10-K

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TABLE OF CONTENTS
Item 1. Business
TABLE OF CONTENTS1

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2012
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to

Commission file number 1-12725

Regis Corporation
(Exact name of registrant as specified in its charter)

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

(952) 947-7777
(registrant's telephone number, including area code)

         Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, par value $0.05 per share	New York Stock Exchange
Preferred Share Purchase Rights	New York Stock Exchange

         Securities registered pursuant to Section 12(g) of the Act: None

         Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý    No o

         Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No ý

         Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

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

         Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

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

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

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

         The aggregate market value of the voting common equity held by non-affiliates computed by reference to the price at which common equity was last sold as of the last business day of the registrant's most recently completed second fiscal quarter, December 31, 2011, was approximately $902,940,461. The registrant has no non-voting common equity.

         As of August 13, 2012, the registrant had 57,407,876 shares of Common Stock, par value $0.05 per share, issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the registrant's definitive Proxy Statement for the annual meeting of shareholders to be held on October 25, 2012 (the "2012 Proxy Statement") (to be filed pursuant to Regulation 14A within 120 days after the registrant's fiscal year-end of June 30, 2012) are incorporated by reference into Part III.

REGIS CORPORATION
FORM 10-K
FOR THE FISCAL YEAR ENDED JUNE 30, 2012
INDEX

			Page(s)
Part I.
	Item 1.	Business		3
		Executive Officers of the Registrant		20
	Item 1A.	Risk Factors		22
	Item 1B.	Unresolved Staff Comments		27
	Item 2.	Properties		27
	Item 3.	Legal Proceedings		27
	Item 4.	Mine Safety Disclosures		28
Part II.
	Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Repurchase or Purchases of Equity Securities		28
	Item 6.	Selected Financial Data		30
	Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations		32
	Item 7A.	Quantitative and Qualitative Disclosures about Market Risk		72
	Item 8.	Financial Statements and Supplementary Data		76
		Management's Statement of Responsibility for Financial Statements and Report on Internal Control over Financial Reporting		77
		Report of Independent Registered Public Accounting Firm		78
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		141
	Item 9A.	Controls and Procedures		141
	Item 9B.	Other Information		141
Part III.
	Item 10.	Directors, Executive Officers and Corporate Governance		142
	Item 11.	Executive Compensation		142
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		142
	Item 13.	Certain Relationships and Related Transactions, and Director Independence		142
	Item 14.	Principal Accounting Fees and Services		142
Part IV.
	Item 15.	Exhibits and Financial Statement Schedules		143
	Signatures			148

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PART I

Item 1.    Business

        Unless the context otherwise provides, when we refer to the "Company," "we," "our," or "us," we are referring to Regis Corporation, the Registrant, together with its subsidiaries.

General Development of Business

        In 1922, Paul and Florence Kunin opened Kunin Beauty Salon, which quickly expanded into a chain of value priced salons located in department stores. In 1958, the chain was purchased by their son and renamed Regis Corporation. On August 1, 2007, the Company contributed its 51 wholly-owned accredited cosmetology schools to Empire Education Group, Inc (EEG). On January 31, 2008, the Company merged its continental European franchise salon operations with the operations of the Franck Provost Salon Group in the newly formed entity, Provalliance. The Company acquired an additional equity interest in Provalliance in March 2011. On February 20, 2008, the Company acquired the capital stock of Cameron Capital I, Inc. (CCI), a wholly-owned subsidiary of Cameron Capital Investments, Inc. CCI owned and operated PureBeauty and BeautyFirst salons. On February 16, 2009, the Company sold its Trade Secret salon concept (Trade Secret), which included CCI.

        During the fiscal year ended June 30, 2012, the Company began reviewing alternatives for non-core assets to focus on our core salon business. In April 2012, the Company entered into a Share Purchase Agreement (Agreement) to sell the Company's 46.7 percent equity interest in Provalliance to the Provost Family for a purchase price of €80 million. The transaction is expected to close no later than September 30, 2012 and is subject to the Provost Family securing financing for the purchase price. On July 13, 2012, the Company entered into a definitive agreement to sell its Hair Club for Men and Women business (Hair Club) for $163.5 million, a provider of hair restoration services. The transaction is expected to close during the first half of fiscal year 2013.

        Regis Corporation is listed 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.

Financial Information about Segments

        Segment data for the years ended June 30, 2012, 2011 and 2010 are included in Note 15 to the Consolidated Financial Statements in Part II, Item 8, of this Form 10-K.

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Narrative Description of Business

        The following topical areas are discussed below in order to aid in understanding the Company and its operations:

Topic	Page(s)
Background		4
Industry Overview		5
Salon Business Strategy		6
Salon Concepts		8
Salon Franchising Program		15
Salon Markets and Marketing		16
Salon Education and Training Programs		17
Salon Staff Recruiting and Retention		17
Salon Design		17
Salon Management Information Systems		18
Salon Competition		18
Hair Restoration Business Strategy		19
Affiliated Ownership Interest		20
Corporate Trademarks		20
Corporate Employees		20
Executive Officers		20
Governmental Regulations		21

Background:

        Based in Minneapolis, Minnesota, the Company's primary business is owning, operating and franchising hair and retail product salons. In addition to the primary hair and retail product salons, during fiscal years 2012 and 2011 the Company owned Hair Club. As of June 30, 2012, the Company owned, franchised or held ownership interests in approximately 12,600 worldwide locations. The Company's locations consisted of 9,738 company-owned and franchise salons, 98 hair restoration centers, and 2,811 locations in which the Company maintains a non-controlling ownership interest of less than 100 percent. Each of the Company's salon concepts offer similar salon products and services and serve the mass market consumer marketplace. The Company's hair restoration centers offer three hair restoration solutions; hair systems, hair transplants and hair therapy, which are targeted at the mass market consumer.

        The Company is organized to manage its operations based on significant lines of business—salons and hair restoration centers. Salon operations are managed based on geographical location—North America and International. The Company's North American salon operations are comprised of 7,324 company-owned salons and 2,016 franchise salons operating in the United States, Canada and Puerto Rico. The Company's International operations are comprised of 398 company-owned salons in the United Kingdom. The Company's worldwide salon locations operate primarily under the trade names of Regis Salons, MasterCuts, SmartStyle, Supercuts, Cost Cutters, and Sassoon. The Company's hair restoration centers are located in the United States and Canada. During fiscal years 2012 and 2011, the number of guest visits at the Company's company-owned salons approximated 90 and 91 million, respectively. The Company had approximately 52,000 corporate employees worldwide during fiscal year 2012.

        On August 1, 2007, the Company contributed 51 of its wholly-owned accredited cosmetology schools to EEG in exchange for a 49.0 percent equity interest in EEG. EEG is the largest beauty school operator in North America with 105 accredited cosmetology schools with revenues of approximately $180 million annually and is overseen by the Empire Beauty School management team.

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        In January 2008, the Company's effective ownership interest increased to 55.1 percent related to the buyout of EEG's minority interest shareholder. The Company accounts for the investment in EEG under the equity method of accounting as Empire Beauty School retains majority voting interest and has full responsibility for managing EEG. The Company recorded a $19.4 million other than temporary impairment charge in its fourth quarter ended June 30, 2012 on its investment in EEG. Refer to Note 6 to the Consolidated Financial Statements for additional information.

        On January 31, 2008, the Company merged its continental European franchise salon operations with the operations of the Franck Provost Salon Group in exchange for a 30.0 percent equity interest in the newly formed entity, Provalliance. The merger agreement contains a right (Equity Put) to require the Company to purchase additional ownership interest in Provalliance between specified dates in 2010 to 2018. The merger with the operations of the Franck Provost Salon Group, which are also located in continental Europe, created Europe's largest salon operator with approximately 2,600 company-owned and franchise salons as of June 30, 2012.

        The Company contributed to Provalliance the shares of each of its European operating subsidiaries, other than the Company's operating subsidiaries in the United Kingdom and Germany. The contributed subsidiaries operate retail hair salons in France, Spain, Switzerland and several other European countries primarily under the Jean Louis David™ and Saint Algue™ brands.

        On February 16, 2009, the Company sold its Trade Secret concept. The Company concluded, after a comprehensive review of its strategic and financial options, to divest Trade Secret. The sale of Trade Secret included 655 company-owned salons and 57 franchise salons, all of which had historically been reported within the Company's North America reportable segment.

        In March of 2011, the Company elected to honor and settle a portion of the Equity Put and acquired approximately 17 percent additional equity interest in Provalliance for $57.3 million (approximately € 40.4 million), bringing the Company's total equity interest to 46.7 percent.

        On April 9, 2012, the Company entered into the Agreement to sell the Company's 46.7 percent equity interest in Provalliance to the Franck Provost family (Provost Family) for a purchase price of €80 million. The transaction is expected to close no later than September 30, 2012 and is subject to the Provost Family securing financing for the purchase price. The purchase price was negotiated independently of the Equity Put and the Equity Put will automatically terminate upon completion of the Agreement. If the completion of the Agreement does not occur by September 30, 2012, the Provost Family will not be entitled to exercise their Equity Put rights until September 30, 2014. During fiscal year 2012, the Company recorded a $37.4 million other than temporary impairment charge on its investment in Provalliance and $20.2 million reduction in the fair value of the Equity Put in conjunction with the Agreement, resulting in a net impairment charge of $17.2 million recorded within the equity in (loss) income of affiliated companies in the Consolidated Statement of Operations.

        During the fiscal year ended June 30, 2012, the Company began reviewing alternatives for non-core assets to focus on our core salon business. On July 13, 2012, the Company entered into a definitive agreement to sell Hair Club for $163.5 million, a provider of hair restoration services. The transaction is expected to close during the first half of fiscal year 2013.

Industry Overview:

        Management estimates that annual revenues of the hair care industry are approximately $50 to $60 billion in the United States and approximately $160 billion worldwide. The Company estimates that it holds approximately two percent of the worldwide market. The hair salon and hair restoration markets are each highly fragmented, with the vast majority of locations independently owned and operated. However, the influence of salon chains on these markets, both franchise and company-owned, has increased substantially. Management believes that salon chains will continue to have a significant

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influence on these markets and will continue to increase their presence. As the Company is the principal consolidator of these chains in the hair care industry, it prevails as an established exit strategy for independent salon owners and operators, which affords the Company numerous opportunities for continued selective acquisitions.

Salon Business Strategy:

        The Company's long-term goal is to provide high quality, affordable hair care services and products to a wide range of mass market consumers, which enables the Company to expand in a controlled manner. The key elements of the Company's strategy to achieve these goals are taking advantage of (1) salon growth opportunities, (2) economies of scale and (3) centralized control over salon operations in order to ensure (i) consistent, quality services and (ii) a superior selection of high quality, professional products. Each of these elements is discussed below.

        Salon Growth Opportunities.    The Company's salon expansion strategy focuses on organic (new salon construction and same-store sales growth of existing salons) and salon acquisition growth.

        Organic Growth.     The Company executes its organic growth strategy through a combination of new construction of company-owned and franchise salons, as well as same-store sales. The square footage requirements related to opening new salons allow the Company great flexibility in securing real estate for new salons as the Company has small or flexible square footage requirements for its salons. The Company's long-term outlook for organic expansion remains strong. The Company has at least one salon in all major cities in the U.S. and has penetrated every viable U.S. market with at least one concept. However, because the Company has a variety of concepts, it can place several of its salons within any given market.

        A key component to successful North American organic growth relates to site selection, as discussed in the following paragraphs.

        Salon Site Selection.    The Company's salons are located in high-traffic locations such as regional shopping malls, strip centers, lifestyle centers, Walmart Supercenters, high-street locations and department stores. The Company is an attractive tenant to landlords due to its financial strength, successful salon operations and international recognition. In evaluating specific locations for both company-owned and franchise salons, the Company seeks conveniently located, visible sites which allow guests adequate parking and quick and easy location access. Various other factors are considered in evaluating sites, including area demographics, availability and cost of space, the strength of the major retailers within the area, location and strength of competitors, proximity of other company-owned and franchise salons, traffic volume, signage and other leasehold factors in a given center or area.

        Pricing is a factor in same-store sales growth. The Company actively monitors the prices charged by its competitors in each market and makes every effort to maintain prices which remain competitive with prices of other salons offering similar services. Price increases are considered on a market-by-market basis and are established based on local market conditions.

        Salon Acquisition Growth.     In addition to organic growth, another key component of the Company's growth strategy is the acquisition of salons. With an estimated two percent worldwide market share, management believes the opportunity to continue to make selective acquisitions exists.

        Over the past 18 years, the Company has acquired 8,052 salons, expanding both in North America and internationally. When contemplating an acquisition, the Company evaluates the existing salon or salon group with respect to the same characteristics as discussed above in conjunction with site selection for constructed salons (conveniently located, visible, strong retailers

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within the area, etc.). The Company generally acquires mature strip center locations, which are systematically integrated within the salon concept that it most clearly emulates.

        In addition to adding new salon locations each year, the Company has an ongoing program of remodeling its existing salons, ranging from redecoration to substantial reconstruction. This program is implemented as management determines that a particular location will benefit from remodeling, or as required by lease renewals. A total of 235 and 271 salons had major remodels in fiscal years 2012 and 2011, respectively.

        Recent Salon Additions.     During fiscal year 2012, the Company constructed 319 new salons (209 company-owned and 110 franchise). Additionally, the Company acquired 13 company-owned salons, including 11 franchise salon buybacks, and purchased a 60.0 percent ownership interest in a franchise network consisting of 31 locations.

        During fiscal year 2011, the Company constructed 213 new salons (146 company-owned and 67 franchise). Additionally, the Company acquired 105 company-owned salons, including 78 franchise salon buybacks.

        Salon Closures.     The Company evaluates its salon performance on a regular basis. Upon evaluation, the Company may close a salon for operational performance or real estate issues. In either case, the closures generally occur at the end of a lease term and typically do not require significant lease buyouts.

        During fiscal year 2012, 384 salons were closed, including 333 company-owned salons and 51 franchise salons (excluding 11 franchise buybacks).

        During fiscal year 2011, 305 salons were closed, including 245 company-owned salons and 60 franchise salons (excluding 78 franchise buybacks).

        Economies of Scale.    Management believes that due to its size and number of locations, the Company has certain advantages which are not available to single location salons or small chains. Economies of scale are realized through the centralized support system offered by the home office. Additionally, due to its size, the Company has numerous 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 are often superior to its smaller competitors.

        Centralized Control Over Salon Operations.    During fiscal year 2012 the Company implemented a new field structure to support our long-term strategy. The Company manages its expansive salon base through a combination of district leaders, regional directors, vice presidents and chief operating officers. Each district leader is responsible for the management of approximately 12 to 15 salons. Regional directors oversee the performance of six to nine district leaders or approximately 80 to 130 salons. Vice presidents manage approximately 700 to 1,000 salons while chief operating officers are responsible for the oversight of an entire consumer concept. During fiscal year 2012 the Company also created Field Human Resources and Corporate Operations departments to support salon operations. The operational hierarchy is key to the Company's ability to expand successfully.

        The Company also has an extensive training program, including the production of training DVDs for use in the salons, to ensure its stylists are knowledgeable in the latest haircutting and fashion trends and provide consistent quality hair care services. Finally, the Company tracks salon activity for all of its company-owned salons through the utilization of daily sales detail delivered from the salons' point of sale system. This information is used to reconcile cash on a daily basis.

        Consistent, Quality Service.    The Company is committed to meeting its guests' hair care needs by providing competitively priced services and products with professional and knowledgeable stylists. The

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Company's operations and marketing emphasize high quality services to create guest loyalty, to encourage referrals and to distinguish the Company's salons from its competitors. 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 trends. The major services supplied by the Company's salons are haircutting and styling (including shampooing and conditioning), hair coloring and waving. During fiscal years 2012, 2011, and 2010, the percentage of company-owned service revenues attributable to each of these services was as follows:

	2012			2011			2010
Haircutting and styling (including shampooing & conditioning)		72	%		72	%		72	%
Hair coloring		19			18			18
Hair waving		3			3			4
Other		6			7			6
		100	%		100	%		100	%

        High Quality, Professional Products.     The Company's salons sell nationally recognized hair care and beauty products as well as a complete line of private label products sold under the Regis, MasterCuts and Cost Cutters labels. The retail products offered by the Company are intended to be sold only through professional salons. The top selling brands include Paul Mitchell, Biolage, Redken, It's a 10, Nioxin, Regis designLINE, Sexy Hair Concepts, Kenra, Tigi Bedhead, Moroccanoil, and the Company's various private label brands.

        The Company has the most comprehensive assortment of retail products in the industry. Although the Company constantly strives to carry an optimal level of inventory in relation to consumer demand, it is more economical for the Company to have a higher amount of inventory on hand than to run the risk of being under stocked should demand prove higher than expected. The extended shelf life and lack of seasonality related to the beauty products allows the cost of carrying inventory to be relatively low and lessens the importance of inventory turnover ratios. The Company's primary goal is to maximize revenues rather than inventory turns.

        The retail portion of the Company's business complements its salon services business. The Company's stylists and beauty consultants are compensated and regularly trained to sell hair care and beauty products to their guests. Additionally, guests are enticed to purchase products after a stylist demonstrates its effect by using it in the styling of the guest's hair.

Salon Concepts:

        The Company's salon concepts focus is on providing high quality hair care services and professional products, primarily to the middle consumer market. The Company's North American salon operations consist of 9,340 salons (including 2,016 franchise salons), operating under several concepts, each offering attractive and affordable hair care products and services in the United States, Canada and Puerto Rico. The Company's international salon operations consist of 398 hair care salons located in Europe, primarily in the United Kingdom. The number of new salons expected to be opened within the upcoming fiscal year is discussed within Management's Discussion and Analysis of Financial Condition and Results of Operations. In addition to these openings, the Company typically acquires salons each year. The number of acquired salons, and the concept under which the acquisitions will fall, vary based on the acquisition opportunities which develop throughout the year.

Salon Development

        The table on the following pages sets forth the number of system wide salons (company-owned and franchise) opened at the beginning and end of each of the last five fiscal years, as well as the number of salons opened, closed, relocated, converted and acquired during each of these periods.

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COMPANY-OWNED AND FRANCHISE SALON SUMMARY

NORTH AMERICAN SALONS:	2012			2011			2010			2009			2008
REGIS SALONS
Open at beginning of period		1,023			1,049			1,071			1,078			1,099
Salons constructed		12			12			14			20			14
Acquired		—			9			3			23			4
Less relocations		(9	)		(10	)		(11	)		(14	)		(11	)
Salon openings		3			11			6			29			7
Conversions		—			(1	)		—			—			1
Salons closed		(73	)		(36	)		(28	)		(36	)		(29	)
Total, Regis Salons		953			1,023			1,049			1,071			1,078
MASTERCUTS
Open at beginning of period		588			600			602			615			629
Salons constructed		11			6			15			14			7
Acquired		—			—			—			—			—
Less relocations		(9	)		(5	)		(7	)		(10	)		(6	)
Salon openings		2			1			8			4			1
Conversions		—			1			—			—			—
Salons closed		(21	)		(14	)		(10	)		(17	)		(15	)
Total, MasterCuts		569			588			600			602			615
TRADE SECRET
Company-owned salons:
Open at beginning of period		—			—			—			674			613
Salons constructed		—			—			—			10			16
Acquired		—			—			—			—			65
Franchise buybacks		—			—			—			—			5
Less relocations		—			—			—			(4	)		(11	)
Salon openings		—			—			—			6			75
Conversions		—			—			—			—			5
Salons sold		—			—			—			(655	)		—
Salons closed		—			—			—			(25	)		(19	)
Total company-owned salons		—			—			—			—			674
Franchise salons:
Open at beginning of period		—			—			—			106			19
Salons constructed		—			—			—			1			2
Acquired(2)		—			—			—			—			93
Less relocations		—			—			—			—			(1	)
Salon openings		—			—			—			1			94
Franchise buybacks		—			—			—			—			(5	)
Interdivisional reclassification(4)		—			—			—			(43	)		—
Salons sold		—			—			—			(57	)		—
Salons closed		—			—			—			(7	)		(2	)
Total franchise salons		—			—			—			—			106
Total, Trade Secret		—			—			—			—			780

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NORTH AMERICAN SALONS:	2012			2011			2010			2009			2008
SMARTSTYLE/COST CUTTERS IN WALMART
Company-owned salons:
Open at beginning of period		2,393			2,374			2,300			2,212			2,000
Salons constructed		50			65			80			71			207
Acquired		—			—			—			—			—
Franchise buybacks		—			—			5			24			12
Less relocations		(1	)		(1	)		(3	)		(2	)		(3	)
Salon openings		49			64			82			93			216
Conversions		—			—			—			—			—
Salons closed		(1	)		(45	)		(8	)		(5	)		(4	)
Total company-owned salons		2,441			2,393			2,374			2,300			2,212
Franchise salons:
Open at beginning of period		120			119			122			146			151
Salons constructed		2			3			2			1			7
Salon openings		2			3			2			1			7
Franchise buybacks		—			—			(5	)		(24	)		(12	)
Salons closed		—			(2	)		—			(1	)		—
Total franchise salons		122			120			119			122			146
Total, SmartStyle/Cost Cutters in Walmart		2,563			2,513			2,493			2,422			2,358
SUPERCUTS
Company-owned salons:
Open at beginning of period		1,158			1,100			1,114			1,132			1,094
Salons constructed		65			24			10			27			33
Acquired		1			—			—			—			3
Franchise buybacks		5			73			12			6			38
Less relocations		(9	)		(3	)		(2	)		(2	)		(6	)
Salon openings		62			94			20			31			68
Conversions		56			13			—			(2	)		—
Salons closed		(48	)		(49	)		(34	)		(47	)		(30	)
Total company-owned salons		1,228			1,158			1,100			1,114			1,132
Franchise salons:
Open at beginning of period		987			1,034			1,022			997			990
Salons constructed		68			43			42			51			71
Acquired		—			—			—			—			—
Less relocations		(3	)		(7	)		(6	)		(7	)		(6	)
Salon openings		65			36			36			44			65
Conversions		5			10			9			1			—
Franchise buybacks		(5	)		(73	)		(12	)		(6	)		(38	)
Salons closed		(12	)		(20	)		(21	)		(14	)		(20	)
Total franchise salons		1,040			987			1,034			1,022			997
Total, Supercuts		2,268			2,145			2,134			2,136			2,129

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NORTH AMERICAN SALONS:	2012			2011			2010			2009			2008
PROMENADE
Company-owned salons:
Open at beginning of period		2,321			2,382			2,450			2,399			2,223
Salons constructed		53			26			18			36			33
Acquired		—			18			—			71			135
Franchise buybacks		6			5			6			53			95
Less relocations		(10	)		(10	)		(10	)		(16	)		(8	)
Salon openings		49			39			14			144			255
Conversions		(56	)		(14	)		—			1			(5	)
Salons sold to franchisees		(7	)		—			—			—			—
Salons closed		(174	)		(86	)		(82	)		(94	)		(74	)
Total company-owned salons		2,133			2,321			2,382			2,450			2,399
Franchise salons:
Open at beginning of period		829			867			901			914			1,008
Salons constructed		40			21			34			40			49
Acquired(2)		31			—			—			—			—
Salons purchased from the Company		7			—			—			—			—
Less relocations		(3	)		(7	)		(9	)		(7	)		(5	)
Salon openings		75			14			25			33			44
Conversions		(5	)		(9	)		(9	)		—			—
Franchise buybacks		(6	)		(5	)		(6	)		(53	)		(95	)
Interdivisional reclassification(4)		—			—			—			43			—
Salons closed		(39	)		(38	)		(44	)		(36	)		(43	)
Total franchise salons		854			829			867			901			914
Total, Promenade		2,987			3,150			3,249			3,351			3,313

INTERNATIONAL SALONS(1):	2012			2011			2010			2009			2008
Company-owned salons:
Open at beginning of period		400			404			444			472			481
Salons constructed		18			13			2			4			15
Acquired		1			—			—			—			25
Franchise buybacks		—			—			—			—			—
Less relocations		(5	)		(2	)		—			(1	)		(1	)
Salon openings		14			11			2			3			39
Conversions		—			—			—			—			1
Affiliated joint ventures		—			—			—			—			(40	)
Salons closed		(16	)		(15	)		(42	)		(31	)		(9	)
Total company-owned salons		398			400			404			444			472
Franchise salons:
Open at beginning of period		—			—			—			—			1,574
Salons constructed		—			—			—			—			50
Acquired(2)		—			—			—			—			—
Less relocations		—			—			—			—			—
Salon openings		—			—			—			—			50
Conversions		—			—			—			—			3
Franchise buybacks		—			—			—			—			—

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INTERNATIONAL SALONS(1):	2012			2011			2010			2009			2008
Affiliated joint ventures(3)		—			—			—			—			(1,587	)
Salons closed		—			—			—			—			(40	)
Total franchise salons		—			—			—			—			—
Total, International Salons		398			400			404			444			472
TOTAL SYSTEM WIDE SALONS
Company-owned salons:
Open at beginning of period		7,883			7,909			7,981			8,582			8,139
Salons constructed		209			146			139			182			325
Acquired		2			27			3			94			232
Franchise buybacks		11			78			23			83			150
Less relocations		(43	)		(31	)		(33	)		(49	)		(46	)
Salon openings		179			220			132			310			661
Conversions		—			(1	)		—			(1	)		2
Affiliated joint ventures		—			—			—			—			(40	)
Salons sold		—			—			—			(655	)		—
Salons sold to franchisees		(7	)		—			—			—			—
Salons closed		(333	)		(245	)		(204	)		(255	)		(180	)
Total company-owned salons		7,722			7,883			7,909			7,981			8,582
Franchise salons:
Open at beginning of period		1,936			2,020			2,045			2,163			3,742
Salons constructed		110			67			78			93			179
Acquired(2)		31			—			—			—			93
Salons purchased from the Company		7			—			—			—			—
Less relocations		(6	)		(14	)		(15	)		(14	)		(12	)
Salon openings		142			53			63			79			260
Conversions		—			1			—			1			3
Franchise buybacks		(11	)		(78	)		(23	)		(83	)		(150	)
Affiliated joint ventures(3)		—			—			—			—			(1,587	)
Salons sold		—			—			—			(57	)		—
Salons closed		(51	)		(60	)		(65	)		(58	)		(105	)
Total franchise salons		2,016			1,936			2,020			2,045			2,163
Total Salons		9,738			9,819			9,929			10,026			10,745

(1)

Canadian and Puerto Rican salons are included in the Regis Salons, MasterCuts, SmartStyle, Supercuts, and Promenade and not included in the International salon totals.

(2)

Represents primarily the acquisition of franchise networks.

(3)

Represents European operating subsidiaries contributed to Franck Provost Salon Group.

(4)

On February 16, 2009, the Company announced the completion of the sale of its Trade Secret retail product division. As a result of this transaction, the Company reported the Trade Secret operations as discontinued operations for all periods presented. Forty-three franchise salons were not included in the sale of Trade Secret to the purchaser of Trade Secret and are not reported as discontinued operations. These franchise salons are now included in Promenade salons.

        In the preceding table, relocations represent a transfer of location by the same salon concept and conversions represent the transfer of one concept to another concept.

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        Regis Salons.    Regis Salons are primarily mall based, full service salons providing complete hair care and beauty services aimed at moderate to upscale, fashion conscious consumers. In recent years, the Company has expanded its Regis Salons into strip centers. As of June 30, 2012, of the 953 total Regis Salons, 156 Regis Salons were located in strip centers. The guest mix at Regis Salons is approximately 79 percent women, and both appointments and walk-in guests are common. These salons offer a full range of custom styling, cutting, hair coloring and waving services, as well as professional hair care products. Service revenues represent approximately 82 percent of the concept's total revenues. The average ticket was approximately $43 and $42 for fiscal years 2012 and 2011, respectively. Regis Salons compete in their existing markets primarily by emphasizing the high quality of the services provided. Included within the Regis Salon concept are various other trade names, including Carlton Hair, Sassoon, Hair by Stewarts, Hair Excitement, and Renee Beauty.

        The average initial capital investment required for a new Regis Salon is approximately $190,000 to $240,000, excluding average opening inventory costs of approximately $22,000. Average annual salon revenues in a Regis Salon which has been open five years or more are approximately $400,000.

        MasterCuts.    MasterCuts is a full service, mall based salon group which focuses on the walk-in consumer (no appointment necessary) that demands moderately priced hair care services. MasterCuts salons emphasize quality hair care services, affordable prices and time saving services for the entire family. These salons offer a full range of custom styling, cutting, hair coloring and waving services as well as professional hair care products. The guest mix at MasterCuts is approximately 58 percent women. Service revenues compose approximately 80 percent of the concept's total revenues. The average ticket was approximately $22 for fiscal years 2012 and 2011.

        The average initial capital investment required for a new MasterCuts salon is approximately $150,000 to $200,000, excluding average opening inventory costs of approximately $14,300. Average annual salon revenues in a MasterCuts salon which has been open five years or more are approximately $280,000.

        SmartStyle.    The SmartStyle salons share many operating characteristics of the Company's other salon concepts; however, they are located exclusively in Walmart Supercenters. SmartStyle has a walk-in guest base, pricing is promotional and services are focused on the family. These salons offer a full range of custom styling, cutting, hair coloring and waving services, as well as professional hair care products. The guest mix at SmartStyle Salons is approximately 75 percent women. Professional retail product sales contribute considerably to overall revenues at approximately 34 percent. Additionally, the Company has 122 franchise salons located in Walmart Supercenters. The average ticket was approximately $21 for fiscal years 2012 and 2011.

        The average initial capital investment required for a new SmartStyle salon is approximately $35,000 to $45,000, excluding average opening inventory costs of approximately $13,100. Average annual salon revenues in a SmartStyle salon which has been open five years or more are approximately $230,000.

        Strip Center Salons.    The Company's Strip Center Salons are comprised of company-owned and franchise salons operating in strip centers across North America under the following concepts:

        Supercuts.    The Supercuts concept provides consistent, high quality hair care services and professional products to its guests at convenient times and locations and at a reasonable price. This concept appeals to men, women and children, although male guests account for approximately 66 percent of the guest mix. Service revenues represent approximately 89 percent of total company-owned Supercuts revenues. The average ticket was approximately $17 for fiscal years 2012 and 2011.

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        The average initial capital investment required for a new Supercuts salon is approximately $80,000 to $130,000, excluding average opening inventory costs of approximately $8,800. Average annual salon revenues in a company-owned Supercuts salon which has been open five years or more are approximately $270,000.

        The Supercuts franchise salons provide consistent, high quality hair care services and professional products to guests at convenient times and locations and at a reasonable price. These Supercuts franchise salons appeal to men, women and children, although male guests account for approximately 71 percent of the guest mix. Service revenues represent approximately 92 percent of the Supercuts franchise total revenues. Average annual revenues in a Supercuts franchise salon which has been open five years or more are approximately $340,000.

        Cost Cutters (franchise salons).    The Cost Cutters concept is a full service salon 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. The guest mix at Cost Cutters is split relatively evenly between men and women. Average annual salon revenues in a franchised Cost Cutters salon which has been open five years or more are approximately $280,000.

        In addition to the franchise salons, the Company operates company-owned Cost Cutters salons, as discussed below under Promenade Salons.

        Promenade Salons.    Promenade Salons are made up of successful regional company-owned salon groups acquired over the past several years operating under the primary concepts of Hair Masters, Cool Cuts for Kids, Style America, First Choice Haircutters, Famous Hair, Cost Cutters, BoRics, Magicuts, Holiday Hair, Head Start, Fiesta Salons and TGF, as well as other concept names. Most concepts offer a full range of custom hairstyling, cutting, coloring and waving, as well as hair care products. Hair Masters offers moderately-priced services to a predominately female demographic, while the other concepts primarily cater to time-pressed, value-oriented families. The guest mix is split relatively evenly between men and women at most concepts. Service revenues represent approximately 89 percent of total company-owned Promenade revenues. The average ticket was approximately $19 and $20 for fiscal years 2012 and 2011, respectively.

        The average initial capital investment required for a new Promenade Salon is approximately $75,000 to $125,000, excluding average opening inventory costs of approximately $9,300. Average annual salon revenues in a Promenade Salon which has been open five years or more are approximately $245,000.

        Other Franchise Concepts.    This group of franchise salons includes primarily First Choice Haircutters, Magicuts, Beauty Supply Outlets, and Pro-Cuts. These concepts function primarily in the high volume, value priced hair care market segment, with key selling features of value, convenience, quality and friendliness, as well as a complete line of professional hair care products. In addition to these franchise salons, the Company operates company-owned First Choice Haircutters and Magicuts salons, as previously discussed above under "Strip Center Salons".

        During fiscal year 2012, the Company acquired a 60.0 percent ownership interest in Roosters MGC International LLC, a franchise concept that combines modern grooming techniques with classic barbershop elements. This ownership interest along with the Company's other men's franchise concepts will allow the Company to expand its focus on the male demographic.

        International Salons.    The Company's International salons are comprised of company-owned salons operating in the United Kingdom primarily under the Supercuts, Regis and Sassoon concepts. These salons offer similar levels of service as the North American salons previously mentioned. However, the initial capital investment required is typically between £110,000 and £130,000 for a Regis salon, and between £60,000 and £80,000 for a Supercuts salon. Average annual salon revenues for a

14

salon which has been open five years or more are approximately £210,000 in a Regis salon and £165,000 in a Supercuts salon. Sassoon is one of the world's most recognized names in hair fashion and appeals to women and men looking for a prestigious full service hair salon. Salons are usually located on prominent high-street locations and offer a full range of custom hairstyling, cutting, coloring and waving, as well as professional hair care products. The initial capital investment required is approximately £500,000. Average annual salon revenues for a salon which has been open five years or more is approximately £770,000.

Salon Franchising Program:

        General.    The Company has various franchising programs supporting its 2,016 franchise salons as of June 30, 2012, consisting mainly of Supercuts, Cost Cutters, First Choice Haircutters, Magicuts, Pro-Cuts, and Roosters. These salons have been included in the discussions regarding salon counts and concepts on the preceding pages.

        The Company provides its franchisees with a comprehensive system of business training, stylist education, site approval and lease negotiation, professional marketing, promotion and advertising programs, and other forms of support designed to help the franchisee build a successful business.

        Standards of Operations.    The Company does not control the day to day operations of its franchisees, including hiring and firing, establishing prices to charge for products and services, business hours, personnel management 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 conform to the Company's established operational policies and procedures relating to quality of service, training, design and decor of stores, and trademark usage. The Company's field personnel make periodic visits to franchise stores to ensure that the stores are operating in conformity with the standards for each franchising program. All of the rights afforded to the Company with regard to the franchise operations allow the Company to protect its brands, but do not allow the Company to control the franchise operations or make decisions that have a significant impact on the success of the franchise salons.

        To further ensure conformity, the Company may enter into the lease for the store site directly with the landlord, and subsequently sublease the site to the franchisee. The franchise agreement and sublease provide the Company with the right to terminate the sublease and gain possession of the store if the franchisee fails to comply with the Company's operational policies and procedures. See Note 10 to the Consolidated Financial Statements for further information about the Company's commitments and contingencies, including leases.

        Franchise Terms.    Pursuant to their franchise agreement with the Company, each franchisee pays an initial fee for each store and ongoing royalties to the Company. In addition, for most franchise concepts, the Company collects advertising funds from franchisees and administers the funds on behalf of the concept. Franchisees are responsible for the costs of leasehold improvements, furniture, fixtures, equipment, supplies, inventory, payroll costs and certain other items, including initial working capital.

        Additional information regarding each of the major franchisee brands is listed below:

Supercuts (North America)


        The majority of existing Supercuts franchise agreements have a perpetual term, subject to termination of the underlying lease agreement or termination of the franchise agreement by either the Company or the franchisee. The agreements also provide the Company a right of first refusal if the store is to be sold. The franchisee must obtain the Company's approval in all instances where there is a sale of the franchise. The current franchise agreement is site specific and does not provide any territorial protection to a franchisee, although some older franchise agreements do

15

include limited territorial protection. Development agreements for new markets include limited territory protection for the Supercuts concept. The Company has a comprehensive impact policy that resolves potential conflicts among Supercuts franchisees and/or the Company's Supercuts locations regarding proposed salon sites.

Cost Cutters, First Choice Haircutters and Magicuts (North America)


        The majority of existing Cost Cutters franchise agreements have a 15 year term with a 15 year option to renew (at the option of the franchisee), while the majority of First Choice Haircutters franchise agreements have a ten year term with a five year option to renew. The majority of Magicuts franchise agreements have a term equal to the greater of five years or the current initial term of the lease agreement with an option to renew for two additional five year periods. All of the agreements also provide the Company a right of first refusal if the store is to be sold. The franchisee must obtain the Company's approval in all instances where there is a sale of the franchise. The current franchise agreement is site specific. Franchisees may enter into development agreements with the Company which provide limited territorial protection.

Pro-Cuts (North America)


        The majority of existing Pro-Cuts franchise agreements have a ten year term with a ten year option to renew. The agreements also provide the Company a right of first refusal if the store is to be sold or transferred. The current franchise agreement is site specific. Franchisees may enter into development agreements with the Company which provide limited territorial protection.

Roosters (North America)


        The majority of existing Roosters franchise agreements have a ten year term with a ten year renewal option. The agreements also provide the Company a right of first refusal if the store is to be sold. The franchisee must obtain the Company's approval in all instances where there is a sale of the franchisee. Upon the signing of a single store franchise agreement, franchisees may also enter into a multi-unit option agreement which provides the right to open three additional stores in a non-exclusive territory.

        Franchisee Training.    The Company provides new franchisees with training, focusing on the various aspects of store management, including operations, personnel management, marketing fundamentals and financial controls. Existing franchisees receive training, counseling and information from the Company on a continuous basis. The Company provides store managers and stylists with extensive technical training for Supercuts franchises. For further description of the Company's education and training programs, see the "Salon Education and Training Programs" section of this document.

Salon Markets and Marketing:

        The Company maintains various advertising, sales and promotion programs for its salons, budgeting a predetermined percent of revenues for such programs. The Company has developed promotional tactics and institutional sales messages for each of its concepts targeting certain guest types and positioning each concept in the marketplace. Print, radio, television, online and billboard advertising are developed and supervised at the Company's headquarters, but most advertising is done in the immediate market of the particular salon.

        Most franchise concepts maintain separate advertising funds (the Funds) that provide comprehensive advertising and sales promotion support for each system. The Supercuts advertising fund is the Company's largest advertising fund and is administered by a council consisting of primarily franchisee representatives. The council has overall control of all of the fund's expenditures and operates in accordance with terms of the franchise operating and other agreements. All stores,

16

company-owned and franchised, contribute to the Funds, the majority of which are allocated to the contributing market for media placement and local marketing activities. The remainder is allocated for the creation of national advertising campaigns and system wide activities. This intensive advertising program creates significant consumer awareness, a strong concept image and high loyalty.

Salon Education and Training Programs:

        The Company has an extensive hands-on training program for their stylists which emphasizes technical training in hairstyling and cutting, hair coloring, texturizing services and hair treatment regimes, as well as guest service skills and product sales. The objective of the training programs is to ensure that guests receive professional and quality services, which the Company believes will result in additional repeat guests, referrals and product sales. The Company is currently evaluating expanding the training program based on the strategy of improving the guest experience.

        The Company has over 130 full and part-time artistic directors who train stylists on the techniques to provide salon services and instruct stylists in current styling trends. Stylist training is achieved through seminars, workshops and DVD-based programs. The Company was the first in its industry to develop a DVD-based training system in its salons and currently has over 200 DVD titles designed to enhance the technical skills of stylists.

        The Company has guest service training programs designed to improve the interaction between employees and guests. Employees are trained in the proper techniques in greeting the guest, telephone courtesy and professional behavior through a series of professionally designed DVDs, along with instructional seminars.

        The Company also provides regulatory compliance training for all its field employees. This training is designed to help supervisors and stylists understand employee regulatory requirements and compliance with these standards.

Salon Staff Recruiting and Retention:

        Recruiting quality managers and stylists is essential to the establishment and operation of successful salons. In search of salon managers, the Company's supervisory team recruits or develops and promotes from within those stylists that display initiative and commitment. The Company has been and believes it will continue to be successful in recruiting capable managers and stylists. Stylists benefit from the Company's high-traffic locations and receive a steady source of new business from walk-in guests. In addition, the Company offers a career path with the opportunity to move into managerial and training positions within the Company.

Salon Design:

        The Company's salons are designed, built and operated in accordance with uniform standards and practices developed by the Company based on its experience. Salon fixtures and equipment are generally uniform, allowing the Company to place large orders for these items with cost savings due to the economies of scale.

        The size of the Company's salons ranges from 500 to 5,000 square feet, with the typical salon having about 1,200 square feet. At present, the cost to the Company of normal tenant improvements and furnishing of a new salon, including inventories, ranges from approximately $25,000 to $225,000, depending on the size of the salon and the concept. Less than ten percent of all new salons will have costs greater than normal with a cost between $225,000 and $500,000 to furnish. International Sassoon salons costs could be even greater than the ranges above. Of the total leasehold costs, approximately 70 percent of the cost is for leasehold improvements and the balance is for salon fixtures, equipment and inventories.

17

        The Company maintains its own design, construction and real estate department, which designs and supervises the leasehold installations, furnishing and fixturing of all new company-owned salons and certain franchise locations. The Company has developed considerable expertise in designing salons. The design and real estate staff focus on visual appeal, efficient use of space, cost and rapid completion times.

Salon Management Information Systems:

        At all of its company-owned salons, the Company utilizes a point-of-sale (POS) information system to collect daily sales information and guest demographics. Salon employees deposit cash receipts into a local bank account on a daily basis. The POS system sends the amount expected to be deposited to the corporate office, where the amount is reconciled daily with local deposits transferred into a centralized corporate bank account. The guest information is then used to determine effectiveness of promotions and the loyalty base of each salon that feed into salon operational decisions. The information is also used to generate payroll information, monitor salon performance, manage salon staffing and payroll costs, and anticipate industry pricing and staffing trends. The corporate information systems deliver information on product sales to improve its inventory control system, including recommendations for each salon of monthly product replenishments. Recent innovations to increase inventory cycle counts and install high speed connections at each salon are expected to improve stylist productivity and improve guest satisfaction with the checkout process.

        The goal of information systems is to maximize the overall value to the business while improving the output per dollar spent by implementing cost-effective solutions and services. Management believes that its information systems provide the Company with operational efficiencies as well as advantages in planning and analysis which are generally not available to competitors. The Company continually reviews and improves its information systems to ensure systems and processes are kept up to date and that they will meet the growing needs of the Company.

        Historically, because of the Company's large size and scale requirements it has been necessary for the Company to internally develop and support its own proprietary POS information system. During fiscal year 2011, the Company identified a third party POS software alternative that has a system that meets our current and future functionality requirements including enhanced guest demographics. The Company began implementing this new technology in our salons in fiscal year 2012 and will continue to implement as technology will allow, which will allow the Company to stay current and meet guests' expectations.

Salon Competition:

        The 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 from smaller chains of salons such as Great Clips, Fantastic Sams and Sport Clips and within malls from companies which operate salons within department stores, independently owned salons and, to a lesser extent, salons which, although independently owned, are operating under franchises from a franchising company that may assist such salons in areas of training, marketing and advertising.

        At the individual salon level the barriers to enter the market are not considerable; however, barriers exist for chains to expand nationally due to the need to establish systems and infrastructure, recruitment of experienced hair care management and adequate store staff, and leasing of quality sites. The principal factors of competition in the affordable hair care category are quality, consistency and convenience. The Company continually strives to improve its performance in each of these areas and to create additional points of differentiation versus the competition. In order to obtain locations in shopping malls, the Company must be competitive as to rentals and other customary tenant obligations.

18

Hair Restoration Business Strategy:

        On July 13, 2012, the Company entered into a definitive agreement to sell Hair Club to Aderans, Co., Ltd. for cash of $163.5 million excluding closing adjustments and transaction fees. Subsequent to fiscal year 2012, the net assets of Hair Club to be sold met the accounting criteria to be classified as held for sale and will be aggregated and reported in accordance with authoritative guidance in the Company's fiscal year 2013 first quarter Form 10-Q. The Company is currently anticipating recognizing an after-tax gain in the range of $8 to $12 million upon closing of the deal. The transaction is expected to close in the first or second fiscal quarter of 2013, and is subject to customary closing conditions.

        Hair Club is the largest U.S. provider of hair loss solutions and the only company offering a comprehensive menu of proven hair loss products and services. Hair Club leverages its strong brand, best-in-class service model and comprehensive menu of hair restoration alternatives to build an increasing base of repeat guests that generate recurring cash flow for the Company. From its traditional non-surgical hair replacement systems, to hair transplants, hair therapies and hair care products and services, Hair Club offers a solution for anyone experiencing or anticipating hair loss. Hair Club's operations, presented under the Hair Restoration Centers reporting unit, consist of 98 locations (29 franchise locations) in the United States and Canada. The domestic hair restoration market is estimated to generate over $4 billion annually. The competitive landscape is highly fragmented and comprised of approximately 4,000 locations. Hair Club and its franchisees have the largest market share, with approximately five percent based on guest count. In an effort to provide privacy to its guests, Hair Club offices are located primarily in office and professional buildings within larger metropolitan areas.

        The following table sets forth the number of company-owned and franchise hair restoration centers opened at the beginning and end of each of the last five fiscal years, as well as the number of centers opened, closed, relocated and acquired during each of these periods:

	2012			2011			2010			2009			2008
Company-owned hair restoration centers:
Open at beginning of period		67			62			62			57			49
Constructed		6			3			4			8			3
Acquired		—			—			—			—			—
Franchise buybacks		—			4			—			2			6
Less relocations		(3	)		(1	)		(4	)		(5	)		(1	)
Site openings		3			6			—			5			8
Sites closed		(1	)		(1	)		—			—			—
Total company-owned hair restoration centers		69			67			62			62			57
Franchise hair restoration centers:
Open at beginning of period		29			33			33			35			41
Acquired		—			—			—			—			2
Franchise buybacks		—			(4	)		—			(2	)		(6	)
Less Relocations		—			—			—			—			(2	)
Site openings		—			(4	)		—			(2	)		(6	)
Sites closed		—			—			—			—			—
Total franchise hair restoration centers		29			29			33			33			35
Total hair restoration centers		98			96			95			95			92

19

Affiliated Ownership Interests:

        The Company maintains ownership interests in salons, beauty schools and hair restoration centers. The primary ownership interests are in Provalliance, EEG and Hair Club for Men, Ltd., which are accounted for as equity method investments.

        The Company maintains a 46.7 percent ownership interest in Provalliance. The fiscal year 2008 merger of the operations of the European operating subsidiaries with the Franck Provost Salon Group created a newly formed entity, Provalliance. The Franck Provost Salon Group management structure has a proven platform to build and acquire company-owned stores as well as a strong franchise operating group that is positioned for expansion. In March of 2011, the Company acquired approximately 17 percent additional equity interest in Provalliance. In April 2012, the Company entered into a Share Purchase Agreement (Agreement) to sell the Company's 46.7 percent equity interest in Provalliance to the Provost Family for a purchase price of €80 million. The transaction is expected to close no later than September 30, 2012 and is subject to the Provost Family securing financing for the purchase price.

        The Company maintains a 55.1 percent ownership interest in EEG. Contributing the Company's beauty schools in fiscal year 2008 to EEG leverages EEG's management expertise, while enabling the Company to maintain a vested interest in the beauty school industry.

        The Company's 50.0 percent ownership in Hair Club for Men, Ltd., which operates Hair Club centers in Illinois and Wisconsin, is included in the definitive agreement entered into on July 13, 2012 to divest Hair Club. The transaction is expected to close during the first half of fiscal year 2013.

Corporate Trademarks:

        The Company holds numerous trademarks, both in the United States and in many foreign countries. The most recognized trademarks are "Regis Salons," "Supercuts," "MasterCuts," "SmartStyle," "Cost Cutters," "Hair Masters," "First Choice Haircutters," "Magicuts" and "Hair Club for Men and Women."

        "Sassoon" is a registered trademark of Procter & Gamble. The Company has a license agreement to use the Sassoon name for existing salons and academies, and new salon development.

        Although the Company believes the use of these trademarks is an element in establishing and maintaining its reputation as a national operator of high quality hairstyling salons, and is committed to protecting these trademarks by vigorously challenging any unauthorized use, the Company's success and continuing growth are the result of the quality of its salon location selections and real estate strategies.

Corporate Employees:

        During fiscal year 2012, the Company had approximately 52,000 full- and part-time employees worldwide, of which approximately 46,000 employees were located in the United States. None of the Company's employees is subject to a collective bargaining agreement and the Company believes that its employee relations are amicable.

Executive Officers:

        On July 11, 2012, the Company announced that Daniel Hanrahan was named President and CEO, effective August 6, 2012, and also became a member of the Regis Board of Directors on that date. In January 2012, Eric Bakken, Executive Vice President, General Counsel and Business Development, was appointed to assume the role of Interim Corporate Chief Operating Officer. Randy Pearce retired as President effective June 30, 2012. Paul Finkelstein retired as Chief Executive Officer effective February 2012.

20

        Information relating to Executive Officers of the Company follows:

Name	Age		Position
Daniel Hanrahan		55	President and Chief Executive Officer
Eric Bakken		45	Executive Vice President, General Counsel and Business Development and Interim Corporate Chief Operating Officer
Norma Knudsen		54	Executive Vice President, Merchandising
Brent Moen		45	Senior Vice President and Chief Financial Officer

        Daniel Hanrahan was appointed to President and Chief Executive Officer in August 2012. He most recently served as President of Celebrity Cruises at Royal Caribbean Cruises Ltd. from February 2005 to July 2012, and as its President and Chief Executive Officer since September 2007.

        Eric Bakken has served as Executive Vice President since 2010. He was appointed to Interim Corporate Chief Operating Officer in January 2012. He performed the function of principal executive officer between July 2012 and August 2012. He served as Senior Vice President from 2006 to 2009, General Counsel from 2004 to 2006, as Vice President, Law from 1998 to 2004 and as a lawyer to the Company from 1994 to 1998.

        Norma Knudsen has served as Executive Vice President, Merchandising since July 2006. She served as Chief Operating Officer, Trade Secret from February 1999 through 2009 and as Vice President, Trade Secret Operations from 1995 to 1999.

        Brent Moen was appointed to Senior Vice President and Chief Financial Officer in 2011. He served as Vice President and Corporate Controller from 2006 to 2011, as Vice President of Finance from 2002 to 2006, and as Director of Finance from 2000 to 2002.

Governmental Regulations:

        The Company is subject to various federal, state, local and provincial laws affecting its business as well as a variety of regulatory provisions relating to the conduct of its beauty related business, including health and safety.

        In the United States, the Company's franchise operations are subject to the Federal Trade Commission's Trade Regulation Rule on Franchising (the FTC Rule) and by state laws and administrative regulations that regulate various aspects of franchise operations and sales. The Company's franchises are offered to franchisees by means of an offering circular/disclosure document containing specified disclosures in accordance with the FTC Rule and the laws and regulations of certain states. The Company has registered its offering of franchises with the regulatory authorities of those states in which it offers franchises and in which such registration is required. State laws that regulate the franchisor-franchisee relationship presently exist in a substantial number of states and, in certain cases, apply substantive standards to this relationship. Such laws may, for example, require that the franchisor deal with the franchisee in good faith, may prohibit interference with the right of free association among franchisees, and may limit termination of franchisees without payment of reasonable compensation. The Company believes that the current trend is for government regulation of franchising to increase over time. However, such laws have not had, and the Company does not expect such laws to have, a significant effect on the Company's operations.

        In Canada, the Company's franchise operations are subject to both the Alberta Franchise Act and the Ontario Franchise Act. The offering of franchises in Canada occurs by way of a disclosure document, which contains certain disclosures required by the Ontario and Alberta Franchise Acts. Both the Ontario and Alberta Franchise Acts primarily focus on disclosure requirements, although each requires certain relationship requirements such as a duty of fair dealing and the right of franchisees to associate and organize with other franchisees.

21

        Governmental regulations surrounding franchise operations in Europe are similar to those in the United States. The Company believes it is operating in substantial compliance with applicable laws and regulations governing all of its operations.

        The Company maintains an ownership interest in EEG. Beauty schools derive a significant portion of their revenue from student financial assistance originating from the U.S Department of Education's Title IV Higher Education Act of 1965. For the students to receive financial assistance at the school, the beauty schools must maintain eligibility requirements established by the U.S Department of Education.

        In June 2012, the United States Supreme Court upheld the Patient Protection and Affordable Care Act (Act). We expect the Act will increase our annual employee healthcare costs, with significant increases commencing in fiscal year 2014.

Financial Information about Foreign and North American Operations

        Financial information about foreign and North American markets is incorporated herein by reference to Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 and segment information in Note 15 to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.

Available Information

        The Company is subject to the informational requirements of the Securities and Exchange Act of 1934 (Exchange Act). The Company therefore files periodic reports, proxy statements and other information with the Securities and Exchange Commission (SEC). Such reports may be obtained by visiting the Public Reference Room of the SEC at 100 F Street NE, Washington, DC 20549, or by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an internet site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically.

        Financial and other information can be accessed in the Investor Information section of the Company's website at www.regiscorp.com. The Company makes available, free of charge, copies of its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after filing such material electronically or otherwise furnishing it to the SEC.

Item 1A.    Risk Factors

Changes in the general economic environment may impact our business and results of operations.

        Changes to the United States, Canadian, United Kingdom, Asian and other European economies have an impact on our business. General economic factors that are beyond our control, such as interest rates, recession, inflation, deflation, tax rates and policy, energy costs, unemployment trends, and other matters that influence consumer confidence and spending, may impact our business. In particular, visitation patterns to our salons and hair restoration centers can be adversely impacted by increases in unemployment rates and decreases in discretionary income levels.

If we continue to have negative same-store sales our business and results of operations may be affected.

        Our success depends, in part, upon our ability to improve sales, as well as both gross margins and operating margins. Comparable same-store sales are affected by average ticket and same-store guest visits. A variety of factors affect same-store guest visits, including the guest experience, fashion trends, competition, current economic conditions, changes in our product assortment, the success of marketing

22

programs and weather conditions. These factors may cause our comparable same-store sales results to differ materially from prior periods and from our expectations. Our comparable same-store sales results for the twelve months ended June 30, 2012 declined 3.1 percent compared to the twelve months ended June 30, 2011. During fiscal year 2012, we impaired $67.7 and $78.4 million of goodwill associated with our Regis salon concept and Hair Restoration Centers reporting units, respectively. We impaired $74.1 million of goodwill associated with our Promenade salon concept during fiscal year 2011 and $35.3 million of goodwill associated with our Regis salon concept during fiscal year 2010. We also impaired $41.7 million of goodwill associated with our salon concepts in the United Kingdom during fiscal year 2009. If negative same-store sales continue and we are unable to offset the impact with operational savings, our financial results may be further affected. We may be required to take additional impairment charges and to impair certain long-lived assets and goodwill and such impairments could be material to our consolidated balance sheet and results of operations. The concept that has the highest likelihood of impairment is Promenade. As previously disclosed, the Company has agreed to sell the Hair Restoration Centers reporting unit in the first half of fiscal year 2013; however, until this reporting unit is sold it is reasonably likely there could be impairment of goodwill in future periods.

        If we are unable to improve our comparable same-store sales on a long-term basis or offset the impact with operational savings, our financial results may be affected. Furthermore, continued declines in same-store sales performance may cause us to be in default of certain covenants in our financing arrangements.

The Board of Directors is engaged in a strategic review of non-core assets that may impact our business and results of operations.

        Our strategic review of non-core assets may adversely affect our financial condition and operating results or impose other risk, such as the following:

•

Disruption of our business or distraction of our employees and management;

•

Difficulty recruiting, hiring, motivating and retaining talented and skilled personnel;

•

Increased stock price volatility;

•

Difficulty in establishing, maintaining or negotiating business or strategic relationships or transactions; and

•

Increased advisory fees.

        On July 13, 2012, the Company entered into a definitive agreement to sell its Hair Club for Men and Women business (Hair Club), a provider of hair restoration services. The transaction is expected to close during the first half of fiscal year 2013.

Changes in our management and organizational structure may affect our operating results.

        On July 11, 2012, the Company announced that Mr. Daniel J. Hanrahan was appointed President and Chief Executive Officer of the Company, effective August 6, 2012. The changes to our management and organizational structure may adversely affect our financial condition and operating results or impose other risk, such as the following:

•

Disruption of our business or distraction of our employees and management;

•

Difficulty recruiting, hiring, motivating and retaining talented and skilled personnel;

•

Increased stock price volatility; and

•

Difficulty in establishing, maintaining or negotiating business or strategic relationships or transactions.

23

Failure to control cost may adversely affect our operating results.

        We must continue to control our expense structure. Failure to manage our cost of product, labor and benefit rates, advertising and marketing expenses, operating lease costs, other store expenses or indirect spending could delay or prevent us from achieving increased profitability or otherwise adversely affect our operating results.

Changes in our key relationships may adversely affect our operating results.

        We maintain key relationships with certain companies, including Walmart. Termination or modification of any of these relationships, including Walmart, could significantly reduce our revenues and have a material and adverse impact on our business, our operating results and our ability to grow.

Changes in fashion trends may impact our revenue.

        Changes in consumer tastes and fashion trends can have an impact on our financial performance. For example, trends in wearing longer hair may reduce the number of visits to, and therefore, sales at our salons.

The health care reform legislation may adversely affect our operating results.

        In March 2010, the United States government enacted comprehensive health care reform legislation, which, among other things, includes guaranteed coverage requirements, eliminates pre-existing condition exclusions and annual and lifetime maximum limits, restricts the extent to which policies can be rescinded and imposes new and significant taxes on health insurers and health care benefits. The current legislation imposed implementation dates beginning in 2010 and extending through 2020, with many of the reform components requiring additional guidance from government agencies or federal regulators. Due to the lack of interpretative guidance and the phased-in nature of the reform, it is difficult to determine at this time what the impact of the health care reform legislation will be on our future financial results. Possible adverse impacts of the health care reform legislation include, but are not limited to, increased costs, exposure to expanded liability and requirements for us to revise the way we provide health care and other benefits to our employees. As a result, the impact of the health care reform legislation could have a material and adverse impact on our results of operations.

Changes in regulatory and statutory laws may result in increased costs to our business.

        With approximately 12,600 locations and 52,000 employees worldwide, our financial results can be adversely impacted by regulatory or statutory changes in laws. Due to the number of people we employ, laws that increase minimum wage rates or increase costs to provide employee benefits may result in additional costs to our company. Compliance with new, complex and changing laws may cause our expenses to increase. In addition, any non-compliance with these laws could result in fines, product recalls and enforcement actions or otherwise restrict our ability to market certain products, which could adversely affect our business, financial condition and results of operations. We are also subject to laws that affect the franchisor-franchisee relationship.

If we are not able to successfully compete in our business segments, our financial results may be affected.

        Competition on a market by market basis remains strong as many smaller chain competitors are franchise systems with local operating strength in certain markets. Therefore, our ability to raise prices in certain markets can be adversely impacted by this competition. If we are not able to raise prices, our ability to grow same-store sales and increase our revenue and earnings may be impaired.

24

If our joint ventures are unsuccessful our financial results may be affected.

        We have entered into joint venture arrangements with other companies in the hair salon and beauty school businesses in order to maintain and expand our operations in the United States, Asia and continental Europe. If our joint venture partners are unwilling or unable to devote their financial resources or marketing and operational capabilities to our joint venture businesses, or if any of our joint ventures are terminated, we may not be able to realize anticipated revenues and profits in the countries where our joint ventures operate and our business could be materially adversely affected. If our joint venture arrangements are not successful, we may have a limited ability to terminate or modify these arrangements. If any of our joint ventures are terminated, there can be no assurance that we will be able to attract new joint venture partners to continue the activities of the terminated joint venture or to operate independently in the countries in which the terminated joint venture conducted business.

        On April 9, 2012, the Company entered into the Agreement to sell the Company's 46.7 percent equity interest in Provalliance to the Provost family for a purchase price of €80 million. The transaction is expected to close no later than September 30, 2012 and is subject to the Provost family securing financing for the purchase price. The purchase price was negotiated independently of the equity put and the equity put and equity call will automatically terminate upon closing. If the closing does not occur by September 30, 2012, the Provost family will not be entitled to exercise their equity put rights until September 30, 2014.

        In connection with executing the Agreement, the Company recorded a $37.4 million other than temporary impairment charge during the twelve months ended June 30, 2012 related to the difference between the purchase price and carrying value of its investment in Provalliance.

        During fiscal year 2012, we recorded an impairment of $19.4 million related to our investment in EEG. During fiscal year 2011, we recorded an impairment of $9.2 million related to our investment in MY Style. During fiscal year 2009, we recorded impairments of $25.7 million and $7.8 million ($4.8 million net of tax) related to our investment in Provalliance and investment in and loans to Intelligent Nutrients, LLC, respectively. Due to economic and other factors, we may be required to take additional impairment charges related to our investments and such impairments could be material to our consolidated balance sheet and results of operations. In addition, our joint venture partners may be required to take impairment charges related to long-lived assets and goodwill, and our share of such impairment charges could be material to our consolidated balance sheet and results of operations. Specific to EEG, the for-profit post secondary educational market has experienced further and substantial declines in late July and August of 2012. Should this continue or not reverse, an additional impairment would be more likely than not during fiscal year 2013. For example, during fiscal year 2012 we recorded $8.7 million for our share of an intangible asset impairment recorded by EEG. Our share of our investment's goodwill balances as of June 30, 2012 is approximately $95 million. Upon completion of the sale of Provalliance our share of our investment's goodwill balances will decrease to approximately $16 million.

We are subject to default risk on our accounts and notes receivable.

        We have outstanding accounts and notes receivable subject to collectability. If the counterparties are unable to repay the amounts due or if payment becomes unlikely our results of operations would be adversely affected. For example, in fiscal year 2011 the Company recorded a $31.2 million valuation reserve on the note receivable from the purchaser of Trade Secret to reflect the net realizable value.

Changes in manufacturers' choice of distribution channels may negatively affect our revenues.

        The retail products that we sell are licensed to be carried exclusively by professional salons. The products we purchase for sale in our salons are purchased pursuant to purchase orders, as opposed to long-term contracts and generally can be terminated by the producer without much advance notice.

25

Should the various product manufacturers decide to utilize other distribution channels, such as large discount retailers, it could negatively impact the revenue earned from product sales.

Changes to interest rates and foreign currency exchange rates may impact our results from operations.

        Changes in interest rates will have an impact on our expected results from operations. Currently, we manage the risk related to fluctuations in interest rates through the use of fixed rate debt instruments and other financial instruments.

We rely heavily on our management information systems. If our systems fail to perform adequately or if we experience an interruption in their operation, our results of operations may be affected.

        The efficient operation of our business is dependent on our management information systems. We rely heavily on our management information systems to collect daily sales information and guest demographics, generate payroll information, monitor salon performance, manage salon staffing and payroll costs, inventory control and other functions. The failure of our management information systems to perform as we anticipate, or to meet the continuously evolving needs of our business, could disrupt our business and may adversely affect our operating results.

        In fiscal year 2012 the Company began the process of implementing a new point-of-sale system in our salons and will continue to implement as technology will allow. Failure to effectively implement the point-of-sale system may adversely affect our operating results.

If we fail to protect the security of personal information about our guests, we could be subject to costly government enforcement actions or private litigation and our reputation could suffer.

        The nature of our business involves processing, transmission and storage of personal information about our guests. If we experience a data security breach, we could be exposed to government enforcement actions and private litigation. In addition, our guests could lose confidence in our ability to protect their personal information, which could cause them to stop visiting our salons altogether. Such events could lead to lost future sales and adversely affect our results of operations.

Certain of the terms and provisions of the convertible notes we issued in July 2009 may adversely affect our financial condition and operating results and impose other risks.

        In July 2009, we issued $172.5 million aggregate principal amount of our 5.0 percent convertible senior notes due 2014 in a public offering. Certain terms of the notes we issued may adversely affect our financial condition and operating results or impose other risks, such as the following:

•

Holders of notes may convert their notes into shares of our common stock, which may dilute the ownership interest of our shareholders,

•

If we elect to settle all or a portion of the conversion obligation exercised by holders of the notes through the payment of cash, it could adversely affect our liquidity,

•

Holders of notes may require us to purchase their notes upon certain fundamental changes, and any failure by us to purchase the notes in such event would result in an event of default with respect to the notes,

•

The fundamental change provisions contained in the notes may delay or prevent a takeover attempt of the Company that might otherwise be beneficial to our investors,

•

Our ability to pay principal and interest on the notes depends on our future operating performance and any failure by us to make scheduled payments could allow the note holders to declare all outstanding principal and interest to be due and payable, result in termination of other debt commitments and foreclosure proceedings by other lenders, or force us into bankruptcy or liquidation, and

26

•

The debt obligations represented by the notes may limit our ability to obtain additional financing, require us to dedicate a substantial portion of our cash flow from operations to pay our debt, limit our ability to adjust rapidly to changing market conditions and increase our vulnerability to downtowns in general economic conditions in our business.

Item 1B.    Unresolved Staff Comments

        None.

Item 2.    Properties

        The Company's corporate offices are headquartered in a 270,000 square foot, four building complex in Edina, Minnesota owned or leased by the Company. The Company also operates small offices in Toronto, Canada; Coventry and London, England; Boca Raton, Florida; and Chattanooga, Tennessee. These offices are occupied under long-term leases.

        The Company owns distribution centers located in Chattanooga, Tennessee and Salt Lake City, Utah. The Chattanooga facility currently utilizes 230,000 square feet while the Salt Lake City facility utilizes 210,000 square feet. The Salt Lake City facility may be expanded to 290,000 square feet to accommodate future growth.

        The Company operates all of its salon locations and hair restoration centers under leases or license agreements. Substantially all of its North American locations in regional malls are operating under leases with an original term of at least ten years. Salons operating within strip centers and Walmart Supercenters have leases with original terms of at least five years, generally with the ability to renew, at the Company's option, for one or more additional five year periods. Salons operating within department stores in Canada and Europe operate under license agreements, while freestanding or shopping center locations in those countries have real property leases comparable to the Company's domestic locations.

        The Company also leases the premises in which certain franchisees operate and has entered into corresponding sublease arrangements with the franchisees. These leases have a five year initial term and one or more five year renewal options. All lease costs are passed through to the franchisees. Remaining franchisees, who do not enter into sublease arrangements with the Company, negotiate and enter into leases on their own behalf.

        None of the Company's salon leases are individually material to the operations of the Company, and the Company expects that it will be able to renew its leases on satisfactory terms as they expire. See Note 10 to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.

Item 3.    Legal Proceedings

        The Company is a defendant in various lawsuits and claims arising out of the normal course of business. Like certain other large retail employers, the Company has been faced with allegations of purported class-wide consumer and wage and hour violations. In addition, the Company is a nominal defendant, and nine current and former directors and officers of the Company are named defendants, in a shareholder derivative action in Minnesota state court. The derivative shareholder alleges that the individual defendants breached their fiduciary duties to the Company in connection with their approval of certain executive compensation arrangements and certain related party transactions. A Special Litigation Committee has been formed per the direction of the judge in the matter. The Company is working with outside counsel to formulate its next steps in keeping with the court. Litigation is inherently unpredictable and the outcome of these matters cannot presently be determined. Although the actions are being vigorously defended, the Company could in the future incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations in any particular period.

27

        During fiscal year 2012, the Company was awarded $1.1 million in conjunction with a class-action lawsuit.

        During fiscal year 2011, the Company settled a legal claim with the former owner of Hair Club for $1.7 million.

        During fiscal year 2010, the Company settled two legal claims regarding certain guest and employee matters for an aggregate charge of $5.2 million plus a commitment to provide discount coupons. During the twelve months ended June 30, 2011 and 2010, payments aggregating $4.3 million and $0.9 million, respectively, were made.

Item 4.    Mine Safety Disclosures

        None.

PART II

Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Repurchase of Equity Securities

(a)

Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder Matters; Performance Graph

        Regis common stock is listed and traded on the New York Stock Exchange under the symbol "RGS."

        The accompanying table sets forth the high and low closing bid quotations for each quarter during fiscal years 2012 and 2011 as reported by the New York Stock Exchange (under the symbol "RGS"). The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not necessarily represent actual transactions.

        As of August 13, 2012, Regis shares were owned by approximately 22,000 shareholders based on the number of record holders and an estimate of individual participants in security position listings. The common stock price was $17.14 per share on August 13, 2012.

	2012				2011
Fiscal Quarter	High		Low		High		Low
1st Quarter	$	15.90	$	12.46	$	19.53	$	12.84
2nd Quarter		17.36		13.79		21.69		15.58
3rd Quarter		18.65		15.02		18.47		16.25
4th Quarter		18.91		17.04		19.20		13.83

        The Company paid quarterly dividends of $0.06 per share during fiscal year 2012 and during each of the three month periods ended March 31, 2011 and June 30, 2011. The Company paid quarterly dividends of $0.04 per share during each of the three month periods ended September 30, 2010 and December 31, 2010. The Company expects to continue paying regular quarterly dividends in the foreseeable future.

Notwithstanding anything to the contrary set forth in any of our previous filings under the Securities Act of 1933 or the Securities Exchange Act of 1934 that might incorporate future filings or this Annual Report, the following performance graph and accompanying data shall not be deemed to be incorporated by reference into any such filings. In addition, they shall not be deemed to be "soliciting material" or "filed" with the SEC.

        The following graph compares the cumulative total shareholder return on the Company's stock for the last five years with the cumulative total return of the Standard and Poor's 500 Stock Index and the

28

cumulative total return of a peer group index (the Peer Group) constructed by the Company. In addition, the Company has included the Standard and Poor's 400 Midcap Index and the Dow Jones Consumer Services Index in this analysis because the Company believes these two indices provide a comparative correlation to the cumulative total return of an investment in shares of Regis Corporation.

        The Peer Group consists of the following companies: Advance Auto Parts, Inc., Boyd Gaming Corp., Brinker International, Inc., Coinstar, Inc., Cracker Barrel Old Country Store, DineEquity, Inc., Fossil, Inc., Fred's, Inc., Green Mountain Coffee Roasters, H&R Block, Inc., Jack in the Box, Inc., Panera Bread Co., Penn National Gaming, Inc., Revlon, Inc., Sally Beauty Holdings, Inc., Service Corporation International, The Cheesecake Factory, Inc., and Ulta Salon, Inc. The Peer Group is a self-constructed peer group of companies that have comparable annual revenues, the guest service element is a critical component to the business, and a target of moderate guests in terms of income and style, excluding apparel companies.

        The comparison assumes the initial investment of $100 in the Company's Common Stock, the S&P 500 Index, the Peer Group, the S&P 400 Midcap Index and the Dow Jones Consumer Services Index on June 30, 2007 and those dividends, if any, were reinvested.

Comparison of 5 Year Cumulative Total Return
Assumes Initial Investment of $100
June 2012

	2007		2008		2009		2010		2011		2012
Regis	$	100.00	$	69.27	$	46.26	$	41.77	$	41.59	$	49.48
S & P 500		100.00		86.88		64.10		73.35		95.87		101.07
S & P 400 Midcap		100.00		92.66		66.70		83.32		116.14		113.42
Dow Jones Consumer Service Index		100.00		78.98		65.19		80.13		110.33		125.00
Peer Group		100.00		74.45		69.66		81.55		146.95		131.79

(b)

Share Repurchase Program

        In May 2000, the Company's Board of Directors (BOD) approved a stock repurchase program. Originally, the program authorized up to $50.0 million to be expended for the repurchase of the Company's stock. The BOD elected to increase this maximum to $100.0 million in August 2003, to $200.0 million on May 3, 2005, and to $300.0 million on April 26, 2007. The timing and amounts of any repurchases will depend on many factors, including the market price of the common stock and overall

29

market conditions. Historically, the repurchases to date have been made primarily to eliminate the dilutive effect of shares issued in conjunction with acquisitions, restricted stock grants and stock option exercises. All repurchased shares become authorized but unissued shares of the Company. This repurchase program has no stated expiration date. As of June 30, 2012, 2011, and 2010, a total accumulated 6.8 million shares have been repurchased for $226.5 million. As of June 30, 2012, $73.5 million remains to be spent on share repurchases under this program.

        The Company did not repurchase any of its common stock through its share repurchase program during the twelve months ended June 30, 2012 and 2011.

CEO and CFO Certifications

        The certifications by our chief executive officer (CEO) and chief financial officer required under Section 302 of the Sarbanes-Oxley Act of 2002, have been filed as exhibits to this Annual Report on Form 10-K. Our CEO's annual certification pursuant to NYSE Corporate Governance Standards Section 303A.12(a) that our CEO was not aware of any violation by the Company of the NYSE's Corporate Governance listing standards was submitted to the NYSE on November 23, 2011.

