Supercuts 2004 Annual Report Download

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REGIS CORP
FORM 10-K
(Annual Report)
Filed 09/10/04 for the Period Ending 06/30/04
Address 7201 METRO BLVD
MINNEAPOLIS, MN 55439
Telephone 9529477777
CIK 0000716643
Symbol RGS
SIC Code 7200 - Services-Personal Services
Industry Personal Services
Sector Services
Fiscal Year 06/30
http://www.edgar-online.com
© Copyright 2013, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    REGIS CORP FORM 10-K (Annual Report) Filed 09/10/04 for the Period Ending 06/30/04 Address Telephone CIK Symbol SIC Code Industry Sector Fiscal Year 7201 METRO BLVD MINNEAPOLIS, MN 55439 9529477777 0000716643 RGS 7200 - Services-Personal Services Personal Services Services 06/30 http://www.edgar-...

  • Page 2
    Table of Contents

  • Page 3
    ...to For the transition period from Commission file number 0-11230 Regis Corporation (Exact name of registrant as specified in its charter) Minnesota State or other jurisdiction of incorporation or organization 7201 Metro Boulevard, Edina, Minnesota (Address of principal executive offices) (952) 947...

  • Page 4

  • Page 5
    ... to the price at which common stock was last sold as of the last business day of the Registrant's most recently completed second fiscal quarter, December 31, 2003, was approximately $1,698,000,000. The Registrant has no non-voting common stock. The number of outstanding shares of the Registrant...

  • Page 6
    .... Other Information PART III Item 10. Directors and Executive Officers of the Registrant Item 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management Item 13. Certain Relationships and Related Transactions Item 14.Principal Accounting Fees and Services PART...

  • Page 7
    ... stock splits). In March of 2003, Regis Corporation began trading on the NYSE under the ticker symbol "RGS." Discussions of the general development of the business take place throughout this Annual Report on Form 10-K. During fiscal year 2004, there were no significant changes to the Company...

  • Page 8
    ... services and products will continue to increase as the overall population continues to focus on personal health and beauty, as well as convenience. Business Strategy: The Company's goal is to provide high quality, affordable hair care services and products to a wide range of mass-market customers...

  • Page 9
    ...the salon business as it allows the Company to attract, train and retain valuable employees. The Company expects to open and acquire additional beauty career schools in the future in order to take advantage of this opportunity. During fiscal year 2003, the Company acquired four beauty career schools...

  • Page 10
    ... Mastercuts TRADE SECRET Company-owned salons: Open at beginning of period Salons constructed Acquired Franchise buybacks Less relocations Salon openings Conversions Salons closed Open at end of period Franchise salons: Open at beginning of period Salons constructed Acquired Salon openings Franchise...

  • Page 11
    ... 2003 2004 SMARTSTYLE/COST CUTTERS IN WAL-MART Company-owned salons: Open at beginning of period Salons constructed Acquired Franchise buybacks Less relocations Salon openings Conversions Salons closed Open at end of period Franchise salons: Open at beginning of period Salons constructed Acquired...

  • Page 12

  • Page 13
    ... 2004 INTERNATIONAL (1) Company-owned salons: Open at beginning of period Salons constructed Acquired Franchise buybacks Salon openings Conversions Salons closed Open at end of period Franchise salons: Open at beginning of period Salons constructed Acquired (2) Salon openings Conversions Franchise...

  • Page 14

  • Page 15
    ...financing and capital expenditure alternatives, as well as the benefits of buying retail products, supplies and salon fixtures directly from manufacturers. Furthermore, the Company can offer employee benefit programs, training and career path opportunities that differ from its smaller competitors. 9

  • Page 16
    ... tuition revenues to increase as it expands its presence in the beauty career school market. To promote quality and consistency of services provided throughout the Company's salons, the Company employs full and part-time artistic directors whose duties are to train salon stylists in current styling...

  • Page 17
    ... inventory costs of approximately $10,000. Average annual salon revenues in a Regis Salon which has been open five years or more are approximately $425,000. During fiscal year 2005, the Company plans to open approximately 55 new Regis Salons. MasterCuts. MasterCuts is a full-service mall-based salon...

  • Page 18
    ... concept providing value-priced hair care services for men, women and children. These full-service salons also sell a complete line of professional hair care products. Franchise revenues from Cost Cutters salons are split relatively evenly between franchise revenues related to royalties and fees and...

