10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014

OR

¨ 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 1-12725

Regis Corporation

(Exact name of registrant as specified in its charter)

Minnesota	41-0749934
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
7201 Metro Boulevard, Edina, Minnesota	55439
(Address of principal executive offices)	(Zip Code)

(952) 947-7777

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has 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 ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to be submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company ¨
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of October 24, 2014:

Common Stock, $.05 par value	55,251,656
Class	Number of Shares

REGIS CORPORATION

INDEX

Part I.	Financial Information
	Item 1.	Financial Statements (Unaudited):
		Condensed Consolidated Balance Sheet as of September 30, 2014 and June 30, 2014	3
		Condensed Consolidated Statement of Operations for the three months ended September 30, 2014 and 2013	4
		Condensed Consolidated Statement of Comprehensive (Loss) Income for the three months ended September 30, 2014 and 2013	5
		Condensed Consolidated Statement of Cash Flows for the three months ended September 30, 2014 and 2013	6
		Notes to Condensed Consolidated Financial Statements	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22
	Item 4.	Controls and Procedures	23
Part II.	Other Information		23
	Item 1.	Legal Proceedings	23
	Item 1A.	Risk Factors	23
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
	Item 6.	Exhibits	24
	Signatures		25

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

REGIS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)

(Dollars in thousands, except share data)

	September 30, 2014		June 30, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	186,257	$	378,627
Receivables, net	22,085		25,808
Inventories	143,328		137,151
Other current assets	69,990		71,680
Total current assets	421,660		613,266
Property and equipment, net	253,072		266,538
Goodwill	423,278		425,264
Other intangibles, net	19,004		19,812
Investment in affiliates	29,339		28,611
Other assets	63,575		62,458
Total assets	$	1,209,928	$	1,415,949
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Long-term debt, current portion	$	14	$	173,501
Accounts payable	71,280		68,491
Accrued expenses	137,497		142,720
Total current liabilities	208,791		384,712
Long-term debt and capital lease obligations	120,000		120,002
Other noncurrent liabilities	194,292		190,454
Total liabilities	523,083		695,168
Commitments and contingencies (Note 6)
Shareholders’ equity:
Common stock, $0.05 par value; issued and outstanding 55,250,514 and 56,651,166 common shares at September 30, 2014 and June 30, 2014, respectively	2,763		2,833
Additional paid-in capital	317,633		337,837
Accumulated other comprehensive income	18,029		22,651
Retained earnings	348,420		357,460
Total shareholders’ equity	686,845		720,781
Total liabilities and shareholders’ equity	$	1,209,928	$	1,415,949

The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements.

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REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

For The Three Months Ended September 30, 2014 and 2013

(Dollars and shares in thousands, except per share data amounts)

	Three Months Ended September 30,
	2014			2013
Revenues:
Service	$	364,742		$	371,727
Product	88,762			86,743
Royalties and fees	11,047			10,113
	464,551			468,583
Operating expenses:
Cost of service	223,687			225,015
Cost of product	44,977			44,024
Site operating expenses	51,652			50,841
General and administrative	45,185			44,433
Rent	77,469			79,010
Depreciation and amortization	22,188			23,831
Total operating expenses	465,158			467,154
Operating (expense) income	(607		)	1,429
Other (expense) income:
Interest expense	(3,098		)	(4,491		)
Interest income and other, net	(127		)	544
Loss before income taxes and equity in income of affiliated companies	(3,832		)	(2,518		)
Income taxes	(5,612		)	383
Equity in income of affiliated companies, net of income taxes	392			1,999
Net loss	$	(9,052	)	$	(136	)
Net loss per share:
Basic and diluted	$	(0.16	)	$	(0.00	)
Weighted average common and common equivalent shares outstanding:
Basic and diluted	55,743			56,393
Cash dividends declared per common share	$	—		$	0.06

The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements.

4

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS) INCOME (Unaudited)

For The Three Months Ended September 30, 2014 and 2013

(Dollars in thousands)

	Three Months Ended September 30,
	2014			2013
Net loss	$	(9,052	)	$	(136	)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments during the period	(4,622		)	3,035
Other comprehensive (loss) income	(4,622		)	3,035
Comprehensive (loss) income	$	(13,674	)	$	2,899

The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements.

5

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

For The Three Months Ended September 30, 2014 and 2013

(Dollars in thousands)

	Three Months Ended September 30,
	2014			2013
Cash flows from operating activities:
Net loss	$	(9,052	)	$	(136	)
Adjustments to reconcile net loss to net cash provided by:
Depreciation and amortization	18,122			22,157
Equity in income of affiliated companies	(392		)	(1,999		)
Deferred income taxes	4,059			(250		)
Salon asset impairment	4,066			1,674
Loss on write down of inventories	—			854
Stock-based compensation	1,781			1,811
Amortization of debt discount and financing costs	618			1,843
Other non-cash items affecting earnings	343			(34		)
Changes in operating assets and liabilities, excluding the effects of acquisitions	(3,512		)	(10,164		)
Net cash provided by operating activities	16,033			15,756
Cash flows from investing activities:
Capital expenditures	(11,629		)	(11,444		)
Asset acquisitions, net of cash acquired and proceeds from sale of assets	4			(12		)
Proceeds from loans and investments	—			2,968
Net cash used in investing activities	(11,625		)	(8,488		)
Cash flows from financing activities:
Repayments of long-term debt and capital lease obligations	(173,740		)	(1,706		)
Repurchase of common stock	(21,529		)	—
Dividends paid	—			(3,397		)
Net cash used in financing activities	(195,269		)	(5,103		)
Effect of exchange rate changes on cash and cash equivalents	(1,509		)	1,033
(Decrease) increase in cash and cash equivalents	(192,370		)	3,198
Cash and cash equivalents:
Beginning of period	378,627			200,488
End of period	$	186,257		$	203,686

The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements.

6

REGIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The unaudited interim Condensed Consolidated Financial Statements of Regis Corporation (the Company) as of September 30, 2014 and for the three months ended September 30, 2014 and 2013, reflect, in the opinion of management, all adjustments necessary to fairly state the consolidated financial position of the Company as of September 30, 2014 and the consolidated results of its operations and its cash flows for the interim periods. Adjustments consist only of normal recurring items, except for any discussed in the notes below. The results of operations and cash flows for any interim period are not necessarily indicative of results of operations and cash flows for the full year.

The Condensed Consolidated Balance Sheet data for June 30, 2014 was derived from audited Consolidated Financial Statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP). The unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2014 and other documents filed or furnished with the Securities and Exchange Commission (SEC) during the current fiscal year.

Stock-Based Employee Compensation:

During the three months ended September 30, 2014, the Company granted various equity awards including restricted stock units (RSUs), equity-based stock appreciation rights (SARs), and performance share units (PSUs). During the three months ended September 30, 2014, the dividend yield assumption was updated to 0%. Otherwise there were no significant changes to the assumptions used in calculating the fair value of SARs. All grants relate to stock incentive plans approved by the shareholders of the Company.

A summary of equity awards granted is as follows:

	Three Months Ended September 30, 2014
Restricted stock units	253,283
Equity-based stock appreciation rights	436,465
Performance share units	193,240

Total compensation cost for stock-based payment arrangements totaled $1.8 million for each of the three months ended September 30, 2014 and 2013, respectively, recorded within general and administrative expense on the unaudited Condensed Consolidated Statement of Operations.

During fiscal year 2014, the Company granted 0.1 million PSUs with a performance metric based upon achieving a three-year cumulative adjusted earnings before interest, income taxes and depreciation and amortization balance. As of September 30, 2014, the Company does not expect any of these units to be earned and has not recorded any net expense associated with these awards. However, future compensation expense for the unvested awards could reach a maximum of $1.9 million if the maximum performance metric is earned.

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Long-Lived Asset Impairment Assessments, Excluding Goodwill:

The Company assesses impairment of long-lived assets at the individual salon level, as this is the lowest level for which identifiable cash flows are largely independent of other groups of assets and liabilities, when events or changes in circumstances indicate the carrying value of the assets or the asset grouping may not be recoverable. Factors considered in deciding when to perform an impairment review include significant under-performance of an individual salon in relation to expectations, significant economic or geographic trends, and significant changes or planned changes in our use of the assets. Impairment is evaluated based on the sum of undiscounted estimated future cash flows expected to result from use of the long-lived assets. If the undiscounted estimated cash flows are less than the carrying value of the assets, the Company calculates an impairment charge based on the assets' estimated fair value. The fair value of the long-lived assets is estimated using a discounted cash flow model based on the best information available, including market data and salon level revenues and expenses. Long-lived asset impairment charges are recorded within depreciation and amortization in the Consolidated Statement of Operations for the three months ended September 30, 2014 and 2013.

Recent Accounting Standards Adopted by the Company:

Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity

In April 2014, the Financial Accounting Standards Board ("FASB") updated the accounting guidance related to the definition of a discontinued operation and the related disclosures. The updated accounting guidance defines a discontinued operation as a disposal of a component or a group of components that is to be disposed of or is classified as held for sale and represents a strategic shift that has or will have a major effect on an entity's operations and financial results. The Company adopted this guidance in the first quarter of fiscal year 2015; its adoption did not have a material impact on the Company’s consolidated financial statements.

Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists

In July 2013, the FASB issued new accounting requirements which provide guidance on the financial statement presentation of unrecognized tax benefits when a net operating loss, a similar tax loss, or a tax credit carryforward exists. The requirements are effective for the Company beginning in the first quarter of fiscal year 2015 with early adoption permitted. The Company adopted this guidance in the first quarter of fiscal year 2015; its adoption did not have a material impact on the Company’s consolidated financial statements.

Accounting Standards Recently Issued But Not Yet Adopted by the Company:

Revenue from Contracts with Customers

In May 2014, the FASB issued updated guidance for revenue recognition. The updated accounting guidance provides a comprehensive new revenue recognition model that requires a Company to recognize revenue to depict the exchange for goods or services to a customer at an amount that reflects the consideration it expects to receive for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. This guidance will be effective in the first quarter of fiscal year 2018. This update permits the use of either the retrospective or simplified transition method. The Company does not expect the adoption of this update to have a material impact on the Company's consolidated financial statements and is evaluating the impact this guidance will have on its related disclosures.

2. INVESTMENT IN AFFILIATES:

EEG, Inc.

As of September 30, 2014, the Company's ownership interest in EEG, Inc. (EEG) was 54.6% and the carrying amount of the Company's investment in EEG was $28.8 million. During the three months ended September 30, 2014 and 2013, the Company recorded $0.4 and $1.0 million, respectively, of equity earnings related to its investment in EEG. The exposure to loss related to the Company’s involvement with EEG is the carrying value of the investment.

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The Company utilized consolidation of variable interest entities guidance to determine whether or not its investment in EEG was a variable interest entity (VIE), and if so, whether the Company was the primary beneficiary of the VIE. The Company concluded that EEG was not a VIE based on the fact that EEG had sufficient equity at risk. The Company accounts for EEG as an equity investment under the voting interest model, as the Company has granted the other shareholder of EEG an irrevocable proxy to vote a certain number of the Company’s shares such that the other shareholder of EEG has voting control of 51.0% of EEG’s common stock, as well as the right to appoint four of the five members of EEG’s Board of Directors.

Based on EEG's annual goodwill impairment assessment performed during the fourth quarter of fiscal year 2014, the Company's portion of EEG's estimated fair value exceeds carrying value of its investment by approximately 10%. Any meaningful underperformance against plan or reduced outlook by EEG, changes to the carrying value of EEG or erosion in valuations of the for-profit secondary educational market could lead to other than temporary impairments of the Company's investment in EEG. In addition, EEG may be required to record non-cash impairment charges related to long-lived assets or establish valuation allowances against certain of its deferred tax assets and our share of such non-cash impairment charges or valuation allowances could be material to the Company's consolidated balance sheet and results of operations. If EEG records a full valuation allowance on its deferred tax assets, our share of the expense would be $7.6 million.

The table below presents the summarized Statement of Operations information for EEG:

	For the Three Months Ended September 30,
	2014		2013
(Unaudited)	(Dollars in thousands)
Gross revenues	$	40,593	$	43,965
Gross profit	11,370		14,912
Operating income	479		2,904
Net income	442		1,938

MY Style

During the three months ended September 30, 2013, MY Style’s parent company, Yamano Holding Corporation (Yamano), redeemed its Class A Preferred Stock for $1.0 million. During fiscal year 2011, the Company had estimated the fair value of the Yamano Class A Preferred Stock to be negligible and recorded an other than temporary non-cash impairment. The Company reported the gain associated with Yamano's redemption within equity in income of affiliated companies, net of income taxes, on the unaudited Condensed Consolidated Statement of Operations.

