EX-99 2 c87783exv99.htm NEWS RELEASE exv99
 

Exhibit 99

         
  CONTACTS:    
  Investors:   REGIS CORPORATION:
      Paul D. Finkelstein – Chairman & CEO
      Randy L. Pearce – Executive Vice President, CFO
      Kyle P. Didier – Vice President, Finance
(952) 947-7000
 
        
For Immediate Release    
     
  Media:   BERNS COMMUNICATIONS GROUP:
      Melissa Jaffin/Michael McMullan
      (212) 994-4660

REGIS REPORTS RECORD FOURTH QUARTER AND FISCAL YEAR 2004 RESULTS
-Fiscal Year 2004 EPS Increased 19 Percent to $2.29-

     MINNEAPOLIS, August 24, 2004 — Regis Corporation (NYSE:RGS), the global leader in the $140 billion hair care industry, today reported record financial results for its fiscal fourth quarter and year ended June 30, 2004.

Fourth Quarter Results

     Consolidated revenues increased 13 percent to a record $509 million compared to $448 million a year ago. Same-store sales increased 1.5 percent. Fourth quarter net income increased 21 percent to $27.3 million, or $0.59 per diluted share. During the quarter, Regis Corporation added a net total of 276 salons. The Company constructed 137 salons and franchisees built 74 salons. In addition, 167 salons were acquired, including 7 franchise buybacks. A total of 95 salons were closed or relocated during the quarter.

Fiscal Year 2004 Results

     Consolidated revenues increased 14 percent to a record $1.92 billion compared to $1.68 billion during fiscal year 2003. Same-store sales increased 2.6 percent. Net income increased 22 percent to a record $105 million, or $2.29 per diluted share. During the year, the Company constructed 452 salons and franchisees built 268 salons. In addition, 411 salons were acquired, including 206 franchise buybacks. A total of 380 salons were closed or relocated during the year. As of June 30, 2004, Regis Corporation owned or franchised 10,162 salons compared to 9,617 salons as of June 30, 2003, a net increase of 545 salons.

     “Fiscal 2004 represented another year of record performance for Regis Corporation. Our flexible strategy of adding salons organically and by acquisition allows us to generate consistent revenue growth year after year,” commented Paul D. Finkelstein, chairman and chief executive officer. “This strategy enables us to achieve, and sometimes exceed, our long-term objective of low-to-mid teens earnings growth.”

     Mr. Finkelstein further commented, “Strong cash flow generated in fiscal 2004 allowed Regis Corporation to strengthen its balance sheet. We reduced our debt-to-capitalization ratio by 440 basis points to 30.5 percent and have now reduced this ratio by over 1500 basis points in the last four years.”

Fiscal Year 2005 Outlook

     Guidance for fiscal 2005 remains unchanged. Excluding the benefit from future acquisitions, revenue for fiscal year 2005 is expected to increase 7-to-8 percent to nearly $2.1 billion, with

 

 

same-store sales forecasted to increase 1.0 to 2.0 percent. Earnings for fiscal year 2005 are forecasted to increase to a range of $2.43 to $2.47 per diluted share.

     Mr. Finkelstein continued, “We anticipate completing our planned fiscal year 2005 acquisition activity in the coming months. Based on the transactions under review, we believe fiscal year 2005 will be another year in which we achieve our long-term growth objectives.”

     Regis Corporation will broadcast its year-end conference call live on the internet, Tuesday, August 24, 2004 at 10:00 a.m. Central Time. Interested parties are invited to listen by logging onto www.regiscorp.com. An archive of the conference call will be available at this website shortly after the conclusion of the live broadcast. Regis Corporation will release August 2004 revenue results, including same-store sales, on September 8, 2004.

          Regis Corporation, a Fortune 1000 company, is the largest owner, operator and franchisor of hair and retail product salons in the world. As of June 30, 2004, the Company operated or franchised 10,162 salons utilizing several concepts including: Supercuts, Jean Louis David, Vidal Sassoon, Regis Salons, MasterCuts, Trade Secret, SmartStyle and Cost Cutters. These salons are located in the United States, Canada, France, Italy, United Kingdom, Spain, Germany, Belgium, Switzerland, Poland and Puerto Rico.