Item 6.    Selected Financial Data

        Beginning with the period ended December 31, 2008 the operations of Trade Secret concept within the North American reportable segment were accounted for as discontinued operations. All periods presented will reflect Trade Secret as a discontinued operation. The following discussion of results of operations will reflect results from continuing operations. Discontinued operations will be discussed at the end of this section.

        The following table sets forth, in thousands (except per share data), for the periods indicated, selected financial data derived from the Company's Consolidated Financial Statements in Part II, Item 8.

	2012			2011			2010		2009		2008
Revenues(a)	$	2,273,779		$	2,325,869		$	2,358,434	$	2,429,787	$	2,481,391
Operating (loss) income(b)		(67,313	)		3,948			97,218		109,073		173,340
(Loss) income from continuing operations(c)		(115,192	)		(8,905	)		39,579		6,970		83,901
(Loss) income from continuing operations per diluted share(c)		(2.02	)		(0.16	)		0.71		0.16		1.92
Total assets		1,571,846			1,805,753			1,919,572		1,892,486		2,235,871
Long-term debt and capital lease obligations, including current portion		287,674			313,411			440,029		634,307		764,747
Dividends declared	$	0.24		$	0.20		$	0.16	$	0.16	$	0.16

(a)

Revenues from salons or hair restorations centers acquired each year were $16.1, $25.6, $17.8, $82.1, and $110.0 million during fiscal years 2012, 2011, 2010, 2009, and 2008, respectively. Revenues from the deconsolidated European franchise salon operations were $36.2 million in fiscal year 2008.

(b)

The following significant items affected operating (loss) income:

•

Impairment charges of $67.7 and $78.4 million associated with the Company's Regis salon concept and Hair Restoration Centers, respectively, were recorded in fiscal year 2012. An impairment charge of $74.1 million associated with the Company's Promenade salon concept was recorded in fiscal year 2011. An impairment charge of $35.3 million associated with the

30

Company's Regis salon concept was recorded in fiscal year 2010. An impairment charge of $41.7 million associated with the Company's United Kingdom salon division was recorded in fiscal year 2009.

•

During fiscal year 2012, the Company recorded incremental depreciation expense of $16.2 million ($10.2 million net of tax or $0.18 per diluted share) associated with the adjustment at June 30, 2011 to the useful life of the Company's internally developed POS system.

•

During fiscal year 2012, the Company recorded $9.8 million in senior management restructuring and other severance charges.

•

Loss development was recorded in fiscal years 2012, 2011, 2010, 2009, and 2008 related to a change in estimate of the Company's self insurance accruals, primarily prior years' workers' compensation claims reserves. Site operating expenses increased by $0.7 and $1.4 million, and decreased by $1.7, $9.9, and $6.9 million in fiscal years 2012, 2011, 2010, 2009, and 2008, respectively, as a result of the change in estimate.

•

During fiscal year 2011, the Company recorded a $31.2 million valuation reserve related to the note receivable with the purchaser of Trade Secret.

•

Charges of $2.1 and $5.7 million were recorded in fiscal years 2010 and 2009, respectively associated with disposal charges and lease termination fees related to the closure of salons other than in the normal course of business.

•

During fiscal year 2011, the Company settled a legal claim with the former owner of Hair Club for $1.7 million. Fiscal year 2010 included a $5.2 million charge related to the settlement of two legal claims regarding certain guest and employee matters.

•

Operating income from the deconsolidated European franchise salon operations was $5.1 million in fiscal year 2008.

(c)

The following significant items affected (loss) income from continuing operations and (loss) income from continuing operations per diluted share:

•

During fiscal year 2012, the Company recorded a net $17.2 million other than temporary net impairment charge within equity in (loss) income of affiliated companies associated with the Agreement to sell the Company's 46.7 percent equity interest in Provalliance to the Provost Family for a purchase price of €80 million. During fiscal year 2012, the Company recorded a $19.4 million other than temporary impairment on its investment in EEG and also recorded $8.7 million for the Company's share of an intangible asset impairment recorded by EEG. During fiscal year 2011, the Company recorded a $9.2 million other than temporary impairment on its investment in preferred shares of Yamano and premium paid at the time of it initial investment in MY Style. Impairment charges of $25.7 and $7.8 million associated with the Company's investment in Provalliance and for the full carrying value of our investment in and loans to Intelligent Nutrients, LLC were recorded in fiscal year 2009.

•

During fiscal year 2012, the Company recorded $1.1 million of other income associated with a favorable legal settlement.

•

During fiscal year 2011, the Company recognized a net gain of approximately $2.4 million representing the settlement of a portion of the company's equity put liability and additional ownership of the Frank Provost Group in Provalliance, for the March 2011 acquisition of the approximately 17 percent additional ownership interest in Provalliance.

•

Fiscal year 2010 includes interest expense of $18.0 million related to make-whole payments and other fees associated with the repayment of private placement debt.

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•

An income tax charge of approximately $3.8 million was recorded during fiscal year 2009 associated with an adjustment to correct our prior year deferred income tax balances. An income tax charge of approximately $3.0 million of which $1.3 million was recorded through income tax expense and $1.7 million was recorded through other comprehensive income during fiscal year 2008 was associated with repatriating approximately $30.0 million of cash previously considered to be indefinitely reinvested outside of the United States.

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

        Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is designed to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. Our MD&A is presented in five sections:

•

Management's Overview

•

Critical Accounting Policies

•

Overview of Fiscal Year 2012 Results

•

Results of Operations

•

Liquidity and Capital Resources

MANAGEMENT'S OVERVIEW

        Regis Corporation (RGS) owns or franchises beauty salons and hair restoration centers. As of June 30, 2012, we owned, franchised or held ownership interests in approximately 12,600 worldwide locations. Our locations consisted of 9,738 system wide North American and international salons, 98 hair restoration centers, and 2,811 locations in which we maintain a non-controlling ownership interest less than 100 percent. Our salon concepts offer generally similar products and services and serve mass market consumers. Our salon operations are organized to be managed based on geographical location. Our North American salon operations include 9,340 salons, including 2,016 franchise salons, operating in the United States, Canada and Puerto Rico primarily under the trade names of Regis Salons, MasterCuts, SmartStyle, Supercuts and Cost Cutters. Our international salon operations include 398 salons located in Europe, primarily in the United Kingdom. Hair Club for Men and Women includes 98 North American locations, including 29 franchise locations. During fiscal year 2012, we had approximately 52,000 corporate employees worldwide.

        Our fiscal year 2013 growth strategy is focused on improving the guest experience. We plan to execute our strategy by putting guests and stylists first, leveraging the power of our salon brands, focusing on technology and connectivity, and reviewing our non-core assets. Initiatives include:

•

Putting guests and stylists first by improving both the experience for the person in the chair and behind the chair. The Company continues to work on attracting, developing and retaining the best stylists through orientation programs, training and development and rewards and recognition through a performance driven culture.

•

Leveraging the power of our salon brands through focusing on the best brands within the best markets.

•

Using technology and connectivity, including internet in the salons, to enhance effectiveness of field management and improve guest satisfaction and retention.

•

Reviewing non-core assets.

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Salon Business

        The strength of our salon business is in the fundamental similarity and broad appeal of our salon concepts. Each concept generally targets the middle market guest, however, each attracts a different demographic.

        We execute our salon growth strategy by focusing on real estate. Our salon real estate strategy is to add new units in convenient locations with good visibility and guest traffic, as well as appropriate trade demographics. Our various salon and product concepts operate in a wide range of retailing environments, including regional shopping malls, strip centers and Walmart Supercenters. We believe that the availability of real estate will augment our ability to achieve the aforementioned long-term growth objectives.

        Organic salon revenue is achieved through the combination of new salon construction and salon same-store sales results. Older, unprofitable salons will be closed or relocated. Although we have generally been experiencing negative same-store sales we believe our strategy of focusing on the in-salon guest experience will improve same-store sales.

        Historically, our salon acquisitions have varied in size from as small as one salon to over one thousand salons. The median acquisition size is approximately ten salons. From fiscal year 1994 to fiscal year 2012, we acquired 8,052 salons, net of franchise buybacks.

Hair Restoration Business

        In December 2004, we acquired Hair Club for Men and Women. Hair Club for Men and Women is a provider of hair loss solutions with an estimated five percent share of the $4 billion domestic market. This industry is comprised of numerous locations domestically and is highly fragmented. In an effort to provide confidentiality for guests, the hair restoration centers operate primarily in professional or medical office buildings. Further, the hair restoration business is more marketing intensive. As a result, organic growth at hair restoration centers is dependant on successfully generating new leads and converting them into hair restoration guests.

        During the fiscal year ended June 30, 2012, the Company began reviewing alternatives for non-core assets. On July 13, 2012, the Company entered into a definitive agreement to sell its Hair Club for Men and Women business (Hair Club), a provider of hair restoration services. The transaction is expected to close during the first half of fiscal year 2013.

CRITICAL ACCOUNTING POLICIES

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

        Our significant accounting policies can be found in Note 1 to the Consolidated Financial Statements contained in Part II, Item 8 of this Form 10-K. We believe the following accounting policies are most critical to aid in fully understanding and evaluating our reported financial condition and results of operations.

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Investment In and Loans to Affiliates

        The Company has equity investments in securities of certain privately held entities. The Company accounts for these investments under the equity method of accounting. The Company also has loan receivables from certain of these entities. Investments accounted for under the equity method are recorded at the amount of the Company's investment and adjusted each period for the Company's share of the investee's income or loss. Investments are reviewed for changes in circumstance or the occurrence of events that suggest the Company's investment may not be recoverable. During fiscal year 2012, we recorded an impairment of $19.4 million related to our investment in EEG. In addition, during fiscal year 2012 we recorded a net $17.2 million other than temporary net impairment charge associated with the Share Purchase Agreement to sell the Company's 46.7 percent equity interest in Provalliance to the Provost Family for a purchase price of €80 million. During fiscal year 2011, we recorded an impairment of $9.2 million related to our investment in MY Style.

Note Receivables, Net

        The note receivable balances within the Company's Consolidated Balance Sheet primarily include note receivables related to the Company's investments in EEG and MY Style, a note receivable with the purchaser of Trade Secret and note receivables with our franchisees. The balances are presented net of a valuation reserve for estimated losses. The Company monitors the financial condition of its counterparties with an outstanding note receivable and records provisions for estimated losses on receivables when it believes the counterparties are unable to make their required payments. The valuation reserve is the Company's best estimate of the amount of probable credit losses related to existing notes receivable.

        During the third quarter of fiscal year 2011, the Company did not receive a scheduled interest payment related to the outstanding note receivable with the purchaser of Trade Secret, the fair value of the collateral decreased to a level below the carrying value of the outstanding note receivable, and the purchaser of Trade Secret provided the Company with a new five year business plan that was well below their original projections. Due to these factors that occurred during the third quarter of fiscal year 2011, the Company evaluated the note receivable for impairment based on a probability weighted expected future cash flow analysis. During the third quarter of fiscal year 2011, the Company recorded a $9.0 million valuation reserve for the excess of the carrying value of the note receivable over the present value of expected future cash flows.

        During the fourth quarter of fiscal year 2011, the Company did not receive a scheduled interest payment related to the outstanding note receivable with the purchaser of Trade Secret and the fair value of the collateral continued to decrease and was at a level significantly below the carrying value of the outstanding note receivable. In addition, the Company received updated financial projections that were below the projections received during the third quarter of fiscal year 2011. Due to these negative financial events in the fourth quarter of fiscal year 2011, the Company performed an extensive evaluation on the Company's option to realize the collateral under the note receivable and recorded an additional $22.2 million valuation reserve that fully reserved the carrying value of the note receivable as of June 30, 2011. The carrying value of the note receivable continues to be fully reserved at June 30, 2012.

Goodwill

        Goodwill is tested for impairment annually or at the time of a triggering event. In evaluating whether goodwill is impaired, the Company compares the carrying value of each reporting unit, including goodwill, to the estimated fair value of the reporting unit. The carrying value of each reporting unit is based on the assets and liabilities associated with the operations of the reporting unit,

34

including allocation of shared or corporate balances among reporting units. Allocations are generally based on the number of salons in each reporting unit as a percent of total company-owned salons.

        The Company calculates the estimated fair value of the reporting units based on discounted future cash flows that utilize estimates in annual revenue, gross margins, fixed expense rates, allocated corporate overhead, and long-term growth rates for determining terminal value. The Company's estimated future cash flows also take into consideration acquisition integration and maturation. Where available and as appropriate, comparative market multiples are used in conjunction with the results of the discounted cash flows. The Company considers its various concepts to be reporting units when testing for goodwill impairment because that is where the goodwill resides. The Company periodically engages third-party valuation consultants to assist in evaluation of the Company's estimated fair value calculations.

        In the situations where a reporting unit's carrying value exceeds its estimated fair value, the amount of the impairment loss must be measured. The measurement of impairment is calculated by determining the implied fair value of a reporting unit's goodwill. In calculating the implied fair value of goodwill, the fair value of the reporting unit is allocated to all other assets and liabilities of that unit based on the relative fair values under the assumption of a taxable transaction. The excess of the fair value of the reporting unit over the amount assigned to its assets and liabilities is the implied fair value of goodwill. The goodwill impairment is measured as the excess of the carrying value of goodwill over its implied fair value.

        As previously disclosed, the Company concluded that it was reasonably likely that goodwill for the Regis and Hair Restoration Centers reporting units might become impaired in future periods.

        As a result of the Company's annual impairment testing of goodwill during the fourth quarter of fiscal year 2012, a $67.7 million impairment charge was recorded within continuing operations for the excess of the carrying value of goodwill over the implied fair value of the goodwill for the Regis salon concept. The Regis salon concept reported same-store sales of negative 4.0 percent for the ten months ended April 30, 2012, which was unfavorable compared to the Company's budgeted same-store sales. Visitation patterns did not rebound as quickly as the Company originally projected. Accordingly, the Company reduced the budgeted financial projections for future years. After the impairment charge the Regis salon concept reporting unit had $35.1 million of goodwill. The impairment was only partially deductible for tax purposes resulting in a tax benefit of $12.5 million.

        During the three months ended December 31, 2011 the Company updated the projections for the Hair Restoration Centers reporting unit used in the fiscal 2011 annual impairment test to reflect the impact of recent industry developments, including a slow down in revenue growth and increasing supply costs. The Company determined there was a triggering event as it was more likely than not that the fair value of the Hair Restoration Centers was below carrying value and performed an interim impairment test of goodwill during the three months ended December 31, 2011.

        As a result of the Company's interim impairment test of goodwill related to the Hair Restoration Centers reporting unit during the second quarter of fiscal year 2012, a $78.4 million impairment charge was recorded within continuing operations for the excess of the carrying value of goodwill over the implied fair value of the goodwill for the Hair Restorations Centers reporting unit. After the impairment charge the Hair Restoration Centers reporting unit had $74.4 million of goodwill. The impairment was only partially deductible for tax purposes resulting in a tax benefit of $5.9 million. See further discussion on the effective tax rate for the twelve months ended June 30, 2012 within Note 12 to the Consolidated Financial Statements.

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        A summary of the critical assumptions utilized during the fiscal year 2012 annual impairment test of the Regis salon concept are outlined below:

        Annual revenue growth.     Annual revenue growth is primarily driven by assumed same-store sales rates of approximately negative 2.0 to positive 3.0 percent. Other considerations include anticipated economic conditions and moderate acquisition growth.

        Gross margin.    Adjusted for anticipated salon closures, new salon construction and acquisitions estimated future gross margins were held constant.

        Fixed expense rates.     Fixed expense rate increases of approximately 1.0 to 2.0 percent based on anticipated inflation. Fixed expenses consisted of rent, site operating, and allocated general and administrative corporate overhead.

        Allocated corporate overhead.    Corporate overhead incurred by the home office based on the number of Regis salons as a percent of total company-owned salons.

        Long-term growth.     A long-term growth rate of 2.5 percent was applied to terminal cash flow based on anticipated economic conditions.

        Discount rate.     A discount rate of 11.0 percent based on the weighted average cost of capital that equals the rate of return on debt capital and equity capital weighted in proportion to the capital structure common to the industry.

        The following table summarizes the approximate impact that a change in certain critical assumptions would have on the estimated fair value of our Regis salon concept reporting unit (the approximate impact of the change in the critical assumptions assumes all other assumptions and factors remain constant):

Critical Assumptions	Increase (Decrease)			Approximate Decrease in Fair Value
				(In thousands)
Discount Rate		1.0	%	$	7,000
Same-Store Sales		(1.0	)		500

        As of our fiscal year 2012 annual impairment test, the estimated fair value of the Hair Restoration Centers reporting unit exceeded its respective carrying value by approximately 18.0 percent. As previously disclosed, the Company has agreed to sell the Hair Restoration Centers reporting unit in the first half of fiscal year 2013; however, until this reporting unit is sold it is reasonably likely that there could be impairment of the Hair Restoration Centers reporting unit's goodwill in future periods. The sensitivity of the Company's critical assumptions in estimating fair value of this reporting unit, the Company has provided additional information related to this reporting unit.

        A summary of the critical assumptions utilized during the fiscal year 2012 interim impairment test of the Hair Restoration Centers reporting unit are outlined below:

        Annual revenue growth.     Annual revenue growth is primarily driven by assumed same-store sales rates of approximately positive 1.0 to positive 3.0 percent. Other considerations include anticipated economic conditions and moderate acquisition growth.

        Gross margin.     Adjusted for anticipated center closures, new center construction and acquisitions. In addition, estimated future gross margins were adjusted for increasing supply costs.

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        Fixed expense rates.     Fixed expense rate increases of approximately 1.0 to 2.0 percent based on anticipated inflation. Fixed expenses consisted of rent, site operating, and allocated general and administrative corporate overhead.

        Allocated corporate overhead.     Corporate overhead incurred by the home office is not allocated as the Hair Restoration Centers reporting unit incurs its own overhead.

        Long-term growth.    A long-term growth rate of 2.5 percent was applied to terminal cash flow based on anticipated economic conditions.

        Discount rate.     A discount rate of 12.0 percent based on the weighted average cost of capital that equals the rate of return on debt capital and equity capital weighted in proportion to the capital structure common to the industry.

        Structure.     A nontaxable structure based on the highest economic value and feasibility of the assumed structure.

        The following table summarizes the approximate impact that a change in certain critical assumptions would have on the estimated fair value of our Hair Restoration Centers reporting unit goodwill balance (the approximate impact of the change in the critical assumptions assumes all other assumptions and factors remain constant):

Critical Assumptions	Increase (Decrease)			Approximate Decrease in Fair Value
				(In thousands)
Discount Rate		1.0	%	$	12,000
Same-Store Sales		(1.0	)		3,000

        As of our fiscal year 2012 annual impairment test, the estimated fair value of the Promenade salon concept exceeded its respective carrying value by approximately 14.0 percent. As it is reasonably likely that there could be impairment of the Promenade salon concept's goodwill in future periods along with the sensitivity of the Company's critical assumptions in estimating fair value of this reporting unit, the Company has provided additional information related to this reporting unit.

        A summary of the critical assumptions utilized during the fiscal year 2012 annual impairment test of the Promenade salon concept are outlined below:

        Annual revenue growth.     Annual revenue growth is primarily driven by assumed same-store sales rates of approximately negative 2.0 to positive 6.0 percent. Other considerations include anticipated economic conditions and moderate acquisition growth.

        Gross margin.    Adjusted for anticipated salon closures, new salon construction and acquisitions estimated future gross margins were held constant.

        Fixed expense rates.     Fixed expense rate increases of approximately 1.0 to 2.0 percent based on anticipated inflation. Fixed expenses consisted of rent, site operating, and allocated general and administrative corporate overhead.

        Allocated corporate overhead.    Corporate overhead incurred by the home office based on the number of Promenade company-owned salons as a percent of total company-owned salons.

        Long-term growth.     A long-term growth rate of 3.0 percent was applied to terminal cash flow based on anticipated economic conditions.

37

        Discount rate.     A discount rate of 11.0 percent based on the weighted average cost of capital that equals the rate of return on debt capital and equity capital weighted in proportion to the capital structure common to the industry.

        The following table summarizes the approximate impact that a change in certain critical assumptions would have on the estimated fair value of our Promenade salon concept goodwill balance (the approximate impact of the change in the critical assumptions assumes all other assumptions and factors remain constant):

Critical Assumptions	Increase (Decrease)			Approximate Decrease in Fair Value
				(In thousands)
Discount Rate		1.0	%	$	29,000
Same-Store Sales		(1.0	)		2,000

        The respective fair values of the Company's remaining reporting units exceeded fair value by greater than 20.0 percent at June 30, 2012. While the Company has determined the estimated fair values of Promenade to be appropriate based on the historical level of revenue growth, operating income and cash flows, it is reasonably likely that Promenade may experience additional impairment in future periods. As previously disclosed, the Company has agreed to sell the Hair Restoration Centers reporting unit in the first half of fiscal year 2013; however, until this reporting unit is sold it is reasonably likely there could be impairment of the Hair Restoration Centers reporting unit's goodwill in future periods. The term "reasonably likely" refers to an occurrence that is more than remote but less than probable in the judgment of the Company. Because some of the inherent assumptions and estimates used in determining the fair value of the reportable segment are outside the control of management, changes in these underlying assumptions can adversely impact fair value. Potential impairment of a portion or all of the carrying value of goodwill for the Promenade salon concept and Hair Restoration Centers reporting units is dependent on many factors and cannot be predicted with certainty.

        As of June 30, 2012, the Company's estimated fair value, as determined by the sum of our reporting units' fair value reconciled to within a reasonable range of our market capitalization which included an assumed control premium.

        A summary of the Company's goodwill balance as of June 30, 2012 and 2011 by reporting unit is as follows:

Reporting Unit	As of June 30, 2012		As of June 30, 2011
	(Dollars in thousands)
Regis	$	34,992	$	103,761
MasterCuts		4,652		4,652
SmartStyle		49,476		48,916
Supercuts		129,621		129,477
Promenade		243,538		240,910
Total North America Salons		462,279		527,716
Hair Restoration Centers		74,376		152,796
Consolidated Goodwill	$	536,655	$	680,512

        We impaired $74.1 million of goodwill associated with our Promenade salon concept during fiscal year 2011 and $35.3 million of goodwill associated with our Regis salon concept during fiscal year 2010.

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Long-Lived Assets, Excluding Goodwill

        We assess the impairment of long-lived assets annually or when events or changes in circumstances indicate that the carrying value of the assets or the asset grouping may not be recoverable. Our impairment analysis on salon property and equipment is performed on a salon by salon basis. The Company's test for impairment is performed at a salon level as this is the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. Factors considered in deciding when to perform an impairment review include significant under-performance of an individual salon in relation to expectations, significant economic or geographic trends, and significant changes or planned changes in our use of the assets. Impairment is evaluated based on the sum of undiscounted estimated future cash flows expected to result from use of the related salon assets that does not recover the carrying value of the salon assets. When the sum of a salon's undiscounted estimated future cash flow is zero or negative, impairment is measured as the full carrying value of the related salon's equipment and leasehold improvements. When the sum of a salon's undiscounted cash flows is greater than zero but less than the carrying value of the related salon's equipment and leasehold improvements, a discounted cash flow analysis is performed to estimate the fair value of the salon assets and impairment is measured as the difference between the carrying value of the salon assets and the estimated fair value. The fair value estimate is based on the best information available, including market data.

        Judgments made by management related to the expected useful lives of long-lived assets and the ability to realize undiscounted cash flows in excess of the carrying amounts of such assets are affected by factors such as the ongoing maintenance and improvement of the assets, changes in economic conditions and changes in operating performance. As the ongoing expected cash flows and carrying amounts of long-lived assets are assessed, these factors could cause us to realize material impairment charges.

        During fiscal years 2012, 2011, and 2010, $6.6, $6.7, and $6.4 million, respectively, of impairments were recorded within depreciation and amortization in the Consolidated Statement of Operations.

Purchase Price Allocation

        The acquisition purchase prices are allocated to assets acquired, including identifiable intangible assets, and liabilities assumed based on their estimated fair values at the dates of acquisition. Fair value is estimated based on the amount for which the asset or liability could be bought or sold in a current transaction between willing parties. For our acquisitions, the majority of the purchase price that is not allocated to identifiable assets, or liabilities assumed, is accounted for as residual goodwill rather than identifiable intangible assets. This stems from the value associated with the walk-in guest 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 of the acquired leased site and guest preference associated with the acquired hair salon brand. Residual goodwill further represents our opportunity to strategically combine the acquired business with our existing structure to serve a greater number of guests through our expansion strategies. Identifiable intangible assets purchased in fiscal year 2012, 2011, and 2010 acquisitions totaled $0.6, $2.0, and $0.1 million, respectively. The residual goodwill generated by fiscal year 2012, 2011, and 2010 acquisitions totaled $5.0, $12.5, and $2.6 million, respectively. See Note 4 to the Consolidated Financial Statements for further information.

Self-Insurance Accruals

        The Company uses a combination of third party insurance and self-insurance for a number of risks including workers' compensation, health insurance, employment practice liability and general liability claims. The liability represents the Company's estimate of the undiscounted ultimate cost of uninsured claims incurred as of the balance sheet date.

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        The workers' compensation, general liability and employment practice liability analysis includes applying loss development factors to the Company's historical claims data (total paid and incurred amounts per claim) for all policy years where the Company has not reached its aggregate limits to project the future development of incurred claims. The workers' compensation analysis is performed for three models; California, Texas and all other states. A variety of accepted actuarial methodologies are followed to determine these liabilities, including several methods to predict the loss development factors for each policy period. These liabilities are determined by modeling the frequency (number of claims) and severity (cost of claims), fitting statistical distributions to the experience, and then running simulations. A similar analysis is performed for both general liability and employment practices liability; however, it is a single model for all liability claims rather than the three separate models used for workers' compensation.

        The health insurance analysis utilizes trailing twelve months of paid and 24 months of incurred medical and prescription claims to project the amount of incurred but not yet reported claims liability amount. The lag factors are developed based on the Company's specific claim data utilizing a completion factor methodology. The developed factor, expressed as a percentage of paid claims, is applied to the trailing twelve months of paid claims to calculate the estimated liability amount. The calculated liability amount is reviewed for reasonableness based on reserve adequacy ranges for historical periods by testing prior reserve levels against actual expenses to date.

        Although the Company does not expect the amounts ultimately paid to differ significantly from the estimates, self-insurance accruals could be affected if future claims experience differs significantly from the historical trends and actuarial assumptions. For fiscal years 2012 and 2011, the Company recorded increases in expense from changes in estimates related to prior year open policy periods of $0.7 and $1.4 million, respectively. For fiscal year 2010, the Company recorded a decrease in expense from changes in estimates related to prior year open policy periods of $1.7 million. A 10.0 percent change in the self-insurance reserve would affect income from continuing operations before income taxes and equity in (loss) income of affiliated companies by $4.8, $4.6, and $4.5 million for the three years ended June 30, 2012, 2011 and 2010, respectively. The Company updates loss projections twice each year and adjusts its recorded liability to reflect the current projections. The updated loss projections consider new claims and developments associated with existing claims for each open policy period. As certain claims can take years to settle, the Company has multiple policy periods open at any point in time.

Income Taxes

        In determining income for financial statement purposes, management must make certain estimates and judgments. These estimates and judgments occur in the calculation of certain tax liabilities and in the determination of the recoverability of certain deferred tax assets which arise from temporary differences between the tax and financial statement recognition of revenue and expense.

        Management must assess the likelihood that deferred tax assets will be recovered. If recovery is not likely, we must increase our provision for taxes by recording a reserve, in the form of a valuation allowance, for the deferred tax assets that will not ultimately be recoverable. Should there be a change in our ability to recover our deferred tax assets, our tax provision would increase in the period in which it is determined that the recovery is not likely.

        In addition, the calculation of tax liabilities involves dealing with uncertainties in the application of complex tax regulations. Management recognizes a reserve for potential liabilities for anticipated tax audit issues in the United States and other tax jurisdictions based on our estimate of whether additional taxes will be due. If payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period when we determine the liabilities are no longer necessary. If our estimate of tax liabilities proves to be less than the ultimate assessment, a further charge to expense would result. In the United States, fiscal years 2009

40

and after remain open for federal tax audit. For state tax audits, the statute of limitations generally spans three to four years, resulting in a number of states remaining open for tax audits dating back to fiscal year 2008. However, the Company is under audit in a number of states in which the statute of limitations has been extended for fiscal years 2006 and forward. Internationally, including Canada, the statute of limitations for tax audits varies by jurisdiction, but generally ranges from three to five years.

        As of June 30, 2012 the Company's liability for uncertain tax positions was $4.4 million. See Note 12 to the Consolidated Financial Statements for further information.

Contingencies

        We are involved in various lawsuits and claims that arise from time to time in the ordinary course of our business. Accruals are recorded for such contingencies based on our assessment that the occurrence is probable, and where determinable, an estimate of the liability amount. Management considers many factors in making these assessments including past history and the specifics of each case. However, litigation is inherently unpredictable and excessive verdicts do occur, which could have a material impact on our Consolidated Financial Statements.

        During fiscal year 2012, the Company was awarded $1.1 million in conjunction with a class-action lawsuit.

        During fiscal year 2011, the Company settled a legal claim with the former owner of Hair Club for $1.7 million.

        During fiscal year 2010, the Company settled two legal claims regarding certain guest and employee matters for an aggregate charge of $5.2 million plus a commitment to provide discount coupons. During the twelve months ended June 30, 2011, the final payments aggregating $4.3 million were made.

OVERVIEW OF FISCAL YEAR 2012 RESULTS

        The following summarizes key aspects of our fiscal year 2012 results:

•

Revenues decreased 2.2 percent during fiscal year 2012. The Company experienced a decline in guest visitation and average ticket price, resulting in a decrease in consolidated same-store sales of 3.1 percent. Partially offsetting the decrease in revenues was the benefit of the additional day from leap year.

•

The Company recorded goodwill impairment charges of $67.7 and $78.4 million associated with our Regis salon concept and Hair Restoration reporting units, respectively, during fiscal year 2012.

•

Long-lived asset impairment charges of $6.6 million were recorded during fiscal year 2012.

•

The Company recorded a $17.2 million net impairment charge associated with the Agreement entered into during fiscal year 2012 to sell the Company's 46.7 percent equity interest in Provalliance to the Provost Family for a purchase price of €80 million. The transaction is expected to close no later than September 30, 2012 and is subject to the Provost Family securing financing for the purchase price. The $17.2 million net impairment charge recorded within equity in (loss) income of affiliated companies in the Consolidated Statement of Operations consists of a $37.4 million impairment charge related to the difference between the purchase price and carrying value of the Company's investment in Provalliance, partially offset by a $20.2 million decrease in the fair value of the Equity Put.

•

The Company recorded a $19.4 million other than temporary impairment on its investment in EEG.

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•

The Company recorded incremental depreciation expense of $16.2 million ($10.2 million net of tax or $0.18 per diluted share) associated with the adjustment to the useful life of the Company's POS system.

•

During fiscal year 2012, the Company reduced the home office workforce by approximately 120 employees. The Company recorded $9.8 million in senior management restructuring and other severance charges. In addition the Company recorded $2.8 million in other restructuring charges associated with one-time costs with implementing the Company's new strategy.

•

The Company recorded $1.8 million in deferred compensation expense associated with amending the deferred compensation contracts such that the benefits are based on years of service and employees' compensation as of June 30, 2012.

•

The Company recorded charges of $4.9 million associated with professional fees incurred in connection with the contested proxy and the exploration of alternatives for non-core assets.

•

The Company recorded a $1.1 million favorable legal settlement during fiscal year 2012.

•

During fiscal year 2012, the Company recorded a $1.1 million tax benefit in discontinued operations related to the release of tax reserves associated with the disposition of the Trade Secret salon concept.

•

The annual effective income tax rate of 5.8 percent was negatively impacted by the goodwill impairment charges which are partially non-deductible for tax purposes. This resulted in the Company recording less of a tax benefit on the pre-tax loss than what would normally be expected utilizing the Company's historical range of tax rates.

RESULTS OF OPERATIONS

        The following discussion of results of operations will reflect results from continuing operations. Discontinued operations will be discussed at the end of this section.

Consolidated Results of Operations

        The following table sets forth, for the periods indicated, certain information derived from our Consolidated Statement of Operations in Item 8, expressed as a percent of revenues. The percentages are computed as a percent of total revenues, except as noted.

42

Results of Operations as a Percent of Revenues

	For the Years Ended June 30,
	2012			2011			2010
Service revenues		75.3	%		75.8	%		75.6	%
Product revenues		22.9			22.5			22.7
Royalties and fees		1.8			1.7			1.7
Operating expenses:
Cost of service(1)		57.5			57.5			56.9
Cost of product(2)		48.0			47.8			49.4
Site operating expenses		8.7			8.5			8.5
General and administrative		13.3			14.6			12.4
Rent		15.0			14.7			14.6
Depreciation and amortization		5.2			4.5			4.6
Goodwill impairment		6.4			3.2			1.5
Lease termination costs		—			—			0.1
Operating (loss) income		(3.0	)		0.2			4.1
(Loss) income from continuing operations before income taxes and equity in (loss) income of affiliated companies		(4.0	)		(1.1	)		2.3
(Loss) income from continuing operations		(5.1	)		(0.4	)		1.7
Income from discontinued operations		0.1			—			0.1
Net (loss) income		(5.0	)		(0.4	)		1.8

(1)

Computed as a percent of service revenues and excludes depreciation expense.

(2)

Computed as a percent of product revenues and excludes depreciation expense.

Consolidated Revenues

        Consolidated revenues primarily include revenues of company-owned salons, product and equipment sales to franchisees, hair restoration center revenues, and franchise royalties and fees. As compared to the prior fiscal year, consolidated revenues decreased 2.2 percent during fiscal year 2012 and decreased 1.4 percent during fiscal year 2011. The following table details our consolidated revenues by concept. All service revenues, product revenues (which include product and equipment sales to

43

franchisees), and franchise royalties and fees are included within their respective concept within the table.

	For the Years Ended June 30,
	2012			2011			2010
	(Dollars in thousands)
North American salons:
Regis	$	414,752		$	434,249		$	437,990
MasterCuts		159,627			165,729			166,821
SmartStyle		514,050			531,090			533,094
Supercuts		343,764			321,881			314,698
Promenade(2)		548,912			576,995			607,960
Total North American Salons		1,981,105			2,029,944			2,060,563
International salons		141,122			150,237			156,085
Hair restoration centers		151,552			145,688			141,786
Consolidated revenues	$	2,273,779		$	2,325,869		$	2,358,434
Percent change from prior year		(2.2	)%		(1.4	)%		(2.9	)%
Salon same-store sales decrease(1)		(3.1	)%		(1.7	)%		(3.2	)%

(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.

(2)

Trade Secret, Inc. was sold by Regis Corporation on February 16, 2009. The agreement included a provision that the Company would supply product to the purchaser of Trade Secret and provide certain administrative services for a transition period. For the fiscal year ended June 30, 2010, the Company generated revenue of $20.0 million in product revenues, which represented 0.8 percent of consolidated revenues. The agreement was substantially complete as of September 30, 2009.

        The decreases of 2.2, 1.4, and 2.9 percent in consolidated revenues during fiscal years 2012, 2011, and 2010, respectively, were driven by the following:

	Percentage Increase (Decrease) in Revenues For the Years Ended June 30,
Factor	2012			2011			2010
Acquisitions		0.7	%		1.1	%		0.8	%
Same-store sales		(3.1	)		(1.7	)		(3.2	)
New stores		1.2			0.6			0.7
Foreign currency		0.0			0.4			0.2
Franchise revenues		0.1			0.0			0.0
Closed salons		(2.2	)		(1.5	)		(0.9	)
Other		1.1			(0.3	)		(0.5	)
		(2.2	)%		(1.4	)%		(2.9	)%

44

        We acquired 13 company-owned salons (including 11 franchise buybacks), and did not acquire or buy back hair restoration centers from franchisees during fiscal year 2012 compared to 105 company-owned salons (including 78 franchise buybacks), and bought back four hair restoration centers from franchisees during fiscal year 2011. The same-store sales decrease of 3.1 percent was due to a decrease in same-store guest visits and marginal declines in average ticket. The Company constructed 209 company-owned salons and six hair restoration centers. We closed 384 and 305 salons (including 51 and 60 franchise salons) during the twelve months ended June 30, 2012 and 2011, respectively.

        We acquired 105 company-owned salons (including 78 franchise buybacks), and bought back four hair restoration centers from franchisees during fiscal year 2011 compared to 26 company-owned salons (including 23 franchise buybacks), and bought back zero hair restoration centers from franchisees during fiscal year 2010. The same-store sales decrease of 1.7 percent was due to a decline in same-store guest visits, partially offset by an increase in average ticket. The Company constructed 146 company-owned salons during the twelve months ended June 30, 2011. We closed 305 and 269 salons (including 60 and 65 franchise salons) during the twelve months ended June 30, 2011 and 2010, respectively.

        During fiscal year 2012, there was no foreign currency impact on revenues as the weakening of the United States dollar against the Canadian dollar was offset by the strengthening of the United Stated dollar against the British pound and Euro as compared to the prior fiscal year's exchange rates. During fiscal year 2011, the foreign currency impact was driven by the weakening of the United States dollar against the Canadian dollar and British pound, as compared to the prior fiscal year's exchange rates. During fiscal year 2010, the foreign currency impact was driven by the weakening of the United States dollar against the Canadian dollar, partially offset by the strengthening of the United Stated dollar against the British pound and Euro as compared to the prior fiscal year's exchange rates. Consolidated revenues are primarily composed of service and product revenues, as well as franchise royalties and fees. Fluctuations in these three major revenue categories were as follows:

        Service Revenues.    Service revenues include revenues generated from company-owned salons and service revenues generated by hair restoration centers. Consolidated service revenues were as follows:

			Decrease Over Prior Fiscal Year
Years Ended June 30,	Revenues		Dollar			Percentage
	(Dollars in thousands)
2012	$	1,712,703	$	(50,271	)		(2.9	)%
2011		1,762,974		(21,163	)		(1.2	)
2010		1,784,137		(49,821	)		(2.7	)

        The decrease in service revenues during fiscal year 2012 was due the closure of 333 company-owned salons and same-store service sales decreasing 3.5 percent. The decrease in same-store services sales was primarily a result of a decline in same-store guest visits and a decline in average ticket due to promotional programs designed to generate additional guest visits in the salons with the promotional programs. Partially offsetting the decrease was growth due to new and acquired salons during the twelve months ended June 30, 2012 and the additional day from leap year.

        The decrease in service revenues during fiscal year 2011 was due to same-store service sales decreasing 2.3 percent, as a result of a decline in same-store guest visits. Partially offsetting the decrease was growth due to new and acquired salons during the twelve months ended June 30, 2011, price increases, sales mix as the company continues to increase hair color and waxing services, and the weakening of the United States dollar against the Canadian dollar during the twelve months ended June 30, 2011.

        The decrease in service revenues during fiscal year 2010 was due to same-store service sales decreasing 3.4 percent, as many guests have continued to lengthen their visitation pattern due to the

45

economy. In addition, service revenues decreased due to the strengthening of the United States dollar against the British pound. Partially offsetting the decrease was growth due to acquisitions during the twelve months and the weakening of the United States dollar against the Canadian dollar during the twelve months ended June 30, 2010.

        Product Revenues.    Product revenues are primarily sales at company-owned salons and hair restoration centers, and sales of product and equipment to franchisees. Consolidated product revenues were as follows:

			Decrease Over Prior Fiscal Year
Years Ended June 30,	Revenues		Dollar			Percentage
	(Dollars in thousands)
2012	$	520,467	$	(2,727	)		(0.5	)%
2011		523,194		(11,399	)		(2.1	)
2010		534,593		(21,612	)		(3.9	)

        The decrease in product revenues during fiscal year 2012 was primarily due to same-store product sales decreasing 1.7 percent, and the closure of 333 company-owned locations, partially offset by the additional day from leap year and an increase in product sales to franchisees as a result of an increase in franchise locations.

        The decrease in product revenues during fiscal year 2011 was primarily due to the decrease in product sales to the purchaser of Trade Secret from $20.0 million in fiscal year 2010 to zero in fiscal year 2011. Partially offsetting the decrease was same-store product sales increasing 0.4 percent, product sales from new and acquired salons, and the weakening of the United States dollar against the Canadian dollar during the twelve months ended June 30, 2011.

        The decrease in product revenues during fiscal year 2010 was primarily due to the decrease in product sales to the purchaser of Trade Secret from $32.2 in fiscal year 2009 to $20.0 in fiscal year 2010, as well as due to same-store product sales decreasing 2.3 percent and the strengthening of the United States dollar against the British pound. Partially offsetting the decrease was the weakening of the United States dollar against the Canadian dollar during the twelve months ended June 30, 2010.

        Royalties and Fees.    Consolidated franchise revenues, which include royalties and franchise fees, were as follows:

			Increase (Decrease) Over Prior Fiscal Year
Years Ended June 30,	Revenues		Dollar			Percentage
	(Dollars in thousands)
2012	$	40,609	$	908			2.3	%
2011		39,701		(3	)		(0.0	)
2010		39,704		80			0.2

        Total franchise locations open at June 30, 2012 and 2011 were 2,045 (including 29 franchise hair restoration centers) and 1,965 (including 29 franchise hair restoration centers), respectively. During fiscal year 2012, we purchased a 60.0 percent ownership interest in a franchise network, consisting of 31 franchise locations. In addition, we purchased 11 of our franchise salons during the twelve months ended June 30, 2012. The increase in royalties and fees was also due to same-store sales increases at franchise locations.

        Total franchise locations open at June 30, 2011 and 2010 were 1,965 (including 29 franchise hair restoration centers) and 2,053 (including 33 franchise hair restoration centers), respectively. The

46

decrease in franchise locations was offset by the impact of the weakening of the United States dollar against the Canadian dollar.

        Total franchise locations open at June 30, 2010 and 2009 were 2,053 (including 33 franchise hair restoration centers) and 2,078 (including 33 franchise hair restoration centers), respectively. The increase in consolidated franchise revenues during fiscal year 2010 was primarily due to the weakening of the United States dollar against the Canadian dollar during the twelve months ended June 30, 2010.

Gross Margin (Excluding Depreciation)

        Our cost of revenues primarily includes labor costs related to salon employees and hair restoration center employees, the cost of product used in providing services and the cost of products sold to guests and franchisees. The resulting gross margin was as follows:

						(Decrease) Increase Over Prior Fiscal Year
Years Ended June 30,	Gross Margin		Margin as % of Service and Product Revenues			Dollar			Percentage			Basis Point(1)
	(Dollars in thousands)
2012	$	998,361		44.7	%	$	(24,960	)		(2.4	)%		(10	)
2011		1,023,321		44.8			(15,806	)		(1.5	)		—
2010		1,039,127		44.8			(23,279	)		(2.2	)		40

(1)

Represents the basis point change in gross margin as a percent of service and product revenues as compared to the corresponding period of the prior fiscal year.

        Service Margin (Excluding Depreciation).    Service margin was as follows:

						(Decrease) Increase Over Prior Fiscal Year
Years Ended June 30,	Service Margin		Margin as % of Service Revenues			Dollar			Percentage			Basis Point(1)
	(Dollars in thousands)
2012	$	727,549		42.5	%	$	(22,557	)		(3.0	)%		—
2011		750,106		42.5			(18,311	)		(2.4	)		(60	)
2010		768,417		43.1			(20,822	)		(2.6	)		10

(1)

Represents the basis point change in service margin as a percent of service revenues as compared to the corresponding period of the prior fiscal year.

        Service margin as a percent of service revenues during fiscal year 2012 was consistent with fiscal year 2011. Lower commissions as a result of leveraged pay plans for new stylists and a decrease in salon health insurance costs due to lower claims were offset by decreased productivity in our North American segment and an increase in the cost of labor within our Hair Restoration Centers segment.

        The basis point decrease in service margins as a percent of service revenues during fiscal year 2011 was primarily due to an unexpected increase in salon health insurance costs due to several unusually large claims and an increase in payroll taxes as a result of states increasing unemployment taxes.

        The basis point improvement in service margins as a percent of service revenues during fiscal year 2010 was primarily due to the benefit of the new leveraged salon pay plans implemented in the 2009 calendar year. Increases in salon health insurance and payroll taxes partially offset the basis point improvement.

47

        Product Margin (Excluding Depreciation).    Product margin was as follows:

						(Decrease) Increase Over Prior Fiscal Year
Years Ended June 30,	Product Margin		Margin as % of Product Revenues			Dollar			Percentage			Basis Point(1)
	(Dollars in thousands)
2012	$	270,812		52.0	%	$	(2,403	)		(0.9	)%		(20	)
2011		273,215		52.2			2,505			0.9			160
2010		270,710		50.6			(2,457	)		(0.9	)		150

(1)

Represents the basis point change in product margin as a percent of product revenues as compared to the corresponding period of the prior fiscal year.

        Trade Secret, Inc. was sold by Regis Corporation on February 16, 2009. The agreement included a provision that Regis Corporation would supply product to the purchaser at cost for a transition period. The agreement was substantially completed as of September 30, 2009.

        The following tables breakout product revenues, cost of product and product margin as a percent of product revenues between product and product sold to the purchaser of Trade Secret.

	For the Years Ended June 30,
Breakout of Product Revenues	2012		2011		2010
Product	$	520,467	$	523,194	$	514,631
Product sold to purchaser of Trade Secret		—		—		19,962
Total product revenues	$	520,467	$	523,194	$	534,593

	For the Years Ended June 30,
Breakout of Cost of Product	2012		2011		2010
Cost of product	$	249,655	$	249,979	$	243,921
Cost of product sold to purchaser of Trade Secret		—		—		19,962
Total cost of product	$	249,655	$	249,979	$	263,883

	For the Years Ended June 30,
Product Margin as % of Product Revenues	2012			2011			2010
Margin on product other than sold to purchaser of Trade Secret		52.0	%		52.2	%		52.6	%
Margin on product sold to purchaser of Trade Secret		—			—			—
Total product margin		52.0	%		52.2	%		50.6	%

        The basis point decrease in product margin as a percentage of product revenues during fiscal year 2012 was primarily due to an increase in the cost of hair systems in our Hair Restoration Centers segment and increases in freight costs due to higher fuel prices. Partially offsetting the basis point decrease was a reduction in commissions paid to new employees on retail product sales in our North American segment.

        The basis point decrease in product margin other than sold to purchaser of Trade Secret as a percentage of product revenues during fiscal year 2011 was primarily due to an increase in sales of slightly lower-profit margin appliances in our International segment and an increase in the cost of hair systems in our Hair Restoration Centers segment, partially offset by reduced commissions paid to new employees on retail product sales in our North American segment.

48

        The basis point improvement in product margin other than sold to purchaser of Trade Secret as a percentage of product revenues during fiscal year 2010 was due to a planned reduction in retail commissions paid to new employees on retail product sales.

Site Operating Expenses

        This expense category includes direct costs incurred by our salons and hair restoration centers, such as on-site advertising, workers' compensation, insurance, utilities and janitorial costs. Site operating expenses were as follows:

						Increase (Decrease) Over Prior Fiscal Year
Years Ended June 30,	Site Operating		Expense as % of Consolidated Revenues			Dollar			Percentage			Basis Point(1)
	(Dollars in thousands)
2012	$	198,725		8.7	%	$	1,003			0.5	%		20
2011		197,722		8.5			(1,616	)		(0.8	)		—
2010		199,338		8.5			8,882			4.7			70

(1)

Represents the basis point change in site operating expenses as a percent of consolidated revenues as compared to the corresponding period of the prior fiscal year.

        The basis point increase in site operating expenses as a percent of consolidated revenues during fiscal year 2012 was primarily due to negative leverage from the decrease in same-store sales.

        Site operating expenses as a percent of consolidated revenues during fiscal year 2011 was consistent with fiscal year 2010. A reduction in legal claims expense and a favorable sales tax audit adjustment were offset by a planned increase in advertising expense within the Company's Promenade concept and an increase in self-insurance accruals.

        The basis point increase in site operating expenses as a percent of consolidated revenues during fiscal year 2010 was primarily due to higher self-insurance expense. The Company recorded a reduction in self-insurance accruals of $1.7 million in fiscal year 2010 compared to a $9.9 million reduction in fiscal year 2009. In addition the Company settled two legal claims related to guest and employee matters resulting in a $5.2 million charge during fiscal year 2010.

General and Administrative

        General and administrative (G&A) includes costs associated with our field supervision, salon training and promotions, product distribution centers and corporate offices (such as salaries and professional fees), including costs incurred to support franchise and hair restoration center operations. G&A expenses were as follows:

						(Decrease) Increase Over Prior Fiscal Year
Years Ended June 30,	G&A		Expense as % of Consolidated Revenues			Dollar			Percentage			Basis Point(1)
	(Dollars in thousands)
2012	$	302,572		13.3	%	$	(37,285	)		(11.0	)%		(130	)
2011		339,857		14.6			47,866			16.4			220
2010		291,991		12.4			330			0.1			40

(1)

Represents the basis point change in G&A as a percent of consolidated revenues as compared to the corresponding period of the prior fiscal year.

        The basis point improvement in G&A costs as a percentage of consolidated revenues during fiscal year 2012 was primarily due to the comparable prior period including a $31.2 million valuation reserve

49

on the note receivable with the purchaser of Trade Secret. Also contributing to the improvement during fiscal year 2012 was a reduction in salaries and other employee benefits as a result of the reduction in home office workforce that occurred in January 2012. Partially offsetting the basis point improvement were incremental costs associated with the Company's senior management restructuring, severance charges, and professional fees incurred in connection with the contested proxy and the exploration of alternatives for non-core assets.

        The basis point increase in G&A costs as a percentage of consolidated revenues during fiscal year 2011 was primarily due to the $31.2 million valuation reserve on the note receivable with the purchaser of Trade Secret, incremental costs associated with the Company's senior management restructure, expenditures associated with the Regis salon concept re-imaging project, professional fees incurred related to the exploration of strategic alternatives and information technology projects, legal claims expense and negative leverage on fixed costs within this category due to negative same-store sales.

        The basis point increase in G&A costs as a percentage of consolidated revenues during fiscal year 2010 was primarily due to negative leverage from the decrease in same-store sales, partially offset by the continuation of cost savings initiatives implemented by the Company.

Rent

        Rent expense, which includes base and percentage rent, common area maintenance and real estate taxes, was as follows:

						(Decrease) Increase Over Prior Fiscal Year
Years Ended June 30,	Rent		Expense as % of Consolidated Revenues			Dollar			Percentage			Basis Point(1)
	(Dollars in thousands)
2012	$	340,805		15.0	%	$	(1,481	)		(0.4	)%		30
2011		342,286		14.7			(1,812	)		(0.5	)		10
2010		344,098		14.6			(3,694	)		(1.1	)		30

(1)

Represents the basis point change in rent expense as a percent of consolidated revenues as compared to the corresponding period of the prior fiscal year.

        The basis point increase in rent expense as a percent of consolidated revenues during fiscal year 2012 was primarily due to negative leverage in this fixed cost category due to negative same-store sales, partially offset by favorable common area maintenance adjustments from landlords and salon closures.

        The basis point increase in rent expense as a percent of consolidated revenues during fiscal year 2011 was primarily due to negative leverage in this fixed cost category due to negative same-store sales, partially offset by a favorable reduction to our common area maintenance expenses.

        The basis point increase in rent expense as a percent of consolidated revenues during fiscal year 2010 was primarily due to negative leverage in this fixed cost category, partially offset by a reduction in our percentage rent payments, both due to negative same-store sales.

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Depreciation and Amortization

        Depreciation and amortization expense (D&A) was as follows:

						Increase (Decrease) Over Prior Fiscal Year
Years Ended June 30,	D&A		Expense as % of Consolidated Revenues			Dollar			Percentage			Basis Point(1)
	(Dollars in thousands)
2012	$	118,071		5.2	%	$	12,962			12.3	%		70
2011		105,109		4.5			(3,655	)		(3.4	)		(10	)
2010		108,764		4.6			(6,891	)		(6.0	)		(20	)

(1)

Represents the basis point change in depreciation and amortization as a percent of consolidated revenues as compared to the corresponding period of the prior fiscal year.

        The basis point increase in D&A as a percent of consolidated revenues during fiscal year 2012 was primarily due to $16.2 million of accelerated depreciation expense in the current year resulting from the useful life adjustment of the Company's internally developed point-of-sale system and negative leverage from the decrease in same-store sales. Partially offsetting the basis point increase was the continuation of a decrease in depreciation expense from the reduction in salon construction beginning in fiscal year 2009 as compared to historical levels prior to fiscal year 2009.

        The basis point decrease in D&A as a percent of consolidated revenues during fiscal year 2011 was primarily due to a decrease in depreciation expense from a reduction in salon construction beginning in fiscal year 2009 as compared to historical levels prior to fiscal year 2009. The basis point decrease was partially offset by negative leverage from the decrease in same-store sales.

        The basis point improvement in D&A as a percent of consolidated revenues during fiscal year 2010 was primarily due to a reduction in the impairment of property and equipment at underperforming locations as compared to fiscal year 2009. The Company recorded impairment charges of $6.4 and $10.2 million during fiscal years 2010 and 2009, respectively. Partially offsetting the improvements was a decline due to negative leverage from the decrease in same-store sales.

Goodwill Impairment

        Goodwill impairment was as follows:

						Increase (Decrease) Over Prior Fiscal Year
Years Ended June 30,	Goodwill Impairment		Expense as % of Consolidated Revenues			Dollar			Percentage			Basis Point(1)
	(Dollars in thousands)
2012	$	146,110		6.4	%	$	72,010			97.2	%		320
2011		74,100		3.2			38,823			110.1			170
2010		35,277		1.5			(6,384	)		(15.3	)		(20	)

(1)

Represents the basis point change in goodwill impairment as a percent of consolidated revenues as compared to the corresponding period of the prior fiscal year.

        The Company recorded goodwill impairment charges totaling $67.7 and $78.4 million related to the Regis salon concept and Hair Restoration Centers reporting units, respectively, during fiscal year 2012. Due to the continuation of a decrease in same-store sales, the estimated fair value of the Regis salon operations was less than the carrying value of this concept's net assets, including goodwill. The $67.7 million impairment charge was the excess of the carrying value of goodwill over the implied fair value of goodwill for the Regis salon operations. Due to the impact of recent industry developments, including a slow down in revenue growth and increasing supply costs, the estimated fair value of the

51

Hair Restoration Centers operations was less than the carrying value of this reporting unit's net assets, including goodwill. The $78.4 million impairment charge was the excess of the carrying value of goodwill over the implied fair value of goodwill for the Hair Restoration Centers reporting unit.

        The Company recorded a $74.1 million goodwill impairment charge related to the Promenade salon concept during fiscal year 2011. Due to lower than expected earnings and same-store sales, the estimated fair value of the Promenade salon operations was less than the carrying value of this concept's net assets, including goodwill. The $74.1 million impairment charge was the excess of the carrying value of goodwill over the implied fair value of goodwill for the Promenade salon operations.

        The Company recorded a $35.3 million goodwill impairment charge related to the Regis salon concept during fiscal year 2010. Due to the current economic conditions, the estimated fair value of the Regis salon operations was less than the carrying value of this concept's net assets, including goodwill. The $35.3 million impairment charge was the excess of the carrying value of goodwill over the implied fair value of goodwill for the Regis salon operations.

Lease Termination Costs

        Lease termination costs were as follows:

						Decrease Over Prior Fiscal Year
Years Ended June 30,	Lease Termination Costs		Expense as % of Consolidated Revenues			Dollar			Percentage			Basis Point(1)
	(Dollars in thousands)
2012	$	—		—	%	$	—			N/A			—
2011		—		—			(2,145	)		(100.0	)		(10	)
2010		2,145		0.1			(3,587	)		(62.6	)		(10	)

(1)

Represents the basis point change in lease termination costs as a percent of consolidated revenues as compared to the corresponding periods of the prior fiscal year.

        As the Company's June 2009 plans to close underperforming company-owned salons were substantially complete as of June 30, 2010, the Company did not incur lease termination costs during the twelve months ended June 30, 2012 and 2011.

        The fiscal year 2010 lease termination costs are associated with the Company's June 2009 plan to close underperforming United Kingdom company-owned salons in fiscal year 2010. During fiscal year 2010 we closed 29 salons under the June 2009 plan.

Interest Expense

        Interest expense was as follows:

						(Decrease) Increase Over Prior Fiscal Year
Years Ended June 30,	Interest		Expense as % of Consolidated Revenues			Dollar			Percentage			Basis Point(1)
	(Dollars in thousands)
2012	$	28,245		1.2	%	$	(6,143	)		(17.9	)%		(30	)
2011		34,388		1.5			(20,026	)		(36.8	)		(80	)
2010		54,414		2.3			14,646			36.8			70

(1)

Represents the basis point change in interest expense as a percent of consolidated revenues as compared to the corresponding period of the prior fiscal year.

52

        The basis point improvement in interest as a percent of consolidated revenues during the twelve months ended June 30, 2012 was primarily due to decreased debt levels as compared to fiscal year 2011.

        The basis point improvement in interest as a percent of consolidated revenues during the twelve months ended June 30, 2011 was primarily due to a reduction in interest expense due to the twelve months ended June 30, 2010 including $18.0 million of make-whole payments and other fees associated with the repayment of private placement debt, and decreased debt levels during fiscal year 2011.

        The basis point increase in interest as a percent of consolidated revenues during the twelve months ended June 30, 2010 was primarily due to $18.0 million of make-whole payments and other fees associated with the repayment of private placement debt. The increase due to the make-whole payments and other fees was partially offset by a reduction in interest expense due to decreased debt levels.

Interest Income and Other, net

        Interest income and other, net was as follows:

						Increase (Decrease) Over Prior Fiscal Year
Years Ended June 30,	Interest		Income as % of Consolidated Revenues			Dollar			Percentage			Basis Point(1)
	(Dollars in thousands)
2012	$	5,130		0.2	%	$	319			6.6	%		—
2011		4,811		0.2			(5,599	)		(53.8	)		(20	)
2010		10,410		0.4			949			10.0			—

(1)

Represents the basis point change in interest income and other, net as a percent of consolidated revenues as compared to the corresponding period of the prior fiscal year.

        Interest income and other, net as a percent of consolidated revenues during the twelve months ended June 30, 2012, was consistent with the comparable prior period as there was a favorable foreign currency impact related to the Company's investment in MY Style and a favorable legal settlement during fiscal year 2012 that were offset by the prior year comparable period including higher fees received for warehousing services provided to the purchaser of Trade Secret.

        The basis point decrease in the interest income and other, net as a percent of consolidated revenues during the twelve months ended June 30, 2011 was primarily due to the foreign currency impact of the Company's investment in MY Style, $1.9 million received from the purchaser of Trade Secret in the comparable prior period for administrative services, and $1.9 million in interest income recorded in the comparable prior period on the outstanding note receivable due from the purchaser of Trade Secret.

        Interest income and other, net as a percent of consolidated revenues during the twelve months ended June 30, 2010 was consistent with the twelve months ended June 30, 2009. Interest income increased as a result of higher cash balances available to earn interest, partially offset by a decline in rates.

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Income Taxes

        Our reported effective tax rate was as follows:

Years Ended June 30,	Effective Rate			Basis Point Increase (Decrease)(1)
2012		(5.8	)%		3,130
2011		(37.1	)		N/A
2010		48.1			(520	)

(1)

Represents the basis point change in income tax (benefit) expense as a percent of (loss) income from continuing operations before income taxes and equity in (loss) income of affiliated companies as compared to the corresponding periods of the prior fiscal year. The basis point change for fiscal year 2011 is not applicable due to the income tax benefit in fiscal year 2011 compared to income tax expense in fiscal year 2010.

        The basis point increase in our overall effective income tax rate for fiscal year 2012 was primarily due to the impact of the goodwill impairment charges recorded during fiscal year 2012 as compared to the impact of the goodwill impairment charge recorded during fiscal year 2011. The majority of the goodwill impairment charges recorded during fiscal year 2012 were non-deductible for tax purposes. This adversely impacted the annual effective tax rate by 37.9% as compared to the prior year impact of 10.4%. Additionally, the impact of employment credits related to the Small Business and Work Opportunity Act of 2007 resulted in less of a tax benefit to the annual effective tax rate when compared to the prior year. This was due to the prior year employment credits having a larger favorable impact to the prior year effective tax rate because of the lower book loss recorded during fiscal year 2011. Absent new legislation being enacted, these credits expired on December 31, 2011.

        For fiscal year 2011, the Company reported a $25.6 million loss from continuing operations before income taxes as compared to income from continuing operations before income taxes of $53.2 and $78.8 million in fiscal years 2010 and 2009, respectively. The rate reconciliation items have a greater impact on the annual effective income tax rate in fiscal year 2011 as the magnitude of the loss from continuing operations before income taxes is less than the magnitude of income from continuing operations before income taxes in fiscal year 2010. The annual effective tax rate was favorably impacted by the employment credits related to the Small Business and Work Opportunity Tax Act of 2007. Partially offsetting the favorable impact of the employment credits was the adverse impact of the pre-tax non-cash goodwill impairment charge of $74.1 million recorded during the third quarter of fiscal year 2011, which is only partially deductible for tax purposes. Additionally, the foreign income taxes at other than U.S. rates adversely impacted the annual effective tax rate due to a decrease in foreign income from continuing operations before income taxes and other foreign non-deductible items.

        The basis point improvement in our overall effective income tax rate for the fiscal year ended June 30, 2010 was primarily due to a decrease in the impact of the non-cash goodwill impairment charge recorded during the year ended June 30, 2010 compared to the impact of the non-cash goodwill impairment charge recorded during the year ended June 30, 2009 and an increase in the employment credits received. In addition, a 0.9 percent decrease in the tax rate was due to adjustments to the income tax balances, which had a smaller impact than the charge recorded in the prior year related to the adjustment of prior year deferred income taxes.

54

Equity in (Loss) Income of Affiliated Companies, Net of Income Taxes

        Equity in (loss) income of affiliates, representing the income or loss generated by our equity investment in Empire Education Group, Inc., Provalliance, and other equity method investments was as follows:

				(Decrease) Increase Over Prior Fiscal Year
	Equity (Loss) Income
Years Ended June 30,				Dollar			Percentage
	(Dollars in thousands)
2012	$	(30,043	)	$	(37,271	)		(515.6	)%
2011		7,228			(4,714	)		(39.5	)
2010		11,942			41,788			140.0

        The loss in affiliated companies, net of taxes for the year ended June 30, 2012 was primarily due to the impairment losses of $17.2 and $19.4 million recorded on our investments in Provalliance and EEG, respectively. On April 9, 2012, the Company entered into the Agreement to sell the Company's 46.7 percent equity interest in Provalliance to the Provost Family for a purchase price of €80 million. In conjunction, the Company recorded a $37.4 million other than temporary impairment charge on its investment in Provalliance and $20.2 million reduction in the fair value of the Equity Put, resulting in a net impairment charge of $17.2 million. The Company recorded a $19.4 million other than temporary impairment charge for the excess of the carrying value of its investment in EEG over the fair value. The Company also recorded its $8.7 million share of an intangible asset impairment recorded directly by EEG. These impairments recorded during fiscal year 2012 were partially offset by our share of earnings of $9.7, $4.7 and $0.8 million recorded for our investments in Provalliance, EEG and Hair Club for Men, Ltd., respectively. See Note 6 to the Consolidated Financial Statements for further discussion of each respective affiliated company.

        Equity in income of affiliated companies, net of taxes for the year ended June 30, 2011 was due to equity in income of $7.8, $5.5 and $0.6 million recorded for our investments in Provalliance, EEG and Hair Club for Men, Ltd., respectively. In addition, the Company recorded a $9.0 million impairment loss related to the Company's investment in MY Style. The impairment charge was based on the decline in equity value of MY Style as a result of changes in projected revenue growth after the natural disasters that occurred in Japan during March 2011. The Company also recorded a $2.4 million net gain related to the settlement of a portion of the Company's equity put liability and additional ownership of the Frank Provost Group in Provalliance.

        Equity in income of affiliated companies, net of taxes for the year ended June 30, 2010 was due to equity in income of $4.1, $6.4 and $0.9 million recorded for our investments in Provalliance, EEG and Hair Club for Men, Ltd., respectively.

Income from Discontinued Operations, net of Taxes

        Income from discontinued operations was as follows:

			Increase (Decrease) Over Prior Fiscal Year
	Income from Discontinued Operations, Net of Taxes
Years Ended June 30,			Dollar			Percentage
	(Dollars in thousands)
2012	$	1,099	$	1,099			N/A
2011		—		(3,161	)		(100.0	)
2010		3,161		134,597			102.4

55

        During fiscal year 2012, the Company recorded a $1.1 million tax benefit in discontinued operations related to the release of tax reserves associated with the disposition of the Trade Secret salon concept.

        During fiscal year 2010, the Company recorded a $3.0 million tax benefit in discontinued operations to correct the prior year calculation of the income tax benefit related to the disposition of the Trade Secret Salon concept.

Recent Accounting Pronouncements

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

Effects of Inflation

        We compensate some of our salon employees with percentage commissions based on sales they generate, thereby enabling salon payroll expense as a percent of company-owned salon revenues to remain relatively constant. Accordingly, this provides us certain protection against inflationary increases, as payroll expense and related benefits (our major expense components) are variable costs of sales. In addition, we may increase pricing in our salons to offset any significant increases in wages. Therefore, we do not believe inflation has had a significant impact on the results of our operations.

Constant Currency Presentation

        The presentation below demonstrates the effect of foreign currency exchange rate fluctuations from year to year. To present this information, current period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the average exchange rates in effect during the corresponding period of the prior fiscal year, rather than the actual average exchange rates in effect during the current fiscal year. Therefore, the foreign currency impact is equal to current year results in local currencies multiplied by the change in the average foreign currency exchange rate between the current fiscal period and the corresponding period of the prior fiscal year.

        During the fiscal year ended June 30, 2012, foreign currency translation had a minimal net impact on consolidated revenues as the weakening of the British Pound and Euro against the United States dollar was offset by the strengthening of the Canadian dollar against the United States dollar.

        During the fiscal year ended June 30, 2011, foreign currency translation had a favorable impact on consolidated revenues due to the strengthening of the Canadian dollar and British Pound against the United States dollar.

        During the fiscal year ended June 30, 2010, foreign currency translation had a favorable impact on consolidated revenues due to the strengthening of the Canadian dollar against the United States dollar, partially offset by the weakening of the British pound and Euro against the United States dollar.

	Favorable (Unfavorable) Impact of Foreign Currency Exchange Rate Fluctuations
	Impact on Revenues									Impact on (Loss) Income Before Income Taxes
Currency	Fiscal 2012			Fiscal 2011			Fiscal 2010			Fiscal 2012			Fiscal 2011		Fiscal 2010
	(Dollars in thousands)
Canadian dollar	$	364		$	9,736		$	10,422		$	47		$	937	$	1,761
British pound		(263	)		653			(4,928	)		(2	)		15		(184	)
Euro		(114	)		(137	)		(34	)		(8	)		39		(5	)
Total	$	(13	)	$	10,252		$	5,460		$	37		$	991	$	1,572

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Results of Operations by Segment

        Based on our internal management structure, we report three segments: North American salons, International salons and Hair Restoration Centers. Significant results of operations are discussed below with respect to each of these segments.

North American Salons

        North American Salon Revenues.    Total North American salon revenues were as follows:

			Decrease Over Prior Fiscal Year
									Same-Store Sales Decrease
Years Ended June 30,	Revenues		Dollar			Percentage
	(Dollars in thousands)
2012	$	1,981,105	$	(48,839	)		(2.4	)%		(3.2	)%
2011		2,029,944		(30,619	)		(1.5	)		(1.8	)
2010		2,060,563		(57,135	)		(2.7	)		(3.3	)

        The percentage decreases during the years ended June 30, 2012, 2011, and 2010 were due to the following factors:

	Percentage Increase (Decrease) in Revenues For the Years Ended June 30,
Factor	2012			2011			2010
Acquisitions		0.7	%		1.2	%		0.8	%
Same-store sales		(3.2	)		(1.8	)		(3.3	)
New stores		1.3			0.6			0.8
Foreign currency		0.0			0.5			0.5
Franchise revenues		0.0			0.0			0.0
Closed salons		(2.3	)		(1.4	)		(0.4	)
Other		1.1			(0.6	)		(1.1	)
		(2.4	)%		(1.5	)%		(2.7	)%

        We acquired 12 North American salons during the twelve months ended June 30, 2012, including 11 franchise buybacks. The same-store sales decrease of 3.2 percent for fiscal year 2012 was the result of a decline in guest visitations and a decrease in average ticket. The Company constructed and closed 191 and 317 company-owned salons, respectively during the twelve months ended June 30, 2012.

        We acquired 105 North American salons during the twelve months ended June 30, 2011, including 78 franchise buybacks. The same-store sales decrease of 1.8 percent was the result of a decline in same-store guest visits, partially offset by an increase in average ticket. The foreign currency impact during fiscal year 2011 resulted primarily from the weakening of the United States dollar against the Canadian dollar. The Company constructed and closed 133 and 230 company-owned salons, respectively during the twelve months ended June 30, 2011.

        We acquired 26 North American salons during the twelve months ended June 30, 2010, including 23 franchise buybacks. The same-store sales decrease of 3.3 percent was the result of a decline in same-store guest visits, partially offset by an increase in average ticket. The foreign currency impact during fiscal year 2010 resulted from the weakening of the United States dollar against the Canadian dollar as compared to the exchange rate for fiscal year 2009. The Company constructed and closed 137 and 162 company-owned salons, respectively during the twelve months ended June 30, 2010.

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        North American Salon Operating Income.    Operating income for the North American salons was as follows:

						(Decrease) Increase Over Prior Fiscal Year
			Operating Income as % of Total Revenues
Years Ended June 30,	Operating Income					Dollar			Percentage			Basis Point(1)
	(Dollars in thousands)
2012	$	165,368		8.3	%	$	(1,315	)		(0.8	)%		10
2011		166,683		8.2			(53,172	)		(24.2	)		(250	)
2010		219,855		10.7			(55,773	)		(20.2	)		(230	)

(1)

Represents the basis point change in North American salon operating income as a percent of total North American salon revenues as compared to the corresponding period of the prior fiscal year.

        The basis point increase in North American salon operating income as a percent of North American salon revenues during fiscal year 2012 was primarily due to the $67.7 million goodwill impairment of the Company's Regis salon concept was less than the $74.1 million goodwill impairment of the Company's Promenade salon concept in fiscal year 2011. The basis point increase was also due to improved service margins, partially offset by negative leverage in fixed cost categories due to negative same-store sales.

        The basis point decrease in North American salon operating income as a percent of North American salon revenues during fiscal year 2011 was primarily due to the $74.1 million goodwill impairment of the Company's Promenade salon concept and negative leverage in fixed cost categories due to negative same-store sales. Partially offsetting the basis point decrease was lower depreciation expense due to a reduction in salon construction.

        The basis point decrease in North American salon operating income as a percent of North American salon revenues during fiscal year 2010 was primarily due to the $35.3 million goodwill impairment of the Company's Regis salon concept and negative leverage in fixed cost categories due to negative same-store sales. In addition, the basis point decrease was due to the settlement of two legal claims regarding guest and employee matters totaling $5.2 million, higher self-insurance expense (the Company recorded reduction in self-insurance accruals of $1.7 million in the twelve months ended June 30, 2010 compared to a $9.9 million reduction in the twelve months ended June 30, 2009), partially offset by the Company's cost saving initiatives and gross margin improvement.

International Salons

        International Salon Revenues.    Total International salon revenues were as follows:

			Decrease Over Prior Fiscal Year
									Same-Store Sales Decrease
Years Ended June 30,	Revenues		Dollar			Percentage
	(Dollars in thousands)
2012	$	141,122	$	(9,115	)		(6.1	)%		(9.1	)%
2011		150,237		(5,848	)		(3.7	)		(3.1	)%
2010		156,085		(15,484	)		(9.0	)		(3.8	)

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        The percentage decreases during the years ended June 30, 2012, 2011, and 2010 were due to the following factors:

	Percentage (Decrease) Increase in Revenues For the Years Ended June 30,
	2012			2011			2010
Acquisitions		—	%		—	%		—	%
Same-store sales		(9.1	)		(3.1	)		(3.8	)
New stores		1.9			1.0			0.1
Foreign currency		(0.3	)		0.3			(2.9	)
Franchise revenues		—			—			—
Closed salons		(2.3	)		(3.7	)		(7.6	)
Other		3.7			1.8			5.2
		(6.1	)%		(3.7	)%		(9.0	)%

        We acquired one International salon during the twelve months ended June 30, 2012. Same-store sales decreased 9.1 percent due to a decline in guest visits. The Company constructed 13 company-owned salons (net of relocations) during the twelve months ended June 30, 2012. The foreign currency impact during fiscal year 2012 resulted from the strengthening of the United States dollar against the British Pound. We closed 16 company-owned salons during the twelve months ended June 30, 2012.