  • Page 19
    ...between franchise revenues related to royalties and fees and those from product sales to franchisees. During fiscal year 2005, the Company plans to open approximately 40 new franchised strip center salons. International Salons: At June 30, 2004, the Company operated 2,014 hair care salons, including...

  • Page 20
    ..., establishing prices to charge for products and services, business hours and capital expenditure decisions. However, the franchise agreements afford certain rights to the Company, such as the right to approve location, suppliers and the sale of a franchise. Additionally, franchisees are required to...

  • Page 21
    ... and product sales. The Company has full- and part-time artistic directors who train the stylists in techniques for providing the salon services and who instruct the stylists in current styling trends. Stylist training is achieved through seminars, workshops and DVD-based programs. The Company was...

  • Page 22
    ... that its compensation structure for salon managers and stylists is competitive within the industry. Stylists benefit from the Company's high-traffic locations and receive a steady source of new business from walk-in customers. In addition, the Company offers a career path with the opportunity to...

  • Page 23
    ... hair care industry is highly fragmented and competitive. In every area in which the Company has a salon, there are competitors offering similar hair care services and products at similar prices. The Company faces competition within malls from companies which operate salons within department stores...

  • Page 24
    ... financial assistance at the school, the beauty career schools must maintain eligibility requirements established by the U.S. Department of Education. (d) Financial Information about Foreign and North American Operations Financial information about foreign and North American markets is incorporated...

  • Page 25
    ... period. In August 2003, the Company reached an agreement with the Equal Employment Opportunity Commission ("EEOC") to settle allegations of discrimination in Supercuts. The $3.2 million settlement was accrued during the fourth quarter of fiscal year 2003 in corporate and franchise support costs...

  • Page 26
    ...fiscal year 2004 stock repurchase activity: Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs (in thousands) Period Total Number of Shares Purchased Average Price Paid per Share...

  • Page 27
    ... data), for the periods indicated, selected financial data derived from the Company's Consolidated Financial Statements in Item 8. 2004 2003 2002 2001 2000 Revenues Operating income Net income (d) Net income per diluted share Total assets Long-term debt, including current portion Dividends declared...

  • Page 28
    ...the Years Ended June 30, 2004 2003 2002 Company-owned service revenues (1) Company-owned product revenues (1) Franchise revenues Company-owned operations: Profit margins on service (2) Profit margins on product (3) Direct salon (1) Rent (1) Depreciation (1) Franchise direct costs, including product...

  • Page 29
    ... CONDITION AND RESULTS OF OPERATIONS MANAGEMENT'S OVERVIEW Regis Corporation, based in Minneapolis, Minnesota, is an owner, operator and franchisor of hair and retail product salons and beauty career schools. Our worldwide operations include 10,162 system-wide North American and international salons...

  • Page 30
    ...the walk-in customer base of the acquired salons, the value of which is not recorded as an identifiable intangible asset under current accounting guidance and the limited value and customer preference associated with the acquired hair salon brand. Residual goodwill further represents our opportunity...

  • Page 31
    ... Recognition for Company-Owned Salons Company-owned salon revenues and related gross margin are recorded at the time of sale, as this is when the services have been provided or, in the case of product revenues, delivery has occurred, and the salon receives the customer's payment. There are minimal...

  • Page 32
    ...franchise revenues in fiscal year 2004, 2003 and 2002, respectively. Same-store sales increases or decreases are calculated on a daily basis as the total change in sales for company-owned salons which were open on that specific day of the week during the corresponding prior period. Annual same-store...

  • Page 33

  • Page 34
    ... product sales, as well as a shift towards higher priced services, such as hair coloring. The foreign currency impact during fiscal years 2004 and 2003 was driven by the weakening of the United States dollar against the Canadian dollar as compared to the prior periods' exchange rates. International...

  • Page 35
    respectively, as compared to the prior fiscal year. 27

  • Page 36
    ...buying and new product lines. Our merchandising strategy recognizes and stresses the importance of product education and communication with the salons. In addition, the sale of beauty tools, such as flat irons, was a strong contributor to the increased same-store product sales, particularly in Trade...

  • Page 37
    ... international franchise salons. The 40.4 percent decrease in franchise fees during fiscal year 2004 was net of a favorable impact of approximately one percent related to foreign currency exchange rate fluctuations. Sales of product and equipment to franchise salons decreased during fiscal year 2004...

