Regis Reports Fourth Quarter 2012 Results |
- 4Q12 GAAP net loss of $63.6 million, or $1.11 per share -
- 4Q12 operational diluted earnings per share of $0.40, up 10.4% from
$0.37 in 4Q11 -
Regis Corporation (NYSE:RGS), the global leader in the $160 billion
haircare industry, today reported a fourth quarter net loss of $1.11 per
share. These results include non-operational after-tax items of $89.2
million, primarily related to goodwill impairment in the Company's Regis
salon division and the write-down of the equity investment in Empire
Education. Excluding non-operational items, fourth quarter operational
earnings increased to $0.40 per diluted share from $0.37 in the
year-earlier quarter. Sales totaled $568.2 million versus $592.0 million
in the 2011 fourth quarter.
"The gain in fourth quarter operational earnings amidst a negative sales
trend reflects Regis' ongoing commitment to controlling costs, managing
our business more efficiently and a decrease in the effective income tax
rate," said Dan Hanrahan, President and Chief Executive Officer. "I have
been on the job for less than three weeks and I believe there is
significant opportunity to improve our performance. We are committed to
improving the salon experience for our guests, hiring and retaining the
best stylists, continuing our efforts to simplify our operating model
and effectively leveraging our scale as North America's largest salon
company."
Commenting on fiscal 2012, Hanrahan said, "Regis faced a number of
challenges in the past year, but reported operational earnings per
diluted share of $1.30, which was up 11.4% from fiscal 2011. We have
lots of work ahead of us. The previously announced sale of non-core
assets will allow us to focus on our core business."
FISCAL 2012 CONSOLIDATED FINANCIAL HIGHLIGHTS Consolidated Highlights -
Sales of $2,273.8 million, down 2.2% from $2,325.9 million in fiscal
2011.
-
Same-store sales declined 3.1% versus a decline of 1.7% in fiscal 2011.
-
Same-store transaction counts for our salon businesses declined 3.0%
in fiscal 2012.
-
Gross margin decreased 10 basis points to 44.7% of sales from 44.8% in
fiscal 2011.
-
Operational operating margins remained flat with fiscal year 2011 at
5.0% of sales.
-
Operational net income of $80.5 million increased 13.0%, from $71.2
million in fiscal 2011.
-
Operational diluted earnings per share of $1.30 increased 11.4%, from
$1.16 in fiscal 2011.
-
Operational EBITDA of $220.4 million decreased 2.8%, from $226.6
million in fiscal 2011.
-
Net store base decreased by 54 units in fiscal 2012 for a total store
count of 12,647 at June 30, 2012.
-
The reported income tax rate was 5.8%, which includes the impact of
the non-operational charges. The operational income tax rate was 28.6%.
-
Total cash at June 30, 2012 grew to $111.9 million, an increase of
$15.7 million since June 30, 2011.
-
Total debt at June 30, 2012 decreased to $287.7 million, a decline of
$25.7 million since June 30, 2011.
FISCAL 2012 FOURTH QUARTER FINANCIAL HIGHLIGHTS Consolidated Highlights -
Sales of $568.2 million, down 4.0% from $592.0 million in the fourth
quarter of fiscal 2011.
-
Same-store sales declined 3.0% versus a decline of 1.7% in the fourth
quarter of fiscal 2011.
-
Same-store transaction counts for our salon businesses declined 4.0%
in the fourth quarter of fiscal 2012.
-
Gross margin decreased 40 basis points to 44.6% of sales from 45.0% in
the fourth quarter of fiscal 2011.
-
Operational operating margins remained flat with the fourth quarter of
fiscal 2011 at 5.7% sales.
-
Operational net income of $25.6 million increased 11.8%, from $22.9
million in the fourth quarter of fiscal 2011.
-
Operational diluted earnings per share of $0.40 increased 10.4%, from
$0.37 in the fourth quarter of fiscal 2011.
-
Operational EBITDA of $59.1 million decreased 4.1%, from $61.7 million
in the fourth quarter of fiscal 2011.
-
Net store base decreased by 15 units in the fourth quarter for a total
store count of 12,647 at June 30, 2012.
-
The reported income tax rate was 21.2%, which includes the impact of
the non-operational charges. The operational income tax rate was 19.5%.
Segment Results: North America Salons Revenues: Fourth quarter 2012 revenues were $487.9 million, a
decrease of 4.7% from the fiscal 2011 fourth quarter. Service revenues
were $381.4 million, a decrease of 5.6% compared to the same period a
year ago. Same-store service sales for the quarter declined 4.0%.
Same-store service guest counts declined 3.6% and average ticket
declined 0.4%. Retail product revenues were $96.7 million, a decrease of
1.5%. Retail product same-store sales declined 0.5%.
Service Margins: Service margin rate for the fourth quarter of
fiscal 2012 was 42.5%, a decline of 10 basis points from the fourth
quarter of fiscal 2011.
Retail Product Margins: Retail product margin rate for the fourth
quarter of fiscal 2012 was 48.4%, a decline of 170 basis points compared
to the fourth quarter of fiscal 2011. The decline in product margins was
driven by a sales incentive program for stylists and higher fuel costs.
Site Operating Expense: Site operating expense was $44.4 million,
or 9.1% of North American revenues, which included non-operational
charges of $0.8 million related to an adjustment to self-insurance
reserves. Operational site operating expense for the fourth quarter of
2012 was $0.5 million lower than the fourth quarter of 2011, coming in
at $43.6 million, or 8.9% of North American revenue.
General and Administrative Expense: General and administrative
expense was $28.5 million, or 5.8% of North American revenues, which
included non-operational charges of $1.4 million related to our field
restructuring. Operational general and administrative expense for the
fourth quarter of 2012 was 20 basis points, or $2.1 million lower than
the fourth quarter of 2011, coming in at $27.1 million, or 5.5% of North
American revenues. Regis continued to see savings in travel expense due
to implementing new portable technology for the field staff. In
addition, general and administrative salaries and professional fees
declined due to cost-saving initiatives.
Rent Expense: Rent expense was $72.2 million, or 14.8% of North
American revenue. This represented an increase of 60 basis points over
the same period a year ago, primarily the result of deleveraging due to
negative same-store sales.
Depreciation and Amortization Expense: Depreciation and
amortization was $16.6 million, or 3.4% of North American revenues, an
increase of 10 basis points over the fourth quarter of fiscal 2011.
Operating Margins: Fourth quarter 2012 GAAP operating margin was
-2.2% of North American revenues. Excluding non-operational items,
operational operating margin was 12.1% of North American revenues, a
decrease of 110 basis points compared to the fourth quarter of fiscal
2011.
International Salons Revenues: Fourth quarter 2012 revenues were $41.0 million, a
decrease of 3.7% from the fiscal 2011 fourth quarter. Service revenues
were $30.4 million, a decrease of 2.4% compared to the same period a
year ago. Same-store service sales for the quarter declined 5.2%. Retail
product revenues were $10.5 million, a decrease of 7.5%. Retail product
same-store sales declined 10.0%.
Service Margins: Service margin rate for the fourth quarter of
fiscal 2012 was 47.3%, a decline of 130 basis points over the fourth
quarter of fiscal 2011. The decline in service margin was primarily
driven by lower salon productivity due to reduced sales levels.
Retail Product Margins: Retail product margin rate for the fourth
quarter of fiscal 2012 was 54.1%, an improvement of 890 basis points
compared to the fiscal 2011 fourth quarter. The increase in product
margins resulted from a favorable book to physical count and vendor
participation in special discounting to sell inventory.
Operating Margins: Fourth quarter 2012 operating margin was $1.1
million, or 2.8% of International revenues, an improvement of 110 basis
points compared to the fourth quarter of fiscal 2011.
Hair Restoration Centers Revenues: Fourth quarter 2012 revenues were $39.3 million, an
increase of 4.3% from the fourth quarter of fiscal year 2011. Same-store
sales for the quarter increased 4.4%.
Gross Margins: Gross margin rate for the fourth quarter of fiscal
2012 was 51.6%, a decline of 300 basis points over the fourth quarter of
fiscal 2011. The decline in gross margin was primarily driven by
increased hair system costs due to wage pressure in China.
Operating Margins: Fourth quarter 2012 GAAP operating margin was
$4.1 million, or 10.4% of Hair Club revenues, which includes
non-operational expense of $0.1 million. Operational operating margin
was $4.2 million, or 10.6% of Hair Club revenues, a decrease of 40 basis
points compared to the fourth quarter of fiscal 2011.
Corporate General and Administrative Expense: Fourth quarter 2012 GAAP
general and administrative expense was $33.8 million, or 6.0% of
consolidated revenues, which includes non-operational charges of $6.5
million. Operational general and administrative expense for the fourth
quarter of 2012 was $27.3 million, or 4.8% of consolidated revenue, a
decrease of 100 basis points over the fourth quarter of 2011. The
decrease in this expense category reflects the cost-saving initiatives
Regis put in place to become more effective and efficient in supporting
salon operations.
Income Taxes
During the three months ended June 30, 2012, the Company recognized a
tax benefit of $10.5 million with a corresponding effective tax rate of
21.2% utilizing the year-to-date method. The Company's operational tax
rate of 19.5% came in better than expected primarily due to the release
of income tax reserves.
Equity in (Loss) Income of Affiliates
Loss from equity method investments and affiliated companies was $24.4
million in the fourth quarter of 2012, which included a non-operational
impairment charge of $28.2 million related to the write-down of the
Company's equity investment in Empire Education Group. Operational
income from equity method investments and affiliated companies was $4.1
million, an increase of $0.7 million over the fourth quarter of 2011.
The increase in this category primarily relates to increased same-store
sales and lower than expected cost of goods sold in Provalliance.
Fourth Quarter Non-Operational Items
Fourth quarter non-operational items, which netted to $89.2 million on
an after-tax basis, consisted of the following items:
-
Non-cash after-tax goodwill impairment of $55.2 million related to the
Company's Regis salon division.
-
Non-cash after-tax impairment of $28.2 million related to the
Company's investment in Empire Education Group.
-
After-tax expense of $1.8 million primarily associated with the field
management restructuring.
-
After-tax expense of $1.4 million of fees related to the expected sale
of the Company's investment in Hair Restoration Centers.
-
After-tax expense of $1.2 million associated with senior management
restructuring and other severance costs.
-
After-tax expense of $1.1 million of deferred compensation expense
associated with freezing the Company's deferred compensation plan.
-
After-tax expense of $0.6 million of prior year self insurance
reserves.
-
Non-cash after-tax expense of $0.3 million related to the Company's
46.7% ownership interest in Provalliance. The expense relates to
holding the investment at the purchase price of 80 million Euro.
-
After-tax benefit of $0.5 million related to the previously
written-off note receivable with Pure Beauty.
A complete reconciliation of reported earnings to operational earnings
is included in today's press release and is available on the Company's
website at www.regiscorp.com.
On April 26, 2012 Regis announced that, effective with the first quarter
of fiscal 2013, the Company will discontinue its current practice of
reporting consolidated revenues and comparative same-store sales in
advance of its quarterly earnings report. Revenues and same-store sales
will be reported together in the quarterly earnings announcement.
Regis Corporation will host a conference call discussing fourth quarter
results today, August 23, 2012, at 10 a.m., Central time. Interested
parties are invited to listen by logging on to www.regiscorp.com
or dialing 866-225-8754. A replay of the call will be available later
that day. The replay phone number is 800-406-7325, access code 4560118#.
As of June 30, 2012, Regis Corporation owned, franchised, or held
ownership interest in 12,647 worldwide locations.
