8-K

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 23, 2006

REGIS CORPORATION
(Exact name of registrant as specified in its charter)

Minnesota	1-12725	41-0749934
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No)

7201 Metro Boulevard
Minneapolis, MN 55439
(Address of principal executive offices and zip code)

(952) 947-7000
(Registrant’s telephone number, including area code)

(Not applicable)

(Former name or former address, if changed from last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Regis Corporation
Current Report on Form 8-K

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On August 23, 2006, Regis Corporation announced the financial results for its fiscal fourth quarter and year ended June 30, 2006.  A copy of the News Release issued by Regis Corporation in connection with this Item 2.02 is attached as Exhibit 99 and incorporated by reference herein.

The information in this Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, regardless of any general incorporation language in such filing.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(c) Exhibits.

EXHIBIT NUMBER
99	Regis Corporation News Release dated August 23, 2006

2

SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	REGIS CORPORATION
Dated: August 23, 2006	By:	/s/ Eric Bakken
		Name: Eric Bakken, Title: Secretary

EXHIBIT INDEX

EXHIBIT NUMBER
99	Regis Corporation News Release dated August 23, 2006

3

EX-99

Exhibit 99

REGIS CORPORATION:

Jack Nielsen – Director, Finance

(952) 806-1765

For Immediate Release

REGIS REPORTS FOURTH QUARTER AND FISCAL YEAR 2006 RESULTS

Net Income Increase of 41% Includes $13.9 Million Net Non-Core Benefit

MINNEAPOLIS, August 23, 2006 — Regis Corporation (NYSE:RGS), the global leader in the $150 billion hair care industry, today reported fourth quarter net income of $41.5 million, or $0.90 per diluted share, a 41 percent increase over $29.5 million, or $0.64 per diluted share reported in the comparable period in fiscal 2005. Fourth quarter net income benefited from a $50 million termination fee received from Alberto-Culver and was partially offset by certain non-core charges totaling $28.4 million, detailed below.

The fourth quarter net income benefit from non-core benefits and charges was $13.9 million, or $0.30 per diluted share, resulting in core earnings of $0.60 per diluted share, meeting the midpoint of the company’s guidance range of $0.58 to $0.62 per diluted share.

On July 12, 2006, the company reported revenues for the fourth quarter ended June 30, 2006 of $636 million, up 7.2 percent over the $593 million reported in the comparable period in fiscal 2005.  Same-store sales increased 0.1 percent for the quarter.

During the quarter, Regis Corporation added a net total of 188 locations. The company constructed 122 salons and franchisees built 80 salons. In addition, Regis acquired 136 salons and one beauty school. The company closed or relocated 147 salons during the quarter.

Full-Year Results

For the full year, revenues totaled $2.4 billion, up 11 percent compared to $2.2 billion during fiscal year 2005. Same-store sales for the full year increased 0.4 percent. Net income increased 70 percent to $110 million, or $2.36 per diluted share, including the benefit of a $50 million merger termination fee received from Alberto-Culver with the accompanying offsets totaling $34.1 million, described below.

Net income results for the fiscal year 2005 included a $38.3 million, or $0.83 per diluted share, non-cash write-off for goodwill impairment related to the company’s international franchise operations.

“Simply put, our fiscal year 2006 results were unacceptable for Regis Corporation,” commented Paul D. Finkelstein, chairman and chief executive officer. “We are committed to improving operational results.”

During the year, the company added a net total of 484 locations. Regis constructed 531 salons and franchisees built 257 salons. In fiscal 2006, the company acquired 290 corporate salons (including 142 franchise buybacks), 30 beauty schools and purchased seven of its franchised hair restoration centers from franchisees. Regis closed or relocated 482 corporate and franchised locations. As of June 30, 2006, Regis Corporation owned or franchised 11,477 worldwide locations.