  • Page 38
    fluctuations caused 14.1 of the 69.5 percent increase during fiscal year 2003. 29

  • Page 39
    ... year 2003 same-store product sales. Favorable foreign currency exchange rate fluctuations caused 5.0 of the 27.6 percent increase during fiscal year 2003. Cost of Revenue Total company-owned gross margin. Our cost of revenues includes salon based labor costs, the cost of product to provide services...

  • Page 40
    ... during the current fiscal year. The basis point increase in fiscal year 2003 rent expense is primarily due to rent expense increasing at a faster rate than same-store sales, as well as higher minimum rents related to acquired JLD salons in Manhattan. Franchise Direct Costs, Including Product and...

  • Page 41
    ... related to salon operations (field supervision, salon training and promotions and product distribution) and home office administration costs (such as salaries and professional fees). During fiscal year 2004, 2003 and 2002, corporate and franchise support costs were as follows: (Dollars in thousands...

  • Page 42

  • Page 43
    ... Year 2004 (Dollars in thousands) Reported Amount Currency Translation Benefit (Loss) Constant Currency Amount Reported % Increase (Decrease)* Constant Currency % Increase (Decrease)* Company-owned revenues: North America International Total Franchise revenues: North America International Total...

  • Page 44
    ...Year 2003 (Dollars in thousands) Reported Amount Currency Translation Benefit (Loss) Constant Currency Amount Reported % Increase* Constant Currency % Increase* Company-owned revenues: North America International Total Franchise revenues: North America International Total Total revenues: North...

  • Page 45
    ... Point Improvement 2004 2003 2002 30.5% 34.9 40.2 440 530 330 Our principal on-going cash requirements are to finance construction of new stores, remodel certain existing stores, acquire salons and purchase inventory. Customers pay for salon services and merchandise in cash at the time of sale...

  • Page 46
    Other 4,560 $205,664 2,247 $151,119 35

  • Page 47
    ...: Investing Cash Flows For the Years Ended June 30, 2004 2003 (Dollars in thousands) Capital expenditures for remodels or other additions Capital expenditures for new salon construction Capital expenditures for the corporate office (including all technology-related expenditures) Business and salon...

  • Page 48
    36

  • Page 49
    ... our operations. Therefore, pro forma information is not included in the Notes to the Consolidated Financial Statements. Fiscal Year 2004 Number of Salons/Schools Fiscal Year 2003 Number of Salons/Schools Company-Owned Franchise buybacks Holiday Hair Blaine Beauty Career Schools Other 206 153 6 46...

  • Page 50
    ...of $9.8 million related to a salary deferral program, $7.2 million related to established contractual payment obligations under retirement and severance payment agreements for a small number of retired employees, $4.5 million related to the Executive Profit Sharing Plan (see Note 9) and $1.0 million...

  • Page 51
    ... buyback program was included allowing the franchisee to require us to purchase all of their salon assets within a specified market for 90 percent of their original cost within two years from the date of the franchisee opening their first salon. As of June 30, 2004, 17 existing franchise salons were...

  • Page 52
    ... of Regis Corporation common stock. On August 19, 2003, the Board of Directors elected to increase the maximum repurchase amount to $100.0 million. The timing and amounts of any repurchases will depend on many factors, including the market price of the common stock and overall market conditions. The...

  • Page 53
    ... exchange rates from period to period may impact the amount of reported income from our international operations. For the year ended June 30, 2004, operations denominated in currencies other than the United States dollar represented approximately 19 percent of consolidated net income before income...

  • Page 54
    ... suitable locations and financing for new salon development; governmental initiatives such as minimum wage rates, taxes and possible franchise legislation; the ability of the Company to successfully identify and acquire salons that support its growth objectives; or other factors not listed above...

  • Page 55
    ... fixed and floating rate debt. Generally, the terms of the interest rate swap agreements contain quarterly settlement dates based on the notional amounts of the swap contracts. (Pay fixed rates, receive variable rates) The Company had interest rate swap contracts that pay fixed rates of interest and...

  • Page 56
    ..., generally the local currency, into United States dollars. Different exchange rates from period to period impact the amounts of reported income and the amount of foreign currency translation recorded in accumulated other comprehensive income. As part of its risk management strategy, the Company...