About Regis Corporation
Regis Corporation (NYSE:RGS) is the beauty industry's global leader in
beauty salons, hair restoration centers and cosmetology education. As of
June 30, 2012, the Company owned, franchised or held ownership interests
in approximately 12,600 worldwide locations. Regis' corporate and
franchised locations operate under concepts such as Supercuts, Sassoon
Salon, Regis Salons, MasterCuts, SmartStyle, Cost Cutters, Cool Cuts 4
Kids and Hair Club for Men and Women. In addition, Regis maintains an
ownership interest in Provalliance, which operates salons primarily in
Europe, under the brands of Jean Louis David, Franck Provost and Saint
Algue. Regis also maintains ownership interests in Empire Education
Group in the U.S. and the MY Style concepts in Japan. System-wide, these
and other concepts are located in the U.S. and in over 30 other
countries in North America, South America, Europe, Africa and Asia. For
additional information about the company, including a reconciliation of
certain non-GAAP financial information and certain supplemental
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 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. 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 management and organizational changes;
competition within the personal hair care industry, which remains
strong, both domestically and internationally, price sensitivity;
changes in economic conditions; changes in consumer tastes and fashion
trends; the ability of the Company to implement its planned spending and
cost reduction plan and to continue to maintain compliance with
financial covenants in its credit agreements; 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 and to maintain satisfactory relationships with landlords
and other licensors with respect to existing locations; governmental
initiatives such as minimum wage rates, taxes and possible franchise
legislation; the ability of the Company to successfully identify,
acquire and integrate salons 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 target 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 in the Company's Annual Report on Form 10-K for the year
ended June 30, 2011. 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, 2012 and 2011 | (In thousands, except per share data) |
| |
| June 30, | | | 2012 |
| 2011 | | |
(Unaudited)
| | | ASSETS | | | | |
Current assets:
| | | | |
Cash and cash equivalents
| |
$
|
111,943
| |
$
|
96,263
|
Receivables, net
| | |
31,578
| | |
27,149
|
Inventories
| | |
148,441
| | |
150,804
|
Deferred income taxes
| | |
17,395
| | |
17,887
|
Income tax receivable
| | |
14,098
| | |
22,341
|
Other current assets
| |
|
61,222
| |
|
32,118
|
Total current assets
| | |
384,677
| | |
346,562
| | | | |
|
Property and equipment, net
| | |
323,060
| | |
347,811
|
Goodwill
| | |
536,655
| | |
680,512
|
Other intangibles, net
| | |
101,790
| | |
111,328
|
Investment in and loans to affiliates
| | |
166,176
| | |
261,140
|
Other assets
| |
|
59,488
| |
|
58,400
| | | | |
|
Total assets
| |
$
|
1,571,846
| |
$
|
1,805,753
| | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | |
Current liabilities:
| | | | |
Long-term debt, current portion
| |
$
|
28,937
| |
$
|
32,252
|
Accounts payable
| | |
50,454
| | |
55,107
|
Accrued expenses
| |
|
172,582
| |
|
167,321
|
Total current liabilities
| | |
251,973
| | |
254,680
| | | | |
|
Long-term debt and capital lease obligations
| | |
258,737
| | |
281,159
|
Other noncurrent liabilities
| |
|
171,979
| |
|
237,295
|
Total liabilities
| |
|
682,689
| |
|
773,134
| | | | |
|
Commitments and contingencies
| | | | | | | | |
|
Shareholders' equity:
| | | | |
Common stock, $0.05 par value; issued and outstanding 57,415,241 and
57,710,811 common shares at June 30, 2012 and 2011, respectively
| | |
2,871
| | |
2,886
|
Additional paid-in capital
| | |
346,943
| | |
341,190
|
Accumulated other comprehensive income
| | |
55,114
| | |
77,946
|
Retained earnings
| |
|
484,229
| |
|
610,597
| | | | |
|
Total shareholders' equity
| |
|
889,157
| |
|
1,032,619
| | | | |
|
Total liabilities and shareholders' equity
| |
$
|
1,571,846
| |
$
|
1,805,753
| | | | | | |
|
|
| REGIS CORPORATION (NYSE: RGS) CONSOLIDATED
STATEMENT OF OPERATIONS (In thousands, except per
share data) | | | |
| | | | Three Months Ended June 30, | | | Year Ended June 30, | | | 2012 | |
| 2011 | | | 2012 | |
| 2011 | | |
(Unaudited)
| | |
(Unaudited)
| | |
(Unaudited)
| | | | |
Revenues:
| | | | | | | | | | | | |
Service
|
$
| |
429,502
| | |
$
|
452,397
| | |
$
|
1,712,703
| | |
$
|
1,762,974
| |
Product
| |
128,325
| | |
129,415
| | |
520,467
| | |
523,194
| |
Royalties and fees
| |
10,341
| | |
10,173
| | |
40,609
| | |
39,701
| | | |
568,168
| | |
591,985
| | |
2,273,779
| | |
2,325,869
| |
Operating expenses:
| | | | | | | | | | | | |
Cost of service
| |
246,423
| | |
258,288
| | |
985,154
| | |
1,012,868
| |
Cost of product
| |
62,377
| | |
61,910
| | |
249,655
| | |
249,979
| |
Site operating expenses
| |
49,010
| | |
47,594
| | |
198,725
| | |
197,722
| |
General and administrative
| |
74,564
| | |
103,545
| | |
302,572
| | |
339,857
| |
Rent
| |
86,517
| | |
87,552
| | |
340,805
| | |
342,286
| |
Depreciation and amortization
| |
25,561
| | |
25,942
| | |
118,071
| | |
105,109
| |
Goodwill impairment
| |
67,684
| | |
-
| | |
146,110
| | |
74,100
| |
Total operating expenses
| |
612,136
| | |
584,831
| | |
2,341,092
| | |
2,321,921
| | | | | | | | | | | | | |
|
Operating (loss) income
| |
(43,968
|
)
| |
7,154
| | |
(67,313
|
)
| |
3,948
| | | | | | | | | | | | | |
|
Other income (expense):
| | | | | | | | | | | | |
Interest expense
| |
(6,892
|
)
| |
(8,390
|
)
| |
(28,245
|
)
| |
(34,388
|
)
|
Interest income and other, net
| |
1,032
| | |
2,081
| | |
5,130
| | |
4,811
| |
(Loss) income from continuing operations before income taxes and
equity in (loss) income of affiliated companies
| |
(49,828
|
)
| |
845
| | |
(90,428
|
)
| |
(25,629
|
)
|
Income taxes
| |
10,549
| | |
(20,182
|
)
| |
5,279
| | |
9,496
| |
Equity in (loss) income of affiliated companies, net of income taxes
| |
(24,355
|
)
| |
2,942
| | |
(30,043
|
)
| |
7,228
| |
Loss from continuing operations
| |
$
|
(63,634
|
)
| |
$
|
(16,395
|
)
| |
$
|
(115,192
|
)
| |
$
|
(8,905
|
)
| | | | | | | | | | | | |
|
Income from discontinued operations, net of tax
| |
-
| | |
-
| | |
1,099
| | |
-
| | | | | | | | | | | | | |
|
Net loss
| |
$
|
(63,634
|
)
| |
$
|
(16,395
|
)
| |
$
|
(114,093
|
)
| |
$
|
(8,905
|
)
| | | | | | | | | | | | |
|
Net loss per share:
| | | | | | | | | | | | |
Basic:
| | | | | | | | | | | | |
Loss from continuing operations
| |
$
|
(1.11
|
)
| |
$
|
(0.29
|
)
| |
$
|
(2.02
|
)
| |
$
|
(0.16
|
)
|
Income from discontinued operations, net of tax
| |
-
| | |
-
| | |
0.02
| | |
-
| |
Net loss per share, basic(1)
| |
$
|
(1.11
|
)
| |
$
|
(0.29
|
)
| |
$
|
(2.00
|
)
| |
$
|
(0.16
|
)
|
Diluted:
| | | | | | | | | | | | |
Loss from continuing operations
| |
$
|
(1.11
|
)
| |
$
|
(0.29
|
)
| |
$
|
(2.02
|
)
| |
$
|
(0.16
|
)
|
Income from discontinued operations, net of tax
| |
-
| | |
-
| | |
0.02
| | |
-
| |
Net loss per share, diluted(1)
| |
$
|
(1.11
|
)
| |
$
|
(0.29
|
)
| |
$
|
(2.00
|
)
| |
$
|
(0.16
|
)
| | | | | | | | | | | | |
|
Weighted average common and common equivalent shares outstanding:
| | | | | | | | | | | | |
Basic
| |
57,229
| | |
56,800
| | |
57,137
| | |
56,704
| |
Diluted
| |
57,229
| | |
56,800
| | |
57,137
| | |
56,704
| | | | | | | | | | | | | |
|
Cash dividends declared per common share
| |
$
|
0.06
| | |
$
|
0.06
| | |
$
|
0.24
| | |
$
|
0.20
| |
|
(1) Total is a recalculation; line items calculated individually
may not sum to total.