3. EARNINGS PER SHARE:

The Company’s basic earnings per share is calculated as net loss divided by weighted average common shares outstanding, excluding unvested outstanding restricted stock awards, RSUs and PSUs. The Company’s diluted earnings per share is calculated as net loss divided by weighted average common shares and common share equivalents outstanding, which includes shares issued under the Company’s stock-based compensation plans. Stock-based awards with exercise prices greater than the average market value of the Company’s common stock are excluded from the computation of diluted earnings per share. The Company’s diluted earnings per share also reflect the assumed conversion under the Company’s convertible debt, if the impact is dilutive, along with the exclusion of interest expense, net of taxes. The impact of the convertible debt is excluded from the computation of diluted earnings per share when interest expense per common share obtainable upon conversion is greater than basic earnings per share.

Net loss available to common shareholders and net loss for diluted earnings per share under the if-converted method were the same for all periods presented.

For the three months ended September 30, 2014 and 2013, 143,749 and 132,392 common stock equivalents of potentially dilutive common stock, respectively, were excluded from the diluted earnings per share calculation due to the net loss.

The computation of weighted average shares outstanding, assuming dilution, excluded 1,681,508 and 1,409,169 of stock-based awards during the three months ended September 30, 2014 and 2013, respectively, as they were not dilutive under the treasury stock method. The computation of weighted average shares outstanding, assuming dilution, also excluded 1,845,053 and 11,289,545 of shares from convertible debt as they were not dilutive for the three months ended September 30, 2014 and 2013, respectively.

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4.SHAREHOLDERS’ EQUITY:

Additional Paid-In Capital:

The $20.2 milliondecrease in additional paid-in capital during the three months ended September 30, 2014 was primarily due to $21.5 million of common stock repurchases, partly offset by $1.8 million of stock-based compensation.

During the three months ended September 30, 2014, the Company repurchased 1,455,587 shares for $21.5 million under a previously approved stock repurchase program. At September 30, 2014, $37.2 million remains outstanding under the approved stock repurchase program.  

5. INCOME TAXES:

During the three months ended September 30, 2014 and 2013, the Company recognized tax expense (benefit) of $5.6 and $(0.4) million, respectively, with corresponding effective tax rates of (146.5)% and 15.2%.

The recorded tax expense and effective tax rate for the three months ended September 30, 2014 were different than what would normally be expected primarily due to non-cash tax expense relating to tax benefits on certain indefinite-lived assets that the Company cannot recognize for reporting purposes and the valuation allowance associated with the U.S. and U.K. deferred tax assets.

The recorded tax benefit and the effective tax rate for the three months ended September 30, 2013 were lower than would be expected due to unique items of tax expense reducing the tax benefit, with a resulting greater impact on the tax rate due to the relatively small amount of pretax loss reported for the quarter.

The Company’s U.S. federal income tax returns for the fiscal years 2010 and 2011 are currently under audit. All earlier tax years are closed to examination. The Internal Revenue Service (IRS) identified certain issues that resulted in audit adjustments. In anticipation of these adjustments, the Company made a payment to the IRS during the fourth quarter ended June 30, 2014. The majority of the amount paid relates to timing differences and will be recovered by claiming tax deductions in subsequent years. While the IRS has proposed additional adjustments in these audits, the Company believes its income tax position and deductions will be sustained and intends to vigorously defend its position on the issues and accordingly will initially appeal to the IRS Appeals Division. Final resolution of these issues is not expected to have a material impact on the Company’s financial position. For state tax audits, the statute of limitations generally runs three to four years resulting in a number of returns being open for tax audits dating back to fiscal year 2010. The Company is currently under audit in a number of states in which the statute of limitations has been extended for fiscal years 2007 and forward.

6. COMMITMENTS AND CONTINGENCIES:

The Company is a defendant in various lawsuits and claims arising out of the normal course of business. Like certain other large retail employers, the Company has been faced with allegations of purported class-wide consumer and wage and hour violations. Litigation is inherently unpredictable and the outcome of these matters cannot presently be determined. Although the actions are being vigorously defended, the Company could in the future incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations in any particular period.

The Company was a nominal defendant, and nine current and former directors and officers of the Company were named defendants, in a shareholder derivative action in Minnesota state court. The derivative shareholder action alleged that the individual defendants breached their fiduciary duties to the Company in connection with their approval of certain executive compensation arrangements and certain related party transactions. The Board of Directors appointed a Special Litigation Committee to investigate the claims and allegations made in the derivative action, and to decide on behalf of the Company whether the claims and allegations should be pursued. In April 2014, the Special Litigation Committee issued a report and concluded the claims and allegations should not be pursued, and in September 2014 the case was dismissed by court order.

The exposure to loss related to the Company’s discontinued Trade Secret salon concept is the guarantee of certain operating leases that have future minimum rents. The Company has determined the exposure to the risk of loss on the guarantee of the operating leases to be immaterial to the financial statements.

See Note 5 to the unaudited Condensed Consolidated Financial Statements for discussion regarding certain issues that have resulted from the IRS' audit of fiscal 2010 and 2011.

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7. GOODWILL AND OTHER INTANGIBLES:

The table below contains details related to the Company’s recorded goodwill:

	September 30, 2014							June 30, 2014
	Gross Carrying Value		Accumulated Impairment (1)			Net (2)		Gross Carrying Value		Accumulated Impairment (1)			Net (2)
	(Dollars in thousands)
Goodwill	$	676,939	$	(253,661	)	$	423,278	$	678,925	$	(253,661	)	$	425,264

_____________________________

(1) The table below contains additional information regarding accumulated impairment losses:

Fiscal Year	Impairment Charge			Reporting Unit (3)
	(Dollars in thousands)
2009	$	(41,661	)	International
2010	(35,277		)	North American Premium
2011	(74,100		)	North American Value
2012	(67,684		)	North American Premium
2014	(34,939		)	North American Premium
Total	$	(253,661	)

_____________________________

(2)  Remaining net goodwill relates to the Company’s North American Value reporting unit.

(3) See Note 10 to the unaudited Condensed Consolidated Financial Statements.

The table below presents other intangible assets:

	September 30, 2014							June 30, 2014
	Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
	(Dollars in thousands)
Amortized intangible assets:
Brand assets and trade names	$	8,937	$	(3,492	)	$	5,445	$	9,203	$	(3,510	)	$	5,693
Franchise agreements	10,758		(7,076		)	3,682		11,063		(7,163		)	3,900
Lease intangibles	14,715		(7,477		)	7,238		14,775		(7,326		)	7,449
Other	4,943		(2,304		)	2,639		5,074		(2,304		)	2,770
	$	39,353	$	(20,349	)	$	19,004	$	40,115	$	(20,303	)	$	19,812

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8. FINANCING ARRANGEMENTS:

The Company’s long-term debt consisted of the following:

			Amounts Outstanding
	Maturity Dates	Interest Rate	September 30, 2014			June 30, 2014
	(fiscal year)		(Dollars in thousands)
Convertible senior notes	2015	5.00%	$	—		$	172,246
Senior term notes	2018	5.75	120,000			120,000
Revolving credit facility	2018	—	—			—
Equipment and leasehold notes payable	2015 - 2016	4.90 - 8.75	14			1,257
			120,014			293,503
Less current portion			(14		)	(173,501		)
Long-term portion			$	120,000		$	120,002

Convertible Senior Notes

In July 2009, the Company issued $172.5 million aggregate principal amount of 5.0% convertible senior notes due July 2014. In July 2014, the Company settled the convertible senior notes with $172.5 million in cash. The notes were unsecured, senior obligations of the Company and interest was payable semi-annually in arrears on January 15 and July 15 of each year at a rate of 5.0% per year. Interest expense related to the 5.0% contractual interest coupon was $0.4 and $2.2 million for the three months ended September 30, 2014 and 2013, respectively. Interest expense related to the amortization of the debt discount was $0.3 and $1.4 million for the three months ended September 30, 2014 and 2013, respectively.

Senior Term Notes

In November 2013, the Company issued $120.0 million aggregate principal amount of 5.75% senior notes due December 2017 (Senior Term Notes). Net proceeds from the issuance of the Senior Term Notes were $118.1 million. Interest on the Senior Term Notes is payable semi-annually in arrears on June 1 and December 1 of each year, beginning on June 1, 2014, at a rate of 5.75% per year. The Senior Term Notes are unsecured and not guaranteed by any of the Company's subsidiaries or any third parties.

Revolving Credit Facility

As of September 30, 2014 and June 30, 2014, the Company had no outstanding borrowings under this facility. Additionally, the Company had outstanding standby letters of credit under the facility of $2.0 million and $2.2 million at September 30, 2014 and June 30, 2014, respectively, primarily related to the Company's self-insurance program. Unused available credit under the facility at September 30, 2014 and June 30, 2014 was $398.0 million and $397.8 million, respectively.

The Company was in compliance with all covenants and requirements of its financing arrangements as of and during the three months ended September 30, 2014.

9. FAIR VALUE MEASUREMENTS:

Fair value measurements are categorized into one of three levels based on the lowest level of significant input used: Level 1 (unadjusted quoted prices in active markets); Level 2 (observable market inputs available at the measurement date, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data).

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis (Level 1)

As of September 30, 2014, the Company’s financial instruments included cash, cash equivalents, receivables and accounts payable. The fair value of these instruments approximated their carrying values as of September 30, 2014 and June 30, 2014. As of September 30, 2014 and June 30, 2014, the estimated fair value of the Company's debt was $118.5 million and $292.5 million, respectively, and the carrying value was $120.0 million and $293.5 million, respectively.

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Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis (Level 3)

We measure certain assets, including the Company’s equity method investments, tangible fixed and other assets and goodwill, at fair value on a nonrecurring basis when they are deemed to be other than temporarily impaired. The fair values of the Company’s investments are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted cash flow projections. During the three months ended September 30, 2014, the Company recorded $4.1 million of long-lived asset impairment charges. See Note 1 to the unaudited Condensed Consolidated Financial Statements. There were no other assets measured at fair value on a nonrecurring basis during the three months ended September 30, 2014.

10. SEGMENT INFORMATION:

Segment information is prepared on the same basis the chief operating decision maker reviews financial information for operational decision-making purposes. During the second quarter of fiscal year 2014, the Company redefined its operating segments to reflect how the chief operating decision maker evaluates the business as a result of the restructuring of the Company's North American field organization. The field reorganization, which impacted all North American salons except for salons in the mass premium category, was announced in the fourth quarter of fiscal year 2013 and completed in the second quarter of fiscal year 2014.

As of September 30, 2014, the Company’s reportable operating segments consisted of the following salons:

	Company-owned	Franchised	Total
North American Value	6,063	2,214	8,277
North American Premium	793	—	793
International	362	—	362

The North American Value operating segment is comprised primarily of SmartStyle, Supercuts, MasterCuts, Cost Cutters, and other regional trade names. The North American Premium operating segment is comprised primarily of the Regis salon concept and the International operating segment includes Supercuts, Regis and Sassoon salon concepts.

Concurrent with the change in reportable operating segments, the Company revised its prior period financial information to reflect comparable financial information for the new segment structure. Historical financial information shown in the following table and elsewhere in this filing reflects this change. 

	For the Three Months Ended September 30,
	2014			2013
	(Dollars in thousands)
Revenues:
North American Value	$	354,376		$	355,341
North American Premium	79,035			84,190
International	31,140			29,052
	$	464,551		$	468,583
Operating (expense) income:
North American Value	$	29,287		$	30,047
North American Premium (1)	(4,544		)	(1,239		)
International	630			(257		)
Total segment operating income	25,373			28,551
Unallocated Corporate	(25,980		)	(27,122		)
Operating (expense) income	$	(607	)	$	1,429

_____________________________

(1) Increases in operating loss primarily driven by long-lived asset impairment charges recorded within depreciation and amortization in the Consolidated Statement of Operations. See Note 1 to the unaudited Condensed Consolidated Financial Statements.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is designed to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. This MD&A should be read in conjunction with the MD&A included in our June 30, 2014 Annual Report on Form 10-K and other documents filed or furnished with the Securities and Exchange Commission (SEC) during the current fiscal year.