Fourth Quarter Non-Core Detail

During the fourth quarter, Regis Corporation recorded the following non-core benefits and charges:

Fourth quarter non-core benefit;

·        $50 million termination fee received from Alberto-Culver

Fourth quarter non-core charges totaled $28.4 million;

·        $10.6 million of transaction costs related to the terminated merger

·        $2.8 million wage and hour settlement

·        $6.5 million charge related to 64 salon closures

·        $3.3 million of incremental reserve for underperforming assets

·        $4.3 million write-off of Cool Cuts 4 Kids equity investment

·        $0.9 million in severance for two executives

Details are described below.

The company recorded the receipt of a $50 million termination fee and various transaction expenses related to the terminated merger agreement with Alberto-Culver during the fourth quarter. During the third quarter, the company recorded $5.7 million of transaction costs related to this terminated transaction. During the fourth quarter, the company recorded an additional $10.6 million of transaction expenses, in-line with the company’s expectations.

As previously noted, the company was engaged in a wage and hour lawsuit. In June 2006, the company settled the suit for $2.8 million. While the company does not admit any liability in this matter, management determined that the cost to defend its position coupled with the distraction created by the litigation exceeded the $2.8 million cost to settle the lawsuit.

The fourth quarter closure of 64 underperforming salons resulted in $6.5 million of non-core expense. The underperforming salons were primarily mall-based concepts, such as Regis and MasterCuts. As a result of these closures, the company wrote-off $2.4 million in assets. The remaining average lease life for these locations was three years. As a result, Regis paid $4.1 million to buyout these leases.

During fiscal year 2005, the company acquired an interest of less than 20 percent in privately held Cool Cuts 4 Kids, Inc. through the acquisition of $4.3 million of preferred stock. The development of this children’s salon concept has not proceeded as anticipated and as a result, the company wrote off the entire investment. However, should the financial condition of Cool Cuts 4 Kids improve, Regis Corporation may exercise its call provision to purchase the company in 2008.

First Quarter 2007 Outlook

The following outlook pertains to the fiscal first quarter ending September 30, 2006:

·Earnings per diluted share are forecasted to be in a range of $0.44 to $0.48, compared to $0.48 a year ago.

·Consolidated revenue is forecasted to grow eight percent to nine percent to a range of $630 million to $635 million compared to $584 million a year ago.

·Consolidated same-store sales are forecasted to be in a range of negative 1.0 percent to flat.

Updated Fiscal Year 2007 Outlook

The following outlook pertains to the fiscal year ending June 30, 2007:

·Excluding accretion from future possible acquisitions, earnings per diluted share are forecasted to be in a range of $2.22 to $2.34.

·Excluding revenue from future possible acquisitions, consolidated revenue is forecasted to grow eight percent to $2.6 billion.

·Consolidated same-store sales are forecasted to increase to a range of 1.0 to 2.0 percent.

Regis Corporation will host a conference call discussing fourth quarter and fiscal year results today, August 23, 2006 at 10:00 a.m., Central Time. Interested parties are invited to listen by logging on to www.regiscorp.com or dialing 800-218-8862. A replay of the call will be available until August 25, 2006. The replay phone number is 800-405-2236, access code 11066728#.

About Regis Corporation

Regis Corporation (NYSE:RGS) is the beauty industry’s global leader in salons, hair restoration centers and education. As of June 30, 2006, the company owned or franchised 11,477 worldwide locations; which included 11,333 beauty salons, 90 hair restoration centers and 54 beauty schools operating under concepts such as Supercuts, Jean Louis David, Vidal Sassoon, Regis Salons, MasterCuts, Trade Secret, SmartStyle, Cost Cutters and Hair Club for Men and Women. These and other concepts are located in the US and in ten other countries throughout North America and Europe. For additional information about the company, including management’s current financial outlook and a reconciliation of non-GAAP financial information, please visit the Investor Information section of the corporate website at www.regiscorp.com. To join Regis Corporation’s email alert list, click on this link:

http://www.b2i.us/irpass.asp?BzID=913&to=ea&Nav=1&S=0&L=1

This press release contains “forward-looking statements” within the meaning of the federal securities laws, including statements concerning anticipated future events and expectations that are not historical facts. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward–looking statements in this document reflect management’s best judgment at the time they are made, but all such statements are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those expressed in or implied by the statements herein. Such forward-looking statements are often identified herein by use of words including, but not limited to, “may,” “believe,” “project,” “forecast,” “expect,” “estimate,” “anticipate” and “plan.” In addition, the following factors could affect the Company’s actual results and cause such results to differ materially from those expressed in forward-looking statements. These factors include competition within the personal hair care industry, which remains