          Regis Corporation is headquartered in Minneapolis, Minnesota. The Company’s common stock is traded on the New York Stock Exchange under the symbol RGS. For additional information about the Company, including a reconciliation of non-GAAP financial information and our current financial outlook, please visit the Investor Information section of the corporate website at www.regiscorp.com.

               This press release contains “forward-looking statements” within the meaning of the federal securities laws, including statements concerning anticipated future events and expectations that are not historical facts. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward–looking statements in this document reflect management’s best judgment at the time they are made, but all such statements are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those expressed in or implied by the statements herein. Such forward-looking statements are often identified herein by use of words including, but not limited to, “may,” “believe,” “project,” “forecast,” “expect,” “estimate,” “anticipate,” and “plan.” In addition, the following factors could affect the Company’s actual results and cause such results to differ materially from those expressed in forward-looking statements. These factors include competition within the personal hair care industry, which remains strong, both domestically and internationally, and price sensitivity; changes in economic condition; changes in consumer tastes and fashion trends; labor and benefit costs; legal claims; risk inherent to international development (including currency fluctuations); the continued ability of the Company and its franchisees to obtain suitable locations and financing for new salon development; governmental initiatives such as minimum wage rates, taxes and possible franchise legislation; the ability of the Company to successfully identify and acquire salons that support its growth objectives; or other factors not listed above. The ability of the Company to meet its expected revenue growth is dependent on salon acquisitions, new salon construction and same-store sales increases, all of which are affected by many of the aforementioned risks. Additional information concerning potential factors that could affect future financial results is set forth the Company’s Annual Report on Form 10-K for the year ended June 30, 2003 and included in Form S-3 Registration Statement filed with the Securities

 

 

and Exchange Commission on June 4, 2004. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made in our subsequent annual and periodic reports filed or furnished with the SEC on Forms 10-K, 10-Q and 8-K and Proxy Statements on Schedule 14A.

(TABLES TO FOLLOW)

 

 

REGIS CORPORATION (NYSE:RGS)
CONSOLIDATED BALANCE SHEET

as of June 30, 2004 and 2003
(Dollars in thousands, except per share amounts)
                 
    June 30,
    2004
   2003
ASSETS
                
Current assets:
                
Cash and cash equivalents
   $ 73,567     $ 55,454  
Receivables, net
     35,033       31,947  
Inventories
     161,304       156,827  
Deferred income taxes
     15,285       18,469  
Other current assets
     28,253       16,963  
 
    
 		      
 		  
Total current assets
     313,442       279,660  
 
Property and equipment, net
     381,903       356,725  
Goodwill
     457,140       372,618  
Other intangibles, net
     79,174       64,498  
Other assets
     40,200       39,454  
 
    
 		      
 		  
Total assets
   $ 1,271,859     $ 1,112,955  
 
    
 		      
 		  
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
Current liabilities:
                
Long-term debt, current portion
   $ 19,128     $ 21,123  
Accounts payable
     53,112       56,175  
Accrued expenses
     129,721       118,696  
 
    
 		      
 		  
Total current liabilities
     201,961       195,994  
 
Long-term debt
     282,015       280,634  
Other noncurrent liabilities
     100,322       73,523  
 
    
 		      
 		  
Total liabilities
     584,298       550,151  
 
    
 		      
 		  
Shareholders’ equity:
                
Preferred stock, authorized 250,000 shares at June 30, 2004 and 2003
                
Common stock, $.05 par value; issued and outstanding, 44,283,949 and 43,527,244 common shares at June 30, 2004 and 2003, respectively
     2,214       2,176  
Additional paid-in capital
     220,204       207,650  
Accumulated other comprehensive income
     40,642       27,789  
Retained earnings
     424,501       325,189  
 
    
 		      
 		  
Total shareholders’ equity
     687,561       562,804  
 
    
 		      
 		  
Total liabilities and shareholders’ equity
   $ 1,271,859     $ 1,112,955  
 
    
 		      
 		  

-more-

 

 

REGIS CORPORATION (NYSE:RGS)
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(Dollars in thousands, except per share amounts)

                                 
    Three Months Ended   Year Ended
    June 30,
   June 30,
    2004
   2003
   2004
   2003
Revenues:
                                