MANAGEMENT’S OVERVIEW

Regis Corporation (RGS) owns, franchises and operates beauty salons. Our long-term mission is to create guests for life. To successfully achieve our mission and build a winning organization, we must help our stylists have successful and satisfying careers, which will drive great guest experiences and in turn, guests for life. We are investing in a number of areas focused on providing an outstanding guest experience and helping our stylists have successful careers, including investments in people, training and technology.

Since fiscal year 2012, the Company has been evaluating its portfolio of assets, investments and businesses, with the strategic objective of simplifying our business model, focusing on our core business of operating beauty salons and improving our long-term profitability and maximizing shareholder value. The disposal or sale of any non-core assets may impact our operations by decreasing total revenues, operating expenses and income or loss from equity method investments.

As of September 30, 2014, we owned, franchised or held ownership interests in 9,652 worldwide locations. Our locations consisted of 9,432 system-wide North American and International salons, and 220 locations in which we maintain a non-controlling ownership interest less than 100 percent. Each of the Company’s salon concepts generally offer similar salon products and services and serve the mass market. As of September 30, 2014, we had approximately 48,000 corporate employees worldwide.

CRITICAL ACCOUNTING POLICIES

The interim unaudited Condensed Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America. In preparing the interim unaudited Condensed Consolidated Financial Statements, we are required to make various judgments, estimates and assumptions that could have a significant impact on the results reported in the interim unaudited Condensed Consolidated Financial Statements. We base these estimates on historical experience and other assumptions believed to be reasonable under the circumstances. Estimates are considered to be critical if they meet both of the following criteria: (1) the estimate requires assumptions about material matters that are uncertain at the time the accounting estimates are made, and (2) other materially different estimates could have been reasonably made or material changes in the estimates are reasonably likely to occur from period to period. Changes in these estimates could have a material effect on our interim unaudited Condensed Consolidated Financial Statements.

Our significant accounting policies can be found in Note 1 to the Consolidated Financial Statements contained in Part II, Item 8 of the June 30, 2014 Annual Report on Form 10-K, as well as Note 1 to the unaudited Condensed Consolidated Financial Statements contained within this Quarterly Report on Form 10-Q. We believe the accounting policies related to investment in affiliates, the valuation of goodwill, the valuation and estimated useful lives of long-lived assets, estimates used in relation to tax liabilities and deferred taxes and legal contingencies are most critical to aid in fully understanding and evaluating our reported financial condition and results of operations. Discussion of each of these policies is contained under “Critical Accounting Policies” in Part II, Item 7 of our June 30, 2014 Annual Report on Form 10-K.

See Note 2 to the unaudited Condensed Consolidated Financial Statements for a discussion of potential impairment of a portion or all of the carrying value of our investment in EEG and the Company's share of any potential non-cash impairment charges recorded by EEG related to long-lived assets or EEG establishing valuation allowances against certain of its deferred tax assets.

Recent Accounting Pronouncements

Recent accounting pronouncements are discussed in Note 1 to the unaudited Condensed Consolidated Financial Statements.

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RESULTS OF OPERATIONS

Explanations are primarily for North American Value, unless otherwise noted.

Condensed Consolidated Results of Operations (Unaudited)

The following table sets forth, for the periods indicated, certain information derived from our unaudited Condensed Consolidated Statement of Operations. The percentages are computed as a percent of total consolidated revenues, except as otherwise indicated.

	For the Three Months Ended September 30,
	2014			2013		2014		2013		2014		2013
	($ in millions)					% of Total Revenues				Basis Point (Decrease) Increase
Service revenues	$	364.7		$	371.7	78.5	%	79.3	%	(80	)	140
Product revenues	88.8			86.7		19.1		18.5		60		(170	)
Franchise royalties and fees	11.0			10.1		2.4		2.2		20		30
Cost of service (1)	223.7			225.0		61.3		60.5		80		140
Cost of product (2)	45.0			44.0		50.7		50.8		(10	)	(110	)
Site operating expenses	51.7			50.8		11.1		10.8		30		40
General and administrative	45.2			44.4		9.7		9.5		20		(160	)
Rent	77.5			79.0		16.7		16.9		(20	)	80
Depreciation and amortization	22.2			23.8		4.8		5.1		(30	)	100
Interest expense	3.1			4.5		0.7		1.0		(30	)	(40	)
Interest income and other, net	(0.1		)	0.5		—		0.1		(10	)	(670	)
Income taxes (3)	(5.6		)	0.4		(146.5	)	15.2		N/A		N/A
Equity in income of affiliated companies, net of income taxes	0.4			2.0		0.1		0.4		(30	)	30

_____________________________

(1) Computed as a percent of service revenues and excludes depreciation and amortization expense.

(2) Computed as a percent of product revenues and excludes depreciation and amortization expense.

(3) Computed as a percent of loss before income taxes and equity in income of affiliated companies. The income taxes basis point change is noted as not applicable (N/A) as the discussion within MD&A is related to the effective income tax rate.

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Consolidated Revenues

Consolidated revenues primarily include revenues of company-owned salons, product and equipment sales to franchisees, and franchise royalties and fees. The following tables summarize revenues and same-store sales by concept as well as the reasons for the percentage change:

	For the Three Months Ended September 30,
	2014			2013
	(Dollars in thousands)
North American Value salons:
SmartStyle	$	123,472		$	117,476
Supercuts	86,720			85,319
MasterCuts	30,052			31,975
Other Value	114,132			120,571
Total North American Value salons	354,376			355,341
North American Premium salons	79,035			84,190
International salons	31,140			29,052
Consolidated revenues	$	464,551		$	468,583
Percent change from prior year	(0.9		)%	(7.3		)%
Salon same-store sales increase (decrease) (1)	0.6		%	(5.4		)%

_____________________________

(1) Same-store sales are calculated on a daily basis as the total change in sales for company-owned locations that were open on a specific day of the week during the current period and the corresponding prior period. Quarterly same-store sales are the sum of the same-store sales computed on a daily basis. Locations relocated within a one-mile radius 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 to remove foreign currency fluctuations from the calculation.

Decreases in consolidated revenues were driven by the following:

	For the Three Months Ended September 30,
Factor	2014		2013
Same-store sales	0.6	%	(5.4	)%
Closed salons	(2.3	)	(3.2	)
New stores and conversions	0.8		0.9
Other	—		0.4
	(0.9	)%	(7.3	)%

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Same-store sales by concept are detailed in the table below:

	For the Three Months Ended September 30,
	2014		2013
SmartStyle	3.5	%	(5.5	)%
Supercuts	2.1		(1.8	)
MasterCuts	(2.3	)	(11.9	)
Other Value	(0.4	)	(5.0	)
North American Value same-store sales	1.4		(5.2	)
North American Premium same-store sales	(2.5	)	(7.0	)
International same-store sales	(0.3	)	(1.4	)
Consolidated same-store sales	0.6	%	(5.4	)%

The same-store sales increase of 0.6% during the three months ended September 30, 2014 was due to an increase of 1.8% in average ticket, partly offset by a decrease of 1.2% in guest visits. The Company constructed (net of relocations) and closed 126 and 280 company-owned salons, respectively, during the twelve months ended September 30, 2014 and sold (net of buybacks) 31 company-owned salons to franchisees during the same period.

The same-store sales decrease of 5.4% during the three months ended September 30, 2013 was due to a 7.2% decrease in guest visits, partly offset by a 1.8% increase in average ticket. The Company constructed (net of relocations) and closed 135 and 393 company-owned salons, respectively, during the twelve months ended September 30, 2013 and sold (net of buybacks) 19 company-owned salons to franchisees during the same period.

Consolidated revenues are primarily comprised of service and product revenues, as well as franchise royalties and fees. Fluctuations in these three major revenue categories, operating expenses and other income and expense were as follows:

Service Revenues

The $7.0 milliondecrease in service revenues during the three months ended September 30, 2014, was primarily due to closure of 280 company-owned salons and sale (net of buybacks) of 31 company-owned salons to franchisees during the twelve months ended September 30, 2014, partly offset by the construction (net of relocations) of 126 company-owned salons during the same period. Same-store service sales were flat as compared to the prior year period. A 0.6%decrease in same-store guest visits was offset by an increase in average ticket of 0.6% during the three months ended September 30, 2014.

The $21.7 million decrease in service revenues during the three months ended September 30, 2013 was primarily due to same-store service sales decreases of 3.1%, closure of 393 company-owned salons and the sale (net of buybacks) of 19 company-owned salons to franchisees during the twelve months ended September 30, 2013. The decrease in same-store service sales was primarily the result of a 5.7% decrease in same-store guest visits, partly offset by a 2.6% increase in average ticket. Partly offsetting the decrease were sales from the construction (net of relocations) of 135 company-owned salons during the twelve months ended September 30, 2013.

Product Revenues

The $2.0 millionincrease in product revenues during the three months ended September 30, 2014 was primarily due to a same-store product sales increase of 3.5% and the construction (net of relocations) of 126 company-owned salons during the twelve months ended September 30, 2014. The increase in same-store product sales was primarily the result of a 4.1%increase in same-store guest visits, partly offset by a 0.6%decrease in average ticket. Partly offsetting the increase was the closure of 280company-owned salons and sale (net of buybacks) of 31 company-owned salons to franchisees during the twelve months ended September 30, 2014.

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The $15.5 million decrease in product revenues during the three months ended September 30, 2013 was primarily due to same-store product sales decreases of 14.8%, closure of 393 company-owned salons and the sale (net of buybacks) of 19 company-owned salons to franchisees during the twelve months ended September 30, 2013. The decrease in same-store product sales was primarily the result of a 17.6% decrease in same-store guest visits, partly offset by 2.8% increase in average ticket. Partly offsetting the decrease was sales from the construction (net of relocations) of 135 salons during the twelve months ended September 30, 2013.

Royalties and Fees

Total franchised locations open at September 30, 2014 were 2,214 as compared to 2,103 at September 30, 2013. The $0.9 million increase in royalties and fees for the three months ended September 30, 2014 was primarily due to the increased number of franchised locations and same-store sales increases at franchised locations.

Total franchise locations open at September 30, 2013 were 2,103, as compared to 2,023 at September 30, 2012. The $0.5 million increase in royalties and fees for the three months ended September 30, 2013 was primarily due to the increased number of franchised locations and same-store sales increases at franchised locations.

Cost of Service

The 80 basis point increase in cost of service as a percent of service revenues during the three months ended September 30, 2014 was primarily the result of higher field incentives as the Company anniversaries against an incentive-lite year, state minimum wage increases and stylist productivity, partly offset by a decrease in health care costs due to lower participation levels compared to the prior year.

The 140 basis point increase in cost of service as a percent of service revenues during the three months ended September 30, 2013 was primarily due to the change in expense categorization driven by the fourth quarter of fiscal year 2013 field reorganization. Effective in the first quarter of fiscal year 2014, district and senior district leader labor costs were reported within Cost of Service rather than General and Administrative expenses. After considering this prior year change in expense categorization, cost of service as a percent of service revenues was flat. Negative leverage of stylist hours caused by same-store service sales declines and increased health care costs were offset by cost reductions due to our field reorganization, reduced labor associated with a full commission coupon event that was not repeated this year and lower levels of bonuses.

Cost of Product

The 10 basis point decrease in cost of product as a percent of product revenues during the three months ended September 30, 2014 was primarily due to the prior comparable period including a $0.9 million inventory write-down associated with standardizing plan-o-grams, partly offset by promotional activity and higher freight costs in the current period.

The 110 basis point decrease in cost of product as a percent of product revenues during the three months ended September 30, 2013 was primarily due to the lapping of a sales incentive program from the prior year, lower product costs and reduced clearance activity, partly offset by $0.9 million inventory write-down associated with standardizing plan-o-grams.

Site Operating Expenses

Site operating expenses increased$0.8 million, or 30 basis points as a percent of consolidated revenues during the three months ended September 30, 2014. The increase was primarily due to the prior year including favorable adjustments to self-insurance expense.

The 40 basis point increase in site operating expenses as a percent of consolidated revenues during the three months ended September 30, 2013 was primarily due to the change in expense categorization driven by the field reorganization. Effective in the first quarter of fiscal year 2014, field leaders' travel costs were reported within Site Operating expenses rather than General and Administrative expenses. After considering the prior year change in expense categorization, site operating expense decreased $3.9 million or as a percent of consolidated revenues was flat. This was primarily as a result of cost savings initiatives to lower utilities and repairs and maintenance expenses, lower travel due to the field reorganization and adjustments to self-insurance expense and cash over and short expense, partly offset by increased salon connectivity costs to support the Company's new POS system.