|
|
| | |
| REGIS CORPORATION (NYSE: RGS) SELECTED CASH FLOW
DATA (In thousands) | | | | |
| |
| Year Ended June 30, | | | | 2012 | |
| 2011 | | | |
(Unaudited)
| | | | | | | | | | | | | |
|
Net cash provided by operating activities
| |
$
|
153,700
| | |
$
|
229,178
| |
Net cash used in investing activities
| |
|
(90,859
|
)
| |
|
(144,330
|
)
|
Net cash used in financing activities
| |
|
(43,548
|
)
| |
|
(148,431
|
)
|
Effect of exchange rate changes on cash and cash equivalents
| |
|
(3,613
|
)
| |
|
7,975
| |
Increase (decrease) in cash and cash equivalents
| |
|
15,680
| | |
|
(55,608
|
)
|
Cash and cash equivalents:
| | | | | | | | |
Beginning of year
| |
|
96,263
| | |
|
151,871
| |
End of year
| |
$
|
111,943
| | |
$
|
96,263
| | | | | | | | | |
|
| REGIS CORPORATION (NYSE: RGS) Salon and Hair
Restoration Center Counts and Revenues | |
| | |
| | | SYSTEM-WIDE LOCATIONS: | | June 30, 2012 | | | June 30, 2011 | | | | | | | |
|
Company-owned salons
| |
7,722
| | |
7,883
| |
Franchise salons
| |
2,016
| | |
1,936
| |
Company-owned hair restoration centers
| |
69
| | |
67
| |
Franchise hair restoration centers
| |
29
| | |
29
| |
Ownership interest locations
| |
2,811
| | |
2,786
| |
Total, system-wide
| |
12,647
| | |
12,701
| | | | | | | |
| SALON LOCATION SUMMARY | | | | | | | | | | | | |
| NORTH AMERICAN SALONS: | | June 30, 2012 | | | June 30, 2011 | | REGIS SALONS | | | | | | |
Open at beginning of period
| |
1,023
| | |
1,049
| |
Salons constructed
| |
12
| | |
12
| |
Acquired
| |
-
| | |
9
| |
Less relocations
| |
(9
|
)
| |
(10
|
)
|
Salon openings
| |
3
| | |
11
| |
Conversions
| |
-
| | |
(1
|
)
|
Salons closed
| |
(73
|
)
| |
(36
|
)
|
Total, Regis Salons
| |
953
| | |
1,023
| | | | | | | |
| MASTERCUTS | | | | | | |
Open at beginning of period
| |
588
| | |
600
| |
Salons constructed
| |
11
| | |
6
| |
Acquired
| |
-
| | |
-
| |
Less relocations
| |
(9
|
)
| |
(5
|
)
|
Salon openings
| |
2
| | |
1
| |
Conversions
| |
-
| | |
1
| |
Salons closed
| |
(21
|
)
| |
(14
|
)
|
Total, MasterCuts Salons
| |
569
| | |
588
| | | | | | | |
| SMARTSTYLE/COST CUTTERS IN WALMART | | | | | | |
Company-owned salons:
| | | | | | |
Open at beginning of period
| |
2,393
| | |
2,374
| |
Salons constructed
| |
50
| | |
65
| |
Acquired
| |
-
| | |
-
| |
Franchise buybacks
| |
-
| | |
-
| |
Less relocations
| |
(1
|
)
| |
(1
|
)
|
Salon openings
| |
49
| | |
64
| |
Conversions
| |
-
| | |
-
| |
Salons closed
| |
(1
|
)
| |
(45
|
)
|
Total company-owned salons
| |
2,441
| | |
2,393
| | | | | | | |
|
Franchise salons:
| | | | | | |
Open at beginning of period
| |
120
| | |
119
| |
Salons constructed
| |
2
| | |
3
| |
Acquired
| |
-
| | |
-
| |
Less relocations
| |
-
| | |
-
| |
Salon openings
| |
2
| | |
3
| |
Conversions
| |
-
| | |
-
| |
Franchise buybacks
| |
-
| | |
-
| |
Salons closed
| |
-
| | |
(2
|
)
|
Total franchise salons
| |
122
| | |
120
| | | | | | | |
|
Total, SmartStyle/Cost Cutters in Walmart Salons
| |
2,563
| | |
2,513
| | | | | | | |
| | | June 30, 2012 | | | June 30, 2011 | | SUPERCUTS | | | | | | |
Company-owned salons:
| | | | | | |
Open at beginning of period
| |
1,158
| | |
1,100
| |
Salons constructed
| |
65
| | |
24
| |
Acquired
| |
1
| | |
-
| |
Franchise buybacks
| |
5
| | |
73
| |
Less relocations
| |
(9
|
)
| |
(3
|
)
|
Salon openings
| |
62
| | |
94
| |
Conversions
| |
56
| | |
13
| |
Salons closed
| |
(48
|
)
| |
(49
|
)
|
Total company-owned salons
| |
1,228
| | |
1,158
| | | | | | | |
|
Franchise salons:
| | | | | | |
Open at beginning of period
| |
987
| | |
1,034
| |
Salons constructed
| |
68
| | |
43
| |
Acquired
| |
-
| | |
-
| |
Less relocations
| |
(3
|
)
| |
(7
|
)
|
Salon openings
| |
65
| | |
36
| |
Conversions
| |
5
| | |
10
| |
Franchise buybacks
| |
(5
|
)
| |
(73
|
)
|
Salons closed
| |
(12
|
)
| |
(20
|
)
|
Total franchise salons
| |
1,040
| | |
987
| | | | | | | |
|
Total, Supercuts Salons
| |
2,268
| | |
2,145
| | | | | | | |
| PROMENADE | | | | | | |
Company-owned salons:
| | | | | | |
Open at beginning of period
| |
2,321
| | |
2,382
| |
Salons constructed
| |
53
| | |
26
| |
Acquired
| |
-
| | |
18
| |
Franchise buybacks
| |
6
| | |
5
| |
Less relocations
| |
(10
|
)
| |
(10
|
)
|
Salon openings
| |
49
| | |
39
| |
Conversions
| |
(56
|
)
| |
(14
|
)
|
Salons sold to franchisees
| |
(7
|
)
| |
-
| |
Salons closed
| |
(174
|
)
| |
(86
|
)
|
Total company-owned salons
| |
2,133
| | |
2,321
| | | | | | | |
|
Franchise salons:
| | | | | | |
Open at beginning of period
| |
829
| | |
867
| |
Salons constructed
| |
40
| | |
21
| |
Acquired (2)
| |
31
| | |
-
| |
Salons purchased from the Company
| |
7
| | |
-
| |
Less relocations
| |
(3
|
)
| |
(7
|
)
|
Salon openings
| |
75
| | |
14
| |
Conversions
| |
(5
|
)
| |
(9
|
)
|
Franchise buybacks
| |
(6
|
)
| |
(5
|
)
|
Salons closed
| |
(39
|
)
| |
(38
|
)
|
Total franchise salons
| |
854
| | |
829
| | | | | | | |
|
Total, Promenade Salons
| |
2,987
| | |
3,150
| | | | | | | |
| | | June 30, 2012 | | | June 30, 2011 | | INTERNATIONAL SALONS (1) | | | | | | |
Company-owned salons:
| | | | | | |
Open at beginning of period
| |
400
| | |
404
| |
Salons constructed
| |
18
| | |
13
| |
Acquired
| |
1
| | |
-
| |
Franchise buybacks
| |
-
| | |
-
| |
Less relocations
| |
(5
|
)
| |
(2
|
)
|
Salon openings
| |
14
| | |
11
| |
Conversions
| |
-
| | |
-
| |
Salons closed
| |
(16
|
)
| |
(15
|
)
|
Total company-owned salons
| |
398
| | |
400
| | | |
| | |
| |
Total franchise salons
| |
-
| | |
-
| | | | | | | |
|
Total, International Salons
| |
398
| | |
400
| | | | | | | |
| TOTAL SYSTEM-WIDE SALONS: | | | | | | |
Company-owned salons:
| | | | | | |
Open at beginning of period
| |
7,883
| | |
7,909
| |
Salons constructed
| |
209
| | |
146
| |
Acquired
| |
2
| | |
27
| |
Franchise buybacks
| |
11
| | |
78
| |
Less relocations
| |
(43
|
)
| |
(31
|
)
|
Salon openings
| |
179
| | |
220
| |
Conversions
| |
-
| | |
(1
|
)
|
Salons sold to franchisees
| |
(7
|
)
| |
-
| |
Salons closed
| |
(333
|
)
| |
(245
|
)
|
Total company-owned salons
| |
7,722
| | |
7,883
| | | | | | | |
|
Franchise salons:
| | | | | | |
Open at beginning of period
| |
1,936
| | |
2,020
| |
Salons constructed
| |
110
| | |
67
| |
Acquired (2)
| |
31
| | |
-
| |
Salons purchased from the Company
| |
7
| | |
-
| |
Less relocations
| |
(6
|
)
| |
(14
|
)
|
Salon openings
| |
142
| | |
53
| |
Conversions
| |
-
| | |
1
| |
Franchise buybacks
| |
(11
|
)
| |
(78
|
)
|
Salons sold
| |
-
| | |
-
| |
Salons closed
| |
(51
|
)
| |
(60
|
)
|
Total franchise salons
| |
2,016
| | |
1,936
| | | | | | | |
|
Total Salons
| |
9,738
| | |
9,819
| | | | | | | |
| | | June 30, 2012 | | | June 30, 2011 | | HAIR RESTORATION CENTERS: | | | | | | |
Company-owned hair restoration centers:
| | | | | | |
Open at beginning of period
| |
67
| | |
62
| |
Salons constructed
| |
6
| | |
3
| |
Acquired
| |
-
| | |
-
| |
Franchise buybacks
| |
-
| | |
4
| |
Less relocations
| |
(3
|
)
| |
(1
|
)
|
Salon openings
| |
3
| | |
6
| |
Conversions
| |
-
| | |
-
| |
Sites closed
| |
(1
|
)
| |
(1
|
)
|
Total company-owned hair restoration centers
| |
69
| | |
67
| | | | | | | |
|
Franchise hair restoration centers:
| | | | | | |
Open at beginning of period
| |
29
| | |
33
| |
Salons constructed
| |
-
| | |
-
| |
Acquired
| |
-
| | |
-
| |
Less relocations
| |
-
| | |
-
| |
Salon openings
| |
-
| | |
-
| |
Franchise buybacks
| |
-
| | |
(4
|
)
|
Sites closed
| |
-
| | |
-
| |
Total franchise hair restoration centers
| |
29
| | |
29
| | | | | | | |
|
Total Hair Restoration Centers
| |
98
| | |
96
| | | | | | | |
|
Ownership interest locations
| |
2,811
| | |
2,786
| | | |
| | |
| |
Grand Total, System-wide
| |
12,647
| | |
12,701
| | | | | | | |
|
(1)
|
|
Canadian and Puerto Rican salons are included in the Regis Salons,
MasterCuts, SmartStyle, Supercuts, and Promenade concepts and not
included in the International salon totals.
|
(2)
| |
Represents the acquisition of a franchise network.
|
|
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 | | | | 2012 | |
| 2011 | | | 2012 | |
| 2011 | | (Dollars in thousands) | |
(Unaudited)
| | |
(Unaudited)
| | |
(Unaudited)
| | | | |
North American salons:
| | | | | | | | | | | | | | | | |
Regis
| |
$
|
99,749
| | |
$
|
108,227
| | |
$
|
414,752
| | |
$
|
434,249
| |
MasterCuts
| |
|
38,327
| | |
|
40,609
| | |
|
159,627
| | |
|
165,729
| |
SmartStyle
| |
|
125,872
| | |
|
131,820
| | |
|
514,050
| | |
|
531,090
| |
Supercuts
| |
|
88,432
| | |
|
84,165
| | |
|
343,764
| | |
|
321,881
| |
Promenade
| |
|
135,487
| | |
|
146,902
| | |
|
548,912
| | |
|
576,995
| |
Total North American salons
| |
|
487,867
| | |
|
511,723
| | |
|
1,981,105
| | |
|
2,029,944
| | | | | | | | | | | | | | | | | |
|
International salons
| |
|
40,975
| | |
|
42,567
| | |
|
141,122
| | |
|
150,237
| |
Hair restoration centers
| |
|
39,326
| | |
|
37,695
| | |
|
151,552
| | |
|
145,688
| |
Consolidated revenues
| |
|
568,168
| | |
$
|
591,985
| | |
$
|
2,273,779
| | |
$
|
2,325,869
| | | | | | | | | | | | | | | | | |
|
Percent change from prior year
| |
|
(4.0
|
)%
| |
|
0.3
|
%
| |
|
(2.2
|
)%
| |
|
(1.4
|
)%
| | | | | | | | | | | | | | | | |
|
Same-store sales decrease(1)
| |
|
(3.0
|
)%
| |
|
(1.7)
|
%
| |
|
(3.1
|
)%
| |
|
(1.7
|
)%
| | | | | | | | | | | | | | | | |
|
(1)
|
|
Same-store sales are calculated on a daily basis as the total change
in sales for company-owned locations which were open on a specific
day of the week during the current period and the corresponding
prior period. Quarterly and year-to-date 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.
| | |
|
| FINANCIAL INFORMATION BY SEGMENT: |
Financial information concerning the Company's salon and hair
restoration businesses is shown in the following tables.