Company-owned salons:
                                
Service
   $ 343,353     $ 302,026     $ 1,271,232     $ 1,117,562  
Product
     137,460       121,644       545,012       465,053  
 
    
 		      
 		      
 		      
 		  
 
     480,813       423,670       1,816,244       1,582,615  
 
    
 		      
 		      
 		      
 		  
Franchise revenues:
                                
Royalties and fees
     18,748       16,108       73,632       67,682  
Product sales
     9,036       8,455       33,267       34,233  
 
    
 		      
 		      
 		      
 		  
 
     27,784       24,563       106,899       101,915  
 
    
 		      
 		      
 		      
 		  
Total Revenue
     508,597       448,233       1,923,143       1,684,530  
 
    
 		      
 		      
 		      
 		  
Operating expenses:
                                
Company-owned salons:
                                
Cost of service
     195,734       170,538       719,809       629,945  
Cost of product
     68,762       61,694       276,704       232,596  
Direct salon
     43,496       36,677       163,178       142,173  
Rent
     73,156       63,801       267,368       233,821  
Depreciation
     16,808       15,239       62,273       54,894  
 
    
 		      
 		      
 		      
 		  
 
     397,956       347,949       1,489,332       1,293,429  
Franchise direct costs, including product and equipment
     14,538       13,433       58,413       57,050  
Corporate and franchise support costs
     46,488       43,246       181,992       163,256  
Depreciation and amortization
     3,305       2,864       12,688       11,855  
 
    
 		      
 		      
 		      
 		  
Total operating expenses
     462,287       407,492       1,742,425       1,525,590  
 
    
 		      
 		      
 		      
 		  
Operating income
     46,310       40,741       180,718       158,940  
 
Other income (expense):
                                
Interest
     (4,021 )     (5,690 )     (17,064 )     (21,394 )
Other, net
     32       208       1,155       1,055  
 
    
 		      
 		      
 		      
 		  
Income before income taxes
     42,321       35,259       164,809       138,601  
 
Income taxes
     (15,017 )     (12,765 )     (59,331 )     (51,926 )
 
    
 		      
 		      
 		      
 		  
Net income
   $ 27,304     $ 22,494     $ 105,478     $ 86,675  
 
    
 		      
 		      
 		      
 		  
Net income per share:
                                
Basic
   $ .62     $ .52     $ 2.40     $ 2.00  
 
    
 		      
 		      
 		      
 		  
Diluted
   $ .59     $ .50     $ 2.29     $ 1.92  
 
    
 		      
 		      
 		      
 		  
Weighted average common and common equivalent shares outstanding:
                                
Basic
     44,298       43,353       44,014       43,292  
 
    
 		      
 		      
 		      
 		  
Diluted
     46,416       45,203       46,145       45,229  
 
    
 		      
 		      
 		      
 		  
Cash dividends declared per common share
   $ .04     $ .03     $ .14     $ .12  
 
    
 		      
 		      
 		      
 		  

- more -

 

 

REGIS CORPORATION (NYSE:RGS)
CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in thousands)
                 
    Year Ended June 30,
    2004
   2003
Cash flows from operating activities:
                
Net income
   $ 105,478     $ 86,675  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation
     72,096       63,767  
Amortization
     3,451       3,632  
Deferred income taxes
     16,071       3,475  
Other
     1,265       710  
 
Changes in operating assets and liabilities*:
                
Receivables
     (16 )     8  
Inventories
     (462 )     (31,145 )
Other current assets
     (10,629 )     2,120  
Other assets
     (1,387 )     (13,606 )
Accounts payable
     (4,991 )     1,363  
Accrued expenses
     9,461       21,105  
Other noncurrent liabilities
     15,327       13,015  
 
    
 		      
 		  
Net cash provided by operating activities
     205,664       151,119  
 
    
 		      
 		  
Cash flows from investing activities:
                
Capital expenditures
     (74,076 )     (77,460 )
Proceeds from sale of assets
     432       1,273  
Business and salon acquisitions, net of cash acquired
     (99,734 )     (66,880 )
 
    
 		      
 		  
Net cash used in investing activities
     (173,378 )     (143,067 )
 