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General and Administrative

General and administrative (G&A) increased$0.8 million, or 20 basis points as a percent of consolidated revenues during the three months ended September 30, 2014. The increase was primarily driven by planned strategic investments in Asset Protection and Human Resource initiatives, partly offset by cost savings.

G&A decreased $11.4 million, or 160 basis points as a percent of consolidated revenues during the three months ended September 30, 2013. This improvement was primarily due to the change in expense categorization driven by the field reorganization. Effective in the first quarter of fiscal year 2014, district and senior district leader labor costs were reported within Cost of Service rather than General and Administrative expenses, and their travel costs are reported within Site Operating expenses rather than General and Administrative expenses. After considering the prior year change in expense categorization, G&A expenses decreased $3.5 million, primarily as a result of cost saving initiatives and savings from the field reorganization.

Rent

Rent expense decreased$1.5 million and $2.5 million during the three months ended September 30, 2014 and 2013 respectively, due to salon closures, primarily within our North American Premium and Value segments. The 20 basis point decrease in rent expense as a percent of consolidated revenues for the three months ended September 30, 2014 was due to the closure of unprofitable locations. The 80 basis point increase in rent expense as a percent of consolidated revenues for the three months ended September 30, 2013 was due to negative leverage caused by same-store sales declines.

Depreciation and Amortization

The $1.6 million or 30 basis point decrease in depreciation and amortization (D&A) as a percent of consolidated revenues during the three months ended September 30, 2014 was primarily due to lower fixed asset balances during the three months ended September 30, 2014 and store closures in the prior year. In addition, the prior period included accelerated depreciation expense for a leased building in connection with consolidating the Company’s headquarters recorded in the Unallocated Corporate segment. Partly offsetting the decrease in D&A for the three months ended September 30, 2014 was an increase in salon asset impairments in the North American Value segment and North American Premium segment as compared to the prior comparable period.

D&A increased $3.1 million or 100 basis point as a percent of consolidated revenues during the three months ended September 30, 2013 primarily due to depreciation expense related to the Company's POS and salon workstations installed in the fourth quarter of fiscal year 2013, accelerated depreciation expense for a leased building in connection with consolidating the Company's headquarters and negative leverage.

Interest Expense

The $1.4 million or 30 basis point decrease in interest expense as a percent of consolidated revenues for the three months ended September 30, 2014 was primarily due to the settlement of the Company's $172.5 million convertible senior notes in July 2014, partly offset by interest on the $120.0 million Senior Term Notes the Company issued in November 2013.

The $2.3 million or 40 basis point decrease in interest expense as a percent of consolidated revenues for the three months ended September 30, 2013 was primarily due to decreased average debt levels as compared to prior year comparable period.

Interest Income and Other, net

The $0.7 million or 10 basis point decrease in interest income and other, net as a percent of consolidated revenues during the three months ended September 30, 2014 was primarily due the comparable prior period including $0.5 million for dividends associated with the Yamano preferred stock redemption.

The $34.1 million or 670 basis point decrease in interest income and other, net as a percent of consolidated revenues during the three months ended September 30, 2013 was primarily due to the recognition of a $33.8 million foreign currency translation gain in connection with the sale of Provalliance in prior comparable period.

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Income Taxes

During the three months ended September 30, 2014 and 2013, the Company recognized tax expense (benefit) of $5.6 and $(0.4) million, respectively, with corresponding effective tax rates of (146.5)% and 15.2%, respectively.

The recorded tax expense and effective tax rate for the three months ended September 30, 2014 were different than what would normally be expected. The majority of the tax expense related to non-cash tax expense for tax benefits on certain indefinite-lived assets that the Company cannot recognize for reporting purposes. The total tax expense expected for the year is approximately $9.0 million related to this matter; however, there will be variation from quarter to quarter as a result of how the effective tax rate is computed on an interim basis. This non-cash tax expense (benefit) will continue as long as the Company has a valuation allowance against most of its deferred tax assets. The Company is currently paying taxes in Canada, Texas and for certain states in which it has profitable entities.

The recorded tax benefit and effective tax rate for the three months ended September 30, 2013 were lower than would be expected due to unique items of tax expense reducing the tax benefit, with a resulting greater impact on the tax rate due to the relatively small amount of pretax loss reported for the quarter.

See Note 5 to the unaudited Condensed Consolidated Financial Statements.

Equity in Income of Affiliated Companies, Net of Income Taxes

Equity in income of affiliated companies of $0.4 million during the three months ended September 30, 2014 was primarily due to the Company's share of EEG's net income. See Note 2 to the unaudited Condensed Consolidated Financial Statements.

The equity in income of affiliated companies of $2.0 million during the three months ended September 30, 2013 was primarily due to the Company's share of EEG's net income and $1.0 million recovery of a previously impaired investment in Yamano Holding Corporation.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity

Funds generated by operating activities, available cash and cash equivalents, and our borrowing agreements are our most significant sources of liquidity. We believe these sources of liquidity will be sufficient to sustain operations and to finance strategic initiatives. However, in the event our liquidity is insufficient, we may be required to limit or delay our strategic initiatives. There can be no assurance we will continue to generate cash flows at or above current levels.

As of September 30, 2014, cash and cash equivalents were $186.3 million, with $150.9, $14.5 and $20.9 million within the United States, Canada, and Europe, respectively.

We have a $400.0 million five-year senior unsecured revolving credit facility with a syndicate of banks that expires in June 2018. As of September 30, 2014, the Company had no outstanding borrowings under the facility, outstanding standby letters of credit of $2.0 million and unused available credit of $398.0 million.

Our ability to access our revolving credit facility is subject to our compliance with the terms and conditions of such facility including a maximum leverage ratio, a minimum fixed charge ratio and other covenants and requirements. At September 30, 2014, we were in compliance with all covenants and other requirements of our credit agreement and senior notes.

Uses of Cash

The Company has a capital allocation policy that focuses on three key principles. These principles focus on preserving a strong balance sheet and enhancing operating flexibility, preventing unnecessary dilution so the benefits of future value accrue to existing shareholders and deploying capital to the highest and best use by optimizing the tradeoff between risk and after-tax returns.

During the current quarter, the Company settled the $172.5 million convertible notes at par value with cash and repurchased approximately 1.5 million shares for $21.5 million at an average share price of $14.76. The Company will continue to follow its capital allocation policy of protecting its balance sheet and providing operating flexibility while fixing the business, minimizing dilution to existing shareholders and deploying capital to its highest returns to maximize shareholder value.

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Cash Flows

Cash Flows from Operating Activities

During the three months ended September 30, 2014, cash provided by operating activities of $16.0 millionincreased by $0.3 million compared to the prior comparable period, primarily as a result of improved working capital management, partly offset by decreases in revenues and operating income.

During the three months ended September 30, 2013, cash provided by operating activities of $15.8 million increased by $7.3 million compared to the prior comparable period, primarily as a result of a $17.3 million decrease in the use of working capital primarily from a decrease in credit card receivables due to timing, partly offset by decreases in revenues and operating income.

Cash Flows from Investing Activities

During the three months ended September 30, 2014, cash used in investing activities of $11.6 million was for capital expenditures.

During the three months ended September 30, 2013, cash used in investing activities of $8.5 million was primarily for capital expenditures of $11.4 million, partly offset by cash provided from the recovery of $1.0 million on the Company's previously impaired investment in Yamano Holding Corporation and the receipt of $2.0 million for the final working capital adjustment on the sale of Hair Club.

Cash Flows from Financing Activities

During the three months ended September 30, 2014 and 2013, cash used in financing activities of $195.3 and $5.1 million,respectively, were primarily for repayments of long-term debt of $173.7 and $1.7 million, respectively. In addition, during the three months ended September 30, 2014, the Company repurchased $21.5 million of common stock in accordance with the Company's capital allocation policy. During the three months ended September 30, 2013, the Company paid $3.4 million for dividends.

Financing Arrangements

See Note 8 of the Notes to the unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 and Note 7 of the Notes to the Condensed Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2014, for additional information regarding our financing arrangements.

Debt to Capitalization Ratio

Our debt to capitalization ratio, calculated as total debt as a percentage of total debt and shareholders’ equity at fiscal quarter end, were as follows:

As of	Debt to Capitalization		Basis Point (Decrease) Increase (1)
September 30, 2014	14.9	%	(1,400	)
June 30, 2014	28.9	%	1,200

_____________________________

(1) Represents the basis point change in debt to capitalization as compared to prior fiscal year end (June 30).

The 1,400 basis point decrease in the debt to capitalization ratio as of September 30, 2014 compared to June 30, 2014, is primarily due to the $173.7 million repayment of long-term debt, which included $172.5 million for the repayment of the convertible notes, and the repurchase of 1.5 million shares of common stock for $21.5 million during the three months ended September 30, 2014.

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The 1,200 basis point increase in the debt to capitalization ratio as of June 30, 2014 compared to June 30, 2013 was primarily due to the issuance of the $120.0 million Senior Term Notes, the $34.9 million non-cash goodwill impairment charge for the Regis salon concept, the $84.4 million non-cash valuation allowance established against the United States and United Kingdom deferred tax assets and the $12.6 million (net of tax) charge recorded by the Company for its share of the non-cash goodwill impairment charge recorded by EEG.

Dividends

We paid dividends of $0.06 per share during the three months ended September 30, 2013. In December 2013, the Board of Directors elected to discontinue declaring regular quarterly dividends.

Share Repurchase Program

In May 2000, the Company’s Board of Directors approved a stock repurchase program. To date, a total of $300.0 million has been authorized to be expended for the repurchase of the Company’s stock. All repurchased shares become authorized but unissued shares of the Company. This repurchase program has no stated expiration date. During the three months ended September 30, 2014, the Company repurchased 1,455,587 shares for $21.5 million. At September 30, 2014, $37.2 million remained outstanding under the approved stock repurchase program.  

SAFE HARBOR PROVISIONS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This Quarterly Report on Form 10-Q, as well as information included in, or incorporated by reference from, future filings by the Company with the Securities and Exchange Commission and information contained in written material, press releases and oral statements issued by or on behalf of the Company contains or may contain “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 the impact of significant initiatives, changes in our management and organizational structure and our ability to attract and retain our executive management team; negative same-store sales; the success of our stylists and our ability to attract, train and retain talented stylists; changes in regulatory and statutory laws; the effect of changes to healthcare laws; our ability to protect the security of sensitive information about our guests, employees, vendors or Company information; the Company's reliance on management information systems; the continued ability of the Company to implement cost reduction initiatives; reliance on external vendors; changes in distribution channels of manufacturers; compliance with debt covenants; financial performance of our franchisees; competition within the personal hair care industry; changes in economic conditions; failure to standardize operating processes across brands; the ability of the Company to maintain satisfactory relationships with certain companies and suppliers; financial performance of our investment with EEG, Inc.; changes in interest rates and foreign currency exchange rates; changes in consumer tastes and fashion trends; or other factors not listed above. 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, 2014. 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.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

There has been no material change to the factors discussed within Part II, Item 7A in the Company’s June 30, 2014 Annual Report on Form 10-K.

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Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including the chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

With the participation of management, the Company’s chief executive officer and chief financial officer evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-5(e) and 15d-15(e) promulgated under the Exchange Act) as of the end of the period. Our management, including our chief executive officer and chief financial officer, concluded that our disclosure controls and procedures were effective as of September 30, 2014.

Changes in Internal Controls over Financial Reporting

Based on management’s most recent evaluation of the Company’s internal control over financial reporting, management determined that there were no changes in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter.

PART II — OTHER INFORMATION

Item 1.  Legal Proceedings

The Company is a defendant in various lawsuits and claims arising out of the normal course of business. Like certain other large retail employers, the Company has been faced with allegations of purported class-wide consumer and wage and hour violations. Litigation is inherently unpredictable and the outcome of these matters cannot presently be determined. Although the actions are being vigorously defended, the Company could in the future incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations in any particular period.

In addition, the Company was a nominal defendant, and nine current and former directors and officers of the Company were named defendants, in a shareholder derivative action in Minnesota state court. The derivative shareholder action alleged that the individual defendants breached their fiduciary duties to the Company in connection with their approval of certain executive compensation arrangements and certain related party transactions. The Board of Directors appointed a Special Litigation Committee to investigate the claims and allegations made in the derivative action, and to decide on behalf of the Company whether the claims and allegations should be pursued. In April 2014, the Special Litigation Committee issued a report and concluded the claims and allegations should not be pursued, and in September 2014 the case was dismissed by court order.