|
|
| | | | | For the Three Months Ended June 30, 2012 (Unaudited) | | | | |
|
| Hair |
|
| | |
| | | | | Salons | | | Restoration | | | Unallocated | | | | | (Dollars in thousands) | | North America | |
| International | | | Centers | | | Corporate | | | Consolidated | |
Revenues:
| | | | | | | | | | | | | | | |
Service
| |
$ 381,431
| | |
$ 30,445
| | |
$ 17,626
| | |
$ -
| | |
$ 429,502
| |
Product
| |
96,692
| | |
10,530
| | |
21,103
| | |
-
| | |
128,325
| |
Royalties and fees
| |
9,744
| | |
-
| | |
597
| | |
-
| | |
10,341
| | | |
487,867
| | |
40,975
| | |
39,326
| | |
-
| | |
568,168
| |
Operating expenses:
| | | | | | | | | | | | | | | |
Cost of service
| |
219,249
| | |
16,050
| | |
11,124
| | |
-
| | |
246,423
| |
Cost of product
| |
49,908
| | |
4,833
| | |
7,636
| | |
-
| | |
62,377
| |
Site operating expenses
| |
44,448
| | |
2,854
| | |
1,708
| | |
-
| | |
49,010
| |
General and administrative
| |
28,474
| | |
3,163
| | |
9,111
| | |
33,816
| | |
74,564
| |
Rent
| |
72,204
| | |
11,452
| | |
2,343
| | |
518
| | |
86,517
| |
Depreciation and amortization
| |
16,573
| | |
1,476
| | |
3,299
| | |
4,213
| | |
25,561
| |
Goodwill impairment
| |
67,684
| | |
-
| | |
-
| | |
-
| | |
67,684
| |
Total operating expenses
| |
498,540
| | |
39,828
| | |
35,221
| | |
38,547
| | |
612,136
| | | | | | | | | | | | | | | | |
|
Operating (loss) income
| |
(10,673
|
)
| |
1,147
| | |
4,105
| | |
(38,547
|
)
| |
(43,968
|
)
| | | | | | | | | | | | | | | |
|
Other income (expense):
| | | | | | | | | | | | | | | |
Interest expense
| |
-
| | |
-
| | |
-
| | |
(6,892
|
)
| |
(6,892
|
)
|
Interest income and other, net
| |
-
| | |
-
| | |
-
| | |
1,032
| | |
1,032
| |
(Loss) income from continuing operations before income taxes and
equity in (loss) income of affiliated companies
| |
$ (10,673
|
)
| |
$ 1,147
| | |
$ 4,105
| | |
$ (44,407
|
)
| |
$ (49,828
|
)
| | | | | | | | | | | | | | | |
|
|
| | | | | For the Three Months Ended June 30, 2011 (Unaudited) | | | | |
|
| Hair |
|
| | |
| | | | | Salons | | | Restoration | | | Unallocated | | | | | (Dollars in thousands) | | North America |
|
| International | | | Centers | | | Corporate | | | Consolidated | |
Revenues:
| | | | | | | | | | | | | | | |
Service
| |
$
|
403,982
| | |
$
|
31,187
| | |
$
|
17,228
| | |
$
|
-
| | |
$ 452,397
| |
Product
| | |
98,160
| | | |
11,380
| | | |
19,875
| | | |
-
| | |
129,415
| |
Royalties and fees
| |
|
9,581
| | |
|
-
| | |
|
592
| | |
|
-
| | |
10,173
| | | |
|
511,723
| | |
|
42,567
| | |
|
37,695
| | |
|
-
| | |
591,985
| |
Operating expenses:
| | | | | | | | | | | | | | | |
Cost of service
| | |
232,086
| | | |
16,018
| | | |
10,184
| | | |
-
| | |
258,288
| |
Cost of product
| | |
48,996
| | | |
6,235
| | | |
6,679
| | | |
-
| | |
61,910
| |
Site operating expenses
| | |
43,552
| | | |
2,825
| | | |
1,217
| | | |
-
| | |
47,594
| |
General and administrative
| | |
29,147
| | | |
3,504
| | | |
9,676
| | | |
61,218
| | |
103,545
| |
Rent
| | |
72,830
| | | |
11,844
| | | |
2,352
| | | |
526
| | |
87,552
| |
Depreciation and amortization
| |
|
16,761
| | |
|
1,433
| | |
|
3,451
| | |
|
4,297
| | |
25,942
| |
Total operating expenses
| |
|
443,372
| | |
|
41,859
| | |
|
33,559
| | |
|
66,041
| | |
584,831
| | | | | | | | | | | | | | | | |
|
Operating income (loss)
| | |
68,351
| | | |
708
| | | |
4,136
| | | |
(66,041
|
)
| |
7,154
| | | | | | | | | | | | | | | | |
|
Other income (expense):
| | | | | | | | | | | | | | | |
Interest expense
| | |
-
| | | |
-
| | | |
-
| | | |
(8,390
|
)
| |
(8,390
|
)
|
Interest income and other, net
| |
|
-
| | |
|
-
| | |
|
-
| | |
|
2,081
| | |
2,081
| |
Income (loss) from continuing operations before income taxes and
equity in income of affiliated companies
| |
$
|
68,351
| | |
$
|
708
| | |
$
|
4,136
| | |
$
|
(72,350
|
)
| |
$ 845
| | | | | | | | | | | | | | | | | | | | |
|
|
| | | | | For the Twelve Months Ended June 30, 2012 (Unaudited) | | | | |
|
| Hair | |
| | |
| | | | | Salons | | | Restoration | | | Unallocated | | | | | (Dollars in thousands) | | North America |
|
| International | | | Centers | | | Corporate | | | Consolidated | |
Revenues:
| | | | | | | | | | | | | | | |
Service
| |
$
|
1,541,491
| | |
$
|
102,400
| | |
$
|
68,812
| | |
$
|
-
| | |
$ 1,712,703
| |
Product
| | |
401,326
| | | |
38,722
| | | |
80,419
| | | |
-
| | |
520,467
| |
Royalties and fees
| |
|
38,288
| | |
|
-
| | |
|
2,321
| | |
|
-
| | |
40,609
| | | |
|
1,981,105
| | |
|
141,122
| | |
|
151,552
| | |
|
-
| | |
2,273,779
| |
Operating expenses:
| | | | | | | | | | | | | | | |
Cost of service
| | |
888,777
| | | |
53,684
| | | |
42,693
| | | |
-
| | |
985,154
| |
Cost of product
| | |
201,625
| | | |
20,010
| | | |
28,020
| | | |
-
| | |
249,655
| |
Site operating expenses
| | |
182,524
| | | |
9,722
| | | |
6,479
| | | |
-
| | |
198,725
| |
General and administrative
| | |
113,952
| | | |
12,024
| | | |
36,436
| | | |
140,160
| | |
302,572
| |
Rent
| | |
292,192
| | | |
37,880
| | | |
9,036
| | | |
1,697
| | |
340,805
| |
Depreciation and amortization
| | |
68,983
| | | |
5,297
| | | |
13,101
| | | |
30,690
| | |
118,071
| |
Goodwill impairment
| |
|
67,684
| | |
|
-
| | |
|
78,426
| | |
|
-
| | |
146,110
| |
Total operating expenses
| |
|
1,815,737
| | |
|
138,617
| | |
|
214,191
| | |
|
172,547
| | |
2,341,092
| | | | | | | | | | | | | | | | |
|
Operating income (loss)
| | |
165,368
| | | |
2,505
| | | |
(62,639
|
)
| | |
(172,547
|
)
| |
(67,313
|
)
| | | | | | | | | | | | | | | |
|
Other income (expense):
| | | | | | | | | | | | | | | |
Interest expense
| | |
-
| | | |
-
| | | |
-
| | | |
(28,245
|
)
| |
(28,245
|
)
|
Interest income and other, net
| |
|
-
| | |
|
-
| | |
|
-
| | |
|
5,130
| | |
5,130
| |
Income (loss) from continuing operations before income taxes and
equity in (loss) income of affiliated companies
| |
$
|
165,368
| | |
$
|
2,505
| | |
$
|
(62,639
|
)
| |
$
|
(195,662
|
)
| |
$ (90,428
|
)
| | | | | | | | | | | | | | | | | | | |
|
|
| | | | | For the Twelve Months Ended June 30, 2011 | | | | |
|
| Hair |
|
| | |
| | | | | Salons | | | Restoration | | | Unallocated | | | | | (Dollars in thousands) | | North America |
|
| International | | | Centers | | | Corporate | | | Consolidated | |
Revenues:
| | | | | | | | | | | | | | | |
Service
| |
$
|
1,588,690
| | |
$
|
106,734
| | |
$
|
67,550
| | |
$
|
-
| | |
$ 1,762,974
| |
Product
| | |
403,962
| | | |
43,503
| | | |
75,729
| | | |
-
| | |
523,194
| |
Royalties and fees
| |
|
37,292
| | |
|
-
| | |
|
2,409
| | |
|
-
| | |
39,701
| | | |
|
2,029,944
| | |
|
150,237
| | |
|
145,688
| | |
|
-
| | |
2,325,869
| |
Operating expenses:
| | | | | | | | | | | | | | | |
Cost of service
| | |
919,526
| | | |
54,213
| | | |
39,129
| | | |
-
| | |
1,012,868
| |
Cost of product
| | |
201,560
| | | |
23,631
| | | |
24,788
| | | |
-
| | |
249,979
| |
Site operating expenses
| | |
183,552
| | | |
9,852
| | | |
4,318
| | | |
-
| | |
197,722
| |
General and administrative
| | |
122,281
| | | |
12,630
| | | |
37,038
| | | |
167,908
| | |
339,857
| |
Rent
| | |
292,479
| | | |
38,423
| | | |
9,227
| | | |
2,157
| | |
342,286
| |
Depreciation and amortization
| | |
69,763
| | | |
4,750
| | | |
12,958
| | | |
17,638
| | |
105,109
| |
Goodwill impairment
| |
|
74,100
| | |
|
-
| | |
|
-
| | |
|
-
| | |
74,100
| |
Total operating expenses
| |
|
1,863,261
| | |
|
143,499
| | |
|
127,458
| | |
|
187,703
| | |
2,321,921
| | | | | | | | | | | | | | | | |
|
Operating income (loss)
| | |
166,683
| | | |
6,738
| | | |
18,230
| | | |
(187,703
|
)
| |
3,948
| | | | | | | | | | | | | | | | |
|
Other income (expense):
| | | | | | | | | | | | | | | |
Interest expense
| | |
-
| | | |
-
| | | |
-
| | | |
(34,388
|
)
| |
(34,388
|
)
|
Interest income and other, net
| |
|
-
| | |
|
-
| | |
|
-
| | |
|
4,811
| | |
4,811
| |
Income (loss) from continuing operations before income taxes and
equity in income of affiliated companies
| |
$
|
166,683
| | |
$
|
6,738
| | |
$
|
18,230
| | |
$
|
(217,280
|
)
| |
$ (25,629
|
)
| | | | | | | | | | | | | | | | | | | |
|
Non-GAAP Reconciliations We believe our presentation of
non-GAAP operating income, net income and net income per diluted share
provides meaningful insight into our ongoing operating performance and
an alternative perspective of our results of operations. Presentation of
the non-GAAP measures allows investors to review our core ongoing
operating performance business from the same perspective as management
and Board of Directors. These non-GAAP financial measures provide
investors an enhanced understanding of our operations, facilitate
investors' analysis and comparisons of our current and past results of
operations and provide insight into the prospects of our future
performance. We also believe that the non-GAAP measures are useful to
investors because they provide supplemental information that research
analysts frequently use to analyze financial performance.
The method we use to produce non-GAAP results is not in accordance with
U.S. GAAP and may differ from methods used by other companies. These
non-GAAP results should not be regarded as a substitute for the
corresponding U.S. GAAP measures but instead should be utilized as a
supplemental measure of operating performance in evaluating our
business. Non-GAAP measures do have limitations in that they do not
reflect certain items that may have a material impact upon our reported
financial results. As such, these non-GAAP measures should be viewed in
conjunction with both our financial statements prepared in accordance
with U.S. GAAP and the reconciliation of the selected U.S. GAAP to
non-GAAP financial measures, which are located in the Investor
Information section of the corporate website at www.regiscorp.com.
Non-GAAP reconciling items for the three and twelve months ended June
30, 2012 and 2011:
The following information is provided to give qualitative and
quantitative information related to items impacting comparability. Items
impacting comparability are not defined terms within U.S. GAAP.
Therefore, our non-GAAP financial information may not be comparable to
similarly titled measures reported by other companies. We determine
which items to consider as "items impacting comparability" based on how
management views our business, makes financial, operating and planning
decisions and evaluates the Company's ongoing performance.
Self-insurance reserves adjustments – We have excluded the
self-insurance reserves adjustments associated with our prior year
reserves from our non-GAAP results. During the three and twelve months
ended June 30, 2012, we incurred expense of $0.9 million. During the
three and twelve months ended June 30, 2011, we incurred expense of $1.2
million.
Sales and use tax audit accrual adjustment – We have excluded a
sales and use tax audit accrual adjustment from our non-GAAP results.