  • Page 57
    .../U.S.) Euro amount Average pay Euro rate U.S.$ amount Average receive U.S. rate $ 64,758 115,139 83,966 â,¬ 23,782 8.29% $ 21,284 8.39% The cross-currency swap derivative financial instrument expires in fiscal year 2007. At June 30, 2004 and 2003, the Company's net investment in this derivative...

  • Page 58
    ...: Report of Independent Registered Public Accounting Firm Consolidated Balance Sheet as of June 30, 2004 and 2003 Consolidated Statement of Operations for each of the three years in the period ended June 30, 2004 Consolidated Statements of Changes in Shareholders' Equity and Comprehensive Income for...

  • Page 59
    ...and comprehensive income and of cash flows present fairly, in all material respects, the consolidated financial position of Regis Corporation at June 30, 2004 and 2003, and the consolidated results of its operations and its cash flows for each of the three years in the period ended June 30, 2004, in...

  • Page 60
    Table of Contents REGIS CORPORATION CONSOLIDATED BALANCE SHEET (Dollars in thousands, except per share amounts) June 30, 2004 2003 ASSETS Current assets: Cash and cash equivalents Receivables, net Inventories Deferred income taxes Other current assets Total current assets Property and equipment, ...

  • Page 61
    Table of Contents REGIS CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (Dollars and shares in thousands, except per share amounts) 2004 Years Ended June 30, 2003 2002 Revenues: Company-owned salons: Service Product Franchise revenues: Royalties and fees Product sales $1,271,232 545,012 1,816,244...

  • Page 62
    Cash dividends declared per common share $ 0.14 $ 0.12 $ 0.12 The accompanying notes are an integral part of the Consolidated Financial Statements. 49

  • Page 63
    ... instruments designated as hedges of interest rate exposure, net of taxes and transfers Stock repurchase plan Proceeds from exercise of stock options Stock option compensation Shares issued through franchise stock incentive program Shares issued in connection with salon acquisitions Tax benefit...

  • Page 64
    Table of Contents Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Comprehensive Income $165,489 $ (4,815) 9,460 (707) $176,740 72,054 (7,729) 7,719 173 26,253 2,954 (5,078) 194,859 3,938 243,716 86,675 22,025 1,...

  • Page 65
    Table of Contents REGIS CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in thousands) 2004 Years Ended June 30, 2003 2002 Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation Amortization Deferred ...

  • Page 66
    ...year. The different exchange rates from period to period impact the amount of reported income from the Company's international operations. Inventories: Inventories consist principally of hair care products held either for use in salon services or for sale. Inventories are stated at the lower of cost...

  • Page 67
    53

  • Page 68
    ... value, based on discounted estimated future cash flows. During fiscal years 2004, 2003 and 2002, the Company tested its long-lived assets for impairment and recognized impairment charges related to the carrying value of certain salons' property and equipment located primarily in North America of...

  • Page 69
    ... Recognition: Company-owned revenues and related gross margin are recorded at the time of sale, as this is when the services have been provided or, in the case of product revenues, delivery has occurred, and the salon receives the customer's payment. An accrual for estimated returns and credits has...

  • Page 70
    ..., cash flows, benefit costs and related information. It also requires the segregation of plan assets by category, such as debt, equity and real estate, and the disclosure of certain expected rates of return and other informational disclosures. This Statement is effective for annual financial...

  • Page 71
    ...of APB No. 25, no stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying stock on the date of grant. On May 4, 2004, the Company's Board of Directors elected to adopt the fair value...

  • Page 72
    ... the Company's Board of Directors approved the 2004 Long Term Incentive Program (2004 Plan). The 2004 Plan is currently pending shareholder approval at the annual shareholders' meeting to be held on October 28, 2004. The 2004 Plan provides for three types of equity compensation: stock options, stock...

  • Page 73

  • Page 74
    ... income taxes Deferred rent payable Other $ 39,598 13,183 47,541 $100,322 $ 26,472 13,313 33,738 $ 73,523 2004 Accumulated Amortization 2003 Accumulated Amortization (Dollars in thousands) Cost Net Cost Net Amortized intangible assets: Trade names Product license agreements Franchise...

  • Page 75
    ..., since they were anti-dilutive. The following provides supplemental disclosures of cash flow activity: (Dollars in thousands) 2004 2003 2002 Cash paid during the year for: Interest Income taxes, net of refunds Significant non-cash investing and financing activities include the following: $17...

  • Page 76
    ... the walk-in customer base of the acquired hair salon brand. Residual goodwill further represents the Company's opportunity to strategically combine the acquired business with the Company's existing structure to serve a greater number of customers through its expansion strategies. Internationally...