        We did not acquire any International salons during the twelve months ended June 30, 2011. Same-store sales decreased 3.1 percent due to a decline in guest visits. The Company constructed 11 company-owned salons (net of relocations) during the twelve months ended June 30, 2011. The foreign currency impact during fiscal year 2011 resulted from the weakening of the United States dollar against the British Pound. We closed 15 company-owned salons during the twelve months ended June 30, 2011.

        We did not acquire any International salons during the twelve months ended June 30, 2010. Same-store sales decreased 3.8 percent due to a decline in guest visits. The Company constructed 2 company-owned salons during the twelve months ended June 30, 2010. The foreign currency impact during fiscal year 2010 resulted from the strengthening of the United States dollar against the British Pound and Euro as compared to the exchange rates for fiscal year 2009. We closed 42 company-owned salons during the twelve months ended June 30, 2010, of which 29 related to the June 2009 plan to close underperforming salons in the United Kingdom.

        International Salon Operating Income.    Operating income for the International salons was as follows:

						(Decrease) Increase Over Prior Fiscal Year
			Operating Income as % of Total Revenues
Years Ended June 30,	Operating Income					Dollar			Percentage			Basis Point(1)
	(Dollars in thousands)
2012	$	2,505		1.8	%	$	(4,233	)		(62.8	)%		(270	)
2011		6,738		4.5			(41	)		(0.6	)		20
2010		6,779		4.3			52,260			114.9			3,080

(1)

Represents the basis point change in International salon operating income as a percent of total International salon revenues as compared to the corresponding period of the prior fiscal year.

59

        The basis point decrease in International salon operating income as a percent of International salon revenues during fiscal year 2012 was primarily due to negative leverage on fixed costs due to a decrease in same-store sales.

        The basis point improvement in International salon operating income as a percent of International salon revenues during fiscal year 2011 was primarily due to $2.1 million of lease termination costs recognized during fiscal year 2010 associated with the Company's planned closure of underperforming salons. Partially offsetting the basis point improvement was a decline on product margins from mix play, as a larger than expected percentage of our product sales came from lower-margin products.

        The basis point improvement in International salon operating income as a percent of International salon revenues during fiscal year 2010 was primarily due to the comparable prior period including a $41.7 million goodwill impairment of the United Kingdom reporting unit and higher impairment charges related to the impairment of property and equipment at underperforming locations. In addition the Company's planned closure of underperforming United Kingdom salons and the continuation of the Company's expense control and payroll management contributed to the basis point improvement during fiscal year 2010.

Hair Restoration Centers

        Hair Restoration Center Revenues.    Total Hair Restoration Centers revenues were as follows:

			Increase Over Prior Fiscal Year
								Same-Store Sales Increase
Years Ended June 30,	Revenues		Dollar		Percentage
	(Dollars in thousands)
2012	$	151,552	$	5,864		4.0	%		2.9	%
2011		145,688		3,902		2.8			1.2
2010		141,786		1,266		0.9			0.4

        The percentage increases during the years ended June 30, 2012, 2011, and 2010 were due to the following factors:

	Percentage Increase (Decrease) in Revenues For the Years Ended June 30,
	2012			2011			2010
Acquisitions		1.3	%		1.1	%		0.2	%
Same-store sales		2.9			1.2			0.4
New centers		0.4			0.3			0.0
Franchise revenues		0.1			0.7			(0.2	)
Closed centers		(0.2	)		(0.3	)		0.0
Other		(0.5	)		(0.2	)		0.5
		4.0	%		2.8	%		0.9

        The increase in Hair Restoration Centers revenues during fiscal year 2012 was due to the increase in same-store sales of 2.9 percent, the construction of six hair restoration centers and the four acquired hair restoration centers during fiscal year 2011.

        The increase in Hair Restoration Centers revenues during fiscal year 2011 was due to the increase in same-store sales of 1.2 percent, the acquisition of four hair restoration centers, all of which were franchise buybacks, and the construction of three hair restoration centers.

        The increase in Hair Restoration Centers revenues during fiscal year 2010 was due to the increase in same-store sales of 0.4 percent and the construction of four hair restoration centers.

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        Hair Restoration Center Operating (Loss) Income.    Operating (loss) income for our Hair Restoration Centers was as follows:

				Operating (Loss) Income as % of Total Revenues			Decrease Over Prior Fiscal Year
Years Ended June 30,	Operating (Loss) Income						Dollar			Percentage			Basis Point(1)
	(Dollars in thousands)
2012	$	(62,639	)		(41.3	)%	$	(80,869	)		(443.6	)%		(5,380	)
2011		18,230			12.5			(2,107	)		(10.4	)		(180	)
2010		20,337			14.3			(3,534	)		(14.8	)		(270	)

(1)

Represents the basis point change in Hair Restoration Centers operating (loss) income as a percent of total Hair Restoration Centers revenues as compared to the corresponding period of the prior fiscal year.

        The basis point decrease in Hair Restoration Centers operating loss as a percent of Hair Restoration Centers revenues during the twelve months ended June 30, 2012 was primarily due to the $78.4 million goodwill impairment of the Hair Restoration Centers, lower margins due primarily to increased labor costs and an increase in the cost hair systems.

        The basis point decrease in Hair Restoration Centers operating income as a percent of Hair Restoration Centers revenues during the twelve months ended June 30, 2011 was primarily due to an increase in the cost of hair systems and expenses associated with a legal claim. Partially offsetting the basis point decrease was a benefit related to a favorable ruling on a state sales tax issue.

        The basis point decrease in Hair Restoration Centers operating income as a percent of Hair Restoration Centers revenues during the twelve months ended June 30, 2010 was primarily due to an increase in advertising spend and the settlement of a vendor dispute totaling $0.6 million.

Unallocated Corporate

        Unallocated Corporate Operating Loss.    Unallocated corporate operating expenses include salaries, stock-based compensation, professional fees, rent, depreciation and other expenses that are not allocated. Unallocated corporate operating losses were as follows:

			(Decrease) Increase Over Prior Fiscal Year
	Operating Loss
Years Ended June 30,			Dollar			Percentage
	(Dollars in thousands)
2012	$	172,547	$	(15,156	)		(8.1	)%
2011		187,703		37,950			25.3
2010		149,753		4,808			3.3

        The improvement in unallocated corporate operating loss during the twelve months ended June 30, 2012 as compared to the twelve months ended June 30, 2011 was primarily due to the comparable prior period including $31.2 million valuation reserve on the note receivable with the purchaser of Trade Secret, partially offset by $16.2 million of accelerated depreciation expense recorded during fiscal year 2012 as a result of an adjustment to the useful life of the Company's internally developed POS system, and incremental costs associated with the Company's senior management restructuring and contested proxy.

        The increase in unallocated corporate operating loss during the twelve months ended June 30, 2011 as compared to the twelve months ended June 30, 2010 was primarily due to the $31.2 million

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valuation reserve on the note receivable with the purchaser of Trade Secret, incremental costs associated with the Company's senior management restructure, professional fees incurred related to the exploration of strategic alternatives and information technology projects and legal claims expense.

        The increase in unallocated corporate operating loss during the twelve months ended June 30, 2010 as compared to the twelve months ended June 30, 2009 was primarily due to an increase in professional fees and distribution costs from an agreement with the purchaser of Trade Secret.

LIQUIDITY AND CAPITAL RESOURCES

Overview

        We continue to maintain a strong balance sheet to support system growth and financial flexibility. Our debt to capitalization ratio, calculated as total debt as a percentage of total debt and shareholders' equity at fiscal year end, was as follows:

As of June 30,	Debt to Capitalization			Basis Point Increase (Decrease)(1)
2012		24.4	%		110
2011		23.3			(700	)
2010		30.3			(1,380	)

(1)

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

        The basis point increase in the debt to capitalization ratio as of June 30, 2012 compared to June 30, 2011 was primarily due to the decrease in shareholders' equity as a result of the non-cash goodwill impairment charges related to the Regis salon concept and Hair Restoration Centers reporting unit, a $17.2 million net impairment charge associated with the Agreement to sell the Company's 46.7 percent equity interest in Provalliance to the Provost family, and a $19.4 million impairment charge associated with our investment in EEG. Partially offsetting the impact of the decrease in shareholders' equity was a decrease in debt levels.

        The basis point improvement in the debt to capitalization ratio as of June 30, 2011 compared to June 30, 2010 was primarily due to the repayment of an $85.0 million term loan during fiscal year 2011 and foreign currency translation adjustments due to the weakening of the United States dollar against the Canadian dollar and British Pound.

        The basis point improvement in the debt to capitalization ratio as of June 30, 2010 compared to June 30, 2009 was primarily due to the July 2009 common stock offering and decreased debt levels stemming from the repayment of private placement debt during fiscal year 2010. Our principal on-going cash requirements are to finance construction of new stores, remodel certain existing stores, acquire salons and purchase inventory. Guests pay for salon services and merchandise in cash at the time of sale, which reduces our working capital requirements.

        Total assets at June 30, 2012, 2011, and 2010 were as follows:

			(Decrease) Increase Over Prior Fiscal Year
	Total Assets
As of June 30,			Dollar			Percentage
	(Dollars in thousands)
2012	$	1,571,846	$	(233,907	)		(13.0	)%
2011		1,805,753		(113,819	)		(5.9	)
2010		1,919,572		27,086			1.4

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        The primary factors for the decrease in total assets as of June 30, 2012 compared to June 30, 2011 were the goodwill impairment charges related to the Regis salon concept and Hair Restoration Centers reporting unit, a $17.2 million net impairment charge associated with the Agreement to sell the Company's 46.7 percent equity interest in Provalliance to the Provost family, and a $19.4 million impairment charge associated with our investment in EEG. Additionally, total assets decreased as a result of the accelerated depreciation expense associated with the adjustment to the useful life of the Company's internally developed POS. Partially offsetting the decrease in total assets were cash flows from operations.

        The $74.1 million goodwill impairment charge related to the Promenade salon concept, a $31.2 million valuation reserve on the note receivable due from the purchaser of Trade Secret, and a $9.2 million impairment on the Company's investment in MY Style, partially offset by cash flows from operations, were the primary factors for the decrease in total assets as of June 30, 2011 compared to June 30, 2010.

        Cash flows from operations, partially offset by the $35.3 million goodwill impairment charge related to the Regis salon concept were the primary factors for the increase in total assets as of June 30, 2010 compared to June 30, 2009.

        Total shareholders' equity at June 30, 2012, 2011, and 2010 was as follows:

			(Decrease) Increase Over Prior Fiscal Year
	Shareholders' Equity
As of June 30,			Dollar			Percentage
	(Dollars in thousands)
2012	$	889,157	$	(143,462	)		(13.9	)%
2011		1,032,619		19,326			1.9
2010		1,013,293		210,433			26.2

        During the twelve months ended June 30, 2012, equity decreased primarily as a as a result of the non-cash goodwill impairment charges related to the Regis salon concept and Hair Restoration Centers reporting unit, a $17.2 million net impairment charge associated with the Agreement to sell the Company's 46.7 percent equity interest in Provalliance to the Provost family, a $19.4 million impairment charge associated with our investment in EEG, and $24.3 million of foreign currency translation.

        During the twelve months ended June 30, 2011, equity increased primarily as a result of $30.4 million of foreign currency translation and $9.6 million of stock based compensation, partially offset by $11.5 million of dividends and $8.9 million of net loss.

        During the twelve months ended June 30, 2010, equity increased primarily as a result of the issuance of the $163.6 million in common stock, the $24.7 million ($15.2 million net of tax) equity component of the convertible debt, stock based compensation of $9.3 million and the $42.7 million of earnings during fiscal year 2010. Partially offsetting the increase was a non-cash goodwill impairment charge of $35.3 million related to our Regis salon concept, $9.1 million of dividends, $8.2 million in equity issuance costs and $5.4 million of foreign currency translation adjustments.

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Cash Flows

Operating Activities

        Net cash provided by operating activities during the twelve months ended June 30, 2012, 2011 and 2010 were a result of the following:

	Operating Cash Flows For the Years Ended June 30,
	2012			2011			2010
	(Dollars in thousands)
Net (loss) income	$	(114,093	)	$	(8,905	)	$	42,740
Depreciation and amortization		111,435			98,428			102,336
Equity in loss (income) of affiliated companies		30,043			(7,228	)		(11,942	)
Dividends received from affiliated companies		4,047			10,023			2,404
Deferred income taxes		(14,171	)		(14,711	)		5,115
Impairment on discontinued operations		—			—			(154	)
Goodwill and asset impairments		152,746			80,781			41,705
Note receivable bad debt (recovery) expense		(805	)		31,227			—
Receivables		(4,502	)		(2,358	)		1,192
Inventories		2,644			4,629			4,823
Income tax receivable		2,809			23,855			957
Other current assets		(5,272	)		4,725			2,657
Other assets		(841	)		(11,050	)		(14,951	)
Accounts payable and accrued expenses		(13,513	)		368			1,040
Other noncurrent liabilities		(11,151	)		1,818			1,954
Other		14,324			17,576			12,347
	$	153,700		$	229,178		$	192,223

        Fiscal year 2012 cash provided by operating activities was lower than fiscal year 2011 cash provided by operating activities due to a $51.8 million decrease in cash provided by operating assets and liabilities primarily due to the timing of accruals and a reduction in the amount received for income taxes, as fiscal year 2011 included a tax refund related to the fiscal year 2009 loss on discontinued operations. Cash provided by operating activities was also lower due to a decrease of $6.0 million in dividends received from affiliated companies.

        Fiscal year 2011 cash provided by operating activities was greater than fiscal year 2010 cash provided by operating activities due to an increase of $7.6 million in dividends received from affiliated companies and a $23.9 million reduction in income tax receivables.

        Fiscal year 2010 cash provided by operating activities was consistent with fiscal year 2009 cash provided by operating activities.

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Investing Activities

        Net cash used in investing activities during the twelve months ended June 30, 2012, 2011 and 2010 was the result of the following:

	Investing Cash Flows For the Years Ended June 30,
	2012			2011			2010
	(Dollars in thousands)
Business and salon acquisitions	$	(2,587	)	$	(17,990	)	$	(3,664	)
Capital expenditures for remodels or other additions		(36,128	)		(44,855	)		(40,561	)
Capital expenditures for the corporate office (including all technology-related expenditures)		(27,072	)		(13,826	)		(7,828	)
Capital expenditures for new salon construction		(22,569	)		(12,788	)		(9,432	)
Proceeds from loans and investments		11,995			16,804			16,099
Disbursements for loans and investments		(15,000	)		(72,301	)		—
Freestanding derivative settlement		—			—			736
Proceeds from sale of assets		502			626			70
	$	(90,859	)	$	(144,330	)	$	(44,580	)

        Cash used by investing activities was less during fiscal year 2012 compared to fiscal year 2011 due to the comparable prior period including the acquisition of approximately 17 percent additional equity interest in Provalliance for $57.3 million (€40.4 million), a decrease in the amount of cash paid for acquisitions during fiscal year 2012, partially offset by an increase in capital expenditures for a new POS system and new salon construction. The Company completed 235 major remodeling projects during fiscal year 2012, compared to 271 and 333 during fiscal years 2011 and 2010, respectively. During fiscal year 2012, we constructed 209 company-owned salons and six hair restoration centers, and acquired 13 company-owned salons (11 of which were franchise buybacks).

        Cash used by investing activities was greater during fiscal year 2011 compared to fiscal year 2010 due to the acquisition of approximately 17 percent additional equity interest in Provalliance for $57.3 million (€ 40.4 million), a disbursement of $15.0 million on the revolving credit facility with EEG and the planned increase in acquisitions and capital expenditures. The Company completed 271 major remodeling projects during fiscal year 2011, compared to 333 and 280 during fiscal years 2010 and 2009, respectively. During fiscal year 2011, we constructed 146 company-owned salons and three hair restoration centers, and acquired 105 company-owned salons (78 of which were franchise buybacks) and four hair restoration centers (all of which were franchise buybacks).

        Cash used by investing activities was lower during fiscal year 2010 compared to fiscal year 2009 due to the planned reduction in acquisitions and capital expenditures and the receipt of $15.0 million on the revolving credit facility with EEG of which there was $0.0 and $15.0 million outstanding as of June 30, 2010 and 2009, respectively. The Company completed 333 major remodeling projects during fiscal year 2010, compared to 280 and 186 during fiscal years 2009 and 2008, respectively. We constructed 139 company-owned salons, four hair restoration centers and acquired 26 company-owned salons (23 of which were franchise buybacks) and zero hair restoration centers.

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        The company-owned constructed and acquired locations (excluding franchise buybacks) consisted of the following number of locations in each concept:

	Years Ended June 30,
	2012				2011				2010
	Constructed		Acquired		Constructed		Acquired		Constructed		Acquired
Regis		12		—		12		9		14		3
MasterCuts		11		—		6		—		15		—
SmartStyle		50		—		65		—		80		—
Supercuts		65		1		24		—		10		—
Promenade		53		—		26		18		18		—
International		18		1		13		—		2		—
Hair restoration centers		6		—		3		—		4		—
		215		2		149		27		143		3

Financing Activities

        Net cash used in financing activities during the twelve months ended June 30, 2012, 2011 and 2010 was the result of the following:

	Financing Cash Flows For the Years Ended June 30,
	2012			2011			2010
	(Dollars in thousands)
Net repayments on revolving credit facilities	$	—		$	—		$	(5,000	)
Net repayments of long-term debt		(29,693	)		(137,671	)		(181,850	)
Proceeds from the issuance of common stock		—			682			159,498
Excess tax benefit from stock-based compensation plans		—			67			243
Dividend payments		(13,855	)		(11,509	)		(9,146	)
Other		—			—			(2,878	)
	$	(43,548	)	$	(148,431	)	$	(39,133	)

        During fiscal year 2012 and 2011, the primary use of cash within financing activities was for repayments of long-term debt and dividends.

        During fiscal year 2010, the primary use of cash within financing activities was for net repayments of long-term debt, partially offset by the issuance of common stock.

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Financing Arrangements

        The Company's financing arrangements as of June 30, 2012 and 2011 consists of the following:

		Interest rate %		Amounts outstanding
	Maturity Dates	2012	2011	2012			2011
	(fiscal year)			(Dollars in thousands)
Senior term notes	2013 - 2018	6.69 - 8.50%	6.69 - 8.50%	$	111,429		$	133,571
Convertible senior notes	2015	5.00	5.00		161,134			156,248
Revolving credit facility	2016	—	—		—			—
Equipment and leasehold notes payable	2015 - 2016	4.90 - 8.75	8.80 - 9.14		14,780			22,273
Other notes payable	2013	5.75 - 8.00	5.75 - 8.00		331			1,319
					287,674			313,411
Less current portion					(28,937	)		(32,252	)
Long-term portion				$	258,737		$	281,159

Fiscal Year 2012

        In April 2012, the Company amended the Restated Private Shelf Agreement. The amendments included increasing the Company's minimum net worth covenant from $800.0 million to $850.0 million and amending or adding certain definitions, including EBITDA and Rental Expense. Under the new agreement, indebtedness related to Capital Leases is limited to $50.0 million. We were in compliance with all covenants and other requirements of our credit agreement and senior notes as of June 30, 2012.

Fiscal Year 2011

        On June 30, 2011, the Company entered into a Fifth Amended and Restated Credit Agreement, which amended and restated in its entirety, the Company's existing Fourth Amended and Restated Credit Agreement. The Fifth Amended and Restated Credit Agreement provides for a $400.0 million senior unsecured five-year revolving credit facility. The amendments included increasing the Company's minimum net worth covenant from $800.0 to $850.0 million, and amending or adding certain definitions, including Change in Law, Defaulting Lender, EBITDA, Fronting Exposure, Replacement Lender, and Accounting Principles. In addition, under the Fifth Amended and Restated Credit Agreement, the Company may request an increase in revolving credit commitments under the facility of up to $200.0 million under certain circumstances. Under the new agreement, indebtedness related to Capital Leases is limited to $50.0 million, and Restricted Payments, as defined in the agreement, are tiered based on Debt to EBITDA. Events of default under the Credit Agreement include change of control of the Company and the Company's default of other debt exceeding $10.0 million.

Fiscal Year 2010

        In July 2009, the Company issued $172.5 million of 5.0 percent convertible senior notes due 2014, and 13,225,000 shares of its common stock at $12.37 per share. The notes are unsecured, senior obligations of the Company and interest payable semi-annually at a rate of 5.0 percent per year. The notes mature on July 15, 2014. The notes are convertible subject to certain conditions at an initial conversion rate of 64.6726 shares of the Company's common stock per $1,000 principal amount of notes (representing an initial conversion price of approximately $15.46 per share of the Company's common stock), subject to adjustment in certain circumstances. As of June 30, 2012, the conversion rate was 65.1432 shares of the Company's common stock per $1,000 principal amount of notes

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(representing a conversion price of approximately $15.35 per share of the Company's common stock). See further discussion within Note 8 to the Consolidated Financial Statements.

        The net proceeds to the Company from the offerings of convertible senior notes and common stock were approximately $323.8 million after deducting underwriting discounts and before estimated offering expenses. The Company utilized the proceeds to repay $267.0 million of private placement senior term notes of varying maturities and $30.0 million of senior term notes under the Private Shelf Agreement. As a result of the repayment of a portion of the senior term notes during the twelve months ended June 30, 2010, the Company incurred $12.8 million in make-whole payments and other fees along with $5.2 million in interest rate swap settlements, as discussed in Note 9 to the Consolidated Financial Statements, totaling $18.0 million that was recorded as interest expense within the Consolidated Statement of Operations. The remaining proceeds were used for general corporate purposes including the repayment of bank debt.

        In connection with the offering above, the Company amended the Fourth Amended and Restated Credit Agreement, the Term Loan Agreement and the Amended and Restated Private Shelf Agreement. The amendments included increasing the Company's minimum net worth covenant from $675 to $800 million, lowering the fixed charge coverage ratio requirement from 1.5x to 1.3x, amending certain definitions, including EBITDA and Fixed Charges, and limiting the Company's Restricted Payments to $20 million if the Company's Leverage Ratio is greater than 2.0x. In addition, the amendments to the Fourth Amended and Restated Credit Agreement reduced the borrowing capacity of the revolving credit facility from $350.0 to $300.0 million and the amendments to the Restated Private Shelf Agreement incorporated a risk based capital fee calculated on the daily average outstanding principal amount equal to an annual rate of 1.0 percent which commences one year after the effective date of the amendment.

Other Financing Arrangements

Private Shelf Agreement

        At June 30, 2012 and 2011, we had $111.4 and $133.6 million, respectively, in unsecured, fixed rate, senior term notes outstanding under a Private Shelf Agreement. The notes require quarterly payments, and final maturity dates range from June 2013 through December 2017. The interest rates on the notes range from 6.69 to 8.50 percent as of June 30, 2012, and ranged from 6.69 to 8.50 percent as of June 30, 2011.

        The Private Shelf Agreement includes financial covenants including debt to earnings before interest, taxes, depreciation and amortization (EBITDA) ratios, fixed charge coverage ratios and minimum net equity tests (as defined within the Private Shelf Agreement), as well as other customary terms and conditions. The maturity date for the debt may be accelerated upon the occurrence of various Events of Default, including breaches of the agreement, certain cross-default situations, certain bankruptcy related situations, and other customary events of default.

Equipment and Leasehold Notes Payable

        The equipment and leasehold notes payable are primarily comprised of capital lease obligations. In September 2011, the Company entered into an agreement to refinance existing capital leases to a three year term with a contract rate of 4.9 percent. Capital leases of $20.5 million are amortized at the historical rate of 9.2 percent. There was no gain or loss recorded on the refinance. The Company entered into the refinancing to reduce cash interest payments.

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Other Notes Payable

        The Company had $0.3 and $1.3 million in unsecured outstanding notes at June 30, 2012 and 2011, respectively, related to debt assumed in acquisitions.

Acquisitions

        Acquisitions are discussed throughout Management's Discussion and Analysis in this Item 7, as well as in Note 4 to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K. The acquisitions were funded primarily from operating cash flow, debt and the issuance of common stock.

Contractual Obligations and Commercial Commitments

        The following table reflects a summary of obligations and commitments outstanding by payment date as of June 30, 2012:

	Payments due by period
Contractual Obligations	Within 1 years		1 - 3 years		3 - 5 years		More than 5 years		Total
	(Dollars in thousands)
On-balance sheet:
Long-term debt obligations	$	22,474	$	196,848	$	35,715	$	17,857	$	272,894
Capital lease obligations		6,463		8,315		2		—		14,780
Other long-term liabilities		5,883		4,711		3,206		14,161		27,961
Total on-balance sheet		34,820		209,874		38,923		32,018		315,635
Off-balance sheet(a):
Operating lease obligations		306,468		433,978		200,432		85,627		1,026,505
Interest on long-term debt and capital lease obligations		18,772		22,758		7,589		1,518		50,637
Total off-balance sheet		325,240		456,736		208,021		87,145		1,077,142
Total(b)	$	360,060	$	666,610	$	246,944	$	119,163	$	1,392,777

(a)

In accordance with accounting principles generally accepted in the United States of America, these obligations are not reflected in the Consolidated Balance Sheet.

(b)

As of June 30, 2012, we have liabilities for uncertain tax positions. We are not able to reasonably estimate the amount by which the liabilities will increase or decrease over time; however, at this time, we do not expect a significant payment related to these obligations within the next fiscal year. See Note 12 to the Consolidated Financial Statements for more information on our uncertain tax positions.

On-Balance Sheet Obligations

        Our long-term obligations are composed primarily of senior term notes and convertible debt. There were no outstanding borrowings under our revolving credit facility at June 30, 2012. Interest payments on long-term debt and capital lease obligations were estimated based on each debt obligation's agreed upon rate as of June 30, 2012 and scheduled contractual repayments.

        Other long-term liabilities include a total of $21.2 million related to the Executive Profit Sharing Plan and a salary deferral program, $6.8 million (including $0.2 million in interest) related to established contractual payment obligations under retirement and severance payment agreements for a small number of retired employees.

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        This table excludes the short-term liabilities, other than the current portion of long-term debt, disclosed on our balance sheet as the amounts recorded for these items will be paid in the next year. We have no unconditional purchase obligations, as defined by long-term obligations guidance. Also excluded from the contractual obligations table are payment estimates associated with employee health and workers' compensation claims for which we are self-insured. The majority of our recorded liability for self-insured employee health and workers' compensation losses represents estimated reserves for incurred claims that have yet to be filed or settled.

        The Company has unfunded deferred compensation contracts covering certain management and executive personnel. The deferred compensation contracts are offered to key executives based on their performance within the Company. Because we cannot predict the timing or amount of our future payments related to these contracts, such amounts were not included in the table above. Related obligations totaled $24.6 and $11.8 million and are included in accrued liabilities and other noncurrent liabilities, respectively, in the Consolidated Balance Sheet at June 30, 2012. Refer to Note 13 to the Consolidated Financial Statements for additional information. The Company intends to fund its future obligations under these arrangements through Company-owned life insurance policies on the participants.

Off-Balance Sheet Arrangements

        Operating leases primarily represent long-term obligations for the rental of salon and hair restoration center premises, including leases for company-owned locations, as well as future salon franchisee lease payments of approximately $152.5 million, which are reimbursed to the Company by franchisees, and the guarantee of approximately 20 salons operated by the purchaser of Trade Secret. Regarding the franchisee subleases, we generally retain the right to the related salon assets net of any outstanding obligations in the event of a default by a franchise owner. Management has not experienced and does not expect any material loss to result from these arrangements.

        We have forward foreign currency contracts. See Part II, Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," for a detailed discussion of our derivative instruments. Future net settlements under these agreements are not included in the table above.

        We are a party to a variety of contractual agreements under which we may be obligated to indemnify the other party for certain matters, which indemnities may be secured by operation of law or otherwise, in the ordinary course of business. These contracts primarily relate to our commercial contracts, operating leases and other real estate contracts, financial agreements, definitive agreement entered into during July 2012 to sell Hair Club, credit facility of EEG that matures on December 31, 2012 with a maximum exposure of $9 million, agreements to provide services, and agreements to indemnify officers, directors and employees in the performance of their work. While our aggregate indemnification obligation could result in a material liability, we are not aware of any current matter that we expect to result in a material liability.

        We do not have other unconditional purchase obligations or significant other commercial commitments such as commitments under lines of credit and standby repurchase obligations or other commercial commitments.

        As a part of our salon development program, we continue to negotiate and enter into leases and commitments for the acquisition of equipment and leasehold improvements related to future salon locations, and continue to enter into transactions to acquire established hair care salons and businesses.

        We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet financial arrangements or other

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contractually narrow or limited purposes at June 30, 2012. As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

Sources of Liquidity

        Funds generated by operating activities, available cash and cash equivalents, and our revolving credit facility are our most significant sources of liquidity. We believe our sources of liquidity will be sufficient to sustain operations and to finance anticipated growth opportunities and strategic initiatives. We also anticipate access to long-term financing. However, in the event our liquidity is insufficient and we are not able to access long-term financing, we may be required to limit our growth opportunities. There can be no assurance that we will continue to generate cash flows at or above current levels.

        In the first half of fiscal year 2013 the Company is expecting to receive approximately $260 million upon completion of the sale of Provalliance and Hair Club. We are currently evaluating the Company's capital structure and the future use of these proceeds. As of June 30, 2012, cash and cash equivalents were $47.9, $32.8 and $31.2 million within the United States, Canada, and Europe, respectively.

        We have a $400.0 million five-year senior unsecured revolving credit facility with a syndicate of banks that expires in June 2016. As of June 30, 2012, the Company had no outstanding borrowings under the facility. Additionally, the Company had outstanding standby letters of credit under the facility of $26.1 million at June 30, 2012, primarily related to its self-insurance program. Unused available credit under the facility at June 30, 2012 was $373.9 million.

        Our ability to access our revolving credit facility is subject to our compliance with the terms and conditions of such facility, including minimum net worth and other covenants and requirements. At June 30, 2012, we were in compliance with all covenants and other requirements of our credit agreement and senior notes.

Financing

        Financing activities are discussed under "Liquidity and Capital Resources" in this Item 7 and in Note 8 to the Consolidated Financial Statements in Part II, Item 8. Derivative activities are discussed in Note 9 to the Consolidated Financial Statements in Part II, Item 8 and Part II, Item 7A, "Quantitative and Qualitative Disclosures about Market Risk."

        Management believes that cash generated from operations and amounts available under existing debt facilities will be sufficient to fund its anticipated capital expenditures, acquisitions and required debt repayments for the foreseeable future. As of June 30, 2012, we have available an unused committed line of credit amount of $373.9 million under our existing revolving credit facility.

Dividends

        We paid dividends of $0.24 per share during fiscal year 2012, $0.20 per share during fiscal year 2011, and $0.16 per share during fiscal year 2010. On August 22, 2012, the Board of Directors of the Company declared a $0.06 per share quarterly dividend payable September 19, 2012 to shareholders of record on September 5, 2012.

Share Repurchase Program

        In May 2000, the Company's Board of Directors (BOD) approved a stock repurchase program. Originally, the program authorized up to $50.0 million to be expended for the repurchase of the Company's stock. The BOD elected to increase this maximum to $100.0 million in August 2003, to $200.0 million on May 3, 2005, and to $300.0 million on April 26, 2007. The timing and amounts of any repurchases will depend on many factors, including the market price of the common stock and overall market conditions. Historically, the repurchases to date have been made primarily to eliminate the

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dilutive effect of shares issued in conjunction with acquisitions, restricted stock grants and stock option exercises. All repurchased shares become authorized but unissued shares of the Company. This repurchase program has no stated expiration date. The Company did not repurchase any shares during fiscal year 2012 or 2011. As of June 30, 2012, 2011, and 2010, a total accumulated 6.8 million shares have been repurchased for $226.5 million. As of June 30, 2012, $73.5 million remains to be spent on share repurchases under this program.

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

        This annual report, as well as information included in, or incorporated by reference from, future filings by the Company with the Securities and Exchange Commission and information contained in written material, press releases and oral statements issued by or on behalf of the Company contains or may contain "forward-looking statements" within the meaning of the federal securities laws, including statements concerning anticipated future events and expectations that are not historical facts. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements in this document reflect management's best judgment at the time they are made, but all such statements are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those expressed in or implied by the statements herein. Such forward-looking statements are often identified herein by use of words including, but not limited to, "may," "believe," "project," "forecast," "expect," "estimate," "anticipate," and "plan." In addition, the following factors could affect the Company's actual results and cause such results to differ materially from those expressed in forward-looking statements. These factors include, the impact of 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; the impact on the Company of healthcare reform legislation; 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 under Item 1A of this Form 10-K. 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-Q and 8-K and Proxy Statements on Schedule 14A.

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk

        The primary market risk exposure of the Company relates to changes in interest rates in connection with its debt, some of which bears interest at variable rates based on LIBOR plus an applicable borrowing margin. Additionally, the Company is exposed to foreign currency translation risk related to its net investments in its foreign subsidiaries and notes receivable with certain affiliated companies and, to a lesser extent, changes in the Canadian dollar exchange rate. The Company has established policies and procedures that govern the management of these exposures through the use of derivative financial instrument contracts. By policy, the Company does not enter into such contracts for

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the purpose of speculation. The following details the Company's policies and use of financial instruments.

Interest Rate Risk:

        The Company has established an interest rate management policy that attempts to minimize its overall cost of debt, while taking into consideration the earnings implications associated with the volatility of short-term interest rates. On occasion, the Company uses interest rate swaps to further mitigate the risk associated with changing interest rates and to maintain its desired balances of fixed and floating rate debt. In addition, access to variable rate debt is available through the Company's revolving credit facility. The Company reviews its policy and interest rate risk management quarterly and makes adjustments in accordance with market conditions and the Company's short and long-term borrowing needs. The Company had outstanding fixed rate debt balances of $287.7 and $313.4 million at June 30, 2012 and June 30, 2011, respectively.

Interest Rate Swap Contracts:

        In the past, the Company used interest rate swaps to maintain its variable to fixed rate debt ratio in accordance with its established policy to further mitigate the risk associated with changing interest rates and to maintain its desired balances of fixed and variable rate debt. Generally, the terms of the interest rate swap agreements contain monthly and quarterly settlement dates based on the notional amounts of the swap contracts.

Pay fixed rates, receive variable rates

        During the three months ended December 31, 2008, the Company entered into two interest rate swap contracts that pay fixed rates of interest and receive variable rates of interest (based on the one-month LIBOR) on notional amounts of indebtedness of $20.0 million each, that had maturation dates in July 2011, respectively. These swaps were designated and were effective as cash flow hedges. These cash flow hedges were recorded at fair value within other noncurrent liabilities in the Consolidated Balance Sheet, with a corresponding offset in deferred income taxes and other comprehensive income within shareholders' equity. These contracts were terminated during fiscal year 2011 in conjunction with the repayment of the $85.0 million term loan. The contracts were settled for an aggregate loss of $0.1 million recorded within interest expense in the Consolidated Statement of Operations during fiscal year 2011. Prior to the termination of the contracts, the Company paid fixed rates of interest of approximately 3.0 percent and 3.4 percent on their respective $20.0 million.

        During the three months ended December 31, 2005, the Company entered into interest rate swap contracts that pay fixed rates of interest and receive variable rates of interest (based on the three-month LIBOR) on notional amounts of indebtedness of $35.0 and $15.0 million, and mature in March 2013 and March 2015, respectively. These swaps were designated and were effective as cash flow hedges. These cash flow hedges were recorded at fair value within other noncurrent liabilities in the Consolidated Balance Sheet, with a corresponding offset in other comprehensive income within shareholders' equity. These contracts were terminated during fiscal year 2010 in conjunction with the repayment of the private placement senior term notes as discussed in Note 9 to the Consolidated Financial Statements. The contracts were settled for an aggregate loss of $5.2 million recorded within interest expense in the Consolidated Statement of Operations during fiscal year 2010.

Tabular Presentation:

        The following table presents information about the Company's debt obligations. As the Company did not have variable rate obligations or derivative financial instruments sensitive to changes in interest

73

rates or as of June 30, 2012, the table presents principal amounts and related weighted-average interest rates by fiscal year of maturity for fixed rate debt obligations.

																			June 30, 2012
	Expected maturity date as of June 30, 2012
																						Fair Value
	2013			2014			2015			2016			2017			Thereafter			Total
	(Dollars in thousands)
Liabilities
Long-term debt:
Fixed rate	$	28,937		$	24,918		$	180,245		$	17,860		$	17,857		$	17,857		$	287,674		$	307,478
Average interest rate		7.4	%		7.5	%		5.4	%		8.5	%		8.5	%		8.5	%		6.3	%
Total liabilities	$	28,937		$	24,918		$	180,245		$	17,860		$	17,857		$	17,857		$	287,674		$	307,478

Foreign Currency Exchange Risk:

        The majority of the Company's revenue, expense and capital purchasing activities are transacted in United States dollars. However, because a portion of the Company's operations consists of activities outside of the United States, the Company has transactions in other currencies, primarily the Canadian dollar, British pound and Euro. In preparing the Consolidated Financial Statements, the Company is required to translate the financial statements of its foreign subsidiaries from the currency in which they keep their accounting records, 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 frequently evaluates its foreign currency exchange risk by monitoring market data and external factors that may influence exchange rate fluctuations. As a result, the Company may engage in transactions involving various derivative instruments to hedge assets, liabilities and purchases denominated in foreign currencies. As of June 30, 2012, the Company has entered into the following financial instruments to manage its foreign currency exchange risk:

Hedge of the Net Investment in Foreign Subsidiaries:

        The Company has numerous investments in foreign subsidiaries, and the net assets of these subsidiaries are exposed to exchange rate volatility. The Company frequently evaluates its foreign currency exchange risk by monitoring market data and external factors that may influence exchange rate fluctuations. As a result, the Company may engage in transactions involving various derivative instruments to hedge assets, liabilities and purchases denominated in foreign currencies.

        During September 2006, the Company's cross-currency swap (which had a notional amount of $21.3 million and hedged a portion of the Company's net investment in its foreign operations) was settled, resulting in a cash outlay of $8.9 million. This cash outlay was recorded within investing activities within the Consolidated Statement of Cash Flows. The related cumulative tax-effected net loss of $7.9 million was recorded in accumulated other comprehensive income (AOCI) in fiscal year 2007. This amount will remain deferred within AOCI indefinitely, as the event which would trigger its release from AOCI and recognition in earnings is the sale or liquidation of the Company's international operations that the cross-currency swap hedged.

        In connection with the sale of Provalliance, the Company is considering alternatives which may trigger release of certain material cumulative foreign currency translation balances and the cumulative tax-effected net loss related to the fiscal year 2007 settlement of the cross-currency swap from AOCI to earnings. The Company is currently estimating a net gain of approximately $30 to $40 million to be released from AOCI to earnings upon liquidation of certain foreign subsidiaries.

74

Forward Foreign Currency Contracts:

        The Company's exposure to foreign exchange risk includes risks related to fluctuations in the Canadian dollar relative to the U.S. dollar. The exposure to Canadian dollar exchange rates on the Company's fiscal year 2012 cash flows is primarily associated with certain forecasted intercompany transactions.

        The Company seeks to manage exposure to changes in the value of the Canadian dollar. In order to do so, the Company has entered into forward currency contracts from fiscal year 2007 to the first quarter of fiscal year 2013 in order to reduce the risk of significant negative impact on its U.S. dollar cash flows or income. The Company does not hedge foreign currency exposure in a manner that would entirely eliminate the effect of changes in foreign currency exchange rates on net income and cash flows. During fiscal year 2011, the Company entered into several forward foreign currency contracts to sell Canadian dollars and buy an aggregate of $8.7 million U.S. dollars, respectively, with maturation dates between July 2011 and September 2012. As of June 30, 2012, the remaining aggregate amount of forward foreign currency contracts related to the Canadian dollar was $1.8 million U.S. dollars .The purpose of the forward contracts is to protect against adverse movements in the Canadian dollar exchange rate. The contracts were designated and were effective as cash flow hedges as of June 30, 2012. They were recorded at fair value within other noncurrent liabilities or other current assets in the Consolidated Balance Sheet, with corresponding offsets primarily recorded in other comprehensive income (loss), net of tax. See Note 9 to the Consolidated Financial Statements for further discussion.

        The Company uses freestanding derivative forward contracts to offset the Company's exposure to the change in fair value of certain foreign currency denominated intercompany assets and liabilities. These derivatives are not designated as hedges and therefore, changes in the fair value of these forward contracts are recognized currently in earnings thereby offsetting the current earnings effect of the related foreign currency denominated assets and liabilities.

        In June 2012, the Company entered into a freestanding derivative forward contract to sell an aggregate $9.0 million U.S. dollars and buy Canadian dollars, with a maturation date in July 2012.

        The table below provides information about the Company's forecasted transactions in U.S. dollar equivalents. (The information is presented in U.S. dollars because that is the Company's reporting currency.) The table summarizes information on transactions that are sensitive to foreign currency exchange rates and the related foreign currency forward exchange agreements. For the foreign currency forward exchange agreements, the table presents the notional amounts and weighted average exchange rates by expected (contractual) maturity dates. These notional amounts are used to calculate the contractual payments to be exchanged under the contract.

	Expected Transaction date June 30,
											June 30, 2012 Fair Value
	2013		2014		2015		2016		Total
Forecasted Transactions
(U.S.$ equivalent in thousands)
Intercompany transactions with Canadian salons (U.S.$)	$	1,804	$	—	$	—	$	—	$	1,804	$	37
Foreign currency denominated intercompany assets and liabilities (U.S.$)		9,000		—		—		—		9,000		108
Total contracts	$	10,804	$	—	$	—	$	—	$	10,804	$	145
Average contractual exchange rate		1.0243								1.0243

75

Item 8.    Financial Statements and Supplementary Data

Index to Consolidated Financial Statements:
Management's Statement of Responsibility for Financial Statements and Report on Internal Control over Financial Reporting	77
Report of Independent Registered Public Accounting Firm	78
Consolidated Balance Sheet as of June 30, 2012 and 2011	79
Consolidated Statement of Operations for each of the three years in the period ended June 30, 2012	80
Consolidated Statements of Changes in Shareholders' Equity and Comprehensive Income for each of the three years in the period ended June 30, 2012	81
Consolidated Statement of Cash Flows for each of the three years in the period ended June 30, 2012	82
Notes to Consolidated Financial Statements	83

76

Management's Statement of Responsibility for Financial Statements and
Report on Internal Control over Financial Reporting

Financial Statements

        Management is responsible for preparation of the consolidated financial statements and other related financial information included in this annual report on Form 10-K. The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, incorporating management's reasonable estimates and judgments, where applicable.

Management's Report on Internal Control over Financial Reporting

        This report is provided by management pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 and the SEC rules promulgated thereunder. Management, including the chief executive officer and chief financial officer, is responsible for establishing and maintaining adequate internal control over financial reporting and for assessing effectiveness of internal control over financial reporting.

        The Company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. The Company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and Directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use, or disposition of the Company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        Management has assessed the Company's internal control over financial reporting as of June 30, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the assessment of the Company's internal control over financial reporting, management has concluded that, as of June 30, 2012, the Company's internal control over financial reporting was effective.

        The Company's independent registered public accounting firm, PricewaterhouseCoopers LLP, has audited the effectiveness of the Company's internal control over financial reporting as of June 30, 2012, as stated in their report which follows in Item 8 of this Form 10-K.

77

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Regis Corporation:

        In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of changes in shareholders' equity and comprehensive income and of cash flows present fairly, in all material respects, the financial position of Regis Corporation and its subsidiaries at June 30, 2012 and June 30, 2011, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2012 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Statement of Responsibility for Financial Statements and Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

        A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Minneapolis, Minnesota
August 29, 2012

78

REGIS CORPORATION

CONSOLIDATED BALANCE SHEET

(Dollars in thousands, except per share data)

	June 30,
	2012		2011
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 (Note 10)
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

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

79

REGIS CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS

(Dollars in thousands, except per share data)

	Years Ended June 30,
	2012			2011			2010
Revenues:
Service	$	1,712,703		$	1,762,974		$	1,784,137
Product		520,467			523,194			534,593
Royalties and fees		40,609			39,701			39,704
		2,273,779			2,325,869			2,358,434
Operating expenses:
Cost of service		985,154			1,012,868			1,015,720
Cost of product		249,655			249,979			263,883
Site operating expenses		198,725			197,722			199,338
General and administrative		302,572			339,857			291,991
Rent		340,805			342,286			344,098
Depreciation and amortization		118,071			105,109			108,764
Goodwill impairment		146,110			74,100			35,277
Lease termination costs		—			—			2,145
Total operating expenses		2,341,092			2,321,921			2,261,216
Operating (loss) income		(67,313	)		3,948			97,218
Other income (expense):
Interest expense		(28,245	)		(34,388	)		(54,414	)
Interest income and other, net		5,130			4,811			10,410
(Loss) income from continuing operations before income taxes and equity in (loss) income of affiliated companies		(90,428	)		(25,629	)		53,214
Income taxes		5,279			9,496			(25,577	)
Equity in (loss) income of affiliated companies, net of income taxes		(30,043	)		7,228			11,942
(Loss) income from continuing operations		(115,192	)		(8,905	)		39,579
Income from discontinued operations, net of taxes (Note 2)		1,099			—			3,161
Net (loss) income	$	(114,093	)	$	(8,905	)	$	42,740
Net (loss) income per share:
Basic:
(Loss) income from continuing operations		(2.02	)		(0.16	)		0.71
Income from discontinued operations		0.02			—			0.06
Net (loss) income per share, basic(1)	$	(2.00	)	$	(0.16	)	$	0.77
Diluted:
(Loss) income from continuing operations		(2.02	)		(0.16	)		0.71
Income from discontinued operations		0.02			—			0.05
Net (loss) income per share, diluted(1)	$	(2.00	)	$	(0.16	)	$	0.75
Weighted average common and common equivalent shares outstanding:
Basic		57,137			56,704			55,806
Diluted		57,137			56,704			66,753
Cash dividends declared per common share	$	0.24		$	0.20		$	0.16

(1)

Total is a recalculation; line items calculated individually may not sum to total due to rounding.

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

80

REGIS CORPORATION

CONSOLIDATED STATEMENT OF CHANGES

IN SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME

(Dollars in thousands, except per share data)

	Common Stock
										Accumulated Other Comprehensive Income
							Additional Paid-In Capital						Retained Earnings						Comprehensive Income
	Shares			Amount												Total
Balance, June 30, 2009		43,881,364		$	2,194		$	151,394		$	51,855		$	597,417		$	802,860		$	(174,584	)
Net income														42,740			42,740			42,740
Foreign currency translation adjustments											(5,416	)					(5,416	)		(5,416	)
Changes in fair market value of financial instruments designated as cash flow hedges, net of taxes											2,467						2,467			2,467
Issuance of common stock		13,225,000			661			162,932									163,593
Equity component of convertible debt, net of taxes								15,245									15,245
Proceeds from exercise of stock options		202,700			10			3,055									3,065
Stock-based compensation								9,337									9,337
Shares issued through franchise stock incentive program		16,053			1			290									291
Recognition of deferred compensation and other, net of taxes (Note 13)											(1,874	)					(1,874	)		(1,874	)
Tax benefit realized upon exercise of stock options								262									262
Issuance of restricted stock		304,200			15			(15	)								—
Restricted stock forfeitures		(1,976	)		—			—									—
Taxes related to restricted stock		(66,161	)		(3	)		(1,710	)								(1,713	)
Dividends														(9,146	)		(9,146	)
Equity issuance costs								(8,154	)								(8,154	)
Adjustment to stock option tax benefit								(264	)								(264	)
Balance, June 30, 2010		57,561,180			2,878			332,372			47,032			631,011			1,013,293			37,917
Net loss														(8,905	)		(8,905	)		(8,905	)
Foreign currency translation adjustments											30,405						30,405			30,405
Changes in fair market value of financial instruments designated as cash flow hedges, net of taxes											132						132			132
Proceeds from exercise of stock options		45,933			2			680									682
Stock-based compensation								9,596									9,596
Shares issued through franchise stock incentive program		24,472			1			397									398
Recognition of deferred compensation and other, net of taxes (Note 13)											377						377			377
Tax benefit realized upon exercise of stock options								67									67
Issuance of restricted stock		277,300			14			(14	)								—
Restricted stock forfeitures		(121,343	)		(6	)		6									—
Taxes related to restricted stock		(76,731	)		(3	)		(1,787	)								(1,790	)
Vested stock option expirations								(127	)								(127	)
Dividends														(11,509	)		(11,509	)
Balance, June 30, 2011		57,710,811			2,886			341,190			77,946			610,597			1,032,619			22,009
Net loss														(114,093	)		(114,093	)		(114,093	)
Foreign currency translation adjustments											(24,254	)					(24,254	)		(24,254	)
Changes in fair market value of financial instruments designated as cash flow hedges, net of taxes											393						393			393
Proceeds from exercise of stock options		60			—			—									—
Stock-based compensation								7,597									7,597
Shares issued through franchise stock incentive program		18,844			1			305									306
Recognition of deferred compensation and other, net of taxes (Note 13)											1,029						1,029			1,029
Issuance of restricted stock		55,000			3			(3	)								—
Restricted stock forfeitures		(290,087	)		(15	)		15									—
Taxes related to restricted stock		(79,387	)		(4	)		(1,438	)								(1,442	)
Vested stock option expirations								(723	)								(723	)
Cumulative minority interest (Note 4)														1,580			1,580
Dividends														(13,855	)		(13,855	)
Balance, June 30, 2012		57,415,241		$	2,871		$	346,943		$	55,114		$	484,229		$	889,157		$	(136,925	)

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

81

REGIS CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in thousands)

	Years Ended June 30,
	2012			2011			2010
Cash flows from operating activities:
Net (loss) income	$	(114,093	)	$	(8,905	)	$	42,740
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation		101,701			88,602			92,466
Amortization		9,734			9,826			9,870
Equity in loss (income) of affiliated companies		30,043			(7,228	)		(11,942	)
Dividends received from affiliated companies		4,047			10,023			2,404
Deferred income taxes		(14,171	)		(14,711	)		5,115
Impairment on discontinued operations		—			—			(154	)
Goodwill impairment		146,110			74,100			35,277
Salon asset impairments		6,636			6,681			6,428
Note receivable bad debt (recovery) expense		(805	)		31,227			—
Excess tax benefits from stock-based compensation plans		—			(67	)		(243	)
Stock-based compensation		7,597			9,596			9,337
Amortization of debt discount and financing costs		6,696			6,469			6,406
Other noncash items affecting earnings		31			1,578			(3,153	)
Changes in operating assets and liabilities(1):
Receivables		(4,502	)		(2,358	)		1,192
Inventories		2,644			4,629			4,823
Income tax receivable		2,809			23,855			957
Other current assets		(5,272	)		4,725			2,657
Other assets		(841	)		(11,050	)		(14,951	)
Accounts payable		(4,856	)		(2,973	)		(4,966	)
Accrued expenses		(8,657	)		3,341			6,006
Other noncurrent liabilities		(11,151	)		1,818			1,954
Net cash provided by operating activities		153,700			229,178			192,223
Cash flows from investing activities:
Capital expenditures		(85,769	)		(71,469	)		(57,821	)
Proceeds from sale of assets		502			626			70
Asset acquisitions, net of cash acquired and certain obligations assumed		(2,587	)		(17,990	)		(3,664	)
Proceeds from loans and investments		11,995			16,804			16,099
Disbursements for loans and investments		(15,000	)		(72,301	)		—
Freestanding derivative settlement		—			—			736
Net cash used in investing activities		(90,859	)		(144,330	)		(44,580	)
Cash flows from financing activities:
Borrowings on revolving credit facilities		471,500			—			337,000
Payments on revolving credit facilities		(471,500	)		—			(342,000	)
Proceeds from issuance of long-term debt		—			—			167,325
Repayments of long-term debt and capital lease obligations		(29,693	)		(137,671	)		(349,175	)
Excess tax benefits from stock-based compensation plans		—			67			243
Proceeds from issuance of common stock		—			682			159,498
Dividends paid		(13,855	)		(11,509	)		(9,146	)
Other		—			—			(2,878	)
Net cash used in financing activities		(43,548	)		(148,431	)		(39,133	)
Effect of exchange rate changes on cash and cash equivalents		(3,613	)		7,975			823
Increase (decrease) in cash and cash equivalents		15,680			(55,608	)		109,333
Cash and cash equivalents:
Beginning of year		96,263			151,871			42,538
End of year	$	111,943		$	96,263		$	151,871

(1)

Changes in operating assets and liabilities exclude assets acquired and liabilities assumed through acquisitions

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

82

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business Description:

        Regis Corporation (the Company) owns, operates and franchises hairstyling and hair care salons throughout the United States (U.S.), the United Kingdom (U.K.), Canada, Puerto Rico and several other countries. Substantially all of the hairstyling and hair care salons owned and operated by the Company in the U.S., Canada and Puerto Rico are located in leased space in enclosed mall shopping centers, strip shopping centers or Walmart Supercenters. Franchise salons throughout the U.S. are primarily located in strip shopping centers. The company-owned salons in the U.K. are owned and operated in malls, leading department stores, mass merchants and high-street locations. In addition, the Company owns and operates hair restoration centers in the U.S. and Canada. On July 13, 2012, the Company entered into a definitive agreement to sell its Hair Club for Men and Women business (Hair Club) for $163.5 million, a provider of hair restoration services. The transaction is expected to close during the first half of fiscal year 2013. See discussion of the agreement to sell Hair Club within Note 17 to the Consolidated Financial Statements. The hair restoration centers are typically located in leased space within office buildings. The Company also maintains ownership interest in salons, beauty schools and hair restoration centers through equity-method investments. On April 9, 2012, the Company entered into a Share Purchase Agreement (Agreement) to sell the Company's 46.7 percent equity interest in Provalliance to the Provost Family for a purchase price of €80 million.

Consolidation:

        The Consolidated Financial Statements include the accounts of the Company and its subsidiaries after the elimination of intercompany accounts and transactions. All material subsidiaries are wholly owned. The Company consolidated variable interest entities where it has determined it is the primary beneficiary of those entities' operations.

Use of Estimates:

        The preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the U.S. of America (GAAP) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Foreign Currency Translation:

        Financial position, results of operations and cash flows of the Company's international subsidiaries are measured using local currency as the functional currency. Assets and liabilities of these subsidiaries are translated at the exchange rates in effect at each fiscal year end. Translation adjustments arising from the use of differing exchange rates from period to period are included in accumulated other comprehensive income within shareholders' equity. Statement of Operations accounts are translated at the average rates of exchange prevailing during the year. The different exchange rates from period to period impact the amount of reported income from the Company's international operations.

Cash and Cash Equivalents:

        Cash equivalents consist of investments in short-term, highly liquid securities having original maturities of three months or less, which are made as a part of the Company's cash management activity. The carrying values of these assets approximate their fair market values. The Company

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primarily utilizes a cash management system with a series of separate accounts consisting of lockbox accounts for receiving cash, concentration accounts that funds are moved to, and several "zero balance" disbursement accounts for funding of payroll and accounts payable. As a result of the Company's cash management system, checks issued, but not presented to the banks for payment, may create negative book cash balances. There were no checks outstanding in excess of related book cash balances at June 30, 2012 and 2011.

Receivables and Allowance for Doubtful Accounts:

        The receivable balance on the Company's Consolidated Balance Sheet primarily includes accounts and notes receivable from franchisees and credit card receivables. The balance is presented net of an allowance for expected losses (i.e., doubtful accounts), primarily related to the receivables from the Company's franchisees. The Company monitors the financial condition of its franchisees and records provisions for estimated losses on receivables when it believes its franchisees are unable to make their required payments based on factors such as delinquencies and aging trends. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses related to existing accounts and notes receivables.

        The following table summarizes the activity in the allowance for doubtful accounts:

	For the Years Ended June 30,
	2012			2011			2010
	(Dollars in thousands)
Beginning balance	$	1,482		$	3,170		$	2,382
Bad debt expense		454			853			1,040
Write-offs		(714	)		(2,549	)		(252	)
Other (primarily the impact of foreign currency fluctuations)		10			8			—
Ending balance	$	1,232		$	1,482		$	3,170

Note Receivables, Net:

        The note receivable balances within the Company's Consolidated Balance Sheet primarily include note receivables related to the Company's investments in EEG and MY Style, a note receivable with the purchaser of Trade Secret and note receivables with our franchisees. The Company monitors the financial condition of its counterparties with an outstanding note receivable and records provisions for estimated losses on receivables when it believes the counterparties are unable to make their required payments. As of June 30, 2012, the outstanding note receivable balances with EEG and MY Style were in good standing with no associated valuation allowance. See discussion of the note receivables related to the purchaser of Trade Secret and Company's investments in EEG and MY Style within Notes 2 and 6, respectively, to the Consolidated Financial Statements.

Inventories:

        Inventories of finished goods consist principally of hair care products for retail product sales. A portion of inventories are also used for salon services consisting of hair color, hair care products including shampoo and conditioner and hair care treatments including permanents, neutralizers and

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relaxers. Inventories are stated at the lower of cost or market, with cost determined on a weighted average cost basis.

        Physical inventory counts are performed annually. Product and service inventories are adjusted based on the results of the physical inventory counts. Between the physical inventory counts, cost of retail product sold to salon guests is determined based on the weighted average cost of product sold, adjusted for an estimated shrinkage factor, and the cost of product used in salon services is determined by applying estimated gross profit margins to service revenues. The estimated gross profit margins related to service inventories are updated semi-annually based on the results of the physical inventory counts and other factors that could impact the Company's margin rate estimates such as mix of service sales, discounting and special promotions. Actual results for the estimated gross margin percentage as compared to the semi-annual estimates have not historically resulted in material adjustments to our Statement of Operations.

Property and Equipment:

        Property and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation and amortization of property and equipment are computed on the straight-line method over estimated useful asset lives (30 to 39 years for buildings, 10 years for improvements and three to ten years for equipment, furniture and software). Depreciation expense was $101.7, $88.6, and $92.5 million in fiscal years 2012, 2011, and 2010, respectively. Leasehold improvements are amortized over the shorter of their estimated useful lives or the related lease term, generally ten years. For leases with renewal periods at the Company's option, management may determine at the inception of the lease that renewal is reasonably assured if failure to exercise a renewal option imposes an economic penalty to the Company. In such cases, the Company will include the renewal option period along with the original lease term in the determination of appropriate estimated useful lives.

        The Company capitalizes both internal and external costs of developing or obtaining computer software for internal use. Costs incurred to develop internal-use software during the application development stage are capitalized, while data conversion, training and maintenance costs associated with internal-use software are expensed as incurred. At June 30, 2012 and 2011, the net book value of capitalized software costs was $26.7 and $34.1 million, respectively. Depreciation expense related to capitalized software was $22.3, $8.4, and $8.5 million in fiscal years 2012, 2011, and 2010, respectively, which has been determined based on an estimated useful life of five or seven years.

        Historically, because of the Company's large size and scale requirements it has been necessary for the Company to internally develop and support its own proprietary point-of-sale (POS) information system. During the fourth quarter of fiscal year 2011, the Company identified a third party POS alternative that has a system that meets current and future functionality requirements including enhanced guest demographics. At June 30, 2011, the Company reassessed and adjusted the remaining useful life of the Company's capitalized POS software to six months as locations using the Company's existing POS information system move to a third party POS alternative by December 31, 2011. Based on the results of the implementation of the third party POS alternative during each of the three month periods ended March 31, 2012 and December 31, 2011, the Company reassessed and extended the useful life of the Company's capitalized POS software by three months. Depreciation expense related to the existing POS information system during the twelve months ended June 30, 2012, included $16.2 million ($10.2 million net of tax or $0.18 per diluted share) of accelerated depreciation related to the

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change in useful life. As of June 30, 2012, the previously internally developed POS was fully depreciated.

        Expenditures for maintenance and repairs and minor renewals and betterments, which do not improve or extend the life of the respective assets are expensed. All other expenditures for renewals and betterments are capitalized. The assets and related depreciation and amortization accounts are adjusted for property retirements and disposals with the resulting gain or loss included in operating income. Fully depreciated or amortized assets remain in the accounts until retired from service.

Investment In and Loans to Affiliates:

        The Company has equity investments in securities of certain privately held entities. The Company accounts for these investments under the equity method of accounting. The Company also has loans receivable from certain of these entities. Investments accounted for under the equity method are recorded at the amount of the Company's investment and adjusted each period for the Company's share of the investee's income or loss. Investments are reviewed for changes in circumstance or the occurrence of events that suggest the Company's investment may not be recoverable. During fiscal year 2012, we entered into a Share Purchase Agreement to sell the Company's 46.7 percent equity interest in Provalliance for a purchase price of €80 million. As such, we recorded a net impairment of $17.2 million related to our investment in Provalliance. In addition, during fiscal year 2012, we recorded an impairment of $19.4 million related to our investment in EEG. During fiscal year 2011, we recorded an impairment of $9.2 million related to our investment in MY Style. See further discussion within Note 6 to the Consolidated Financial Statements.

Self-Insurance Accruals:

        The Company uses a combination of third party insurance and self-insurance for a number of risks including workers' compensation, health insurance, employment practice liability and general liability claims. The liability represents the Company's estimate of the undiscounted ultimate cost of uninsured claims incurred as of the balance sheet date.

        The workers' compensation, general liability and employment practice liability analysis includes applying loss development factors to the Company's historical claims data (total paid and incurred amounts per claim) for all policy years where the Company has not reached its aggregate limits to project the future development of incurred claims. The workers' compensation analysis is performed for three models; California, Texas and all other states. A variety of accepted actuarial methodologies are followed to determine these liabilities, including several methods to predict the loss development factors for each policy period. These liabilities are determined by modeling the frequency (number of claims) and severity (cost of claims), fitting statistical distributions to the experience, and then running simulations. A similar analysis is performed for both general liability and employment practices liability; however, it is a single model for all liability claims rather than the three separate models used for workers' compensation.

        The health insurance analysis utilizes trailing twelve months of paid and 24 months of incurred medical and prescription claims to project the amount of incurred but not yet reported claims liability amount. The lag factors are developed based on the Company's specific claim data utilizing a completion factor methodology. The developed factor, expressed as a percentage of paid claims, is applied to the trailing twelve months of paid claims to calculate the estimated liability amount. The

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calculated liability amount is reviewed for reasonableness based on reserve adequacy ranges for historical periods by testing prior reserve levels against actual expenses to date.

        Although the Company does not expect the amounts ultimately paid to differ significantly from the estimates, self-insurance accruals could be affected if future claims experience differs significantly from the historical trends and actuarial assumptions. For fiscal year 2012, the Company recorded an increase in expense from changes in estimates related to prior year open policy periods related to continuing operations of $0.7 million. For fiscal year 2011, the Company recorded an increase in expense from changes in estimates related to prior year open policy periods related to continuing operations of $1.4 million. For fiscal year 2010, the Company recorded a decrease in expense from changes in estimates related to prior year open policy periods related to continuing operations of $1.7 million. A 10.0 percent change in the self-insurance reserve would affect (loss) income from continuing operations before income taxes and equity in (loss) income of affiliated companies by $4.8, $4.6, and $4.5 million for the three years ended June 30, 2012, 2011 and 2010, respectively. The Company updates loss projections twice each year and adjusts its recorded liability to reflect the current projections. The updated loss projections consider new claims and developments associated with existing claims for each open policy period. As certain claims can take years to settle, the Company has multiple policy periods open at any point in time.

        As the workers' compensation accrual is the majority of the self-insurance accrual, below is a rollforward of the activity within the Company's workers' compensation self-insurance accrual:

	For the Years Ended June 30,
	2012			2011			2010
	(Dollars in thousands)
Beginning balance	$	32,994		$	30,082		$	31,505
Provision for incurred losses		14,133			13,993			14,739
Prior year actuarial loss development		1,221			2,231			35
Claim payments		(14,140	)		(12,584	)		(14,867	)
Other, net		415			(728	)		(1,330	)
Ending balance	$	34,623		$	32,994		$	30,082

        As of June 30, 2012, the Company had $15.5 and $32.5 million recorded in current liabilities and noncurrent liabilities, respectively, related to the Company's self-insurance accruals, which includes the workers' compensation self-insurance accrual. As of June 30, 2011, the Company had $14.7 and $30.9 million recorded in current liabilities and noncurrent liabilities, respectively, related to the Company's self-insurance accruals, which includes the workers' compensation self-insurance accrual.

Goodwill:

        Goodwill is tested for impairment annually or at the time of a triggering event. In evaluating whether goodwill is impaired, the Company compares the carrying value of each reporting unit, including goodwill, to the estimated fair value of the reporting unit. The carrying value of each reporting unit is based on the assets and liabilities associated with the operations of the reporting unit, including allocation of shared or corporate balances among reporting units. Allocations are generally based on the number of salons in each reporting unit as a percent of total company-owned salons.

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        The Company calculates the estimated fair value of the reporting units based on discounted future cash flows that utilize estimates in annual revenue, gross margins, fixed expense rates, allocated corporate overhead, and long-term growth rates for determining terminal value. The Company's estimated future cash flows also take into consideration acquisition integration and maturation. Where available and as appropriate, comparative market multiples are used in conjunction with the results of the discounted cash flows. The Company considers its various concepts to be reporting units when testing for goodwill impairment because that is where the goodwill resides. The Company periodically engages third-party valuation consultants to assist in evaluation of the Company's estimated fair value calculations.

        In the situations where a reporting unit's carrying value exceeds its estimated fair value, the amount of the impairment loss must be measured. The measurement of impairment is calculated by determining the implied fair value of a reporting unit's goodwill. In calculating the implied fair value of goodwill, the fair value of the reporting unit is allocated to all other assets and liabilities of that unit based on the relative fair values under the assumption of a taxable transaction. The excess of the fair value of the reporting unit over the amount assigned to its assets and liabilities is the implied fair value of goodwill. The goodwill impairment is measured as the excess of the carrying value of goodwill over its implied fair value.

        As previously disclosed, the Company concluded that it was reasonably likely that goodwill for the Regis and Hair Restoration Centers reporting units might become impaired in future periods. During the three months ended December 31, 2011 the Company updated the projections for the Hair Restoration Centers reporting unit used in the fiscal 2011 annual impairment test to reflect the impact of recent industry developments, including a slow down in revenue growth and increasing supply costs. The Company determined there was a triggering event as it was more likely than not that the fair value of the Hair Restoration Centers was below carrying value and performed an interim impairment test of goodwill during the three months ended December 31, 2011. There were no triggering events relative to the Company's other reporting units.

        As a result of the Company's interim impairment test of goodwill related to the Hair Restoration Centers reporting unit during the second quarter of fiscal year 2012, a $78.4 million impairment charge was recorded within continuing operations for the excess of the carrying value of goodwill over the implied fair value of the goodwill for the Hair Restorations Centers reporting unit. After the impairment charge the Hair Restoration Centers reporting unit had $74.4 million of goodwill. The impairment was only partially deductible for tax purposes resulting in a tax benefit of $5.9 million. See further discussion on the effective tax rate for the twelve months ended June 30, 2012 within Note 12 to the Consolidated Financial Statements.

        As a result of the Company's annual impairment testing of goodwill during the fourth quarter of fiscal year 2012, a $67.7 million impairment charge was recorded within continuing operations for the excess of the carrying value of goodwill over the implied fair value of the goodwill for the Regis salon concept. The Regis salon concept reported same-store sales of negative 4.0 percent for the ten months ended April 30, 2012, which was unfavorable compared to the Company's budgeted same-store sales. Visitation patterns did not rebound as quickly as the Company originally projected. Accordingly, the Company reduced the budgeted financial projections for future years. After the impairment charge the Regis salon concept reporting unit had $35.1 million of goodwill. The impairment was only partially deductible for tax purposes resulting in a tax benefit of $12.5 million.

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        As of June 30, 2012, the estimated fair value of the Promenade salon concept and Hair Restoration Centers reporting units exceeded the carrying value by approximately 14.0 and 12.0 percent, respectively. The respective fair values of the Company's remaining reporting units exceeded carrying value by greater than 20.0 percent at June 30, 2012. While the Company has determined the estimated fair value of Promenade to be appropriate based on the historical level of revenue growth, operating income and cash flows, it is reasonably likely that Promenade may experience additional impairment in future periods. As previously disclosed, the Company has agreed to sell the Hair Restoration Centers reporting unit in the first half of fiscal year 2013; however, until this reporting unit is sold it is reasonably likely that there could be impairment of the Hair Restoration Centers reporting unit's goodwill in future periods. The term "reasonably likely" refers to an occurrence that is more than remote but less than probable in the judgment of the Company. Because some of the inherent assumptions and estimates used in determining the fair value of the reportable segment are outside the control of management, changes in these underlying assumptions can adversely impact fair value. Potential impairment of a portion or all of the carrying value of goodwill for the Promenade salon concept and Hair Restoration Centers reporting units is dependent on many factors and cannot be predicted with certainty.

        As of June 30, 2012, the Company's estimated fair value, as determined by the sum of our reporting units' fair value reconciled to within a reasonable range of our market capitalization which included an assumed control premium.

        A summary of the Company's goodwill balance as of June 30, 2012 and 2011 by reporting unit is as follows:

Reporting Unit	June 30, 2012		June 30, 2011
	(Dollars in thousands)
Regis	$	34,992	$	103,761
MasterCuts		4,652		4,652
SmartStyle		49,476		48,916
Supercuts		129,621		129,477
Promenade		243,538		240,910
Total North America Salons		462,279		527,716
Hair Restoration Centers		74,376		152,796
Consolidated Goodwill	$	536,655	$	680,512

        As a result of the goodwill impairment analyses performed in fiscal years 2011 and 2010, the Company recorded $74.1 and $35.3 million, respectively, impairment charges within continuing operations for the excess of the carrying value of goodwill over the implied fair value of goodwill for the Promenade salon concept in fiscal year 2011 and the Regis salon concept in fiscal year 2010.

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Long-Lived Asset Impairment Assessments, Excluding Goodwill:

        The Company reviews long-lived assets for impairment at the salon level annually or if events or circumstances indicate that the carrying value of such assets may not be recoverable. The Company's test for impairment of property and equipment is performed at a salon level, as this is the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. Impairment is evaluated based on the sum of undiscounted estimated future cash flows expected to result from use of the assets that does not recover the carrying value of the related salon assets. When the sum of a salon's undiscounted estimated future cash flow is zero or negative, impairment is measured as the full carrying value of the related salon's equipment and leasehold improvements. When the sum of a salon's undiscounted cash flows is greater than zero but less than the carrying value of the related salon's equipment and leasehold improvements, a discounted cash flow analysis is performed to estimate the fair value of the salon assets and impairment is measured as the difference between the carrying value of the salon assets and the estimated fair value. The fair value estimate is based on the best information available, including market data.

        As a result of the Company's annual impairment analysis of long-lived assets, the following impairment charges were recognized during fiscal years 2012, 2011, and 2010, respectively, related primarily to the carrying value of certain salons' property and equipment within our North American, International, and Hair Restoration Centers segments:

	For the Years Ended June 30,
	2012		2011		2010
	(Dollars in thousands)
North American salons	$	6,066	$	6,115	$	6,253
International salons		570		394		175
Hair restoration centers		—		172		—
Total	$	6,636	$	6,681	$	6,428

        The Company also evaluated the appropriateness of the remaining useful lives of its non-impaired property and equipment and whether a change to the depreciation charge was warranted. Impairment charges for continuing operations are included in depreciation related to company-owned salons in the Consolidated Statement of Operations.

Deferred Rent and Rent Expense:

        The Company leases most salon and hair restoration center locations under operating leases. Rent expense is recognized on a straight-line basis over the lease term. Tenant improvement allowances funded by landlord incentives, rent holidays, and rent escalation clauses which provide for scheduled rent increases during the lease term or for rental payments commencing at a date other than the date of initial occupancy are recorded in the Consolidated Statements of Operations on a straight-line basis over the lease term (including one renewal option period if renewal is reasonably assured based on the imposition of an economic penalty for failure to exercise the renewal option). The difference between the rent due under the stated periods of the lease compared to that of the straight-line basis is recorded as deferred rent within other noncurrent liabilities in the Consolidated Balance Sheet.

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        For purposes of recognizing incentives and minimum rental expenses on a straight-line basis over the terms of the leases, the Company uses the date that it obtains the legal right to use and control the leased space to begin amortization, which is generally when the Company enters the space and begins to make improvements in preparation of intended use of the leased space.