During the three and twelve months ended June 30, 2011, we recorded a
benefit of $1.7 million.
Senior management restructure and severance charges – We have
excluded expense associated with senior management restructuring and
other related severance charges from our non-GAAP results. During the
three and twelve months ended June 30, 2012 and 2011, we incurred
expense of $1.9 and $9.8 million and $2.4 and $4.3 million,
respectively, associated with senior management restructuring and other
severance charges.
Professional fees – We have excluded expenses associated with the
pending sale of the Hair Restoration Centers and our fiscal year 2011
contested proxy from our non-GAAP results. During the three and twelve
months ended June 30, 2012, we incurred $2.2 and $4.9 million,
respectively, of expense associated with the pending sale of the Hair
Restoration Centers and advisory fees and other costs associated with
the fiscal year 2011 contested proxy.
Field restructure and other – We have excluded expenses
associated with other one-time field restructuring charges from our
non-GAAP results. During the three and twelve months ended June 30,
2012, we incurred expense of $2.8 million associated with our field
restructuring.
Deferred compensation – We have excluded expense associated with
amending our deferred compensation plan from our non-GAAP results.
During the three and twelve months ended June 30, 2012, we incurred
expense of $1.8 million associated with amending our deferred
compensation plan such that the benefits are based on years of service
and the employees' compensation as of June 30, 2012.
Pure Beauty note receivable (recovery) reserve – We have excluded
the bad debt recovery and valuation reserve associated with the
outstanding note receivable with Pure Beauty from our non-GAAP results.
During the three and twelve months ended June 30, 2012, we recorded $0.8
million for the recovery of bad debt previously recorded on the
outstanding note receivable with Pure Beauty. We recorded valuation
reserves of $22.2 and $31.2 million, respectively, during the three and
twelve months ended June 30, 2011.
Legal settlements – We have excluded income and expense
associated with legal settlements from our non-GAAP results. During the
twelve months ended June 30, 2012 we recorded income of $1.1 million
associated with a legal settlement. During the three and twelve months
ended June 30, 2011, we incurred expense of $2.4 million associated with
a legal settlement.
Strategic alternative costs – We have excluded the fees
associated with our exploration of strategic alternatives during our
second quarter of fiscal year 2011 from our non-GAAP results. During the
twelve months ended June 30, 2011, we incurred $1.3 million of expense
related to the exploration of strategic alternatives.
Point-of-sale system accelerated depreciation – We have excluded
the accelerated depreciation we recorded related to our point-of-sale
system from our non-GAAP results. During the twelve months ended June
30, 2012, we recorded $16.1 million in accelerated depreciation related
to our point-of-sale system.
Goodwill impairment – We have excluded the goodwill impairment
charges we recorded related to our Hair Restoration Centers reportable
segment, our Regis salon concept, and our Promenade salon concept from
our non-GAAP results. The Company recorded goodwill impairment charges
of $67.7 million related to our Regis salon concept during the three
months ended June 30, 2012. The Company recorded goodwill impairment
charges of $67.7 million and $78.4 million related to our Regis salon
concept and Hair Restoration Centers' reportable segment, respectively,
during the twelve months ended June 30, 2012. The Company recorded a
goodwill impairment charge of $74.1 million related to our Promenade
salon concept during the twelve months ended June 30, 2011.
Tax provision adjustments – The non-GAAP tax provision
adjustments are due to the change in non-GAAP taxable income as compared
to U.S. GAAP taxable income or loss, resulting from the non-GAAP
reconciling items addressed herein. The non-GAAP tax provision
adjustments are made to reflect the year-to-date non-GAAP tax rate for
each period.
Empire Education Group ("EEG") impairment and non-operational charges
recorded by EEG– We have excluded the impairment recorded on our
investment in EEG and non-operational charges recorded by EEG from our
non-GAAP results. The Company recorded an other than temporary
impairment charge of approximately $19.4 million during the three and
twelve months ended June 30, 2012 as a result of a decrease in the fair
value of the Company's investment in EEG. In addition, the Company
recorded an additional $8.7 million of expense primarily related to
non-operational charges recorded by EEG for intangible asset impairments.
Provalliance impairment, equity put liability, and non-operational
charges recorded by Provalliance – We have excluded the impairment
recorded on our investment in Provalliance, partially offset by the gain
recorded for the reduction in the fair value of the equity put option
associated with our Provalliance equity method investment and
non-operational charges recorded by Provalliance from our non-GAAP
results. The Company recorded an other than temporary impairment charge
of approximately $0.3 and $37.4 million during the three and twelve
months ended June 30, 2012, respectively, as a result of the Company
entering into an agreement to sell its 46.7 percent interest in
Provalliance for EUR 80 million. As a result of the expected sale, the
Company recorded a gain of approximately $20.2 million during the twelve
months ended June 30, 2012 for the decrease in the fair value of the
equity put option associated with the Provalliance. In addition, the
Company recorded an additional $0.8 million of expense primarily related
to non-operational charges recorded by Provalliance. The Company
recorded a gain of approximately $3.6 million during the twelve months
ended June 30, 2011 for the settlement of a portion of an equity put
option associated with our Provalliance equity method investment from
our non-GAAP results.
MY Style impairment – We have excluded the impairment recorded
for our investment in MY Style from our non-GAAP results. Due to the
natural disasters in Japan that occurred in March 2011, we recorded an
other than temporary impairment for our investment in MY Style of $0.5
and $9.2 million, respectively, during the three and twelve months ended
June 30, 2011.
Release of income tax reserve related to discontinued operations – We
have excluded the tax benefit for the release of income tax reserves
related to our previous ownership in Trade Secret, Inc. operations from
our non-GAAP results. The Company recorded income of approximately $1.1
million during the twelve months ended June 30, 2012.
Weighted average shares adjustments – The non-GAAP weighted
average shares adjustments are due to the change in non-GAAP net income
as compared to the U.S. GAAP net income or loss, resulting from the
non-GAAP reconciling items addressed herein. Non-GAAP net income per
share reflects the weighted average shares associated with non-GAAP net
income, which includes the dilutive effect of common stock and
convertible share equivalents.
|
|
| |
|
| | REGIS CORPORATION | Reconciliation of selected U.S. GAAP to non-GAAP financial
measures | (In thousands, except per share data) | (unaudited) |
|
|
|
|
|
|
| Reconciliation of U.S. GAAP operating income and net income to
equivalent non-GAAP measures | | | | | | | Three Months Ended June 30, | | | | | U.S. GAAP financial line item | | | 2012 | |
| 2011 | | U.S. GAAP revenue | | | | | | $ | 568,168 | | | $ | 591,985 | | | | | | | |
| U.S. GAAP operating (loss) income | | | | | | $ | (43,968 |
)
| | $ | 7,154 | | | | | | | |
|
Non-GAAP operating expense adjustments:
| | | | | | | | | | |
Self-insurance reserves adjustments
| | |
Site operating expense
| | |
918
| | |
1,185
| |
Sales and use tax audit accrual adjustment
| | |
Site operating expense
| | |
-
| | |
(1,748
|
)
|
Field restructure and other
| | |
General and administrative
| | |
2,807
| | |
-
| |
Professional fees
| | |
General and administrative
| | |
2,204
| | |
-
| |
Senior management restructure
| | |
General and administrative
| | |
1,866
| | |
2,393
| |
Deferred compensation
| | |
General and administrative
| | |
1,808
| | |
-
| |
Self-insurance reserves adjustments
| | |
General and administrative
| | |
22
| | |
-
| |
Pure Beauty note receivable (recovery)/reserve
| | |
General and administrative
| | |
(805
|
)
| |
22,227
| |
Legal settlements
| | |
General and administrative
| | |
-
| | |
2,433
| |
Goodwill impairment
| | |
Goodwill impairment
| | |
67,684
| | |
-
| |
Total non-GAAP operating expense adjustments
| | | | | |
76,504
| | |
26,490
| | Non-GAAP operating income (2) | | | | | | $ | 32,536 | | | $ | 33,644 | | | | | | | |
| U.S. GAAP net loss | | | | | | $ | (63,634 |
)
| | $ | (16,395 |
)
| | | | | | |
|
Non-GAAP net income adjustments:
| | | | | | | | | | |
Non-GAAP operating expense adjustments
| | | | | |
76,504
| | |
26,490
| |
Tax provision adjustments (1)
| | |
Income taxes
| | |
(15,759
|
)
| |
12,297
| |
Empire Education Group impairment
| | |
Equity in (loss) income of affiliated companies, net of tax
| | |
28,157
| | |
-
| |
Provalliance impairment, equity put liability and non-operational
charges recorded by Provalliance
| | |
Equity in (loss) income of affiliated companies, net of tax
| | |
338
| | |
-
| |
MY Style impairment
| | |
Equity in (loss) income of affiliated companies, net of tax
| | |
-
| | |
516
| |
Total non-GAAP net income adjustments
| | | | | |
89,240
| | |
39,303
| | Non-GAAP net income | | | | | | $ | 25,606 | | | $ | 22,908 | |
|
| Notes: | | (1) | |
Based on a year-to-date tax rate analysis, the non-GAAP tax
provision was calculated to be approximately 37% for the three
months ended June 30, 2012 for all non-GAAP operating expense
adjustments, except the goodwill impairment. The goodwill
impairment had a tax benefit of approximately $12.5 million for
the three months ended June 30, 2012, as the charge is only
partially deductible for income tax purposes. The non-GAAP tax
rate for the three months ended June 30, 2012 was 19.5%. Based on
a projected statutory effective tax rate analysis, the non-GAAP
tax provision was calculated to be approximately 38% for the three
months ended June 30, 2011 for all non-GAAP operating expense
adjustment, except the goodwill impairment. The goodwill
impairment had a tax benefit of approximately $22.4 million for
the three months ended June 30, 2011, as the charge is only
partially deductible for income tax purposes.
| (2) | |
Operational operating margins for the three months ended June 30,
2012, and 2011, were 5.7% for both respective periods and are
calculated as non-GAAP operating income divided by U.S. GAAP revenue
for each respective period.
| | |
|
| REGIS CORPORATION | Reconciliation of selected U.S. GAAP to non-GAAP financial
measures | (In thousands, except per share data) | (unaudited) |
| Reconciliation of U.S. GAAP net income per diluted share to
non-GAAP net income per diluted share | |
| Three Months Ended June 30, | | | | 2012 | |
| 2011 | | U.S. GAAP net loss per diluted share | | $ | (1.112 |
)
| | $ | (0.289 |
)
|
Self-insurance reserves adjustments (1)
| |
0.009
| | |
0.011
| |
Sales and use tax audit accrual adjustment (1)
| |
-
| | |
(0.016
|
)
|
Field restructure and other (1)
| |
0.026
| | |
-
| |
Professional fees (1)
| |
0.020
| | |
-
| |
Senior management restructure (1)
| |
0.017
| | |
0.022
| |
Deferred compensation (1)
| |
0.017
| | |
-
| |
Pure Beauty note receivable (recovery)/reserve (1)
| |
(0.007
|
)
| |
0.201
| |
Legal settlements (1)
| |
-
| | |
0.022
| |
Goodwill impairment (1)
| |
0.805
| | |
0.329
| |
Empire Education Group impairment (1)
| |
0.411
| | |
-
| |
Provalliance impairment, equity put liability and non-operational
charges recorded by Provalliance (1)
| |
0.005
| | |
-
| |
MY Style impairment (1)
| |
-
| | |
0.008
| |
Dilutive effect under if-converted method (4)
| |
0.213
| | |
0.078
| | Non-GAAP net income per diluted share (2) (3) | | $ | 0.404 | | | $ | 0.366 | |
| U.S. GAAP weighted average shares – basic | | 57,229 | | | 56,800 | | U.S. GAAP weighted average shares - diluted | | 57,229 | | | 56,800 | | Non-GAAP weighted average shares – diluted (3) | | 68,562 | | | 68,271 | | | | | | | |
|
Notes: | | (1) | |
Based on a year-to-date tax rate analysis, the non-GAAP tax
provision was calculated to be approximately 37% for the three
months ended June 30, 2012 for all non-GAAP operating expense
adjustments, except the goodwill impairment. The goodwill impairment
had a tax benefit of approximately $12.5 million for the three
months ended June 30, 2012, as the charge is only partially
deductible for income tax purposes. The non-GAAP tax rate for the
three months ended June 30, 2012 was 19.5%. Based on a projected
statutory effective tax rate analysis, the non-GAAP tax provision
was calculated to be approximately 38% for the three months ended
June 30, 2011 for all non-GAAP operating expense adjustment, except
the goodwill impairment. The goodwill impairment had a tax benefit
of approximately $22.4 million for the three months ended June 30,
2011, as the charge is only partially deductible for income tax
purposes.