Item 1A.  Risk Factors

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 30, 2014.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

In May 2000, the Company’s Board of Directors approved a stock repurchase program. To date, a total of $300.0 million has been authorized to be expended for the repurchase of the Company’s stock. All repurchased shares become authorized but unissued shares of the Company. This repurchase program has no stated expiration date. The timing and amounts of any repurchases depend on many factors, including the market price of our common stock and overall market conditions. During the three months ended September 30, 2014, the Company repurchased 1,455,587 shares for $21.5 million. As of September 30, 2014, a total accumulated 9.1 million shares have been repurchased for $262.8 million. At September 30, 2014, $37.2 million remained outstanding under the approved stock repurchase program.  

23

The following table shows the stock repurchase activity by the Company or any “affiliated purchaser” of the Company, as defined in Rule 10b-18(a)(3) under the Exchange Act, by month for the three months ended September 30, 2014:

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs (in thousands)
7/1/14 - 7/31/14	826,922	$	13.89	8,520,886	$	47,194
8/1/14 - 8/31/14	222,339	13.92		8,743,225	44,099
9/1/14 - 9/30/14	406,326	16.98		9,149,551	37,199
Total	1,455,587	$	14.76	9,149,551	$	37,199

Item 6.  Exhibits

Exhibit 10(a)(*)	Short Term Incentive Compensation Plan, effective August 19, 2014. (Incorporated by reference to Appendix A of the Company's Proxy Statement on Definitive Form 14A filed on September 10, 2014, for the year ended June 30, 2014.)
Exhibit 10(b)(*)	Amendment to the Amended and Restated 2004 Long-Term Incentive Plan, effective August 29, 2014.
Exhibit 31.1	President and Executive Officer of Regis Corporation: Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2	Executive Vice President and Chief Financial Officer of Regis Corporation: Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32	Chief Executive Officer and Chief Financial Officer of Regis Corporation: Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 101	The following financial information from Regis Corporation's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014, formatted in Extensible Business Reporting Language (XBRL) and filed electronically herewith: (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Earnings; (iii) the Condensed Consolidated Statements of Comprehensive Income; (iv) the Condensed Consolidated Statements of Cash Flows; and (v) the Notes to the Consolidated Financial Statements.

_____________________________

(*) Management contract, compensatory plan or arrangement required to be filed as an exhibit to the Company’s Report on Form 10-Q.

24

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.

	REGIS CORPORATION
Date: November 4, 2014	By:	/s/ Steven M. Spiegel
		Steven M. Spiegel
		Executive Vice President and Chief Financial Officer
		Signing on behalf of the registrant and as principal accounting officer

25

EX-10.(B)(*)

Exhibit 10(b)

AMENDMENT

to

AMENDED AND RESTATED 2004 LONG-TERM INCENTIVE PLAN

THIS AMENDMENT TO Long-Term Incentive Plan (the “Amendment”) was approved by the Compensation Committee of the Board of Directors of Regis Corporation (the “Corporation”), effective August 29, 2014.

1. The definition of “Change in Control” in the Corporation’s Amended and Restated 2004 Long-Term Incentive Plan is hereby replaced by the following:

2.7 “Change in Control” means:

(1) with respect to Awards granted before January 1, 2009, the first to occur of any of the following events:

(a) the acquisition by any “person,” as that term is used in Sections 13(d) and 14(d) of the Exchange Act of “beneficial ownership,” as defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of 20% or more of the shares of the Company’s capital stock;

(b) the first day on which less than two-thirds of the total membership of the Board of Directors shall be Continuing Directors (as that term is defined in Article VII of the Company’s Articles of Incorporation);

(c) the approval by the shareholders of the Company of a merger, share exchange, or consolidation of the Company (a “Transaction”), other than a Transaction which would result in the Voting Stock of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the Voting Stock of the Company or such surviving entity immediately after such Transaction; or

(d) the approval by the shareholders of the Company of a complete liquidation of the Company or a sale or disposition of all or substantially all the assets of the Company; and

(2) with respect to Awards granted on or after January 1, 2009, the first to occur of any of the following

events:

(a) any “person” within the meaning of Section 2(a)(2) of the Securities Act of 1933 and Section 14(d) of the Exchange Act is or has become the “beneficial

owner,” as defined in Rule 13d-3 under the Exchange Act, of twenty percent (20%) or more of either (i) the then outstanding shares of Common Stock of the Company (the “Outstanding Common Stock”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”), except for an acquisition by an entity resulting from a Business Combination (as defined below) in which clauses (x) and (y) of subparagraph (b) applies, provided that Change in Control shall not occur if a person becomes the beneficial owner of twenty percent (20%) or more of the Outstanding Common Stock or Outstanding Voting Securities solely as the result of a change in the aggregate number of shares of Outstanding Common Stock or Outstanding Voting Securities since the last date on which such person acquired beneficial ownership of any shares of Common Stock or voting securities (provided, however, that if a person becomes the beneficial owner of twenty percent (20%) or more of the Outstanding Common Stock or Outstanding Voting Securities by reason of such change in the aggregate number of shares of Outstanding Common Stock or Outstanding Voting Securities and thereafter becomes the beneficial owner of any additional shares of Common Stock or voting securities (other than pursuant to a dividend or distribution paid or made by the Company on the Outstanding Common Stock or Outstanding Voting Securities or pursuant to a split or subdivision of the Outstanding Common Stock or Outstanding Voting Securities), then a Change in Control shall occur unless upon becoming the beneficial owner of such additional shares of Common Stock or voting securities such person does not beneficially own more than twenty percent (20%) of the Outstanding Common Stock or Outstanding Voting Securities);

(b) consummation of (i) a merger or consolidation of the Company with or into another entity, (ii) a statutory share exchange or (iii) the acquisition by any person (as defined above) of all or substantially all of the assets of the Company (each, a “Business Combination”), unless immediately following such Business Combination, (x) all or substantially all of the beneficial owners of the Outstanding Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the voting power of the then outstanding shares of voting stock (or comparable voting equity interests) of the surviving or acquiring entity resulting from such Business Combination (including such beneficial ownership of an entity that, as a result of such transaction, owns the Company or all or substantially all of the

Company’s assets either directly or through one or more subsidiaries), in substantially the same proportions (as compared to the other beneficial owners of the Company’s voting stock immediately prior to such Business Combination) as their beneficial ownership of the Company’s voting stock immediately prior to such Business Combination and (y) no person (as defined above) beneficially owns, directly or indirectly, twenty percent (20%) or more of the voting power of the outstanding voting stock (or comparable equity interests) of the surviving or acquiring entity (other than a direct or indirect parent entity of the surviving or

acquiring entity, that, after giving effect to the Business Combination, beneficially owns, directly or indirectly, 100% of the outstanding voting stock (or comparable equity interests) of the surviving or acquiring entity), or

(c) individuals who constitute the Company’s Board of Directors on the Effective Date (the “Incumbent Board”) have ceased for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least three-quarters (75%) of the directors comprising the Incumbent Board shall be, for purposes of this Plan, considered as though such person were a member of the Incumbent Board;

provided, however, that for any payment with respect to any Award under the Plan that is subject to Section 409A of the Code, the Change in Control must also be a change in control event under Treas. Reg. Section 1.409A-3(i)(5).

Certified by Eric Bakken, Corporate Secretary
	/s/ Eric Bakken
	Eric Bakken

EX-31.1

Exhibit No. 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Daniel J. Hanrahan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Regis Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s Board of Directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

November 4, 2014

/s/ Daniel J. Hanrahan

Daniel J. Hanrahan, President and Chief Executive Officer

EX-31.2

Exhibit No. 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Steven M. Spiegel, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Regis Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s Board of Directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

November 4, 2014

/s/ Steven M. Spiegel

Steven M. Spiegel, Executive Vice President and Chief Financial Officer

EX-32

Exhibit No. 32

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Regis Corporation (the Registrant) on Form 10-Q for the fiscal quarter ending September 30, 2014 filed with the Securities and Exchange Commission on the date hereof, Daniel J. Hanrahan, President and Chief Executive Officer of the Registrant, and Steven M. Spiegel, Executive Vice President and Chief Financial Officer of the Registrant, each hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Quarterly Report on Form 10-Q complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Quarter Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

November 4, 2014

/s/ Daniel J. Hanrahan

Daniel J. Hanrahan, President and Chief Executive Officer

November 4, 2014

/s/ Steven M. Spiegel

Steven M. Spiegel, Executive Vice President and Chief Financial Officer

XML

SEGMENT INFORMATION: SEGMENT INFORMATION: Franchisor Disclosures (Details)	Sep. 30, 2014 salon
North American Value
Franchisor Disclosure [Line Items]
Number of Stores	8,277
North American Value | Company-owned
Franchisor Disclosure [Line Items]
Number of Stores	6,063
North American Value | Franchised
Franchisor Disclosure [Line Items]
Number of Stores	2,214
North American Premium
Franchisor Disclosure [Line Items]
Number of Stores	793
North American Premium | Company-owned
Franchisor Disclosure [Line Items]
Number of Stores	793
North American Premium | Franchised
Franchisor Disclosure [Line Items]
Number of Stores	0
International
Franchisor Disclosure [Line Items]
Number of Stores	362
International | Company-owned
Franchisor Disclosure [Line Items]
Number of Stores	362
International | Franchised
Franchisor Disclosure [Line Items]
Number of Stores	0

XML

EARNINGS PER SHARE: (Details)	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Awards excluded from earnings per share calculations
Awards excluded from diluted earnings per share computation (in shares)	143,749	132,392
Equity-based compensation awards
Awards excluded from earnings per share calculations
Awards excluded from diluted earnings per share computation (in shares)	1,681,508	1,409,169
Shares issuable upon conversion of debt
Awards excluded from earnings per share calculations
Awards excluded from diluted earnings per share computation (in shares)	1,845,053	11,289,545

XML

EARNINGS PER SHARE:

3 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE:

The Company’s basic earnings per share is calculated as net loss divided by weighted average common shares outstanding, excluding unvested outstanding restricted stock awards, RSUs and PSUs. The Company’s diluted earnings per share is calculated as net loss divided by weighted average common shares and common share equivalents outstanding, which includes shares issued under the Company’s stock-based compensation plans. Stock-based awards with exercise prices greater than the average market value of the Company’s common stock are excluded from the computation of diluted earnings per share. The Company’s diluted earnings per share also reflect the assumed conversion under the Company’s convertible debt, if the impact is dilutive, along with the exclusion of interest expense, net of taxes. The impact of the convertible debt is excluded from the computation of diluted earnings per share when interest expense per common share obtainable upon conversion is greater than basic earnings per share.

Net loss available to common shareholders and net loss for diluted earnings per share under the if-converted method were the same for all periods presented.

For the three months ended September 30, 2014 and 2013, 143,749 and 132,392 common stock equivalents of potentially dilutive common stock, respectively, were excluded from the diluted earnings per share calculation due to the net loss.

The computation of weighted average shares outstanding, assuming dilution, excluded 1,681,508 and 1,409,169 of stock-based awards during the three months ended September 30, 2014 and 2013, respectively, as they were not dilutive under the treasury stock method. The computation of weighted average shares outstanding, assuming dilution, also excluded 1,845,053 and 11,289,545 of shares from convertible debt as they were not dilutive for the three months ended September 30, 2014 and 2013, respectively.

