2000 failures will have a material impact on the Company's
business, results of operations, or financial condition.
The Company is also working with its franchisees to assist them in
identifying Year 2000 issues. Although the Company's current version of its
point of sale software is Year 2000 compliant, the Company believes that many of
its franchisee's hardware systems are not Year 2000 compliant. The Company is in
the process of developing test procedures to assist its franchisees in testing
their hardware systems for Year 2000 compliance. The Company does not anticipate
incurring significant costs related to assisting its franchisees in this manner.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Other than as set forth below, the Company is not currently a party to
any material pending legal proceedings. From time to time the Company may become
involved in routine litigation incidental to its business.
LELA BISHOP, ET AL. V. DOCTOR'S ASSOCIATES, INC., FREDERICK DELUCA,
PETER H. BUCK, FRANCHISE WORLD HEADQUARTERS, INC., WE CARE HAIR
DEVELOPMENT, INC., JOHN AMICO, SR., FRED FLORIO, THE BARBERS,
HAIRSTYLING FOR MEN & WOMEN, INC., WE CARE HAIR REALTY, INC., FRANCHISE
REAL ESTATE LEASING CORP., JOHN F. AMICO & COMPANY, WCH, INC. AND JAMI
INTERNATIONAL, INC. (Circuit Court, Third Judicial Circuit, Madison
County, Illinois, Cause No. 97-L-231, filed February 4, 1997).
Approximately 58 present or former We Care Hair(R) franchisees have
joined in this lawsuit and requested certification of the lawsuit as a
class action pursuant to 735 ILCS Section 5/2-801 et seq. on behalf of
all past and present We Care Hair(R) franchisees. This lawsuit has been
brought against the above defendants for alleged breaches of fiduciary
duty. The plaintiffs further allege that We Care Hair Development, Inc.
and all other defendants in this lawsuit have violated the Illinois
Anti-trust Statute, 740 ILCS Section 10/3 (2) or (3), by requiring We
Care Hair(R) franchisees to purchase alleged unusable hair care
products. The plaintiffs further allege that We Care Development, Inc.
and all other defendants in this lawsuit have violated the Illinois
Franchise Disclosure Act by using a standard franchise agreement for We
Care Hair(R) franchises that violated the anti-waiver provisions of 815
ILCS Section 705/41, and by engaging in fraudulent practices and
selling franchises at certain times during which We Care Development,
Inc.'s registration with the Illinois Attorney General's Office had
lapsed. The Company and its subsidiary, WCH, Inc., have been named as
defendants in this lawsuit under the theory that they acted with all
other defendants pursuant to a civil conspiracy and/or mutual scheme
with concerted action for the purpose of constructively terminating the
We Care Hair(R) franchises throughout the country by convincing We Care
Hair(R) franchisees to execute new franchise agreements with the
Company to operate as Cost Cutters franchisees and decrease and/or
eliminate all services and advertising for the remaining We Care
Hair(R) franchisees in violation of the Illinois Franchise Disclosure
Act. We Care Hair Realty, Inc., a wholly-owned subsidiary of WCH, Inc.,
has been named as a defendant in this lawsuit under the theory that it
also participated in the conspiracy or scheme by attempting to transfer
the We Care Hair(R) subleases to the Company and WCH, Inc. The
plaintiffs seek to recover an award of actual damages, punitive
damages, treble damages and attorneys fees in an amount not to exceed,
in the aggregate, under all counts of the complaint, against all
defendants, the sum of $74,950 for each franchisee, and for court
costs.
This case is in the early pretrial stage. The Company, WCH, Inc. and We Care
Hair Realty, Inc. have initiated an action in Illinois Federal District Court
seeking to compel arbitration of the claims of the plaintiffs and are awaiting
the Court's decision on their pending motion to compel arbitration. The
co-defendants have initiated a separate action in Illinois Federal District
Court also seeking to compel arbitration of the claims of the plaintiffs. By
order dated September 25, 1997, the Federal District Court, in the
co-defendants' action, compelled all non-Illinois plaintiffs to arbitrate their
disputes with the co-defendants, and enjoined all non-Illinois plaintiffs from
continuing the lawsuit against all defendants, including the Company, WCH, Inc.
and We Care Hair Realty, Inc. The plaintiffs have appealed this ruling. In
addition, on March 9, 1998, the Appellate Court of Illinois - Fifth District
ordered the State Court proceeding to be transferred to the Circuit Court of
Cook County, Illinois.
ITEM 5. OTHER INFORMATION
On January 25, 1999, The Barbers, Hairstyling for Men & Women, Inc.
("The Barbers") and Regis Corporation ("Regis") entered into a definitive Merger
Agreement for Regis to acquire The Barbers.
A copy of the press release disclosing the execution of the Merger
Agreement is attached hereto as Exhibit 99.1 and is incorporated by reference
herein.
The description contained in this Form 10-QSB and in the press release
attached hereto as Exhibit 99.1 does not purport to be complete and qualified in
its entirety by reference to the Merger Agreement, a copy of which is attached
hereto as Exhibit 2.1.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following exhibits are included herein:
Exhibit
Number Description
- ------ -----------
2.1 Agreement and Plan of Merger between Regis Corporation, Regis
Merger Sub, Inc. and The Barbers, Hairstyling for Men & Women,
Inc. dated January 25, 1999
10.1 Form of Cost Cutters Family Hair Care Franchise Agreement
10.2 Form of Cost Cutters Family Hair Care Development Agreement
10.3 Form of We Care Hair Franchise Agreement
10.4 Form of We Care Hair Development Agreement
10.5 Form of City Looks Salons International Franchise Agreement
10.6 Form of City Looks Salons International Development Agreement
99.1 Press Release
27 Financial Data Schedule
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.
(Registrant)
Date: February 5, 1999 By: /s/ Frederick A. Huggins
------------------------
Frederick A. Huggins, Jr.
President
By: /s/ J. Brent Hanson
-------------------
J. Brent Hanson
Chief Financial Officer