        Certain leases provide for contingent rents, which are determined as a percentage of revenues in excess of specified levels. The Company records a contingent rent liability in accrued expenses on the Consolidated Balance Sheet, along with the corresponding rent expense in the Consolidated Statement of Operations, when specified levels have been achieved or when management determines that achieving the specified levels during the fiscal year is probable.

Revenue Recognition and Deferred Revenue:

        Company-owned salon revenues and related cost of sales are recognized 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 guest's payment. Revenues from purchases made with gift cards are also recorded when the guest takes possession of the merchandise or services are provided. Gift cards issued by the Company are recorded as a liability (deferred revenue) until they are redeemed.

        Product sales by the Company to its franchisees are included within product revenues on the Consolidated Statement of Operations and recorded at the time product is shipped to franchise locations. The related cost of product sold to franchisees is included within cost of product in the Consolidated Statement of Operations.

        Company-owned hair restoration center revenues stem primarily from servicing hair systems and surgical procedures, as well as through product and hair system sales. The Company records deferred revenue for contracts related to the servicing of hair systems and recognizes the revenue ratably over the term of the service contract. Revenues are recognized related to surgical procedures when the procedure is performed. Product revenues, including sales of hair systems, are recognized at the time of application, as this is when delivery occurs and payment is probable.

        Franchise revenues primarily include royalties, initial franchise fees and net rental income (see Note 10). Royalties are recognized as revenue in the month in which franchisee services are rendered. The Company recognizes revenue from initial franchise fees at the time franchise locations are opened, as this is generally when the Company has performed all initial services required under the franchise agreement.

Consideration Received from Vendors:

        The Company receives consideration for a variety of vendor-sponsored programs. These programs primarily include volume rebates and promotion and advertising reimbursements. Promotion and advertising reimbursements are discussed under Advertising within this note.

        With respect to volume rebates, the Company estimates the amount of rebate it will receive and accrues it as a reduction of the cost of inventory over the period in which the rebate is earned based upon historical purchasing patterns and the terms of the volume rebate program. A periodic analysis is performed, at least quarterly, in order to ensure that the estimated rebate accrued is reasonable, and any necessary adjustments are recorded.

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Shipping and Handling Costs:

        Shipping and handling costs are incurred to store, move and ship product from the Company's distribution centers to company-owned and franchise locations, and include an allocation of internal overhead. Such shipping and handling costs related to product shipped to company-owned locations are included in site operating expenses in the Consolidated Statement of Operations. Shipping and handling costs related to shipping product to franchise locations totaled $3.8, $3.5, and $2.9 million during fiscal years 2012, 2011, and 2010, respectively, and are included within general and administrative expenses on the Consolidated Statement of Operations. Any amounts billed to the franchisee for shipping and handling are included in product revenues within the Consolidated Statement of Operations.

Advertising:

        Advertising costs, including salon collateral material, are expensed as incurred. Advertising costs expensed and included in continuing operations in fiscal years 2012, 2011 and 2010 was $58.7, $63.3, and $54.9 million, respectively.

        The Company participates in cooperative advertising programs under which the vendor reimburses the Company for costs related to advertising for its products. The Company records such reimbursements as a reduction of advertising expense when the expense is incurred. During fiscal years 2012, 2011, and 2010, no amounts were received in excess of the Company's related expense.

Advertising Funds:

        The Company has various franchising programs supporting its franchise salon concepts consisting of Supercuts, Cost Cutters, First Choice Haircutters, Magicuts, Pro-Cuts, Beauty Supply Outlet and Hair Club. Most of the concepts maintain advertising funds that provide comprehensive advertising and sales promotion support.

        The Supercuts advertising fund is the Company's largest advertising fund. The Supercuts advertising fund is administered by a council consisting primarily of franchisee representatives. The council has overall control of all of the fund's expenditures and operates in accordance with terms of the franchise operating and other agreements.

        Each Supercuts salon contributes 5.0 percent of service revenues to the fund (contributions for other concepts range between 1.5 and 5.0 percent). The majority of the advertising funds are spent to support media placement and local marketing activities. The remainder is allocated for the creation of national advertising campaigns and system wide activities. None of the Supercuts advertising funds collected may be used by the Company as reimbursement for the cost of administering the advertising fund. Advertising funds can only be used as directed by the fund's council and are considered to be restricted.

        The Company records all advertising funds as assets and liabilities within the Company's Consolidated Balance Sheet. As of June 30, 2012 and 2011, approximately $14.8 and $16.7 million, respectively, of the advertising funds' assets and liabilities were recorded within total assets and total liabilities in the Company's Consolidated Balance Sheet.

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        The Company records advertising expense in the period the company-owned salon makes contributions to the respective advertising fund. During fiscal years 2012, 2011, and 2010, total contributions to the franchise brand advertising funds totaled $42.0, $41.9, and $39.8 million, respectively.

        The Company acts as an agent for the franchisees with regard to these contributions to the advertising funds. Thus, in accordance with guidance for accounting for franchise fee revenue, the Company does not reflect contributions to these advertising funds by its franchisees in its Consolidated Statement of Operations or Consolidated Statement of Cash Flows but reflects the related assets and liabilities in its Consolidated Balance Sheet.

Preopening Expenses:

        Non-capital expenditures such as payroll, training costs and promotion incurred prior to the opening of a new location are expensed as incurred.

Sales Taxes:

        Sales taxes are recorded on a net basis (rather than as both revenue and an expense) within the Company's Consolidated Statement of Operations.

Income Taxes:

        Deferred income tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the Consolidated Financial Statements or income tax returns. Deferred income tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using currently enacted tax rates in effect for the years in which the differences are expected to reverse. Realization of deferred tax assets is ultimately dependent upon future taxable income. Inherent in the measurement of deferred balances are certain judgments and interpretations of tax laws and published guidance with respect to the Company's operations. Income tax expense is primarily the current tax payable for the period and the change during the period in certain deferred tax assets and liabilities.

Net (Loss) Income Per Share:

        The Company's basic earnings per share is calculated as net (loss) income divided by weighted average common shares outstanding, excluding unvested outstanding restricted stock awards and restricted stock units. The Company's dilutive earnings per share is calculated as net (loss) income divided by weighted average common shares and common share equivalents outstanding, which includes shares issuable under the Company's stock option plan and long-term incentive plan, and dilutive securities. Stock-based awards with exercise prices greater than the average market value of the Company's common stock are excluded from the computation of diluted earnings per share. The Company's diluted earnings per share will also reflect the assumed conversion under the Company's convertible debt if the impact is dilutive, along with the exclusion of interest expense, net of taxes. The impact of the convertible debt is excluded from the computation of diluted earnings per share when interest expense per common share obtainable upon conversion is greater than basic earnings per share.

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Comprehensive (Loss) Income:

        Components of comprehensive (loss) income for the Company include net (loss) income, changes in fair value of financial instruments designated as hedges of interest rate or foreign currency exposure, recognition of deferred compensation, and foreign currency translation charged or credited to the cumulative translation account within shareholders' equity. These amounts are presented in the Consolidated Statements of Changes in Shareholders' Equity and Comprehensive Income.

	2012			2011			2010
	(Dollars in thousands)
Accumulated Other Comprehensive Income, balance at July 1	$	77,946		$	47,032		$	51,855
Cumulative translation adjustment:
Balance at July 1		87,814			57,409			62,825
Pre-tax amount		(24,254	)		30,405			(5,416	)
Tax effect		—			—			—
Net of tax amount		(24,254	)		30,405			(5,416	)
Balance at June 30		63,560			87,814			57,409
Unrecognized loss on net investment hedge:
Balance at July 1		(7,932	)		(7,932	)		(7,932	)
Pre-tax amount		—			—			—
Tax effect		—			—			—
Net of tax amount		—			—			—
Balance at June 30		(7,932	)		(7,932	)		(7,932	)
Changes in fair market value of financial instruments designated as cash flow hedges:
Balance at July 1		(372	)		(504	)		(2,971	)
Pre-tax amount		603			218			3,949
Tax effect		(210	)		(86	)		(1,482	)
Net of tax amount		393			132			2,467
Balance at June 30		21			(372	)		(504	)
Recognition of deferred compensation:
Balance at July 1		(1,564	)		(1,941	)		(67	)
Pre-tax amount		1,673			609			(3,184	)
Tax effect		(644	)		(232	)		1,310
Net of tax amount		1,029			377			(1,874	)
Balance at June 30		(535	)		(1,564	)		(1,941	)
Accumulated Other Comprehensive Income, balance at June 30	$	55,114		$	77,946		$	47,032

Derivative Instruments:

        The Company may manage its exposure to interest rate and foreign currency risk within the Consolidated Financial Statements through the use of derivative financial instruments, according to its

94

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

hedging policy. The Company does not use derivatives with a level of complexity or with a risk higher than the exposures to be hedged and does not hold or issue derivatives for trading or speculative purposes. The Company currently has or has had interest rate swaps designated as both cash flow and fair value hedges, treasury locks designated as cash flow hedges, a hedge of its net investment in its European operations and forward foreign currency contracts designated as cash flow hedges of forecasted transactions denominated in a foreign currency. Refer to Note 9 to the Consolidated Financial Statements for further discussion.

        The Company follows guidance for accounting for derivative instruments and hedging activities, as amended and interpreted, which requires that all derivatives be recorded on the balance sheet at fair value. This guidance also requires companies to designate all derivatives that qualify as hedging instruments as fair value hedges, cash flow hedges or hedges of net investments in foreign operations. This designation is based upon the exposure being hedged. Cash flow and fair value hedges are designated and documented at the inception of each hedge by matching the terms of the contract to the underlying transaction. At inception, as dictated by the facts and circumstances, all hedges are expected to be highly effective, as the critical terms of these instruments are generally the same as those of the underlying risks being hedged. All derivatives designated as hedging instruments are assessed for effectiveness on an on-going basis. For purposes of the Consolidated Statement of Cash Flows, cash flows associated with all derivatives (designated as hedges or freestanding economic hedges) are classified in the same category as the related cash flows subject to the hedging relationship.

Stock-Based Employee Compensation Plans:

        Stock-based awards are granted under the terms of the 2004 Long Term Incentive Plan (2004 Plan). Additionally, the Company has outstanding stock options under its 2000 Stock Option Plan (2000 Plan), although the 2000 Plan terminated in 2010. Under these plans, four types of stock-based compensation awards are granted: stock options, equity-based stock appreciation rights (SARs), restricted stock awards (RSAs) and restricted stock units (RSUs). The stock options and SARs have a maximum term of ten years. The stock-based awards, other than the RSUs, generally vest at a rate of 20.0 percent annually on each of the first five anniversaries of the date of grant. The RSUs generally cliff vest after five years, and payment of the RSUs is deferred until January 31 of the year following vesting. Certain RSUs issued during fiscal year 2012 cliff vest two years after the grant date. Unvested awards are subject to forfeiture in the event of termination of employment. The Company utilizes an option-pricing model to estimate the fair value of options and SARs at their grant date. Stock options and SARs are granted at not less than fair market value on the date of grant. The Company generally recognizes compensation expense for its stock-based compensation awards on a straight-line basis over a five-year vesting period. Awards granted do not contain acceleration of vesting terms for retirement of eligible recipients.

        Total compensation cost for stock-based payment arrangements totaled $7.6, $9.6, and $9.3 million for the fiscal years ended June 30, 2012, 2011 and 2010, respectively. Cash retained for share based payments as a result of the tax deductibility of increases in the value of stock-based arrangements are presented as a cash inflow from financing activity in the Consolidated Statement of Cash Flows. The amount presented as a financing activity for fiscal years 2012, 2011, and 2010 was zero, $0.1, and $0.2 million, respectively.

95

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Employee Termination Expense:

        During fiscal year 2012, the Company reduced the home office workforce by approximately 120 employees. The Company recorded $9.8 million in senior management restructuring and other severance charges. In addition the Company recorded $2.8 million in other restructuring charges associated with one-time costs of implementing the Company's new strategy.

Recent Accounting Standards Adopted by the Company:

Disclosures about Fair Value of Financial Instruments

        In January 2010, the Financial Accounting Standards Board (FASB) issued guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires a roll forward of activities, presented separately on a gross basis, on purchases, sales, issuance, and settlements of the assets and liabilities measured using significant unobservable inputs (Level 3 fair value measurements). The Company adopted the new disclosure guidance related to Level 3 fair value measurements, including the disclosure on the roll forward activities, on July 1, 2011.

Fair Value Measurement

        In May 2011, the FASB issued guidance to achieve common fair value measurement and disclosure requirements between GAAP and International Financial Reporting Standards. This new guidance amends current fair value measurement and disclosure guidance to include increased transparency around valuation inputs and investment categorization. This new guidance is effective for fiscal years and interim periods beginning after December 15, 2011. The Company adopted the guidance on January 1, 2012.

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

Testing Goodwill for Impairment

        In September 2011, the FASB issued guidance to allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. If after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is not required. This new guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The Company will adopt the guidance on July 1, 2012 but does not expect it to have a material impact on the Company's financial position, results of operations or cash flows.

Comprehensive Income

        In June 2011, the FASB issued guidance on the presentation of comprehensive income. Specifically, the new guidance allows an entity to present components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. While the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current

96

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

accounting guidance. This new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2011. The Company will adopt the guidance on a retrospective basis on July 1, 2012. The guidance will not have a material impact on the Company's financial position, results of operations or cash flows. However, it will require changing the Company's presentation and disclosure of comprehensive income.

Disclosures about Offsetting Assets and Liabilities

        In December 2011, the FASB issued new accounting disclosure requirements about the nature and exposure of offsetting arrangements related to financial and derivative instruments. The requirements are effective for fiscal years beginning after January 1, 2013. The Company will adopt the guidance on July 1, 2013. Other than requiring additional disclosures, the Company does not expect it to have a material impact on the Company's results of operations or financial position.

2. DISCONTINUED OPERATIONS

        On February 16, 2009, the Company sold its Trade Secret salon concept (Trade Secret). The Company reported Trade Secret as a discontinued operation.

        The Company has a formal note receivable agreement with the purchaser of Trade Secret. The Company recorded a valuation reserve of $31.2 million during fiscal year 2011. The carrying value of the note receivable was fully reserved as of June 30, 2011. The Company has determined the collectibility of accrued interest on the note receivable to be less than probable. The Company suspended recognition of interest income effective April 2010 and will use the cash basis method for recognizing future interest income. The Company did not receive interest payments from the purchaser of Trade Secret during the twelve months ended June 30, 2012.

        The purchaser of Trade Secret emerged from bankruptcy in March 2012 and in conjunction, the Company entered into a credit and security agreement in which the principal balance of the note receivable was reduced from $35.7 to $18.0 million. Payments of $0.5 million are due quarterly beginning on May 31, 2012. Upon receipt of the quarterly payments through February 2019 the remaining principal and unpaid interest will be forgiven. Included in the agreement was a scheduled extraordinary principal payment to be made in the fourth quarter of fiscal year 2012. The purchaser of Trade Secret satisfied the extraordinary principal payment during the fourth fiscal quarter of 2012 by returning $0.8 million of inventory. The Company recorded the recovery of bad debt expense upon receipt of the inventory in June 2012. The principal payment of $0.5 million due May 31, 2012, was not received as of June 30, 2012. The carrying value of the note receivable continues to be fully reserved at June 30, 2012.

        Effective in the second quarter of fiscal year 2010, the Company has an agreement in which the Company provides warehouse services to the purchaser of Trade Secret. Under the warehouse services agreement, the Company recognized $1.5, $2.7 and $3.0 million of other income related to warehouse services during the twelve months ended June 30, 2012, 2011 and 2010, respectively. The carrying value of the receivable related to warehouse services was $0.2 and $0.3 million as of June 30, 2012 and 2011, respectively.

97

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. DISCONTINUED OPERATIONS (Continued)

        The Company utilized the consolidation of variable interest entities guidance to determine whether or not Trade Secret was a VIE, and if so, whether the Company was the primary beneficiary of Trade Secret. The Company concluded that Trade Secret is a VIE based on the fact that the equity investment at risk in Trade Secret is insufficient. The Company determined that the purchaser of Trade Secret has met the power criterion due to the purchaser of Trade Secret having the authority to direct the activities that most significantly impact Trade Secret's economic performance. The Company concluded based on the consideration above that the primary beneficiary of Trade Secret is the purchaser of Trade Secret. The exposure to loss related to the Company's involvement with Trade Secret is the guarantee of approximately 20 operating leases. The Company has determined the exposure to the risk of loss on the guarantee of the operating leases to be immaterial to the financial statements. See Note 10 to the Consolidated Financial Statements for further information on the guaranteed leases.

        The income from discontinued operations is summarized below:

	For the Years Ended June 30,
	2012		2011		2010
	(Dollars in thousands)
Revenues	$	—	$	—	$	—
Income from discontinued operations, before income taxes		—		—		154
Income tax benefit on discontinued operations		1,099		—		3,007
Income from discontinued operations, net of income taxes	$	1,099	$	—	$	3,161

        During the twelve months ended June 30, 2012, the Company recorded a $1.1 million tax benefit in discontinued operations related to the release of tax reserves associated with the disposition of the Trade Secret salon concept.

        During the first quarter of fiscal year 2010, the Company recorded a $3.0 million tax benefit in discontinued operations to correct the prior year calculation of the income tax benefit related to the disposition of the Trade Secret salon concept. The Company does not believe the adjustment is material to its results of operations for the twelve months ended June 30, 2010 or its financial position or results of operations of any prior periods.

98

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. OTHER FINANCIAL STATEMENT DATA

        The following provides additional information concerning selected balance sheet accounts as of June 30, 2012 and 2011:

	2012			2011
	(Dollars in thousands)
Accounts receivable	$	32,810		$	28,631
Less allowance for doubtful accounts		(1,232	)		(1,482	)
	$	31,578		$	27,149
Other current assets:
Prepaids	$	32,179		$	29,705
Notes receivable, primarily affiliates		29,043			2,413
	$	61,222		$	32,118
Property and equipment:
Land	$	3,864		$	3,864
Buildings and improvements		48,017			47,907
Equipment, furniture and leasehold improvements		794,353			775,527
Internal use software		106,264			94,507
Equipment, furniture and leasehold improvements under capital leases		84,757			88,297
		1,037,255			1,010,102
Less accumulated depreciation and amortization		(656,512	)		(611,669	)
Less amortization of equipment, furniture and leasehold improvements under capital leases		(57,683	)		(50,622	)
	$	323,060		$	347,811
Investment in and loans to affiliates:
Equity-method investments	$	166,176		$	258,930
Noncurrent loans to affiliates		—			2,210
	$	166,176		$	261,140
Other assets:
Notes receivable, net	$	1,584		$	1,072
Other noncurrent assets		57,904			57,328
	$	59,488		$	58,400
Accrued expenses:
Payroll and payroll related costs	$	80,649		$	89,788
Insurance		19,410			19,127
Deferred compensation		26,055			6,180
Deferred revenues		9,054			8,313
Taxes payable		5,673			8,113
Other		31,741			35,800
	$	172,582		$	167,321
Other noncurrent liabilities:
Deferred income taxes	$	38,266		$	55,208
Deferred rent		52,773			53,102
Deferred benefits		39,178			58,150
Insurance		32,459			30,925
Equity put options		794			22,700
Other		8,509			17,210
	$	171,979		$	237,295

99

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. OTHER FINANCIAL STATEMENT DATA (Continued)

        The following provides additional information concerning the other intangibles, net, balance sheet account as of June 30, 2012 and 2011:

	June 30, 2012							June 30, 2011
	Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
	(Dollars in thousands)
Amortized intangible assets:
Brand assets and trade names	$	79,995	$	(16,325	)	$	63,670	$	80,310	$	(14,329	)	$	65,981
Guest lists		53,189		(39,676	)		13,513		53,188		(34,096	)		19,092
Franchise agreements		22,335		(9,768	)		12,567		22,221		(8,909	)		13,312
Lease intangibles		14,896		(5,885	)		9,011		14,948		(5,168	)		9,780
Non-compete agreements		207		(117	)		90		353		(232	)		121
Other		4,539		(1,600	)		2,939		4,429		(1,387	)		3,042
	$	175,161	$	(73,371	)	$	101,790	$	175,449	$	(64,121	)	$	111,328

        All intangible assets have been assigned an estimated finite useful life, and are amortized on a straight-line basis over the number of years that approximate their expected period of benefit (ranging from one to 40 years). The cost of intangible assets is amortized to earnings in proportion to the amount of economic benefits obtained by the Company in that reporting period. The weighted average amortization periods, in total and by major intangible asset class, are as follows:

	Weighted Average Amortization Period June 30,
	2012		2011
	(In years)
Amortized intangible assets:
Brand assets and trade names		39		39
Guest lists		10		10
Franchise agreements		22		22
Lease intangibles		20		20
Non-compete agreements		6		5
Other		21		25
Total		26		26

        Total amortization expense related to amortizable intangible assets during the years ended June 30, 2012, 2011, and 2010 was approximately $9.7, $9.8, and $9.9 million, respectively. As of June 30, 2012, future estimated amortization expense related to amortizable intangible assets is estimated to be:

Fiscal Year	(Dollars in thousands)
2013	$	9,413
2014		9,199
2015		6,157
2016		3,999
2017		3,996

100

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. OTHER FINANCIAL STATEMENT DATA (Continued)

        The following provides supplemental disclosures of cash flow activity:

	For the Years Ended June 30,
	2012		2011			2010
	(Dollars in thousands)
Cash paid (received) during the year for:
Interest	$	28,448	$	33,493		$	53,547
Income taxes, net of refunds		14,754		(15,083	)		17,058

        Significant non-cash investing and financing activities include the following:

        The Company did not finance capital expenditures through capital leases during fiscal year 2012. In fiscal years 2011 and 2010, the Company financed capital expenditures totaling $6.0, and $7.9 million, respectively, through capital leases.

4. ACQUISITIONS

        During fiscal years 2012, 2011, and 2010, the Company made acquisitions and the purchase prices have been allocated to assets acquired and liabilities assumed based on their estimated fair values at the dates of acquisition. These acquisitions individually and in the aggregate are not material to the Company's operations. Operations of the acquired companies have been included in the operations of the Company since the date of the respective acquisition.

        Based upon purchase price allocations, the components of the aggregate purchase prices of the acquisitions made during fiscal years 2012, 2011, and 2010 and the allocation of the purchase prices were as follows:

	For the Years Ended June 30,
	2012			2011			2010
	(Dollars in thousands)
Components of aggregate purchase prices:
Cash (net of cash acquired)	$	2,587		$	17,990		$	3,664
Liabilities assumed or payable		—			561			—
	$	2,587		$	18,551		$	3,664
Allocation of the purchase prices:
Current assets	$	344		$	641		$	178
Property and equipment		534			4,232			873
Goodwill		4,978			12,489			2,581
Identifiable intangible assets		594			1,964			134
Accounts payable and accrued expenses		(1,117	)		(534	)		(102	)
Other noncurrent liabilities		(1,246	)		(241	)		—
Noncontrolling interest		(1,500	)		—			—
	$	2,587		$	18,551		$	3,664

101

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. ACQUISITIONS (Continued)

        The value and related weighted average amortization periods for the intangibles acquired during fiscal years 2012 and 2011 business acquisitions, in total and by major intangible asset class, are as follows:

	Purchase Price Allocation				Weighted Average Amortization Period
	For the Years Ended June 30,
	2012		2011		2012		2011
	(Dollars in thousands)				(in years)
Amortized intangible assets:
Brand assets and trade names	$	31	$	159		20		10
Guest lists		—		1,207		—		7
Franchise agreements		513		269		30		40
Lease intangibles		13		151		20		20
Non-compete agreements		10		—		5		—
Other		27		178		20		20
Total value and weighted average amortization period	$	594	$	1,964		28		14

        The majority of the purchase price in salon acquisitions is accounted for as residual goodwill rather than identifiable intangible assets. This stems from the value associated with the walk-in guest base of the acquired salons, which is not recorded as an identifiable intangible asset under current accounting guidance, as well as the limited value and guest preference associated with the acquired hair salon brand. Key factors considered by guests of hair salon services include personal relationships with individual stylists, service quality and price point competitiveness. These attributes represent the "going concern" value of the salon.

        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 guests through its expansion strategies. In the acquisitions of international salons and hair restoration centers, the residual goodwill primarily represents the growth prospects that are not captured as part of acquired tangible or identified intangible assets. Generally, the goodwill recognized in the North American salon transactions is expected to be fully deductible for tax purposes and the goodwill recognized in the international salon transactions is not deductible for tax purposes. Goodwill generated in certain acquisitions, such as the acquisition of hair restoration centers, is not deductible for tax purposes due to the acquisition structure of the transaction.

        During fiscal years 2012, 2011, and 2010, the Company purchased salon operations from its franchisees. The Company evaluated the effective settlement of the pre-existing franchise contracts and associated rights afforded by those contracts. The Company determined that the effective settlement of the pre-existing franchise contracts at the date of the acquisition did not result in a gain or loss, as the agreements were neither favorable nor unfavorable when compared to similar current market transactions, and no settlement provisions exist in the pre-existing contracts. Therefore, no settlement gain or loss was recognized with respect to the Company's franchise buybacks.

102

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. ACQUISITIONS (Continued)

        On July 1, 2011, the Company acquired 31 franchise salon locations through its acquisition of a 60.0 percent ownership interest in Roosters for $2.3 million. The purchase agreement contains a right, Roosters Equity Put, to require the Company to purchase additional ownership interest in Roosters between specified dates in 2012 to 2015, and an option, Roosters Equity Call, whereby the Company can acquire additional ownership interest in Roosters beginning in 2015. The acquisition price is determined based on a multiple of the earnings before interest, taxes, depreciation and amortization of Roosters for a trailing twelve month period adjusted for certain items as defined in the agreement which is intended to approximate fair value. The initial estimated fair values as of July 1, 2011 of the Roosters Equity Put and Roosters Equity Call were $0.2 and $0.1 million, respectively. Any changes in the estimated fair value of the Roosters Equity Put and Roosters Equity Call are recorded in the Company's Consolidated Statement of Operations.

        The Company utilized the consolidation of variable interest entities guidance to determine whether or not its investment in Roosters was a VIE, and if so, whether the Company was the primary beneficiary of the VIE. The Company concluded that Roosters is a VIE based on the fact that the holders of the equity investment at risk, as a group, lack the obligation to absorb the expected losses of the entity. The Roosters Equity Put is based on a formula that may or may not be at market when exercised, therefore, it could prevent the minority interest owners from absorbing its share of expected losses by transferring such obligation to the Company. Under certain circumstances, including a decline in the fair value of Roosters, the Roosters Equity Put could be exercised and the minority interest owners could be protected from absorbing the downside of the equity interest. As the Roosters Equity Put absorbs a large amount of variability this characteristic results in Roosters being a VIE.

        Regis determined that the Company has met the power criterion due to the Company having the authority to direct the activities that most significantly impact Roosters' economic performance. The Company concluded based on the considerations above that it is the primary beneficiary of Roosters and therefore the financial positions, results of operations, and cash flows of Roosters are consolidated in the Company's financial statements from the acquisition date. Total assets, total liabilities and total shareholders' equity of Roosters as of June 30, 2012 were $5.9, $2.0 and $3.9 million, respectively. Net income attributable to the noncontrolling interest in Roosters was $0.1 million for the twelve months ended June 30, 2012, and was recorded within interest income and other, net in the Consolidated Statement of Operations. Shareholders' equity attributable to the noncontrolling interest in Roosters was $1.6 million as of June 30, 2012 and was recorded within retained earnings on the Consolidated Balance Sheet.

103

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. GOODWILL

        The table below contains details related to the Company's recorded goodwill for the years ended June 30, 2012 and 2011:

	Salons
							Hair Restoration Centers
	North America			International						Consolidated
	(Dollars in thousands)
Gross goodwill at June 30, 2010	$	700,012		$	41,661		$	150,380		$	892,053
Accumulated impairment losses		(113,403	)		(41,661	)		—			(155,064	)
Net goodwill at June 30, 2010		586,609			—			150,380			736,989
Goodwill acquired(1)		10,070			—			2,419			12,489
Translation rate adjustments		5,137			—			(3	)		5,134
Goodwill impairment(2)		(74,100	)		—			—			(74,100	)
Gross goodwill at June 30, 2011		715,219			41,661			152,796			909,676
Accumulated impairment losses		(187,503	)		(41,661	)		—			(229,164	)
Net goodwill at June 30, 2011		527,716			—			152,796			680,512
Goodwill acquired(1)		4,978			—			—			4,978
Translation rate adjustments		(2,731	)		—			6			(2,725	)
Goodwill impairment(3)(4)		(67,684	)		—			(78,426	)		(146,110	)
Gross goodwill at June 30, 2012		717,466			41,661			152,802			911,929
Accumulated impairment losses		(255,187	)		(41,661	)		(78,426	)		(375,274	)
Net goodwill at June 30, 2012	$	462,279		$	—		$	74,376		$	536,655

(1)

See Note 4 to the Consolidated Financial Statements.

(2)

As a result of the Company's annual impairment testing of goodwill, a $74.1 million impairment charge was recorded within continuing operations for the excess of the carrying value of goodwill over the implied fair value of goodwill for the Promenade salon concept.

(3)

As a result of the Company's interim impairment testing of goodwill during the three months ended December 31, 2011, a $78.4 million impairment charge was recorded within continuing operations for the excess of the carrying value of goodwill over the implied fair value of goodwill for the Hair Restoration Centers reporting unit.

(4)

As a result of the Company's annual impairment testing of goodwill, a $67.7 million impairment charge was recorded within continuing operations for the excess of the carrying value of goodwill over the implied fair value of goodwill for the Regis salon concept.

104

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. INVESTMENTS IN AND LOANS TO AFFILIATES

        The table below presents the carrying amount of investments in and loans to affiliates as of June 30, 2012 and 2011:

	Provalliance			Empire Education Group, Inc.			MY Style			Hair Club for Men, Ltd.			Total
	(Dollars in thousands)
Balance at June 30, 2010	$	75,481		$	102,882		$	12,116		$	5,307		$	195,786
Acquisition of additional interest(1)		57,301			—			—			—			57,301
Payment of loans by affiliates		—			(15,000	)		—			—			(15,000	)
Loans to affiliates		—			15,000			—			—			15,000
Equity in income of affiliated companies, net of income taxes(2)		7,752			5,463			—			567			13,782
Other than temporary impairment(3)		—			—			(9,173	)		—			(9,173	)
Cash dividends received		(4,814	)		(4,129	)		—			(1,080	)		(10,023	)
Other, primarily translation adjustments		13,525			324			(733	)		351			13,467
Balance at June 30, 2011	$	149,245		$	104,540		$	2,210		$	5,145		$	261,140
Payment of loans by affiliates		—			(1,025	)		—			—			(1,025	)
Equity in income of affiliated companies, net of income taxes(7)		9,759			(4,031	)		—			816			6,544
Other than temporary impairment(4)(5)		(37,383	)		(19,426	)		—			—			(56,809	)
Cash dividends received		(2,769	)		—			—			(1,278	)		(4,047	)
Transfer to current notes receivable(6)		—			(20,375	)		(2,278	)		—			(22,653	)
Other, primarily translation adjustments		(17,548	)		—			68			506			(16,974	)
Balance at June 30, 2012	$	101,304		$	59,683		$	—		$	5,189		$	166,176
Percentage ownership at June 30, 2012		46.7	%		55.1	%		—			50.0	%

(1)

In March of 2011, the Company elected to honor and settle a portion of the equity put option and acquired approximately 17 percent additional equity interest in Provalliance for $57.3 million (€ 40.4 million), bringing the Company's total equity interest to approximately 47 percent.

(2)

Equity in income of affiliated companies, net of income taxes per the Consolidated Statement of Operations includes $7.8 million in equity income of Provalliance and a $2.4 million gain for the decrease in the Provalliance equity put valuation.

(3)

Due to the natural disasters in Japan that occurred in March 2011, the Company was required to assess the preferred shares and premium for other than temporary impairment. As a result, the Company recorded an other than temporary impairment during the twelve months ended June 30, 2011 for the carrying value of the preferred shares and premium of $3.9 million (326,700,000 Yen) and $5.3 million (435,000,000 Yen), respectively. Of the total impairment, $9.0 million was recorded through the equity in income of affiliated companies and $0.2 million was recorded through the interest income and other, net, line items in the Consolidated Statement of Operations.

(4)

On April 9, 2012, the Company entered into the Agreement to sell the Company's 46.7 percent equity interest in Provalliance to the Provost Family for a purchase price of €80 million. During the twelve months ended June 30, 2012, the Company recorded a $17.2 million net impairment charge associated with the Agreement recorded within equity in (loss) income of affiliated

105

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6. INVESTMENTS IN AND LOANS TO AFFILIATES (Continued)

companies in the Consolidated Statement of Operations, which consisted of a $37.4 million impairment charge related to the difference between the purchase price and carrying value of the Company's investment in Provalliance, partially offset by a $20.2 million decrease in the fair value of the Equity Put.

(5)

The Company recorded a $19.4 million other than temporary impairment charge in its fourth quarter ended June 30, 2012 on its investment in EEG.

(6)

During the third quarter of fiscal year 2012, the Company had a $20.4 million outstanding loan receivable with EEG that was reclassified in the Consolidated Balance Sheet as other current assets as the loan is due in January 2013.

(7)

Equity in loss of affiliated companies, net of income taxes per the Consolidated Statement of Operations includes the Provalliance $17.2 million net impairment charge discussed in (4) and the $19.4 million impairment charge associated with EEG discussed in (5).

        The table below presents the summarized financial information of the equity method investees as of June 30, 2012 2011, and 2010. The financial information of the equity investees was based on results as of and for the twelve months ended June 30.

	Equity Method Investee Greater Than 50 Percent Owned							Equity Method Investees Less Than 50 Percent Owned
	2012			2011		2010		2012		2011		2010
	(Dollars in thousands)
Summarized Balance Sheet Information:
Current assets	$	56,516		$	34,715	$	35,070	$	84,914	$	93,280	$	74,040
Noncurrent assets		96,639			113,249		105,469		316,829		314,127		263,472
Current liabilities		61,074			29,340		27,458		107,636		109,416		91,077
Noncurrent liabilities		13,947			33,658		32,017		78,815		98,269		93,055
Summarized Statement of Operations Information:
Gross revenue	$	182,326		$	192,864	$	176,535	$	317,143	$	283,442	$	299,188
Gross profit		67,201			73,068		64,661		137,074		120,992		123,210
Operating (loss) income		(1,335	)		18,994		19,752		35,569		30,084		21,227
Net (loss) income		(7,211	)		11,023		11,082		24,067		21,154		14,763

Investment in Provalliance

        On January 31, 2008, the Company merged its continental European franchise salon operations with the operations of the Franck Provost Salon Group in exchange for a 30.0 percent equity interest in the newly formed Provalliance entity (Provalliance). The merger with the operations of the Franck Provost Salon Group, which are also located in continental Europe, created Europe's largest salon operator with approximately 2,600 company-owned and franchise salons as of June 30, 2012.

        The merger agreement contains a right (Equity Put) to require the Company to purchase an additional ownership interest in Provalliance between specified dates in 2010 to 2018. In December 2010, a portion of the Equity Put was exercised. In March of 2011, the Company elected to honor and settle a portion of the Equity Put and acquired approximately 17 percent additional equity interest in

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. INVESTMENTS IN AND LOANS TO AFFILIATES (Continued)

Provalliance for $57.3 million (approximately €40.4 million), bringing the Company's total equity interest to 46.7 percent.

        On April 9, 2012, the Company entered into the Agreement to sell the Company's 46.7 percent equity interest in Provalliance to the Provost Family for a purchase price of €80 million. The transaction is expected to close no later than September 30, 2012 and is subject to the Provost Family securing financing for the purchase price. The purchase price was negotiated independently of the Equity Put and the Equity Put and Equity Call will automatically terminate upon closing. If the closing does not occur by September 30, 2012, the Provost Family will not be entitled to exercise their Equity Put rights until September 30, 2014.

        During the twelve months ended June 30, 2012, the Company recorded a $37.4 million other than temporary impairment charge related to the difference between the €80 million purchase price and the carrying value of its investment in Provalliance. In addition, the fair value of the Equity Put decreased by $20.2 million to $0.6 million as of June 30, 2012. The remaining Equity Put liability as of June 30, 2012 is associated with the probability of the Agreement not closing and the Equity Put remaining effective. The $37.4 million other than temporary impairment charge, partially offset by the $20.2 million reduction in the fair value of the Equity Put, resulted in a net impairment charge of $17.2 million that is recorded within the equity in (loss) income of affiliated companies during the twelve months ended June 30, 2012. Regis did not receive a tax benefit on the net impairment charge.

        In connection with the Agreement, the Company reassessed the consolidation of variable interest entities guidance to determine whether the Company will now be considered the primary beneficiary of the VIE. Consistent with the previous assessment, the Company has determined the Frank Provost Group continues to meet the power criterion and is considered the primary beneficiary of Provalliance as of June 30, 2012.

        The tables below contain details related to the Company's investment in Provalliance for the twelve months ended June 30, 2012, 2011, and 2010:

Impact on Consolidated Balance Sheet

		Carrying Value at June 30,
	Classification	2012		2011
		(Dollars in thousands)
Investment in Provalliance	Investment in and loans to affiliates	$	101,304	$	149,245
Equity Put Option—Provalliance	Other noncurrent liabilities		633		22,700

Impact on Consolidated Statement of Operations

		For the Twelve Months Ended June 30,
	Classification	2012			2011		2010
		(Dollars in thousands)
Equity in (loss) income, net of income taxes	Equity in (loss) income of affiliated companies, net of income taxes		(9,759	)		7,752		4,134

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6. INVESTMENTS IN AND LOANS TO AFFILIATES (Continued)

Impact on Consolidated Statement of Cash Flows

		For the Twelve Months Ended June 30,
	Classification	2012		2011			2010
		(Dollars in thousands)
Equity in loss (income), net of income taxes	Equity in loss (income) of affiliated companies	$	9,759	$	(7,752	)	$	(4,134	)
Cash dividends received	Dividends received from affiliated companies		2,769		4,814			1,141

Investment in Empire Education Group, Inc.

        On August 1, 2007, the Company contributed its 51 wholly-owned accredited cosmetology schools to Empire Education Group, Inc. (EEG) in exchange for a 49.0 percent equity interest in EEG. In January 2008, the Company's effective ownership interest increased to 55.1 percent related to the buyout of EEG's minority interest shareholder. EEG operates 105 accredited cosmetology schools, has revenues of approximately $180 million annually and is overseen by the Empire Beauty School management team.

        At June 30, 2012 and 2011, the Company had an outstanding loan receivable with EEG totaling $11.4 and $21.4 million, respectively. During fiscal year 2012, the outstanding loan receivable was reclassified in the Consolidated Balance Sheet as other current assets as the loan is due in January 2013. The Company has also provided EEG with a $15.0 million revolving credit facility, against which there were $15.0 million and zero outstanding borrowings as of June 30, 2012 and 2011, respectively. The Company reviews the outstanding loan with EEG for changes in circumstances or the occurrence of events that suggest the Company's loan may not be recoverable. The outstanding loan and revolving credit facility with EEG as of June 30, 2012 is in good standing with no associated valuation allowance. During fiscal year 2012, 2011, and 2010, the Company recorded $0.5, $0.7, and $0.7 million, respectively, of interest income related to the loan and revolving credit facility. In addition, the Company received $10.0 million in principal payments on the loan during the twelve months ended June 30, 2012. The Company has also guaranteed a credit facility of EEG that expires on December 31, 2012 with a maximum exposure of $9 million. The Company has determined the exposure to the risk of loss on the guaranteed credit facility to be immaterial to the financial statements.

        The proprietary school industry has seen broad changes the past few years in regulations resulting in challenges in the areas of student populations, revenue and profitability. Due to the regulatory changes, EEG experienced a decline in revenue and profitability in fiscal year 2012 and is projecting further declines in fiscal year 2013. As a result, during fiscal year 2012, the Company recorded a $19.4 million other than temporary impairment charge on its investment in EEG for the excess of the carrying value of its investment in EEG over the fair value. Regis did not receive a tax benefit on the impairment charge. The Company also recorded its $8.7 million share of an intangible asset impairment recorded directly by EEG. The exposure to loss related to the Company's involvement with EEG is the carrying value of the investment, the outstanding loan and the guarantee of the credit facility. Due to economic and other factors, the Company may be required to record additional impairment charges related to our investment in EEG and such impairments could be material to our consolidated balance

108

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. INVESTMENTS IN AND LOANS TO AFFILIATES (Continued)

sheet and results of operations. In addition, EEG may be required to record impairment charges related to long-lived assets and goodwill, and our share of such impairment charges could be material to our consolidated balance sheet and results of operations.

        The Company utilized consolidation of variable interest entities guidance to determine whether or not its investment in EEG was a variable interest entity (VIE), and if so, whether the Company was the primary beneficiary of the VIE. The Company concluded that EEG was not a VIE based on the fact that EEG had sufficient equity at risk. As the substantive voting control relates to the voting rights of the Board of Directors, the Company granted the other shareholder a proxy to vote such number of the Company's shares such that the other shareholder would have voting control of 51.0 percent of the common stock of EEG. The Company accounts for EEG as an equity investment under the voting interest model. During fiscal years ended June 30, 2012, 2011, and 2010, the Company recorded $(4.0), $5.5, and $6.4 million of equity (loss) earnings related to its investment in EEG. During the twelve months ended June 30, 2011, EEG declared and distributed a dividend in which the Company received $4.1 million in cash and recorded tax expense of $0.3 million.

Investment in MY Style

        In April 2007, the Company purchased exchangeable notes issued by Yamano Holding Corporation (Exchangeable Note) and a loan obligation of a Yamano Holdings subsidiary, MY Style, formally known as Beauty Plaza Co. Ltd., (MY Style Note) for an aggregate amount of $11.3 million (1.3 billion Yen as of April 2007). The Exchangeable Note contains an option for the Company to exchange a portion of the Exchangeable Note for 27.1 percent of the 800 outstanding shares of common stock of MY Style. This exchange feature is akin to a deep-in-the-money option permitting the Company to purchase shares of common stock of MY Style. The option is embedded in the Exchangeable Note and does not meet the criteria for separate accounting under accounting for derivative instruments and hedging activities. In connection with the issuance of the Exchangeable Note, the Company paid a premium of approximately $5.5 million (573,000,000 Yen as of April 2007).

        In March 2010 the Company amended the agreement with Yamano for which the Company purchased one share of Yamano Class A Preferred Stock with a subscription amount of $1.1 million (100,000,000 Yen) and one share of Yamano Class B Preferred Stock with a subscription amount of $2.3 million (211,131,284 Yen), collectively the "Preferred Shares". Portions of the Exchangeable Note that became due as a result of the March 2010 amendments were contributed in-kind as payment for the Preferred Shares. The Preferred Shares have the same terms and rights, yield a 5.0 percent dividend that accrues if not paid and have no voting rights. The preferred shares are accounted for as an available for sale debt security.

        Due to the natural disasters in Japan that occurred in March 2011, the Company was required to assess the preferred shares and premium for other than temporary impairment. The fair value of the collateral which is the equity value of MY Style, declined due to changes in projected revenue growth rates after the natural disasters. As MY Style is highly leveraged, any change in growth rates has a significant impact on fair value. The estimated fair value was negligible. The Company recorded an other than temporary impairment during the third quarter of fiscal year 2011 for the carrying value of the preferred shares and premium of $3.9 million (326,700,000 Yen) and $5.3 million (435,000,000 Yen), respectively.

        Exchangeable Note.    As of June 30, 2012, the principal amount outstanding under the Exchangeable Note is $1.3 million (100,000,000 Yen) and is due September 30, 2012. The Company

109

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. INVESTMENTS IN AND LOANS TO AFFILIATES (Continued)

reviews the Exchangeable Note with Yamano for changes in circumstances or the occurrence of events that suggest the Company's note may not be recoverable. The $1.3 million outstanding Exchangeable Note with Yamano as of June 30, 2012 is in good standing with no associated valuation allowance. The Company has determined the future cash flows of Yamano support the ability to make payments on the Exchangeable Note. The Exchangeable Note accrues interest at 1.845 percent and interest is payable on September 30, 2012 with the final principal payment. The Company recorded approximately $0.1 million in interest income related to the Exchangeable Note during fiscal years 2012, 2011, and 2010.

        MY Style Note.    As of June 30, 2012, the principal amount outstanding under the MY Style Note is $0.7 million (52,164,000 Yen). Principal payments of 52,164,000 Yen along with accrued interest are due annually on May 31 through May 31, 2013. The Company reviews the outstanding note with MY Style for changes in circumstances or the occurrence of events that suggest the Company's note may not be recoverable. The $0.7 million outstanding note with MY Style as of June 30, 2012 is in good standing with no associated valuation allowance. The Company has determined the future cash flows of MY Style support the ability to make payments on the outstanding note. The MY Style Note accrues interest at 3.0 percent. The Company recorded less than $0.1 million in interest income related to the MY Style Note during fiscal years 2012, 2011, and 2010.

        As of June 30, 2012, $2.3 million is recorded in the Consolidated Balance Sheet as current assets representing the Company's Exchangeable Note and outstanding note with MY Style. The exposure to loss related to the Company's involvement with MY Style is the carrying value of the outstanding notes.

        All foreign currency transaction gains and losses on the Exchangeable Note and MY Style Note are recorded through other income within the Consolidated Statement of Operations. The foreign currency transaction gain (loss) was $0.5, $(1.1), and $3.1 million during fiscal years 2012, 2011, and 2010, respectively.

Investment in Hair Club for Men, Ltd.

        The Company acquired a 50.0 percent interest in Hair Club for Men, Ltd. through its acquisition of Hair Club in fiscal year 2005. The Company accounts for its investment in Hair Club for Men, Ltd. under the equity method of accounting. Hair Club for Men, Ltd. operates Hair Club centers in Illinois and Wisconsin. During fiscal years 2012, 2011, and 2010, the Company recorded income and received dividends of $0.8 and $1.3 million, $0.6 and $1.1 million, and $0.9 and $1.3 million, respectively. The exposure to loss related to the Company's involvement with Hair Club for Men, Ltd. is the carrying value of the investment. See Note 17 for discussion of the purchase agreement subsequent to June 30, 2012 that includes Hair Club for Men, Ltd.

7. FAIR VALUE MEASUREMENTS

        The fair value measurement guidance for financial and nonfinancial assets and liabilities defines fair value, establishes a framework for measuring fair value and expands disclosure requirements about fair value measurements. This guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy prescribed by this guidance contains three levels as follows:

Level 1—Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date.

110

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. FAIR VALUE MEASUREMENTS (Continued)

Level 2—Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including:

•

Quoted prices for similar assets or liabilities in active markets;

•

Quoted prices for identical or similar assets in non-active markets;

•

Inputs other than quoted prices that are observable for the asset or liability; and

•

Inputs that are derived principally from or corroborated by other observable market data.

Level 3—Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management's estimates of market participant assumptions.

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

        The fair value hierarchy requires the use of observable market data when available. In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability. The following tables sets forth by level within the fair value hierarchy, the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis at June 30, 2012 and June 30, 2011, according to the valuation techniques the Company used to determine their fair values.

			Fair Value Measurements Using Inputs Considered as
	Fair Value at June 30, 2012
			Level 1		Level 2		Level 3
			(Dollars in thousands)
ASSETS
Current assets
Derivative instruments	$	145	$	—	$	145	$	—
Noncurrent assets
Equity call option—Roosters		117		—		—		117
LIABILITIES
Noncurrent liabilities
Equity put option—Provalliance	$	633	$	—	$	—	$	633
Equity put option—Roosters		161		—		—		161

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. FAIR VALUE MEASUREMENTS (Continued)

			Fair Value Measurements Using Inputs Considered as
	Fair Value at June 30, 2011
			Level 1		Level 2		Level 3
			(Dollars in thousands)
ASSETS
Current assets
Derivative instruments	$	212	$	—	$	212	$	—
LIABILITIES
Current liabilities
Derivative instruments	$	599	$	—	$	599	$	—
Noncurrent liabilities
Equity put option—Provalliance	$	22,700	$	—	$	—	$	22,700

Changes in Financial Instruments Measured at Level 3 Fair Value on a Recurring Basis

        The following tables present the changes during the twelve ended June 30, 2012 and 2011 in our Level 3 financial instruments that are measured at fair value on a recurring basis.

	Changes in Financial Instruments Measured at Level 3 Fair Value Classified as
	Roosters Equity Call Option		Roosters Equity Put Option		Provalliance Equity Put Option
	(Dollars in thousands)
Balance at July 1, 2011	$	—	$	—	$	22,700
Total realized and unrealized gains (losses):
Included in other comprehensive (loss) income		—		—		(1,845	)
Issuances		—		161		—
Purchases		117		—		—
Included in equity in (loss) income of affiliated companies		—		—		(20,222	)
Balance at June 30, 2012	$	117	$	161	$	633

	Changes in Financial Instruments Measured at Level 3 Fair Value Classified as
	Preferred Shares			Provalliance Equity Put Option
	(Dollars in thousands)
Balance at July 1, 2010	$	3,502		$	22,009
Total realized and unrealized gains (losses):
Included in other comprehensive income (loss)		433			3,847
Included in equity in (loss) income of affiliated companies		—			(2,442	)
Transfer out of Level 3		—			(714	)
Other than temporary impairment		(3,935	)		—
Balance at June 30, 2011	$	—		$	22,700

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. FAIR VALUE MEASUREMENTS (Continued)

        The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

        Derivative instruments.    The Company's derivative instrument assets and liabilities consist of cash flow hedges represented by forward foreign currency contracts. The instruments are classified as Level 2 as the fair value is obtained using observable inputs available for similar liabilities in active markets at the measurement date that are reviewed by the Company. See breakout by type of contract and reconciliation to the balance sheet line item that each contract is classified within Note 9 of the Consolidated Financial Statements.

        Equity put option—Provalliance.    The Company's merger of the European franchise salon operations with the operations of the Franck Provost Salon Group on January 31, 2008 contained an equity put (Provalliance Equity Put) and an equity call. The Provalliance Equity Put is valued using binomial lattice models that incorporate assumptions including the business enterprise value at that date and future estimates of volatility and earnings before interest, taxes, and depreciation and amortization multiples. During fiscal year 2011, a portion of the Provalliance Equity Put was settled. During the twelve months ended June 30, 2012, the fair value of the Provalliance Equity Put decreased by $20.2 million to $0.6 million and is classified within other noncurrent liabilities on the Consolidated Balance Sheet. The remaining Provalliance Equity Put liability as of June 30, 2012 is associated with the probability of the share purchase agreement in which the Company will sell the 46.7 percent equity interest in Provalliance not closing and the Provalliance Equity Put remaining effective. The sensitivity of the underlying assumptions to the Provalliance Equity Put is not material to the Consolidated Financial Statements. See Note 6 to the Consolidated Financial Statements for discussion of the share purchase agreement.

        Equity put and call options—Roosters.    The purchase agreement for the Company's acquisition of a 60.0 percent ownership interest in Roosters MGC International LLC (Roosters) on July 1, 2011 contained an equity put (Roosters Equity Put) and an equity call (Roosters Equity Call). See further discussion within Note 4 to the Consolidated Financial Statements. The Roosters Equity Put and Roosters Equity Call are valued using binomial lattice models that incorporate assumptions including the business enterprise value at that date and future estimates of volatility and earnings before interest, taxes, and depreciation and amortization multiples. The sensitivity of the underlying assumptions to the Roosters Equity put and Roosters Equity Call is not material to the Consolidated financial statements. At June 30, 2012, the fair value of the Roosters Equity Put and Roosters Equity Call were $0.2 and $0.1 million, respectively, and are classified within noncurrent liabilities and other assets, respectively, on the Consolidated Balance Sheet.

        Preferred Shares.    The Company has preferred shares in Yamano Holding Corporation. The preferred shares are classified as Level 3 as there are no quoted market prices and minimal market participant data for preferred shares of similar rating. The fair value of the preferred shares is based on the financial health of Yamano Holding Corporation and terms within the preferred share agreement which allow the Company to convert the subscription amount of the preferred shares into equity of MY Style, a wholly owned subsidiary of Yamano Holding Corporation. The Company recorded an other than temporary impairment for the full carrying value of the preferred shares during the twelve months ended June 30, 2011. See further discussion within Note 6 to the Consolidated Financial Statements.

        Financial Instruments.    In addition to the financial instruments listed above, the Company's financial instruments also include cash, cash equivalents, receivables, accounts payable and debt.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. FAIR VALUE MEASUREMENTS (Continued)

        The fair value of cash and cash equivalents, receivables and accounts payable approximated the carrying values as of June 30, 2012 and 2011. At June 30, 2012, the estimated fair values and carrying amounts of debt were $307.5 and $287.7 million, respectively. At June 30, 2011, the estimated fair values and carrying amounts of debt were $335.4 and $313.4 million, respectively. The estimated fair value of debt was determined based on internal valuation models, which utilize quoted market prices and interest rates for the same or similar instruments (Level 2).

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

        We measure certain assets, including the Company's equity method investments, tangible fixed assets and goodwill, at fair value on a nonrecurring basis when they are deemed to be other than temporarily impaired. The fair values of our investments are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted cash flow projections.

        The following tables present the fair value in our assets measured at fair value on a nonrecurring basis during the twelve months ended June 30, 2012 and 2011, respectively:

	June 30, 2012		Level 1		Level 2		Level 3		Total Losses
	(Dollars in thousands)
Assets
Goodwill—Regis(1)	$	35,083	$	—	$	—	$	35,083	$	(67,684	)
Goodwill—Hair Restoration Centers(2)		74,376		—		—		74,376		(78,426	)
Investment in affiliates—EEG(3)		59,683		—		—		59,683		(19,426	)
Investment in affiliates—Provalliance(4)		101,304		—		—		101,304		(37,383	)
Total	$	270,446	$	—	$	—	$	270,446	$	(202,919	)

(1)

Goodwill of the Regis salon concept with a carrying value of $102.8 million was written down to its implied fair value, resulting in an impairment charge of $67.7 million, which was recorded during fiscal year 2012. See Note 1 to the Consolidated Financial Statements for further information.

(2)

Goodwill of the Hair Restoration Centers reporting unit with a carrying value of $152.8 million was written down to its implied fair value of $74.4 million, resulting in an impairment charge of $78.4 million. See Note 1 to the Consolidated Financial Statements for further information.

(3)

The Company's investment in EEG with a carrying value of $79.1 million was written down to its implied fair value of $59.7 million, resulting in an impairment charge of $19.4 million. See Note 6 to the Consolidated Financial Statements for further information.

114

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. FAIR VALUE MEASUREMENTS (Continued)

(4)

The Company's investment in Provalliance was written down to its implied fair value, resulting in an impairment charge of $37.4 million. See Note 6 to the Consolidated Financial Statements for further information.

	June 30, 2011		Level 1		Level 2		Level 3		Total Losses
	(Dollars in thousands)
Assets
Goodwill—Promenade(1)	$	240,910	$	—	$	—	$	240,910	$	(74,100	)
Total	$	240,910	$	—	$	—	$	240,910	$	(74,100	)

(1)

Goodwill of the Promenade salon concept with a carrying value of $315.0 million was written down to its implied fair value, resulting in an impairment charge of $74.1 million, which was recorded during fiscal year 2011. The Company recorded $0.3 million of translation rate adjustments during the fourth quarter of fiscal year 2011 on the Promenade salon concept goodwill balance.

8. FINANCING ARRANGEMENTS

        The Company's long-term debt as of June 30, 2012 and 2011 consists of the following:

		Interest rate %		Amounts outstanding
	Maturity Dates	2012	2011	2012			2011
	(fiscal year)			(Dollars in thousands)
Senior term notes	2013 - 2018	6.69 - 8.50%	6.69 - 8.50%	$	111,429		$	133,571
Convertible senior notes	2015	5.00	5.00		161,134			156,248
Revolving credit facility	2016	—	—		—			—
Equipment and leasehold notes payable	2015 - 2016	4.90 - 8.75	8.80 - 9.14		14,780			22,273
Other notes payable	2013	5.75 - 8.00	5.75 - 8.00		331			1,319
					287,674			313,411
Less current portion					(28,937	)		(32,252	)
Long-term portion				$	258,737		$	281,159

        The debt agreements contain covenants, including limitations on incurrence of debt, granting of liens, investments, merger or consolidation, and transactions with affiliates. In addition, the Company must adhere to specified fixed charge coverage and leverage ratios, as well as minimum net worth levels. The Company was in compliance with all covenants and other requirements of our financing arrangements as of June 30, 2012. Additional details are included below with the discussion of the specific categories of debt.

115

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. FINANCING ARRANGEMENTS (Continued)

        Aggregate maturities of long-term debt, including associated capital lease obligations of $14.8 million at June 30, 2012, are as follows:

Fiscal year	(Dollars in thousands)
2013	$	28,937
2014		24,918
2015		180,245
2016		17,860
2017		17,857
Thereafter		17,857
	$	287,674

Senior Term Notes

Private Shelf Agreement

        At June 30, 2012 and 2011, the Company had $111.4 and $133.6 million, respectively, in unsecured, fixed rate, senior term notes outstanding under a Private Shelf Agreement, of which $22.1 million were classified as part of the current portion of the Company's long-term debt at June 30, 2012 and 2011. The notes require quarterly payments, and final maturity dates range from June 2013 through December 2017.

        The Private Shelf Agreement includes financial covenants including debt to EBITDA ratios, fixed charge coverage ratios and minimum net equity tests (as defined within the Private Shelf Agreement), as well as other customary terms and conditions. The maturity date for the debt may be accelerated upon the occurrence of various events of default, including breaches of the agreement, certain cross-default situations, certain bankruptcy related situations, and other customary events of default.

        In April 2012, the Company amended the Restated Private Shelf Agreement. The amendments included increasing the Company's minimum net worth covenant from $800.0 to $850.0 million and amending certain definitions, including EBITDA and Rental Expenses. Under the new agreement, indebtedness related to Capital Leases is limited to $50.0 million.

Convertible Senior Notes

        In July 2009, the Company issued $172.5 million aggregate principal amount of 5.0 percent convertible senior notes due July 2014. The notes are unsecured, senior obligations of the Company and interest is payable semi-annually in arrears on January 15 and July 15 of each year at a rate of 5.0 percent per year. Upon the July 2009 issuance the notes were convertible subject to certain conditions further described below at an initial conversion rate of 64.6726 shares of the Company's common stock per $1,000 principal amount of notes (representing an initial conversion price of approximately $15.46 per share of the Company's common stock). As of June 30, 2012, the conversion rate was 65.1432 shares of the Company's common stock per $1,000 principal amount of notes (representing a conversion price of approximately $15.35 per share of the Company's common stock).

        Holders may convert their notes at their option prior to April 15, 2014 if the Company's stock price meets certain price triggers or upon the occurrence of specified corporate events as defined in the

116

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. FINANCING ARRANGEMENTS (Continued)

convertible senior note agreement. On or after April 15, 2014, holders may convert each of their notes at their option at any time prior to the maturity date for the notes.

        The Company has the choice of net-cash settlement, settlement in its own shares or a combination thereof and concluded the conversion option is indexed to its own stock. As a result, the Company allocated $24.7 million of the $172.5 million principal amount of the convertible senior notes to equity, which resulted in a $24.7 million debt discount. The allocation was based on measuring the fair value of the convertible senior notes using a discounted cash flow analysis. The discount rate was based on an estimated credit rating for the Company. The estimated fair value of the convertible senior notes was $147.8 million, and the resulting $24.7 million debt discount will be amortized over the period the convertible senior notes are expected to be outstanding, which is five years, as additional non-cash interest expense. The combined debt discount amortization and the contractual interest coupon resulted in an effective interest rate on the convertible debt of 8.9 percent.

        The following table provides equity and debt information for the convertible senior notes:

	Convertible Senior Notes Due July 2014 at
(Dollars in thousands)	June 30, 2012			June 30, 2011
Principal amount on the convertible senior notes	$	172,500		$	172,500
Unamortized debt discount		(11,366	)		(16,252	)
Net carrying amount of convertible debt	$	161,134		$	156,248

        The following table provides interest rate and interest expense amounts related to the convertible senior notes:

	Convertible Senior Notes Due July 2014 For the Years Ended June 30,
(Dollars in thousands)	2012		2011
Interest cost related to contractual interest coupon—5.0%	$	8,625	$	8,625
Interest cost related to amortization of the discount		4,886		4,488
Total interest cost	$	13,511	$	13,113

Revolving Credit Facility

        On June 30, 2011, the Company amended its revolving credit agreement, which now provides for a $400.0 million senior unsecured five-year revolving credit facility. The revolving credit facility has rates tied to a LIBOR credit spread and a quarterly facility fee on the average daily amount of the facility (whether used or unused). Both the LIBOR credit spread and the facility fee are based on the Company's debt to EBITDA ratio at the end of each fiscal quarter. The amendments included increasing the Company's minimum net worth covenant from $800.0 to $850.0 million, and amending or adding certain definitions, including Change in Law, Defaulting Lender, EBITDA, Fronting Exposure, Replacement Lender, and Accounting Principles. In addition, the Company may request an increase in revolving credit commitments under the facility of up to $200.0 million under certain circumstances. Under the new agreement, indebtedness related to Capital Leases is limited to $50.0 million, and Restricted Payments are tiered based on Debt to EBITDA. Events of default under the Credit

117

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. FINANCING ARRANGEMENTS (Continued)

Agreement include change of control of the Company and the Company's default of other debt exceeding $10.0 million. The facility expires in July 2016. We were in compliance with all covenants and other requirements of our credit agreement and senior notes as of June 30, 2012.

        As of June 30, 2012 and 2011, the Company had no outstanding borrowings under this facility. Additionally, the Company had outstanding standby letters of credit under the facility of $26.1 and $26.0 million at June 30, 2012 and 2011, respectively, primarily related to its self-insurance program. Unused available credit under the facility at June 30, 2012 and 2011 was $373.9 and $374.0 million, respectively.

Equipment and Leasehold Notes Payable

        The equipment and leasehold notes payable are primarily comprised of capital lease obligations. In September 2011, the Company entered into an agreement to refinance existing capital leases to a three year term with a contract rate of 4.9 percent. Capital leases of $20.5 million are amortized at the historical rate of 9.2 percent. There was no gain or loss recorded on the refinance. The Company entered into the refinancing to reduce cash interest payments.

Other Notes Payable

        The Company had $0.3 and $1.3 million in unsecured outstanding notes at June 30, 2012 and 2011, respectively, related to debt assumed in acquisitions.

9. DERIVATIVE FINANCIAL INSTRUMENTS

        The Company's primary market risk exposures in the normal course of business are changes in interest rates and foreign currency exchange rates. The Company has established policies and procedures that govern the management of these exposures through the use of a variety of strategies, including the use of derivative financial instrument contracts. By policy, the Company does not enter into such contracts for the purpose of speculation or trading. Hedging transactions are limited to an underlying exposure. The Company has established an interest rate management policy that manages the interest rate mix of its total debt portfolio and related overall cost of borrowing. The Company's foreign currency exchange rate risk management policy includes frequently monitoring market data and external factors that may influence exchange rate fluctuations in order to minimize fluctuation in earnings due to changes in exchange rates. The Company enters into arrangements with counterparties that the Company believes are creditworthy. Generally, derivative contract arrangements settle on a net basis. The Company assesses the effectiveness of its hedges on a quarterly basis using the critical terms method in accordance with guidance for accounting for derivative instruments and hedging activities.

        The Company has primarily utilized derivatives, which are designated as either cash flow or fair value hedges and qualify for hedge accounting treatment. For cash flow hedges and fair value hedges, changes in fair value are deferred in accumulated other comprehensive income (loss) within shareholders' equity until the underlying hedged item is recognized in earnings. Any hedge ineffectiveness is recognized immediately in current earnings. To the extent the changes offset, the hedge is effective. Any hedge ineffectiveness the Company has historically experienced has not been material. By policy, the Company designs its derivative instruments to be effective as hedges and aims to minimize fluctuations in earnings due to market risk exposures. If a derivative instrument is terminated prior to its contract date, the Company continues to defer the related gain or loss and recognizes it in current earnings over the remaining life of the related hedged item.

118

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

        The Company also utilizes freestanding derivative contracts, which do not qualify for hedge accounting treatment. The Company marks to market such derivatives with the resulting gains and losses recorded within current earnings in the Consolidated Statement of Operations. For purposes of the Consolidated Statement of Cash Flows, cash flows associated with all derivatives (designated as hedges or freestanding economic hedges) are classified in the same category as the related cash flows subject to the hedging relationship.

Cash Flow Hedges

        As of June 30, 2012, the Company's cash flow hedges consist of forward foreign currency contracts.

        In the past, the Company used interest rate swaps to maintain its variable to fixed rate debt ratio in accordance with its established policy. The Company repaid variable and fixed rate debt during the twelve months ended June 30, 2011. Prior to the repayments, the Company had two outstanding interest rate swaps totaling $40.0 million on $85.0 million aggregate variable rate debt with maturity dates in fiscal year 2012. The interest rate swaps were terminated prior to the maturity dates in conjunction with the repayments of debt and were settled for an aggregate loss of $0.1 million. The $0.1 million loss was recorded during the fourth quarter of fiscal year 2011 on the termination of the interest rate swaps and was recorded within interest expense in the Consolidated Statement of Operations.

        The Company uses forward foreign currency contracts to manage foreign currency rate fluctuations associated with certain forecasted intercompany transactions. The Company's primary forward foreign currency contracts hedge approximately $0.6 million of monthly payments in Canadian dollars for intercompany transactions. The Company's forward foreign currency contracts hedge transactions through September 2012.

        These cash flow hedges were designed and are effective as cash flow hedges. They were recorded at fair value within other noncurrent liabilities or other current assets in the Consolidated Balance Sheet, with corresponding offsets primarily recorded in other comprehensive income (loss), net of tax.

Net Investment Hedges

        The Company has numerous investments in foreign subsidiaries, and the net assets of these subsidiaries are exposed to exchange rate volatility. The Company frequently evaluates its foreign currency exchange risk by monitoring market data and external factors that may influence exchange rate fluctuations. As a result, the Company may engage in transactions involving various derivative instruments to hedge assets, liabilities and purchases denominated in foreign currencies.

119

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

        During September 2006, the Company's cross-currency swap (which had a notional amount of $21.3 million and hedged a portion of the Company's net investment in its foreign operations) was settled, resulting in a cash outlay of $8.9 million. This cash outlay was recorded within investing activities within the Consolidated Statement of Cash Flows. The related cumulative tax-effected net loss of $7.9 million was recorded in accumulated other comprehensive income (AOCI) in fiscal year 2007. The amount will remain deferred within AOCI until an event which would trigger its release from AOCI and recognition in earnings being the sale or liquidation of the Company's international operations that the cross-currency swap hedged.

Freestanding Derivative Forward Contracts

        The Company uses freestanding derivative forward contracts to offset the Company's exposure to the change in fair value of certain foreign currency denominated investments and intercompany assets and liabilities. These derivatives are not designated as hedges and therefore, changes in the fair value of these forward contracts are recognized currently in earnings, thereby offsetting the current earnings effect of the related foreign currency denominated assets and liabilities.

        The Company had the following derivative instruments in its Consolidated Balance Sheet as of June 30, 2012 and 2011:

	Asset					Liability
		Fair Value					Fair Value
Type	Classification	June 30, 2012		June 30, 2011		Classification	June 30, 2012		June 30, 2011
		(Dollars in thousands)					(Dollars in thousands)
Designated as hedging instruments—Cash Flow Hedges:
Forward foreign currency contracts	Other current assets	$	37	$	—	Other current liabilities	$	—	$	(599	)
Freestanding derivative contracts—not designated as hedging instruments:
Forward foreign currency contracts	Other current assets	$	108	$	212	Other current liabilities	$	—	$	—
Total		$	145	$	212		$	—	$	(599	)

        The table below sets forth the gain (loss) on the Company's derivative instruments recorded within AOCI in the Consolidated Balance Sheet for the twelve months ended June 30, 2012 and 2011. The table also sets forth the gain (loss) on the Company's derivative instruments that has been reclassified

120

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

from AOCI into current earnings during the twelve months ended June 30, 2012 and 2011 within the following line items in the Consolidated Statement of Operations.

	Gain (Loss) Recognized in Other Comprehensive (Loss) Income For the Years Ended June 30,								Gain (Loss) Reclassified from Accumulated OCI into (Loss) Income at June 30,
Type	2012		2011			2010			Classification	2012		2011		2010
	(Dollars in thousands)									(Dollars in thousands)
Designated as hedging instruments—Cash Flow Hedges:
Interest rate swaps	$	—	$	(636	)	$	(2,967	)		$	—	$	—	$	—
Forward foreign currency contracts		393		456			519		Cost of sales		—		48		(261	)
Treasury lock contracts		—		—			(146	)	Interest income		—		—		388
Total	$	393	$	(180	)	$	(2,594	)		$	—	$	48	$	127

        As of June 30, 2012 the Company estimates that it will reclassify into earnings during the next 12 months a gain of less than $0.1 million from the pretax amount recorded in AOCI as the anticipated cash flows occur.

        The table below sets forth the (loss) gain on the Company's derivative instruments for the years ended June 30, 2012, 2011 and 2010 recorded within interest income and other, net in the Consolidated Statement of Operations.

	Derivatives Impact on (Loss) Income at June 30,
Type	Classification	2012			2011		2010
		(Dollars in thousands)
Freestanding derivative contracts—not designated as hedging instruments:
Forward foreign currency contracts	Interest income and other, net	$	(105	)	$	613	$	(811	)

10. COMMITMENTS AND CONTINGENCIES:

Operating Leases:

        The Company is committed under long-term operating leases for the rental of most of its company-owned salon and hair restoration center locations. The original terms of the leases range from one to 20 years, with many leases renewable for an additional five to ten year term at the option of the Company, and certain leases include escalation provisions. For certain leases, the Company is required to pay additional rent based on a percent of sales in excess of a predetermined amount and, in most cases, real estate taxes and other expenses. Rent expense for the Company's international department store salons is based primarily on a percent of sales.

        The Company also leases the premises in which the majority of its franchisees operate and has entered into corresponding sublease arrangements with the franchisees. These leases, generally with terms of approximately five years, are expected to be renewed on expiration. All additional lease costs are passed through to the franchisees.

        During fiscal year 2005, the Company entered into a lease agreement for a 102,448 square foot building, located in Edina, Minnesota. The Company began to recognize rent expense related to this property during the three months ended September 30, 2005, which was the date that it obtained the

121

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. COMMITMENTS AND CONTINGENCIES: (Continued)

legal right to use and control the property. The original lease term ends in May 2016 and the aggregate amount of lease payments to be made over the remaining original lease term are approximately $4.5 million. The lease agreement includes an option to purchase the property or extend the original term for two successive periods of five years.

        In addition, the Company leases an 89,900 square foot building near the company-owned distribution center located in Chattanooga, Tennessee. The original lease term ends in August 2013 and the aggregate amount of lease payments to be made over the remaining original lease term are approximately $0.6 million

        Sublease income was $28.3, $28.4, and $29.2 million in fiscal years 2012, 2011 and 2010, respectively. Rent expense on premises subleased was $27.9, $27.9, and $28.8 million in fiscal years 2012, 2011 and 2010, respectively. Rent expense and the related rental income on the sublease arrangements with franchisees is netted within the rent expense line item on the Consolidated Statement of Operations. In most cases, the amount of rental income related to sublease arrangements with franchisees approximates the amount of rent expense from the primary lease, thereby having no net impact on rent expense or net (loss) income. However, in limited cases, the Company charges a ten percent mark-up in its sublease arrangements. The net rental income resulting from such arrangements totaled $0.4, $0.5, and $0.4 million for fiscal year 2012, 2011 and 2010, respectively, and was classified in the royalties and fees caption of the Consolidated Statement of Operations.

        Total rent expense, excluding rent expense on premises subleased to franchisees, includes the following:

	2012		2011		2010
	(Dollars in thousands)
Minimum rent	$	259,522	$	260,644	$	259,984
Percentage rent based on sales		8,938		9,225		10,138
Real estate taxes and other expenses		72,345		72,417		73,976
	$	340,805	$	342,286	$	344,098

        As of June 30, 2012, future minimum lease payments (excluding percentage rents based on sales) due under existing noncancelable operating leases with remaining terms of greater than one year are as follows:

Fiscal year	Corporate leases		Franchisee leases		Guaranteed leases
	(Dollars in thousands)
2013	$	259,975	$	45,677	$	816
2014		208,992		37,898		553
2015		157,154		29,038		343
2016		106,887		20,250		225
2017		62,016		10,861		193
Thereafter		76,675		8,754		198
Total minimum lease payments	$	871,699	$	152,478	$	2,328

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. COMMITMENTS AND CONTINGENCIES: (Continued)

Salon Development Program:

        As a part of its salon development program, the Company continues to negotiate and enter into leases and commitments for the acquisition of equipment and leasehold improvements related to future salon locations, and continues to enter into transactions to acquire established hair care salons.