|
| (2) | |
For the three months ended June 30, 2012 and 2011 non-GAAP net
income per share, diluted has been calculated under the if-converted
method. For the three months ended June 30, 2012 and 2011, $2.1 and
$2.0 million, respectively, of after-tax interest on the convertible
debt is added to the non-GAAP net income to determine the non-GAAP
net income for diluted earnings per share.
|
| (3) | |
Non-GAAP net income per share reflects the weighted average shares
associated with non-GAAP net income, which includes the dilutive
effect of common stock and convertible share equivalents. The
earnings per share impact of the adjustments for the three months
ended June 30, 2012 included 0.1 million of common stock equivalents
and convertible share equivalents of 11.2 million of additional
shares under the if-converted method. The earnings per share impact
of the adjustments for the three months ended June 30, 2011 included
0.3 million of common stock equivalents and 11.2 million of
convertible share equivalents of additional shares under the
if-converted method.
| | |
|
|
|
| |
|
| | REGIS CORPORATION | Reconciliation of selected U.S. GAAP to non-GAAP financial
measures | (In thousands, except per share data) | (unaudited) |
|
|
|
|
|
|
| Reconciliation of U.S. GAAP operating income and net income to
equivalent non-GAAP measures | | | | | | | Twelve Months Ended June 30, | | | | | U.S. GAAP financial line item | | | 2012 | |
| 2011 | | U.S. GAAP revenue | | | | | | $ | 2,273,779 | | | $ | 2,325,869 | | | | | | | |
| U.S. GAAP operating (loss) income | | | | | | $ | (67,313 |
)
| | $ | 3,948 | | | | | | | |
|
Non-GAAP operating expense adjustments:
| | | | | | | | | | |
Self-insurance reserves adjustments
| | |
Site operating expense
| | |
918
| | |
1,185
| |
Sales and use tax audit accrual adjustment
| | |
Site operating expense
| | |
-
| | |
(1,748
|
)
|
Senior management restructure
| | |
General and administrative
| | |
9,810
| | |
4,299
| |
Professional fees
| | |
General and administrative
| | |
4,920
| | |
-
| |
Field restructure and other
| | |
General and administrative
| | |
2,807
| | |
-
| |
Deferred compensation
| | |
General and administrative
| | |
1,808
| | |
-
| |
Pure Beauty note receivable (recovery)/reserve
| | |
General and administrative
| | |
(805
|
)
| |
31,227
| |
Self-insurance reserves adjustments
| | |
General and administrative
| | |
22
| | |
-
| |
Legal settlements
| | |
General and administrative
| | |
-
| | |
2,433
| |
Strategic alternative costs
| | |
General and administrative
| | |
-
| | |
1,253
| |
Point-of-sale accelerated depreciation
| | |
Depreciation and amortization
| | |
16,149
| | |
-
| |
Goodwill impairment
| | |
Goodwill impairment
| | |
146,110
| | |
74,100
| |
Total non-GAAP operating expense adjustments
| | | | | |
181,739
| | |
112,749
| | Non-GAAP operating income (2) | | | | | | $ | 114,426 | | | $ | 116,697 | | | | | | | |
| U.S. GAAP net loss | | | | | | $ | (114,093 |
)
| | $ | (8,905 |
)
| | | | | | |
|
Non-GAAP net income adjustments:
| | | | | | | | | | |
Non-GAAP operating expense adjustments
| | | | | |
181,739
| | |
112,749
| |
Legal settlements
| | |
Interest income and other, net
| | |
(1,098
|
)
| |
-
| |
Tax provision adjustments (1)
| | |
Income taxes
| | |
(31,066
|
)
| |
(38,167
|
)
|
Empire Education Group impairment
| | |
Equity in (loss) income of affiliated companies, net of tax
| | |
28,157
| | |
-
| |
Provalliance impairment, equity put liability and non-operational
charges recorded by Provalliance
| | |
Equity in (loss) income of affiliated companies, net of tax
| | |
17,927
| | |
(3,625
|
)
|
MY Style impairment
| | |
Equity in (loss) income of affiliated companies, net of tax
| | |
-
| | |
9,173
| |
Release of income tax reserve related to discontinued operations
| | |
Income from discontinued operations, net of tax
| | |
(1,099
|
)
| |
-
| |
Total non-GAAP net income adjustments
| | | | | |
194,560
| | |
80,130
| | Non-GAAP net income | | | | | | $ | 80,467 | | | $ | 71,225 | | | | | | | | | | | | | |
|
Notes: | | (1) | |
Based on a year-to-date tax rate analysis, the non-GAAP tax
provision was calculated to be approximately 37% for the twelve
months ended June 30, 2012 for all non-GAAP operating expense
adjustments, except the goodwill impairment charges. The goodwill
impairment charges had a tax benefit of approximately $18.4
million for the twelve months ended June 30, 2012, as the charge
is only partially deductible for income tax purposes. The non-GAAP
tax rate for the twelve months ended June 30, 2012 was 28.6%.
Based on a projected statutory effective tax rate analysis, the
non-GAAP tax provision was calculated to be approximately 38% for
the twelve months ended June 30, 2011 for all non-GAAP operating
expense adjustment, except the goodwill impairment. The goodwill
impairment had a benefit of approximately $23.3 million for the
three months ended June 30, 2011, as the charge is only partially
deductible for income tax purposes.
| (2) | |
Operational operating margins for the twelve months ended June 30,
2012, and 2011, were 5.0% for both respective periods and are
calculated as non-GAAP operating income divided by U.S. GAAP revenue
for each respective period.
| | |
|
| REGIS CORPORATION | Reconciliation of selected U.S. GAAP to non-GAAP financial
measures | (In thousands, except per share data) | (unaudited) |
| Reconciliation of U.S. GAAP net income per diluted share to
non-GAAP net income per diluted share | |
| Twelve Months Ended June 30, | | | | 2012 | |
| 2011 | | U.S GAAP net (loss) income per diluted share | | $ | (1.997 |
)
| | $ | (0.157 |
)
|
Self-insurance reserves adjustments (1)
| |
0.009
| | |
0.011
| |
Sales and use tax audit accrual adjustment (1)
| |
-
| | |
(0.016
|
)
|
Senior management restructure (1)
| |
0.090
| | |
0.039
| |
Professional fees (1)
| |
0.045
| | |
-
| |
Field restructure and other (1)
| |
0.026
| | |
-
| |
Deferred compensation (1)
| |
0.017
| | |
-
| |
Pure Beauty note receivable (recovery)/reserve (1)
| |
(0.007
|
)
| |
0.281
| |
Legal settlements (1)
| |
(0.010
|
)
| |
0.022
| |
Strategic alternative costs (1)
| |
-
| | |
0.011
| |
Point-of-sale accelerated depreciation (1)
| |
0.149
| | |
-
| |
Goodwill impairment (1)
| |
1.864
| | |
0.745
| |
Empire Education Group impairment (1)
| |
0.411
| | |
-
| |
Provalliance impairment, equity put liability and non-operational
charges recorded by Provalliance (1)
| |
0.262
| | |
(0.053
|
)
|
MY Style impairment (1)
| |
-
| | |
0.134
| |
Release of income tax reserve related to discontinued operations(1)
| |
(0.016
|
)
| |
-
| |
Dilutive effect under if-converted method (4)
| |
0.453
| | |
0.146
| | Non-GAAP net income per diluted share (2) (3) | | $ | 1.296 | | | $ | 1.163 | |
| U.S. GAAP weighted average shares – basic | | 57,137 | | | 56,704 | | U.S. GAAP weighted average shares - diluted | | 57,137 | | | 56,704 | | Non-GAAP weighted average shares – diluted (3) | | 68,528 | | | 68,201 | | | | | | | |
|
Notes: | | (1) | |
Based on a year-to-date tax rate analysis, the non-GAAP tax
provision was calculated to be approximately 37% for the twelve
months ended June 30, 2012 for all non-GAAP operating expense
adjustments, except the goodwill impairment charges. The goodwill
impairment charges had a tax benefit of approximately $18.4 million
for the twelve months ended June 30, 2012, as the charge is only
partially deductible for income tax purposes. The non-GAAP tax rate
for the twelve months ended June 30, 2012 was 28.6%. Based on a
projected statutory effective tax rate analysis, the non-GAAP tax
provision was calculated to be approximately 38% for the twelve
months ended June 30, 2011 for all non-GAAP operating expense
adjustment, except the goodwill impairment. The goodwill impairment
had a benefit of approximately $23.3 million for the three months
ended June 30, 2011, as the charge is only partially deductible for
income tax purposes.
|
| (2) | |
For the twelve months ended June 30, 2012 and 2011 non-GAAP net
income per share, diluted has been calculated under the if-converted
method. For the twelve months ended June 30, 2012 and 2011, $8.3 and
$8.1 million, respectively, of after-tax interest on the convertible
debt is added to the non-GAAP net income to determine the non-GAAP
net income for diluted earnings per share.
|
| (3) | |
Non-GAAP net income per share reflects the weighted average shares
associated with non-GAAP net income, which includes the dilutive
effect of common stock and convertible share equivalents. The
earnings per share impact of the adjustments for the twelve months
ended June 30, 2012 included 0.2 million of common stock equivalents
and convertible share equivalents of 11.2 million of additional
shares under the if-converted method. The earnings per share impact
of the adjustments for the twelve months ended June 30, 2011
included 0.3 million of common stock equivalents and 11.2 million of
convertible share equivalents of additional shares under the
if-converted method.