XML

GOODWILL AND OTHER INTANGIBLES: (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Jun. 30, 2014	Jun. 30, 2009 International	Jun. 30, 2014 North American Premium	Jun. 30, 2012 North American Premium	Jun. 30, 2010 North American Premium	Jun. 30, 2011 North American Value
Goodwill
Goodwill, Gross	$ 676,939	$ 678,925
Accumulated Impairment	(253,661)	(253,661)	(41,661)	(34,939)	(67,684)	(35,277)	(74,100)
Goodwill	$ 423,278	$ 425,264

XML

COMMITMENTS AND CONTINGENCIES: (Details)	12 Months Ended
	Jun. 30, 2014 director
Commitments and Contingencies Disclosure [Abstract]
Number of current and former directors and officers who are named defendants	9

XML

GOODWILL AND OTHER INTANGIBLES: (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Jun. 30, 2014
Amortized intangible assets:
Other intangibles, cost	$ 39,353	$ 40,115
Other intangibles, accumulated amortization	(20,349)	(20,303)
Other intangibles, net	19,004	19,812
Brand assets and trade names
Amortized intangible assets:
Other intangibles, cost	8,937	9,203
Other intangibles, accumulated amortization	(3,492)	(3,510)
Other intangibles, net	5,445	5,693
Franchise agreements
Amortized intangible assets:
Other intangibles, cost	10,758	11,063
Other intangibles, accumulated amortization	(7,076)	(7,163)
Other intangibles, net	3,682	3,900
Lease intangibles
Amortized intangible assets:
Other intangibles, cost	14,715	14,775
Other intangibles, accumulated amortization	(7,477)	(7,326)
Other intangibles, net	7,238	7,449
Other
Amortized intangible assets:
Other intangibles, cost	4,943	5,074
Other intangibles, accumulated amortization	(2,304)	(2,304)
Other intangibles, net	$ 2,639	$ 2,770

XML

FINANCING ARRANGEMENTS: (Details) (USD $)	3 Months Ended			3 Months Ended					1 Months Ended					3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Jun. 30, 2014	Sep. 30, 2014 Convertible senior notes	Sep. 30, 2013 Convertible senior notes	Jun. 30, 2014 Convertible senior notes	Nov. 30, 2013 Convertible senior notes	Jul. 31, 2009 Convertible senior notes	Nov. 30, 2013 Senior term notes	Sep. 30, 2014 Senior term notes	Jun. 30, 2014 Senior term notes	Sep. 30, 2014 Revolving credit facility	Jun. 30, 2014 Revolving credit facility	Sep. 30, 2014 Equipment and leasehold notes payable	Jun. 30, 2014 Equipment and leasehold notes payable
Long-term debt
Net carrying amount of long-term debt	$ 120,014,000		$ 293,503,000	$ 0		$ 172,246,000				$ 120,000,000	$ 120,000,000	$ 0	$ 0	$ 14,000	$ 1,257,000
Less current portion	(14,000)		(173,501,000)
Long-term debt and capital lease obligations	120,000,000		120,002,000
Interest rate percentage				5.00%			5.75%	5.00%	5.75%	5.75%
Interest rate percentage, minimum														4.90%
Interest rate percentage, maximum														8.75%
Convertible Senior Debt
Debt Instrument, Face Amount								172,500,000	120,000,000
Repayments of Long-term Debt, Long-term Capital Lease Obligations, and Capital Securities	173,740,000	1,706,000		172,500,000
Interest expense related to contractual interest coupon				400,000	2,200,000
Interest cost related to amortization of the discount				300,000	1,400,000
Senior Term Notes
Long-term Debt, Gross									118,100,000
Revolving Credit Facility
Line of Credit Facility, Amount Outstanding												0	0
Outstanding standby letters of credit												2,000,000	2,200,000
Revolving credit facility remaining borrowing capacity												$ 398,000,000	$ 397,800,000

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INVESTMENT IN AFFILIATES:

3 Months Ended

Sep. 30, 2014

Investments in and Advances to Affiliates, Schedule of Investments [Abstract]

INVESTMENT IN AFFILIATES

INVESTMENT IN AFFILIATES:

EEG, Inc.

As of September 30, 2014, the Company's ownership interest in EEG, Inc. (EEG) was 54.6% and the carrying amount of the Company's investment in EEG was $28.8 million. During the three months ended September 30, 2014 and 2013, the Company recorded $0.4 and $1.0 million, respectively, of equity earnings related to its investment in EEG. The exposure to loss related to the Company’s involvement with EEG is the carrying value of the investment.

The Company utilized consolidation of variable interest entities guidance to determine whether or not its investment in EEG was a variable interest entity (VIE), and if so, whether the Company was the primary beneficiary of the VIE. The Company concluded that EEG was not a VIE based on the fact that EEG had sufficient equity at risk. The Company accounts for EEG as an equity investment under the voting interest model, as the Company has granted the other shareholder of EEG an irrevocable proxy to vote a certain number of the Company’s shares such that the other shareholder of EEG has voting control of 51.0% of EEG’s common stock, as well as the right to appoint four of the five members of EEG’s Board of Directors.

Based on EEG's annual goodwill impairment assessment performed during the fourth quarter of fiscal year 2014, the Company's portion of EEG's estimated fair value exceeds carrying value of its investment by approximately 10%. Any meaningful underperformance against plan or reduced outlook by EEG, changes to the carrying value of EEG or erosion in valuations of the for-profit secondary educational market could lead to other than temporary impairments of the Company's investment in EEG. In addition, EEG may be required to record non-cash impairment charges related to long-lived assets or establish valuation allowances against certain of its deferred tax assets and our share of such non-cash impairment charges or valuation allowances could be material to the Company's consolidated balance sheet and results of operations. If EEG records a full valuation allowance on its deferred tax assets, our share of the expense would be $7.6 million.

The table below presents the summarized Statement of Operations information for EEG:

	For the Three Months Ended September 30,
	2014		2013
(Unaudited)	(Dollars in thousands)
Gross revenues	$	40,593	$	43,965
Gross profit	11,370		14,912
Operating income	479		2,904
Net income	442		1,938

MY Style

During the three months ended September 30, 2013, MY Style’s parent company, Yamano Holding Corporation (Yamano), redeemed its Class A Preferred Stock for $1.0 million. During fiscal year 2011, the Company had estimated the fair value of the Yamano Class A Preferred Stock to be negligible and recorded an other than temporary non-cash impairment. The Company reported the gain associated with Yamano's redemption within equity in income of affiliated companies, net of income taxes, on the unaudited Condensed Consolidated Statement of Operations.

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FAIR VALUE MEASUREMENTS: FAIR VALUE MEASUREMENTS (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2014	Jun. 30, 2014
Fair Value Disclosures [Abstract]
Long-term Debt, Fair Value	$ 118.5	$ 292.5
Long-term Debt	$ 120.0	$ 293.5

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CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Jun. 30, 2014
Current assets:
Cash and cash equivalents	$ 186,257	$ 378,627
Receivables, net	22,085	25,808
Inventories	143,328	137,151
Other current assets	69,990	71,680
Total current assets	421,660	613,266
Property and equipment, net	253,072	266,538
Goodwill	423,278	425,264
Other intangibles, net	19,004	19,812
Investment in affiliates	29,339	28,611
Other assets	63,575	62,458
Total assets	1,209,928	1,415,949
Current liabilities:
Long-term debt, current portion	14	173,501
Accounts payable	71,280	68,491
Accrued expenses	137,497	142,720
Total current liabilities	208,791	384,712
Long-term debt and capital lease obligations	120,000	120,002
Other noncurrent liabilities	194,292	190,454
Total liabilities	523,083	695,168
Commitments and contingencies
Shareholders' equity:
Common stock, $0.05 par value; issued and outstanding 55,250,514 and 56,651,166 common shares at September 30, 2014 and June 30, 2014, respectively	2,763	2,833
Additional paid-in capital	317,633	337,837
Accumulated other comprehensive income	18,029	22,651
Retained earnings	348,420	357,460
Total shareholders’ equity	686,845	720,781
Total liabilities and shareholders’ equity	$ 1,209,928	$ 1,415,949

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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Cash flows from operating activities:
Net loss	$ (9,052)	$ (136)
Adjustments to reconcile net loss to net cash provided by:
Depreciation and amortization	18,122	22,157
Equity in income of affiliated companies	(392)	(1,999)
Deferred income taxes	4,059	(250)
Salon asset impairment	4,066	1,674
Loss on write down of inventories	0	854
Stock-based compensation	1,781	1,811
Amortization of debt discount and financing costs	618	1,843
Other non-cash items affecting earnings	343	(34)
Changes in operating assets and liabilities, excluding the effects of acquisitions	(3,512)	(10,164)
Net cash provided by operating activities	16,033	15,756
Cash flows from investing activities:
Capital expenditures	(11,629)	(11,444)
Asset acquisitions, net of cash acquired and proceeds from sale of assets	4	(12)
Proceeds from loans and investments	0	2,968
Net cash used in investing activities	(11,625)	(8,488)
Cash flows from financing activities:
Repayments of long-term debt and capital lease obligations	(173,740)	(1,706)
Repurchase of common stock	(21,529)	0
Dividends paid	0	(3,397)
Net cash used in financing activities	(195,269)	(5,103)
Effect of exchange rate changes on cash and cash equivalents	(1,509)	1,033
(Decrease) increase in cash and cash equivalents	(192,370)	3,198
Cash and cash equivalents:
Beginning of period	378,627	200,488
End of period	$ 186,257	$ 203,686

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SEGMENT INFORMATION: Schedule of Franchisor Disclosure (Tables)

3 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Schedule of Franchisor Disclosure

	Company-owned	Franchised	Total
North American Value	6,063	2,214	8,277
North American Premium	793	—	793
International	362	—	362

Schedule of Segment Reporting Information, by Segment

	For the Three Months Ended September 30,
	2014			2013
	(Dollars in thousands)
Revenues:
North American Value	$	354,376		$	355,341
North American Premium	79,035			84,190
International	31,140			29,052
	$	464,551		$	468,583
Operating (expense) income:
North American Value	$	29,287		$	30,047
North American Premium (1)	(4,544		)	(1,239		)
International	630			(257		)
Total segment operating income	25,373			28,551
Unallocated Corporate	(25,980		)	(27,122		)
Operating (expense) income	$	(607	)	$	1,429

_____________________________

(1) Increases in operating loss primarily driven by long-lived asset impairment charges recorded within depreciation and amortization in the Consolidated Statement of Operations. See Note 1 to the unaudited Condensed Consolidated Financial Statements.

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INVESTMENT IN AFFILIATES: (Details) (USD $)	3 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Jun. 30, 2014
Investment in affiliates
Investment in affiliates	$ 29,339,000		$ 28,611,000
Equity in income (loss), net of income taxes	392,000	1,999,000
Empire Education Group Inc
Investment in affiliates
Equity Method Investment, Ownership Percentage	54.60%
Investment in affiliates	28,800,000
Equity in income (loss), net of income taxes	400,000	1,000,000
Equity Method Investment Voting Control Held by Investee	51.00%
Percentage that fair value exceeded carrying value			10.00%
Deferred Tax Assets, Net	7,600,000
Gross revenues	40,593,000	43,965,000
Gross profit	11,370,000	14,912,000
Operating income	479,000	2,904,000
Net income	442,000	1,938,000
Yamano Holding Corporation | MY Style
Investment in affiliates
Equity in income (loss), net of income taxes	$ 1,000,000

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BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

3 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The unaudited interim Condensed Consolidated Financial Statements of Regis Corporation (the Company) as of September 30, 2014 and for the three months ended September 30, 2014 and 2013, reflect, in the opinion of management, all adjustments necessary to fairly state the consolidated financial position of the Company as of September 30, 2014 and the consolidated results of its operations and its cash flows for the interim periods. Adjustments consist only of normal recurring items, except for any discussed in the notes below. The results of operations and cash flows for any interim period are not necessarily indicative of results of operations and cash flows for the full year.

The Condensed Consolidated Balance Sheet data for June 30, 2014 was derived from audited Consolidated Financial Statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP). The unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2014 and other documents filed or furnished with the Securities and Exchange Commission (SEC) during the current fiscal year.

Stock-Based Employee Compensation:

During the three months ended September 30, 2014, the Company granted various equity awards including restricted stock units (RSUs), equity-based stock appreciation rights (SARs), and performance share units (PSUs). During the three months ended September 30, 2014, the dividend yield assumption was updated to 0%. Otherwise there were no significant changes to the assumptions used in calculating the fair value of SARs. All grants relate to stock incentive plans approved by the shareholders of the Company.

A summary of equity awards granted is as follows:

	Three Months Ended September 30, 2014
Restricted stock units	253,283
Equity-based stock appreciation rights	436,465
Performance share units	193,240

Total compensation cost for stock-based payment arrangements totaled $1.8 million for each of the three months ended September 30, 2014 and 2013, respectively, recorded within general and administrative expense on the unaudited Condensed Consolidated Statement of Operations.

During fiscal year 2014, the Company granted 0.1 million PSUs with a performance metric based upon achieving a three-year cumulative adjusted earnings before interest, income taxes and depreciation and amortization balance. As of September 30, 2014, the Company does not expect any of these units to be earned and has not recorded any net expense associated with these awards. However, future compensation expense for the unvested awards could reach a maximum of $1.9 million if the maximum performance metric is earned.