Contingencies:

        The Company is self-insured for most workers' compensation, employment practice liability, and general liability. Workers' compensation and general liability losses are subject to per occurrence and aggregate annual liability limitations. The Company is insured for losses in excess of these limitations. The Company is also self-insured for health care claims for eligible participating employees subject to certain deductibles and limitations. The Company determines its liability for claims incurred but not reported on an actuarial basis.

11. LITIGATION

        The Company is a defendant in various lawsuits and claims arising out of the normal course of business. Like certain other large retail employers, the Company has been faced with allegations of purported class-wide consumer and wage and hour violations. In addition, the Company is a nominal defendant, and nine current and former directors and officers of the Company are named defendants, in a shareholder derivative action in Minnesota state court. The derivative shareholder alleges that the individual defendants breached their fiduciary duties to the Company in connection with their approval of certain executive compensation arrangements and certain related party transactions. A Special Litigation Committee has been formed per the direction of the judge in the matter. The Company is working with outside counsel to formulate its next steps in keeping with the courts. Litigation is inherently unpredictable and the outcome of these matters cannot presently be determined. Although the actions are being vigorously defended, the Company could in the future incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations in any particular period.

        During fiscal year 2012, the Company was awarded $1.1 million in conjunction with a class-action lawsuit.

        During fiscal year 2011, the Company settled a legal claim with the former owner of Hair Club for $1.7 million.

        During fiscal year 2010, the Company settled two legal claims regarding certain guest and employee matters for an aggregate charge of $5.2 million plus a commitment to provide discount coupons. Payments aggregating $4.3 and $0.9 million were made during fiscal years 2011 and 2010, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. INCOME TAXES

        The components of (loss) income before income taxes are as follows:

	2012			2011			2010
	(Dollars in thousands)
(Loss) income before income taxes:
U.S.	$	(100,792	)	$	(31,963	)	$	35,289
International		10,364			6,334			17,925
	$	(90,428	)	$	(25,629	)	$	53,214

        The (benefit) provision for income taxes consists of:

	2012			2011			2010
	(Dollars in thousands)
Current:
U.S.	$	6,493		$	3,658		$	5,580
International		2,399			1,557			14,882
Deferred:
U.S.		(13,984	)		(17,882	)		4,007
International		(187	)		3,171			1,108
	$	(5,279	)	$	(9,496	)	$	25,577

        The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory rate to (loss) earnings before income taxes, as a result of the following:

	2012			2011			2010
U.S. statutory rate (benefit)		(35.0	)%		(35.0	)%		35.0	%
State income taxes, net of federal income tax benefit		0.8			0.7			5.9
Tax effect of goodwill impairment		37.9			10.4			12.1
Foreign income taxes at other than U.S. rates		(0.2	)		7.9			(0.8	)
Work Opportunity and Welfare-to-Work Tax Credits		(5.4	)		(15.7	)		(7.0	)
Adjustment of prior year income tax balances		—			—			3.9
Other, net		(3.9	)		(5.4	)		(1.0	)
		(5.8	)%		(37.1	)%		48.1	%

        During the twelve months ended June 30, 2012, the Company recognized a tax benefit of $5.3 million with a corresponding effective tax rate of 5.8 percent. The effective income tax rate for the twelve months ended June 30, 2012 was negatively impacted by the goodwill impairment charges totaling $146.1 million which are primarily non-deductible for tax purposes. This resulted in the Company recording less of a tax benefit on the pre-tax loss than what would normally be expected utilizing the Company's historical range of tax rates.

        The (3.9) percent of other, net in fiscal year 2012 includes the rate impact of unrecognized tax benefits and miscellaneous items of (2.8) and (1.1) percent, respectively.

        For fiscal year 2011, the Company reported a $25.6 million loss from continuing operations before income taxes as compared to income from continuing operations before income taxes of $53.2 million in fiscal year 2010. The rate reconciliation items have a greater impact on the annual effective income tax rate in fiscal year 2011 because the magnitude of the loss from continuing operations before income

124

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. INCOME TAXES (Continued)

taxes is less than the magnitude of income from continuing operations before income taxes in fiscal year 2010. The annual effective tax rate was favorably impacted by employment credits in both years. Partially offsetting the favorable impact of the employment credits was the adverse impact of the pre-tax non-cash goodwill impairment charge of $74.1 million recorded during the third quarter of fiscal year 2011, which is only partially deductible for tax purposes. Additionally, the foreign income taxes at other than U.S. rates adversely impacted the annual effective tax rate due to a decrease in foreign income from continuing operations before income taxes and other foreign non-deductible items.

        The (5.4) percent of other, net in fiscal year 2011 includes the rate impact of meals and entertainment expense disallowance, donated inventory, unrecognized tax benefits, and miscellaneous items of 2.7, (2.9), (3.7), and (1.5) percent, respectively.

        The components of the net deferred tax assets and liabilities are as follows:

	2012			2011
	(Dollars in thousands)
Deferred tax assets:
Deferred rent	$	15,226		$	15,233
Payroll and payroll related costs		44,454			37,852
Net operating loss carryforwards		797			1,210
Salon asset impairment		5,038			5,176
Inventories		3,027			2,968
Deferred gift card revenue		745			1,536
Federal and state benefit on uncertain tax positions		2,113			8,549
Allowance for doubtful accounts/notes		5,180			9,855
Insurance		6,439			5,669
Other		6,963			6,396
Total deferred tax assets	$	89,982		$	94,444
Deferred tax liabilities:
Depreciation	$	(17,984	)	$	(29,348	)
Amortization of intangibles		(86,431	)		(94,257	)
Accrued property taxes		(2,079	)		(1,942	)
Deferred debt issuance costs		(4,336	)		(6,215	)
Other		(23	)		(3	)
Total deferred tax liabilities	$	(110,853	)	$	(131,765	)
Net deferred tax liabilities	$	(20,871	)	$	(37,321	)

        At June 30, 2012, the Company had state and foreign operating loss carryforwards of approximately $14.8 million and $3.7 million, respectively. These losses related to various states, the U.K. and Luxembourg. The Company had recorded a valuation allowance related to losses in various states and Luxembourg of $2.6 million and $3.1 million, respectively. The Company expects to fully utilize all of the loss carryforwards for which a valuation allowance has not been established.

        As of June 30, 2012, undistributed earnings of international subsidiaries of approximately $60.4 million were considered to have been reinvested indefinitely and, accordingly, the Company has not provided for U.S. income taxes on such earnings. It is not practicable for the Company to determine the amount of unrecognized deferred tax liabilities on these indefinitely reinvested earnings.

125

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. INCOME TAXES (Continued)

Deferred taxes would be recorded for earnings of our foreign operations if we determine that such earnings are no longer indefinitely reinvested and cannot be remitted in a tax-neutral transaction.

        The Company files tax returns and pays tax primarily in the U.S., Canada, the U.K., and Luxembourg as well as states, cities, and provinces within these jurisdictions. In the U.S., fiscal years 2009 and after remain open for federal tax audit. For state tax audits, the statute of limitations generally spans three to four years, resulting in a number of states remaining open for tax audits dating back to fiscal year 2008. However, the Company is under audit in a number of states in which the statute of limitations has been extended for fiscal years 2006 and forward. Internationally, including Canada, the statute of limitations for tax audits varies by jurisdiction, but generally ranges from three to five years. A rollforward of the unrecognized tax benefits is as follows:

	2012			2011			2010
Balance at beginning of period	$	13,493		$	16,856		$	14,787
Additions based on tax positions related to the current year		482			796			5,549
(Reductions)/additions based on tax positions of prior years		(7	)		(759	)		(185	)
Reductions on tax positions related to the expiration of the statute of limitations		(1,571	)		(2,718	)		(2,993	)
Settlements		(8,016	)		(682	)		(302	)
Balance at end of period	$	4,381		$	13,493		$	16,856

        If the Company were to prevail on all unrecognized tax benefits recorded, a benefit of approximately $2.8 million would be recorded in the effective tax rate. Interest and penalties associated with unrecognized tax benefits are recorded within income tax expense. During the years ended June 30, 2012, 2011, and 2010 we recorded income tax (benefit)/expense of approximately $(1.2), $(0.6), and $(1.1) million, respectively, for the reversal of previously accrued interest and penalties net of the respective fiscal years additions to the accrual. As of June 30, 2012, the Company had accrued interest and penalties related to unrecognized tax benefits of $1.5 million. This amount is not included in the gross unrecognized tax benefits noted above.

        It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain of our unrecognized tax positions will increase or decrease during the next twelve months. However, we do not expect the change to have a significant effect on our results of operations or our financial position.

13. BENEFIT PLANS

Regis Retirement Savings Plan

        The Company maintains a defined contribution 401(k) plan, the Regis Retirement Savings Plan (RRSP Plan). The RRSP Plan is a defined contribution profit sharing plan with a 401(k) feature that is intended to qualify with the Internal Revenue Code (Code) and is subject to the Employee Retirement Income Security Act of 1974.

        The 401(k) portion of the Plan is a contributory defined contribution plan under which eligible employees may elect to contribute a percentage of their eligible compensation. Employees who are 18 years of age or older and who were not highly compensated employees as defined by the Code

126

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13. BENEFIT PLANS (Continued)

during the preceding Plan year are eligible to participate in the Plan commencing with the first day of the month following their completion of one month of service.

        The discretionary employer contribution profit sharing portion of the Plan is a noncontributory defined contribution component covering full-time and part-time employees of the Company who have at least one year of eligible service, 1,000 hours of service during the Plan year, are employed by the Employer on the last day of the Plan year and are employed at the home office or distribution centers, or as area or regional supervisors, artistic directors or educators, and that are not highly compensated employees as defined by the Code. Participants' interest in the noncontributory defined contribution component become 20.0 percent vested after completing two years of service with vesting increasing 20.0 percent for each additional year of service, and with participants becoming fully vested after six full years of service.

Nonqualified Deferred Salary Plan:

        The Company maintains a Nonqualified Deferred Salary Plan (Executive Plan), which covers Company officers, field supervisors, warehouse and corporate office employees who are highly compensated. The discretionary employer contribution profit sharing portion of the Executive Plan is a noncontributory defined contribution component in which participants interest become 20.0 percent vested after completing two years of service with vesting increasing 20.0 percent for each additional year of service, and with participants becoming fully vested after six full years of service.

Stock Purchase Plan:

        The Company has an employee stock purchase plan (ESPP) available to substantially all employees. Under the terms of the ESPP, eligible employees may purchase the Company's common stock through payroll deductions. The Company contributes an amount equal to 15.0 percent of the purchase price of the stock to be purchased on the open market and pays all expenses of the ESPP and its administration, not to exceed an aggregate contribution of $10.0 million. As of June 30, 2012, the Company's cumulative contributions to the ESPP totaled $8.9 million.

Franchise Stock Purchase Plan:

        The Company has a franchise stock purchase plan (FSPP) available to substantially all franchisee employees. 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 to exceed an aggregate contribution of $0.7 million. As of June 30, 2012, the Company's cumulative contributions to the FSPP totaled $0.2 million.

Deferred Compensation Contracts:

        The Company has agreed to pay its former Chief Executive Officer, a lump sum amount equal to 60.0 percent of his salary for the remainder of his life. Compensation associated with this agreement was charged to expense as services were provided. Associated costs included in general and administrative expenses on the Consolidated Statement of Operations totaled $3.7, $1.8 and $3.0 million for fiscal years 2012, 2011, and 2010, respectively. As of June 30, 2012 and 2011, zero and $11.4 million is included in other noncurrent liabilities, respectively. As of June 30, 2012 and 2011, $15.1 million and zero of the balance is included in accrued liabilities, respectively

127

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. BENEFIT PLANS (Continued)

        In addition, the Company has other unfunded deferred compensation contracts covering key executives within the Company. The key executives' benefits are based on years of service and the employee's compensation prior to departure. Effective June 30, 2012, the Company amended the deferred compensation contracts such that the benefits are based on years of service and employee's compensation as of June 30, 2012. The Company utilizes a June 30 measurement date for these deferred compensation contracts, a discount rate based on the Aa Bond index rate (4.0 and 5.5 percent at June 30, 2012 and 2011, respectively) and projected salary increases of 4.0 percent at June 30, 2011 to estimate the obligations associated with these deferred compensation contracts.

        Compensation associated with these agreements is charged to expense as services are provided. Associated costs included in general and administrative expenses on the Consolidated Statement of Operations totaled $5.9, $2.5 and $2.2 million for fiscal years 2012, 2011, and 2010, respectively. The projected benefit obligation of these deferred compensation contracts totaled $21.3 and $22.2 million at June 30, 2012 and 2011, respectively, in the Consolidated Balance Sheet. As of June 30, 2012 and 2011, $11.8 and $17.2 million is included in other noncurrent liabilities, respectively. As of June 30, 2012 and 2011, $9.5 and $5.0 million of the balance is included in accrued liabilities, respectively. The tax-affected accumulated other comprehensive loss for the deferred compensation contracts, consisting of primarily unrecognized actuarial loss, was $0.5 and $1.6 million at June 30, 2012 and 2011, respectively. The Company intends to fund its future obligations under these arrangements through company-owned life insurance policies on the participants. Cash values of these policies totaled $24.4 and $22.3 million at June 30, 2012 and 2011, respectively, and are included in other assets in the Consolidated Balance Sheet.

        The Company has agreed to pay the former Vice Chairman an annual amount of $0.6 million, adjusted for inflation to $0.9 million in fiscal years 2012 and 2011, for the remainder of his life. The former Vice Chairman has agreed that during the period in which payments are made, as provided in the agreement, he will not engage in any business competitive with the business conducted by the Company. Additionally, the Company has a survivor benefit plan for the former Vice Chairman's spouse, payable upon his death, at a rate of one half of his deferred compensation benefit, adjusted for inflation, for the remaining life of his spouse. Estimated associated costs included in general and administrative expenses on the Consolidated Statement of Operations totaled $0.8, $0.7 and $0.6 million for fiscal years 2012, 2011, and 2010, respectively. Related obligations totaled $4.9 and $5.9 million at June 30, 2012 and 2011, respectively, and are included in other noncurrent liabilities in the Consolidated Balance Sheet. The Company intends to fund all future obligations under this agreement through company-owned life insurance policies on the former Vice Chairman. Cash values of these policies totaled $4.5 and $4.2 million at June 30, 2012 and 2011, respectively, and are included in other assets in the Consolidated Balance Sheet. The policy death benefits exceed the obligations under this agreement.

        Compensation expense included in (loss) income before income taxes and equity in (loss) income of affiliated companies related to the aforementioned plans, excluding amounts paid for expenses and

128

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. BENEFIT PLANS (Continued)

administration of the plans, for the fiscal years ended June 30, 2012, 2011, and 2010, included the following:

	2012		2011		2010
	(Dollars in thousands)
RRSP Plan profit sharing	$	—	$	1,907	$	3,206
Executive Plan profit sharing		—		477		654
ESPP		449		494		484
FSPP		9		8		8
Deferred compensation contracts		10,452		4,977		5,814

14. SHAREHOLDERS' EQUITY

Net (Loss) Income Per Share:

        The Company's basic earnings per share is calculated as net (loss) income divided by weighted average common shares outstanding, excluding unvested outstanding RSAs and RSUs. The Company's dilutive earnings per share is calculated as net (loss) income divided by weighted average common shares and common share equivalents outstanding, which includes shares issuable under the Company's stock option plan and long-term incentive plan, and dilutive securities. Stock-based awards with exercise prices greater than the average market value of the Company's common stock are excluded from the computation of diluted earnings per share. The Company's dilutive earnings per share will also reflect the assumed conversion under the Company's convertible debt if the impact is dilutive, along with the exclusion of interest expense, net of taxes. The impact of the convertible debt is excluded from the computation of diluted earnings per share when interest expense per common share obtainable upon conversion is greater than basic earnings per share.

        The following table sets forth a reconciliation of shares used in the computation of basic and diluted earnings per share:

	2012		2011		2010
	(Shares in thousands)
Weighted average shares for basic earnings per share		57,137		56,704		55,806
Effect of dilutive securities:
Dilutive effect of convertible debt		—		—		10,730
Dilutive effect of stock-based compensation(1)		—		—		217
Weighted average shares for diluted earnings per share		57,137		56,704		66,753

(1)

For fiscal year 2012 and 2011, 182 and 334 common stock equivalents of potentially dilutive common stock were not included in the diluted earnings per share calculation because to do so would have been anti-dilutive.

129

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. SHAREHOLDERS' EQUITY (Continued)

        The following table sets forth the awards, which are excluded from the various earnings per share calculations:

	2012		2011		2010
	(Shares in thousands)
Basic earnings per share:
RSAs(1)		403		862		931
RSUs(1)		17		215		215
		420		1,077		1,146
Diluted earnings per share:
Stock options(2)		789		890		960
SARs(2)		957		1,084		1,110
RSAs(2)		242		580		677
Shares issuable upon conversion of debt(2)		11,209		11,163		—
		13,197		13,717		2,747

(1)

Shares were not vested

(2)

Share were anti-dilutive

        The following table sets forth a reconciliation of the net (loss) income from continuing operations available to common shareholders and the net (loss) income from continuing operations for diluted earnings per share under the if-converted method:

	2012			2011			2010
	(Dollars in thousands)
Net (loss) income from continuing operations available to common shareholders	$	(115,192	)	$	(8,905	)	$	39,579
Effect of dilutive securities:
Interest on convertible debt		—			—			7,520
Net (loss) income from continuing operations for diluted earnings per share	$	(115,192	)	$	(8,905	)	$	47,099

Stock-based Compensation Award Plans:

        In May of 2004, the Company's Board of Directors approved the 2004 Long Term Incentive Plan (2004 Plan). The 2004 Plan received shareholder approval at the annual shareholders' meeting held on October 28, 2004. The 2004 Plan provides for the granting of stock options, equity-based stock appreciation rights (SARs) and restricted stock, as well as cash-based performance grants, to employees and directors of the Company. On March 8, 2007, the Company's Board of Directors approved an amendment to the 2004 Plan to permit the granting and issuance of restricted stock units (RSUs). On October 28, 2010, the shareholders of Regis Corporation approved an amendment to the 2004 Plan to increase the maximum number of shares of the Company's common stock authorized for issuance pursuant to grants and awards from 2,500,000 to 6,750,000. The 2004 Plan expires on May 26, 2014. Stock options, SARs and restricted stock granted prior to fiscal year 2012 under the 2004 Plan generally vest at a rate of 20.0 percent annually on each of the first five anniversaries of the date of

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14. SHAREHOLDERS' EQUITY (Continued)

grant. The stock options and SARs have a maximum term of ten years. The RSUs granted prior to fiscal year 2012 cliff vest after five years and payment of the RSUs is deferred until January 31 of the year following vesting.

        During the fiscal year ended 2012, the Company granted 55,000 shares of restricted stock awards and 42,316 restricted stock units. Of the 55,000 restricted stock awards, 20,000 shares vest at a rate of 20.0 percent annually on the first five anniversaries of the date of grant with the remaining 35,000 shares cliff vest two years after the grant date. The grant of the 42,316 restricted stock units occurred in the last month of the fiscal year, with retroactive vesting on a monthly basis, generally from the Company's 2011 annual shareholder meeting date. As such, at the date of grant there were 25,704 vested restricted stock units. The distribution of the vested restricted stock units is deferred until separation of service from the Company.

        Unvested awards are subject to forfeiture in the event of termination of employment.

        The Company also has outstanding stock options under the 2000 Stock Option Plan (2000 Plan), although the plan terminated in 2010, which allowed the Company to grant both incentive and nonqualified stock options and replaced the Company's 1991 Stock Option Plan (1991 Plan). Total options covering 3,500,000 shares of common stock were available for grant under the 2000 Plan to employees of the Company for a term not to exceed ten years from the date of grant. The term may not exceed five years for incentive stock options granted to employees of the Company possessing more than ten percent of the total combined voting power of all classes of stock of the Company or any subsidiary of the Company. Options may 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 were granted at not less than fair market value on the date of grant. The Board of Directors determines the 2000 Plan participants and establishes the terms and conditions of each option.

        The terms and conditions of the shares granted under the 1991 Plan are similar to the 2000 Plan. The 1991 Plan terminated in 2001. All shares granted under the 1991 Plan have been exercised, forfeited, or cancelled as of June 30, 2011.

        Common shares available for grant under the following plans as of June 30 were:

	2012		2011		2010
	(Shares in thousands)
2000 Plan		—		—		4
2004 Plan		4,838		4,209		12
		4,838		4,209		16

131

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. SHAREHOLDERS' EQUITY (Continued)

        Stock options outstanding and weighted average exercise prices were as follows:

	Options Outstanding
	Shares			Weighted Average Exercise Price
	(in thousands)
Balance, June 30, 2009		1,385		$	25.55
Granted		135			18.90
Cancelled		(337	)		17.74
Exercised		(203	)		15.12
Balance, June 30, 2010		980			29.48
Granted		—			—
Cancelled		(96	)		18.89
Exercised		(46	)		15.04
Balance, June 30, 2011		838			31.48
Granted		—			—
Cancelled		(186	)		27.80
Exercised		—			—
Balance, June 30, 2012		652		$	32.53
Exercisable June 30, 2012		593		$	33.50

        Outstanding options of 651,578 at June 30, 2012 had an intrinsic value (the amount by which the stock price exceeded the exercise or grant date price) of zero and a weighted average remaining contractual term of 3.4 years. Exercisable options of 593,288 at June 30, 2012 had an intrinsic value of zero and a weighted average remaining contractual term of 3.0 years. Of the outstanding and unvested options and due to estimated forfeitures, 54,458 options are expected to vest with a $22.82 per share weighted average grant price and a weighted average remaining contractual life of 6.5 years that have a total intrinsic value of zero.

        All options granted relate to stock option plans that have been approved by the shareholders of the Company. Stock options granted in fiscal year 2010 were granted under the 2000 and 2004 plan.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. SHAREHOLDERS' EQUITY (Continued)

        A rollforward of RSAs, RSUs and SARs outstanding, as well as other relevant terms of the awards, were as follows:

	Restricted Stock Outstanding					SARs Outstanding
	Shares/Units			Weighted Average Grant Date Fair Value		Shares			Weighted Average Exercise Price
	(in thousands)					(in thousands)
Balance, June 30, 2009		1,032			26.33		1,114			26.30
Granted		304			19.12		2			28.57
Cancelled		(2	)		20.02		(6	)		38.63
Vested/Exercised		(188	)		24.74		—			—
Balance, June 30, 2010		1,146			24.70		1,110			26.24
Granted		277			16.60		103			16.60
Cancelled		(118	)		20.42		(126	)		24.35
Vested/Exercised		(228	)		22.69		—			—
Balance, June 30, 2011		1,077			23.48		1,087			25.54
Granted		97			16.94		—			—
Forfeited or expired		(290	)		19.07		(352	)		24.57
Vested/Exercised		(224	)		20.58		(1	)		16.60
Balance, June 30, 2012		660		$	25.44		734		$	26.02

        Outstanding and unvested RSAs of 403,120 at June 30, 2012 had an intrinsic value of $7.2 million and a weighted average remaining vesting term of 1.7 years. Due to estimated forfeitures, 366,864 awards are expected to vest with a total intrinsic value of $6.6 million.

        Outstanding RSUs of 257,316 at June 30, 2012 had an intrinsic value of $4.6 million and a weighted average remaining vesting term of less than 0.1 years. Vested RSUs of 240,704 at June 30, 2012 had an intrinsic value of $4.3 million. Unvested RSUs of 16,612 at June 30, 2012 had an intrinsic value of $0.3 million and a weighted average remaining vesting term of 0.5 years. The payment of 215,000 vested RSUs is deferred until January 31, 2013. The payment of the remaining 25,704 vested RSUs is deferred six months after the respective award recipient is no longer an employee of the Company or serves on the Board of Directors.

        Outstanding SARs of 733,800 at June 30, 2012 had a total intrinsic value of $0.1 million and a weighted average remaining contractual term of 3.8 years. Exercisable SARs of 579,790 at June 30, 2012 had a total intrinsic value of less than $0.1 million and a weighted average contractual term of 2.9 years. Of the outstanding and unvested rights and due to estimated forfeitures, 147,035 SARs are expected to vest with a $18.99 per share weighted average grant price, a weighted average remaining contractual life of 6.9 years and a total intrinsic value of $0.1 million.

        During fiscal year 2011, the Company accelerated the vesting of 68,390 unvested RSAs held by the Company's former Chief Executive Officer and former Executive Vice President, Fashion and Education. Under the terms of the modifications, any unvested RSAs granted to the former Chief Executive Officer and former Executive Vice President, Fashion and Education fully vested on their last days of employment, which was February 8, 2012 and June 30, 2012, respectively. As a result of the

133

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. SHAREHOLDERS' EQUITY (Continued)

modifications, the Company recognized an incremental compensation cost of $0.2 and less than $0.1 million during fiscal years 2012 and 2011, respectively.

        Total cash received from the exercise of share-based instruments in fiscal years 2012, 2011 and 2010 was less than $0.1, $0.7, and $3.1 million, respectively.

        As of June 30, 2012, the total unrecognized compensation cost related to all unvested stock-based compensation arrangements was $7.8 million. The related weighted average period over which such cost is expected to be recognized was approximately 2.6 years as of June 30, 2012.

        The total intrinsic value of all stock-based compensation that was exercised during fiscal years 2012, 2011, and 2010 was less than $0.1, $0.2, and $0.7 million, respectively.

        The total fair value of stock awards that vested and were distributed during fiscal years 2012, 2011, and 2010 was $4.8, $5.4, and $4.9 million, respectively.

        Using the fair value of each grant on the date of grant, the weighted average fair values per stock-based compensation award granted during fiscal years 2012, 2011 and 2010 were as follows:

	2012		2011		2010
Stock options	$	—	$	—	$	7.36
SARs		—		6.26		8.60
Restricted stock awards		16.15		16.60		19.12
Restricted stock units		17.96		—		—

        The expense associated with the RSA and RSU grants is based on the market price of the Company's stock at the date of grant. The significant assumptions used in determining the underlying fair value on the date of grant of each stock option and SAR grant issued during the fiscal years 2012, 2011 and 2010 is presented below:

	2012	2011			2010
Risk-free interest rate	N/A		2.29	%		2.79	%
Expected term (in years)	N/A		5.50			5.50
Expected volatility	N/A		44.00	%		42.00	%
Expected dividend yield	N/A		1.45	%		0.85	%

        The risk free rate of return is determined based on the U.S. Treasury rates approximating the expected life of the options and SARs granted. Expected volatility is established based on historical volatility of the Company's stock price. Estimated expected life was based on an analysis of historical stock options granted data which included analyzing grant activity including grants exercised, expired, and canceled. The expected dividend yield is determined based on the Company's annual dividend amount as a percentage of the strike price at the time of the grant. The Company uses historical data to estimate pre-vesting forfeiture rates.

        Compensation expense included in income before income taxes related to stock- based compensation was $7.6, $9.6, and $9.3 million for the three years ended June 30, 2012, 2011, and 2010, respectively.

Authorized Shares and Designation of Preferred Class:

        The Company has 100 million shares of capital stock authorized, par value $0.05, of which all outstanding shares, and shares available under the Stock Option Plans, have been designated as common.

134

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. SHAREHOLDERS' EQUITY (Continued)

        In addition, 250,000 shares of authorized capital stock have been designated as Series A Junior Participating Preferred Stock (preferred stock). None of the preferred stock has been issued.

Shareholders' Rights Plan:

        The Company has a shareholders' rights plan pursuant to which one preferred share purchase right is held by shareholders for each outstanding share of common stock. The rights become exercisable only following the acquisition by a person or group, without the prior consent of the Board of Directors, of 15.0 percent or more of the Company's voting stock, or following the announcement of a tender offer or exchange offer to acquire an interest of 15.0 percent or more. If the rights become exercisable, they entitle all holders, except the takeover bidder, to purchase one one-thousandth of a share of preferred stock at an exercise price of $140, subject to adjustment, or in lieu of purchasing the preferred stock, to purchase for the same exercise price common stock of the Company (or in certain cases common stock of an acquiring company) having a market value of twice the exercise price of a right.

Share Repurchase Program:

        In May 2000, the Company's Board of Directors (BOD) approved a stock repurchase program. Originally, the program authorized up to $50.0 million to be expended for the repurchase of the Company's stock. The BOD elected to increase this maximum to $100.0 million in August 2003, to $200.0 million on May 3, 2005, and to $300.0 million on April 26, 2007. The timing and amounts of any repurchases will depend on many factors, including the market price of the common stock and overall market conditions. Historically, the repurchases to date have been made primarily to eliminate the dilutive effect of shares issued in conjunction with acquisitions, restricted stock grants and stock option exercises. All repurchased shares become authorized but unissued shares of the Company. This repurchase program has no stated expiration date. As of June 30, 2012, 2011, and 2010, a total accumulated 6.8 million shares have been repurchased for $226.5 million. As of June 30, 2012, $73.5 million remains to be spent on share repurchases under this program.

15. SEGMENT INFORMATION

        As of June 30, 2012, the Company owned, franchised or held ownership interests in approximately 12,600 worldwide locations. The Company's locations consisted of 9,340 North American salons (located in the U.S., Canada and Puerto Rico), 398 international salons, 98 hair restoration centers, and 2,811 locations in which the Company maintains a non-controlling ownership interest through its investments in affiliates.

        The Company operates its North American salon operations through five primary concepts: Regis Salons, MasterCuts, SmartStyle, Supercuts and Promenade salons. The concepts offer similar products and services, concentrate on the mass market consumer marketplace and have consistent distribution channels. All of the company-owned and franchise salons within the North American salon concepts are located in high traffic, retail shopping locations that attract mass market consumers, and the individual salons display similar long-term economic characteristics. The salons share interdependencies and a common support base.

        The Company operates its International salon operations, primarily in the United Kingdom, through three primary concepts: Regis, Supercuts, and Sassoon salons. Consistent with the North American concepts, the international concepts offer similar products and services, concentrate on the

135

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. SEGMENT INFORMATION (Continued)

mass market consumer marketplace and have consistent distribution channels. All of the international salon concepts are company-owned and are located in malls, leading department stores, and high-street locations. Individual salons display similar long-term economic characteristics. The salons share interdependencies and a common support base.

        The Company's company-owned and franchise hair restoration centers are located in the U.S. and Canada. The Company's hair restoration centers offer three hair restoration solutions; hair systems, hair transplants, and hair therapy, which are targeted at the mass market consumer. Hair restoration centers are located primarily in office and professional buildings within larger metropolitan areas.

        Based on the way the Company manages its business, it has reported its North American salons, International salons, and Hair Restoration Centers as three separate reportable segments.

        The accounting policies of the reportable operating segments are the same as those described in Note 1 to the Consolidated Financial Statements. Intersegment sales and transfers are not significant. Summarized financial information concerning the Company's reportable operating segments is shown in the following table as of June 30, 2012, 2011, and 2010:

	For the Year Ended June 30, 2012
	Salons
					Hair Restoration Centers			Unallocated Corporate
	North America		International								Consolidated
	(Dollars in thousands)
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	)

136

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. SEGMENT INFORMATION (Continued)

	For the Year Ended June 30, 2011
	Salons
					Hair Restoration Centers		Unallocated Corporate
	North America		International							Consolidated
	(Dollars in thousands)
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
Lease termination costs		—		—		—		—			—
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 (loss) income of affiliated companies	$	166,683	$	6,738	$	18,230	$	(217,280	)	$	(25,629	)

137

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. SEGMENT INFORMATION (Continued)

	For the Year Ended June 30, 2010
	Salons
					Hair Restoration Centers		Unallocated Corporate
	North America		International							Consolidated
	(Dollars in thousands)
Revenues:
Service	$	1,605,979	$	111,833	$	66,325	$	—		$	1,784,137
Product		417,363		44,252		72,978		—			534,593
Royalties and fees		37,221		—		2,483		—			39,704
		2,060,563		156,085		141,786		—			2,358,434
Operating expenses:
Cost of service		920,905		57,657		37,158		—			1,015,720
Cost of product		219,745		22,570		21,568		—			263,883
Site operating expenses		183,881		10,152		5,305		—			199,338
General and administrative		113,956		13,115		36,207		128,713			291,991
Rent		294,263		38,681		9,013		2,141			344,098
Depreciation and amortization		72,681		4,986		12,198		18,899			108,764
Goodwill impairment		35,277		—		—		—			35,277
Lease termination costs		—		2,145		—		—			2,145
Total operating expenses		1,840,708		149,306		121,449		149,753			2,261,216
Operating income (loss)		219,855		6,779		20,337		(149,753	)		97,218
Other income (expense):
Interest expense		—		—		—		(54,414	)		(54,414	)
Interest income and other, net		—		—		—		10,410			10,410
Income (loss) from continuing operations before income taxes and equity in (loss) income of affiliated companies	$	219,855	$	6,779	$	20,337	$	(193,757	)	$	53,214

        Total revenues and long-lived assets associated with business operations in the U.S. and all other countries in aggregate were as follows:

	Year Ended June 30,
	2012				2011				2010
	Total Revenues		Long-lived Assets		Total Revenues		Long-lived Assets		Total Revenues		Long-lived Assets
	(Dollars in thousands)
U.S.	$	1,967,349	$	291,972	$	2,007,042	$	314,406	$	2,055,059	$	327,753
Other countries		306,430		31,088		318,827		33,405		303,375		31,497
Total	$	2,273,779	$	323,060	$	2,325,869	$	347,811	$	2,358,434	$	359,250

138

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16. QUARTERLY FINANCIAL DATA (UNAUDITED)

        Summarized quarterly data for fiscal years 2012 and 2011 follows:

	Quarter Ended
	September 30		December 31			March 31			June 30			Year Ended
	(Dollars in thousands, except per share amounts)
2012
Revenues	$	568,749	$	563,278		$	573,584		$	568,168		$	2,273,779
Gross margin, excluding royalties and depreciation		252,627		247,697			249,010			249,027			998,361
Operating income (loss)(a)		13,072		(61,617	)		25,200			(43,968	)		(67,313	)
Income (loss) from continuing operations(a)(b)		8,337		(57,427	)		(2,468	)		(63,634	)		(115,192	)
Income (loss) from discontinued operations(c)		—		—			1,099			—			1,099
Net income (loss)(a)(b)		8,337		(57,427	)		(1,369	)		(63,634	)		(114,093	)
Income (loss) from continuing operations per share, basic		0.15		(1.01	)		(0.04	)		(1.11	)		(2.02	)
Income from discontinued operations per share, basic		—		—			0.02			—			0.02
Net income (loss) per basic share(f)		0.15		(1.01	)		(0.02	)		(1.11	)		(2.00	)
Income (loss) from continuing operations per share, diluted		0.15		(1.01	)		(0.04	)		(1.11	)		(2.02	)
Income (loss) from discontinued operations per share, diluted		—		—			0.02			—			0.02
Net income (loss) per diluted share(f)		0.15		(1.01	)		(0.02	)		(1.11	)		(2.00	)
Dividends declared per share		0.06		0.06			0.06			0.06			0.24

Refer to Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 6 in this Form 10-K for explanations of items, which impacted fiscal year 2012 revenues, operating and net income (loss).

	Quarter Ended
	September 30		December 31		March 31			June 30			Year Ended
	(Dollars in thousands, except per share amounts)
2011
Revenues	$	578,245	$	574,372	$	581,267		$	591,985		$	2,325,869
Gross margin, excluding royalties and depreciation		257,558		251,132		253,017			261,614			1,023,321
Operating income (loss)(a)(d)		33,434		22,864		(59,504	)		7,154			3,948
Income (loss) from continuing operations(a)(d)(e)		18,320		14,505		(25,335	)		(16,395	)		(8,905	)
Net income (loss)(a)(d)(e)		18,320		14,505		(25,335	)		(16,395	)		(8,905	)
Income (loss) from continuing operations per share, basic		0.32		0.26		(0.45	)		(0.29	)		(0.16	)
Net income (loss) per basic share		0.32		0.26		(0.45	)		(0.29	)		(0.16	)
Income (loss) from continuing operations per share, diluted		0.30		0.24		(0.45	)		(0.29	)		(0.16	)
Net income (loss) per diluted share		0.30		0.24		(0.45	)		(0.29	)		(0.16	)
Dividends declared per share		0.04		0.04		0.06			0.06			0.20

Refer to Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 6 in this Form 10-K for explanations of items, which impacted fiscal year 2011 revenues, operating and net income.

(a)

Expense of $67.7 million ($55.2 million net of tax) was recorded in the fourth quarter ended June 30, 2012 related to our Regis salon concept goodwill impairment. Expense of $78.4 million ($72.6 million net of tax) was recorded in the second quarter ended December 31, 2011 related to our Hair Restoration Centers reporting unit goodwill impairment. Expense of $74.1 million ($50.8 million net of tax) was recorded in the third quarter ended March 31, 2011 related to our Promenade salon concept goodwill impairment due to recent performance challenges in that concept.

139

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16. QUARTERLY FINANCIAL DATA (UNAUDITED) (Continued)

(b)

Expense of $17.2 million was recorded during fiscal year 2012 related to the impairment of our investment in Provalliance as a result of the Company entering into a Share Purchase Agreement to sell the Company's 46.7 percent equity interest in Provalliance for a purchase price of €80 million. Expense of $19.4 million was recorded during fiscal year 2012 related to the impairment of our investment in EEG.

(c)

During the third quarter ended March 31, 2012, the Company recorded a $1.1 million tax benefit in discontinued operations related to the release of tax reserves associated with the disposition of the Trade Secret salon concept.

(d)

Operating income and net income decreased $31.2 million ($19.2 million net of tax) as a result of a valuation reserve on a note receivable with the purchase of Trade Secret that was recorded in the third quarter ($9.0 million) and fourth quarter ($22.2 million) of fiscal year 2011.

(e)

Income (loss) from continuing operations and net income decreased as a result of $9.2 million that was recorded in the third quarter ($8.7 million) and in the fourth quarter ($0.5 million) as a result of an other than temporary impairment on an investment in preferred shares of Yamano and a premium paid at the time of an initial investment in MY Style.

(f)

Total is a recalculation; line items calculated individually may not sum to total.

17. SUBSEQUENT EVENTS

        On July 11, 2012, the Company announced that Mr. Daniel J. Hanrahan was appointed President and Chief Executive Officer of the Company, effective August 6, 2012. He was also appointed to the Board of Directors, effective August 6, 2012.

        On July 13, 2012, the Company entered into a definitive agreement to sell Hair Club to Aderans, Co., Ltd. for cash of $163.5 million excluding closing adjustments and transaction fees. Subsequent to fiscal year 2012, the net assets of Hair Club to be sold met the accounting criteria to be classified as held for sale and will be aggregated and reported in accordance with authoritative guidance in the Company's fiscal year 2013 first quarter Form 10-Q. The Company is currently anticipating recognizing a gain upon closing of the deal. The transaction is expected to close in the first or second fiscal quarter of 2013, and is subject to customary closing conditions.

        On July 17, 2012, Mr. Daniel G. Beltzman was appointed to the Board of Directors of the Company, effective August 1, 2012.

140

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

        None.

Item 9A.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

        Our Disclosure Committee, consisting of certain members of management, assists in this evaluation. The Disclosure Committee meets on a quarterly basis and more often if necessary.

        With the participation of management, the Company's chief executive officer and chief financial officer evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a-5(e) and 15d-15(e) promulgated under the Exchange Act) at the conclusion of the period ended June 30, 2012. Based upon this evaluation, the chief executive officer and chief financial officer concluded that the Company's disclosure controls and procedures were effective.

Management's Report on Internal Control over Financial Reporting

        In Part II, Item 8 above, management provided a report on internal control over financial reporting, in which management concluded that the Company's internal control over financial reporting was effective as of June 30, 2012. In addition, PricewaterhouseCoopers LLP, the Company's independent registered public accounting firm, provided a report on the Company's effectiveness of internal control over financial reporting. The full text of management's report and PricewaterhouseCoopers' report appears on pages 77 and 78 herein.

Changes in Internal Controls

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

Item 9B.    Other Information

        None.

141

PART III

Item 10.    Directors, Executive Officers and Corporate Governance

        Information regarding the Directors of the Company and Exchange Act Section 16(a) filings will be set forth in the sections titled "Item 1—Election of Directors", "Corporate Governance" and "Section 16(a) Beneficial Ownership Reporting Compliance" of the Company's 2012 Proxy, and is incorporated herein by reference. The information required by Item 401 of Regulation S-K regarding the Company's executive officers is included under "Executive Officers" in Item 1 of this Annual Report on Form 10-K. Additionally, information regarding the Company's audit committee and audit committee financial expert, as well nominating committee functions, will be set forth in the section titled "Committees of the Board" and shareholder communications with directors will be set forth in the section titled "Communications with the Board" of the Company's 2012 Proxy Statement, and is incorporated herein by reference.

        The Company has adopted a code of ethics, known as the Code of Business Conduct & Ethics that applies to all employees, including the Company's chief executive officer, chief financial officer, directors and executive officers. The Code of Business Conduct & Ethics is available on the Company's website at www.regiscorp.com, under the heading "Corporate Governance / Guidelines" (within the "Investor Information" section). The Company intends to disclose any substantive amendments to, or waivers from, its Code of Business Conduct & Ethics on its website or in a report on Form 8-K. In addition, the charters of the Company's Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee and the Company's Corporate Governance Guidelines may be found on the Company's website. Copies of any of these documents are available upon request to any shareholder of the Company by writing to the Company's Secretary at Regis Corporation, 7201 Metro Boulevard, Edina, Minnesota 55439.

Item 11.    Executive Compensation

        Information about Executive and director compensation will be set forth in the section titled "Executive Compensation" of the Company's 2012 Proxy Statement, and is incorporated herein by reference.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

        Information regarding the Company's equity compensation plans will be set forth in the section titled "Equity Compensation Plan Information" of the Company's 2012 Proxy Statement, and is incorporated herein by reference.

Item 13.    Certain Relationships and Related Transactions, and Director Independence

        Information regarding certain relationships and related transactions will be set forth in the section titled "Certain Relationships and Related Transactions" of the Company's 2012 Proxy Statement, and is incorporated herein by reference. Information regarding director independence will be set forth in the section titled "Corporate Governance—Director Independence" of the Company's 2012 Proxy Statement, 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 the section titled "Item 2—Ratification of Appointment of Independent Registered Public Accounting Firm" of the Company's 2012 Proxy Statement and is incorporated herein by reference.

142

PART IV

Item 15.    Exhibits and Financial Statement Schedules

(a)

(1). All financial statements:

Consolidated Financial Statements filed as part of this report are listed under Part II, Item 8 of this Form 10-K.

(b)

Exhibits:

        The exhibits listed in the accompanying index are filed as part of this report. Except where otherwise indicated below, the SEC file number for each report and registration statement from which the exhibits are incorporated by reference is 1-12725.

Exhibit Number/Description

2(a)	Contribution Agreement, dated April 18, 2007, between the Company and Empire Beauty School Inc. (Incorporated by reference to Exhibit 2.1 of the Company's Report on Form 8-K filed on April 24, 2007.)
2(b)	Purchase Agreement, dated November 13, 2004, between the Company and Hair Club Group Inc. (Incorporated by reference to Exhibit 2 of the Company's Report on Form 10-Q filed on February 9, 2005, for the quarter ended December 31, 2004.)
2(c)	Stock Purchase Agreement dated as of January 26, 2009 between Regis Corporation, Trade Secret, Inc. and Premier Salons Beauty Inc. (Incorporated by reference to Exhibit 2.1 to the Company's Report on Form 8-K filed on January 27, 2009.)
2(d)	Share Purchase Agreement, dated as of April 9, 2012, between Regis Merger S.A.R.L. and Mr. Yvon Provost, Mrs. Olivia Provost and Mr. Fabien Provost. (Incorporated by reference to Exhibit 2.1 of the Company's Report on Form 8-K filed on April 13, 2012.)
2(e)	Stock Purchase Agreement, dated as of July 13, 2012, between Regis Corporation and Aderans Co., Ltd. (Incorporated by reference to Exhibit 10.1 of the Company's Report on Form 8-K filed on July 17, 2012).
3(a)	Election of the Company to become governed by Minnesota Statutes Chapter 302A and Restated Articles of Incorporation of the Company, dated March 11, 1983; Articles of Amendment to Restated Articles of Incorporation, dated October 29, 1984; Articles of Amendment to Restated Articles of Incorporation, dated August 14, 1987; Articles of Amendment to Restated Articles of Incorporation, dated October 21, 1987; Articles of Amendment to Restated Articles of Incorporation, dated November 20, 1996; Articles of Amendment to Restated Articles of Incorporation, dated July 25, 2000. (Incorporated by reference to Exhibit 3(a) of the Company's Report on Form 10-Q filed on February 8, 2006, for the quarter ended December 31, 2005.)
3(b)	By-Laws of the Company. (Incorporated by reference to Exhibit 3.1 of the Company's Report on Form 8-K filed on October 31, 2006.)
3(c)	Certificate of the Voting Powers, Designations, Preferences and Relative Participating, Optional and Other Special Rights and Qualifications, Limitations or Restrictions of Series A Junior Participating Preferred Stock of the Company. (Attached as Exhibit A to the Rights Agreement dated December 26, 2006, and incorporated by reference to Exhibit 2 of the Company's Registration Statement on Form 8-A12B filed on December 26, 2006.)

143

4(a)		Shareholder Rights Agreement, dated December 23, 1996, between the Company and Norwest Bank Minnesota, N.A. as Rights Agent. (Incorporated by reference to Exhibit 4 of the Company's Report on Form 8-A12G filed on February 4, 1997.)
4(b)		Rights Agreement, dated December 26, 2006, between the Company and Wells Fargo Bank, N.A., as Rights Agent, and Form of Right Certificate attached as Exhibit B to the Rights Agreement. (Incorporated by reference to Exhibits 1 and 3 of the Company's Registration Statement on Form 8-A12B, filed on December 26, 2006.)
4(c)		Amendment No. 1, dated as of October 29, 2008, to Rights Agreement, dated December 26, 2006, between Regis Corporation and Wells Fargo Bank, N.A. (Incorporated by reference to Exhibit 4 to the Company's Registration Statement on Form 8-A12B/A filed on October 29, 2008.)
4(d)		Form of Stock Certificate. (Incorporated by reference to Exhibit 4.1 of the Company's Registration Statement on Form S-1 (Reg. No. 40142).)
4(e)		Indenture dated July 14, 2009 by and between the Company and Wells Fargo Bank, N.A, as Trustee (Incorporated by reference to Exhibit 4.1 of the Company's Report on Form 8-K filed July 17, 2009.)
10(a)	(*)	Survivor Benefit Agreement, dated June 27, 1994, between the Company and Myron Kunin. (Incorporated by reference to Exhibit 10(t) part of the Company's Report on Form 10-K filed on September 28, 1994, for the year ended June 30, 1994.)
10(b)		Amended and Restated Private Shelf Agreement, dated October 3, 2000, between the Company and Prudential Insurance Company of America. (Incorporated by reference to Exhibit 10(ff) of the Company's Report on Form 10-Q filed on November 13, 2000, for the quarter ended September 30, 2000.)
10(c)		Senior Series I Note, dated October 3, 2000, between the Company and Prudential Insurance Company of America. (Incorporated by reference to Exhibit 10(aa) of the Company's Report on Form 10-K filed on September 12, 2001, for the year ended June 30, 2001.)
10(d)		Note Purchase Agreement, dated March 1, 2002, between the Company and purchasers listed in Schedule A attached thereto. (Incorporated by reference to Exhibit 10(aa) of the Company's Report on Form 10-K filed on September 24, 2002, for the year ended June 30, 2002.)
10(e)		Form of Series A Senior Note. (Attached as Exhibit 1(a) to the Note Purchase Agreement dated March 1, 2002, and incorporated by reference to Exhibit 10(aa) of the Company's Report on Form 10-K filed on September 24, 2002, for the year ended June 30, 2002.)
10(f)		Series J Senior Notes, dated June 9, 2003, between the Company and Prudential Insurance Company of America. (Incorporated by reference to Exhibit 10(dd) of the Company's Report on Form 10-K filed on September 17, 2003, for the year ended June 30, 2003.)
10(g)		Promissory Note dated November 26, 2003, between the Company and Information Leasing Corporation. (Incorporated by reference to Exhibit 10(ee) of the Company's Report on Form 10-K filed on September 10, 2004, for the year ended June 30, 2004.)
10(h)		Lease Agreement commencing October 1, 2005, between the Company and France Edina, Property, LLP. (Incorporated by reference to Exhibit 99 of the Company's Report on Form 8-K filed on May 6, 2005.)

144

10(i)		Third Amended and Restated Credit Agreement, dated April 7, 2005, among the Company, Bank of America, N.A., as Administrative Agent, LaSalle Bank National Association, as Co-Administrative Agent and Co-Arranger and as Swing-Line Lender, J.P. Morgan Chase Bank, N.A., as Syndication Agent, Wachovia Bank, National Association, as Documentation Agent, Other Financial Institutions Party thereto, and Banc of America Securities LLC as Co-Arranger and Sole Book Manager. (Incorporated by reference to Exhibit 99.1 of the Company's Report on Form 8-K filed April 12, 2005.)
10(j)		Prepayment Agreement between Regis Corporation and various holders of Senior Notes of Regis Corporation, dated June 29, 2009 (Incorporated by reference to Exhibit 10.1 of the Company's Report on Form 8-K filed July 6, 2009.)
10(k)		First Amendment to Term Loan agreement dated as of October 3, 2008 among Regis Corporation and various lenders, and JP Morgan Chase Bank, N.A, dated July 3, 2009 (Incorporated by reference to Exhibit 10.2 of the Company's Report on Form 8-K filed July 6, 2009.)
10(l)		First Amendment to Fourth Amendment and Restated Credit Agreement dated as of July 12, 2007 among Regis Corporation and various lenders and JP Morgan Chase Bank, N.A, dated July 3, 2009 (Incorporated by reference to Exhibit 10.3 of the Company's Report on Form 8-K filed July 6, 2009.)
10(m)		Amendment No. 8 to Amend and Restated Private Shelf Agreement between Regis Corporation and Prudential Investment Management, Inc., The Prudential Insurance Company of America, Pruco Life Insurance Company, Pruco Life Insurance Company of New Jersey and other Prudential affiliates dated April 23, 2012.
10(n)		First Amendment to Note Purchase Agreement dated March 1, 2005, between the Company and the purchasers listed in Schedule I attached thereto. (Incorporated by reference to Exhibit 99.3 of the Company's Report on Form 8-K filed April 12, 2005.)
10(o)	(*)	Short Term Incentive Compensation Plan, effective August 19, 2009. (Incorporated by reference to Appendix A of the Company's Proxy Statement on Form 14A filed on September 15, 2009, for the year ended June 30, 2009.)
10(p)		Consulting Agreement, dated April 18, 2007, between the Company and Empire Beauty School Inc. (Incorporated by reference to Exhibit 10.1 of the Company's Report on Form 8-K filed on April 24, 2007.)
10(q)	(*)	Amended and Restated Compensation Agreement, dated June 29, 2007, between the Company and Myron Kunin. (Incorporated by reference to Exhibit 10.1 of the Company's Report on Form 8-K filed on July 5, 2007.)
10(r)		Master Agreement, dated October 11, 2007, between Mr. Yvon Provost, Mr. Fabien Provost, Mrs. Olivia Provost, Mrs. Monique La Rizza, Artal Services N.V., Mr. Jean Mouton, RHS Netherlands Holdings BV, RHS France SAS, the Company and Artal Group S.A. (Incorporated by reference to Exhibit 10 of the Company's Report on Form 10-Q filed on February 7, 2008, for the quarter ended December 31, 2007.)

145

10(s)	(*)	Regis Corporation Executive Retirement Savings Plan Adoption Agreement and Trust Agreement, dated November 15, 2008 between the Company and Fidelity Management Trust Company (The CORPORATE Plan for Retirement EXECUTIVE PLAN basic plan document is incorporated by reference to Exhibit 10(c) to the Company's Report on Form 10-K filed on August 29, 2007, for the year ended June 30, 2007). (Incorporated by reference to Exhibit 10(a) of the Company's Report on Form 10-Q filed February 9, 2009.)
10(t)	(*)	Employment Agreement, as Amended and Restated effective March 1, 2011, between the Company and Paul D. Finkelstein. (Incorporated by reference to Exhibit 10(a) of the Company's Report on Form 10-Q filed May 10, 2011)
10(u)	(*)	Employment Agreement, as Amended and Restated effective December 31, 2008, between the Company and Randy L. Pearce. (Incorporated by reference to Exhibit 10(c) of the Company's Report on Form 10-Q filed February 9, 2009.)
10(v)	(*)	Amended and Restated Senior Officer Employment and Deferred Compensation Agreement, dated December 31, 2008, between the Company and Gordon Nelson. (Incorporated by reference to Exhibit 10(d) of the Company's Report on Form 10-Q filed February 9, 2009.)
10(w)	(*)	Form of Amended and Restated Senior Officer Employment and Deferred Compensation Agreement, dated December 31, 2008, between the Company and certain senior executive officers. (Incorporated by reference to Exhibit 10(e) of the Company's Report on Form 10-Q filed February 9, 2009.)
10(x)	(*)	Amendment to Amended and Restated Compensation Agreement, dated December 23, 2008, between the Company, and Myron Kunin (Incorporated by reference to Exhibit 10(f) of the Company's Report on Form 10-Q filed February 9, 2009.)
10(y)	(*)	2004 Long Term Incentive Plan as Amended and Restated, effective October 28, 2011, (Incorporated by reference to Appendix A of the Company's Report on Form DEF14A filed September 14, 2010.)
10(z	(*)	Amendment to Amended and Restated Senior Officer Employment and Deferred Compensation Agreement, dated April 26, 2011, between the Company and Gordon Nelson. (Incorporated by reference to Exhibit 10(dd) of the Company's Report on Form 10-K filed August 26, 2011.)
10(aa)		Fifth Amended and Restated Credit Agreement, dated June 30, 2011, among the Company, and various financial institutions party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Swing Line Lender, and Issuer, Bank of America, as Syndication Agent, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., U.S. Bank National Association, and Wells Fargo Bank, N.A., as Documentation Agents (Incorporated by reference to Exhibit 10.1 of the Company's Report on Form 8-K filed July 6, 2011.)
10(bb)	(*)	Separation Agreement and Release between David Bortnem, former EVP and Corporate Chief Operating Officer effective January 19, 2012.
21		List of Subsidiaries of Regis Corporation
23		Consent of PricewaterhouseCoopers LLP
31.1		Chief Executive Officer of the Company: Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

146

31.2		Senior Vice President and Chief Financial Officer of the Company: Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Chief Executive Officer of the Company: Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Senior Vice President and Chief Financial Officer of the Company: Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	(**)	XBRL Instance Document
101.SCH	(**)	XBRL Taxonomy Extension Schema
101.CAL	(**)	XBRL Taxonomy Extension Calculation Linkbase
101.LAB	(**)	XBRL Taxonomy Extension Label Linkbase
101.PRE	(**)	XBRL Taxonomy Extension Presentation Linkbase
101.DEF	(**)	XBRL Taxonomy Extension Definition Linkbase

(*)

Management contract, compensatory plan or arrangement required to be filed as an exhibit to the Company's Report on Form 10-K.

(**)

The XBRL related information in Exhibit 101 to this Annual Report on Form 10-K shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

147

SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

REGIS CORPORATION
By	/s/ DANIEL J. HANRAHAN Daniel J. Hanrahan, President and Chief Executive Officer (Principal Executive Officer)
By	/s/ BRENT A. MOEN Brent A. Moen, Senior Vice President, Chief Financial Officer (Principal Financial and Accounting Officer)
DATE: August 29, 2012

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/s/ JOSEPH L. CONNER Joseph L. Conner, Chairman of the Board of Directors	Date: August 29, 2012
/s/ DANIEL J. HANRAHAN Daniel J. Hanrahan, Director	Date: August 29, 2012
/s/ DANIEL G. BELTZMAN Daniel G. Beltzman, Director	Date: August 29, 2012
/s/ JAMES P. FOGARTY James P. Fogarty, Director	Date: August 29, 2012
/s/ MICHAEL J. MERRIMAN Michael J. Merriman, Director	Date: August 29, 2012

148

/s/ JEFFREY C. SMITH Jeffrey C. Smith, Director	Date: August 29, 2012
/s/ STEPHEN E. WATSON Stephen E. Watson, Director	Date: August 29, 2012
/s/ DAVID P. WILLIAMS David P. Williams, Director	Date: August 29, 2012

149

EX-10.(M)

Exhibit 10(m)

Execution Copy

April 23, 2012

Regis Corporation

7201 Metro Boulevard

Minneapolis, Minnesota 55439

Re: Amendment No. 8 to Amended and Restated Private Shelf Agreement

Ladies and Gentlemen:

We refer to the Amended and Restated Private Shelf Agreement dated as October 3, 2000, as amended by the letter amendment dated as of May 9, 2002, Letter Amendment No. 2 to Amended and Restated Private Shelf Agreement dated as of February 28, 2003, the letter amendment dated April 29, 2005, the letter amendment dated July 6, 2006, the letter amendment dated July 31, 2007, Amendment No. 6 thereto dated as of July 3, 2009 and Amendment No. 7 thereto dated as of January 12, 2011 (as so amended, the “Shelf Agreement”), between Regis Corporation, a Minnesota corporation (the “Company”), on the one hand, and Prudential Investment Management, Inc. (“PIM”), The Prudential Insurance Company of America, Pruco Life Insurance Company, Pruco Life Insurance Company of New Jersey and the other “Prudential Affiliates” which pursuant to the terms thereof have become bound by certain provisions thereof, on the other hand.  Unless otherwise defined herein, the terms defined in the Shelf Agreement shall be used herein as therein defined.

Pursuant to the request of the Company and in accordance with the provisions of paragraph 11C of the Shelf Agreement, the parties hereto agree as follows:

SECTION 1.        Amendment.  From and after the Effective Date, the Shelf Agreement and the Notes are amended as follows:

1.1.         Paragraph 6B of the Shelf Agreement is hereby amended and restated in its entirety to read as follows:

“6B.        Minimum Net Worth.  The Company shall not, as of the last day of any fiscal quarter,  permit its Net Worth to be less than the sum of (i) $850,000,000 plus (ii) on a cumulative basis, 25% of the positive net income earned during each fiscal quarter commencing on or after April 1, 2011 plus (iii) on a cumulative basis, 50% of the net cash proceeds received from the issuance of equity securities of the Company after June 30, 2011.  As used herein, the term “Net Worth” means the shareholder’s equity of the Company as determined in accordance with generally accepted accounting principals consistently applied.”

1.2.         Paragraph 6C(1) of the Shelf Agreement is hereby amended by deleting the “and” at the end of clause (iii) thereof and replacing clause (iv) thereof with the following:

“(iv)        Liens securing Capital Lease Obligations in an aggregate outstanding amount not to exceed $50,000,000 at any time, provided such Liens attach only to the assets subject to the underlying capital lease, and provided further, that Priority Debt does not at any time exceed 20% of Net Worth determined as of the end of the most recently ended fiscal quarter; and

(v) Liens securing Indebtedness other than Capital Lease Obligations not otherwise permitted by clauses (i)-(iv) above, provided that (a) Priority Debt does not at any time exceed 20% of Net Worth determined as of the end of the most recently ended fiscal quarter; and (b) the aggregate amount of Indebtedness secured by Liens pursuant to this clause (v) shall not exceed four percent (4%) of Net Worth determined as of the end of the most recently ended fiscal quarter; and provided, further, that such Liens may not secure the Credit Agreement, the Term Loan Agreement or other Indebtedness to a bank, insurance company or other financial institution in excess of $20,000,000.”

1.3.         Paragraph 6C(2) of the Shelf Agreement is hereby amended and restated in its entirety to read as follows:

“6C(2).  Unsecured Subsidiary Debt.             The Company shall not permit any Subsidiary to incur any unsecured Debt if after giving effect thereto Priority Debt would exceed 20% of Net Worth, determined as of the end of the most recently ended fiscal quarter.”

1.4.         Paragraph 6C(3) of the Shelf Agreement is hereby amended by amending and restating clause (vii) thereof to read as follows:

“(vii)       make or permit to remain outstanding other Investments (including Investments in Joint Ventures) in addition to the foregoing Investments permitted under this Section 6(C)(3); provided that (i) the aggregate amount thereof shall at no time exceed 30% of Consolidated Net Worth and (ii) the aggregate amount thereof made in or to Persons that are not in the same or similar line of business in which the Company and its Subsidiaries are engaged as of June 30, 2011 shall at no time exceed 10% of Consolidated Net Worth.”

1.5.         Paragraph 6C(4) of the Shelf Agreement is hereby amended and restated in its entirety to read as follows:

“6C(4).  Margin Regulations.  The Company shall not, whether directly or indirectly, and whether immediately, incidentally or ultimately, purchase or carry ay Margin Stock or extend credit to others for the purpose of purchasing or carrying Margin Stock.”

1.6.         Paragraph 6E of the Shelf Agreement is hereby amended by (i) replacing the phrase “any agreement creating or evidencing Indebtedness in excess of $15,000,000” with “any

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Material Debt Agreement” and (ii) adding a new sentence to the end thereof that reads as follows:

“For purposes of the foregoing, “Material Debt Agreement” means any agreement (or group of related agreements) under which the Company and/or any Subsidiary at any time incurs (directly, by assumption, by operation of law or otherwise) or has the right to incur (pursuant to committed financing) Indebtedness in excess of $50,000,000; provided that any such agreement (or group of related agreements) shall cease to be a Material Debt Agreement if the total amount of Indebtedness and unfunded commitments thereunder is permanently reduced to $30,000,000 or less.”

1.7.         Paragraph 6F of the Shelf Agreement is hereby amended and restated in its entirety to read as follows:

“6F.        Restricted Payments.  The Company shall not, and shall not permit any Subsidiary to, (i) declare or pay any dividend or make any other distribution (whether in cash, securities or other property) on any of its stock or other equity interests or any warrants, options or other rights with respect thereto (any of the foregoing, “Equity Interests”) or (ii) purchase, redeem or otherwise acquire for value any of its Equity Interests (any such declaration, payment, distribution, purchase, redemption or other acquisition, a “Restricted Payment”); provided that:

(i)            any Subsidiary may declare and pay dividends, and make other distributions, to the Company or any other Subsidiary;

(ii)           the Company may declare and pay stock dividends; and

(iii)          so long as no Default or Event of Default exists, the Company and its Subsidiaries may make other Restricted Payments; provided that if the Leverage Ratio as of the last day of the most recently ended fiscal quarter was greater than:

(1)           2.25 to 1.0 but equal to or less than 2.50 to 1.0, then neither the Company nor any Subsidiary will make any Restricted Payment pursuant to this clause (iii) if, after giving effect thereto, the aggregate amount of all such Restricted Payments made during the 12-month period ending on the date of such Restricted Payment would exceed $35,000,000; or

(2)           2.50 to 1.0, then neither the Company nor any Subsidiary will make any Restricted Payment pursuant to this clause (iii) if, after giving effect thereto, the aggregate amount of all such Restricted Payments made during the 12-month period ending on the date of such Restricted Payment would exceed $25,000,000.”

1.8.         Paragraph 8G of the Shelf Agreement is amended by adding the following to the end of the third sentence thereof:

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“(as such Schedule 8G may have been modified from time to time by written supplements thereto delivered by the Company and accepted in writing by Prudential)”

1.9.         Paragraph 8G of the Shelf Agreement is further amended by amending and restating the fourth sentence thereof to read as follows:

“The Company is not party to any agreement evidencing or pertaining to Debt of the Company in an outstanding or committed amount in excess of $20,000,000 which includes any operation or financial covenant which is more favorable to a lender or other beneficiary than those set forth in paragraph 6 hereof, except as set forth in the agreements listed on Schedule 8G-2 attached hereto (as such Schedule 8G-2 may have been modified from time to time by written supplements thereto delivered by the Company and accepted in writing by Prudential).”

1.10.       Paragraph 8G of the Shelf Agreement is further amended by replacing the reference to “paragraph 5F” in the last sentence thereof with “paragraph 6E”.

1.11.       Paragraph 10B of the Shelf Agreement is amended by adding, or amending and restating, as applicable, the following definitions in their entirety to read as follows:

“Credit Agreement” shall mean that certain Credit Agreement dated as of June 30, 2011 among the Company, various financial institutions, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other agents named therein, as amended, supplemented or modified from time to time in accordance with the terms thereof.

“EBITDA” means, for any period, for the Company and its Subsidiaries on a consolidated basis, determined in accordance with generally accepted accounting principles, the total, without duplication, of

(a) net income (or net loss) for such period, excluding any gains or losses from sales of assets and any extraordinary non-cash gains or losses during such period (provided that the net income of any Person that is not a Subsidiary of the Company shall be included in the consolidated net income of the Company only to the extent of the amount of cash dividends or distributions paid by such Person to the Company or to a consolidated Subsidiary of the Company), plus

(b) to the extent included in the determination of such net income (or net loss), the sum, without duplication, of (i) all amounts treated as expenses for depreciation (including, without duplication, non-cash losses (net of non-cash gains) upon the closing and abandonment of any non-franchised store locations), plus (ii) all amounts treated as expenses for interest paid or accrued, plus (iii) all amounts treated as expenses for amortization of intangibles of any kind, plus (iv) all taxes paid or accrued and unpaid on or measured by income, plus (v) any non-cash interest expense on Indebtedness convertible into shares of common stock of the Company plus

(c) the amount of any other charge in respect of non-recurring expenses for such period arising in connection with acquisitions, to the extent approved by the Required Holders; plus

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(d) up to $5,000,000 in the aggregate for such period of (i) non-recurring cash charges in connection with restructurings and (ii) external professional fees and diligence expenses relating to Acquisitions (whether or not consummated); plus

(e) if the Company or any Subsidiary acquires a Person (an “Acquired Person”) in an acquisition during such period, all of the Acquired Person’s EBITDA (calculated for such Person as set forth above without giving effect to clause (c)) for the four fiscal quarters then ended; minus

(f) if the Company or any Subsidiary sells all or substantially all of the stock or assets of any Subsidiary during such period, the EBITDA of such Subsidiary (calculated for such Person as set forth above without giving effect to clause (c)) for the four fiscal quarters then ended; plus

(g) all non-cash losses and expenses and non-cash impairment charges (including non-cash compensation expense and non-cash impairment of goodwill and other intangibles or arising in connection with any Joint Venture) to the extent deducted in determining such net income; minus

(h) all cash payments made during such period that arise out of non-cash losses or expenses and impairment charges taken in any previous period.

“Margin Stock” means “margin stock” as defined in paragraph 8I hereof.

“Rental Expense” means, for any period, the sum of (a) all store rental payments (excluding lease termination payments), (b) all common area maintenance payments and (c) all real estate taxes paid by the Company and its Subsidiaries, in each case, with respect to non-franchised store location (and not, for avoidance of doubt, with respect to office or warehouse locations).

1.12.       Paragraph 10C of the Shelf Agreement is amended by adding the following sentence to the end thereof:

“Notwithstanding any provision of this Agreement to the contrary, for purposes of this Agreement (other than covenants to deliver financial statements), the determination of whether a lease constitutes a capital lease or an operating lease and whether obligations arising under a lease are required to be capitalized on the balance sheet of the lessee thereunder and/or recognized as interest expense in the lessee’s financial statements shall be determined under generally accepted accounting principles in the United States as of June 30, 2011, notwithstanding any modifications or interpretive changes thereto that may occur thereafter.”

1.13.       Schedule 8A — Subsidiaries to the Shelf Agreement is deleted and Schedule 8A — Subsidiaries attached to this letter is substituted in lieu thereof.

1.14.       Schedule 8G — Agreements Restricting Debt to the Shelf Agreement is deleted and Schedule 8G — Agreements Restricting Debt attached to this letter is substituted in lieu thereof.

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1.15.       Schedule 8G-2 — More Restrictive Agreements is added to the Shelf Agreement in the form of Schedule 8G-2 — More Restrictive Agreements attached to this letter.

SECTION 2.        Conditions Precedent.  This letter shall become effective as of the date (the “Effective Date”) when the following conditions have been satisfied:

2.1.         Documents.  PIM and each holder of the Notes party hereto shall have received an original counterpart hereof duly executed by the Company, the Guarantors and the Required Holder(s) of the Notes of each Series.  The foregoing documentation should be returned to Prudential Capital Group, Two Prudential Plaza, Suite 5600, Chicago, Illinois, 60601-6716, Attention: Scott B. Barnett.

2.2.         Representations and Warranties; No Default.  To induce the holders of the Notes to execute and deliver this letter, the Company represents, warrants and covenants that (1) the execution and delivery of this letter has been duly authorized by all necessary corporate action on behalf of each Company and each Guarantor and this letter has been executed and delivered by a duly authorized officer of each Company and each Guarantor, and all necessary or required consents to and approvals of this letter have been obtained and are in full force and effect, (2) the representations and warranties contained in paragraph 8 of the Shelf Agreement shall be true on and as of the Effective Date, immediately before and after giving effect to the consummation of the transactions contemplated hereby, (3) the Shelf Agreement, as amended hereby, is the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms except as enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by the availability of the remedy of specific performance, (4) the Subsidiaries of the Company party to this letter represent all of the Subsidiaries of the Company that have joined the Guaranty Agreement (as defined in Section 4 below), and (5) there shall exist on the Effective Date no Event of Default or Default, immediately before and after giving effect to the consummation of the transactions contemplated hereby.

2.3.         Proceedings.  All corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incident thereto shall be satisfactory in substance and form to the Required Holder(s) of each Series, and each holder of the Notes party hereto shall have received all such counterpart originals or certified or other copies of such documents as it may reasonably request.

SECTION 3.        Reference to and Effect on Shelf _Agreement.  Upon the effectiveness of this letter, each reference to the Shelf Agreement in any other document, instrument or agreement shall mean and be a reference to the Shelf Agreement as modified by this letter.  Except as specifically set forth in Section 1 hereof, the Shelf Agreement and the Notes shall remain in full force and effect and is hereby ratified and confirmed in all respects.  Except as specifically stated in this letter, the execution, delivery and effectiveness of this letter shall not (a) amend the Shelf Agreement or any Note, (b) operate as a waiver of any right, power or remedy of PIM or any holder of the Notes, or (c) constitute a waiver of, or consent to any departure from, any provision of the Shelf Agreement or any Note at any time.  The Company acknowledges and agrees that neither PIM nor any holder of any Note is under any duty or obligation of any kind or nature whatsoever to grant the Company any additional amendments or

6

waivers of any type, whether under the same or different circumstances, and no course of dealing or course of performance shall be deemed to have occurred as a result of the amendments and wavier herein.

SECTION 4.        Reaffirmation.  Each Guarantor (as defined in the Amended and Restated Subsidiary Guaranty dated February 23, 2003 (the “Guaranty Agreement”) by certain Subsidiaries of the Company in favor of the holders of the Notes) hereby ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise, under the Guaranty Agreement. Each Guarantor hereby consents to the terms and conditions of this letter and reaffirms its obligations and liabilities under or with respect to the Shelf Agreement and the Notes, each as amended by this letter (including, without limitation, any additional Guaranteed Obligations (as defined in the Guaranty Agreement) resulting from this letter), and the Guaranty Agreement.  Each Guarantor acknowledges that the Guaranty Agreement remains in full force and effect and is hereby ratified and confirmed.  Without limiting the generality of the foregoing, each Guarantor agrees and confirms that the Guaranty Agreement continues to guaranty the Guaranteed Obligations arising under or in connection with the Shelf Agreement and the Notes, each as amended by this letter.  The execution of this letter shall not operate as a novation, waiver of any right, power or remedy of the holders of the Notes under the Guaranty Agreement.

SECTION 5.        Expenses.  The Company hereby confirms its obligations under the Shelf Agreement, whether or not the transactions hereby contemplated are consummated, to pay, promptly after request by any holder of the Notes, all reasonable out-of-pocket costs and expenses, including attorneys’ fees and expenses, incurred by any holder of the Notes in connection with this letter or the transactions contemplated hereby, in enforcing any rights under this letter, or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this letter or the transactions contemplated hereby.  The obligations of the Company under this Section 5 shall survive transfer by any holder of the Notes of any Note and payment of any Note.