| | |
|
| REGIS CORPORATION | Summary of Pre-Tax, Income Taxes, and Net Income Impact for Q4
FY12 Non-Operational Items |
| |
| | |
| | |
| | | | | Pre-Tax | | | Income Taxes | | | Net Income | | | | | | | | | | |
|
Self-insurance accrual adjustments
| |
$
|
940
| | |
$
|
(346
|
)
| |
$
|
594
| |
Field restructure and other
| |
2,807
| | |
(1,035
|
)
| |
1,772
| |
Professional fees
| |
2,204
| | |
(812
|
)
| |
1,392
| |
Senior management restructure
| |
1,866
| | |
(688
|
)
| |
1,178
| |
Deferred compensation
| |
1,808
| | |
(666
|
)
| |
1,142
| |
Pure Beauty note receivable recovery
| |
(805
|
)
| |
296
| | |
(509
|
)
|
Goodwill impairment
| |
67,684
| | |
(12,508
|
)
| |
55,176
| |
Empire Education Group impairment and non-operational charges
recorded by EEG
| |
28,157
| | |
-
| | |
28,157
| |
Provalliance impairment
| |
338
| | |
-
| | |
338
| |
Total
| |
$
|
104,999
| | |
$
|
(15,759
|
)
| |
$
|
89,240
| | | | | | | | | | | | | |
|
REGIS CORPORATION Reconciliation of reported U.S. GAAP
net loss to operational EBITDA, a non-GAAP financial measure ($
In thousands) (unaudited) Operational EBITDA |
EBITDA represents U.S. GAAP net (loss) income for the respective
period excluding interest expense, income taxes and depreciation
and amortization expense. The Company defines operational EBITDA,
as EBITDA excluding equity in (loss) income of affiliated
companies, and identified items impacting comparability for each
respective period. For the three months ended June 30, 2012, the
items impacting comparability consisted of $2.8 million of pre-tax
expense associated our field restructuring, $2.2 million of
pre-tax professional fees expense associated with the pending sale
of the hair restoration business, $1.9 million of pre-tax expense
associated with senior management restructuring and severance
charges, $1.8 million pre-tax expense associated with amending our
deferred compensation contracts, $0.9 million of pre-tax expense
associated with prior year's self-insurance reserves adjustments,
$67.7 million goodwill impairment charge related to our Regis
salon concept, and $0.8 million of income associated with the
recovery of bad debt on the Pure Beauty note receivable. The
impact of the income tax provision adjustments associated with the
above items are already included in the U.S. GAAP reported net
loss income to EBITDA reconciliation, therefore there is no
adjustment needed for the reconciliation from EBITDA to
operational EBITDA. The impact of the $28.2 million impairment and
non-operational charges recorded by EEG and the $0.3 million
Provalliance impairment is already included by excluding the
impact of the Company's equity in (loss) income of affiliated
companies, net of taxes, as reported. For the three months ended
June 30, 2011, the items impacting comparability consisted $2.4
million of pre-tax expense associated with senior management
restructuring and severance charges, $1.2 million of million of
pre-tax expense associated with prior year's self-insurance
reserves adjustments, $22.2 million of pre-tax expense associated
with the Pure Beauty note receivable reserve, $2.4 million of
pre-tax expense associated with a legal settlement and $1.7
million benefit for a sales and use tax audit accrual adjustment.
The impact of the income tax provision adjustments associated with
the above items are already included in the U.S. GAAP reported net
loss income to EBITDA reconciliation, therefore there is no
adjustment needed for the reconciliation from EBITDA to
operational EBITDA. The impact of the $0.5 million MY Style
impairment is already included by excluding the impact of the
Company's equity in (loss) income of affiliated companies, net of
taxes, as reported.
|
|
|
| Three Months Ended | | | | June 30, 2012 | |
| June 30, 2011 | | | |
(Dollars in thousands)
| | Consolidated reported net loss, as reported (U.S. GAAP) | |
$
| (63,634 | ) | |
$
| (16,395 | ) |
Interest expense, as reported
| |
6,892
| | |
8,390
| |
Income taxes, as reported
| |
(10,549
|
)
| |
20,182
| |
Depreciation and amortization, as reported
| |
25,561
| | |
25,942
| |
EBITDA (as defined above)
| |
$
|
(41,730
|
)
| |
$
|
38,119
| | | | | | | |
| | | | | | |
|
Equity in loss (income) of affiliated companies, net of income
taxes, as reported
| |
24,355
| | |
(2,942
|
)
|
Field restructure and other
| |
2,807
| | |
-
| |
Professional fees
| |
2,204
| | |
-
| |
Senior management restructuring and severance charges
| |
1,866
| | |
2,392
| |
Deferred compensation
| |
1,808
| | |
-
| |
Self-insurance reserve adjustments
| |
940
| | |
1,185
| |
Pure Beauty note receivable (recovery) reserve
| |
(805
|
)
| |
22,227
| |
Goodwill impairment, as reported
| |
67,684
| | |
-
| |
Sales and use tax audit accrual adjustment
| |
-
| | |
(1,748
|
)
|
Legal settlements
| |
-
| | |
2,433
| | Operational EBITDA, non-GAAP financial measure | |
$
|
59,129
| | |
$
|
61,666
| | | | | | | | | |
|
REGIS CORPORATION Reconciliation of reported U.S. GAAP
net loss to operational EBITDA, a non-GAAP financial measure ($
In thousands) (unaudited) Operational EBITDA |
EBITDA represents U.S. GAAP net loss for the respective period
excluding interest expense, income taxes and depreciation and
amortization expense. The Company defines operational EBITDA, as
EBITDA excluding equity in (loss) income of affiliated companies,
and identified items impacting comparability for each respective
period. For the twelve months ended June 30, 2012, the items
impacting comparability consisted of $9.8 million of pre-tax
expense associated with senior management restructuring and
severance charges, $4.9 million of pre-tax professional fees
expense associated with the pending sale of the hair restoration
business and our fiscal year 2011 contested proxy, $2.8 million of
pre-tax expense associated our field restructuring, $1.8 million
pre-tax expense associated with amending our deferred compensation
contracts, $0.9 million of pre-tax expense associated with prior
year's self-insurance reserves adjustments, $146.1 million
goodwill impairment charges related to our Regis salon concept and
our Hair Restoration Centers, $0.8 million of income associated
with the recovery of bad debt on the Pure Beauty note receivable,
$1.1 million of income associated with a legal settlement, and
$1.1 million tax benefit for the release of income tax reserves
related to our previous ownership in Trade Secret, Inc.
operations. The impact of the income tax provision adjustments
associated with the above items and the $16.1 million of
accelerated depreciation related to our point-of-sale system are
already included in the U.S. GAAP reported net loss income to
EBITDA reconciliation, therefore there is no adjustment needed for
the reconciliation from EBITDA to operational EBITDA. The impact
of the $28.2 million impairment and non-operational charges
recorded by EEG and the net $17.9 million Provalliance impairment
is already included by excluding the impact of the Company's
equity in (loss) income of affiliated companies, net of taxes, as
reported. For the twelve months ended June 30, 2011, the items
impacting comparability consisted $4.3 million of pre-tax expense
associated with senior management restructuring and severance
charges, $1.2 million of million of pre-tax expense associated
with prior year's self-insurance reserves adjustments, $31.2
million of pre-tax expense associated with the Pure Beauty note
receivable reserve, $2.4 million of pre-tax expense associated
with a legal settlement, $74.1 million goodwill impairment charge
related to our Promenade salon concept, $1.7 million benefit for a
sales and use tax audit accrual adjustment and $1.3 million of
expense associated with our exploration of strategic alternatives.
The impact of the income tax provision adjustments associated with
the above items is already included in the U.S. GAAP reported net
loss income to EBITDA reconciliation, therefore there is no
adjustment needed for the reconciliation from EBITDA to
operational EBITDA. The impact of the $9.2 million MY Style
impairment and $3.6 million gain for the settlement of a portion
of the Provalliance equity put is already included by excluding
the impact of the Company's equity in (loss) income of affiliated
companies, net of taxes, as reported.
|
|
|
| | | | | Twelve Months Ended | | | | June 30, 2012 | |
| June 30, 2011 | | | |
(Dollars in thousands)
| | Consolidated reported net loss, as reported (U.S. GAAP) | |
$
| (114,093 | ) | |
$
| (8,905 | ) |
Interest expense, as reported
| |
28,245
| | |
34,388
| |
Income taxes, as reported
| |
(5,279
|
)
| |
(9,496
|
)
|
Depreciation and amortization, as reported
| |
118,071
| | |
105,109
| |
EBITDA (as defined above)
| |
$
|
26,944
| | |
$
|
121,096
| | | | | | | |
| | | | | | |
|
Equity in loss (income) of affiliated companies, net of income
taxes, as reported
| |
30,043
| | |
(7,228
|
)
|
Senior management restructuring and severance charges
| |
9,810
| | |
4,299
| |
Professional fees
| |
4,920
| | |
-
| |
Field restructure and other
| |
2,807
| | |
-
| |
Deferred compensation
| |
1,808
| | |
-
| |
Self-insurance reserve adjustments
| |
940
| | |
1,185
| |
Pure Beauty note receivable (recovery) reserve
| |
(805
|
)
| |
31,227
| |
Legal settlements
| |
(1,098
|
)
| |
2,433
| |
Goodwill impairment, as reported
| |
146,110
| | |
74,100
| |
Sales and use tax audit accrual adjustment
| |
-
| | |
(1,748
|
)
|
Strategic alternative costs
| |
-
| | |
1,253
| |
Release of income tax reserve related to discontinued operations
| |
(1,099
|
)
| |
-
| | Operational EBITDA, non-GAAP financial measure | |
$
|
220,380
| | |
$
|
226,617
| | | | | | | | | |
|
| REGIS CORPORATION'S NORTH AMERICA REPORTABLE SEGMENT | Reconciliation of selected U.S. GAAP to non-GAAP financial
measures | ($ In thousands) | (unaudited) | |
| | |
| | |
| | | | | As Reported | | | Non-Operational Adjustments (1) | | | Non-GAAP | | | | Three Months Ended June 30,
2012 | |
| % of Revenues | | | | | Three Months Ended June 30,
2012 |
|
| % of Revenues | | | | | | | | | | | | | | | | |
|
Service
| |
$
|
381,431
| | |
78.2
|
%
| |
$
|
-
| | |
$
|
381,431
| | |
78.2
|
%
|
Product
| |
96,692
| | |
19.8
| | |
-
| | |
96,692
| | |
19.8
| |
Royalties and fees
| |
9,744
| | |
2.0
| | |
-
| | |
9,744
| | |
2.0
| |
Total revenues
| |
$
|
487,867
| | |
100.0
| | |
$
|
-
| | |
$
|
487,867
| | |
100.0
| | | | | | | | | | | | | | | | |
|
Cost of service (2)
| |
219,249
| | |
57.5
| | |
-
| | |
219,249
| | |
57.5
| |
Cost of product (3)
| |
49,908
| | |
51.6
| | |
-
| | |
49,908
| | |
51.6
| |
Site operating expenses
| |
44,448
| | |
9.1
| | |
(839
|
)
| |
43,609
| | |
8.9
| |
General and administrative
| |
28,474
| | |
5.8
| | |
(1,401
|
)
| |
27,073
| | |
5.5
| |
Rent
| |
72,204
| | |
14.8
| | |
-
| | |
72,204
| | |
14.8
| |
Depreciation and amortization
| |
16,573
| | |
3.4
| | |
-
| | |
16,573
| | |
3.4
| |
Goodwill impairment
| |
67,684
| | |
13.9
| | |
(67,684
|
)
| |
-
| | |
-
| |
Total operating expenses
| |
$
|
498,540
| | |
102.2
| | |
$
|
(69,924
|
)
| |
$
|
428,616
| | |
87.9
| | | | | | | | | | | | | | | | |
|
Operating (loss) income
| |
$
|
(10,673
|
)
| |
(2.2
|
)
| |
$
|
69,924
| | |
$
|
59,251
| | |
12.1
| |
____________________ |
|
|
(1)
|
|
|
The three months ended June 30, 2012 included $0.8 million pre-tax
expense for self-insurance reserves adjustments, $1.4 million
pre-tax expense associated with our field restructuring and $67.7
million pre-tax non-cash goodwill impairment charge related to the
Company's Regis salon concept.
| | |
(2)
| | |
Computed as a percent of service revenues and excludes depreciation
expense.
| | |
(3)
| | |
Computed as a percent of product revenues and excludes depreciation
expense.