strong, both domestically and internationally, 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 for new salon development; governmental initiatives such as minimum wage rates, taxes and possible franchise legislation; the ability of the Company to successfully identify, acquire and integrate salons and beauty schools that support its growth objectives; the ability of the company to maintain satisfactory relationships with suppliers; or other factors not listed above. The ability of the Company to meet its expected revenue growth is dependent on salon and beauty school acquisitions, new salon construction and same-store sales increases, all of which are affected by many of the aforementioned risks. Additional information concerning potential factors that could affect future financial results is set forth in the Company’s Annual Report on Form 10-K for the year ended June 30, 2005 and included in Form S-3 Registration Statement filed with the Securities and Exchange Commission on June 8, 2005. 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.

REGIS CORPORATION (NYSE:RGS)

CONSOLIDATED BALANCE SHEET

as of June 30, 2006 and 2005

(Dollars in thousands, except per share amounts)

	June 30, 2006		June 30, 2005
ASSETS
Current assets:
Cash and cash equivalents	$	135,397	$	102,718
Receivables, net	62,558		47,752
Inventories	193,999		184,609
Deferred income taxes	16,224		17,229
Other current assets	33,588		28,341
Total current assets	441,766		380,649
Property and equipment, net	483,764		435,324
Goodwill	778,228		646,510
Other intangibles, net	216,831		208,800
Other assets	61,475		54,693
Total assets	$	1,982,064	$	1,725,976
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Long-term debt, current portion	$	38,912	$	19,747
Accounts payable	70,807		64,111
Accrued expenses	230,236		178,192
Total current liabilities	339,955		262,050
Long-term debt	583,357		549,029
Other noncurrent liabilities	187,345		160,185
Total liabilities	1,110,657		971,264
Commitments and contingencies
Shareholders’ equity:
Preferred stock, authorized 250,000 shares at June 30, 2006 and 2005
Common stock, $.05 par value; issued and outstanding 45,303,459 and 44,952,002 common shares at June 30, 2006 and 2005, respectively	2,266		2,248
Additional paid-in capital	232,284		229,871
Accumulated other comprehensive income	58,066		46,124
Retained earnings	578,791		476,469
Total shareholders’ equity	871,407		754,712
Total liabilities and shareholders’ equity	$	1,982,064	$	1,725,976

REGIS CORPORATION (NYSE:RGS)

CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

(Dollars in thousands, except per share amounts)

	Three Months Ended						Year Ended
	June 30, (Unaudited)						June 30,
	2006			2005			2006			2005
Revenues:
Service	$	436,717		$	401,073		$	1,634,028		$	1,466,336
Product	179,175			171,368			718,942			648,420
Franchise royalties and fees	20,073			21,035			77,894			79,538
	635,965			593,476			2,430,864			2,194,294
Operating expenses:
Cost of service	247,849			228,352			928,515			836,449
Cost of product	93,074			86,544			371,018			335,636
Site operating expenses	49,900			48,737			199,602			183,056
General and administrative	78,011			69,574			294,092			260,207
Rent	95,869			84,781			350,926			310,984
Depreciation and amortization	34,687			26,289			115,903			91,753
Goodwill impairment	—			—			—			38,319
Terminated acquisition income, net	(39,370		)	—			(33,683		)	—
Total operating expenses	560,020			544,277			2,226,373			2,056,404
Operating income	75,945			49,199			204,491			137,890
Other income (expense):
Interest	(9,128		)	(7,583		)	(34,989		)	(24,385		)
Other, net	(2,351		)	784			651			2,952
Income before income taxes	64,466			42,400			170,153			116,457
Income taxes	(22,951		)	(12,895		)	(60,575		)	(51,826		)
Net income	$	41,515		$	29,505		$	109,578		$	64,631
Net income per share:
Basic	$	0.92		$	0.66		$	2.43		$	1.45
Diluted	$	0.90		$	0.64		$	2.36		$	1.39
Weighted average common and common equivalent shares outstanding:
Basic	45,226			44,881			45,168			44,622
Diluted	46,259			46,340			46,400			46,380
Cash dividends declared per common share	$	0.04		$	0.04		$	0.16		$	0.16