  • Page 77
    ... basis points. The LIBOR credit spread and unused fee are based on the Company's debt-to-EBITDA ratio at the end of each fiscal quarter. The facility is used for short-term financing of new salon and acquisition growth as well as to finance the general working capital requirements of the Company. In...

  • Page 78
    ...-to-market adjustment and current market interest rates, the carrying values of the Company's debt instruments, based upon discounted cash flow analyses using the Company's current incremental borrowing rate, approximate their fair values at June 30, 2004 and 2003. Aggregate maturities of long-term...

  • Page 79
    ... income: Realized net loss transferred from other comprehensive income to earnings Unrealized net loss from changes in fair value of cash flow swap $ 386 (231) $ 155 $2,510 (684) $1,826 $ 2,745 (3,452) $ (707) As of June 30, 2004, the Company estimates, based on current interest rates...

  • Page 80
    ... franchise revenues - royalties and fees caption of the Consolidated Statement of Operations. Total rent expense, excluding rent expense on premises subleased to franchisees, includes the following: (Dollars in thousands) 2004 2003 2002 Minimum rent Percentage rent based on sales Real estate taxes...

  • Page 81
    ... period. In August 2003, the Company reached an agreement with the Equal Employment Opportunity Commission ("EEOC") to settle allegations of discrimination in Supercuts. The $3.2 million settlement was accrued during the fourth quarter of fiscal year 2003 in corporate and franchise support costs...

  • Page 82
    ... deferred tax asset (liability) are as follows: (Dollars in thousands) 2004 2003 Net current deferred tax asset: Insurance Payroll and payroll related costs Nonrecurring items Reserve for impaired assets Accrued litigation Deferred franchise fees Other, net $ 5,752 4,902 382 2,351 - 767 1,131 $ 15...

  • Page 83
    .... Under the terms of the plan, eligible franchisees and their employees may purchase the Company's common stock. The Company contributes an amount equal to five percent of the purchase price of the stock to be purchased on the open market and pays all expenses of the plan and its administration, not...

  • Page 84
    exceed an aggregate contribution of $0.7 million. At June 30, 2004, cumulative contributions to the FSPP totaled $83,000. 68

  • Page 85
    ... also be granted to the Company's outside directors for a term not to exceed ten years from the grant date. The 2000 Plan contains restrictions on transferability, time of exercise, exercise price and on disposition of any shares acquired through exercise of the options. Stock options are granted at...

  • Page 86
    ....49 15.28 $18.32 At June 30, 2004, the weighted average exercise prices and remaining contractual lives of stock options are as follows: Options outstanding Weighted average remaining contractual life (in years) Options exercisable Range of exercise prices Number options outstanding as of 6/30/04...

  • Page 87
    ... the Company. The key executives' benefits are based on years of service and the employee's compensation prior to departure. The Company utilizes a June 30 measurement date for these deferred compensation contracts and a discount rate based on the Aa Bond index rate (6.25 percent at June 30, 2004...

  • Page 88
    ... in Europe, are located in salons operating in malls, leading department stores, mass merchants and high-street locations. Based on the way the Company manages its business, it has presented its North American and international operations as two reportable operating segments. The accounting policies...

  • Page 89
    ...: (Dollars in thousands) 2004 2003 2002 Total company-owned service revenues: North America International Total Total company-owned product revenues: North America International Total Total franchise royalties and fees: North America International Total Total franchise product sales: North America...

  • Page 90
    ... salon assets: North America International Total $ 65,208 7,817 1,051 74,076 $ 63,496 4,622 9,342 77,460 $ 54,444 4,792 6,996 $ 66,232 $ $ $ 105,113 5,093 $ 110,206 $ $ 68,109 23,518 91,627 $ 26,060 73,774 $ 99,834 * primarily corporate and franchise support costs, corporate depreciation...

  • Page 91
    ... North American long-lived assets presented above at June 30, 2004, 2003 and 2002, respectively. QUARTERLY FINANCIAL DATA (Unaudited) (Dollars in thousands, except per share amounts) Quarter Ended Year Ended September 30 December 31 March 31 June 30 2004 Revenues Operating income Net income Net...

  • Page 92
    ... forms, and that such information is accumulated and communicated to management, including the chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. Management necessarily applied its judgment in assessing the costs and benefits...