SECTION 6.        Governing Law.  THIS LETTER SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF ILLINOIS (EXCLUDING ANY CONFLICTS OF LAW RULES WHICH WOULD OTHERWISE CAUSE THIS AGREEMENT TO BE CONSTRUED OR ENFORCED IN ACCORDANCE WITH, OR THE RIGHTS OF THE PARTIES TO BE GOVERNED BY, THE LAWS OF ANY OTHER JURISDICTION).

SECTION 7.        Counterparts, Section Titles.  This letter may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument.  Delivery of an executed counterpart of a signature page to this letter by facsimile or electronic transmission shall be effective as delivery of a manually executed counterpart of this letter.  The section titles contained in this letter are and shall be without substance, meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto.

[signature pages follow]

7

Very truly yours,
PRUDENTIAL INVESTMENT MANAGEMENT, INC.
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
PRUCO LIFE INSURANCE COMPANY
By:	/s/ Peter Pricco
	Vice President

RGA REINSURANCE COMPANY
MUTUAL OF OMAHA INSURANCE COMPANY
RELIASTAR LIFE INSURANCE COMPANY
UNION SECURITY INSURANCE COMPANY
PHYSICIANS MUTUAL INSURANCE COMPANY
FARMERS NEW WORLD LIFE INSURANCE COMPANY
ZURICH AMERICAN INSURANCE COMPANY
SECURITY BENEFIT LIFE INSURANCE COMPANY, INC
BAYSTATE INVESTMENTS, LLC
ING LIFE INSURANCE AND ANNUITY COMPANY
MEDICA HEALTH PLANS
MTL INSURANCE COMPANY
By:	Prudential Private Placement Investors,
	L.P. (as Investment Advisor)
By:	Prudential Private Placement Investors, Inc.
	(as its General Partner)
	By:	/s/ Peter Pricco
		Vice President
PRUDENTIAL RETIREMENT INSURANCE AND ANNUITY COMPANY
PRUDENTIAL ANNUITIES LIFE ASSURANCE CORPORATION
UNIVERSAL PRUDENTIAL ARIZONA REINSURANCE COMPANY
By:	Prudential Investment Management, Inc.,
	as investment manager
	By:	/s/ Peter Pricco
		Vice President

[Signature Page to Amendment No. 8 to Amended and Restated Private Shelf Agreement]

GIBRALTAR LIFE INSURANCE CO., LTD.
By:	Prudential Investment Management (Japan),
	Inc., as Investment Manager
By:	Prudential Investment Management, Inc.,
	as Sub-Adviser
	By:	/s/ Peter Pricco
		Vice President

[Signature Page to Amendment No. 8 to Amended and Restated Private Shelf Agreement]

Agreed as of the date first above written:

REGIS CORPORATION

REGIS INC.

HAIR CLUB FOR MEN, LLC

SUPERCUTS CORPORATE SHOPS, INC.

THE BARBERS HAIRSTYLING FOR MEN & WOMEN, INC.

REGIS CORP.

FIRST CHOICE HAIRCUTTERS (INTERNATIONAL) CORP.

By:	/s/ Brent Moen
	Brent Moen
	Chief Financial Officer

[Signature Page to Amendment No. 8 to Amended and Restated Private Shelf Agreement]

SCHEDULE 8A

SUBSIDIARIES

Subsidiaries of Regis Corporation	Jurisdiction	% Ownership Structure
1.The Barbers, Hairstyling for Men & Women, Inc.	Minnesota	100.00% Regis Corporation
A. WCH, Inc.*	Minnesota	100.00% The Barbers, Hairstyling for Men & Women, Inc.
1. We Care Hair Realty, Inc.*	Delaware	100.00% WCH, Inc.
B. Roosters MGC International LLC	Michigan	60.00% The Barbers, Hairstyling for Men & Women, Inc.
2.Supercuts, Inc.	Delaware	100.00% Regis Corporation
A. Supercuts Corporate Shops, Inc.	Delaware	100.00% Supercuts, Inc.
1. Tulsa’s Best Haircut LLC	Oklahoma	50.00% Supercuts Corporate Shops, Inc.
3.RPC Acquisition Corp.	Minnesota	100.00% Regis Corporation
A. RPC Corporate Shops, Inc.	Minnesota	100% RPC Acquisition Corp
4.Regis Corp.	Minnesota	100.00% Regis Corporation
5.Regis Insurance Group, Inc.	Vermont	100.00% Regis Corporation
6.Regis, Inc.	Minnesota	100.00% Regis Corporation
7.First Choice Haircutters International Corp.	Delaware	100.00% Regis Corporation
8.Cutco Acquisition Corp.	Minnesota	100.00% Regis Corporation
A. Great Expectations Precision Haircutters Of Evans Towne Center, Inc*		100.00% Cutco Acquisition Corp.
B. Great Expectations Precision Haircutters of Northlake Mall, Inc*		100.00% Cutco Acquisition Corp.
9.Regis International Ltd.	Minnesota	100.00% Regis Corporation
10.N.A.H.C. Acquisition LLC*	Minnesota	100.00% Regis Corporation
11.EEG, Inc.	Delaware	55.10% Regis Corporation
12.HC (USA), Inc.	Delaware	100.00% Regis Corporation
1. HCM Industries, Inc.	Florida	100.00% HC (USA), Inc.
2. Hair Club for Men, Ltd., Inc.	Florida	100.00% HC (USA), Inc.
a. Hair Club for Men, LLC	Delaware	100.00% Hair Club for Men, Ltd., Inc.
i. HCMG, LLC	Delaware	100.00% Hair Club for Men, LLC
b. HCA Advertising Services, Inc.	New York	100.00% Hair Club for Men, Ltd., Inc.
c. Hair Club for Men, Ltd.	Delaware	100.00% Hair Club for Men, Ltd., Inc.
d. 3115038 Canada, Inc.	Canada Federal	100.00% Hair Club for Men, Ltd., Inc.
e. Hair Club for Men, Ltd.	Illinois	50.00% Hair Club for Men, Ltd., Inc.
f. Hair Club for Men of Milwaukee, Ltd.	Wisconsin	50.00% Hair Club for Men, Ltd., Inc.
g. TTEM, LLC*	Delaware	100.00% Hair Club for Men, Ltd., Inc.
h. HCMA Staffing, LLC	Delaware	100.00% Hair Club for Men, Ltd., Inc.

Subsidiaries of Regis Corporation	Jurisdiction	% Ownership Structure
i. 8045950 Canada, Inc.	Canada Federal	100.00% HCMA Staffing, LLC
13.Salon Management Corporation	California	100.00% Regis Corporation
A.Salon Management Corporation of New York*	New York	100.00% Salon Management Corporation
14.Regis Netherlands, Inc	Minnesota	100.00% Regis Corporation
15.Roger Merger Subco LLC	Delaware	100.00% Regis Corporation
16.RGS International SNC	Luxemburg	99.99% Regis Corporation
		00.01% Roger Merger Subco, LLC
A. Regis International Holdings SARL	Luxemburg	100.00% RGS International SNC
1. Regis Holdings (Canada), Ltd	Nova Scotia	100.00% Regis International Holdings SARL
a. First Choice Haircutters, Ltd	Nova Scotia	100.00% Regis Holdings (Canada), Ltd
b. Magicuts, Ltd	Nova Scotia	100.00% Regis Holdings (Canada), Ltd
2. RHS UK Holdings Ltd*	United Kingdom	100.00% Regis International Holdings SARL
a. Haircare Ltd*	United Kingdom	100.00% RHS UK Holdings Ltd
1. Haircare Gmbh	Germany	100.00% Haircare Ltd
2. York Ave Beauty Salons	Canada	50.00% Haircare Ltd
3. Sagestyle Ltd*	United Kingdom	100.00% Haircare Ltd
4. Haircare UK Ltd*	United Kingdom	100.00% Haircare Ltd
5. Regis UK Limited	United Kingdom	100.00% Haircare Ltd
i. 8 Inactive Subsidiaries*	United Kingdom	100.00% Regis UK Limited
ii. Blinkers Group, Ltd*	United Kingdom	100.00% Regis UK Limited
A. Blinkers Property, Ltd*	United Kingdom	100.00% Blinkers Group, Ltd
b. HCUK Hair, Ltd*	United Kingdom	100.00% RHS UK Holdings Ltd
3. Regis Merger SARL	Luxemburg	100.00% Regis International SNC
a. Provalliance, SAS	France	29.76% Regis Merger SARL
b. Provost Participations SAS	France	24.23% Regis Merger SARL
17.Mark Anthony, Inc.	North Carolina	100.00% Regis Corporation

*Inactive Entities

[Signature Page to Amendment No. 8 to Amended and Restated Private Shelf Agreement]

SCHEDULE 8G

AGREEMENTS RESTRICTING DEBT

Fourth Amended and Restated Credit Agreement

Dated as of June 30, 2011

Among

Regis Corporation,

JPMorgan Chase Bank, N.A., Bank of America, N.A., The Bank of Tokyo-Mitsubishi UFJ, Ltd., U.S. Bank National Association, Wells Fargo Bank, N.A., Fifth Third Bank, PNC Bank, N.A., Royal Bank of Canada

SCHEDULE 8G-2

MORE RESTRICTIVE AGREEMENTS

Fourth Amended and Restated Credit Agreement

Dated as of June 30, 2011

Among

Regis Corporation,

JPMorgan Chase Bank, N.A., Bank of America, N.A., The Bank of Tokyo-Mitsubishi UFJ, Ltd., U.S. Bank National Association, Wells Fargo Bank, N.A., Fifth Third Bank, PNC Bank, N.A., Royal Bank of Canada

EX-10.(BB)

Exhibit 10.(bb)

SEPARATION AND NON-DISPARAGEMENT AGREEMENT AND GENERAL RELEASE

TO:	David Bortnem
FROM:	Regis Corporation	VIA EXPRESS COURIER
DATE:	April 23, 2012

Please read this document carefully.  You are giving up certain legal claims that you might have against Regis Corporation by signing this agreement.  You are advised to consult an attorney before signing this agreement.

This agreement sets out the terms of your separation from Regis Corporation (“Regis”).  Under the agreement, Regis will provide you with extra benefits in exchange for your agreement to waive and release certain past or present legal claims you may have against Regis.

TERMS OF AGREEMENT

1.Termination.  Regis has terminated your employment effective on January 19, 2012.

2.Compensation and Benefits.  This agreement terminates the Employer/Employee relationship between you and Regis and closes out past or present claims as set forth in this agreement that you might have against Regis arising from that relationship.  In return for your release of claims, the agreement provides you with benefits to which you otherwise would not be entitled.  Accordingly, you and Regis agree as follows:

a.Whether or not you sign this agreement, Regis will pay you:

1)All compensation you have earned through and including the last day of your employment;

2)Any accrued but unused PTO benefit; and

3)Vested profit sharing, deferred compensation and 401(k) benefits in accordance with the terms and conditions of those plans.

By signing this agreement, you agree that you have already been paid all of these sums, specifically including all of your wages and benefits due to you as a result of your employment with Regis and that no other sums are due to you as a result of your employment.  Even if you do not sign this agreement, you can elect the period of continued health benefits coverage to which you are entitled under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”).  A separate COBRA notice is being sent to you.

b.In exchange for the General Release set forth below, Regis agrees to provide:

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1)Severance pay in the gross amount of Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00), representing 12 months of Employee’s base compensation, less statutory payroll deductions and other legally required withholdings; no deductions or withholdings will be made for contributions to employment plans such as 401(k) or any employee stock purchase plan.  Regis shall issue an IRS Form W-2 for the full amount of this payment.

2)One payment in the gross amount of Thirty Thousand Two Hundred Five and 63/100 Dollars ($30,205.63) representing the cost of COBRA payments for medical, dental and life insurance for a period of 18 months.  This benefit is taxable and will be grossed up for the related taxes.  Regis shall issue an IRS Form W-2 for the full amount of this payment.

3)Any officer bonus earned in FY12, prorated for a period of 7 months.  Payment shall be made at the same time bonus payments are customarily made to officers.  Payment shall be subject to all statutory deductions and other legally required withholdings.  Regis shall issue an IRS Form W-2 for the full amount of this payment.

4)One payment in the gross amount of Thirty-One Thousand Eight Hundred Eighty and 00/100 Dollars, less statutory payroll deductions and other legally required withholdings, representing Employee’s Officer perquisites account for 12 months reduced by the value of Employee’s automobile lease from January 19, 2012 to November 30, 2012.  This benefit is taxable and will be grossed up for the related taxes.  Regis shall issue an IRS Form W-2 for the full amount of this payment.

5)Continued use of Employee’s leased vehicle through lease end, November 30, 2012.  This benefit, has a value of Eleven Thousand Five Hundred Ninety and 00/100 Dollars ($11,590.00) is taxable and will be grossed up for the related taxes. Regis shall issue an IRS Form W-2 for the full amount of this payment.

6)One payment in the gross amount of Seven Thousand and 00/100 ($7,000.00) representing one year of executive medical coverage.  This benefit is taxable and will be grossed up for the related taxes.  Regis shall issue an IRS Form W-2 for the full amount of this payment.

7)One payment in the gross amount of Twenty-Thousand and 00/100 Dollars ($20,000.00) to be used at employee’s discretion for outplacement services.  This amount shall be subject to statutory payroll deductions and other legally required withholdings.  Regis shall issue an IRS Form W-2 for the full amount of this payment.

8)One payment in the gross amount of Six Hundred and 00/100 ($600.00) to be used at employee’s discretion for professional fees for review of the agreement and release.  This amount shall be subject to statutory payroll deductions and other legally required withholdings.  Regis shall issue an IRS Form W-2 for the full amount of this payment.

2

Except as otherwise indicated, the above payments shall be made to you in a single lump sum within ten (10) business days after all of the following have occurred: (a) receipt by Regis of the signed agreements; and (b) expiration of the rescission periods referred to in paragraphs 8 and 9.

If you do not sign this agreement or if you sign and rescind this agreement, you will not receive the Total Payment referred to in this subparagraph b.  If you sign and do not rescind this agreement, you agree that the Total Payment fully and adequately compensates you for everything released in this agreement.

3.General Release.  In exchange for the benefits promised you in this agreement, you agree to irrevocably and unconditionally release and discharge Regis, its predecessors, successors, and assigns, as well as past and present officers, directors, employees, and agents, from any and all claims, liabilities, or promises, whether known or unknown, arising out of or relating to your employment with Regis through the date you sign this agreement.  You waive these claims on behalf of yourself and your heirs, assigns, and anyone making a claim through you.  The claims waived and discharged include, but are not limited to:

a.Employment discrimination claims (including claims for harassment) and retaliation claims under Title VII of the Civil Rights Act of 1964 or other similar laws;

b.Age discrimination claims under the Age Discrimination in Employment Act or similar discrimination act under any unit of federal, state, or local government;

c.Any claim under the Minnesota Human Rights Act or similar discrimination act under any unit of federal, state, or local government;

d.Any claim for whistleblowing, public policy, retaliation, or other similar law;

e.Wrongful discharge and/or breach of contract claims;

f.Tort claims, including but not limited to invasion of privacy, defamation, negligence of any kind, fraud, and infliction of emotional distress; and

g.Any other statutory (including federal, any state, local, or other unit of government), common law, contract, or tort claims concerning your employment with Regis, including but not limited to claims under the Equal Pay Act, the Family and Medical Leave Act, the Americans with Disabilities Act, the Civil Rights Act of 1991, the Sarbanes Oxley Act, and 42 U.S.C. §§ 1981, 1983, or 1985, to the full extent such claims can be waived.

This release does not include claims that cannot, by law, be waived, such as unemployment compensation.

4.Confidentiality and Non-Disparagement.  To the fullest extent permitted by law, you will not, directly or indirectly, disclose the terms of this agreement to anyone other than your attorney, spouse, or significant other, or except as required for accounting, tax, or other legally-mandated or legally-

3

permitted purposes, provided that, unless there is a legal reason for the disclosure, any such person to whom disclosure is made shall, prior to disclosure, specifically agree to keep this agreement confidential.  To the fullest extent permitted by law, you also agree not to make or endorse any disparaging or negative remarks or statements (whether oral, written, or otherwise) concerning Regis or its predecessors, successors, and/or assigns, as well as past and present officers, directors, agents, and/or employees.

5.Non-Compete Agreement.  Employee expressly agrees, as a condition to the performance by Regis of its obligations hereunder, that for a period of 24 months following Employee’s separation from service with Regis and its affiliates, Employee will not, directly or indirectly, be involved in the ownership, operation or franchising of any licensed beauty salon(s), nor will employee consult with or for any person or entity with respect to the operation, ownership or franchising of any licensed beauty salon(s).

6.Binding Nature of Agreement.  This agreement is binding on the parties and their heirs, administrators, representatives, executors, successors, and assigns.

7.Return of Corporate Property.  By signing below, you represent and warrant that all Regis property has been returned to Regis, and that you have not retained any copies, electronic or otherwise, of any Regis property.  Notwithstanding this paragraph of this agreement, you may keep documents pertaining to your compensation and/or benefits.

8.Compliance with the Age Discrimination in Employment Act (“ADEA”) and Notice of Right to Consider and Rescind Agreement. You understand that this Agreement has to meet certain requirements to validly release any claims you might have under the ADEA (including under the Older Workers’ Benefit Protection Act), and you represent that all such requirements have been satisfied, including that:

a.The agreement is written in a manner that is understandable to you;

b.You are specifically waiving ADEA rights;

c.You are not waiving ADEA rights arising after the date of your signing this agreement;

d.You are receiving valuable consideration in exchange for execution of this agreement that you would not otherwise be entitled to receive;

e.Regis is hereby, in writing, encouraging you to consult with an attorney before signing this agreement; and

f.You received 21 days to consider this Agreement and at least 7 days to rescind it (you are actually receiving 15 days to rescind).

9.Compliance with the Minnesota Human Rights Act and Notice of Right to Consider and Rescind Agreement.  Regis hereby advises Employee to consult with an attorney of his/her choice before signing this agreement releasing any rights or claims that he/she believes he/she may have under the Minnesota Human Rights Act (MHRA).  Once this Separation Agreement is executed,

4

Employee may rescind this Separation Agreement within fifteen (15) calendar days to reinstate any claims under the MHRA.  To be effective, any rescission within the relevant time period must be in writing and delivered to Employer, in care of Ms. Katherine M. Merrill, 7201 Metro Boulevard, Minneapolis, MN 55439 by hand or by mail within the fifteen (15) day period.  If delivered by mail, the rescission must be (1) postmarked within the fifteen (15) day period; (2) properly addressed to Employer; and (3) sent by certified mail, return receipt requested.

10.No Unlawful Restriction.  You understand that nothing in this agreement is intended to or shall: (a) impose any condition, penalty, or other limitation affecting your right to challenge this agreement; (b) constitute an unlawful release of any of your rights; or (c) prevent or interfere with your ability and/or right to: (1) provide truthful testimony if under subpoena to do so; (2) file any charge with or participate in any investigation or proceeding conducted by the Equal Employment Opportunity Commission or any other federal, state, and/or local governmental entity; and/or (3) respond as otherwise provided by law.

11.Severability.  The provisions of this agreement are severable.  If any provision (excluding the General Release above) is held to be invalid or unenforceable, it shall not affect the validity or enforceability of any other provision.

12.Entire Agreement.  Except to the extent that you have an arbitration agreement with Regis, this agreement sets out the entire agreement between you and Regis and supersedes any and all prior oral or written agreements or understandings between you and Regis concerning your termination of employment.  Any arbitration agreement that you have with Regis will continue in full force and effect.

13.Employee Representations.  You represent that you:

a.you have the right and we have encouraged you to review all aspects of this agreement with an attorney of your choice;

b.have had the opportunity to consult with an attorney of your choice and have either done so or freely chosen not to do so;

c.have carefully read and fully understand all the provisions of this agreement; and

d.are freely, knowingly, and voluntarily entering into this Separation and Non-Disparagement Agreement and General Release.

14.Effective Date of Agreement.  This agreement will become effective on the sixteenth day after you sign it, provided that you have not rescinded the agreement.

15.Valid Agreement.  As stated above, you agree that this agreement and its releases fully comply with the ADEA.  You also agree that this agreement and its releases fully comply with the Minnesota Human Rights Act, and all other laws, statutes, ordinances, regulations, and/or principles of common law governing releases.

5

16.No Admission of Liability.  Regis denies any and all liability to you.  You understand and agree that this agreement is not an admission of wrongdoing or liability, including, but not limited to, any violation of any federal, state, and/or local law, statute, ordinance, contract, and/or principle of common law by Regis and/or any individuals and/or entities associated with Regis.

17.Attorneys’ Fees.  You agree that you are responsible for your own attorneys’ fees and costs, if any, incurred in any respect, including but not limited to in connection: with your employment with Regis; with the termination of your employment with Regis; and with negotiating and executing this agreement.

18.Governing Law.  This agreement shall be construed and enforced in accordance with the laws of the State of Minnesota and the laws of the United States, where applicable.

IN WITNESS WHEREOF, the parties hereto have executed this Separation and Non-Disparagement Agreement and General Release as of the day and year first above written.

Dated:	May 9, 2012	/s/ David Bortnem
		Employee (print name):				David Bortnem
		REGIS CORPORATION:
Dated:	May 10, 2012	By:	/s/ Katherine Merrill
				Its:	Vice President, Law

6

EX-21

Exhibit 21

Regis Corporation

List of Subsidiaries

Company Name	Country or State of  Incorporation/Formation
The Barbers, Hairstyling for Men & Women, Inc.	Minnesota
WCH, Inc.*	Minnesota
We Care Hair Realty, Inc.*	Delaware
Roosters MGC International LLC	Michigan
Supercuts, Inc.	Delaware
Supercuts Corporate Shops, Inc.	Delaware
Tulsa’s Best Haircut LLC	Oklahoma
RPC Acquisition Corp.	Minnesota
RPC Corporate Shops, Inc.	Minnesota
Regis Corp.	Minnesota
Regis Insurance Group, Inc.	Vermont
Regis, Inc.	Minnesota
First Choice Haircutters International Corp.	Delaware
Cutco Acquisition Corp.	Minnesota
Regis International Ltd.	Minnesota
N.A.H.C. Acquisition LLC*	Minnesota
EEG, Inc.	Delaware
HC (USA), Inc.	Delaware
HCM Industries, Inc.	Florida
Hair Club for Men, Ltd., Inc.	Florida
Hair Club for Men, LLC	Delaware
HCMG, LLC	Delaware
HCA Advertising Services, Inc.	New York
Hair Club for Men, Ltd.	Delaware
3115038 Canada, Inc.	Canada Federal
Hair Club for Men, Ltd.	Illinois
Hair Club for Men of Milwaukee, Ltd.	Wisconsin
TTEM, LLC*	Delaware
HCMA Staffing, LLC	Delaware
8045950 Canada, Inc.	Canada Federal
Salon Management Corporation	California
Salon Management Corporation of New York*	New York
Regis Netherlands, Inc	Minnesota
Roger Merger Subco LLC	Delaware
RGS International SNC	Luxemburg
Regis International Holdings SARL	Luxemburg
Regis Holdings (Canada), Ltd	Nova Scotia
First Choice Haircutters, Ltd	Nova Scotia
Magicuts, Ltd	Nova Scotia
RHS UK Holdings Ltd*	United Kingdom
Haircare Ltd*	United Kingdom
Haircare Gmbh	Germany
York Ave Beauty Salons	Canada
Sagestyle Ltd*	United Kingdom
Haircare UK Ltd*	United Kingdom
Regis UK Limited	United Kingdom
Blinkers Group, Ltd*	United Kingdom
Blinkers Property, Ltd*	United Kingdom
HCUK Hair, Ltd*	United Kingdom

Company Name	Country or State of  Incorporation/Formation
Regis Merger SARL	Luxemburg
Provalliance, SAS	France
Provost Participations SAS	France
Mark Anthony, Inc.	North Carolina

*Inactive Entities

EX-23

Exhibit No. 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (File Nos. 333-160438, 333-125631, 333-100327, 333-102858, 333-116170, 333-87482, 333-51094, 333-78793, 333-89279, 333-90809, 333-31874, 333-57092 and 333-72200), and Form S-8 (Nos. 333-170517, 333-163350, 333-123737, 333-88938, 33-44867 and 33-89882) of Regis Corporation of our report dated August 29, 2012 relating to the consolidated financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PRICEWATERHOUSECOOPERS LLP

PricewaterhouseCoopers LLP

Minneapolis, Minnesota

August 29, 2012

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Daniel J. Hanrahan certify that:

1.I have reviewed this 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 omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

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

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

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

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

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

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

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

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

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

August 29, 2012

/s/ Daniel J. Hanrahan

Daniel J. Hanrahan,

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Brent A. Moen 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 omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

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

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

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

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

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

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

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

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

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

August 29, 2012

/s/ Brent A. Moen

Brent A. Moen,

Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

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

In connection with the Annual Report of Regis Corporation (the Registrant) on Form 10-K for the fiscal year ending June 30, 2012 as filed with the Securities and Exchange Commission on the date hereof, I, Daniel J. Hanrahan, President and Chief Executive Officer of the Registrant, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Annual Report on Form 10-K fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

August 29, 2012

/s/ Daniel J. Hanrahan

Daniel J. Hanrahan,

President and Chief Executive Officer

EX-32.2

Exhibit 32.2

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

In connection with the Annual Report of Regis Corporation (the Registrant) on Form 10-K for the fiscal year ending June 30, 2012 as filed with the Securities and Exchange Commission on the date hereof, I, Brent A. Moen, Senior Vice President and Chief Financial Officer of the Registrant, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Annual Report on Form 10-K fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

August 29, 2012

/s/ Brent A. Moen

Brent A. Moen,

Senior Vice President and Chief Financial Officer

XML

QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables)

12 Months Ended

Jun. 30, 2012

QUARTERLY FINANCIAL DATA (UNAUDITED)

Schedule of quarterly financial data

	Quarter Ended
	September 30		December 31			March 31			June 30			Year Ended
	(Dollars in thousands, except per share amounts)
2012
Revenues	$	568,749	$	563,278		$	573,584		$	568,168		$	2,273,779
Gross margin, excluding royalties and depreciation		252,627		247,697			249,010			249,027			998,361
Operating income (loss)(a)		13,072		(61,617	)		25,200			(43,968	)		(67,313	)
Income (loss) from continuing operations(a)(b)		8,337		(57,427	)		(2,468	)		(63,634	)		(115,192	)
Income (loss) from discontinued operations(c)		—		—			1,099			—			1,099
Net income (loss)(a)(b)		8,337		(57,427	)		(1,369	)		(63,634	)		(114,093	)
Income (loss) from continuing operations per share, basic		0.15		(1.01	)		(0.04	)		(1.11	)		(2.02	)
Income from discontinued operations per share, basic		—		—			0.02			—			0.02
Net income (loss) per basic share(f)		0.15		(1.01	)		(0.02	)		(1.11	)		(2.00	)
Income (loss) from continuing operations per share, diluted		0.15		(1.01	)		(0.04	)		(1.11	)		(2.02	)
Income (loss) from discontinued operations per share, diluted		—		—			0.02			—			0.02
Net income (loss) per diluted share(f)		0.15		(1.01	)		(0.02	)		(1.11	)		(2.00	)
Dividends declared per share		0.06		0.06			0.06			0.06			0.24

Refer to Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 6 in this Form 10-K for explanations of items, which impacted fiscal year 2012 revenues, operating and net income (loss).

	Quarter Ended
	September 30		December 31		March 31			June 30			Year Ended
	(Dollars in thousands, except per share amounts)
2011
Revenues	$	578,245	$	574,372	$	581,267		$	591,985		$	2,325,869
Gross margin, excluding royalties and depreciation		257,558		251,132		253,017			261,614			1,023,321
Operating income (loss)(a)(d)		33,434		22,864		(59,504	)		7,154			3,948
Income (loss) from continuing operations(a)(d)(e)		18,320		14,505		(25,335	)		(16,395	)		(8,905	)
Net income (loss)(a)(d)(e)		18,320		14,505		(25,335	)		(16,395	)		(8,905	)
Income (loss) from continuing operations per share, basic		0.32		0.26		(0.45	)		(0.29	)		(0.16	)
Net income (loss) per basic share		0.32		0.26		(0.45	)		(0.29	)		(0.16	)
Income (loss) from continuing operations per share, diluted		0.30		0.24		(0.45	)		(0.29	)		(0.16	)
Net income (loss) per diluted share		0.30		0.24		(0.45	)		(0.29	)		(0.16	)
Dividends declared per share		0.04		0.04		0.06			0.06			0.20

Refer to Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 6 in this Form 10-K for explanations of items, which impacted fiscal year 2011 revenues, operating and net income.

(a)

Expense of $67.7 million ($55.2 million net of tax) was recorded in the fourth quarter ended June 30, 2012 related to our Regis salon concept goodwill impairment. Expense of $78.4 million ($72.6 million net of tax) was recorded in the second quarter ended December 31, 2011 related to our Hair Restoration Centers reporting unit goodwill impairment. Expense of $74.1 million ($50.8 million net of tax) was recorded in the third quarter ended March 31, 2011 related to our Promenade salon concept goodwill impairment due to recent performance challenges in that concept.

(b)

Expense of $17.2 million was recorded during fiscal year 2012 related to the impairment of our investment in Provalliance as a result of the Company entering into a Share Purchase Agreement to sell the Company's 46.7 percent equity interest in Provalliance for a purchase price of €80 million. Expense of $19.4 million was recorded during fiscal year 2012 related to the impairment of our investment in EEG.

(c)

During the third quarter ended March 31, 2012, the Company recorded a $1.1 million tax benefit in discontinued operations related to the release of tax reserves associated with the disposition of the Trade Secret salon concept.

(d)

Operating income and net income decreased $31.2 million ($19.2 million net of tax) as a result of a valuation reserve on a note receivable with the purchase of Trade Secret that was recorded in the third quarter ($9.0 million) and fourth quarter ($22.2 million) of fiscal year 2011.

(e)

Income (loss) from continuing operations and net income decreased as a result of $9.2 million that was recorded in the third quarter ($8.7 million) and in the fourth quarter ($0.5 million) as a result of an other than temporary impairment on an investment in preferred shares of Yamano and a premium paid at the time of an initial investment in MY Style.

(f)

Total is a recalculation; line items calculated individually may not sum to total.

XML

INVESTMENTS IN AND LOANS TO AFFILIATES (Details)	12 Months Ended									1 Months Ended		12 Months Ended					1 Months Ended		12 Months Ended		12 Months Ended						12 Months Ended			9 Months Ended		12 Months Ended
	Jun. 30, 2012 USD ($)	Jun. 30, 2011 USD ($)	Jun. 30, 2012 Provost Family USD ($)	Jun. 30, 2012 Equity Method Investee Greater Than 50 Percent Owned USD ($)	Jun. 30, 2011 Equity Method Investee Greater Than 50 Percent Owned USD ($)	Jun. 30, 2010 Equity Method Investee Greater Than 50 Percent Owned USD ($)	Jun. 30, 2012 Equity Method Investee Less Than 50 Percent Owned USD ($)	Jun. 30, 2011 Equity Method Investee Less Than 50 Percent Owned USD ($)	Jun. 30, 2010 Equity Method Investee Less Than 50 Percent Owned USD ($)	Mar. 31, 2011 Provalliance USD ($)	Mar. 31, 2011 Provalliance EUR (€)	Jun. 30, 2012 Provalliance USD ($)	Jun. 30, 2012 Provalliance EUR (€)	Jun. 30, 2011 Provalliance USD ($)	Jun. 30, 2010 Provalliance USD ($)	Jan. 31, 2008 Provalliance	Apr. 30, 2012 Provalliance Provost Family USD ($)	Apr. 30, 2012 Provalliance Provost Family EUR (€)	Jun. 30, 2012 Provalliance Provost Family USD ($)	Apr. 09, 2012 Provalliance Provost Family	Jun. 30, 2012 Empire Education Group, Inc. USD ($)	Jun. 30, 2011 Empire Education Group, Inc. USD ($)	Jun. 30, 2010 Empire Education Group, Inc. USD ($)	Mar. 31, 2012 Empire Education Group, Inc. USD ($)	Jan. 31, 2008 Empire Education Group, Inc.	Aug. 01, 2007 Empire Education Group, Inc.	Jun. 30, 2012 MY Style USD ($)	Jun. 30, 2011 MY Style USD ($)	Jun. 30, 2011 MY Style JPY (¥)	Mar. 31, 2011 MY Style Preferred Shares USD ($)	Mar. 31, 2011 MY Style Preferred Shares JPY (¥)	Jun. 30, 2012 Hair Club for Men, Ltd USD ($)	Jun. 30, 2011 Hair Club for Men, Ltd USD ($)	Jun. 30, 2010 Hair Club for Men, Ltd USD ($)
Changes in carrying amount of investments in and loans to affiliates
Beginning balance	$ 261,140,000	$ 195,786,000										$ 149,245,000		$ 75,481,000							$ 104,540,000	$ 102,882,000					$ 2,210,000	$ 12,116,000				$ 5,145,000	$ 5,307,000
Acquisition of additional interest		57,301,000												57,301,000
Payment of loans by affiliates	(1,025,000)	(15,000,000)																			(1,025,000)	(15,000,000)
Loans to affiliates		15,000,000																				15,000,000
Equity in income of affiliated companies, net of income taxes	6,544,000	13,782,000										(9,759,000)		7,752,000	4,134,000						(4,031,000)	5,463,000	6,400,000									816,000	567,000	900,000
Other than temporary impairment	(56,809,000)	(9,173,000)										(37,383,000)									(19,426,000)							(9,173,000)
Cash dividends received	(4,047,000)	(10,023,000)										(2,769,000)		(4,814,000)								(4,129,000)										(1,278,000)	(1,080,000)
Transfer to current notes receivable	(22,653,000)																				(20,375,000)						(2,278,000)
Other, primarily translation adjustments	(16,974,000)	13,467,000										(17,548,000)		13,525,000								324,000					68,000	(733,000)				506,000	351,000
Closing balance	166,176,000	261,140,000										101,304,000		149,245,000	75,481,000						59,683,000	104,540,000	102,882,000					2,210,000				5,189,000	5,145,000	5,307,000
Ownership percentage in equity method investee										46.70%	46.70%	46.70%	46.70%			30.00%				46.70%	55.10%				55.10%	49.00%						50.00%
Additional ownership interest acquired in equity method investee (as a percent)										17.00%	17.00%
Amount paid to acquire additional ownership interest in equity method investee										57,300,000	40,400,000
Increase (Decrease) in equity put valuation														(2,400,000)
Other than temporary impairment on carrying value of preferred shares																												3,900,000	326,700,000	3,900,000	326,700,000
Other than temporary impairment on premium																												5,300,000	435,000,000	5,300,000	435,000,000
Other than temporary impairment recorded through the equity in income of affiliated companies												17,200,000					17,200,000											9,000,000
Other than temporary impairment recorded through the interest income and other, net																												200,000
Purchase price of equity method investment (in Euro)													80,000,000					80,000,000
Net impact of the impairment charge partially offset by the reduction in the fair value of the Equity Put																			37,400,000
Other than temporary impairment			17,200,000									17,200,000							37,400,000		19,400,000
Outstanding loan receivable with affiliates	29,043,000	2,413,000																						20,400,000			2,300,000
Decrease in fair value of equity put valuation																			20,200,000
Summarized Balance Sheet Information:
Current assets				56,516,000	34,715,000	35,070,000	84,914,000	93,280,000	74,040,000
Noncurrent assets				96,639,000	113,249,000	105,469,000	316,829,000	314,127,000	263,472,000
Current liabilities				61,074,000	29,340,000	27,458,000	107,636,000	109,416,000	91,077,000
Noncurrent liabilities				13,947,000	33,658,000	32,017,000	78,815,000	98,269,000	93,055,000
Summarized Statement of Operations Information:
Gross revenue				182,326,000	192,864,000	176,535,000	317,143,000	283,442,000	299,188,000												180,000,000
Gross profit				67,201,000	73,068,000	64,661,000	137,074,000	120,992,000	123,210,000
Operating (loss) income				(1,335,000)	18,994,000	19,752,000	35,569,000	30,084,000	21,227,000
Net (loss) income				$ (7,211,000)	$ 11,023,000	$ 11,082,000	$ 24,067,000	$ 21,154,000	$ 14,763,000																							$ 800,000	$ 600,000	$ 900,000

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BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 9) (USD $)	12 Months Ended
	Jun. 30, 2012 employee	Jun. 30, 2011	Jun. 30, 2010
Stock-based compensation award plans
Number of types of share-based awards granted	4
Compensation expense	$ 7,600,000	$ 9,600,000	$ 9,300,000
Excess tax benefits from stock-based compensation plans		67,000	243,000
Number of employees reduced	120
Senior management restructuring and other severance charges	9,800,000
Other restructuring charges	$ 2,800,000
RSUs
Stock-based compensation award plans
Vesting period	2 years
2004 Plan | Stock options and SARs
Stock-based compensation award plans
Award expiration period	P10Y
Vesting period	5 years
Percentage of stock-based awards vesting annually on each of the first five anniversaries of the date of grant	20.00%
2004 Plan | RSAs
Stock-based compensation award plans
Vesting period	5 years
Percentage of stock-based awards vesting annually on each of the first five anniversaries of the date of grant	20.00%
2004 Plan | RSUs
Stock-based compensation award plans
Vesting period	5 years

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SEGMENT INFORMATION (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Total revenues and long-lived assets associated with business operations
Total revenues	$ 568,168	$ 573,584	$ 563,278	$ 568,749	$ 591,985	$ 581,267	$ 574,372	$ 578,245	$ 2,273,779	$ 2,325,869	$ 2,358,434
Long-lived Assets	323,060				347,811				323,060	347,811	359,250
U.S.
Total revenues and long-lived assets associated with business operations
Total revenues									1,967,349	2,007,042	2,055,059
Long-lived Assets	291,972				314,406				291,972	314,406	327,753
Other countries
Total revenues and long-lived assets associated with business operations
Total revenues									306,430	318,827	303,375
Long-lived Assets	$ 31,088				$ 33,405				$ 31,088	$ 33,405	$ 31,497

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INVESTMENTS IN AND LOANS TO AFFILIATES (Details 2)	12 Months Ended										1 Months Ended		12 Months Ended					1 Months Ended		12 Months Ended			12 Months Ended								9 Months Ended		1 Months Ended				12 Months Ended				1 Months Ended	12 Months Ended					12 Months Ended
	Jun. 30, 2012 USD ($) salon	Jun. 30, 2011 USD ($)	Jun. 30, 2010 USD ($)	Jun. 30, 2012 Provost Family USD ($)	Jun. 30, 2012 Empire Education Group, Inc. USD ($) school	Jun. 30, 2011 Empire Education Group, Inc. USD ($)	Jun. 30, 2010 Empire Education Group, Inc. USD ($)	Mar. 31, 2012 Empire Education Group, Inc. USD ($)	Jan. 31, 2008 Empire Education Group, Inc.	Aug. 01, 2007 Empire Education Group, Inc. school	Mar. 31, 2011 Provalliance USD ($)	Mar. 31, 2011 Provalliance EUR (€)	Jun. 30, 2012 Provalliance USD ($) salon	Jun. 30, 2012 Provalliance EUR (€)	Jun. 30, 2011 Provalliance USD ($)	Jun. 30, 2010 Provalliance USD ($)	Jan. 31, 2008 Provalliance	Apr. 30, 2012 Provalliance Provost Family USD ($)	Apr. 30, 2012 Provalliance Provost Family EUR (€)	Jun. 30, 2012 Provalliance Provost Family USD ($)	Jun. 30, 2012 Provalliance Provost Family EUR (€)	Apr. 09, 2012 Provalliance Provost Family	Jun. 30, 2012 MY Style USD ($)	Jun. 30, 2011 MY Style USD ($)	Jun. 30, 2011 MY Style JPY (¥)	Jun. 30, 2010 MY Style USD ($)	Jun. 30, 2012 MY Style MY Style Note USD ($)	Jun. 30, 2012 MY Style MY Style Note JPY (¥)	Jun. 30, 2011 MY Style MY Style Note USD ($)	Jun. 30, 2010 MY Style MY Style Note USD ($)	Mar. 31, 2011 MY Style Preferred Shares USD ($)	Mar. 31, 2011 MY Style Preferred Shares JPY (¥)	Apr. 30, 2007 MY Style Yamano Holding Corporation USD ($)	Apr. 30, 2007 MY Style Yamano Holding Corporation JPY (¥)	Apr. 30, 2007 MY Style Yamano Holding Corporation Shares issuable upon conversion of debt USD ($)	Apr. 30, 2007 MY Style Yamano Holding Corporation Shares issuable upon conversion of debt JPY (¥)	Jun. 30, 2012 MY Style Yamano Holding Corporation Shares issuable upon conversion of debt USD ($)	Jun. 30, 2011 MY Style Yamano Holding Corporation Shares issuable upon conversion of debt USD ($)	Jun. 30, 2010 MY Style Yamano Holding Corporation Shares issuable upon conversion of debt USD ($)	Jun. 30, 2012 MY Style Yamano Holding Corporation Shares issuable upon conversion of debt JPY (¥)	Mar. 30, 2010 MY Style Yamano Holding Corporation Preferred Shares	Jun. 30, 2012 MY Style Yamano Holding Corporation Preferred Shares	Mar. 30, 2010 MY Style Yamano Holding Corporation Class A preferred stock USD ($)	Mar. 30, 2010 MY Style Yamano Holding Corporation Class A preferred stock JPY (¥)	Mar. 30, 2010 MY Style Yamano Holding Corporation Class B preferred stock USD ($)	Mar. 30, 2010 MY Style Yamano Holding Corporation Class B preferred stock JPY (¥)	Jun. 30, 2012 Hair Club for Men, Ltd USD ($)	Jun. 30, 2011 Hair Club for Men, Ltd USD ($)	Jun. 30, 2010 Hair Club for Men, Ltd USD ($)
Investment in and loans to affiliates
Ownership percentage in equity method investee					55.10%				55.10%	49.00%	46.70%	46.70%	46.70%	46.70%			30.00%					46.70%																									50.00%
Number of stores	12,600												2,600	2,600
Additional ownership interest acquired in equity method investee (as a percent)											17.00%	17.00%
Estimated fair value of equity put option included as a component of the investment in Provalliance											$ 57,300,000	€ 40,400,000
Purchase price of equity method investment (in Euro)														80,000,000					80,000,000
Other than temporary impairment				17,200,000	19,400,000								17,200,000							37,400,000
Decrease in fair value of equity put valuation																				20,200,000
Fair value of equity put valuation																				600,000
Net impact of the impairment charge partially offset by the reduction in the fair value of the Equity Put																				37,400,000
Other than temporary impairment recorded through the equity in income of affiliated companies													17,200,000					17,200,000						9,000,000
Investment in and loans to affiliates	166,176,000	261,140,000	195,786,000		59,683,000	104,540,000	102,882,000						101,304,000		149,245,000	75,481,000								2,210,000		12,116,000																					5,189,000	5,145,000	5,307,000
Equity put option	794,000	22,700,000											633,000		22,700,000
Equity in (loss) income, net of income taxes	6,544,000	13,782,000			(4,031,000)	5,463,000	6,400,000						(9,759,000)		7,752,000	4,134,000																															816,000	567,000	900,000
Equity in (loss) income, net of income taxes, cash flow													9,759,000		(7,752,000)	(4,134,000)
Cash dividends received	4,047,000	10,023,000	2,404,000			4,100,000							2,769,000		4,814,000	1,141,000																															1,300,000	1,100,000	1,300,000
Number of cosmetology schools contributed to acquire equity method investment										51
Number of cosmetology schools owned by equity method investee					105
Annual revenues					180,000,000
Gross revenue					180,000,000
Outstanding loan receivable from equity method investee					11,400,000	21,400,000
Outstanding amount of revolving credit facility provided to equity method investee					15,000,000	0
Maximum revolving credit facility provided to equity method investee					15,000,000	15,000,000
Interest income related to the loan and revolving credit facility					500,000	700,000	700,000
Principal payments on the loan received					10,000,000
Credit facility, maximum exposure					9,000,000
Intangible asset impairment recorded					8,700,000
Voting control granted to other shareholders (as a percent)					51.00%
Carrying value of investment, pre-impairment																					80,000,000
Tax expense on dividend						300,000
Aggregate amount of investment																																	11,300,000	1,300,000,000
Exchangeable note, shares of affiliate permitted to be acquired (as a percent)																																			27.10%	27.10%
Affiliate shares outstanding																																	800	800
Premium paid on investment																																			5,500,000	573,000,000
Number of shares purchased																																											1	1	1	1
Subscription amount																																											1,100,000	100,000,000	2,300,000	211,131,284
Dividend rate (as a percent)																																									5.00%	5.00%
Other than temporary impairment on carrying value of preferred shares																								3,900,000	326,700,000						3,900,000	326,700,000
Other than temporary impairment on premium																								5,300,000	435,000,000						5,300,000	435,000,000
Principal amount outstanding																											700,000	52,164,000									1,300,000			100,000,000
Principal payments due annually																												52,164,000
Interest rate (as a percent)																											3.00%	3.00%									1.845%
Interest income																																					100,000	100,000	100,000
Interest income, maximum																											100,000		100,000	100,000
Investment recorded in current assets	29,043,000	2,413,000						20,400,000															2,300,000
Foreign currency transaction gain (loss)																							500,000	(1,100,000)		3,100,000
Equity (loss) earnings related to investment																																															$ 800,000	$ 600,000	$ 900,000

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BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 7) (Continuing operations, USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Continuing operations
Advertising costs	$ 58.7	$ 63.3	$ 54.9

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DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Jun. 30, 2012

DERIVATIVE FINANCIAL INSTRUMENTS

Schedule of fair value of derivative instruments

	Asset					Liability
		Fair Value					Fair Value
Type	Classification	June 30, 2012		June 30, 2011		Classification	June 30, 2012		June 30, 2011
		(Dollars in thousands)					(Dollars in thousands)
Designated as hedging instruments—Cash Flow Hedges:
Forward foreign currency contracts	Other current assets	$	37	$	—	Other current liabilities	$	—	$	(599	)
Freestanding derivative contracts—not designated as hedging instruments:
Forward foreign currency contracts	Other current assets	$	108	$	212	Other current liabilities	$	—	$	—
Total		$	145	$	212		$	—	$	(599	)

Schedule of (gain) or loss recognized in other comprehensive income and reclassified from AOCI into income (loss)

	Gain (Loss) Recognized in Other Comprehensive (Loss) Income For the Years Ended June 30,								Gain (Loss) Reclassified from Accumulated OCI into (Loss) Income at June 30,
Type	2012		2011			2010			Classification	2012		2011		2010
	(Dollars in thousands)									(Dollars in thousands)
Designated as hedging instruments—Cash Flow Hedges:
Interest rate swaps	$	—	$	(636	)	$	(2,967	)		$	—	$	—	$	—
Forward foreign currency contracts		393		456			519		Cost of sales		—		48		(261	)
Treasury lock contracts		—		—			(146	)	Interest income		—		—		388
Total	$	393	$	(180	)	$	(2,594	)		$	—	$	48	$	127

Schedule of (gain) or loss on derivative instruments recognized in consolidated statement of operations

	Derivatives Impact on (Loss) Income at June 30,
Type	Classification	2012			2011		2010
		(Dollars in thousands)
Freestanding derivative contracts—not designated as hedging instruments:
Forward foreign currency contracts	Interest income and other, net	$	(105	)	$	613	$	(811	)

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SUBSEQUENT EVENTS (Details) (USD $) In Millions, unless otherwise specified	1 Months Ended
	Jul. 31, 2012
Subsequent Events
Cash excluding closing adjustments and transaction fees	$ 163.5
Aderans, Co., Ltd.
Subsequent Events
Cash excluding closing adjustments and transaction fees	$ 163.5

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FAIR VALUE MEASUREMENTS (Details 2) (USD $)			12 Months Ended					12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2011 Provalliance	Jun. 30, 2012 Provalliance	Mar. 31, 2011 Provalliance	Jan. 31, 2008 Provalliance	Jul. 02, 2011 Roosters	Jun. 30, 2012 Equity Call Option Roosters	Jun. 30, 2012 Equity Put Option Provalliance	Jun. 30, 2011 Equity Put Option Provalliance	Jun. 30, 2012 Equity Put Option Roosters	Jun. 30, 2011 Preferred Shares
Changes in financial instruments measured on recurring basis unobservable input reconciliation calculation
Balance at the beginning of the period												$ 3,502,000
Total realized and unrealized gains (losses):
Included in other comprehensive income (loss)												433,000
Purchases								117,000
Other than temporary impairment												(3,935,000)
Balance at the end of the period								117,000
Changes in financial instruments measured on recurring basis unobservable input reconciliation calculation
Balance at the beginning of the period									22,700,000	22,009,000
Total realized and unrealized gains (losses):
Included in other comprehensive income (loss)			(2,400,000)						(1,845,000)	3,847,000
Issuances											161,000
Included in equity in (loss) income of affiliated companies									(20,222,000)	(2,442,000)
Transfer out of Level 3										(714,000)
Balance at the end of the period									633,000	22,700,000	161,000
Equity interest in Provalliance (as a percent)				46.70%	46.70%	30.00%
Ownership interest (as a percent)							60.00%
Financial Instruments
Debt	287,674,000	313,411,000
Fair value of debt	$ 307,500,000	$ 335,400,000

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QUARTERLY FINANCIAL DATA (UNAUDITED) (Details)	3 Months Ended								12 Months Ended										12 Months Ended			3 Months Ended		12 Months Ended	3 Months Ended	12 Months Ended
	Jun. 30, 2012 USD ($)	Mar. 31, 2012 USD ($)	Dec. 31, 2011 USD ($)	Sep. 30, 2011 USD ($)	Jun. 30, 2011 USD ($)	Mar. 31, 2011 USD ($)	Dec. 31, 2010 USD ($)	Sep. 30, 2010 USD ($)	Jun. 30, 2012 USD ($)		Jun. 30, 2011 USD ($)		Jun. 30, 2010 USD ($)		Jun. 30, 2012 Provalliance USD ($)	Jun. 30, 2012 Provalliance EUR (€)	Mar. 31, 2011 Provalliance	Jan. 31, 2008 Provalliance	Jun. 30, 2012 Empire Education Group, Inc. USD ($)	Jan. 31, 2008 Empire Education Group, Inc.	Aug. 01, 2007 Empire Education Group, Inc.	Dec. 31, 2011 Hair Restoration Centers USD ($)	Mar. 31, 2011 Promenade salon concept USD ($)	Jun. 30, 2011 Promenade salon concept USD ($)	Jun. 30, 2012 Regis salon concept USD ($)	Jun. 30, 2010 Regis salon concept USD ($)
QUARTERLY FINANCIAL DATA (UNAUDITED)
Revenues	$ 568,168,000	$ 573,584,000	$ 563,278,000	$ 568,749,000	$ 591,985,000	$ 581,267,000	$ 574,372,000	$ 578,245,000	$ 2,273,779,000		$ 2,325,869,000		$ 2,358,434,000
Gross margin, excluding royalties and depreciation	249,027,000	249,010,000	247,697,000	252,627,000	261,614,000	253,017,000	251,132,000	257,558,000	998,361,000		1,023,321,000
Operating income (loss)	(43,968,000)	25,200,000	(61,617,000)	13,072,000	7,154,000	(59,504,000)	22,864,000	33,434,000	(67,313,000)		3,948,000		97,218,000
Income (loss) from continuing operations	(63,634,000)	(2,468,000)	(57,427,000)	8,337,000	(16,395,000)	(25,335,000)	14,505,000	18,320,000	(115,192,000)		(8,905,000)		39,579,000
Income (loss) from discontinued operations		1,099,000							1,099,000				3,161,000
Net income (loss)	(63,634,000)	(1,369,000)	(57,427,000)	8,337,000	(16,395,000)	(25,335,000)	14,505,000	18,320,000	(114,093,000)		(8,905,000)		42,740,000
Income (loss) from continuing operations per share, basic (in dollars per share)	$ (1.11)	$ (0.04)	$ (1.01)	$ 0.15	$ (0.29)	$ (0.45)	$ 0.26	$ 0.32	$ (2.02)		$ (0.16)		$ 0.71
Income (loss) from discontinued operations per share, basic (in dollars per share)		$ 0.02							$ 0.02				$ 0.06
Net (loss) income per share, basic (in dollars per share)	$ (1.11)	$ (0.02)	$ (1.01)	$ 0.15	$ (0.29)	$ (0.45)	$ 0.26	$ 0.32	$ (2.00)	[1]	$ (0.16)	[1]	$ 0.77	[1]
Income (loss) from continuing operations per share, diluted (in dollars per share)	$ (1.11)	$ (0.04)	$ (1.01)	$ 0.15	$ (0.29)	$ (0.45)	$ 0.24	$ 0.30	$ (2.02)		$ (0.16)		$ 0.71
Income (loss) from discontinued operations per share, diluted (in dollars per share)		$ 0.02							$ 0.02				$ 0.05
Net (loss) income per share, diluted (in dollars per share)	$ (1.11)	$ (0.02)	$ (1.01)	$ 0.15	$ (0.29)	$ (0.45)	$ 0.24	$ 0.30	$ (2.00)	[1]	$ (0.16)	[1]	$ 0.75	[1]
Dividends declared per share (in dollars per share)	$ 0.06	$ 0.06	$ 0.06	$ 0.06	$ 0.06	$ 0.06	$ 0.04	$ 0.04	$ 0.24		$ 0.20		$ 0.16
Impairment
Goodwill impairment						74,100,000			146,110,000		74,100,000		35,277,000									78,400,000	74,100,000	74,100,000	67,700,000	35,300,000
Goodwill impairment expense, net of tax																						72,600,000	50,800,000		55,200,000
Impairment charge															17,200,000				19,400,000
Ownership percentage in equity method investee															46.70%	46.70%	46.70%	30.00%	55.10%	55.10%	49.00%
Purchase price of equity method investment (in Euro)																€ 80,000,000

[1] Total is a recalculation; line items calculated individually may not sum to total due to rounding.

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BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Jun. 30, 2012

BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Schedule of activity in the allowance for doubtful accounts

	For the Years Ended June 30,
	2012			2011			2010
	(Dollars in thousands)
Beginning balance	$	1,482		$	3,170		$	2,382
Bad debt expense		454			853			1,040
Write-offs		(714	)		(2,549	)		(252	)
Other (primarily the impact of foreign currency fluctuations)		10			8			—
Ending balance	$	1,232		$	1,482		$	3,170

Schedule of activity within the workers' compensation self-insurance accrual

	For the Years Ended June 30,
	2012			2011			2010
	(Dollars in thousands)
Beginning balance	$	32,994		$	30,082		$	31,505
Provision for incurred losses		14,133			13,993			14,739
Prior year actuarial loss development		1,221			2,231			35
Claim payments		(14,140	)		(12,584	)		(14,867	)
Other, net		415			(728	)		(1,330	)
Ending balance	$	34,623		$	32,994		$	30,082

Schedule of goodwill by reporting unit

Reporting Unit	June 30, 2012		June 30, 2011
	(Dollars in thousands)
Regis	$	34,992	$	103,761
MasterCuts		4,652		4,652
SmartStyle		49,476		48,916
Supercuts		129,621		129,477
Promenade		243,538		240,910
Total North America Salons		462,279		527,716
Hair Restoration Centers		74,376		152,796
Consolidated Goodwill	$	536,655	$	680,512

Schedule of long-lived asset impairment charges

	For the Years Ended June 30,
	2012		2011		2010
	(Dollars in thousands)
North American salons	$	6,066	$	6,115	$	6,253
International salons		570		394		175
Hair restoration centers		—		172		—
Total	$	6,636	$	6,681	$	6,428

Schedule of components of accumulated other comprehensive income

	2012			2011			2010
	(Dollars in thousands)
Accumulated Other Comprehensive Income, balance at July 1	$	77,946		$	47,032		$	51,855
Cumulative translation adjustment:
Balance at July 1		87,814			57,409			62,825
Pre-tax amount		(24,254	)		30,405			(5,416	)
Tax effect		—			—			—
Net of tax amount		(24,254	)		30,405			(5,416	)
Balance at June 30		63,560			87,814			57,409
Unrecognized loss on net investment hedge:
Balance at July 1		(7,932	)		(7,932	)		(7,932	)
Pre-tax amount		—			—			—
Tax effect		—			—			—
Net of tax amount		—			—			—
Balance at June 30		(7,932	)		(7,932	)		(7,932	)
Changes in fair market value of financial instruments designated as cash flow hedges:
Balance at July 1		(372	)		(504	)		(2,971	)
Pre-tax amount		603			218			3,949
Tax effect		(210	)		(86	)		(1,482	)
Net of tax amount		393			132			2,467
Balance at June 30		21			(372	)		(504	)
Recognition of deferred compensation:
Balance at July 1		(1,564	)		(1,941	)		(67	)
Pre-tax amount		1,673			609			(3,184	)
Tax effect		(644	)		(232	)		1,310
Net of tax amount		1,029			377			(1,874	)
Balance at June 30		(535	)		(1,564	)		(1,941	)
Accumulated Other Comprehensive Income, balance at June 30	$	55,114		$	77,946		$	47,032

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OTHER FINANCIAL STATEMENT DATA (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
OTHER FINANCIAL STATEMENT DATA
Accounts receivable	$ 32,810	$ 28,631
Less allowance for doubtful accounts	(1,232)	(1,482)
Receivables, net	31,578	27,149
Other current assets:
Prepaids	32,179	29,705
Notes receivable, primarily affiliates	29,043	2,413
Other current assets	61,222	32,118
Property and equipment:
Property and equipment, gross	1,037,255	1,010,102
Less accumulated depreciation and amortization	(656,512)	(611,669)
Less amortization of equipment, furniture and leasehold improvements under capital leases	(57,683)	(50,622)
Property and equipment, net	323,060	347,811	359,250
Investment in and loans to affiliates:
Equity-method investments	166,176	258,930
Noncurrent loans to affiliates		2,210
Investment in and loans to affiliates	166,176	261,140	195,786
Other assets:
Notes receivable, net	1,584	1,072
Other noncurrent assets	57,904	57,328
Other assets	59,488	58,400
Accrued expenses:
Payroll and payroll related costs	80,649	89,788
Insurance	19,410	19,127
Deferred compensation	26,055	6,180
Deferred revenues	9,054	8,313
Taxes payable	5,673	8,113
Other	31,741	35,800
Accrued expenses	172,582	167,321
Other noncurrent liabilities:
Deferred income taxes	38,266	55,208
Deferred rent	52,773	53,102
Deferred benefits	39,178	58,150
Insurance	32,459	30,925
Equity put option	794	22,700
Other	8,509	17,210
Other noncurrent liabilities	171,979	237,295
Land
Property and equipment:
Property and equipment, gross	3,864	3,864
Buildings and improvements
Property and equipment:
Property and equipment, gross	48,017	47,907
Equipment, furniture and leasehold improvements
Property and equipment:
Property and equipment, gross	794,353	775,527
Internal use software
Property and equipment:
Property and equipment, gross	106,264	94,507
Equipment, furniture and leasehold improvements under capital leases
Property and equipment:
Property and equipment, gross	$ 84,757	$ 88,297

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BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) (USD $)	12 Months Ended												3 Months Ended		12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2012 Buildings Y	Jun. 30, 2012 Improvements Y	Jun. 30, 2012 Equipment Y	Jun. 30, 2012 Software Y	Jun. 30, 2012 Furniture Y	Jun. 30, 2012 Leasehold improvements Y	Jun. 30, 2012 Capitalized software Y	Jun. 30, 2011 Capitalized software	Jun. 30, 2010 Capitalized software	Mar. 31, 2012 POS Information System M	Dec. 31, 2011 POS Information System M	Jun. 30, 2012 POS Information System	Jun. 30, 2011 POS Information System M
Property and equipment:
Estimated useful asset lives, minimum (in years)				30		3	3	3		5
Estimated useful asset lives, maximum (in years)				39		10	10	10		7
Estimated/ adjusted remaining useful asset lives (in years/ months)					10				10							6
Extension of useful life (in months)													3	3
Depreciation expense	$ 101,701,000	$ 88,602,000	$ 92,466,000
Net book value of capitalized software costs										26,700,000	34,100,000
Amortization expense related to capitalized software										22,300,000	8,400,000	8,500,000
Accelerated depreciation															16,200,000
Accelerated depreciation, net of tax															$ 10,200,000
Accelerated depreciation, per diluted share (in dollars per share)															$ 0.18

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SHAREHOLDERS' EQUITY (Tables)

12 Months Ended

Jun. 30, 2012

SHAREHOLDERS' EQUITY

Reconciliation of shares used in the computation of basic and diluted earnings per share

	2012		2011		2010
	(Shares in thousands)
Weighted average shares for basic earnings per share		57,137		56,704		55,806
Effect of dilutive securities:
Dilutive effect of convertible debt		—		—		10,730
Dilutive effect of stock-based compensation(1)		—		—		217
Weighted average shares for diluted earnings per share		57,137		56,704		66,753

(1)

For fiscal year 2012 and 2011, 182 and 334 common stock equivalents of potentially dilutive common stock were not included in the diluted earnings per share calculation because to do so would have been anti-dilutive.

Awards excluded from earnings per share calculations

	2012		2011		2010
	(Shares in thousands)
Basic earnings per share:
RSAs(1)		403		862		931
RSUs(1)		17		215		215
		420		1,077		1,146
Diluted earnings per share:
Stock options(2)		789		890		960
SARs(2)		957		1,084		1,110
RSAs(2)		242		580		677
Shares issuable upon conversion of debt(2)		11,209		11,163		—
		13,197		13,717		2,747

(1)

Shares were not vested

(2)

Share were anti-dilutive

Reconciliation of the net (loss) income from continuing operations available to common shareholders and the net (loss) income from continuing operations for diluted earnings per share

	2012			2011			2010
	(Dollars in thousands)
Net (loss) income from continuing operations available to common shareholders	$	(115,192	)	$	(8,905	)	$	39,579
Effect of dilutive securities:
Interest on convertible debt		—			—			7,520
Net (loss) income from continuing operations for diluted earnings per share	$	(115,192	)	$	(8,905	)	$	47,099

Schedule of common shares available for grant under stock-based compensation award plans

	2012		2011		2010
	(Shares in thousands)
2000 Plan		—		—		4
2004 Plan		4,838		4,209		12
		4,838		4,209		16

Schedule of stock options outstanding and weighted average exercise prices

	Options Outstanding
	Shares			Weighted Average Exercise Price
	(in thousands)
Balance, June 30, 2009		1,385		$	25.55
Granted		135			18.90
Cancelled		(337	)		17.74
Exercised		(203	)		15.12
Balance, June 30, 2010		980			29.48
Granted		—			—
Cancelled		(96	)		18.89
Exercised		(46	)		15.04
Balance, June 30, 2011		838			31.48
Granted		—			—
Cancelled		(186	)		27.80
Exercised		—			—
Balance, June 30, 2012		652		$	32.53
Exercisable June 30, 2012		593		$	33.50

Rollforward of RSAs, RSUs and SARs outstanding, as well as other relevant terms of the awards

	Restricted Stock Outstanding					SARs Outstanding
	Shares/Units			Weighted Average Grant Date Fair Value		Shares			Weighted Average Exercise Price
	(in thousands)					(in thousands)
Balance, June 30, 2009		1,032			26.33		1,114			26.30
Granted		304			19.12		2			28.57
Cancelled		(2	)		20.02		(6	)		38.63
Vested/Exercised		(188	)		24.74		—			—
Balance, June 30, 2010		1,146			24.70		1,110			26.24
Granted		277			16.60		103			16.60
Cancelled		(118	)		20.42		(126	)		24.35
Vested/Exercised		(228	)		22.69		—			—
Balance, June 30, 2011		1,077			23.48		1,087			25.54
Granted		97			16.94		—			—
Forfeited or expired		(290	)		19.07		(352	)		24.57
Vested/Exercised		(224	)		20.58		(1	)		16.60
Balance, June 30, 2012		660		$	25.44		734		$	26.02

Schedule of weighted average fair values per stock-based compensation award granted

	2012		2011		2010
Stock options	$	—	$	—	$	7.36
SARs		—		6.26		8.60
Restricted stock awards		16.15		16.60		19.12
Restricted stock units		17.96		—		—

Schedule of assumptions used in determining a fair value of each stock option and SAR grant

	2012	2011			2010
Risk-free interest rate	N/A		2.29	%		2.79	%
Expected term (in years)	N/A		5.50			5.50
Expected volatility	N/A		44.00	%		42.00	%
Expected dividend yield	N/A		1.45	%		0.85	%

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ACQUISITIONS (Details) (USD $)					12 Months Ended				12 Months Ended									1 Months Ended	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2009	Jun. 30, 2012 Non-compete agreements Y	Jun. 30, 2012 Aggregate acquisitions Y	Jun. 30, 2011 Aggregate acquisitions Y	Jun. 30, 2010 Aggregate acquisitions	Jun. 30, 2012 Aggregate acquisitions Brand assets and trade names Y	Jun. 30, 2011 Aggregate acquisitions Brand assets and trade names Y	Jun. 30, 2011 Aggregate acquisitions Guest lists Y	Jun. 30, 2012 Aggregate acquisitions Franchise agreements Y	Jun. 30, 2011 Aggregate acquisitions Franchise agreements Y	Jun. 30, 2012 Aggregate acquisitions Lease intangibles Y	Jun. 30, 2011 Aggregate acquisitions Lease intangibles Y	Jun. 30, 2012 Aggregate acquisitions Other Y	Jun. 30, 2011 Aggregate acquisitions Other Y	Jul. 31, 2011 Roosters salon M	Jun. 30, 2012 Roosters	Jul. 02, 2011 Roosters
Components of aggregate purchase prices:
Cash (net of cash acquired)						$ 2,587,000	$ 17,990,000	$ 3,664,000
Liabilities assumed or payable							561,000
Aggregate purchase price of acquisitions						2,587,000	18,551,000	3,664,000
Allocation of the purchase prices:
Current assets						344,000	641,000	178,000
Property and equipment						534,000	4,232,000	873,000
Goodwill						4,978,000	12,489,000	2,581,000
Identifiable intangible assets						594,000	1,964,000	134,000
Accounts payable and accrued expenses						(1,117,000)	(534,000)	(102,000)
Other noncurrent liabilities						(1,246,000)	(241,000)
Noncontrolling interest						(1,500,000)
Aggregate purchase price of acquisitions						2,587,000	18,551,000	3,664,000
Acquired amortized intangible assets:
Purchase Price Allocation					10,000	594,000	1,964,000		31,000	159,000	1,207,000	513,000	269,000	13,000	151,000	27,000	178,000
Weighted Average Amortization Period (in years)					5	28	14		20	10	7	30	40	20	20	20	20
Number of franchise salon locations acquired																		31
Ownership interest (as a percent)																				60.00%
Purchase price																				2,300,000
Trailing period for determining the acquisition price (in months)																		12
Equity put option	794,000	22,700,000																		200,000
Equity call option																				100,000
Total assets	1,571,846,000	1,805,753,000																	5,900,000
Total liabilities	682,689,000	773,134,000																	2,000,000
Total shareholders' equity	889,157,000	1,032,619,000	1,013,293,000	802,860,000															3,900,000
Net income attributable to the noncontrolling interest																			100,000
Shareholders' equity attributable to the noncontrolling interest																			$ 1,600,000

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SHAREHOLDERS' EQUITY (Details 2) (USD $)	12 Months Ended														12 Months Ended								12 Months Ended					12 Months Ended
	Jun. 30, 2012 Y	Jun. 30, 2011 Y	Jun. 30, 2010 Y	Jun. 30, 2012 RSAs and RSUs	Jun. 30, 2011 RSAs and RSUs	Jun. 30, 2010 RSAs and RSUs	Jun. 30, 2012 RSAs Y	Jun. 30, 2011 RSAs	Jun. 30, 2010 RSAs	Jun. 30, 2012 RSAs vesting over five anniversaries item	Jun. 30, 2012 RSAs vesting after two years	Jun. 30, 2012 RSUs Y	Jun. 30, 2012 RSUs Less than Y	Jun. 30, 2012 Vested RSUs with deferral of payment until January 31, 2013	Jun. 30, 2012 SARs Y	Jun. 30, 2011 SARs	Jun. 30, 2010 SARs	Jun. 30, 2012 2004 Plan	Jun. 30, 2011 2004 Plan	Oct. 28, 2010 2004 Plan	Jun. 30, 2010 2004 Plan	May 31, 2004 2004 Plan	Jun. 30, 2012 2004 Plan RSAs	Jun. 30, 2012 2004 Plan RSUs	Jun. 30, 2012 2004 Plan Stock options and SARs	Jun. 30, 2012 2000 Plan	Jun. 30, 2010 2000 Plan	Jun. 30, 2012 2000 Plan Incentive stock options, greater than 10 percent voting power	Jun. 30, 2012 2000 Plan Director options
Stock-based compensation award plans
Common stock authorized for issuance (in shares)																				6,750,000		2,500,000
Percentage of stock-based awards vesting annually on each of the first five anniversaries of the date of grant																							20.00%		20.00%
Vesting period											2 years	2 years											5 years	5 years	5 years
Number of anniversaries										5
Maximum term of awards																									P10Y	P10Y		P5Y	P10Y
Shares available for grant	4,838,000	4,209,000	16,000															4,838,000	4,209,000		12,000						4,000
Shares previously available for grant																										3,500,000
Percentage of voting power in excess of which tenure of award would not exceed five years																												10.00%
Stock options outstanding
Balance at the beginning of the period (in shares)	838,000	980,000	1,385,000
Granted (in shares)			135,000
Cancelled (in shares)	(186,000)	(96,000)	(337,000)
Exercised (in shares)		(45,933)	(202,700)
Balance at the end of the period (in shares)	652,000	838,000	980,000
Exercisable at the end of the period (in shares)	593,000
Stock options, weighted average exercise price
Balance at the beginning of the period (in dollars per share)	$ 31.48	$ 29.48	$ 25.55
Granted (in dollars per share)			$ 18.90
Cancelled (in dollars per share)	$ 27.80	$ 18.89	$ 17.74
Exercised (in dollars per share)		$ 15.04	$ 15.12
Balance at the end of the period (in dollars per share)	$ 32.53	$ 31.48	$ 29.48
Exercisable at the end of the period (in dollars per share)	$ 33.50
Intrinsic value of exercisable options (in dollars)	$ 0
Outstanding options, weighted average remaining contractual term (in years)	3.4
Weighted average remaining contractual term of exercisable options (in years)	3.0
Options expected to vest (in shares)	54,458
Options expected to vest, weighted average exercise price (in dollars per share)	$ 22.82
Options expected to vest, weighted average remaining contractual life (in years)	6.5
Options expected to vest, total intrinsic value (in dollars)	0
Rollforward of RSAs, RSUs and SARs outstanding
Nonvested at the beginning of the period (in shares)	1,077,000	1,146,000		1,077,000	1,146,000	1,032,000
Outstanding at the beginning of the period (in shares)															1,087,000	1,110,000	1,114,000
Granted (in shares)				97,000	277,000	304,000	55,000			20,000	35,000	42,316				103,000	2,000
Forfeited or expired (in shares)				(290,000)	(118,000)	(2,000)									(352,000)	(126,000)	(6,000)
Vested/Exercised (in shares)				(224,000)	(228,000)	(188,000)						(25,704)			(1,000)
Outstanding at the end of the period (in shares)							403,120					257,316			734,000	1,087,000	1,110,000
Nonvested at the end of the period (in shares)	420,000	1,077,000	1,146,000	660,000	1,077,000	1,146,000						16,612
RSAs, RSUs and SARs outstanding, other relevant terms of the awards
Outstanding and unvested awards (in shares)	420,000	1,077,000	1,146,000	660,000	1,077,000	1,146,000						16,612
Weighted Average Grant Date Fair Value, nonvested at the beginning of the period (in dollars per share)				$ 23.48	$ 24.70	$ 26.33
Weighted Average Grant Date Fair Value, Granted (in dollars per share)				$ 16.94	$ 16.60	$ 19.12	$ 16.15	$ 16.60	$ 19.12			$ 17.96				$ 6.26	$ 8.60
Weighted Average Grant Date Fair Value, Forfeited or Expired (in dollars per share)				$ 19.07	$ 20.42	$ 20.02
Weighted Average Grant Date Fair Value, Vested/Exercised (in dollars per share)				$ 20.58	$ 22.69	$ 24.74
Weighted Average Grant Date Fair Value, nonvested at the end of the period (in dollars per share)				$ 25.44	$ 23.48	$ 24.70
Vesting rate (as a percent)										20.00%
Weighted Average Exercise Price, outstanding at the beginning of the period (in dollars per share)															$ 25.54	$ 26.24	$ 26.30
Weighted Average Exercise Price, Granted (in dollars per share)																$ 16.60	$ 28.57
Weighted Average Exercise Price, Forfeited or Expired (in dollars per share)															$ 24.57	$ 24.35	$ 38.63
Weighted Average Exercise Price, Vested or Exercised (in dollars per share)															$ 16.60
Weighted Average Exercise Price, outstanding at the end of the period (in dollars per share)															$ 26.02	$ 25.54	$ 26.24
Exercisable at the end of the period (in shares)															579,790
Exercisable awards, intrinsic value															100,000
Outstanding and unvested awards, intrinsic value							7,200,000
Outstanding awards, intrinsic value												4,600,000			100,000
Outstanding and unvested awards (in shares)							366,864
Outstanding awards, weighted average remaining contractual term (in years)							1.7					0.1	0.1		3.8
Vested awards (in shares)												240,704		215,000
Vested awards, intrinsic value												4,300,000
Unvested awards (in shares)	420,000	1,077,000	1,146,000	660,000	1,077,000	1,146,000						16,612
Unvested awards, weighted average remaining contractual term (in years)												0.5
Total fair value of stock awards vested	4,800,000	5,400,000	4,900,000
Period for which payment is deferred												6 months
Outstanding and unvested awards expected to vest, total intrinsic value (in dollars)							6,600,000								1,000,000
Outstanding and unvested awards expected to vest, weighted average grant price (in dollars per share)															$ 18.99
Outstanding and unvested awards expected to vest, weighted average remaining contractual term (in years)															6.9
Unvested RSAs with accelerated vesting period held by the company's chief executive officer and the company's executive vice president (in shares)							68,390
Incremental compensation cost recognized as a result of the modifications							200,000	100,000
Weighted average remaining contractual term of exercisable options (in years)															2.9
Stock-based compensation award plans, additional disclosures
Cash received from exercise of share-based instruments	100,000	700,000	3,100,000
Unrecognized compensation cost related to unvested stock-based compensation	7,800,000
Weighted average period of recognition of unrecognized compensation cost related to unvested stock-based compensation (in years)	2.6
Intrinsic value of share-based awards exercised	100,000	200,000	700,000
Stock options, weighted average grant date fair value (in dollars per share)			$ 7.36
Compensation expense	7,600,000	9,600,000	9,300,000
Outstanding options, intrinsic value (in dollars)	$ 0
Assumptions used in determining fair value of stock options and SARs
Risk-free interest rate (as a percent)		2.29%	2.79%
Expected term (in years)		5.50	5.50
Expected volatility (as a percent)		44.00%	42.00%
Expected dividend yield (as a percent)		1.45%	0.85%

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DERIVATIVE FINANCIAL INSTRUMENTS (Details 3) (USD $)	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Derivative gains and losses
Gain (Loss) Recognized in Other Comprehensive (Loss) Income	$ 393,000	$ (180,000)	$ (2,594,000)
Gain (Loss) Reclassified from Accumulated OCI into (Loss) Income		48,000	127,000
Cash Flow Hedges | Less than
Derivative gains and losses
Gain on cash flow hedge expected to be recognized in earnings	100,000
Cash Flow Hedges | Interest rate swaps
Derivative gains and losses
Gain (Loss) Recognized in Other Comprehensive (Loss) Income		(636,000)	(2,967,000)
Cash Flow Hedges | Forward foreign currency contracts
Derivative gains and losses
Gain (Loss) Recognized in Other Comprehensive (Loss) Income	393,000	456,000	519,000
Gain (Loss) Reclassified from Accumulated OCI into (Loss) Income		48,000	(261,000)
Cash Flow Hedges | Treasury lock agreements
Derivative gains and losses
Gain (Loss) Recognized in Other Comprehensive (Loss) Income			(146,000)
Gain (Loss) Reclassified from Accumulated OCI into (Loss) Income			388,000
Freestanding derivative contracts | Forward foreign currency contracts
Derivative gains and losses
Derivatives Impact on (Loss) Income	$ (105,000)	$ 613,000	$ (811,000)

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BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 8) (USD $)	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Advertising Funds
Contribution to advertising fund as percentage of service revenue, low end of range	1.50%
Contribution to advertising fund as percentage of service revenue, high end of range	5.00%
Advertising funds, assets	$ 14,800,000	$ 16,700,000
Advertising funds, liabilities	14,800,000	16,700,000
Total contributions to franchise brand advertising funds	42,000,000	41,900,000	39,800,000
Changes in shareholders' equity and comprehensive income
Accumulated Other Comprehensive Income, balance at the beginning of the period	77,946,000	47,032,000	51,855,000
Cumulative translation adjustment:
Balance at the beginning of the period	87,814,000	57,409,000	62,825,000
Pre-tax amount	(24,254,000)	30,405,000	(5,416,000)
Net of tax amount	(24,254,000)	30,405,000	(5,416,000)
Balance at the end of the period	63,560,000	87,814,000	57,409,000
Unrecognized loss on net investment hedge:
Balance at the beginning of the period	(7,932,000)	(7,932,000)
Balance at the end of the period	(7,932,000)	(7,932,000)	(7,932,000)
Changes in fair market value of financial instruments designated as cash flow hedges:
Balance at the beginning of the period	(372,000)	(504,000)	(2,971,000)
Pre-tax amount	603,000	218,000	3,949,000
Tax effect	(210,000)	(86,000)	(1,482,000)
Net of tax amount	393,000	132,000	2,467,000
Balance at the end of the period	21,000	(372,000)	(504,000)
Recognition of deferred compensation
Balance at the beginning of the period	(1,564,000)	(1,941,000)	(67,000)
Pre-tax amount	1,673,000	609,000	(3,184,000)
Tax effect	(644,000)	(232,000)	1,310,000
Recognition of deferred compensation and other, net of taxes	1,029,000	377,000	(1,874,000)
Balance at the end of the period	(535,000)	(1,564,000)	(1,941,000)
Accumulated Other Comprehensive Income, balance at the end of the period	$ 55,114,000	$ 77,946,000	$ 47,032,000
Supercuts
Advertising Funds:
Contribution to advertising fund as percentage of service revenue	5.00%

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OTHER FINANCIAL STATEMENT DATA

12 Months Ended

Jun. 30, 2012

OTHER FINANCIAL STATEMENT DATA

OTHER FINANCIAL STATEMENT DATA

3. OTHER FINANCIAL STATEMENT DATA

        The following provides additional information concerning selected balance sheet accounts as of June 30, 2012 and 2011:

	2012			2011
	(Dollars in thousands)
Accounts receivable	$	32,810		$	28,631
Less allowance for doubtful accounts		(1,232	)		(1,482	)
	$	31,578		$	27,149
Other current assets:
Prepaids	$	32,179		$	29,705
Notes receivable, primarily affiliates		29,043			2,413
	$	61,222		$	32,118
Property and equipment:
Land	$	3,864		$	3,864
Buildings and improvements		48,017			47,907
Equipment, furniture and leasehold improvements		794,353			775,527
Internal use software		106,264			94,507
Equipment, furniture and leasehold improvements under capital leases		84,757			88,297
		1,037,255			1,010,102
Less accumulated depreciation and amortization		(656,512	)		(611,669	)
Less amortization of equipment, furniture and leasehold improvements under capital leases		(57,683	)		(50,622	)
	$	323,060		$	347,811
Investment in and loans to affiliates:
Equity-method investments	$	166,176		$	258,930
Noncurrent loans to affiliates		—			2,210
	$	166,176		$	261,140
Other assets:
Notes receivable, net	$	1,584		$	1,072
Other noncurrent assets		57,904			57,328
	$	59,488		$	58,400
Accrued expenses:
Payroll and payroll related costs	$	80,649		$	89,788
Insurance		19,410			19,127
Deferred compensation		26,055			6,180
Deferred revenues		9,054			8,313
Taxes payable		5,673			8,113
Other		31,741			35,800
	$	172,582		$	167,321
Other noncurrent liabilities:
Deferred income taxes	$	38,266		$	55,208
Deferred rent		52,773			53,102
Deferred benefits		39,178			58,150
Insurance		32,459			30,925
Equity put options		794			22,700
Other		8,509			17,210
	$	171,979		$	237,295

        The following provides additional information concerning the other intangibles, net, balance sheet account as of June 30, 2012 and 2011:

	June 30, 2012							June 30, 2011
	Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
	(Dollars in thousands)
Amortized intangible assets:
Brand assets and trade names	$	79,995	$	(16,325	)	$	63,670	$	80,310	$	(14,329	)	$	65,981
Guest lists		53,189		(39,676	)		13,513		53,188		(34,096	)		19,092
Franchise agreements		22,335		(9,768	)		12,567		22,221		(8,909	)		13,312
Lease intangibles		14,896		(5,885	)		9,011		14,948		(5,168	)		9,780
Non-compete agreements		207		(117	)		90		353		(232	)		121
Other		4,539		(1,600	)		2,939		4,429		(1,387	)		3,042
	$	175,161	$	(73,371	)	$	101,790	$	175,449	$	(64,121	)	$	111,328

        All intangible assets have been assigned an estimated finite useful life, and are amortized on a straight-line basis over the number of years that approximate their expected period of benefit (ranging from one to 40 years). The cost of intangible assets is amortized to earnings in proportion to the amount of economic benefits obtained by the Company in that reporting period. The weighted average amortization periods, in total and by major intangible asset class, are as follows:

	Weighted Average Amortization Period June 30,
	2012		2011
	(In years)
Amortized intangible assets:
Brand assets and trade names		39		39
Guest lists		10		10
Franchise agreements		22		22
Lease intangibles		20		20
Non-compete agreements		6		5
Other		21		25
Total		26		26

        Total amortization expense related to amortizable intangible assets during the years ended June 30, 2012, 2011, and 2010 was approximately $9.7, $9.8, and $9.9 million, respectively. As of June 30, 2012, future estimated amortization expense related to amortizable intangible assets is estimated to be:

Fiscal Year	(Dollars in thousands)
2013	$	9,413
2014		9,199
2015		6,157
2016		3,999
2017		3,996

        The following provides supplemental disclosures of cash flow activity:

	For the Years Ended June 30,
	2012		2011			2010
	(Dollars in thousands)
Cash paid (received) during the year for:
Interest	$	28,448	$	33,493		$	53,547
Income taxes, net of refunds		14,754		(15,083	)		17,058

        Significant non-cash investing and financing activities include the following:

        The Company did not finance capital expenditures through capital leases during fiscal year 2012. In fiscal years 2011 and 2010, the Company financed capital expenditures totaling $6.0, and $7.9 million, respectively, through capital leases.