REGIS CORPORATION (NYSE:RGS)

CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in thousands)

	Year Ended June 30,
	2006			2005
Cash flows from operating activities:
Net income	$	109,578		$	64,631
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	95,660			79,924
Amortization	11,810			8,226
Deferred income taxes	7,409			(9,257		)
Goodwill impairment	—			38,319
Asset impairment	12,740			3,603
Excess tax benefit from stock-based compensation plans	(4,556		)	—
Stock-based compensation	4,905			1,222
Other noncash items affecting earnings	316			(41		)
Changes in operating assets and liabilities:
Receivables	(4,918		)	(6,516		)
Inventories	(6,068		)	(17,974		)
Other current assets	(4,291		)	1,437
Other assets	(1,027		)	(5,726		)
Accounts payable	151			8,288
Accrued expenses	43,513			32,426
Other noncurrent liabilities	16,463			17,169
Net cash provided by operating activities	281,685			215,731
Cash flows from investing activities:
Capital expenditures	(119,914		)	(101,097		)
Proceeds from sale of assets	730			846
Purchase of salon and school net assets, net of cash acquired	(149,119		)	(118,915		)
Purchase of hair restoration centers, net of cash acquired	(6,362		)	(209,652		)
Other investing activities	(6,000		)	—
Net cash used in investing activities	(280,665		)	(428,818		)
Cash flows from financing activities:
Borrowings on revolving credit facilities	3,054,730			2,954,100
Payments on revolving credit facilities	(2,998,480		)	(2,976,750		)
Proceeds from issuance of long-term debt	1,766			301,938
Repayments of long-term debt	(22,553		)	(21,313		)
Excess tax benefit from stock-based compensation plans	4,556			—
Other, primarily increase (decrease) in negative book cash balances	1,678			(2,472		)
Dividends paid	(7,256		)	(7,149		)
Repurchase of common stock	(20,280		)	(23,117		)
Proceeds from issuance of common stock	14,410			17,257
Net cash provided by financing activities	28,571			242,494
Effect of exchange rate changes on cash and cash equivalents	3,088			(256		)
Increase in cash and cash equivalents	32,679			29,151
Cash and cash equivalents:
Beginning of year	102,718			73,567
End of year	$	135,397		$	102,718

REGIS CORPORATION (NYSE:RGS)

Salon / School/ Hair Restoration Center Counts and Revenues

	June 30,	June 30,
	2006	2005
SYSTEM-WIDE LOCATIONS:
Company-owned salons	7,559	6,977
Franchise salons	3,774	3,902
Beauty career schools	54	24
Company-owned hair restoration centers	48	41
Franchise hair restoration centers	42	49
	11,477	10,993

SALON LOCATION SUMMARY

NORTH AMERICAN SALONS:

	June 30,		June 30,
	2006		2005
REGIS SALONS
Open at beginning of period	1,093		1,085
Salons constructed	38		39
Acquired	14		13
Less relocations	16		14
Salon openings	36		38
Conversions	—		(1	)
Salons closed	(50	)	(29	)
Total, Regis Salons	1,079		1,093
MASTERCUTS
Open at beginning of period	636		604
Salons constructed	32		47
Acquired	—		2
Less relocations	8		13
Salon openings	24		36
Conversions	(2	)	1
Salons closed	(16	)	(5	)
Total, MasterCuts	642		636