    
 		      
 		  
Cash flows from financing activities:
                
Borrowings on revolving credit facilities
     514,650       854,195  
Payments on revolving credit facilities
     (508,025 )     (886,420 )
Proceeds from issuance of long-term debt
     11,887       30,000  
Repayments of long-term debt
     (24,111 )     (11,471 )
Other, primarily increase (decrease) in negative book cash balances
     118       (2,720 )
Dividends paid
     (6,166 )     (5,202 )
Repurchase of common stock
     (22,548 )     (21,694 )
Proceeds from issuance of common stock
     17,347       7,051  
 
    
 		      
 		  
Net cash used in financing activities
     (16,848 )     (36,261 )
 
    
 		      
 		  
Effect of exchange rate changes on cash
     2,675       2,122  
 
    
 		      
 		  
Increase (decrease) in cash
     18,113       (26,087 )
 
Cash and cash equivalents:
                
Beginning of period
     55,454       81,541  
 
    
 		      
 		  
End of period
   $ 73,567     $ 55,454  
 
    
 		      
 		  

* Changes in operating assets and liabilities do not include assets and liabilities assumed through acquisitions.

- more -

 

 

REGIS CORPORATION (NYSE:RGS)
Salon Counts and Revenues

                 
    June 30,   June 30,
    2004
   2003
SYSTEM-WIDE SALONS:
                
Company-owned salons
     6,238       5,563  
Franchise salons
     3,924       4,054  
 
    
 		      
 		  
 
     10,162       9,617  
 
    
 		      
 		  
SALON LOCATION SUMMARY
                
 
NORTH AMERICA:
                
REGIS SALONS
                
Open at beginning of period
     1,096       1,016  
Salons constructed
     33       53  
Acquired
     10       73  
Less relocations
     10       12  
 
    
 		      
 		  
Salon openings
     33       114  
Conversions
     (2 )     (2 )
Salons closed
     (35 )     (32 )
 
    
 		      
 		  
Open at end of period
     1,092       1,096  
 
    
 		      
 		  
MASTERCUTS
                
Open at beginning of period
     590       551  
Salons constructed
     34       47  
Acquired
     3       0  
Less relocations
     9       6  
 
    
 		      
 		  
Salon openings
     28       41  
Conversions
     1       2  
Salons closed
     (15 )     (4 )
 
    
 		      
 		  
Open at end of period
     604       590  
 
    
 		      
 		  
TRADE SECRET
                
Company-owned salons:
                
Open at beginning of period
     517       490  
Salons constructed
     26       34  
Acquired
     12       10  
Franchise buybacks
     2       0  
Less relocations
     5       4  
 
    
 		      
 		  
Salon openings
     35       40  
Conversions
     1       0  
Salons closed
     (4 )     (13 )
 
    
 		      
 		  
Open at end of period
     549       517  
 
    
 		      
 		  
Franchise salons:
                
Open at beginning of period
     25       26  
Salons constructed
     1       0  
Acquired
     0       0  
 
    
 		      
 		  
Salon openings
     1       0  
Franchise buybacks
     (2 )     0  
Salons closed
     0       (1 )
 
    
 		      
 		  
Open at end of period
     24       25  
 
    
 		      
 		  

- more -

 

 

                 
    June 30,   June 30,
    2004
   2003
SMARTSTYLE/COST CUTTERS IN WAL-MART
                
Company-owned salons:
                
Open at beginning of period
     1,033       861  
Salons constructed
     174       168  
Acquired
     0       2  
Franchise buybacks
     61       12  
Less relocations
     0       5  
 
    
 		      
 		  
Salon openings
     235       177  
Conversions
     0       0  
Salons closed
     (5 )     (5 )
 
    
 		      
 		  
Open at end of period
     1,263       1,033  
 
    
 		      
 		  
Franchise salons:
                
Open at beginning of period
     230       210  
Salons constructed
     33       33  
Acquired
     0       0  
Less relocations
     0       0  
 
    
 		      
 		  
Salon openings
     33       33  
Conversions
     0       0  
Franchise buybacks
     (61 )     (12 )
Salons closed
     (1 )     (1 )
 
    
 		      
 		  
Open at end of period
     201       230  
 
    
 		      