  • Page 93
    ... and Administrative Officer Vice President, General Counsel and Secretary Senior Vice President, Real Estate Senior Vice President, Design and Construction Senior Vice President, Regis Corporation and President, Franchise Division Senior Vice President, Fashion, Education and Marketing Chief...

  • Page 94
    ... in 1998, and General Counsel in 2004. Melissa Boughton has served as Senior Vice President of Real Estate since December of 2002, and has been in the shopping center industry for over 20 years. Prior to joining the Company, she served as Vice President of Real Estate at Best Buy, Inc. Bruce Johnson...

  • Page 95
    ... Values," "Director Compensation," "Comparative Stock Performance," and "Employment Arrangements" of the Company's Proxy Statement dated September 20, 2004, is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management Security Ownership of Certain...

  • Page 96
    ... Relationships and Related Transactions" of the Company's Proxy Statement dated September 20, 2004, and is incorporated herein by reference. Item 14. Principal Accounting Fees and Services A description of the fees paid to the independent registered public accounting firm will be set forth in...

  • Page 97
    ... the year ended June 30, 1998.) Form of Employment and Deferred Compensation Agreement between the Company and six executive officers. (Incorporated by reference to Exhibit 10(b) of the Company's Report on Form 10-K date September 24, 1997.) Northwestern Mutual Life Insurance Company Policy Number...

  • Page 98
    ...of Contents Exhibit Number Description 10(d) 10(e) Schedule of omitted split-dollar insurance policies. (Filed as Exhibit 10(h) to the Registrant's Registration Statement on Form S1 (Reg. No. 40142) and incorporated herein by reference.) Employee Stock Ownership Plan and Trust Agreement dated as...

  • Page 99
    ... 31, 1997.) Series G Senior Note dated as of July 10, 1998 between the Registrant and Prudential Insurance Company of America. (Incorporated by reference to the Company's Report on Form 10-K dated September 17, 1998, for the year ended June 30, 1998.) Term Note C Agreement between the Registrant and...

  • Page 100
    ...of Contents Exhibit Number Description 10(bb) Series A Senior Note between the Registrant and purchasers listed in the attached schedule A as referred to in 10(aa). (Incorporated by reference to Exhibit 10(bb) of the Company's Report on Form 10-K dated September 24, 2002, for the year ended June...

  • Page 101
    ...thereunto duly authorized. REGIS CORPORATION By /s/ Paul D. Finkelstein Paul D. Finkelstein, Chairman of the Board of Directors, President and Chief Executive Officer By /s/ Randy L. Pearce Randy L. Pearce, Executive Vice President, Chief Financial and Administrative Officer (Principal Financial and...

  • Page 102
    ... appearing in the 2004 Annual Report on Form 10-K of Regis Corporation also included an audit of the financial statement schedule listed in Item 15(a)(2) of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein...

  • Page 103
    Table of Contents REGIS CORPORATION SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS as of June 30, 2004, 2003 and 2002 (dollars in thousands) Column A Column B Balance at beginning of period Column C Charged to costs and expenses Column D Column E Balance at end of period Description Charged to ...

  • Page 104
    ... the year ended June 30, 1998.) Form of Employment and Deferred Compensation Agreement between the Company and six executive officers. (Incorporated by reference to Exhibit 10(b) of the Company's Report on Form 10-K date September 24, 1997.) Northwestern Mutual Life Insurance Company Policy Number...

  • Page 105
    ... Contents Exhibit Number Description 10(d) 10(e) Schedule of omitted split-dollar insurance policies. (Filed as Exhibit 10(h) to the Registrant's Registration Statement on Form S-1 (Reg. No. 40142) and incorporated herein by reference.) Employee Stock Ownership Plan and Trust Agreement dated as...

  • Page 106
    ... 31, 1997.) Series G Senior Note dated as of July 10, 1998 between the Registrant and Prudential Insurance Company of America. (Incorporated by reference to the Company's Report on Form 10-K dated September 17, 1998, for the year ended June 30, 1998.) Term Note C Agreement between the Registrant and...

  • Page 107
    ...of Contents Exhibit Number Description 10(bb) Series A Senior Note between the Registrant and purchasers listed in the attached schedule A as referred to in 10(aa). (Incorporated by reference to Exhibit 10(bb) of the Company's Report on Form 10-K dated September 24, 2002, for the year ended June...