	June 30, 2006		June 30, 2005
TRADE SECRET
Company-owned salons:
Open at beginning of period	597		549
Salons constructed	33		56
Acquired	2		23
Franchise buybacks	5		—
Less relocations	6		17
Salon openings	34		62
Conversions	1		—
Salons closed	(17	)	(14	)
Total company-owned salons	615		597
Franchise salons:
Open at beginning of period	24		24
Franchise buybacks	(5	)	—
Total franchise salons	19		24
Total, Trade Secret	634		621
SMARTSTYLE/COST CUTTERS IN WAL-MART
Company-owned salons:
Open at beginning of period	1,497		1,263
Salons constructed	215		194
Franchise buybacks	31		45
Less relocations	2		1
Salon openings	244		238
Conversions	1		—
Salons closed	(3	)	(4	)
Total company-owned salons	1,739		1,497
Franchise salons:
Open at beginning of period	184		201
Salons constructed	11		29
Salon openings	11		29
Franchise buybacks	(31	)	(45	)
Salons closed	—		(1	)
Total franchise salons	164		184
Total, SmartStyle/Cost Cutters in Wal-Mart	1,903		1,681

	June 30, 2006		June 30, 2005
STRIP CENTERS
Company-owned salons:
Open at beginning of period	2,728		2,310
Salons constructed	180		167
Acquired	122		248
Franchise buybacks	104		94
Less relocations	21		21
Salon openings	385		488
Conversions	(2	)	(3	)
Salons closed	(80	)	(67	)
Total company-owned salons	3,031		2,728
Franchise salons:
Open at beginning of period	2,102		2,105
Salons constructed	135		154
Acquired (2)	—		7
Less relocations	18		13
Salon openings	117		148
Conversions	2		6
Franchise buybacks	(104	)	(94	)
Salons closed	(113	)	(63	)
Total franchise salons	2,004		2,102
Total, Strip Centers	5,035		4,830
INTERNATIONAL SALONS (1)
Company-owned salons:
Open at beginning of period	426		416
Salons constructed	33		22
Acquired	10		19
Franchise buybacks	2		—
Less relocations	4		—
Salon openings	41		41
Conversions	(2	)	(3	)
Salons closed	(12	)	(28	)
Total company-owned salons	453		426
Franchise salons:
Open at beginning of period	1,592		1,594
Salons constructed	111		102
Salon openings	111		102
Conversions	2		—
Franchise buybacks	(2	)	—
Salons closed	(116	)	(104	)
Total franchise salons	1,587		1,592
Total international salons	2,040		2,018

	March 31, 2006		June 30,  2005
TOTAL SYSTEM-WIDE SALONS
Company-owned salons:
Open at beginning of period	6,977		6,227
Salons constructed	531		525
Acquired	148		305
Franchise buybacks	142		139
Less relocations	57		66
Salon openings	764		903
Conversions	(4	)	(6	)
Salons closed	(178	)	(147	)
Total company-owned salons	7,559		6,977
Franchise salons:
Open at beginning of period	3,902		3,924
Salons constructed	257		285
Acquired (2)	—		7
Less relocations	18		13
Salon openings	239		279
Conversions	4		6
Franchise buybacks	(142	)	(139	)
Salons closed	(229	)	(168	)
Total franchise salons	3,774		3,902
Total Salons	11,333		10,879
Beauty schools:
Open at beginning of period	24		11
Salons constructed	2		—
Acquired	30		13
Less relocations	2		—
Total beauty schools	54		24
Company-owned hair restoration centers:
Open at beginning of period	41		—
Constructed	1		—
Acquired	1		42
Franchise buybacks	7		(1	)
Less relocations	1		—
Site openings	8		42
Sites Closed	(1	)	—
Total company-owned hair restoration centers	48		41
Franchise hair restoration centers:
Open at beginning of period	49		—
Acquired	—		49
Franchise buybacks	(7	)	—
Total franchise hair restoration centers	42		49
Total hair restoration centers	90		90
Grand total, system-wide	11,477		10,993

(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.