| | | | | |
|
|
| As Reported | |
| Non-Operational Adjustments (1) | |
| Non-GAAP | | | | Three Months Ended June 30,
2011 |
|
| % of Revenues | | | | | Three Months Ended June 30,
2011 |
|
| % of Revenues | | | | | | | | | | | | | | | | |
|
Service
| |
$
|
403,982
| | |
78.9
|
%
| |
$
|
-
| | |
$
|
403,982
| | |
78.9
|
%
|
Product
| |
98,160
| | |
19.2
| | |
-
| | |
98,160
| | |
19.2
| |
Royalties and fees
| |
9,581
| | |
1.9
| | |
-
| | |
9,581
| | |
1.9
| |
Total revenues
| |
$
|
511,723
| | |
100.0
| | |
$
|
-
| | |
$
|
511,723
| | |
100.0
| | | | | | | | | | | | | | | | |
|
Cost of service (2)
| |
232,086
| | |
57.4
| | |
-
| | |
232,086
| | |
57.4
| |
Cost of product (3)
| |
48,996
| | |
49.9
| | |
-
| | |
48,996
| | |
49.9
| |
Site operating expenses
| |
43,552
| | |
8.5
| | |
563
| | |
44,115
| | |
8.6
| |
General and administrative
| |
29,147
| | |
5.7
| | |
-
| | |
29,147
| | |
5.7
| |
Rent
| |
72,830
| | |
14.2
| | |
-
| | |
72,830
| | |
14.2
| |
Depreciation and amortization
| |
16,761
| | |
3.3
| | |
-
| | |
16,761
| | |
3.3
| |
Goodwill impairment
| |
-
| | |
-
| | |
-
| | |
-
| | |
-
| |
Total operating expenses
| |
$
|
443,372
| | |
86.6
| | |
$
|
563
| | |
|
443,935
| | |
86.8
| | | | | | | | | | | | | | | | |
|
Operating income
| |
$
|
68,351
| | |
13.4
| | |
$
|
(563
|
)
| |
$
|
67,788
| | |
13.2
| |
____________________ |
|
|
(1)
|
|
|
The three months ended June 30, 2011 included $1.2 million pre-tax
expense for self-insurance reserves adjustments and $1.7 million
pre-tax benefit for a sales and use tax audit accrual adjustment.
| | |
(2)
| | |
Computed as a percent of service revenues and excludes depreciation
expense.
| | |
(3)
| | |
Computed as a percent of product revenues and excludes depreciation
expense.
| | | | | |
|
|
| | |
| | |
| | | REGIS CORPORATION'S HAIR RESTORATION CENTERS REPORTABLE SEGMENT | Reconciliation of selected U.S. GAAP to non-GAAP financial
measures | ($ In thousands) | (unaudited) | | | | | | | | | |
| | | As Reported | | | Non-Operational Adjustments (1) | | | Non-GAAP | | | | Three Months Ended June 30,
2012 |
|
| % of Revenues | | | | | Three Months Ended June 30,
2012 |
|
| % of Revenues | | | | | | | | | | | | | | | | |
|
Service
| |
$
|
17,626
| | |
44.8
|
%
| |
$
|
-
| | |
$
|
17,626
| | |
44.8
|
%
|
Product
| |
21,103
| | |
53.7
| | |
-
| | |
21,103
| | |
53.7
| |
Royalties and fees
| |
597
| | |
1.5
| | |
-
| | |
597
| | |
1.5
| |
Total revenues
| |
$
|
39,326
| | |
100.0
| | |
$
|
-
| | |
$
|
39,326
| | |
100.0
| | | | | | | | | | | | | | | | |
|
Cost of service (2)
| |
11,124
| | |
63.1
| | |
-
| | |
11,124
| | |
63.1
| |
Cost of product (3)
| |
7,636
| | |
36.2
| | |
-
| | |
7,636
| | |
36.2
| |
Site operating expenses
| |
1,708
| | |
4.3
| | |
(78
|
)
| |
1,630
| | |
4.1
| |
General and administrative
| |
9,111
| | |
23.2
| | |
-
| | |
9,111
| | |
23.2
| |
Rent
| |
2,343
| | |
6.0
| | |
-
| | |
2,343
| | |
6.0
| |
Depreciation and amortization
| |
3,299
| | |
8.4
| | |
-
| | |
3,299
| | |
8.4
| |
Goodwill impairment
| |
-
| | |
-
| | |
-
| | |
-
| | |
-
| |
Total operating expenses
| |
$
|
35,221
| | |
89.6
| | |
$
|
(78
|
)
| |
$
|
35,143
| | |
89.4
| | | | | | | | | | | | | | | | |
|
Operating income
| |
$
|
4,105
| | |
10.4
| | |
$
|
78
| | |
$
|
4,183
| | |
10.6
| |
____________________ |
|
|
(1)
|
|
|
The three months ended June 30, 2012 included $0.1 million pre-tax
expense for self-insurance reserves adjustments.
| | |
(2)
| | |
Computed as a percent of service revenues and excludes depreciation
expense.
| | |
(3)
| | |
Computed as a percent of product revenues and excludes depreciation
expense.
| | | | | |
|
|
| | |
| | |
| | | REGIS CORPORATION'S UNALLOCATED CORPORATE REPORTABLE SEGMENT | Reconciliation of selected U.S. GAAP to non-GAAP financial
measures | ($ In thousands) | (unaudited) | | | | | | | | | |
| | | As Reported | | | Non-Operational Adjustments (2) | | | Non-GAAP | | | | Three Months Ended June 30,
2012 | |
| % of Revenues (1) | | | | | Three Months Ended June 30,
2012 | |
| % of Revenues (1) | | | | | | | | | | | | | | | | |
|
Service
| |
$
|
-
| | |
-
|
%
| |
$
|
-
| | |
$
|
-
| | |
-
|
%
|
Product
| |
-
| | |
-
| | |
-
| | |
-
| | |
-
| |
Royalties and fees
| |
-
| | |
-
| | |
-
| | |
-
| | |
-
| |
Total revenues
| |
$
|
-
| | |
-
| | |
$
|
-
| | |
$
|
-
| | |
-
| | | | | | | | | | | | | | | | |
|
Cost of service (3)
| |
-
| | |
-
| | |
-
| | |
-
| | |
-
| |
Cost of product (4)
| |
-
| | |
-
| | |
-
| | |
-
| | |
-
| |
Site operating expenses
| |
-
| | |
-
| | |
-
| | |
-
| | |
-
| |
General and administrative
| |
33,816
| | |
6.0
| | |
(6,500
|
)
| |
27,316
| | |
4.8
| |
Rent
| |
518
| | |
0.1
| | |
-
| | |
518
| | |
0.1
| |
Depreciation and amortization
| |
4,213
| | |
0.7
| | |
-
| | |
4,213
| | |
0.7
| |
Goodwill impairment
| |
-
| | |
-
| | |
-
| | |
-
| | |
-
| |
Total operating expenses
| |
$
|
38,547
| | |
6.8
| | |
$
|
(6,500
|
)
| |
$
|
32,047
| | |
5.6
| | | | | | | | | | | | | | | | |
|
Operating loss
| |
$
|
(38,547
|
)
| |
(6.8
|
)
| |
$
|
6,500
| | |
$
|
(32,047
|
)
| |
(5.6
|
)
|
____________________ |
|
|
(1)
|
|
|
Computed as a percent of consolidated revenues.
| | |
(2)
| | |
The three months ended June 30, 2012 included $2.2 million pre-tax
expense for professional fees primarily associated with the pending
sale of the Company's Hair Restoration reportable segment, $1.9
million of pre-tax expense associated with senior management
restructuring and severance charges, $1.8 million of pre-tax expense
associated with amending our deferred compensation contracts, $1.4
million of pre-tax expense associated with our field restructure,
and $0.8 million benefit for the recovery of bad debt on the Pure
Beauty note receivable.
| | |
(3)
| | |
Computed as a percent of service revenues and excludes depreciation
expense.
| | |
(4)
| | |
Computed as a percent of product revenues and excludes depreciation
expense.
| | | | | |
|
|
| | |
| | |
| | | | | As Reported | | | Non-Operational Adjustments (2) | | | Non-GAAP | | | | Three Months Ended June 30,
2011 | |
| % of Revenues (1) | | | | | Three Months Ended June 30,
2011 | |
| % of Revenues (1) | | | | | | | | | | | | | | | | |
|
Service
| |
$
|
-
| | |
-
|
%
| |
$
|
-
| | |
$
|
-
| | |
-
|
%
|
Product
| |
-
| | |
-
| | |
-
| | |
-
| | |
-
| |
Royalties and fees
| |
-
| | |
-
| | |
-
| | |
-
| | |
-
| |
Total revenues
| |
$
|
-
| | |
-
| | |
$
|
-
| | |
$
|
-
| | |
-
| | | | | | | | | | | | | | | | |
|
Cost of service (3)
| |
-
| | |
-
| | |
-
| | |
-
| | |
-
| |
Cost of product (4)
| |
-
| | |
-
| | |
-
| | |
-
| | |
-
| |
Site operating expenses
| |
-
| | |
-
| | |
-
| | |
-
| | |
-
| |
General and administrative
| |
61,218
| | |
10.3
| | |
(27,053
|
)
| |
34,165
| | |
5.8
| |
Rent
| |
526
| | |
0.1
| | |
-
| | |
526
| | |
0.1
| |
Depreciation and amortization
| |
4,297
| | |
0.7
| | |
-
| | |
4,297
| | |
0.7
| |
Goodwill impairment
| |
-
| | |
-
| | |
-
| | |
-
| | |
-
| |
Total operating expenses
| |
$
|
66,041
| | |
11.2
| | |
$
|
(27,053
|
)
| |
$
|
38,988
| | |
6.6
| | | | | | | | | | | | | | | | |
|
Operating loss
| |
$
|
(66,041
|
)
| |
(11.2
|
)
| |
$
|
27,053
| | |
$
|
(38,988
|
)
| |
(6.6
|
)
|
____________________ |
|
|
(1)
|
|
|
Computed as a percent of consolidated revenues.
| | |
(2)
| | |
The three months ended June 30, 2011 included $22.2 million of
pre-tax expense associated with Pure Beauty note receivable reserve,
$2.4 million pre-tax expense associated with legal settlements, and
$2.4 million pre-tax expense related to senior management
restructuring.
| | |
(3)
| | |
Computed as a percent of service revenues and excludes depreciation
expense.
| | |
(4)
| | |
Computed as a percent of product revenues and excludes depreciation
expense.
| | | | | |
|
|
| | REGIS CORPORATION'S EQUITY IN (LOSS) INCOME OF AFFILIATED
COMPANIES, NET OF TAXES | Reconciliation of selected U.S. GAAP to non-GAAP financial
measures | ($ In thousands) | (unaudited) | | |
| | | Three Months Ended | | | June 30, 2012 | |
| June 30, 2011 | | |
(Dollars in thousands)
| Equity in (loss) income of affiliated companies, net of income
taxes, as reported (U.S. GAAP) | |
$
| (24,355 | ) | |
$
| 2,942 |
Empire Education Group impairment and non-operational charges
recorded by EEG (1)
| |
28,157
| | |
-
|
Provalliance impairment (2)
| |
338
| | |
-
|
MY Style impairment (3)
| |
-
| | |
516
| Operational equity in income of affiliated companies, net of
income taxes, non-GAAP | |
$
|
4,140
| | |
$
|
3,458
|
____________________ |
|
|
(1)
|
|
|
The Company recorded an other than temporary impairment charge of
approximately $19.4 million during the three months ended June 30,
2012 as a result of a decrease in the fair value of the Company's
investment in EEG. In addition, the Company recorded an additional
$8.7 million of expense primarily related to non-operational
charges recorded by EEG.
| | |
(2)
| | |
The Company recorded an other than temporary impairment charge of
approximately $0.3 million during the three months ended June 30,
2012 as a result of the Company entering into an agreement to sell
its 46.7 percent interest in Provalliance for EUR 80 million.
| | |
(3)
| | |
Due to the natural disasters in Japan that occurred in March 2011,
we recorded an other than temporary impairment for our investment in
MY Style of $0.5 million during the three months ended June 30, 2011.
|
REGIS CORPORATION: Mark Fosland, 952-806-1707 SVP,
Finance and Investor Relations Andy Larew, 952-806-1425 Director,
Finance-Investor Relations
|
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