  • Page 108

  • Page 109
    ...prepayment, using a discount rate equal to the yield to maturity of the U.S. Treasury Note with a maturity date closest to the remaining term of this Note, as published in the Wall Street Journal on the Business Day immediately preceding the date of the prepayment plus 175 basis points over (ii) the...

  • Page 110
    ... of such interest rate swap agreement will be directly born by the Borrower. The Lender (and its participants) will provide to the Borrower ...business hours, at the Lender's office or such other place as so designated by Lender, and such payments shall be effective only upon receipt. All payments...

  • Page 111
    ...the appropriate Federal and state courts located in the State of New York for the purposes of any suit, action or other proceeding arising out of this Note or with respect to the subject matter hereof, and, to the extent permitted by applicable law, hereby waives, and agrees not to assert, by way of...

  • Page 112
    ... herein, all notices (excluding billings and other communications in the ordinary course of business) required or permitted by the terms hereof shall be given in the manner and with the effect provided for in the Loan Agreement. 16. Conflicts. In the event of any conflict between the provisions of...

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    IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed as of the date first written above. WITNESS: REGIS CORPORATION By: Name: Title:

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    EXHIBIT 10 (ff) DRAFT Dated August 4, 2004 SUBJECT TO REVIEW BY LEGAL COUNSEL Regis Corporation 2004 Long Term Incentive Plan

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    ... 2.2 Agreement 2.3 Award 2.4 Beneficiary 2.5 Board of Directors or Board 2.6 Cause 2.7 Change in Control 2.8 Code 2.9 Commission 2.10 Committee 2.11 Common Stock 2.12 Company 2.13 Covered Employees 2.14 Disability 2.15 Effective Date 2.16 Exchange Act 2.17 Exercise Price 2.18 Fair Market Value...

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    Page ARTICLE IV SHARES SUBJECT TO PLAN 4.1 Number of Shares 4.2 Release of Shares 4.3 Restrictions on Shares 4.4 Shareholder Rights 4.5 Effect of Certain Changes ARTICLE V ELIGIBILITY 5.1 Eligibility ARTICLE VI STOCK OPTIONS 6.1 General 6.2 Grant 6.3 Terms and Conditions 6.4 Termination by Reason ...

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    Page ARTICLE XI PROVISIONS APPLICABLE TO SHARES ACQUIRED UNDER THIS PLAN 11.1 No Company Obligation ARTICLE XII MISCELLANEOUS 12.1 Amendments and Termination 12.2 Unfunded Status of Plan 12.3 Provisions Relating to Internal Revenue Code Section 162(m) 12.4 No Additional Obligation 12.5 Withholding ...

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    .... The Regis Corporation 2004 Long Term Incentive Plan ("Plan") is hereby established by Regis Corporation ("Company"), effective as of the Effective Date. 1.2 Purposes. The purpose of the Plan is to foster and promote the long-term financial success of the Company and materially increase shareholder...

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    ... ownership," as defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of 20% or more of the shares of the Company's capital stock; (2) the first day on which less than two-thirds of the total membership of the Board of Directors shall be Continuing Directors (as that term is...

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    ...interest: (1) if the Common Stock is listed on a securities exchange or quoted on The Nasdaq Stock Market ("Nasdaq"), the closing price of a share of Common Stock on the relevant date (or, if such date is not a business day or a day on which quotations are reported, then on the immediately preceding...

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    ... listed on a national securities exchange or quoted on Nasdaq, but is actively traded in the over-thecounter market, the average of the closing bid and asked prices for a share of the Common Stock on the relevant date (or, if such date is not a business day or a day on which quotations are reported...

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    ... to an employment agreement or otherwise that actually or effectively causes or results in the person's ceasing, for whatever reason, to be any and all of an officer or employee of the Company or of any Affiliate, or to be any and all of an officer or employee of any entity that provides services to...

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    ... determine the terms and conditions of any Award granted hereunder, provided that the Exercise Price of any Option or Stock Appreciation Right shall not be less than the Fair Market Value per share as of the Grant Date; (5) to adjust the terms and conditions, at any time or from time to time, of any...

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    ... permissible methods of Award exercise and payment within the terms and conditions of the Plan and the particular Agreement; (15) to adopt, amend and rescind such rules and regulations as, in its opinion, may be advisable in the administration of this Plan; and (16) to appoint and compensate agents...