Long-Lived Asset Impairment Assessments, Excluding Goodwill:

The Company assesses impairment of long-lived assets at the individual salon level, as this is the lowest level for which identifiable cash flows are largely independent of other groups of assets and liabilities, when events or changes in circumstances indicate the carrying value of the assets or the asset grouping may not be recoverable. Factors considered in deciding when to perform an impairment review include significant under-performance of an individual salon in relation to expectations, significant economic or geographic trends, and significant changes or planned changes in our use of the assets. Impairment is evaluated based on the sum of undiscounted estimated future cash flows expected to result from use of the long-lived assets. If the undiscounted estimated cash flows are less than the carrying value of the assets, the Company calculates an impairment charge based on the assets' estimated fair value. The fair value of the long-lived assets is estimated using a discounted cash flow model based on the best information available, including market data and salon level revenues and expenses. Long-lived asset impairment charges are recorded within depreciation and amortization in the Consolidated Statement of Operations for the three months ended September 30, 2014 and 2013.

Recent Accounting Standards Adopted by the Company:

Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity

In April 2014, the Financial Accounting Standards Board ("FASB") updated the accounting guidance related to the definition of a discontinued operation and the related disclosures. The updated accounting guidance defines a discontinued operation as a disposal of a component or a group of components that is to be disposed of or is classified as held for sale and represents a strategic shift that has or will have a major effect on an entity's operations and financial results. The Company adopted this guidance in the first quarter of fiscal year 2015; its adoption did not have a material impact on the Company’s consolidated financial statements.

Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists

In July 2013, the FASB issued new accounting requirements which provide guidance on the financial statement presentation of unrecognized tax benefits when a net operating loss, a similar tax loss, or a tax credit carryforward exists. The requirements are effective for the Company beginning in the first quarter of fiscal year 2015 with early adoption permitted. The Company adopted this guidance in the first quarter of fiscal year 2015; its adoption did not have a material impact on the Company’s consolidated financial statements.

Accounting Standards Recently Issued But Not Yet Adopted by the Company:

Revenue from Contracts with Customers

In May 2014, the FASB issued updated guidance for revenue recognition. The updated accounting guidance provides a comprehensive new revenue recognition model that requires a Company to recognize revenue to depict the exchange for goods or services to a customer at an amount that reflects the consideration it expects to receive for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. This guidance will be effective in the first quarter of fiscal year 2018. This update permits the use of either the retrospective or simplified transition method. The Company does not expect the adoption of this update to have a material impact on the Company's consolidated financial statements and is evaluating the impact this guidance will have on its related disclosures.

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CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (Parenthetical) (USD $)	Sep. 30, 2014	Jun. 30, 2014
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.05	$ 0.05
Common stock, shares issued	55,250,514	56,651,166
Common stock, shares outstanding	55,250,514	56,651,166

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BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Policies)

3 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Stock-Based Employee Compensation

Stock-Based Employee Compensation:

During the three months ended September 30, 2014, the Company granted various equity awards including restricted stock units (RSUs), equity-based stock appreciation rights (SARs), and performance share units (PSUs). During the three months ended September 30, 2014, the dividend yield assumption was updated to 0%. Otherwise there were no significant changes to the assumptions used in calculating the fair value of SARs. All grants relate to stock incentive plans approved by the shareholders of the Company.

A summary of equity awards granted is as follows:

	Three Months Ended September 30, 2014
Restricted stock units	253,283
Equity-based stock appreciation rights	436,465
Performance share units	193,240

Total compensation cost for stock-based payment arrangements totaled $1.8 million for each of the three months ended September 30, 2014 and 2013, respectively, recorded within general and administrative expense on the unaudited Condensed Consolidated Statement of Operations.

During fiscal year 2014, the Company granted 0.1 million PSUs with a performance metric based upon achieving a three-year cumulative adjusted earnings before interest, income taxes and depreciation and amortization balance. As of September 30, 2014, the Company does not expect any of these units to be earned and has not recorded any net expense associated with these awards. However, future compensation expense for the unvested awards could reach a maximum of $1.9 million if the maximum performance metric is earned.

Long-Lived Asset Impairment Assessments, Excluding Goodwill

Long-Lived Asset Impairment Assessments, Excluding Goodwill:

The Company assesses impairment of long-lived assets at the individual salon level, as this is the lowest level for which identifiable cash flows are largely independent of other groups of assets and liabilities, when events or changes in circumstances indicate the carrying value of the assets or the asset grouping may not be recoverable. Factors considered in deciding when to perform an impairment review include significant under-performance of an individual salon in relation to expectations, significant economic or geographic trends, and significant changes or planned changes in our use of the assets. Impairment is evaluated based on the sum of undiscounted estimated future cash flows expected to result from use of the long-lived assets. If the undiscounted estimated cash flows are less than the carrying value of the assets, the Company calculates an impairment charge based on the assets' estimated fair value. The fair value of the long-lived assets is estimated using a discounted cash flow model based on the best information available, including market data and salon level revenues and expenses. Long-lived asset impairment charges are recorded within depreciation and amortization in the Consolidated Statement of Operations for the three months ended September 30, 2014 and 2013

Recent Accounting Standards Adopted by the Company

Recent Accounting Standards Adopted by the Company:

Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity

In April 2014, the Financial Accounting Standards Board ("FASB") updated the accounting guidance related to the definition of a discontinued operation and the related disclosures. The updated accounting guidance defines a discontinued operation as a disposal of a component or a group of components that is to be disposed of or is classified as held for sale and represents a strategic shift that has or will have a major effect on an entity's operations and financial results. The Company adopted this guidance in the first quarter of fiscal year 2015; its adoption did not have a material impact on the Company’s consolidated financial statements.

Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists

In July 2013, the FASB issued new accounting requirements which provide guidance on the financial statement presentation of unrecognized tax benefits when a net operating loss, a similar tax loss, or a tax credit carryforward exists. The requirements are effective for the Company beginning in the first quarter of fiscal year 2015 with early adoption permitted. The Company adopted this guidance in the first quarter of fiscal year 2015; its adoption did not have a material impact on the Company’s consolidated financial statements.

Accounting Standards Recently Issued But Not Yet Adopted by the Company

Accounting Standards Recently Issued But Not Yet Adopted by the Company:

Revenue from Contracts with Customers

In May 2014, the FASB issued updated guidance for revenue recognition. The updated accounting guidance provides a comprehensive new revenue recognition model that requires a Company to recognize revenue to depict the exchange for goods or services to a customer at an amount that reflects the consideration it expects to receive for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. This guidance will be effective in the first quarter of fiscal year 2018. This update permits the use of either the retrospective or simplified transition method. The Company does not expect the adoption of this update to have a material impact on the Company's consolidated financial statements and is evaluating the impact this guidance will have on its related disclosures.

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Document and Entity Information	3 Months Ended
	Sep. 30, 2014	Oct. 24, 2014
Document and Entity Information
Entity Registrant Name	REGIS CORP
Entity Central Index Key	0000716643
Document Type	10-Q
Document Period End Date	Sep. 30, 2014
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		55,251,656
Document Fiscal Year Focus	2015
Document Fiscal Period Focus (Q1,Q2,Q3,FY)	Q1

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BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Tables)

3 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Schedule stock-based employee compensation

A summary of equity awards granted is as follows:

	Three Months Ended September 30, 2014
Restricted stock units	253,283
Equity-based stock appreciation rights	436,465
Performance share units	193,240

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CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Revenues:
Service	$ 364,742	$ 371,727
Product	88,762	86,743
Royalties and fees	11,047	10,113
Total revenues	464,551	468,583
Operating expenses:
Cost of service	223,687	225,015
Cost of product	44,977	44,024
Site operating expenses	51,652	50,841
General and administrative	45,185	44,433
Rent	77,469	79,010
Depreciation and amortization	22,188	23,831
Total operating expenses	465,158	467,154
Operating (expense) income	(607)	1,429
Other income (expense):
Interest expense	(3,098)	(4,491)
Interest income and other, net	(127)	544
Loss before income taxes and equity in income of affiliated companies	(3,832)	(2,518)
Income taxes	(5,612)	383
Income (Loss) from Equity Method Investments	392	1,999
Net Income (Loss) Attributable to Parent	$ (9,052)	$ (136)
Earnings Per Share, Basic and Diluted	$ (0.16)	$ 0.00
Weighted average common and common equivalent shares outstanding:
Weighted Average Number of Shares Outstanding, Basic and Diluted	55,743	56,393
Cash dividends declared per common share	$ 0	$ 0.06

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COMMITMENTS AND CONTINGENCIES:

3 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES:

The Company is a defendant in various lawsuits and claims arising out of the normal course of business. Like certain other large retail employers, the Company has been faced with allegations of purported class-wide consumer and wage and hour violations. Litigation is inherently unpredictable and the outcome of these matters cannot presently be determined. Although the actions are being vigorously defended, the Company could in the future incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations in any particular period.

The Company was a nominal defendant, and nine current and former directors and officers of the Company were named defendants, in a shareholder derivative action in Minnesota state court. The derivative shareholder action alleged that the individual defendants breached their fiduciary duties to the Company in connection with their approval of certain executive compensation arrangements and certain related party transactions. The Board of Directors appointed a Special Litigation Committee to investigate the claims and allegations made in the derivative action, and to decide on behalf of the Company whether the claims and allegations should be pursued. In April 2014, the Special Litigation Committee issued a report and concluded the claims and allegations should not be pursued, and in September 2014 the case was dismissed by court order.

The exposure to loss related to the Company’s discontinued Trade Secret salon concept is the guarantee of certain operating leases that have future minimum rents. The Company has determined the exposure to the risk of loss on the guarantee of the operating leases to be immaterial to the financial statements.

See Note 5 to the unaudited Condensed Consolidated Financial Statements for discussion regarding certain issues that have resulted from the IRS' audit of fiscal 2010 and 2011.

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INCOME TAXES:

3 Months Ended

Sep. 30, 2014

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES:

During the three months ended September 30, 2014 and 2013, the Company recognized tax expense (benefit) of $5.6 and $(0.4) million, respectively, with corresponding effective tax rates of (146.5)% and 15.2%.

The recorded tax expense and effective tax rate for the three months ended September 30, 2014 were different than what would normally be expected primarily due to non-cash tax expense relating to tax benefits on certain indefinite-lived assets that the Company cannot recognize for reporting purposes and the valuation allowance associated with the U.S. and U.K. deferred tax assets.

The recorded tax benefit and the effective tax rate for the three months ended September 30, 2013 were lower than would be expected due to unique items of tax expense reducing the tax benefit, with a resulting greater impact on the tax rate due to the relatively small amount of pretax loss reported for the quarter.

The Company’s U.S. federal income tax returns for the fiscal years 2010 and 2011 are currently under audit. All earlier tax years are closed to examination. The Internal Revenue Service (IRS) identified certain issues that resulted in audit adjustments. In anticipation of these adjustments, the Company made a payment to the IRS during the fourth quarter ended June 30, 2014. The majority of the amount paid relates to timing differences and will be recovered by claiming tax deductions in subsequent years. While the IRS has proposed additional adjustments in these audits, the Company believes its income tax position and deductions will be sustained and intends to vigorously defend its position on the issues and accordingly will initially appeal to the IRS Appeals Division. Final resolution of these issues is not expected to have a material impact on the Company’s financial position. For state tax audits, the statute of limitations generally runs three to four years resulting in a number of returns being open for tax audits dating back to fiscal year 2010. The Company is currently under audit in a number of states in which the statute of limitations has been extended for fiscal years 2007 and forward.

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BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Details) (USD $)	3 Months Ended					12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 Restricted stock units	Sep. 30, 2014 Equity-based stock appreciation rights	Sep. 30, 2014 Performance share units	Jun. 30, 2014 Long term incentive plan 2004 Performance share units	Sep. 30, 2014 Long term incentive plan 2004 Performance share units
Stock-based employees compensation
Fair Value Assumptions, Expected Dividend Rate	0.00%
Stock granted (in shares)			253,283	436,465	193,240	100,000
Stock-based compensation	$ 1,781,000	$ 1,811,000
Future compensation expense							$ 1,900,000

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INVESTMENT IN AFFILIATES: (Tables)

3 Months Ended

Sep. 30, 2014

Investments in and Advances to Affiliates, Schedule of Investments [Abstract]

Schedule Of Equity Method Investments Summarized Financial Information

The table below presents the summarized Statement of Operations information for EEG:

	For the Three Months Ended September 30,
	2014		2013
(Unaudited)	(Dollars in thousands)
Gross revenues	$	40,593	$	43,965
Gross profit	11,370		14,912
Operating income	479		2,904
Net income	442		1,938

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FAIR VALUE MEASUREMENTS:

3 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS:

Fair value measurements are categorized into one of three levels based on the lowest level of significant input used: Level 1 (unadjusted quoted prices in active markets); Level 2 (observable market inputs available at the measurement date, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data).