REVENUES BY CONCEPT:

	For the Periods Ended June 30,
	Three Months						Twelve Months
(Dollars in thousands)	2006			2005			2006			2005
North American salons:
Regis	$	120,783		$	121,948		$	481,760		$	475,736
MasterCuts	43,066			43,050			174,674			172,792
Trade Secret (1)	63,005			62,675			262,862			252,934
SmartStyle	107,189			94,047			413,907			351,741
Strip Center (1)	191,354			170,835			703,345			621,008
Total North American Salons	525,397			492,555			2,036,548			1,874,211
International salons (1)	64,249			65,192			220,662			226,784
Beauty schools	17,590			9,665			63,952			33,911
Hair restoration centers (1)	28,729			26,064			109,702			59,388
Consolidated revenues	$	635,965		$	593,476		$	2,430,864		$	2,194,294
Percent change from prior year	7.2		%	16.7		%	10.8		%	14.1		%
Salon same-store sales increase (2)	0.1		%	0.9		%	0.4		%	0.9		%

(1) Includes aggregate franchise royalties and fees of $20.1 and $21.0 million for the three months ended June 30, 2006 and 2005, respectively, and $77.9 and $79.5 million for the years ended June 30, 2006 and 2005, respectively.  North American salon franchise royalties and fees represented 50.1 and 49.0 percent of total franchise revenues in the three months ended June 30, 2006 and 2005, respectively, and 50.4 and 50.6 percent of total franchise revenues in the years ended June 30, 2006 and 2005.

FINANCIAL INFORMATION BY SEGMENT:

Financial information concerning the Company’s salon, school and hair restoration businesses is shown in the following tables.

	For the Three Months Ended June 30, 2006
	Salons				Beauty			Hair Restoration		Unallocated
(Dollars in thousands)	North America		International		Schools			Centers		Corporate			Consolidated
Revenues:
Service	$	368,292	$	40,107	$	15,933		$	12,385	$	—		$	436,717
Product	147,055		15,413		1,657			15,050		—			179,175
Franchise royalties and fees	10,050		8,729		—			1,294		—			20,073
	525,397		64,249		17,590			28,729		—			635,965
Operating expenses:
Cost of service	211,965		21,014		7,858			7,012		—			247,849
Cost of product	78,616		8,934		964			4,560		—			93,074
Site operating expenses	41,828		2,905		3,935			1,232		—			49,900
General and administrative	28,593		11,584		2,442			6,040		29,352			78,011
Rent	78,522		13,096		2,151			1,677		423			95,869
Depreciation and amortization	23,300		3,619		785			2,996		3,987			34,687
Terminated acquisition income	—		—		—			—		(39,370		)	(39,370		)
Total operating expenses	462,824		61,152		18,135			23,517		(5,608		)	560,020
Operating income (loss)	62,573		3,097		(545		)	5,212		5,608			75,945
Other income (expense):
Interest	—		—		—			—		(9,128		)	(9,128		)
Other, net	—		—		—			—		(2,351		)	(2,351		)
Income (loss) before income taxes	$	62,573	$	3,097	$	(545	)	$	5,212	$	(5,871	)	$	64,466

	For the Three Months Ended June 30, 2005
	Salons				Beauty		Hair Restoration		Unallocated
(Dollars in thousands)	North America		International		Schools		Centers		Corporate			Consolidated
Revenues:
Service	$	339,857	$	41,493	$	9,204	$	10,519	$	—		$	401,073
Product	142,401		14,491		461		14,015		—			171,368
Franchise royalties and fees	10,297		9,208		—		1,530		—			21,035
	492,555		65,192		9,665		26,064		—			593,476
Operating expenses:
Cost of service	196,282		21,880		4,005		6,185		—			228,352
Cost of product	74,141		7,478		183		4,742		—			86,544
Site operating expenses	43,875		2,856		1,615		391		—			48,737
General and administrative	24,621		12,240		1,284		5,875		25,554			69,574
Rent	68,896		13,310		1,053		1,434		88			84,781
Depreciation and amortization	18,539		2,319		432		2,191		2,808			26,289
Total operating expenses	426,354		60,083		8,572		20,818		28,450			544,277
Operating income (loss)	66,201		5,109		1,093		5,246		(28,450		)	49,199
Other income (expense):
Interest	—		—		—		—		(7,583		)	(7,583		)
Other, net	—		—		—		—		784			784
Income (loss) before income taxes	$	66,201	$	5,109	$	1,093	$	5,246	$	(35,249	)	$	42,400