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    ...specified herein and to such other terms, conditions and restrictions as the Committee in its discretion may determine or provide in the Award Agreement. The Company shall not be required to issue or deliver any certificates for Common Stock, cash or other property prior to (i) the completion of any...

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    ...-law employee of the Company, any parent corporation of the Company, or a subsidiary (as such terms are defined in Section 424 of the Code) on the date of grant shall be eligible to be granted an Incentive Stock Option. To the extent that any Option is not designated as an Incentive Stock Option...

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    ... Stock already owned by the Participant having a total Fair Market Value on the date of such delivery equal to the Option Price; (ii ) the delivery of cash by a broker-dealer as a "cashless" exercise, provided such method of payment may not be used by a director or executive officer of the Company...

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    ... Termination of Employment otherwise provided herein shall not extend the time permitted to exercise an Option. ARTICLE VII STOCK APPRECIATION RIGHTS 7.1 General. The Committee shall have authority to grant Stock Appreciation Rights under the Plan at any time or from time to time. Stock Appreciation...

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    ...Market Value per share of Common Stock shall be determined as of the date of exercise of such Stock Appreciation Right. (3) Non-transferability of Stock Appreciation Rights. Except as provided in the Plan or in an Agreement, no Stock Appreciation Rights shall be sold, assigned, margined, transferred...

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    ... to such terms and conditions as shall be determined by the Committee, including the following: (1) Limitations on Transferability. The issue prices for Restricted Stock shall be set by the Committee and may be zero. Subject to the provisions of the Plan and the Agreement, during a period set by...

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    ... made at the same time payments are made to Participants who did not incur a Termination of Employment during the applicable Performance Period. 9.4 Nontransferability. Unless otherwise provided in an Agreement, Performance Units may not be sold, assigned, margined, transferred, encumbered, conveyed...

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    ... TO SHARES ACQUIRED UNDER THIS PLAN 11.1 No Company Obligation. Except to the extent required by applicable securities laws, none of the Company, an Affiliate or the Committee shall have any duty or obligation to affirmatively disclose material information to a record or beneficial holder of...

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    ... Plan. 12.3 Provisions Relating to Internal Revenue Code Section 162(m). It is the intent of the Company that Awards granted to persons who are Covered Employees within the meaning of Section 162(m) of the Code shall constitute "qualified performance-based compensation" satisfying the requirements...

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    ...determine: sales; cash flow; cash flow from operations; operating profit or income; net income; operating margin; net income margin; return on net assets; economic value added; return on total assets; return on common equity; return on total capital; total shareholder return; revenue; revenue growth...

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    ...any Award a number of shares with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the required statutory minimum (but no more than such required minimum) with respect to the Company's withholding obligation, or (ii) transferring to the Company shares of...

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    ... under the Plan from time to time in substitution for awards held by employees, directors or service providers of other corporations who are about to become officers, directors or employees of the Company or an Affiliate as the result of a merger or consolidation of the employing corporation - 19...

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    ... the acquisition by the Company or Affiliate of the share of the employing corporation, as the result of which it becomes a designated employer under the Plan. The terms and conditions of the Awards so granted may vary from the terms and conditions set forth in this Plan at the time of such grant as...

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    ...-90809, 333-31874, 333-57092 and 333-72200), and Form S-8 (Nos. 33-44867 and 33-89882) of Regis Corporation of our report dated August 24, 2004, relating to the consolidated financial statements, which appears in the 2004 Annual Report on Form 10-K. We also consent to the incorporation by reference...

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    ... SARBANES-OXLEY ACT OF 2002 I, Paul D. Finkelstein, Chairman of the Board of Directors, President and Chief Executive Officer of Regis Corporation, certify that: 1. I have reviewed this annual report on Form 10-K of Regis Corporation; 2. Based on my knowledge, this report does not contain any untrue...

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    ...2002 I, Randy L. Pearce, Executive Vice President, Chief Financial and Administrative Officer of Regis Corporation, certify that: 1. I have reviewed this annual report on Form 10-K of Regis Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or...

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    ... with the Annual Report of Regis Corporation (the Registrant) on Form 10-K for the fiscal year ending June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof, I, Paul D. Finkelstein, Chairman of the Board of Directors, President and Chief Executive Officer of the...

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    ... with the Annual Report of Regis Corporation (the Registrant) on Form 10-K for the fiscal year ending June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof, I, Randy L. Pearce, Executive Vice President, Chief Financial and Administrative Officer of the Registrant...