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis (Level 1)

As of September 30, 2014, the Company’s financial instruments included cash, cash equivalents, receivables and accounts payable. The fair value of these instruments approximated their carrying values as of September 30, 2014 and June 30, 2014. As of September 30, 2014 and June 30, 2014, the estimated fair value of the Company's debt was $118.5 million and $292.5 million, respectively, and the carrying value was $120.0 million and $293.5 million, respectively.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis (Level 3)

We measure certain assets, including the Company’s equity method investments, tangible fixed and other assets and goodwill, at fair value on a nonrecurring basis when they are deemed to be other than temporarily impaired. The fair values of the Company’s investments are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted cash flow projections. During the three months ended September 30, 2014, the Company recorded $4.1 million of long-lived asset impairment charges. See Note 1 to the unaudited Condensed Consolidated Financial Statements. There were no other assets measured at fair value on a nonrecurring basis during the three months ended September 30, 2014.

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GOODWILL AND OTHER INTANGIBLES:

3 Months Ended

Sep. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLES

GOODWILL AND OTHER INTANGIBLES:

The table below contains details related to the Company’s recorded goodwill:

	September 30, 2014							June 30, 2014
	Gross Carrying Value		Accumulated Impairment (1)			Net (2)		Gross Carrying Value		Accumulated Impairment (1)			Net (2)
	(Dollars in thousands)
Goodwill	$	676,939	$	(253,661	)	$	423,278	$	678,925	$	(253,661	)	$	425,264

_____________________________

(1) The table below contains additional information regarding accumulated impairment losses:

Fiscal Year	Impairment Charge			Reporting Unit (3)
	(Dollars in thousands)
2009	$	(41,661	)	International
2010	(35,277		)	North American Premium
2011	(74,100		)	North American Value
2012	(67,684		)	North American Premium
2014	(34,939		)	North American Premium
Total	$	(253,661	)

_____________________________

(2)  Remaining net goodwill relates to the Company’s North American Value reporting unit.

(3) See Note 10 to the unaudited Condensed Consolidated Financial Statements.

The table below presents other intangible assets:

	September 30, 2014							June 30, 2014
	Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
	(Dollars in thousands)
Amortized intangible assets:
Brand assets and trade names	$	8,937	$	(3,492	)	$	5,445	$	9,203	$	(3,510	)	$	5,693
Franchise agreements	10,758		(7,076		)	3,682		11,063		(7,163		)	3,900
Lease intangibles	14,715		(7,477		)	7,238		14,775		(7,326		)	7,449
Other	4,943		(2,304		)	2,639		5,074		(2,304		)	2,770
	$	39,353	$	(20,349	)	$	19,004	$	40,115	$	(20,303	)	$	19,812

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FINANCING ARRANGEMENTS:

3 Months Ended

Sep. 30, 2014

Debt Disclosure [Abstract]

FINANCING ARRANGEMENTS

FINANCING ARRANGEMENTS:

The Company’s long-term debt consisted of the following:

			Amounts Outstanding
	Maturity Dates	Interest Rate	September 30, 2014			June 30, 2014
	(fiscal year)		(Dollars in thousands)
Convertible senior notes	2015	5.00%	$	—		$	172,246
Senior term notes	2018	5.75	120,000			120,000
Revolving credit facility	2018	—	—			—
Equipment and leasehold notes payable	2015 - 2016	4.90 - 8.75	14			1,257
			120,014			293,503
Less current portion			(14		)	(173,501		)
Long-term portion			$	120,000		$	120,002

Convertible Senior Notes

In July 2009, the Company issued $172.5 million aggregate principal amount of 5.0% convertible senior notes due July 2014. In July 2014, the Company settled the convertible senior notes with $172.5 million in cash. The notes were unsecured, senior obligations of the Company and interest was payable semi-annually in arrears on January 15 and July 15 of each year at a rate of 5.0% per year. Interest expense related to the 5.0% contractual interest coupon was $0.4 and $2.2 million for the three months ended September 30, 2014 and 2013, respectively. Interest expense related to the amortization of the debt discount was $0.3 and $1.4 million for the three months ended September 30, 2014 and 2013, respectively.

Senior Term Notes

In November 2013, the Company issued $120.0 million aggregate principal amount of 5.75% senior notes due December 2017 (Senior Term Notes). Net proceeds from the issuance of the Senior Term Notes were $118.1 million. Interest on the Senior Term Notes is payable semi-annually in arrears on June 1 and December 1 of each year, beginning on June 1, 2014, at a rate of 5.75% per year. The Senior Term Notes are unsecured and not guaranteed by any of the Company's subsidiaries or any third parties.

Revolving Credit Facility

As of September 30, 2014 and June 30, 2014, the Company had no outstanding borrowings under this facility. Additionally, the Company had outstanding standby letters of credit under the facility of $2.0 million and $2.2 million at September 30, 2014 and June 30, 2014, respectively, primarily related to the Company's self-insurance program. Unused available credit under the facility at September 30, 2014 and June 30, 2014 was $398.0 million and $397.8 million, respectively.

The Company was in compliance with all covenants and requirements of its financing arrangements as of and during the three months ended September 30, 2014.

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SEGMENT INFORMATION:

3 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

SEGMENT INFORMATION:

Segment information is prepared on the same basis the chief operating decision maker reviews financial information for operational decision-making purposes. During the second quarter of fiscal year 2014, the Company redefined its operating segments to reflect how the chief operating decision maker evaluates the business as a result of the restructuring of the Company's North American field organization. The field reorganization, which impacted all North American salons except for salons in the mass premium category, was announced in the fourth quarter of fiscal year 2013 and completed in the second quarter of fiscal year 2014.

As of September 30, 2014, the Company’s reportable operating segments consisted of the following salons:

	Company-owned	Franchised	Total
North American Value	6,063	2,214	8,277
North American Premium	793	—	793
International	362	—	362

The North American Value operating segment is comprised primarily of SmartStyle, Supercuts, MasterCuts, Cost Cutters, and other regional trade names. The North American Premium operating segment is comprised primarily of the Regis salon concept and the International operating segment includes Supercuts, Regis and Sassoon salon concepts.

Concurrent with the change in reportable operating segments, the Company revised its prior period financial information to reflect comparable financial information for the new segment structure. Historical financial information shown in the following table and elsewhere in this filing reflects this change. 

	For the Three Months Ended September 30,
	2014			2013
	(Dollars in thousands)
Revenues:
North American Value	$	354,376		$	355,341
North American Premium	79,035			84,190
International	31,140			29,052
	$	464,551		$	468,583
Operating (expense) income:
North American Value	$	29,287		$	30,047
North American Premium (1)	(4,544		)	(1,239		)
International	630			(257		)
Total segment operating income	25,373			28,551
Unallocated Corporate	(25,980		)	(27,122		)
Operating (expense) income	$	(607	)	$	1,429

_____________________________

(1) Increases in operating loss primarily driven by long-lived asset impairment charges recorded within depreciation and amortization in the Consolidated Statement of Operations. See Note 1 to the unaudited Condensed Consolidated Financial Statements.

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SEGMENT INFORMATION: (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Segment Reporting Information [Line Items]
Total revenues	$ 464,551	$ 468,583
Operating (loss) income	(607)	1,429
North American Value
Segment Reporting Information [Line Items]
Total revenues	354,376	355,341
Operating (loss) income	29,287	30,047
North American Premium
Segment Reporting Information [Line Items]
Total revenues	79,035	84,190
Operating (loss) income	(4,544)	(1,239)
International
Segment Reporting Information [Line Items]
Total revenues	31,140	29,052
Operating (loss) income	630	(257)
Total segment operating income
Segment Reporting Information [Line Items]
Operating (loss) income	25,373	28,551
Unallocated Corporate
Segment Reporting Information [Line Items]
Operating (loss) income	$ (25,980)	$ (27,122)

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FINANCING ARRANGEMENTS: (Tables)

3 Months Ended

Sep. 30, 2014

Debt Disclosure [Abstract]

Schedule of long-term debt

The Company’s long-term debt consisted of the following:

			Amounts Outstanding
	Maturity Dates	Interest Rate	September 30, 2014			June 30, 2014
	(fiscal year)		(Dollars in thousands)
Convertible senior notes	2015	5.00%	$	—		$	172,246
Senior term notes	2018	5.75	120,000			120,000
Revolving credit facility	2018	—	—			—
Equipment and leasehold notes payable	2015 - 2016	4.90 - 8.75	14			1,257
			120,014			293,503
Less current portion			(14		)	(173,501		)
Long-term portion			$	120,000		$	120,002

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SHAREHOLDERS' EQUITY: (Details) (USD $)	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Equity [Abstract]
Increase in additional paid-in capital	$ (20,200,000)
Stock-based compensation	1,781,000	1,811,000
Stock Repurchased During Period, Shares	1,455,587
Payments for Repurchase of Common Stock	$ (21,529,000)	$ 0
Stock Repurchase Program, Number of Shares Authorized to be Repurchased	37,200,000

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CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Statement of Comprehensive Income [Abstract]
Net Income (Loss) Attributable to Parent	$ (9,052)	$ (136)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments during the period	(4,622)	3,035
Other comprehensive (loss) income	(4,622)	3,035
Comprehensive (loss) income	$ (13,674)	$ 2,899

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SHAREHOLDERS' EQUITY:

3 Months Ended

Sep. 30, 2014

Equity [Abstract]

SHAREHOLDERS' EQUITY

SHAREHOLDERS’ EQUITY:

Additional Paid-In Capital:

The $20.2 milliondecrease in additional paid-in capital during the three months ended September 30, 2014 was primarily due to $21.5 million of common stock repurchases, partly offset by $1.8 million of stock-based compensation.

During the three months ended September 30, 2014, the Company repurchased 1,455,587 shares for $21.5 million under a previously approved stock repurchase program. At September 30, 2014, $37.2 million remains outstanding under the approved stock repurchase program.

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INCOME TAXES: (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Income Tax Disclosure [Abstract]
Income tax (benefit) expense	$ 5,612	$ (383)
Effective tax rate (as a percent)	146.50%	(15.20%)

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GOODWILL AND OTHER INTANGIBLES: (Tables)

3 Months Ended

Sep. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of the Company's recorded goodwill

The table below contains details related to the Company’s recorded goodwill:

	September 30, 2014							June 30, 2014
	Gross Carrying Value		Accumulated Impairment (1)			Net (2)		Gross Carrying Value		Accumulated Impairment (1)			Net (2)
	(Dollars in thousands)
Goodwill	$	676,939	$	(253,661	)	$	423,278	$	678,925	$	(253,661	)	$	425,264

_____________________________

(1) The table below contains additional information regarding accumulated impairment losses:

Fiscal Year	Impairment Charge			Reporting Unit (3)
	(Dollars in thousands)
2009	$	(41,661	)	International
2010	(35,277		)	North American Premium
2011	(74,100		)	North American Value
2012	(67,684		)	North American Premium
2014	(34,939		)	North American Premium
Total	$	(253,661	)

_____________________________

(2)  Remaining net goodwill relates to the Company’s North American Value reporting unit.

(3) See Note 10 to the unaudited Condensed Consolidated Financial Statements.

Schedule of other intangible assets

The table below presents other intangible assets:

	September 30, 2014							June 30, 2014
	Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
	(Dollars in thousands)
Amortized intangible assets:
Brand assets and trade names	$	8,937	$	(3,492	)	$	5,445	$	9,203	$	(3,510	)	$	5,693
Franchise agreements	10,758		(7,076		)	3,682		11,063		(7,163		)	3,900
Lease intangibles	14,715		(7,477		)	7,238		14,775		(7,326		)	7,449
Other	4,943		(2,304		)	2,639		5,074		(2,304		)	2,770
	$	39,353	$	(20,349	)	$	19,004	$	40,115	$	(20,303	)	$	19,812