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COMMITMENTS AND CONTINGENCIES: (Details) (USD $)	12 Months Ended						12 Months Ended
	Jun. 30, 2012 Y	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2012 Corporate leases	Jun. 30, 2012 Franchisee leases	Jun. 30, 2012 Guaranteed leases	Jun. 30, 2012 Edina, Minnesota Y period	Jun. 30, 2005 Edina, Minnesota sqft	Jun. 30, 2012 Chattanooga, Tennessee sqft
Operating Leases:
Operating leases term, low end of the range (in years)	1
Operating leases term, high end of the range (in years)	20
Operating leases typical renewal term, low end of the range (in years)	5
Operating leases typical renewal term, high end of the range (in years)	10
Operating leases for subleased franchise salons, term (in years)	5
Sublease income	$ 28,300,000	$ 28,400,000	$ 29,200,000
Rent expense on premises subleased to franchisees	27,900,000	27,900,000	28,800,000
Sublease arrangements mark-up (as a percent)	10.00%
Net rental income from sublease arrangements	400,000	500,000	400,000
Minimum rent	259,522,000	260,644,000	259,984,000
Percentage rent based on sales	8,938,000	9,225,000	10,138,000
Real estate taxes and other expenses	72,345,000	72,417,000	73,976,000
Total rent expense, excluding rent expense on premises subleased to franchisees	340,805,000	342,286,000	344,098,000
Operating Leases
Square foot of building								102,448	89,900
Operating lease, number of extension periods							2
Operating lease term, period of extension (in years)							5
Operating leases future minimum lease payments
Future minimum lease payments, due in fiscal year 2013				259,975,000	45,677,000	816,000
Future minimum lease payments, due in fiscal year 2014				208,992,000	37,898,000	553,000
Future minimum lease payments, due in fiscal year 2015				157,154,000	29,038,000	343,000
Future minimum lease payments, due in fiscal year 2016				106,887,000	20,250,000	225,000
Future minimum lease payments, due in fiscal year 2017				62,016,000	10,861,000	193,000
Future minimum lease payments, due thereafter				76,675,000	8,754,000	198,000
Total minimum corporate lease payments				$ 871,699,000	$ 152,478,000	$ 2,328,000	$ 4,500,000		$ 600,000

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BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) (USD $)	12 Months Ended
	Jun. 30, 2012 item M	Jun. 30, 2011	Jun. 30, 2010
Self Insurance Accruals
Number of workers' compensation analysis models	3
Trailing period of paid medical and prescription claims used in health insurance analysis (in months)	12
Trailing period of incurred medical and prescription claims used in health insurance analysis (in months)	24
Increase (decrease) in self-insurance expense due to change in estimates related to prior year open policy periods	$ 700,000	$ 1,400,000	$ 1,700,000
Change in self-insurance reserve that would affect (loss) income (as a percent)	10.00%	10.00%	10.00%
Effect of percentage change in the self-insurance reserve on income from continuing operations before income taxes and equity in (loss) income of affiliated companies	4,800,000	4,600,000	4,500,000
Number of times the entity updates loss projections each year	2
Changes in workers' compensation self-insurance accrual
Self-insurance accruals, current	15,500,000	14,700,000
Self-insurance accruals, noncurrent	32,500,000	30,900,000
Workers' compensation self-insurance
Changes in workers' compensation self-insurance accrual
Beginning balance	32,994,000	30,082,000	31,505,000
Provision for incurred losses	14,133,000	13,993,000	14,739,000
Prior year actuarial loss development	1,221,000	2,231,000	35,000
Claim payments	(14,140,000)	(12,584,000)	(14,867,000)
Other, net	415,000	(728,000)	(1,330,000)
Ending balance	$ 34,623,000	$ 32,994,000	$ 30,082,000

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GOODWILL (Tables)

12 Months Ended

Jun. 30, 2012

GOODWILL

Schedule of goodwill

	Salons
							Hair Restoration Centers
	North America			International						Consolidated
	(Dollars in thousands)
Gross goodwill at June 30, 2010	$	700,012		$	41,661		$	150,380		$	892,053
Accumulated impairment losses		(113,403	)		(41,661	)		—			(155,064	)
Net goodwill at June 30, 2010		586,609			—			150,380			736,989
Goodwill acquired(1)		10,070			—			2,419			12,489
Translation rate adjustments		5,137			—			(3	)		5,134
Goodwill impairment(2)		(74,100	)		—			—			(74,100	)
Gross goodwill at June 30, 2011		715,219			41,661			152,796			909,676
Accumulated impairment losses		(187,503	)		(41,661	)		—			(229,164	)
Net goodwill at June 30, 2011		527,716			—			152,796			680,512
Goodwill acquired(1)		4,978			—			—			4,978
Translation rate adjustments		(2,731	)		—			6			(2,725	)
Goodwill impairment(3)(4)		(67,684	)		—			(78,426	)		(146,110	)
Gross goodwill at June 30, 2012		717,466			41,661			152,802			911,929
Accumulated impairment losses		(255,187	)		(41,661	)		(78,426	)		(375,274	)
Net goodwill at June 30, 2012	$	462,279		$	—		$	74,376		$	536,655

(1)

See Note 4 to the Consolidated Financial Statements.

(2)

As a result of the Company's annual impairment testing of goodwill, a $74.1 million impairment charge was recorded within continuing operations for the excess of the carrying value of goodwill over the implied fair value of goodwill for the Promenade salon concept.

(3)

As a result of the Company's interim impairment testing of goodwill during the three months ended December 31, 2011, a $78.4 million impairment charge was recorded within continuing operations for the excess of the carrying value of goodwill over the implied fair value of goodwill for the Hair Restoration Centers reporting unit.

(4)

As a result of the Company's annual impairment testing of goodwill, a $67.7 million impairment charge was recorded within continuing operations for the excess of the carrying value of goodwill over the implied fair value of goodwill for the Regis salon concept.

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ACQUISITIONS (Tables)

12 Months Ended

Jun. 30, 2012

ACQUISITIONS

Schedule of components and allocation of purchase prices of acquisitions

	For the Years Ended June 30,
	2012			2011			2010
	(Dollars in thousands)
Components of aggregate purchase prices:
Cash (net of cash acquired)	$	2,587		$	17,990		$	3,664
Liabilities assumed or payable		—			561			—
	$	2,587		$	18,551		$	3,664
Allocation of the purchase prices:
Current assets	$	344		$	641		$	178
Property and equipment		534			4,232			873
Goodwill		4,978			12,489			2,581
Identifiable intangible assets		594			1,964			134
Accounts payable and accrued expenses		(1,117	)		(534	)		(102	)
Other noncurrent liabilities		(1,246	)		(241	)		—
Noncontrolling interest		(1,500	)		—			—
	$	2,587		$	18,551		$	3,664

Schedule of value and related weighted average amortization periods for intangibles acquired

	Purchase Price Allocation				Weighted Average Amortization Period
	For the Years Ended June 30,
	2012		2011		2012		2011
	(Dollars in thousands)				(in years)
Amortized intangible assets:
Brand assets and trade names	$	31	$	159		20		10
Guest lists		—		1,207		—		7
Franchise agreements		513		269		30		40
Lease intangibles		13		151		20		20
Non-compete agreements		10		—		5		—
Other		27		178		20		20
Total value and weighted average amortization period	$	594	$	1,964		28		14

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FAIR VALUE MEASUREMENTS (Details) (USD $)	3 Months Ended	12 Months Ended			3 Months Ended	12 Months Ended			3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended			12 Months Ended												12 Months Ended
	Mar. 31, 2011	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010	Dec. 31, 2011 Hair Restoration Centers	Jun. 30, 2012 Hair Restoration Centers	Jun. 30, 2011 Hair Restoration Centers	Jun. 30, 2010 Hair Restoration Centers	Mar. 31, 2011 Promenade salon concept	Jun. 30, 2011 Promenade salon concept	Jun. 30, 2012 Regis salon concept	Jun. 30, 2010 Regis salon concept	Jun. 30, 2012 Provalliance	Jun. 30, 2011 Provalliance	Jun. 30, 2012 Empire Education Group, Inc.	Jul. 02, 2011 Roosters	Jun. 30, 2012 Fair Value on Recurring Basis Fair Value	Jun. 30, 2011 Fair Value on Recurring Basis Fair Value	Jun. 30, 2012 Fair Value on Recurring Basis Fair Value Provalliance	Jun. 30, 2011 Fair Value on Recurring Basis Fair Value Provalliance	Jun. 30, 2012 Fair Value on Recurring Basis Fair Value Roosters	Jun. 30, 2012 Fair Value on Recurring Basis Level 2	Jun. 30, 2011 Fair Value on Recurring Basis Level 2	Jun. 30, 2012 Fair Value on Recurring Basis Level 3 Provalliance	Jun. 30, 2011 Fair Value on Recurring Basis Level 3 Provalliance	Jun. 30, 2012 Fair Value on Recurring Basis Level 3 Roosters	Jun. 30, 2012 Fair Value on Nonrecurring Basis	Jun. 30, 2011 Fair Value on Nonrecurring Basis	Jun. 30, 2012 Fair Value on Nonrecurring Basis Hair Restoration Centers	Jun. 30, 2011 Fair Value on Nonrecurring Basis Promenade salon concept	Jun. 30, 2012 Fair Value on Nonrecurring Basis Regis salon concept	Jun. 30, 2012 Fair Value on Nonrecurring Basis Provalliance	Jun. 30, 2012 Fair Value on Nonrecurring Basis Empire Education Group, Inc.	Jun. 30, 2012 Fair Value on Nonrecurring Basis Fair Value	Jun. 30, 2011 Fair Value on Nonrecurring Basis Fair Value	Jun. 30, 2012 Fair Value on Nonrecurring Basis Fair Value Hair Restoration Centers	Jun. 30, 2011 Fair Value on Nonrecurring Basis Fair Value Promenade salon concept	Jun. 30, 2012 Fair Value on Nonrecurring Basis Fair Value Regis salon concept	Jun. 30, 2012 Fair Value on Nonrecurring Basis Fair Value Provalliance	Jun. 30, 2012 Fair Value on Nonrecurring Basis Fair Value Empire Education Group, Inc.	Jun. 30, 2012 Fair Value on Nonrecurring Basis Level 3	Jun. 30, 2011 Fair Value on Nonrecurring Basis Level 3	Jun. 30, 2012 Fair Value on Nonrecurring Basis Level 3 Hair Restoration Centers	Jun. 30, 2011 Fair Value on Nonrecurring Basis Level 3 Promenade salon concept	Jun. 30, 2012 Fair Value on Nonrecurring Basis Level 3 Regis salon concept	Jun. 30, 2012 Fair Value on Nonrecurring Basis Level 3 Provalliance	Jun. 30, 2012 Fair Value on Nonrecurring Basis Level 3 Empire Education Group, Inc.
Current assets
Derivative instruments																	$ 145,000	$ 212,000				$ 145,000	$ 212,000
Non-current assets
Equity call option																100,000					117,000					117,000
Current liabilities
Derivative instruments																		599,000					599,000
Non-current liabilities
Equity put option		794,000	22,700,000										633,000	22,700,000		200,000			633,000	22,700,000	161,000			633,000	22,700,000	161,000
Assets and liabilities measured at fair value on a nonrecurring basis
Investment in equity method investee																																							101,304,000	59,683,000						101,304,000	59,683,000
Investment in affiliates, Total Losses																											202,581,000	74,100,000				(37,383,000)	(19,426,000)
Goodwill																																				74,376,000	240,910,000	35,083,000					74,376,000	240,910,000	35,083,000
Goodwill gross		911,929,000	909,676,000	892,053,000		152,802,000	152,796,000	150,380,000																					152,800,000	315,000,000	102,800,000		79,100,000
Fair value of assets measured on nonrecurring basis																																		270,446,000	240,910,000						270,466,000	240,910,000
Goodwill impairment	(74,100,000)	(146,110,000)	(74,100,000)	(35,277,000)	(78,400,000)	(78,426,000)			(74,100,000)	(74,100,000)	(67,700,000)	(35,300,000)																	(78,426,000)	(74,100,000)	(67,684,000)
Total Losses																											(202,919,000)	(74,100,000)
Carrying value of investment in equity method investment																																	79,100,000
Implied fair value																													74,400,000
Impairment charge													17,200,000		19,400,000
Translation rate adjustments		$ (2,725,000)	$ 5,134,000			$ 6,000	$ (3,000)																							$ 300,000

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BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 5) (USD $)	3 Months Ended	12 Months Ended						3 Months Ended	12 Months Ended			3 Months Ended	10 Months Ended	12 Months Ended									3 Months Ended	12 Months Ended
	Mar. 31, 2011	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2012 North American Salons	Jun. 30, 2011 North American Salons	Jun. 30, 2010 North American Salons	Dec. 31, 2011 Hair Restoration Centers	Jun. 30, 2012 Hair Restoration Centers	Jun. 30, 2011 Hair Restoration Centers	Jun. 30, 2010 Hair Restoration Centers	Jun. 30, 2012 Regis	Apr. 30, 2012 Regis	Jun. 30, 2012 Regis	Jun. 30, 2010 Regis	Jun. 30, 2011 Regis	Jun. 30, 2012 MasterCuts	Jun. 30, 2011 MasterCuts	Jun. 30, 2012 SmartStyle	Jun. 30, 2011 SmartStyle	Jun. 30, 2012 Supercuts	Jun. 30, 2011 Supercuts	Mar. 31, 2011 Promenade	Jun. 30, 2012 Promenade	Jun. 30, 2011 Promenade
Goodwill,
Goodwill impairment	$ 74,100,000	$ 146,110,000	$ 74,100,000	$ 35,277,000	$ 67,684,000	$ 74,100,000	$ 35,277,000	$ 78,400,000	$ 78,426,000			$ 67,700,000			$ 35,300,000								$ 74,100,000		$ 74,100,000
Decline in same-store sales (as a percent)													4.00%
Tax benefit from goodwill impairment loss								5,900,000						12,500,000
Minimum excess of fair value over carrying value for reporting units not impaired or likely to be impaired (as a percent)		20.00%
Excess of fair value over carrying value (as a percent)									12.00%															14.00%
Goodwill		$ 536,655,000	$ 680,512,000	$ 736,989,000	$ 462,279,000	$ 527,716,000	$ 586,609,000	$ 74,400,000	$ 74,376,000	$ 152,796,000	$ 150,380,000	$ 34,992,000		$ 34,992,000		$ 103,761,000	$ 4,652,000	$ 4,652,000	$ 49,476,000	$ 48,916,000	$ 129,621,000	$ 129,477,000		$ 243,538,000	$ 240,910,000

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INVESTMENTS IN AND LOANS TO AFFILIATES (Tables)

12 Months Ended

Jun. 30, 2012

INVESTMENTS IN AND LOANS TO AFFILIATES

Schedule of carrying amount of investments in and loans to affiliates

	Provalliance			Empire Education Group, Inc.			MY Style			Hair Club for Men, Ltd.			Total
	(Dollars in thousands)
Balance at June 30, 2010	$	75,481		$	102,882		$	12,116		$	5,307		$	195,786
Acquisition of additional interest(1)		57,301			—			—			—			57,301
Payment of loans by affiliates		—			(15,000	)		—			—			(15,000	)
Loans to affiliates		—			15,000			—			—			15,000
Equity in income of affiliated companies, net of income taxes(2)		7,752			5,463			—			567			13,782
Other than temporary impairment(3)		—			—			(9,173	)		—			(9,173	)
Cash dividends received		(4,814	)		(4,129	)		—			(1,080	)		(10,023	)
Other, primarily translation adjustments		13,525			324			(733	)		351			13,467
Balance at June 30, 2011	$	149,245		$	104,540		$	2,210		$	5,145		$	261,140
Payment of loans by affiliates		—			(1,025	)		—			—			(1,025	)
Equity in income of affiliated companies, net of income taxes(7)		9,759			(4,031	)		—			816			6,544
Other than temporary impairment(4)(5)		(37,383	)		(19,426	)		—			—			(56,809	)
Cash dividends received		(2,769	)		—			—			(1,278	)		(4,047	)
Transfer to current notes receivable(6)		—			(20,375	)		(2,278	)		—			(22,653	)
Other, primarily translation adjustments		(17,548	)		—			68			506			(16,974	)
Balance at June 30, 2012	$	101,304		$	59,683		$	—		$	5,189		$	166,176
Percentage ownership at June 30, 2012		46.7	%		55.1	%		—			50.0	%

(1)

In March of 2011, the Company elected to honor and settle a portion of the equity put option and acquired approximately 17 percent additional equity interest in Provalliance for $57.3 million (€ 40.4 million), bringing the Company's total equity interest to approximately 47 percent.

(2)

Equity in income of affiliated companies, net of income taxes per the Consolidated Statement of Operations includes $7.8 million in equity income of Provalliance and a $2.4 million gain for the decrease in the Provalliance equity put valuation.

(3)

Due to the natural disasters in Japan that occurred in March 2011, the Company was required to assess the preferred shares and premium for other than temporary impairment. As a result, the Company recorded an other than temporary impairment during the twelve months ended June 30, 2011 for the carrying value of the preferred shares and premium of $3.9 million (326,700,000 Yen) and $5.3 million (435,000,000 Yen), respectively. Of the total impairment, $9.0 million was recorded through the equity in income of affiliated companies and $0.2 million was recorded through the interest income and other, net, line items in the Consolidated Statement of Operations.

(4)

On April 9, 2012, the Company entered into the Agreement to sell the Company's 46.7 percent equity interest in Provalliance to the Provost Family for a purchase price of €80 million. During the twelve months ended June 30, 2012, the Company recorded a $17.2 million net impairment charge associated with the Agreement recorded within equity in (loss) income of affiliated companies in the Consolidated Statement of Operations, which consisted of a $37.4 million impairment charge related to the difference between the purchase price and carrying value of the Company's investment in Provalliance, partially offset by a $20.2 million decrease in the fair value of the Equity Put.

(5)

The Company recorded a $19.4 million other than temporary impairment charge in its fourth quarter ended June 30, 2012 on its investment in EEG.

(6)

During the third quarter of fiscal year 2012, the Company had a $20.4 million outstanding loan receivable with EEG that was reclassified in the Consolidated Balance Sheet as other current assets as the loan is due in January 2013.

(7)

Equity in loss of affiliated companies, net of income taxes per the Consolidated Statement of Operations includes the Provalliance $17.2 million net impairment charge discussed in (4) and the $19.4 million impairment charge associated with EEG discussed in (5).

Schedule of summarized financial information of equity method investees

	Equity Method Investee Greater Than 50 Percent Owned							Equity Method Investees Less Than 50 Percent Owned
	2012			2011		2010		2012		2011		2010
	(Dollars in thousands)
Summarized Balance Sheet Information:
Current assets	$	56,516		$	34,715	$	35,070	$	84,914	$	93,280	$	74,040
Noncurrent assets		96,639			113,249		105,469		316,829		314,127		263,472
Current liabilities		61,074			29,340		27,458		107,636		109,416		91,077
Noncurrent liabilities		13,947			33,658		32,017		78,815		98,269		93,055
Summarized Statement of Operations Information:
Gross revenue	$	182,326		$	192,864	$	176,535	$	317,143	$	283,442	$	299,188
Gross profit		67,201			73,068		64,661		137,074		120,992		123,210
Operating (loss) income		(1,335	)		18,994		19,752		35,569		30,084		21,227
Net (loss) income		(7,211	)		11,023		11,082		24,067		21,154		14,763

Schedule of impact of investment in Provalliance on condensed consolidated balance sheet

Impact on Consolidated Balance Sheet

		Carrying Value at June 30,
	Classification	2012		2011
		(Dollars in thousands)
Investment in Provalliance	Investment in and loans to affiliates	$	101,304	$	149,245
Equity Put Option—Provalliance	Other noncurrent liabilities		633		22,700

Schedule of impact of investment in Provalliance on condensed consolidated statement of operations

		For the Twelve Months Ended June 30,
	Classification	2012			2011		2010
		(Dollars in thousands)
Equity in (loss) income, net of income taxes	Equity in (loss) income of affiliated companies, net of income taxes		(9,759	)		7,752		4,134

Schedule of impact of investment in Provalliance on condensed consolidated statement of cash flows

		For the Twelve Months Ended June 30,
	Classification	2012		2011			2010
		(Dollars in thousands)
Equity in loss (income), net of income taxes	Equity in loss (income) of affiliated companies	$	9,759	$	(7,752	)	$	(4,134	)
Cash dividends received	Dividends received from affiliated companies		2,769		4,814			1,141

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FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Jun. 30, 2012

FAIR VALUE MEASUREMENTS

Schedule of assets and liabilities measured at fair value on a recurring basis

			Fair Value Measurements Using Inputs Considered as
	Fair Value at June 30, 2012
			Level 1		Level 2		Level 3
			(Dollars in thousands)
ASSETS
Current assets
Derivative instruments	$	145	$	—	$	145	$	—
Noncurrent assets
Equity call option—Roosters		117		—		—		117
LIABILITIES
Noncurrent liabilities
Equity put option—Provalliance	$	633	$	—	$	—	$	633
Equity put option—Roosters		161		—		—		161

			Fair Value Measurements Using Inputs Considered as
	Fair Value at June 30, 2011
			Level 1		Level 2		Level 3
			(Dollars in thousands)
ASSETS
Current assets
Derivative instruments	$	212	$	—	$	212	$	—
LIABILITIES
Current liabilities
Derivative instruments	$	599	$	—	$	599	$	—
Noncurrent liabilities
Equity put option—Provalliance	$	22,700	$	—	$	—	$	22,700

Schedule of changes in Level 3 financial instruments measured at fair value on a recurring basis

	Changes in Financial Instruments Measured at Level 3 Fair Value Classified as
	Roosters Equity Call Option		Roosters Equity Put Option		Provalliance Equity Put Option
	(Dollars in thousands)
Balance at July 1, 2011	$	—	$	—	$	22,700
Total realized and unrealized gains (losses):
Included in other comprehensive (loss) income		—		—		(1,845	)
Issuances		—		161		—
Purchases		117		—		—
Included in equity in (loss) income of affiliated companies		—		—		(20,222	)
Balance at June 30, 2012	$	117	$	161	$	633

	Changes in Financial Instruments Measured at Level 3 Fair Value Classified as
	Preferred Shares			Provalliance Equity Put Option
	(Dollars in thousands)
Balance at July 1, 2010	$	3,502		$	22,009
Total realized and unrealized gains (losses):
Included in other comprehensive income (loss)		433			3,847
Included in equity in (loss) income of affiliated companies		—			(2,442	)
Transfer out of Level 3		—			(714	)
Other than temporary impairment		(3,935	)		—
Balance at June 30, 2011	$	—		$	22,700

Schedule of assets and liabilities measured at fair value on a nonrecurring basis

	June 30, 2012		Level 1		Level 2		Level 3		Total Losses
	(Dollars in thousands)
Assets
Goodwill—Regis(1)	$	35,083	$	—	$	—	$	35,083	$	(67,684	)
Goodwill—Hair Restoration Centers(2)		74,376		—		—		74,376		(78,426	)
Investment in affiliates—EEG(3)		59,683		—		—		59,683		(19,426	)
Investment in affiliates—Provalliance(4)		101,304		—		—		101,304		(37,383	)
Total	$	270,446	$	—	$	—	$	270,446	$	(202,919	)

(1)

Goodwill of the Regis salon concept with a carrying value of $102.8 million was written down to its implied fair value, resulting in an impairment charge of $67.7 million, which was recorded during fiscal year 2012. See Note 1 to the Consolidated Financial Statements for further information.

(2)

Goodwill of the Hair Restoration Centers reporting unit with a carrying value of $152.8 million was written down to its implied fair value of $74.4 million, resulting in an impairment charge of $78.4 million. See Note 1 to the Consolidated Financial Statements for further information.

(3)

The Company's investment in EEG with a carrying value of $79.1 million was written down to its implied fair value of $59.7 million, resulting in an impairment charge of $19.4 million. See Note 6 to the Consolidated Financial Statements for further information.

(4)

The Company's investment in Provalliance was written down to its implied fair value, resulting in an impairment charge of $37.4 million. See Note 6 to the Consolidated Financial Statements for further information.

	June 30, 2011		Level 1		Level 2		Level 3		Total Losses
	(Dollars in thousands)
Assets
Goodwill—Promenade(1)	$	240,910	$	—	$	—	$	240,910	$	(74,100	)
Total	$	240,910	$	—	$	—	$	240,910	$	(74,100	)

(1)

Goodwill of the Promenade salon concept with a carrying value of $315.0 million was written down to its implied fair value, resulting in an impairment charge of $74.1 million, which was recorded during fiscal year 2011. The Company recorded $0.3 million of translation rate adjustments during the fourth quarter of fiscal year 2011 on the Promenade salon concept goodwill balance.

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DISCONTINUED OPERATIONS

12 Months Ended

Jun. 30, 2012

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

2. DISCONTINUED OPERATIONS

        On February 16, 2009, the Company sold its Trade Secret salon concept (Trade Secret). The Company reported Trade Secret as a discontinued operation.

        The Company has a formal note receivable agreement with the purchaser of Trade Secret. The Company recorded a valuation reserve of $31.2 million during fiscal year 2011. The carrying value of the note receivable was fully reserved as of June 30, 2011. The Company has determined the collectibility of accrued interest on the note receivable to be less than probable. The Company suspended recognition of interest income effective April 2010 and will use the cash basis method for recognizing future interest income. The Company did not receive interest payments from the purchaser of Trade Secret during the twelve months ended June 30, 2012.

        The purchaser of Trade Secret emerged from bankruptcy in March 2012 and in conjunction, the Company entered into a credit and security agreement in which the principal balance of the note receivable was reduced from $35.7 to $18.0 million. Payments of $0.5 million are due quarterly beginning on May 31, 2012. Upon receipt of the quarterly payments through February 2019 the remaining principal and unpaid interest will be forgiven. Included in the agreement was a scheduled extraordinary principal payment to be made in the fourth quarter of fiscal year 2012. The purchaser of Trade Secret satisfied the extraordinary principal payment during the fourth fiscal quarter of 2012 by returning $0.8 million of inventory. The Company recorded the recovery of bad debt expense upon receipt of the inventory in June 2012. The principal payment of $0.5 million due May 31, 2012, was not received as of June 30, 2012. The carrying value of the note receivable continues to be fully reserved at June 30, 2012.

        Effective in the second quarter of fiscal year 2010, the Company has an agreement in which the Company provides warehouse services to the purchaser of Trade Secret. Under the warehouse services agreement, the Company recognized $1.5, $2.7 and $3.0 million of other income related to warehouse services during the twelve months ended June 30, 2012, 2011 and 2010, respectively. The carrying value of the receivable related to warehouse services was $0.2 and $0.3 million as of June 30, 2012 and 2011, respectively.

        The Company utilized the consolidation of variable interest entities guidance to determine whether or not Trade Secret was a VIE, and if so, whether the Company was the primary beneficiary of Trade Secret. The Company concluded that Trade Secret is a VIE based on the fact that the equity investment at risk in Trade Secret is insufficient. The Company determined that the purchaser of Trade Secret has met the power criterion due to the purchaser of Trade Secret having the authority to direct the activities that most significantly impact Trade Secret's economic performance. The Company concluded based on the consideration above that the primary beneficiary of Trade Secret is the purchaser of Trade Secret. The exposure to loss related to the Company's involvement with Trade Secret is the guarantee of approximately 20 operating leases. The Company has determined the exposure to the risk of loss on the guarantee of the operating leases to be immaterial to the financial statements. See Note 10 to the Consolidated Financial Statements for further information on the guaranteed leases.

        The income from discontinued operations is summarized below:

	For the Years Ended June 30,
	2012		2011		2010
	(Dollars in thousands)
Revenues	$	—	$	—	$	—
Income from discontinued operations, before income taxes		—		—		154
Income tax benefit on discontinued operations		1,099		—		3,007
Income from discontinued operations, net of income taxes	$	1,099	$	—	$	3,161

        During the twelve months ended June 30, 2012, the Company recorded a $1.1 million tax benefit in discontinued operations related to the release of tax reserves associated with the disposition of the Trade Secret salon concept.

        During the first quarter of fiscal year 2010, the Company recorded a $3.0 million tax benefit in discontinued operations to correct the prior year calculation of the income tax benefit related to the disposition of the Trade Secret salon concept. The Company does not believe the adjustment is material to its results of operations for the twelve months ended June 30, 2010 or its financial position or results of operations of any prior periods.

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FINANCING ARRANGEMENTS (Tables)

12 Months Ended

Jun. 30, 2012

FINANCING ARRANGEMENTS

Schedule of long-term debt

		Interest rate %		Amounts outstanding
	Maturity Dates	2012	2011	2012			2011
	(fiscal year)			(Dollars in thousands)
Senior term notes	2013 - 2018	6.69 - 8.50%	6.69 - 8.50%	$	111,429		$	133,571
Convertible senior notes	2015	5.00	5.00		161,134			156,248
Revolving credit facility	2016	—	—		—			—
Equipment and leasehold notes payable	2015 - 2016	4.90 - 8.75	8.80 - 9.14		14,780			22,273
Other notes payable	2013	5.75 - 8.00	5.75 - 8.00		331			1,319
					287,674			313,411
Less current portion					(28,937	)		(32,252	)
Long-term portion				$	258,737		$	281,159

Schedule of maturities of long-term debt

Fiscal year	(Dollars in thousands)
2013	$	28,937
2014		24,918
2015		180,245
2016		17,860
2017		17,857
Thereafter		17,857
	$	287,674

Schedule of equity and debt information for convertible senior notes

	Convertible Senior Notes Due July 2014 at
(Dollars in thousands)	June 30, 2012			June 30, 2011
Principal amount on the convertible senior notes	$	172,500		$	172,500
Unamortized debt discount		(11,366	)		(16,252	)
Net carrying amount of convertible debt	$	161,134		$	156,248

Schedule of interest rate and interest expense on convertible senior notes

	Convertible Senior Notes Due July 2014 For the Years Ended June 30,
(Dollars in thousands)	2012		2011
Interest cost related to contractual interest coupon—5.0%	$	8,625	$	8,625
Interest cost related to amortization of the discount		4,886		4,488
Total interest cost	$	13,511	$	13,113

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BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) In Millions, unless otherwise specified	1 Months Ended	12 Months Ended					1 Months Ended	12 Months Ended		3 Months Ended		12 Months Ended
	Jul. 31, 2012 USD ($)	Jun. 30, 2012 Provost Family USD ($)	Jun. 30, 2012 Provalliance USD ($)	Jun. 30, 2012 Provalliance EUR (€)	Mar. 31, 2011 Provalliance	Jan. 31, 2008 Provalliance	Apr. 30, 2012 Provalliance Provost Family EUR (€)	Jun. 30, 2012 Provalliance Provost Family USD ($)	Apr. 09, 2012 Provalliance Provost Family	Jun. 30, 2011 MY Style USD ($)	Mar. 31, 2011 MY Style USD ($)	Jun. 30, 2011 MY Style USD ($)	Jun. 30, 2012 Empire Education Group, Inc. USD ($)	Jan. 31, 2008 Empire Education Group, Inc.	Aug. 01, 2007 Empire Education Group, Inc.
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Definitive agreement to sell Hair Club for Men and Women business	$ 163.5
Investment in and loans to affiliates
Ownership percentage in equity method investee			46.70%	46.70%	46.70%	30.00%			46.70%				55.10%	55.10%	49.00%
Sale price of equity method investment	3,163.5
Purchase price of equity method investment (in Euro)				80			80
Impairment of equity method investment (net of taxes)		17.2	17.2					37.4					19.4
Other than temporary impairment										$ 0.5	$ 8.7	$ 9.2	$ 19.4

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GOODWILL (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended			3 Months Ended	12 Months Ended		12 Months Ended						3 Months Ended	12 Months Ended
	Mar. 31, 2011	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010	Mar. 31, 2011 Promenade salon concept	Jun. 30, 2011 Promenade salon concept	Jun. 30, 2012 Promenade salon concept	Jun. 30, 2012 North American Salons	Jun. 30, 2011 North American Salons	Jun. 30, 2010 North American Salons	Jun. 30, 2012 International Salons	Jun. 30, 2011 International Salons	Jun. 30, 2010 International Salons	Dec. 31, 2011 Hair Restoration Centers	Jun. 30, 2012 Hair Restoration Centers	Jun. 30, 2011 Hair Restoration Centers
Changes in goodwill
Gross goodwill at the beginning of the period		$ 909,676	$ 892,053					$ 715,219	$ 700,012		$ 41,661	$ 41,661	$ 41,661		$ 152,796	$ 150,380
Accumulated impairment losses at the beginning of the period		(229,164)	(155,064)					(187,503)	(113,403)		(41,661)	(41,661)	(41,661)
Net goodwill at the beginning of the period		680,512	736,989				243,538	527,716	586,609						152,796	150,380
Goodwill acquired		4,978	12,489					4,978	10,070							2,419
Translation rate adjustments		(2,725)	5,134					(2,731)	5,137						6	(3)
Goodwill impairment	(74,100)	(146,110)	(74,100)	(35,277)	(74,100)	(74,100)		(67,684)	(74,100)	(35,277)				(78,400)	(78,426)
Gross goodwill at the end of the period		911,929	909,676	892,053				717,466	715,219	700,012	41,661	41,661	41,661		152,802	152,796
Accumulated impairment losses at the end of the period		(375,274)	(229,164)	(155,064)				(255,187)	(187,503)	(113,403)	(41,661)	(41,661)	(41,661)		(78,426)
Net goodwill at the end of the period		$ 536,655	$ 680,512	$ 736,989		$ 240,910	$ 243,538	$ 462,279	$ 527,716	$ 586,609				$ 74,400	$ 74,376	$ 152,796

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QUARTERLY FINANCIAL DATA (UNAUDITED) (Details 2) (USD $)	3 Months Ended		12 Months Ended	3 Months Ended		12 Months Ended	3 Months Ended	12 Months Ended
	Jun. 30, 2011 MY Style	Mar. 31, 2011 MY Style	Jun. 30, 2011 MY Style	Jun. 30, 2011 Purchaser of Trade Secret Notes receivable	Mar. 31, 2011 Purchaser of Trade Secret Notes receivable	Jun. 30, 2011 Purchaser of Trade Secret Notes receivable	Mar. 31, 2012 Trade Secret	Jun. 30, 2012 Trade Secret	Jun. 30, 2010 Trade Secret
Supplemental information
Valuation allowance				$ 22,200,000	$ 9,000,000	$ 31,200,000
Valuation reserves, net of tax						19,200,000
Income tax benefit on discontinued operations							1,100,000	1,099,000	3,007,000
Other than temporary impairment	$ 500,000	$ 8,700,000	$ 9,200,000

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CONSOLIDATED BALANCE SHEET (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
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
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 (Note 10)
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

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BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 6) (USD $)	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Long-Lived Asset Impairment Assessments, Excluding Goodwill:
Impairment of assets	$ 6,636,000	$ 6,681,000	$ 6,428,000
Shipping and Handling Costs:
Shipping and handling costs	3,800,000	3,500,000	2,900,000
North American Salons
Long-Lived Asset Impairment Assessments, Excluding Goodwill:
Impairment of assets	6,066,000	6,115,000	6,253,000
International Salons
Long-Lived Asset Impairment Assessments, Excluding Goodwill:
Impairment of assets	570,000	394,000	175,000
Hair Restoration Centers
Long-Lived Asset Impairment Assessments, Excluding Goodwill:
Impairment of assets		$ 172,000

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CONSOLIDATED STATEMENT OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012		Jun. 30, 2011		Jun. 30, 2010
Cash flows from operating activities:
Net (loss) income	$ (114,093)		$ (8,905)		$ 42,740
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation	101,701		88,602		92,466
Amortization	9,734		9,826		9,870
Equity in loss (income) of affiliated companies	30,043		(7,228)		(11,942)
Dividends received from affiliated companies	4,047		10,023		2,404
Deferred income taxes	(14,171)		(14,711)		5,115
Impairment on discontinued operations					(154)
Goodwill impairment	146,110		74,100		35,277
Salon asset impairments	6,636		6,681		6,428
Note receivable bad debt (recovery) expense	(805)		31,227
Excess tax benefits from stock-based compensation plans			(67)		(243)
Stock-based compensation	7,597		9,596		9,337
Amortization of debt discount and financing costs	6,696		6,469		6,406
Other noncash items affecting earnings	31		1,578		(3,153)
Changes in operating assets and liabilities:
Receivables	(4,502)	[1]	(2,358)	[1]	1,192	[1]
Inventories	2,644	[1]	4,629	[1]	4,823	[1]
Income tax receivable	2,809	[1]	23,855	[1]	957	[1]
Other current assets	(5,272)	[1]	4,725	[1]	2,657	[1]
Other assets	(841)	[1]	(11,050)	[1]	(14,951)	[1]
Accounts payable	(4,856)	[1]	(2,973)	[1]	(4,966)	[1]
Accrued expenses	(8,657)	[1]	3,341	[1]	6,006	[1]
Other noncurrent liabilities	(11,151)	[1]	1,818	[1]	1,954	[1]
Net cash provided by operating activities	153,700		229,178		192,223
Cash flows from investing activities:
Capital expenditures	(85,769)		(71,469)		(57,821)
Proceeds from sale of assets	502		626		70
Asset acquisitions, net of cash acquired and certain obligations assumed	(2,587)		(17,990)		(3,664)
Proceeds from loans and investments	11,995		16,804		16,099
Disbursements for loans and investments	(15,000)		(72,301)
Freestanding derivative settlement					736
Net cash used in investing activities	(90,859)		(144,330)		(44,580)
Cash flows from financing activities:
Borrowings on revolving credit facilities	471,500				337,000
Payments on revolving credit facilities	(471,500)				(342,000)
Proceeds from issuance of long-term debt					167,325
Repayments of long-term debt and capital lease obligations	(29,693)		(137,671)		(349,175)
Excess tax benefits from stock-based compensation plans			67		243
Proceeds from issuance of common stock			682		159,498
Dividends paid	(13,855)		(11,509)		(9,146)
Other					(2,878)
Net cash used in financing activities	(43,548)		(148,431)		(39,133)
Effect of exchange rate changes on cash and cash equivalents	(3,613)		7,975		823
Increase (decrease) in cash and cash equivalents	15,680		(55,608)		109,333
Cash and cash equivalents:
Beginning of year	96,263		151,871		42,538
End of year	$ 111,943		$ 96,263		$ 151,871

[1] Changes in operating assets and liabilities exclude assets acquired and liabilities assumed through acquisitions

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DERIVATIVE FINANCIAL INSTRUMENTS (Details)	12 Months Ended			3 Months Ended			1 Months Ended	12 Months Ended
	Jun. 30, 2012 USD ($)	Jun. 30, 2011 USD ($)	Jun. 30, 2010 USD ($)	Jun. 30, 2011 Interest rate swap USD ($)	Jun. 30, 2012 Cash Flow Hedges Interest rate swap USD ($)	Jun. 30, 2012 Cash Flow Hedges Forward foreign currency contracts CAD	Sep. 30, 2006 Net Investment Hedges Cross currency swap USD ($)	Jun. 30, 2007 Net Investment Hedges Cross currency swap USD ($)
Derivative financial instruments
Number of outstanding interest rate derivatives before debt repayment					2
Notional amount of interest rate derivatives before debt repayment					$ 40,000,000
Total variable rate debt outstanding prior to repayments	85,000,000
Aggregate loss on settlement of derivative				100,000
Amount of hedged item (in Canadian dollars)						600,000
Notional amount of derivative							21,300,000
Cash outlay for derivative							8,900,000
Cumulative tax-effected net income (loss) of derivative recorded in accumulated other comprehensive income (AOCI)	$ 393,000	$ (180,000)	$ (2,594,000)					$ (7,900,000)

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INCOME TAXES (Tables)

12 Months Ended

Jun. 30, 2012

INCOME TAXES

Components of (loss) income before income taxes

	2012			2011			2010
	(Dollars in thousands)
(Loss) income before income taxes:
U.S.	$	(100,792	)	$	(31,963	)	$	35,289
International		10,364			6,334			17,925
	$	(90,428	)	$	(25,629	)	$	53,214

(Benefit) provision for income taxes

	2012			2011			2010
	(Dollars in thousands)
Current:
U.S.	$	6,493		$	3,658		$	5,580
International		2,399			1,557			14,882
Deferred:
U.S.		(13,984	)		(17,882	)		4,007
International		(187	)		3,171			1,108
	$	(5,279	)	$	(9,496	)	$	25,577

Provision for income taxes, reconciliation to applicable U.S. statutory rate

	2012			2011			2010
U.S. statutory rate (benefit)		(35.0	)%		(35.0	)%		35.0	%
State income taxes, net of federal income tax benefit		0.8			0.7			5.9
Tax effect of goodwill impairment		37.9			10.4			12.1
Foreign income taxes at other than U.S. rates		(0.2	)		7.9			(0.8	)
Work Opportunity and Welfare-to-Work Tax Credits		(5.4	)		(15.7	)		(7.0	)
Adjustment of prior year income tax balances		—			—			3.9
Other, net		(3.9	)		(5.4	)		(1.0	)
		(5.8	)%		(37.1	)%		48.1	%

Components of the net deferred tax assets and liabilities

	2012			2011
	(Dollars in thousands)
Deferred tax assets:
Deferred rent	$	15,226		$	15,233
Payroll and payroll related costs		44,454			37,852
Net operating loss carryforwards		797			1,210
Salon asset impairment		5,038			5,176
Inventories		3,027			2,968
Deferred gift card revenue		745			1,536
Federal and state benefit on uncertain tax positions		2,113			8,549
Allowance for doubtful accounts/notes		5,180			9,855
Insurance		6,439			5,669
Other		6,963			6,396
Total deferred tax assets	$	89,982		$	94,444
Deferred tax liabilities:
Depreciation	$	(17,984	)	$	(29,348	)
Amortization of intangibles		(86,431	)		(94,257	)
Accrued property taxes		(2,079	)		(1,942	)
Deferred debt issuance costs		(4,336	)		(6,215	)
Other		(23	)		(3	)
Total deferred tax liabilities	$	(110,853	)	$	(131,765	)
Net deferred tax liabilities	$	(20,871	)	$	(37,321	)

Unrecognized tax benefits

	2012			2011			2010
Balance at beginning of period	$	13,493		$	16,856		$	14,787
Additions based on tax positions related to the current year		482			796			5,549
(Reductions)/additions based on tax positions of prior years		(7	)		(759	)		(185	)
Reductions on tax positions related to the expiration of the statute of limitations		(1,571	)		(2,718	)		(2,993	)
Settlements		(8,016	)		(682	)		(302	)
Balance at end of period	$	4,381		$	13,493		$	16,856

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BENEFIT PLANS (Details) (USD $)	1 Months Ended	12 Months Ended
	Feb. 29, 2012	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Benefit plans
Eligibility age to participate in 401(k) plan (in years)		18
Service period for eligibility to participation in 401(k) plan (in months)		1
Compensation expense		$ 7,600,000	$ 9,600,000	$ 9,300,000
Accrued liability and projected benefit obligation, noncurrent		39,178,000	58,150,000
Accrued liability and projected benefit obligation, current		26,055,000	6,180,000
Deferred Compensation Contracts
Benefit plans
Compensation expense		10,452,000	4,977,000	5,814,000
Deferred Compensation Contracts | Former Chief executive officer
Benefit plans
Deferred compensation as a percentage of salary	60.00%
Compensation expense		3,700,000	1,800,000	3,000,000
Accrued liability and projected benefit obligation, noncurrent		0	11,400,000
Accrued liability and projected benefit obligation, current		15,100,000	0
Deferred Compensation Contracts | Key Executives [Member]
Benefit plans
Discount rate used to estimate obligations (as a percent)		4.00%	5.50%
Projected salary increase (as a percent)			4.00%
Compensation expense		5,900,000	2,500,000	2,200,000
Projected benefit obligation		21,300,000	22,200,000
Accrued liability and projected benefit obligation, noncurrent		11,800,000	17,200,000
Accrued liability and projected benefit obligation, current		9,500,000	5,000,000
Tax-effected accumulated other comprehensive loss for deferred compensation contracts		500,000	1,600,000
Cash values of policies		24,400,000	22,300,000
Deferred Compensation Contracts | Former vice chairman
Benefit plans
Survivor benefit plan for remaining life of spouse as portion of deferred compensation benefit (as a percent)		50.00%
Compensation expense		800,000	700,000	600,000
Accrued liability and projected benefit obligation, noncurrent		4,900,000	5,900,000
Agreed annual payment		600,000	600,000
Cash values of policies		4,500,000	4,200,000
Agreed annual payment after adjustment for inflation		900,000	900,000
Stock Purchase Plan (ESPP)
Benefit plans
Employer contribution as percent of stock purchase price		15.00%
Employer contribution to plan, maximum		10,000,000
Cumulative employer contribution to plan		8,900,000
Compensation expense		449,000	494,000	484,000
Franchise Stock Purchase Plan (FSPP)
Benefit plans
Employer contribution as percent of stock purchase price		5.00%
Employer contribution to plan, maximum		700,000
Cumulative employer contribution to plan		200,000
Compensation expense		9,000	8,000	8,000
Regis Retirement Savings Plan, profit sharing portion
Benefit plans
Minimum period of eligible service to participate in the plan (in years)		1
Requisite service hours in plan year to participate in the plan (in hours)		1,000
Percentage of noncontributory defined contribution component vested after completing two years of service		20.00%
Percentage of noncontributory defined contribution component vesting after each additional year of service		20.00%
Period after which noncontributory defined contribution component becomes fully vested (in years)		P6Y
Compensation expense			1,907,000	3,206,000
Nonqualified Deferred Salary Plan, profit sharing portion
Benefit plans
Percentage of noncontributory defined contribution component vested after completing two years of service		20.00%
Percentage of noncontributory defined contribution component vesting after each additional year of service		20.00%
Period after which noncontributory defined contribution component becomes fully vested (in years)		P6Y
Compensation expense			$ 477,000	$ 654,000

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QUARTERLY FINANCIAL DATA (UNAUDITED)

12 Months Ended

Jun. 30, 2012

QUARTERLY FINANCIAL DATA (UNAUDITED)

QUARTERLY FINANCIAL DATA (UNAUDITED)

16. QUARTERLY FINANCIAL DATA (UNAUDITED)

        Summarized quarterly data for fiscal years 2012 and 2011 follows:

	Quarter Ended
	September 30		December 31			March 31			June 30			Year Ended
	(Dollars in thousands, except per share amounts)
2012
Revenues	$	568,749	$	563,278		$	573,584		$	568,168		$	2,273,779
Gross margin, excluding royalties and depreciation		252,627		247,697			249,010			249,027			998,361
Operating income (loss)(a)		13,072		(61,617	)		25,200			(43,968	)		(67,313	)
Income (loss) from continuing operations(a)(b)		8,337		(57,427	)		(2,468	)		(63,634	)		(115,192	)
Income (loss) from discontinued operations(c)		—		—			1,099			—			1,099
Net income (loss)(a)(b)		8,337		(57,427	)		(1,369	)		(63,634	)		(114,093	)
Income (loss) from continuing operations per share, basic		0.15		(1.01	)		(0.04	)		(1.11	)		(2.02	)
Income from discontinued operations per share, basic		—		—			0.02			—			0.02
Net income (loss) per basic share(f)		0.15		(1.01	)		(0.02	)		(1.11	)		(2.00	)
Income (loss) from continuing operations per share, diluted		0.15		(1.01	)		(0.04	)		(1.11	)		(2.02	)
Income (loss) from discontinued operations per share, diluted		—		—			0.02			—			0.02
Net income (loss) per diluted share(f)		0.15		(1.01	)		(0.02	)		(1.11	)		(2.00	)
Dividends declared per share		0.06		0.06			0.06			0.06			0.24

Refer to Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 6 in this Form 10-K for explanations of items, which impacted fiscal year 2012 revenues, operating and net income (loss).

	Quarter Ended
	September 30		December 31		March 31			June 30			Year Ended
	(Dollars in thousands, except per share amounts)
2011
Revenues	$	578,245	$	574,372	$	581,267		$	591,985		$	2,325,869
Gross margin, excluding royalties and depreciation		257,558		251,132		253,017			261,614			1,023,321
Operating income (loss)(a)(d)		33,434		22,864		(59,504	)		7,154			3,948
Income (loss) from continuing operations(a)(d)(e)		18,320		14,505		(25,335	)		(16,395	)		(8,905	)
Net income (loss)(a)(d)(e)		18,320		14,505		(25,335	)		(16,395	)		(8,905	)
Income (loss) from continuing operations per share, basic		0.32		0.26		(0.45	)		(0.29	)		(0.16	)
Net income (loss) per basic share		0.32		0.26		(0.45	)		(0.29	)		(0.16	)
Income (loss) from continuing operations per share, diluted		0.30		0.24		(0.45	)		(0.29	)		(0.16	)
Net income (loss) per diluted share		0.30		0.24		(0.45	)		(0.29	)		(0.16	)
Dividends declared per share		0.04		0.04		0.06			0.06			0.20

Refer to Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 6 in this Form 10-K for explanations of items, which impacted fiscal year 2011 revenues, operating and net income.

(a)

Expense of $67.7 million ($55.2 million net of tax) was recorded in the fourth quarter ended June 30, 2012 related to our Regis salon concept goodwill impairment. Expense of $78.4 million ($72.6 million net of tax) was recorded in the second quarter ended December 31, 2011 related to our Hair Restoration Centers reporting unit goodwill impairment. Expense of $74.1 million ($50.8 million net of tax) was recorded in the third quarter ended March 31, 2011 related to our Promenade salon concept goodwill impairment due to recent performance challenges in that concept.

(b)

Expense of $17.2 million was recorded during fiscal year 2012 related to the impairment of our investment in Provalliance as a result of the Company entering into a Share Purchase Agreement to sell the Company's 46.7 percent equity interest in Provalliance for a purchase price of €80 million. Expense of $19.4 million was recorded during fiscal year 2012 related to the impairment of our investment in EEG.

(c)

During the third quarter ended March 31, 2012, the Company recorded a $1.1 million tax benefit in discontinued operations related to the release of tax reserves associated with the disposition of the Trade Secret salon concept.

(d)

Operating income and net income decreased $31.2 million ($19.2 million net of tax) as a result of a valuation reserve on a note receivable with the purchase of Trade Secret that was recorded in the third quarter ($9.0 million) and fourth quarter ($22.2 million) of fiscal year 2011.

(e)

Income (loss) from continuing operations and net income decreased as a result of $9.2 million that was recorded in the third quarter ($8.7 million) and in the fourth quarter ($0.5 million) as a result of an other than temporary impairment on an investment in preferred shares of Yamano and a premium paid at the time of an initial investment in MY Style.

(f)

Total is a recalculation; line items calculated individually may not sum to total.

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BENEFIT PLANS (Tables)

12 Months Ended

Jun. 30, 2012

BENEFIT PLANS

Schedule of compensation expenses

	2012		2011		2010
	(Dollars in thousands)
RRSP Plan profit sharing	$	—	$	1,907	$	3,206
Executive Plan profit sharing		—		477		654
ESPP		449		494		484
FSPP		9		8		8
Deferred compensation contracts		10,452		4,977		5,814

XML

BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Jun. 30, 2012

BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation

        The Consolidated Financial Statements include the accounts of the Company and its subsidiaries after the elimination of intercompany accounts and transactions. All material subsidiaries are wholly owned. The Company consolidated variable interest entities where it has determined it is the primary beneficiary of those entities' operations.

Use of Estimates

        The preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the U.S. of America (GAAP) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Foreign Currency Translation

        Financial position, results of operations and cash flows of the Company's international subsidiaries are measured using local currency as the functional currency. Assets and liabilities of these subsidiaries are translated at the exchange rates in effect at each fiscal year end. Translation adjustments arising from the use of differing exchange rates from period to period are included in accumulated other comprehensive income within shareholders' equity. Statement of Operations accounts are translated at the average rates of exchange prevailing during the year. The different exchange rates from period to period impact the amount of reported income from the Company's international operations.

Cash and Cash Equivalents

        Cash equivalents consist of investments in short-term, highly liquid securities having original maturities of three months or less, which are made as a part of the Company's cash management activity. The carrying values of these assets approximate their fair market values. The Company primarily utilizes a cash management system with a series of separate accounts consisting of lockbox accounts for receiving cash, concentration accounts that funds are moved to, and several "zero balance" disbursement accounts for funding of payroll and accounts payable. As a result of the Company's cash management system, checks issued, but not presented to the banks for payment, may create negative book cash balances. There were no checks outstanding in excess of related book cash balances at June 30, 2012 and 2011.

Receivables and Allowance for Doubtful Accounts

        The receivable balance on the Company's Consolidated Balance Sheet primarily includes accounts and notes receivable from franchisees and credit card receivables. The balance is presented net of an allowance for expected losses (i.e., doubtful accounts), primarily related to the receivables from the Company's franchisees. The Company monitors the financial condition of its franchisees and records provisions for estimated losses on receivables when it believes its franchisees are unable to make their required payments based on factors such as delinquencies and aging trends. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses related to existing accounts and notes receivables.

        The following table summarizes the activity in the allowance for doubtful accounts:

	For the Years Ended June 30,
	2012			2011			2010
	(Dollars in thousands)
Beginning balance	$	1,482		$	3,170		$	2,382
Bad debt expense		454			853			1,040
Write-offs		(714	)		(2,549	)		(252	)
Other (primarily the impact of foreign currency fluctuations)		10			8			—
Ending balance	$	1,232		$	1,482		$	3,170

Note Receivables, Net

        The note receivable balances within the Company's Consolidated Balance Sheet primarily include note receivables related to the Company's investments in EEG and MY Style, a note receivable with the purchaser of Trade Secret and note receivables with our franchisees. The Company monitors the financial condition of its counterparties with an outstanding note receivable and records provisions for estimated losses on receivables when it believes the counterparties are unable to make their required payments. As of June 30, 2012, the outstanding note receivable balances with EEG and MY Style were in good standing with no associated valuation allowance. See discussion of the note receivables related to the purchaser of Trade Secret and Company's investments in EEG and MY Style within Notes 2 and 6, respectively, to the Consolidated Financial Statements.

Inventories

        Inventories of finished goods consist principally of hair care products for retail product sales. A portion of inventories are also used for salon services consisting of hair color, hair care products including shampoo and conditioner and hair care treatments including permanents, neutralizers and relaxers. Inventories are stated at the lower of cost or market, with cost determined on a weighted average cost basis.

        Physical inventory counts are performed annually. Product and service inventories are adjusted based on the results of the physical inventory counts. Between the physical inventory counts, cost of retail product sold to salon guests is determined based on the weighted average cost of product sold, adjusted for an estimated shrinkage factor, and the cost of product used in salon services is determined by applying estimated gross profit margins to service revenues. The estimated gross profit margins related to service inventories are updated semi-annually based on the results of the physical inventory counts and other factors that could impact the Company's margin rate estimates such as mix of service sales, discounting and special promotions. Actual results for the estimated gross margin percentage as compared to the semi-annual estimates have not historically resulted in material adjustments to our Statement of Operations.

Property and Equipment

        Property and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation and amortization of property and equipment are computed on the straight-line method over estimated useful asset lives (30 to 39 years for buildings, 10 years for improvements and three to ten years for equipment, furniture and software). Depreciation expense was $101.7, $88.6, and $92.5 million in fiscal years 2012, 2011, and 2010, respectively. Leasehold improvements are amortized over the shorter of their estimated useful lives or the related lease term, generally ten years. For leases with renewal periods at the Company's option, management may determine at the inception of the lease that renewal is reasonably assured if failure to exercise a renewal option imposes an economic penalty to the Company. In such cases, the Company will include the renewal option period along with the original lease term in the determination of appropriate estimated useful lives.

        The Company capitalizes both internal and external costs of developing or obtaining computer software for internal use. Costs incurred to develop internal-use software during the application development stage are capitalized, while data conversion, training and maintenance costs associated with internal-use software are expensed as incurred. At June 30, 2012 and 2011, the net book value of capitalized software costs was $26.7 and $34.1 million, respectively. Depreciation expense related to capitalized software was $22.3, $8.4, and $8.5 million in fiscal years 2012, 2011, and 2010, respectively, which has been determined based on an estimated useful life of five or seven years.

        Historically, because of the Company's large size and scale requirements it has been necessary for the Company to internally develop and support its own proprietary point-of-sale (POS) information system. During the fourth quarter of fiscal year 2011, the Company identified a third party POS alternative that has a system that meets current and future functionality requirements including enhanced guest demographics. At June 30, 2011, the Company reassessed and adjusted the remaining useful life of the Company's capitalized POS software to six months as locations using the Company's existing POS information system move to a third party POS alternative by December 31, 2011. Based on the results of the implementation of the third party POS alternative during each of the three month periods ended March 31, 2012 and December 31, 2011, the Company reassessed and extended the useful life of the Company's capitalized POS software by three months. Depreciation expense related to the existing POS information system during the twelve months ended June 30, 2012, included $16.2 million ($10.2 million net of tax or $0.18 per diluted share) of accelerated depreciation related to the change in useful life. As of June 30, 2012, the previously internally developed POS was fully depreciated.

        Expenditures for maintenance and repairs and minor renewals and betterments, which do not improve or extend the life of the respective assets are expensed. All other expenditures for renewals and betterments are capitalized. The assets and related depreciation and amortization accounts are adjusted for property retirements and disposals with the resulting gain or loss included in operating income. Fully depreciated or amortized assets remain in the accounts until retired from service.

Investment In and Loans to Affiliates

        The Company has equity investments in securities of certain privately held entities. The Company accounts for these investments under the equity method of accounting. The Company also has loans receivable from certain of these entities. Investments accounted for under the equity method are recorded at the amount of the Company's investment and adjusted each period for the Company's share of the investee's income or loss. Investments are reviewed for changes in circumstance or the occurrence of events that suggest the Company's investment may not be recoverable. During fiscal year 2012, we entered into a Share Purchase Agreement to sell the Company's 46.7 percent equity interest in Provalliance for a purchase price of €80 million. As such, we recorded a net impairment of $17.2 million related to our investment in Provalliance. In addition, during fiscal year 2012, we recorded an impairment of $19.4 million related to our investment in EEG. During fiscal year 2011, we recorded an impairment of $9.2 million related to our investment in MY Style. See further discussion within Note 6 to the Consolidated Financial Statements.

Self Insurance Accruals

        The Company uses a combination of third party insurance and self-insurance for a number of risks including workers' compensation, health insurance, employment practice liability and general liability claims. The liability represents the Company's estimate of the undiscounted ultimate cost of uninsured claims incurred as of the balance sheet date.

        The workers' compensation, general liability and employment practice liability analysis includes applying loss development factors to the Company's historical claims data (total paid and incurred amounts per claim) for all policy years where the Company has not reached its aggregate limits to project the future development of incurred claims. The workers' compensation analysis is performed for three models; California, Texas and all other states. A variety of accepted actuarial methodologies are followed to determine these liabilities, including several methods to predict the loss development factors for each policy period. These liabilities are determined by modeling the frequency (number of claims) and severity (cost of claims), fitting statistical distributions to the experience, and then running simulations. A similar analysis is performed for both general liability and employment practices liability; however, it is a single model for all liability claims rather than the three separate models used for workers' compensation.

        The health insurance analysis utilizes trailing twelve months of paid and 24 months of incurred medical and prescription claims to project the amount of incurred but not yet reported claims liability amount. The lag factors are developed based on the Company's specific claim data utilizing a completion factor methodology. The developed factor, expressed as a percentage of paid claims, is applied to the trailing twelve months of paid claims to calculate the estimated liability amount. The calculated liability amount is reviewed for reasonableness based on reserve adequacy ranges for historical periods by testing prior reserve levels against actual expenses to date.

        Although the Company does not expect the amounts ultimately paid to differ significantly from the estimates, self-insurance accruals could be affected if future claims experience differs significantly from the historical trends and actuarial assumptions. For fiscal year 2012, the Company recorded an increase in expense from changes in estimates related to prior year open policy periods related to continuing operations of $0.7 million. For fiscal year 2011, the Company recorded an increase in expense from changes in estimates related to prior year open policy periods related to continuing operations of $1.4 million. For fiscal year 2010, the Company recorded a decrease in expense from changes in estimates related to prior year open policy periods related to continuing operations of $1.7 million. A 10.0 percent change in the self-insurance reserve would affect (loss) income from continuing operations before income taxes and equity in (loss) income of affiliated companies by $4.8, $4.6, and $4.5 million for the three years ended June 30, 2012, 2011 and 2010, respectively. The Company updates loss projections twice each year and adjusts its recorded liability to reflect the current projections. The updated loss projections consider new claims and developments associated with existing claims for each open policy period. As certain claims can take years to settle, the Company has multiple policy periods open at any point in time.

        As the workers' compensation accrual is the majority of the self-insurance accrual, below is a rollforward of the activity within the Company's workers' compensation self-insurance accrual:

	For the Years Ended June 30,
	2012			2011			2010
	(Dollars in thousands)
Beginning balance	$	32,994		$	30,082		$	31,505
Provision for incurred losses		14,133			13,993			14,739
Prior year actuarial loss development		1,221			2,231			35
Claim payments		(14,140	)		(12,584	)		(14,867	)
Other, net		415			(728	)		(1,330	)
Ending balance	$	34,623		$	32,994		$	30,082

        As of June 30, 2012, the Company had $15.5 and $32.5 million recorded in current liabilities and noncurrent liabilities, respectively, related to the Company's self-insurance accruals, which includes the workers' compensation self-insurance accrual. As of June 30, 2011, the Company had $14.7 and $30.9 million recorded in current liabilities and noncurrent liabilities, respectively, related to the Company's self-insurance accruals, which includes the workers' compensation self-insurance accrual.

Goodwill

        Goodwill is tested for impairment annually or at the time of a triggering event. In evaluating whether goodwill is impaired, the Company compares the carrying value of each reporting unit, including goodwill, to the estimated fair value of the reporting unit. The carrying value of each reporting unit is based on the assets and liabilities associated with the operations of the reporting unit, including allocation of shared or corporate balances among reporting units. Allocations are generally based on the number of salons in each reporting unit as a percent of total company-owned salons.