	For the Year Ended June 30, 2006
	Salons				Beauty		Hair Restoration		Unallocated
(Dollars in thousands)	North America		International		Schools		Centers		Corporate			Consolidated
Revenues:
Service	$	1,395,953	$	133,323	$	58,281	$	46,471	$	—		$	1,634,028
Product	601,332		53,796		5,671		58,143		—			718,942
Franchise royalties and fees	39,263		33,543		—		5,088		—			77,894
	2,036,548		220,662		63,952		109,702		—			2,430,864
Operating expenses:
Cost of service	806,024		71,110		24,757		26,624		—			928,515
Cost of product	316,980		32,168		4,278		17,592		—			371,018
Site operating expenses	175,039		9,755		10,272		4,536		—			199,602
General and administrative	108,362		41,963		8,270		23,254		112,243			294,092
Rent	293,571		42,756		6,999		6,215		1,385			350,926
Depreciation and amortization	80,011		9,348		2,610		9,908		14,026			115,903
Terminated acquisition income	—		—		—		—		(33,683		)	(33,683		)
Total operating expenses	1,779,987		207,100		57,186		88,129		93,971			2,226,373
Operating income (loss)	256,561		13,562		6,766		21,573		(93,971		)	204,491
Other income (expense):
Interest	—		—		—		—		(34,989		)	(34,989		)
Other, net	—		—		—		—		651			651
Income (loss) before income taxes	$	256,561	$	13,562	$	6,766	$	21,573	$	(128,309	)	$	170,153

	For the Year Ended June 30, 2005
	Salons					Beauty		Hair Restoration		Unallocated
(Dollars in thousands)	North America		International			Schools		Centers		Corporate			Consolidated
Revenues:
Service	$	1,270,444	$	139,629		$	31,848	$	24,415	$	—		$	1,466,336
Product	563,529		51,143			2,063		31,685		—			648,420
Franchise royalties and fees	40,238		36,012			—		3,288		—			79,538
	1,874,211		226,784			33,911		59,388		—			2,194,294
Operating expenses:
Cost of service	737,045		74,344			11,535		13,525		—			836,449
Cost of product	293,336		30,745			1,288		10,267		—			335,636
Site operating expenses	166,680		9,750			4,319		2,307		—			183,056
General and administrative	99,210		42,357			5,097		12,712		100,831			260,207
Rent	262,818		41,523			2,943		3,242		458			310,984
Depreciation and amortization	67,042		7,879			1,263		5,071		10,498			91,753
Goodwil impairment	—		38,319			—		—		—			38,319
Total operating expenses	1,626,131		244,917			26,445		47,124		111,787			2,056,404
Operating income (loss)	248,080		(18,133		)	7,466		12,264		(111,787		)	137,890
Other income (expense):
Interest	—		—			—		—		(24,385		)	(24,385		)
Other, net	—		—			—		—		2,952			2,952
Income (loss) before income taxes	$	248,080	$	(18,133	)	$	7,466	$	12,264	$	(133,220	)	$	116,457

REGIS CORPORATION (NYSE:RGS)

RECONCILIATION OF GAAP EARNINGS PER SHARE TO NON-GAAP EARNINGS PER SHARE

Quarterly Period Ended June 30, 2006

The company’s press release announcing results of operations for the three month period ended June 30, 2006 includes references to the following “non-GAAP financial measure” as defined by Regulation G of the Securities and Exchange Commission:

— Diluted net earnings per share excluding non-core items

Reconciliation of the non-GAAP financial measure to their most directly comparable financial measures under GAAP for the three months ended June 30, 2006 is as follows (in thousands, except per share data):

Non-core operational charges (income) expense:

All items shown net of income taxes

Diluted net earnings per share, as reported	$	0.90
Termination fee	(0.70		)
Terminated acquisition expenses	0.15
Wage & hour settlement	0.04
Severance	0.01
Lease termination fees	0.06
Salon closures (fixed asset portion)	0.03
Under-performing assets	0.05
Cool Cuts 4 Kids write-off	0.06
Non-GAAP earnings per share	$	0.60
Shares	46,259