 		  
STRIP CENTERS
                
Company-owned salons:
                
Open at beginning of period
     1,928       1,476  
Salons constructed
     166       85  
Acquired
     162       361  
Franchise buybacks
     133       85  
Less relocations
     8       3  
 
    
 		      
 		  
Salon openings
     453       528  
Conversions
     (8 )     (13 )
Salons closed
     (63 )     (63 )
 
    
 		      
 		  
Open at end of period
     2,310       1,928  
 
    
 		      
 		  
Franchise salons:
                
Open at beginning of period
     2,172       1,988  
Salons constructed
     146       147  
Acquired (2)
     0       198  
Less relocations
     10       10  
 
    
 		      
 		  
Salon openings
     136       335  
Conversions
     8       13  
Franchise buybacks
     (133 )     (85 )
Salons closed
     (78 )     (79 )
 
    
 		      
 		  
Open at end of period
     2,105       2,172  
 
    
 		      
 		  

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    June 30,   June 30,
    2004
   2003
INTERNATIONAL (1)
                
Company-owned salons:
                
Open at beginning of period
     399       382  
Salons constructed
     19       10  
Acquired
     18       17  
Franchise buybacks
     10       0  
 
    
 		      
 		  
Salon openings
     47       27  
Conversions
     0       0  
Salons closed
     (26 )     (10 )
 
    
 		      
 		  
Open at end of period
     420       399  
 
    
 		      
 		  
Franchise salons:
                
Open at beginning of period
     1,627       1,684  
Salons constructed
     88       95  
Acquired (2)
     0       0  
 
    
 		      
 		  
Salon openings
     88       95  
Conversions
     0       0  
Franchise buybacks
     (10 )     0  
Salons closed
     (111 )     (152 )
 
    
 		      
 		  
Open at end of period
     1,594       1,627  
 
    
 		      
 		  
TOTAL SYSTEM-WIDE SALONS
                
 
Company-owned salons:
                
Open at beginning of period
     5,563       4,776  
Salons constructed
     452       397  
Acquired
     205       463  
Franchise buybacks
     206       97  
Less relocations
     32       30  
 
    
 		      
 		  
Salon openings
     831       927  
Conversions
     (8 )     (13 )
Salons closed
     (148 )     (127 )
 
    
 		      
 		  
Open at end of period
     6,238       5,563  
 
    
 		      
 		  
Franchise salons:
                
Open at beginning of period
     4,054       3,908  
Salons constructed
     268       275  
Acquired (2)
     0       198  
Less relocations
     10       10  
 
    
 		      
 		  
Salon openings
     258       463  
Conversions
     8       13  
Franchise buybacks
     (206 )     (97 )
Salons closed
     (190 )     (233 )
 
    
 		      
 		  
Open at end of period
     3,924       4,054  
 
    
 		      
 		  
Grand total, system-wide
     10,162       9,617  
 
    
 		      
 		  

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(1)   Canadian and Puerto Rican salons are included in the Regis Salons, Strip Center, MasterCuts and Trade Secret concepts and not included in the International salon totals.

(2)   Represents primarily the acquisition of franchise networks.

Relocations represent a transfer of location by the same salon concept.

Conversions represent the transfer of one salon concept to another concept.

                                 
    (Dollars in thousands)
    Three Months Ended   Year Ended
    June 30,
   June 30,
Revenues by Concept:
   2004
   2003
   2004
   2003
Regis Salons
   $ 120,886     $ 116,524     $ 482,303     $ 437,449  
MasterCuts
     42,568       42,450       173,415       170,288  
Trade Secret
     59,747       53,485       242,604       209,671  
SmartStyle
     78,809       61,712       294,564       227,527  
Strip Centers
     142,471       123,056       518,856       468,121  
International
     64,116       51,006       211,401       171,474  
 
    
 		      
 		      
 		      
 		  
 
   $ 508,597     $ 448,233     $ 1,923,143     $ 1,684,530  
 
    
 		      
 		      
 		      
 		  

Included in the table above are franchise revenues of $27,784 and $24,563 for the three months ended June 30, 2004 and 2003, respectively, and $106,899 and $101,915 for the year ended June 30, 2004 and 2003, respectively.

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