        The Company calculates the estimated fair value of the reporting units based on discounted future cash flows that utilize estimates in annual revenue, gross margins, fixed expense rates, allocated corporate overhead, and long-term growth rates for determining terminal value. The Company's estimated future cash flows also take into consideration acquisition integration and maturation. Where available and as appropriate, comparative market multiples are used in conjunction with the results of the discounted cash flows. The Company considers its various concepts to be reporting units when testing for goodwill impairment because that is where the goodwill resides. The Company periodically engages third-party valuation consultants to assist in evaluation of the Company's estimated fair value calculations.

        In the situations where a reporting unit's carrying value exceeds its estimated fair value, the amount of the impairment loss must be measured. The measurement of impairment is calculated by determining the implied fair value of a reporting unit's goodwill. In calculating the implied fair value of goodwill, the fair value of the reporting unit is allocated to all other assets and liabilities of that unit based on the relative fair values under the assumption of a taxable transaction. The excess of the fair value of the reporting unit over the amount assigned to its assets and liabilities is the implied fair value of goodwill. The goodwill impairment is measured as the excess of the carrying value of goodwill over its implied fair value.

        As previously disclosed, the Company concluded that it was reasonably likely that goodwill for the Regis and Hair Restoration Centers reporting units might become impaired in future periods. During the three months ended December 31, 2011 the Company updated the projections for the Hair Restoration Centers reporting unit used in the fiscal 2011 annual impairment test to reflect the impact of recent industry developments, including a slow down in revenue growth and increasing supply costs. The Company determined there was a triggering event as it was more likely than not that the fair value of the Hair Restoration Centers was below carrying value and performed an interim impairment test of goodwill during the three months ended December 31, 2011. There were no triggering events relative to the Company's other reporting units.

        As a result of the Company's interim impairment test of goodwill related to the Hair Restoration Centers reporting unit during the second quarter of fiscal year 2012, a $78.4 million impairment charge was recorded within continuing operations for the excess of the carrying value of goodwill over the implied fair value of the goodwill for the Hair Restorations Centers reporting unit. After the impairment charge the Hair Restoration Centers reporting unit had $74.4 million of goodwill. The impairment was only partially deductible for tax purposes resulting in a tax benefit of $5.9 million. See further discussion on the effective tax rate for the twelve months ended June 30, 2012 within Note 12 to the Consolidated Financial Statements.

        As a result of the Company's annual impairment testing of goodwill during the fourth quarter of fiscal year 2012, a $67.7 million impairment charge was recorded within continuing operations for the excess of the carrying value of goodwill over the implied fair value of the goodwill for the Regis salon concept. The Regis salon concept reported same-store sales of negative 4.0 percent for the ten months ended April 30, 2012, which was unfavorable compared to the Company's budgeted same-store sales. Visitation patterns did not rebound as quickly as the Company originally projected. Accordingly, the Company reduced the budgeted financial projections for future years. After the impairment charge the Regis salon concept reporting unit had $35.1 million of goodwill. The impairment was only partially deductible for tax purposes resulting in a tax benefit of $12.5 million.

        As of June 30, 2012, the estimated fair value of the Promenade salon concept and Hair Restoration Centers reporting units exceeded the carrying value by approximately 14.0 and 12.0 percent, respectively. The respective fair values of the Company's remaining reporting units exceeded carrying value by greater than 20.0 percent at June 30, 2012. While the Company has determined the estimated fair value of Promenade to be appropriate based on the historical level of revenue growth, operating income and cash flows, it is reasonably likely that Promenade may experience additional impairment in future periods. As previously disclosed, the Company has agreed to sell the Hair Restoration Centers reporting unit in the first half of fiscal year 2013; however, until this reporting unit is sold it is reasonably likely that there could be impairment of the Hair Restoration Centers reporting unit's goodwill in future periods. The term "reasonably likely" refers to an occurrence that is more than remote but less than probable in the judgment of the Company. Because some of the inherent assumptions and estimates used in determining the fair value of the reportable segment are outside the control of management, changes in these underlying assumptions can adversely impact fair value. Potential impairment of a portion or all of the carrying value of goodwill for the Promenade salon concept and Hair Restoration Centers reporting units is dependent on many factors and cannot be predicted with certainty.

        As of June 30, 2012, the Company's estimated fair value, as determined by the sum of our reporting units' fair value reconciled to within a reasonable range of our market capitalization which included an assumed control premium.

        A summary of the Company's goodwill balance as of June 30, 2012 and 2011 by reporting unit is as follows:

Reporting Unit	June 30, 2012		June 30, 2011
	(Dollars in thousands)
Regis	$	34,992	$	103,761
MasterCuts		4,652		4,652
SmartStyle		49,476		48,916
Supercuts		129,621		129,477
Promenade		243,538		240,910
Total North America Salons		462,279		527,716
Hair Restoration Centers		74,376		152,796
Consolidated Goodwill	$	536,655	$	680,512

        As a result of the goodwill impairment analyses performed in fiscal years 2011 and 2010, the Company recorded $74.1 and $35.3 million, respectively, impairment charges within continuing operations for the excess of the carrying value of goodwill over the implied fair value of goodwill for the Promenade salon concept in fiscal year 2011 and the Regis salon concept in fiscal year 2010.

Long-Lived Asset Impairment Assessments, Excluding Goodwill

        The Company reviews long-lived assets for impairment at the salon level annually or if events or circumstances indicate that the carrying value of such assets may not be recoverable. The Company's test for impairment of property and equipment is performed at a salon level, as this is the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. Impairment is evaluated based on the sum of undiscounted estimated future cash flows expected to result from use of the assets that does not recover the carrying value of the related salon assets. When the sum of a salon's undiscounted estimated future cash flow is zero or negative, impairment is measured as the full carrying value of the related salon's equipment and leasehold improvements. When the sum of a salon's undiscounted cash flows is greater than zero but less than the carrying value of the related salon's equipment and leasehold improvements, a discounted cash flow analysis is performed to estimate the fair value of the salon assets and impairment is measured as the difference between the carrying value of the salon assets and the estimated fair value. The fair value estimate is based on the best information available, including market data.

        As a result of the Company's annual impairment analysis of long-lived assets, the following impairment charges were recognized during fiscal years 2012, 2011, and 2010, respectively, related primarily to the carrying value of certain salons' property and equipment within our North American, International, and Hair Restoration Centers segments:

	For the Years Ended June 30,
	2012		2011		2010
	(Dollars in thousands)
North American salons	$	6,066	$	6,115	$	6,253
International salons		570		394		175
Hair restoration centers		—		172		—
Total	$	6,636	$	6,681	$	6,428

        The Company also evaluated the appropriateness of the remaining useful lives of its non-impaired property and equipment and whether a change to the depreciation charge was warranted. Impairment charges for continuing operations are included in depreciation related to company-owned salons in the Consolidated Statement of Operations.

Deferred Rent and Rent Expense

        The Company leases most salon and hair restoration center locations under operating leases. Rent expense is recognized on a straight-line basis over the lease term. Tenant improvement allowances funded by landlord incentives, rent holidays, and rent escalation clauses which provide for scheduled rent increases during the lease term or for rental payments commencing at a date other than the date of initial occupancy are recorded in the Consolidated Statements of Operations on a straight-line basis over the lease term (including one renewal option period if renewal is reasonably assured based on the imposition of an economic penalty for failure to exercise the renewal option). The difference between the rent due under the stated periods of the lease compared to that of the straight-line basis is recorded as deferred rent within other noncurrent liabilities in the Consolidated Balance Sheet.

        For purposes of recognizing incentives and minimum rental expenses on a straight-line basis over the terms of the leases, the Company uses the date that it obtains the legal right to use and control the leased space to begin amortization, which is generally when the Company enters the space and begins to make improvements in preparation of intended use of the leased space.

        Certain leases provide for contingent rents, which are determined as a percentage of revenues in excess of specified levels. The Company records a contingent rent liability in accrued expenses on the Consolidated Balance Sheet, along with the corresponding rent expense in the Consolidated Statement of Operations, when specified levels have been achieved or when management determines that achieving the specified levels during the fiscal year is probable.

Revenue Recognition and Deferred Revenue

        Company-owned salon revenues and related cost of sales are recognized 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 guest's payment. Revenues from purchases made with gift cards are also recorded when the guest takes possession of the merchandise or services are provided. Gift cards issued by the Company are recorded as a liability (deferred revenue) until they are redeemed.

        Product sales by the Company to its franchisees are included within product revenues on the Consolidated Statement of Operations and recorded at the time product is shipped to franchise locations. The related cost of product sold to franchisees is included within cost of product in the Consolidated Statement of Operations.

        Company-owned hair restoration center revenues stem primarily from servicing hair systems and surgical procedures, as well as through product and hair system sales. The Company records deferred revenue for contracts related to the servicing of hair systems and recognizes the revenue ratably over the term of the service contract. Revenues are recognized related to surgical procedures when the procedure is performed. Product revenues, including sales of hair systems, are recognized at the time of application, as this is when delivery occurs and payment is probable.

        Franchise revenues primarily include royalties, initial franchise fees and net rental income (see Note 10). Royalties are recognized as revenue in the month in which franchisee services are rendered. The Company recognizes revenue from initial franchise fees at the time franchise locations are opened, as this is generally when the Company has performed all initial services required under the franchise agreement.

Consideration Received from Vendors

        The Company receives consideration for a variety of vendor-sponsored programs. These programs primarily include volume rebates and promotion and advertising reimbursements. Promotion and advertising reimbursements are discussed under Advertising within this note.

        With respect to volume rebates, the Company estimates the amount of rebate it will receive and accrues it as a reduction of the cost of inventory over the period in which the rebate is earned based upon historical purchasing patterns and the terms of the volume rebate program. A periodic analysis is performed, at least quarterly, in order to ensure that the estimated rebate accrued is reasonable, and any necessary adjustments are recorded.

Shipping and Handling Costs

        Shipping and handling costs are incurred to store, move and ship product from the Company's distribution centers to company-owned and franchise locations, and include an allocation of internal overhead. Such shipping and handling costs related to product shipped to company-owned locations are included in site operating expenses in the Consolidated Statement of Operations. Shipping and handling costs related to shipping product to franchise locations totaled $3.8, $3.5, and $2.9 million during fiscal years 2012, 2011, and 2010, respectively, and are included within general and administrative expenses on the Consolidated Statement of Operations. Any amounts billed to the franchisee for shipping and handling are included in product revenues within the Consolidated Statement of Operations.

Advertising

        Advertising costs, including salon collateral material, are expensed as incurred. Advertising costs expensed and included in continuing operations in fiscal years 2012, 2011 and 2010 was $58.7, $63.3, and $54.9 million, respectively.

        The Company participates in cooperative advertising programs under which the vendor reimburses the Company for costs related to advertising for its products. The Company records such reimbursements as a reduction of advertising expense when the expense is incurred. During fiscal years 2012, 2011, and 2010, no amounts were received in excess of the Company's related expense.

Advertising Funds

        The Company has various franchising programs supporting its franchise salon concepts consisting of Supercuts, Cost Cutters, First Choice Haircutters, Magicuts, Pro-Cuts, Beauty Supply Outlet and Hair Club. Most of the concepts maintain advertising funds that provide comprehensive advertising and sales promotion support.

        The Supercuts advertising fund is the Company's largest advertising fund. The Supercuts advertising fund is administered by a council consisting primarily of franchisee representatives. The council has overall control of all of the fund's expenditures and operates in accordance with terms of the franchise operating and other agreements.

        Each Supercuts salon contributes 5.0 percent of service revenues to the fund (contributions for other concepts range between 1.5 and 5.0 percent). The majority of the advertising funds are spent to support media placement and local marketing activities. The remainder is allocated for the creation of national advertising campaigns and system wide activities. None of the Supercuts advertising funds collected may be used by the Company as reimbursement for the cost of administering the advertising fund. Advertising funds can only be used as directed by the fund's council and are considered to be restricted.

        The Company records all advertising funds as assets and liabilities within the Company's Consolidated Balance Sheet. As of June 30, 2012 and 2011, approximately $14.8 and $16.7 million, respectively, of the advertising funds' assets and liabilities were recorded within total assets and total liabilities in the Company's Consolidated Balance Sheet.

        The Company records advertising expense in the period the company-owned salon makes contributions to the respective advertising fund. During fiscal years 2012, 2011, and 2010, total contributions to the franchise brand advertising funds totaled $42.0, $41.9, and $39.8 million, respectively.

        The Company acts as an agent for the franchisees with regard to these contributions to the advertising funds. Thus, in accordance with guidance for accounting for franchise fee revenue, the Company does not reflect contributions to these advertising funds by its franchisees in its Consolidated Statement of Operations or Consolidated Statement of Cash Flows but reflects the related assets and liabilities in its Consolidated Balance Sheet.

Preopening Expenses

        Non-capital expenditures such as payroll, training costs and promotion incurred prior to the opening of a new location are expensed as incurred.

Sales Taxes

        Sales taxes are recorded on a net basis (rather than as both revenue and an expense) within the Company's Consolidated Statement of Operations.

Income Taxes

        Deferred income tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the Consolidated Financial Statements or income tax returns. Deferred income tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using currently enacted tax rates in effect for the years in which the differences are expected to reverse. Realization of deferred tax assets is ultimately dependent upon future taxable income. Inherent in the measurement of deferred balances are certain judgments and interpretations of tax laws and published guidance with respect to the Company's operations. Income tax expense is primarily the current tax payable for the period and the change during the period in certain deferred tax assets and liabilities.

Net (Loss) Income Per Share

        The Company's basic earnings per share is calculated as net (loss) income divided by weighted average common shares outstanding, excluding unvested outstanding restricted stock awards and restricted stock units. The Company's dilutive earnings per share is calculated as net (loss) income divided by weighted average common shares and common share equivalents outstanding, which includes shares issuable under the Company's stock option plan and long-term incentive plan, and dilutive securities. Stock-based awards with exercise prices greater than the average market value of the Company's common stock are excluded from the computation of diluted earnings per share. The Company's diluted earnings per share will also reflect the assumed conversion under the Company's convertible debt if the impact is dilutive, along with the exclusion of interest expense, net of taxes. The impact of the convertible debt is excluded from the computation of diluted earnings per share when interest expense per common share obtainable upon conversion is greater than basic earnings per share.

Comprehensive (Loss) Income

        Components of comprehensive (loss) income for the Company include net (loss) income, changes in fair value of financial instruments designated as hedges of interest rate or foreign currency exposure, recognition of deferred compensation, and foreign currency translation charged or credited to the cumulative translation account within shareholders' equity. These amounts are presented in the Consolidated Statements of Changes in Shareholders' Equity and Comprehensive Income.

	2012			2011			2010
	(Dollars in thousands)
Accumulated Other Comprehensive Income, balance at July 1	$	77,946		$	47,032		$	51,855
Cumulative translation adjustment:
Balance at July 1		87,814			57,409			62,825
Pre-tax amount		(24,254	)		30,405			(5,416	)
Tax effect		—			—			—
Net of tax amount		(24,254	)		30,405			(5,416	)
Balance at June 30		63,560			87,814			57,409
Unrecognized loss on net investment hedge:
Balance at July 1		(7,932	)		(7,932	)		(7,932	)
Pre-tax amount		—			—			—
Tax effect		—			—			—
Net of tax amount		—			—			—
Balance at June 30		(7,932	)		(7,932	)		(7,932	)
Changes in fair market value of financial instruments designated as cash flow hedges:
Balance at July 1		(372	)		(504	)		(2,971	)
Pre-tax amount		603			218			3,949
Tax effect		(210	)		(86	)		(1,482	)
Net of tax amount		393			132			2,467
Balance at June 30		21			(372	)		(504	)
Recognition of deferred compensation:
Balance at July 1		(1,564	)		(1,941	)		(67	)
Pre-tax amount		1,673			609			(3,184	)
Tax effect		(644	)		(232	)		1,310
Net of tax amount		1,029			377			(1,874	)
Balance at June 30		(535	)		(1,564	)		(1,941	)
Accumulated Other Comprehensive Income, balance at June 30	$	55,114		$	77,946		$	47,032

Derivative Instruments

        The Company may manage its exposure to interest rate and foreign currency risk within the Consolidated Financial Statements through the use of derivative financial instruments, according to its hedging policy. The Company does not use derivatives with a level of complexity or with a risk higher than the exposures to be hedged and does not hold or issue derivatives for trading or speculative purposes. The Company currently has or has had interest rate swaps designated as both cash flow and fair value hedges, treasury locks designated as cash flow hedges, a hedge of its net investment in its European operations and forward foreign currency contracts designated as cash flow hedges of forecasted transactions denominated in a foreign currency. Refer to Note 9 to the Consolidated Financial Statements for further discussion.

        The Company follows guidance for accounting for derivative instruments and hedging activities, as amended and interpreted, which requires that all derivatives be recorded on the balance sheet at fair value. This guidance also requires companies to designate all derivatives that qualify as hedging instruments as fair value hedges, cash flow hedges or hedges of net investments in foreign operations. This designation is based upon the exposure being hedged. Cash flow and fair value hedges are designated and documented at the inception of each hedge by matching the terms of the contract to the underlying transaction. At inception, as dictated by the facts and circumstances, all hedges are expected to be highly effective, as the critical terms of these instruments are generally the same as those of the underlying risks being hedged. All derivatives designated as hedging instruments are assessed for effectiveness on an on-going basis. For purposes of the Consolidated Statement of Cash Flows, cash flows associated with all derivatives (designated as hedges or freestanding economic hedges) are classified in the same category as the related cash flows subject to the hedging relationship.

Stock-Based Employee Compensation

        Stock-based awards are granted under the terms of the 2004 Long Term Incentive Plan (2004 Plan). Additionally, the Company has outstanding stock options under its 2000 Stock Option Plan (2000 Plan), although the 2000 Plan terminated in 2010. Under these plans, four types of stock-based compensation awards are granted: stock options, equity-based stock appreciation rights (SARs), restricted stock awards (RSAs) and restricted stock units (RSUs). The stock options and SARs have a maximum term of ten years. The stock-based awards, other than the RSUs, generally vest at a rate of 20.0 percent annually on each of the first five anniversaries of the date of grant. The RSUs generally cliff vest after five years, and payment of the RSUs is deferred until January 31 of the year following vesting. Certain RSUs issued during fiscal year 2012 cliff vest two years after the grant date. Unvested awards are subject to forfeiture in the event of termination of employment. The Company utilizes an option-pricing model to estimate the fair value of options and SARs at their grant date. Stock options and SARs are granted at not less than fair market value on the date of grant. The Company generally recognizes compensation expense for its stock-based compensation awards on a straight-line basis over a five-year vesting period. Awards granted do not contain acceleration of vesting terms for retirement of eligible recipients.

        Total compensation cost for stock-based payment arrangements totaled $7.6, $9.6, and $9.3 million for the fiscal years ended June 30, 2012, 2011 and 2010, respectively. Cash retained for share based payments as a result of the tax deductibility of increases in the value of stock-based arrangements are presented as a cash inflow from financing activity in the Consolidated Statement of Cash Flows. The amount presented as a financing activity for fiscal years 2012, 2011, and 2010 was zero, $0.1, and $0.2 million, respectively.

XML

SHAREHOLDERS' EQUITY (Details 3) (USD $) In Millions, except Share data, unless otherwise specified	1 Months Ended				12 Months Ended
	Apr. 30, 2007	May 31, 2005	Aug. 31, 2003	May 31, 2000	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Authorized Shares and Designation of Preferred Class:
Common stock, authorized shares					100,000,000
Common stock, par value (in dollars per share)					$ 0.05	$ 0.05
Series A Junior Participating Preferred Stock, authorized shares					250,000
Shareholders' Rights Plan:
Number of preferred share purchase rights held by shareholders for each share of common stock owned					1
Percentage of ownership of outstanding common stock by a person to group to trigger preferred stock purchase rights					15.00%
Number of shares of preferred stock that a holder is entitled to purchase, if the rights become exercisable					0.001
Exercise price per one one-thousandth of share of Series A junior participating preferred stock					$ 140
Share Repurchase Program:
Stock repurchase program authorized amount	$ 300.0	$ 200.0	$ 100.0	$ 50.0
Repurchases of common stock to date (in shares)					6,800,000	6,800,000	6,800,000
Repurchases of common stock to date					226.5	226.5	226.5
Remaining authorized repurchase amount					$ 73.5

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BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Jun. 30, 2012

BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business Description:

        Regis Corporation (the Company) owns, operates and franchises hairstyling and hair care salons throughout the United States (U.S.), the United Kingdom (U.K.), Canada, Puerto Rico and several other countries. Substantially all of the hairstyling and hair care salons owned and operated by the Company in the U.S., Canada and Puerto Rico are located in leased space in enclosed mall shopping centers, strip shopping centers or Walmart Supercenters. Franchise salons throughout the U.S. are primarily located in strip shopping centers. The company-owned salons in the U.K. are owned and operated in malls, leading department stores, mass merchants and high-street locations. In addition, the Company owns and operates hair restoration centers in the U.S. and Canada. On July 13, 2012, the Company entered into a definitive agreement to sell its Hair Club for Men and Women business (Hair Club) for $163.5 million, a provider of hair restoration services. The transaction is expected to close during the first half of fiscal year 2013. See discussion of the agreement to sell Hair Club within Note 17 to the Consolidated Financial Statements. The hair restoration centers are typically located in leased space within office buildings. The Company also maintains ownership interest in salons, beauty schools and hair restoration centers through equity-method investments. On April 9, 2012, the Company entered into a Share Purchase Agreement (Agreement) to sell the Company's 46.7 percent equity interest in Provalliance to the Provost Family for a purchase price of €80 million.

Consolidation:

        The Consolidated Financial Statements include the accounts of the Company and its subsidiaries after the elimination of intercompany accounts and transactions. All material subsidiaries are wholly owned. The Company consolidated variable interest entities where it has determined it is the primary beneficiary of those entities' operations.

Use of Estimates:

        The preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the U.S. of America (GAAP) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Foreign Currency Translation:

        Financial position, results of operations and cash flows of the Company's international subsidiaries are measured using local currency as the functional currency. Assets and liabilities of these subsidiaries are translated at the exchange rates in effect at each fiscal year end. Translation adjustments arising from the use of differing exchange rates from period to period are included in accumulated other comprehensive income within shareholders' equity. Statement of Operations accounts are translated at the average rates of exchange prevailing during the year. The different exchange rates from period to period impact the amount of reported income from the Company's international operations.

Cash and Cash Equivalents:

        Cash equivalents consist of investments in short-term, highly liquid securities having original maturities of three months or less, which are made as a part of the Company's cash management activity. The carrying values of these assets approximate their fair market values. The Company primarily utilizes a cash management system with a series of separate accounts consisting of lockbox accounts for receiving cash, concentration accounts that funds are moved to, and several "zero balance" disbursement accounts for funding of payroll and accounts payable. As a result of the Company's cash management system, checks issued, but not presented to the banks for payment, may create negative book cash balances. There were no checks outstanding in excess of related book cash balances at June 30, 2012 and 2011.

Receivables and Allowance for Doubtful Accounts:

        The receivable balance on the Company's Consolidated Balance Sheet primarily includes accounts and notes receivable from franchisees and credit card receivables. The balance is presented net of an allowance for expected losses (i.e., doubtful accounts), primarily related to the receivables from the Company's franchisees. The Company monitors the financial condition of its franchisees and records provisions for estimated losses on receivables when it believes its franchisees are unable to make their required payments based on factors such as delinquencies and aging trends. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses related to existing accounts and notes receivables.

        The following table summarizes the activity in the allowance for doubtful accounts:

	For the Years Ended June 30,
	2012			2011			2010
	(Dollars in thousands)
Beginning balance	$	1,482		$	3,170		$	2,382
Bad debt expense		454			853			1,040
Write-offs		(714	)		(2,549	)		(252	)
Other (primarily the impact of foreign currency fluctuations)		10			8			—
Ending balance	$	1,232		$	1,482		$	3,170

Note Receivables, Net:

        The note receivable balances within the Company's Consolidated Balance Sheet primarily include note receivables related to the Company's investments in EEG and MY Style, a note receivable with the purchaser of Trade Secret and note receivables with our franchisees. The Company monitors the financial condition of its counterparties with an outstanding note receivable and records provisions for estimated losses on receivables when it believes the counterparties are unable to make their required payments. As of June 30, 2012, the outstanding note receivable balances with EEG and MY Style were in good standing with no associated valuation allowance. See discussion of the note receivables related to the purchaser of Trade Secret and Company's investments in EEG and MY Style within Notes 2 and 6, respectively, to the Consolidated Financial Statements.

Inventories:

        Inventories of finished goods consist principally of hair care products for retail product sales. A portion of inventories are also used for salon services consisting of hair color, hair care products including shampoo and conditioner and hair care treatments including permanents, neutralizers and relaxers. Inventories are stated at the lower of cost or market, with cost determined on a weighted average cost basis.

        Physical inventory counts are performed annually. Product and service inventories are adjusted based on the results of the physical inventory counts. Between the physical inventory counts, cost of retail product sold to salon guests is determined based on the weighted average cost of product sold, adjusted for an estimated shrinkage factor, and the cost of product used in salon services is determined by applying estimated gross profit margins to service revenues. The estimated gross profit margins related to service inventories are updated semi-annually based on the results of the physical inventory counts and other factors that could impact the Company's margin rate estimates such as mix of service sales, discounting and special promotions. Actual results for the estimated gross margin percentage as compared to the semi-annual estimates have not historically resulted in material adjustments to our Statement of Operations.

Property and Equipment:

        Property and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation and amortization of property and equipment are computed on the straight-line method over estimated useful asset lives (30 to 39 years for buildings, 10 years for improvements and three to ten years for equipment, furniture and software). Depreciation expense was $101.7, $88.6, and $92.5 million in fiscal years 2012, 2011, and 2010, respectively. Leasehold improvements are amortized over the shorter of their estimated useful lives or the related lease term, generally ten years. For leases with renewal periods at the Company's option, management may determine at the inception of the lease that renewal is reasonably assured if failure to exercise a renewal option imposes an economic penalty to the Company. In such cases, the Company will include the renewal option period along with the original lease term in the determination of appropriate estimated useful lives.

        The Company capitalizes both internal and external costs of developing or obtaining computer software for internal use. Costs incurred to develop internal-use software during the application development stage are capitalized, while data conversion, training and maintenance costs associated with internal-use software are expensed as incurred. At June 30, 2012 and 2011, the net book value of capitalized software costs was $26.7 and $34.1 million, respectively. Depreciation expense related to capitalized software was $22.3, $8.4, and $8.5 million in fiscal years 2012, 2011, and 2010, respectively, which has been determined based on an estimated useful life of five or seven years.

        Historically, because of the Company's large size and scale requirements it has been necessary for the Company to internally develop and support its own proprietary point-of-sale (POS) information system. During the fourth quarter of fiscal year 2011, the Company identified a third party POS alternative that has a system that meets current and future functionality requirements including enhanced guest demographics. At June 30, 2011, the Company reassessed and adjusted the remaining useful life of the Company's capitalized POS software to six months as locations using the Company's existing POS information system move to a third party POS alternative by December 31, 2011. Based on the results of the implementation of the third party POS alternative during each of the three month periods ended March 31, 2012 and December 31, 2011, the Company reassessed and extended the useful life of the Company's capitalized POS software by three months. Depreciation expense related to the existing POS information system during the twelve months ended June 30, 2012, included $16.2 million ($10.2 million net of tax or $0.18 per diluted share) of accelerated depreciation related to the change in useful life. As of June 30, 2012, the previously internally developed POS was fully depreciated.

        Expenditures for maintenance and repairs and minor renewals and betterments, which do not improve or extend the life of the respective assets are expensed. All other expenditures for renewals and betterments are capitalized. The assets and related depreciation and amortization accounts are adjusted for property retirements and disposals with the resulting gain or loss included in operating income. Fully depreciated or amortized assets remain in the accounts until retired from service.

Investment In and Loans to Affiliates:

        The Company has equity investments in securities of certain privately held entities. The Company accounts for these investments under the equity method of accounting. The Company also has loans receivable from certain of these entities. Investments accounted for under the equity method are recorded at the amount of the Company's investment and adjusted each period for the Company's share of the investee's income or loss. Investments are reviewed for changes in circumstance or the occurrence of events that suggest the Company's investment may not be recoverable. During fiscal year 2012, we entered into a Share Purchase Agreement to sell the Company's 46.7 percent equity interest in Provalliance for a purchase price of €80 million. As such, we recorded a net impairment of $17.2 million related to our investment in Provalliance. In addition, during fiscal year 2012, we recorded an impairment of $19.4 million related to our investment in EEG. During fiscal year 2011, we recorded an impairment of $9.2 million related to our investment in MY Style. See further discussion within Note 6 to the Consolidated Financial Statements.

Self-Insurance Accruals:

        The Company uses a combination of third party insurance and self-insurance for a number of risks including workers' compensation, health insurance, employment practice liability and general liability claims. The liability represents the Company's estimate of the undiscounted ultimate cost of uninsured claims incurred as of the balance sheet date.

        The workers' compensation, general liability and employment practice liability analysis includes applying loss development factors to the Company's historical claims data (total paid and incurred amounts per claim) for all policy years where the Company has not reached its aggregate limits to project the future development of incurred claims. The workers' compensation analysis is performed for three models; California, Texas and all other states. A variety of accepted actuarial methodologies are followed to determine these liabilities, including several methods to predict the loss development factors for each policy period. These liabilities are determined by modeling the frequency (number of claims) and severity (cost of claims), fitting statistical distributions to the experience, and then running simulations. A similar analysis is performed for both general liability and employment practices liability; however, it is a single model for all liability claims rather than the three separate models used for workers' compensation.

        The health insurance analysis utilizes trailing twelve months of paid and 24 months of incurred medical and prescription claims to project the amount of incurred but not yet reported claims liability amount. The lag factors are developed based on the Company's specific claim data utilizing a completion factor methodology. The developed factor, expressed as a percentage of paid claims, is applied to the trailing twelve months of paid claims to calculate the estimated liability amount. The calculated liability amount is reviewed for reasonableness based on reserve adequacy ranges for historical periods by testing prior reserve levels against actual expenses to date.

        Although the Company does not expect the amounts ultimately paid to differ significantly from the estimates, self-insurance accruals could be affected if future claims experience differs significantly from the historical trends and actuarial assumptions. For fiscal year 2012, the Company recorded an increase in expense from changes in estimates related to prior year open policy periods related to continuing operations of $0.7 million. For fiscal year 2011, the Company recorded an increase in expense from changes in estimates related to prior year open policy periods related to continuing operations of $1.4 million. For fiscal year 2010, the Company recorded a decrease in expense from changes in estimates related to prior year open policy periods related to continuing operations of $1.7 million. A 10.0 percent change in the self-insurance reserve would affect (loss) income from continuing operations before income taxes and equity in (loss) income of affiliated companies by $4.8, $4.6, and $4.5 million for the three years ended June 30, 2012, 2011 and 2010, respectively. The Company updates loss projections twice each year and adjusts its recorded liability to reflect the current projections. The updated loss projections consider new claims and developments associated with existing claims for each open policy period. As certain claims can take years to settle, the Company has multiple policy periods open at any point in time.

        As the workers' compensation accrual is the majority of the self-insurance accrual, below is a rollforward of the activity within the Company's workers' compensation self-insurance accrual:

	For the Years Ended June 30,
	2012			2011			2010
	(Dollars in thousands)
Beginning balance	$	32,994		$	30,082		$	31,505
Provision for incurred losses		14,133			13,993			14,739
Prior year actuarial loss development		1,221			2,231			35
Claim payments		(14,140	)		(12,584	)		(14,867	)
Other, net		415			(728	)		(1,330	)
Ending balance	$	34,623		$	32,994		$	30,082

        As of June 30, 2012, the Company had $15.5 and $32.5 million recorded in current liabilities and noncurrent liabilities, respectively, related to the Company's self-insurance accruals, which includes the workers' compensation self-insurance accrual. As of June 30, 2011, the Company had $14.7 and $30.9 million recorded in current liabilities and noncurrent liabilities, respectively, related to the Company's self-insurance accruals, which includes the workers' compensation self-insurance accrual.

Goodwill:

        Goodwill is tested for impairment annually or at the time of a triggering event. In evaluating whether goodwill is impaired, the Company compares the carrying value of each reporting unit, including goodwill, to the estimated fair value of the reporting unit. The carrying value of each reporting unit is based on the assets and liabilities associated with the operations of the reporting unit, including allocation of shared or corporate balances among reporting units. Allocations are generally based on the number of salons in each reporting unit as a percent of total company-owned salons.

        The Company calculates the estimated fair value of the reporting units based on discounted future cash flows that utilize estimates in annual revenue, gross margins, fixed expense rates, allocated corporate overhead, and long-term growth rates for determining terminal value. The Company's estimated future cash flows also take into consideration acquisition integration and maturation. Where available and as appropriate, comparative market multiples are used in conjunction with the results of the discounted cash flows. The Company considers its various concepts to be reporting units when testing for goodwill impairment because that is where the goodwill resides. The Company periodically engages third-party valuation consultants to assist in evaluation of the Company's estimated fair value calculations.

        In the situations where a reporting unit's carrying value exceeds its estimated fair value, the amount of the impairment loss must be measured. The measurement of impairment is calculated by determining the implied fair value of a reporting unit's goodwill. In calculating the implied fair value of goodwill, the fair value of the reporting unit is allocated to all other assets and liabilities of that unit based on the relative fair values under the assumption of a taxable transaction. The excess of the fair value of the reporting unit over the amount assigned to its assets and liabilities is the implied fair value of goodwill. The goodwill impairment is measured as the excess of the carrying value of goodwill over its implied fair value.

        As previously disclosed, the Company concluded that it was reasonably likely that goodwill for the Regis and Hair Restoration Centers reporting units might become impaired in future periods. During the three months ended December 31, 2011 the Company updated the projections for the Hair Restoration Centers reporting unit used in the fiscal 2011 annual impairment test to reflect the impact of recent industry developments, including a slow down in revenue growth and increasing supply costs. The Company determined there was a triggering event as it was more likely than not that the fair value of the Hair Restoration Centers was below carrying value and performed an interim impairment test of goodwill during the three months ended December 31, 2011. There were no triggering events relative to the Company's other reporting units.

        As a result of the Company's interim impairment test of goodwill related to the Hair Restoration Centers reporting unit during the second quarter of fiscal year 2012, a $78.4 million impairment charge was recorded within continuing operations for the excess of the carrying value of goodwill over the implied fair value of the goodwill for the Hair Restorations Centers reporting unit. After the impairment charge the Hair Restoration Centers reporting unit had $74.4 million of goodwill. The impairment was only partially deductible for tax purposes resulting in a tax benefit of $5.9 million. See further discussion on the effective tax rate for the twelve months ended June 30, 2012 within Note 12 to the Consolidated Financial Statements.

        As a result of the Company's annual impairment testing of goodwill during the fourth quarter of fiscal year 2012, a $67.7 million impairment charge was recorded within continuing operations for the excess of the carrying value of goodwill over the implied fair value of the goodwill for the Regis salon concept. The Regis salon concept reported same-store sales of negative 4.0 percent for the ten months ended April 30, 2012, which was unfavorable compared to the Company's budgeted same-store sales. Visitation patterns did not rebound as quickly as the Company originally projected. Accordingly, the Company reduced the budgeted financial projections for future years. After the impairment charge the Regis salon concept reporting unit had $35.1 million of goodwill. The impairment was only partially deductible for tax purposes resulting in a tax benefit of $12.5 million.

        As of June 30, 2012, the estimated fair value of the Promenade salon concept and Hair Restoration Centers reporting units exceeded the carrying value by approximately 14.0 and 12.0 percent, respectively. The respective fair values of the Company's remaining reporting units exceeded carrying value by greater than 20.0 percent at June 30, 2012. While the Company has determined the estimated fair value of Promenade to be appropriate based on the historical level of revenue growth, operating income and cash flows, it is reasonably likely that Promenade may experience additional impairment in future periods. As previously disclosed, the Company has agreed to sell the Hair Restoration Centers reporting unit in the first half of fiscal year 2013; however, until this reporting unit is sold it is reasonably likely that there could be impairment of the Hair Restoration Centers reporting unit's goodwill in future periods. The term "reasonably likely" refers to an occurrence that is more than remote but less than probable in the judgment of the Company. Because some of the inherent assumptions and estimates used in determining the fair value of the reportable segment are outside the control of management, changes in these underlying assumptions can adversely impact fair value. Potential impairment of a portion or all of the carrying value of goodwill for the Promenade salon concept and Hair Restoration Centers reporting units is dependent on many factors and cannot be predicted with certainty.

        As of June 30, 2012, the Company's estimated fair value, as determined by the sum of our reporting units' fair value reconciled to within a reasonable range of our market capitalization which included an assumed control premium.

        A summary of the Company's goodwill balance as of June 30, 2012 and 2011 by reporting unit is as follows:

Reporting Unit	June 30, 2012		June 30, 2011
	(Dollars in thousands)
Regis	$	34,992	$	103,761
MasterCuts		4,652		4,652
SmartStyle		49,476		48,916
Supercuts		129,621		129,477
Promenade		243,538		240,910
Total North America Salons		462,279		527,716
Hair Restoration Centers		74,376		152,796
Consolidated Goodwill	$	536,655	$	680,512

        As a result of the goodwill impairment analyses performed in fiscal years 2011 and 2010, the Company recorded $74.1 and $35.3 million, respectively, impairment charges within continuing operations for the excess of the carrying value of goodwill over the implied fair value of goodwill for the Promenade salon concept in fiscal year 2011 and the Regis salon concept in fiscal year 2010.

Long-Lived Asset Impairment Assessments, Excluding Goodwill:

        The Company reviews long-lived assets for impairment at the salon level annually or if events or circumstances indicate that the carrying value of such assets may not be recoverable. The Company's test for impairment of property and equipment is performed at a salon level, as this is the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. Impairment is evaluated based on the sum of undiscounted estimated future cash flows expected to result from use of the assets that does not recover the carrying value of the related salon assets. When the sum of a salon's undiscounted estimated future cash flow is zero or negative, impairment is measured as the full carrying value of the related salon's equipment and leasehold improvements. When the sum of a salon's undiscounted cash flows is greater than zero but less than the carrying value of the related salon's equipment and leasehold improvements, a discounted cash flow analysis is performed to estimate the fair value of the salon assets and impairment is measured as the difference between the carrying value of the salon assets and the estimated fair value. The fair value estimate is based on the best information available, including market data.

        As a result of the Company's annual impairment analysis of long-lived assets, the following impairment charges were recognized during fiscal years 2012, 2011, and 2010, respectively, related primarily to the carrying value of certain salons' property and equipment within our North American, International, and Hair Restoration Centers segments:

	For the Years Ended June 30,
	2012		2011		2010
	(Dollars in thousands)
North American salons	$	6,066	$	6,115	$	6,253
International salons		570		394		175
Hair restoration centers		—		172		—
Total	$	6,636	$	6,681	$	6,428

        The Company also evaluated the appropriateness of the remaining useful lives of its non-impaired property and equipment and whether a change to the depreciation charge was warranted. Impairment charges for continuing operations are included in depreciation related to company-owned salons in the Consolidated Statement of Operations.

Deferred Rent and Rent Expense:

        The Company leases most salon and hair restoration center locations under operating leases. Rent expense is recognized on a straight-line basis over the lease term. Tenant improvement allowances funded by landlord incentives, rent holidays, and rent escalation clauses which provide for scheduled rent increases during the lease term or for rental payments commencing at a date other than the date of initial occupancy are recorded in the Consolidated Statements of Operations on a straight-line basis over the lease term (including one renewal option period if renewal is reasonably assured based on the imposition of an economic penalty for failure to exercise the renewal option). The difference between the rent due under the stated periods of the lease compared to that of the straight-line basis is recorded as deferred rent within other noncurrent liabilities in the Consolidated Balance Sheet.

        For purposes of recognizing incentives and minimum rental expenses on a straight-line basis over the terms of the leases, the Company uses the date that it obtains the legal right to use and control the leased space to begin amortization, which is generally when the Company enters the space and begins to make improvements in preparation of intended use of the leased space.

        Certain leases provide for contingent rents, which are determined as a percentage of revenues in excess of specified levels. The Company records a contingent rent liability in accrued expenses on the Consolidated Balance Sheet, along with the corresponding rent expense in the Consolidated Statement of Operations, when specified levels have been achieved or when management determines that achieving the specified levels during the fiscal year is probable.

Revenue Recognition and Deferred Revenue:

        Company-owned salon revenues and related cost of sales are recognized 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 guest's payment. Revenues from purchases made with gift cards are also recorded when the guest takes possession of the merchandise or services are provided. Gift cards issued by the Company are recorded as a liability (deferred revenue) until they are redeemed.

        Product sales by the Company to its franchisees are included within product revenues on the Consolidated Statement of Operations and recorded at the time product is shipped to franchise locations. The related cost of product sold to franchisees is included within cost of product in the Consolidated Statement of Operations.

        Company-owned hair restoration center revenues stem primarily from servicing hair systems and surgical procedures, as well as through product and hair system sales. The Company records deferred revenue for contracts related to the servicing of hair systems and recognizes the revenue ratably over the term of the service contract. Revenues are recognized related to surgical procedures when the procedure is performed. Product revenues, including sales of hair systems, are recognized at the time of application, as this is when delivery occurs and payment is probable.

        Franchise revenues primarily include royalties, initial franchise fees and net rental income (see Note 10). Royalties are recognized as revenue in the month in which franchisee services are rendered. The Company recognizes revenue from initial franchise fees at the time franchise locations are opened, as this is generally when the Company has performed all initial services required under the franchise agreement.

Consideration Received from Vendors:

        The Company receives consideration for a variety of vendor-sponsored programs. These programs primarily include volume rebates and promotion and advertising reimbursements. Promotion and advertising reimbursements are discussed under Advertising within this note.

        With respect to volume rebates, the Company estimates the amount of rebate it will receive and accrues it as a reduction of the cost of inventory over the period in which the rebate is earned based upon historical purchasing patterns and the terms of the volume rebate program. A periodic analysis is performed, at least quarterly, in order to ensure that the estimated rebate accrued is reasonable, and any necessary adjustments are recorded.

Shipping and Handling Costs:

        Shipping and handling costs are incurred to store, move and ship product from the Company's distribution centers to company-owned and franchise locations, and include an allocation of internal overhead. Such shipping and handling costs related to product shipped to company-owned locations are included in site operating expenses in the Consolidated Statement of Operations. Shipping and handling costs related to shipping product to franchise locations totaled $3.8, $3.5, and $2.9 million during fiscal years 2012, 2011, and 2010, respectively, and are included within general and administrative expenses on the Consolidated Statement of Operations. Any amounts billed to the franchisee for shipping and handling are included in product revenues within the Consolidated Statement of Operations.

Advertising:

        Advertising costs, including salon collateral material, are expensed as incurred. Advertising costs expensed and included in continuing operations in fiscal years 2012, 2011 and 2010 was $58.7, $63.3, and $54.9 million, respectively.

        The Company participates in cooperative advertising programs under which the vendor reimburses the Company for costs related to advertising for its products. The Company records such reimbursements as a reduction of advertising expense when the expense is incurred. During fiscal years 2012, 2011, and 2010, no amounts were received in excess of the Company's related expense.

Advertising Funds:

        The Company has various franchising programs supporting its franchise salon concepts consisting of Supercuts, Cost Cutters, First Choice Haircutters, Magicuts, Pro-Cuts, Beauty Supply Outlet and Hair Club. Most of the concepts maintain advertising funds that provide comprehensive advertising and sales promotion support.

        The Supercuts advertising fund is the Company's largest advertising fund. The Supercuts advertising fund is administered by a council consisting primarily of franchisee representatives. The council has overall control of all of the fund's expenditures and operates in accordance with terms of the franchise operating and other agreements.

        Each Supercuts salon contributes 5.0 percent of service revenues to the fund (contributions for other concepts range between 1.5 and 5.0 percent). The majority of the advertising funds are spent to support media placement and local marketing activities. The remainder is allocated for the creation of national advertising campaigns and system wide activities. None of the Supercuts advertising funds collected may be used by the Company as reimbursement for the cost of administering the advertising fund. Advertising funds can only be used as directed by the fund's council and are considered to be restricted.

        The Company records all advertising funds as assets and liabilities within the Company's Consolidated Balance Sheet. As of June 30, 2012 and 2011, approximately $14.8 and $16.7 million, respectively, of the advertising funds' assets and liabilities were recorded within total assets and total liabilities in the Company's Consolidated Balance Sheet.

        The Company records advertising expense in the period the company-owned salon makes contributions to the respective advertising fund. During fiscal years 2012, 2011, and 2010, total contributions to the franchise brand advertising funds totaled $42.0, $41.9, and $39.8 million, respectively.

        The Company acts as an agent for the franchisees with regard to these contributions to the advertising funds. Thus, in accordance with guidance for accounting for franchise fee revenue, the Company does not reflect contributions to these advertising funds by its franchisees in its Consolidated Statement of Operations or Consolidated Statement of Cash Flows but reflects the related assets and liabilities in its Consolidated Balance Sheet.

Preopening Expenses:

        Non-capital expenditures such as payroll, training costs and promotion incurred prior to the opening of a new location are expensed as incurred.

Sales Taxes:

        Sales taxes are recorded on a net basis (rather than as both revenue and an expense) within the Company's Consolidated Statement of Operations.

Income Taxes:

        Deferred income tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the Consolidated Financial Statements or income tax returns. Deferred income tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using currently enacted tax rates in effect for the years in which the differences are expected to reverse. Realization of deferred tax assets is ultimately dependent upon future taxable income. Inherent in the measurement of deferred balances are certain judgments and interpretations of tax laws and published guidance with respect to the Company's operations. Income tax expense is primarily the current tax payable for the period and the change during the period in certain deferred tax assets and liabilities.

Net (Loss) Income Per Share:

        The Company's basic earnings per share is calculated as net (loss) income divided by weighted average common shares outstanding, excluding unvested outstanding restricted stock awards and restricted stock units. The Company's dilutive earnings per share is calculated as net (loss) income divided by weighted average common shares and common share equivalents outstanding, which includes shares issuable under the Company's stock option plan and long-term incentive plan, and dilutive securities. Stock-based awards with exercise prices greater than the average market value of the Company's common stock are excluded from the computation of diluted earnings per share. The Company's diluted earnings per share will also reflect the assumed conversion under the Company's convertible debt if the impact is dilutive, along with the exclusion of interest expense, net of taxes. The impact of the convertible debt is excluded from the computation of diluted earnings per share when interest expense per common share obtainable upon conversion is greater than basic earnings per share.

Comprehensive (Loss) Income:

        Components of comprehensive (loss) income for the Company include net (loss) income, changes in fair value of financial instruments designated as hedges of interest rate or foreign currency exposure, recognition of deferred compensation, and foreign currency translation charged or credited to the cumulative translation account within shareholders' equity. These amounts are presented in the Consolidated Statements of Changes in Shareholders' Equity and Comprehensive Income.

	2012			2011			2010
	(Dollars in thousands)
Accumulated Other Comprehensive Income, balance at July 1	$	77,946		$	47,032		$	51,855
Cumulative translation adjustment:
Balance at July 1		87,814			57,409			62,825
Pre-tax amount		(24,254	)		30,405			(5,416	)
Tax effect		—			—			—
Net of tax amount		(24,254	)		30,405			(5,416	)
Balance at June 30		63,560			87,814			57,409
Unrecognized loss on net investment hedge:
Balance at July 1		(7,932	)		(7,932	)		(7,932	)
Pre-tax amount		—			—			—
Tax effect		—			—			—
Net of tax amount		—			—			—
Balance at June 30		(7,932	)		(7,932	)		(7,932	)
Changes in fair market value of financial instruments designated as cash flow hedges:
Balance at July 1		(372	)		(504	)		(2,971	)
Pre-tax amount		603			218			3,949
Tax effect		(210	)		(86	)		(1,482	)
Net of tax amount		393			132			2,467
Balance at June 30		21			(372	)		(504	)
Recognition of deferred compensation:
Balance at July 1		(1,564	)		(1,941	)		(67	)
Pre-tax amount		1,673			609			(3,184	)
Tax effect		(644	)		(232	)		1,310
Net of tax amount		1,029			377			(1,874	)
Balance at June 30		(535	)		(1,564	)		(1,941	)
Accumulated Other Comprehensive Income, balance at June 30	$	55,114		$	77,946		$	47,032

Derivative Instruments:

        The Company may manage its exposure to interest rate and foreign currency risk within the Consolidated Financial Statements through the use of derivative financial instruments, according to its hedging policy. The Company does not use derivatives with a level of complexity or with a risk higher than the exposures to be hedged and does not hold or issue derivatives for trading or speculative purposes. The Company currently has or has had interest rate swaps designated as both cash flow and fair value hedges, treasury locks designated as cash flow hedges, a hedge of its net investment in its European operations and forward foreign currency contracts designated as cash flow hedges of forecasted transactions denominated in a foreign currency. Refer to Note 9 to the Consolidated Financial Statements for further discussion.

        The Company follows guidance for accounting for derivative instruments and hedging activities, as amended and interpreted, which requires that all derivatives be recorded on the balance sheet at fair value. This guidance also requires companies to designate all derivatives that qualify as hedging instruments as fair value hedges, cash flow hedges or hedges of net investments in foreign operations. This designation is based upon the exposure being hedged. Cash flow and fair value hedges are designated and documented at the inception of each hedge by matching the terms of the contract to the underlying transaction. At inception, as dictated by the facts and circumstances, all hedges are expected to be highly effective, as the critical terms of these instruments are generally the same as those of the underlying risks being hedged. All derivatives designated as hedging instruments are assessed for effectiveness on an on-going basis. For purposes of the Consolidated Statement of Cash Flows, cash flows associated with all derivatives (designated as hedges or freestanding economic hedges) are classified in the same category as the related cash flows subject to the hedging relationship.

Stock-Based Employee Compensation Plans:

        Stock-based awards are granted under the terms of the 2004 Long Term Incentive Plan (2004 Plan). Additionally, the Company has outstanding stock options under its 2000 Stock Option Plan (2000 Plan), although the 2000 Plan terminated in 2010. Under these plans, four types of stock-based compensation awards are granted: stock options, equity-based stock appreciation rights (SARs), restricted stock awards (RSAs) and restricted stock units (RSUs). The stock options and SARs have a maximum term of ten years. The stock-based awards, other than the RSUs, generally vest at a rate of 20.0 percent annually on each of the first five anniversaries of the date of grant. The RSUs generally cliff vest after five years, and payment of the RSUs is deferred until January 31 of the year following vesting. Certain RSUs issued during fiscal year 2012 cliff vest two years after the grant date. Unvested awards are subject to forfeiture in the event of termination of employment. The Company utilizes an option-pricing model to estimate the fair value of options and SARs at their grant date. Stock options and SARs are granted at not less than fair market value on the date of grant. The Company generally recognizes compensation expense for its stock-based compensation awards on a straight-line basis over a five-year vesting period. Awards granted do not contain acceleration of vesting terms for retirement of eligible recipients.

        Total compensation cost for stock-based payment arrangements totaled $7.6, $9.6, and $9.3 million for the fiscal years ended June 30, 2012, 2011 and 2010, respectively. Cash retained for share based payments as a result of the tax deductibility of increases in the value of stock-based arrangements are presented as a cash inflow from financing activity in the Consolidated Statement of Cash Flows. The amount presented as a financing activity for fiscal years 2012, 2011, and 2010 was zero, $0.1, and $0.2 million, respectively.

Employee Termination Expense:

        During fiscal year 2012, the Company reduced the home office workforce by approximately 120 employees. The Company recorded $9.8 million in senior management restructuring and other severance charges. In addition the Company recorded $2.8 million in other restructuring charges associated with one-time costs of implementing the Company's new strategy.

Recent Accounting Standards Adopted by the Company:

Disclosures about Fair Value of Financial Instruments

        In January 2010, the Financial Accounting Standards Board (FASB) issued guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires a roll forward of activities, presented separately on a gross basis, on purchases, sales, issuance, and settlements of the assets and liabilities measured using significant unobservable inputs (Level 3 fair value measurements). The Company adopted the new disclosure guidance related to Level 3 fair value measurements, including the disclosure on the roll forward activities, on July 1, 2011.

Fair Value Measurement

        In May 2011, the FASB issued guidance to achieve common fair value measurement and disclosure requirements between GAAP and International Financial Reporting Standards. This new guidance amends current fair value measurement and disclosure guidance to include increased transparency around valuation inputs and investment categorization. This new guidance is effective for fiscal years and interim periods beginning after December 15, 2011. The Company adopted the guidance on January 1, 2012.

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

Testing Goodwill for Impairment

        In September 2011, the FASB issued guidance to allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. If after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is not required. This new guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The Company will adopt the guidance on July 1, 2012 but does not expect it to have a material impact on the Company's financial position, results of operations or cash flows.

Comprehensive Income

        In June 2011, the FASB issued guidance on the presentation of comprehensive income. Specifically, the new guidance allows an entity to present components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. While the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance. This new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2011. The Company will adopt the guidance on a retrospective basis on July 1, 2012. The guidance will not have a material impact on the Company's financial position, results of operations or cash flows. However, it will require changing the Company's presentation and disclosure of comprehensive income.

Disclosures about Offsetting Assets and Liabilities

        In December 2011, the FASB issued new accounting disclosure requirements about the nature and exposure of offsetting arrangements related to financial and derivative instruments. The requirements are effective for fiscal years beginning after January 1, 2013. The Company will adopt the guidance on July 1, 2013. Other than requiring additional disclosures, the Company does not expect it to have a material impact on the Company's results of operations or financial position.

XML

CONSOLIDATED BALANCE SHEET (Parenthetical) (USD $)	Jun. 30, 2012	Jun. 30, 2011
CONSOLIDATED BALANCE SHEET
Common stock, par value (in dollars per share)	$ 0.05	$ 0.05
Common stock, shares issued	57,415,241	57,710,811
Common stock, shares outstanding	57,415,241	57,710,811

XML

LITIGATION

12 Months Ended

Jun. 30, 2012

LITIGATION

LITIGATION

11. LITIGATION

        The Company is a defendant in various lawsuits and claims arising out of the normal course of business. Like certain other large retail employers, the Company has been faced with allegations of purported class-wide consumer and wage and hour violations. In addition, the Company is a nominal defendant, and nine current and former directors and officers of the Company are named defendants, in a shareholder derivative action in Minnesota state court. The derivative shareholder alleges that the individual defendants breached their fiduciary duties to the Company in connection with their approval of certain executive compensation arrangements and certain related party transactions. A Special Litigation Committee has been formed per the direction of the judge in the matter. The Company is working with outside counsel to formulate its next steps in keeping with the courts. Litigation is inherently unpredictable and the outcome of these matters cannot presently be determined. Although the actions are being vigorously defended, the Company could in the future incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations in any particular period.

        During fiscal year 2012, the Company was awarded $1.1 million in conjunction with a class-action lawsuit.

        During fiscal year 2011, the Company settled a legal claim with the former owner of Hair Club for $1.7 million.

        During fiscal year 2010, the Company settled two legal claims regarding certain guest and employee matters for an aggregate charge of $5.2 million plus a commitment to provide discount coupons. Payments aggregating $4.3 and $0.9 million were made during fiscal years 2011 and 2010, respectively.

XML

Document and Entity Information (USD $)	12 Months Ended
	Jun. 30, 2012	Aug. 13, 2012	Dec. 31, 2011
Document and Entity Information
Entity Registrant Name	REGIS CORP
Entity Central Index Key	0000716643
Document Type	10-K
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 902,940,461
Entity Common Stock, Shares Outstanding		57,407,876
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY

XML

INCOME TAXES

12 Months Ended

Jun. 30, 2012

INCOME TAXES

INCOME TAXES

12. INCOME TAXES

        The components of (loss) income before income taxes are as follows:

	2012			2011			2010
	(Dollars in thousands)
(Loss) income before income taxes:
U.S.	$	(100,792	)	$	(31,963	)	$	35,289
International		10,364			6,334			17,925
	$	(90,428	)	$	(25,629	)	$	53,214

        The (benefit) provision for income taxes consists of:

	2012			2011			2010
	(Dollars in thousands)
Current:
U.S.	$	6,493		$	3,658		$	5,580
International		2,399			1,557			14,882
Deferred:
U.S.		(13,984	)		(17,882	)		4,007
International		(187	)		3,171			1,108
	$	(5,279	)	$	(9,496	)	$	25,577

        The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory rate to (loss) earnings before income taxes, as a result of the following:

	2012			2011			2010
U.S. statutory rate (benefit)		(35.0	)%		(35.0	)%		35.0	%
State income taxes, net of federal income tax benefit		0.8			0.7			5.9
Tax effect of goodwill impairment		37.9			10.4			12.1
Foreign income taxes at other than U.S. rates		(0.2	)		7.9			(0.8	)
Work Opportunity and Welfare-to-Work Tax Credits		(5.4	)		(15.7	)		(7.0	)
Adjustment of prior year income tax balances		—			—			3.9
Other, net		(3.9	)		(5.4	)		(1.0	)
		(5.8	)%		(37.1	)%		48.1	%

        During the twelve months ended June 30, 2012, the Company recognized a tax benefit of $5.3 million with a corresponding effective tax rate of 5.8 percent. The effective income tax rate for the twelve months ended June 30, 2012 was negatively impacted by the goodwill impairment charges totaling $146.1 million which are primarily non-deductible for tax purposes. This resulted in the Company recording less of a tax benefit on the pre-tax loss than what would normally be expected utilizing the Company's historical range of tax rates.

        The (3.9) percent of other, net in fiscal year 2012 includes the rate impact of unrecognized tax benefits and miscellaneous items of (2.8) and (1.1) percent, respectively.

        For fiscal year 2011, the Company reported a $25.6 million loss from continuing operations before income taxes as compared to income from continuing operations before income taxes of $53.2 million in fiscal year 2010. The rate reconciliation items have a greater impact on the annual effective income tax rate in fiscal year 2011 because the magnitude of the loss from continuing operations before income taxes is less than the magnitude of income from continuing operations before income taxes in fiscal year 2010. The annual effective tax rate was favorably impacted by employment credits in both years. Partially offsetting the favorable impact of the employment credits was the adverse impact of the pre-tax non-cash goodwill impairment charge of $74.1 million recorded during the third quarter of fiscal year 2011, which is only partially deductible for tax purposes. Additionally, the foreign income taxes at other than U.S. rates adversely impacted the annual effective tax rate due to a decrease in foreign income from continuing operations before income taxes and other foreign non-deductible items.

        The (5.4) percent of other, net in fiscal year 2011 includes the rate impact of meals and entertainment expense disallowance, donated inventory, unrecognized tax benefits, and miscellaneous items of 2.7, (2.9), (3.7), and (1.5) percent, respectively.

        The components of the net deferred tax assets and liabilities are as follows:

	2012			2011
	(Dollars in thousands)
Deferred tax assets:
Deferred rent	$	15,226		$	15,233
Payroll and payroll related costs		44,454			37,852
Net operating loss carryforwards		797			1,210
Salon asset impairment		5,038			5,176
Inventories		3,027			2,968
Deferred gift card revenue		745			1,536
Federal and state benefit on uncertain tax positions		2,113			8,549
Allowance for doubtful accounts/notes		5,180			9,855
Insurance		6,439			5,669
Other		6,963			6,396
Total deferred tax assets	$	89,982		$	94,444
Deferred tax liabilities:
Depreciation	$	(17,984	)	$	(29,348	)
Amortization of intangibles		(86,431	)		(94,257	)
Accrued property taxes		(2,079	)		(1,942	)
Deferred debt issuance costs		(4,336	)		(6,215	)
Other		(23	)		(3	)
Total deferred tax liabilities	$	(110,853	)	$	(131,765	)
Net deferred tax liabilities	$	(20,871	)	$	(37,321	)

        At June 30, 2012, the Company had state and foreign operating loss carryforwards of approximately $14.8 million and $3.7 million, respectively. These losses related to various states, the U.K. and Luxembourg. The Company had recorded a valuation allowance related to losses in various states and Luxembourg of $2.6 million and $3.1 million, respectively. The Company expects to fully utilize all of the loss carryforwards for which a valuation allowance has not been established.

        As of June 30, 2012, undistributed earnings of international subsidiaries of approximately $60.4 million were considered to have been reinvested indefinitely and, accordingly, the Company has not provided for U.S. income taxes on such earnings. It is not practicable for the Company to determine the amount of unrecognized deferred tax liabilities on these indefinitely reinvested earnings. Deferred taxes would be recorded for earnings of our foreign operations if we determine that such earnings are no longer indefinitely reinvested and cannot be remitted in a tax-neutral transaction.

        The Company files tax returns and pays tax primarily in the U.S., Canada, the U.K., and Luxembourg as well as states, cities, and provinces within these jurisdictions. In the U.S., fiscal years 2009 and after remain open for federal tax audit. For state tax audits, the statute of limitations generally spans three to four years, resulting in a number of states remaining open for tax audits dating back to fiscal year 2008. However, the Company is under audit in a number of states in which the statute of limitations has been extended for fiscal years 2006 and forward. Internationally, including Canada, the statute of limitations for tax audits varies by jurisdiction, but generally ranges from three to five years. A rollforward of the unrecognized tax benefits is as follows:

	2012			2011			2010
Balance at beginning of period	$	13,493		$	16,856		$	14,787
Additions based on tax positions related to the current year		482			796			5,549
(Reductions)/additions based on tax positions of prior years		(7	)		(759	)		(185	)
Reductions on tax positions related to the expiration of the statute of limitations		(1,571	)		(2,718	)		(2,993	)
Settlements		(8,016	)		(682	)		(302	)
Balance at end of period	$	4,381		$	13,493		$	16,856

        If the Company were to prevail on all unrecognized tax benefits recorded, a benefit of approximately $2.8 million would be recorded in the effective tax rate. Interest and penalties associated with unrecognized tax benefits are recorded within income tax expense. During the years ended June 30, 2012, 2011, and 2010 we recorded income tax (benefit)/expense of approximately $(1.2), $(0.6), and $(1.1) million, respectively, for the reversal of previously accrued interest and penalties net of the respective fiscal years additions to the accrual. As of June 30, 2012, the Company had accrued interest and penalties related to unrecognized tax benefits of $1.5 million. This amount is not included in the gross unrecognized tax benefits noted above.

        It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain of our unrecognized tax positions will increase or decrease during the next twelve months. However, we do not expect the change to have a significant effect on our results of operations or our financial position.

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CONSOLIDATED STATEMENT OF OPERATIONS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2012		Jun. 30, 2011		Jun. 30, 2010
Revenues:
Service									$ 1,712,703		$ 1,762,974		$ 1,784,137
Product									520,467		523,194		534,593
Royalties and fees									40,609		39,701		39,704
Total revenues	568,168	573,584	563,278	568,749	591,985	581,267	574,372	578,245	2,273,779		2,325,869		2,358,434
Operating expenses:
Cost of service									985,154		1,012,868		1,015,720
Cost of product									249,655		249,979		263,883
Site operating expenses									198,725		197,722		199,338
General and administrative									302,572		339,857		291,991
Rent									340,805		342,286		344,098
Depreciation and amortization									118,071		105,109		108,764
Goodwill impairment						74,100			146,110		74,100		35,277
Lease termination costs													2,145
Total operating expenses									2,341,092		2,321,921		2,261,216
Operating (loss) income	(43,968)	25,200	(61,617)	13,072	7,154	(59,504)	22,864	33,434	(67,313)		3,948		97,218
Other income (expense):
Interest expense									(28,245)		(34,388)		(54,414)
Interest income and other, net									5,130		4,811		10,410
(Loss) income from continuing operations before income taxes and equity in (loss) income of affiliated companies									(90,428)		(25,629)		53,214
Income taxes									5,279		9,496		(25,577)
Equity in (loss) income of affiliated companies, net of income taxes									(30,043)		7,228		11,942
(Loss) income from continuing operations	(63,634)	(2,468)	(57,427)	8,337	(16,395)	(25,335)	14,505	18,320	(115,192)		(8,905)		39,579
Income from discontinued operations, net of taxes (Note 2)		1,099							1,099				3,161
Net (loss) income									$ (114,093)		$ (8,905)		$ 42,740
Basic:
(Loss) income from continuing operations (in dollars per share)	$ (1.11)	$ (0.04)	$ (1.01)	$ 0.15	$ (0.29)	$ (0.45)	$ 0.26	$ 0.32	$ (2.02)		$ (0.16)		$ 0.71
Income from discontinued operations (in dollars per share)		$ 0.02							$ 0.02				$ 0.06
Net (loss) income per share, basic (in dollars per share)	$ (1.11)	$ (0.02)	$ (1.01)	$ 0.15	$ (0.29)	$ (0.45)	$ 0.26	$ 0.32	$ (2.00)	[1]	$ (0.16)	[1]	$ 0.77	[1]
Diluted:
(Loss) income from continuing operations (in dollars per share)	$ (1.11)	$ (0.04)	$ (1.01)	$ 0.15	$ (0.29)	$ (0.45)	$ 0.24	$ 0.30	$ (2.02)		$ (0.16)		$ 0.71
Income from discontinued operations (in dollars per share)		$ 0.02							$ 0.02				$ 0.05
Net (loss) income per share, diluted (in dollars per share)	$ (1.11)	$ (0.02)	$ (1.01)	$ 0.15	$ (0.29)	$ (0.45)	$ 0.24	$ 0.30	$ (2.00)	[1]	$ (0.16)	[1]	$ 0.75	[1]
Weighted average common and common equivalent shares outstanding:
Basic (in shares)									57,137		56,704		55,806
Diluted (in shares)									57,137		56,704		66,753
Cash dividends declared per common share (in dollars per share)	$ 0.06	$ 0.06	$ 0.06	$ 0.06	$ 0.06	$ 0.06	$ 0.04	$ 0.04	$ 0.24		$ 0.20		$ 0.16

[1] Total is a recalculation; line items calculated individually may not sum to total due to rounding.

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INVESTMENTS IN AND LOANS TO AFFILIATES

12 Months Ended

Jun. 30, 2012

INVESTMENTS IN AND LOANS TO AFFILIATES

INVESTMENTS IN AND LOANS TO AFFILIATES

6. INVESTMENTS IN AND LOANS TO AFFILIATES

        The table below presents the carrying amount of investments in and loans to affiliates as of June 30, 2012 and 2011:

	Provalliance			Empire Education Group, Inc.			MY Style			Hair Club for Men, Ltd.			Total
	(Dollars in thousands)
Balance at June 30, 2010	$	75,481		$	102,882		$	12,116		$	5,307		$	195,786
Acquisition of additional interest(1)		57,301			—			—			—			57,301
Payment of loans by affiliates		—			(15,000	)		—			—			(15,000	)
Loans to affiliates		—			15,000			—			—			15,000
Equity in income of affiliated companies, net of income taxes(2)		7,752			5,463			—			567			13,782
Other than temporary impairment(3)		—			—			(9,173	)		—			(9,173	)
Cash dividends received		(4,814	)		(4,129	)		—			(1,080	)		(10,023	)
Other, primarily translation adjustments		13,525			324			(733	)		351			13,467
Balance at June 30, 2011	$	149,245		$	104,540		$	2,210		$	5,145		$	261,140
Payment of loans by affiliates		—			(1,025	)		—			—			(1,025	)
Equity in income of affiliated companies, net of income taxes(7)		9,759			(4,031	)		—			816			6,544
Other than temporary impairment(4)(5)		(37,383	)		(19,426	)		—			—			(56,809	)
Cash dividends received		(2,769	)		—			—			(1,278	)		(4,047	)
Transfer to current notes receivable(6)		—			(20,375	)		(2,278	)		—			(22,653	)
Other, primarily translation adjustments		(17,548	)		—			68			506			(16,974	)
Balance at June 30, 2012	$	101,304		$	59,683		$	—		$	5,189		$	166,176
Percentage ownership at June 30, 2012		46.7	%		55.1	%		—			50.0	%

(1)

In March of 2011, the Company elected to honor and settle a portion of the equity put option and acquired approximately 17 percent additional equity interest in Provalliance for $57.3 million (€ 40.4 million), bringing the Company's total equity interest to approximately 47 percent.

(2)

Equity in income of affiliated companies, net of income taxes per the Consolidated Statement of Operations includes $7.8 million in equity income of Provalliance and a $2.4 million gain for the decrease in the Provalliance equity put valuation.

(3)

Due to the natural disasters in Japan that occurred in March 2011, the Company was required to assess the preferred shares and premium for other than temporary impairment. As a result, the Company recorded an other than temporary impairment during the twelve months ended June 30, 2011 for the carrying value of the preferred shares and premium of $3.9 million (326,700,000 Yen) and $5.3 million (435,000,000 Yen), respectively. Of the total impairment, $9.0 million was recorded through the equity in income of affiliated companies and $0.2 million was recorded through the interest income and other, net, line items in the Consolidated Statement of Operations.

(4)

On April 9, 2012, the Company entered into the Agreement to sell the Company's 46.7 percent equity interest in Provalliance to the Provost Family for a purchase price of €80 million. During the twelve months ended June 30, 2012, the Company recorded a $17.2 million net impairment charge associated with the Agreement recorded within equity in (loss) income of affiliated companies in the Consolidated Statement of Operations, which consisted of a $37.4 million impairment charge related to the difference between the purchase price and carrying value of the Company's investment in Provalliance, partially offset by a $20.2 million decrease in the fair value of the Equity Put.

(5)

The Company recorded a $19.4 million other than temporary impairment charge in its fourth quarter ended June 30, 2012 on its investment in EEG.

(6)

During the third quarter of fiscal year 2012, the Company had a $20.4 million outstanding loan receivable with EEG that was reclassified in the Consolidated Balance Sheet as other current assets as the loan is due in January 2013.

(7)

Equity in loss of affiliated companies, net of income taxes per the Consolidated Statement of Operations includes the Provalliance $17.2 million net impairment charge discussed in (4) and the $19.4 million impairment charge associated with EEG discussed in (5).

        The table below presents the summarized financial information of the equity method investees as of June 30, 2012 2011, and 2010. The financial information of the equity investees was based on results as of and for the twelve months ended June 30.

	Equity Method Investee Greater Than 50 Percent Owned							Equity Method Investees Less Than 50 Percent Owned
	2012			2011		2010		2012		2011		2010
	(Dollars in thousands)
Summarized Balance Sheet Information:
Current assets	$	56,516		$	34,715	$	35,070	$	84,914	$	93,280	$	74,040
Noncurrent assets		96,639			113,249		105,469		316,829		314,127		263,472
Current liabilities		61,074			29,340		27,458		107,636		109,416		91,077
Noncurrent liabilities		13,947			33,658		32,017		78,815		98,269		93,055
Summarized Statement of Operations Information:
Gross revenue	$	182,326		$	192,864	$	176,535	$	317,143	$	283,442	$	299,188
Gross profit		67,201			73,068		64,661		137,074		120,992		123,210
Operating (loss) income		(1,335	)		18,994		19,752		35,569		30,084		21,227
Net (loss) income		(7,211	)		11,023		11,082		24,067		21,154		14,763

Investment in Provalliance

        On January 31, 2008, the Company merged its continental European franchise salon operations with the operations of the Franck Provost Salon Group in exchange for a 30.0 percent equity interest in the newly formed Provalliance entity (Provalliance). The merger with the operations of the Franck Provost Salon Group, which are also located in continental Europe, created Europe's largest salon operator with approximately 2,600 company-owned and franchise salons as of June 30, 2012.

        The merger agreement contains a right (Equity Put) to require the Company to purchase an additional ownership interest in Provalliance between specified dates in 2010 to 2018. In December 2010, a portion of the Equity Put was exercised. In March of 2011, the Company elected to honor and settle a portion of the Equity Put and acquired approximately 17 percent additional equity interest in Provalliance for $57.3 million (approximately €40.4 million), bringing the Company's total equity interest to 46.7 percent.

        On April 9, 2012, the Company entered into the Agreement to sell the Company's 46.7 percent equity interest in Provalliance to the Provost Family for a purchase price of €80 million. The transaction is expected to close no later than September 30, 2012 and is subject to the Provost Family securing financing for the purchase price. The purchase price was negotiated independently of the Equity Put and the Equity Put and Equity Call will automatically terminate upon closing. If the closing does not occur by September 30, 2012, the Provost Family will not be entitled to exercise their Equity Put rights until September 30, 2014.

        During the twelve months ended June 30, 2012, the Company recorded a $37.4 million other than temporary impairment charge related to the difference between the €80 million purchase price and the carrying value of its investment in Provalliance. In addition, the fair value of the Equity Put decreased by $20.2 million to $0.6 million as of June 30, 2012. The remaining Equity Put liability as of June 30, 2012 is associated with the probability of the Agreement not closing and the Equity Put remaining effective. The $37.4 million other than temporary impairment charge, partially offset by the $20.2 million reduction in the fair value of the Equity Put, resulted in a net impairment charge of $17.2 million that is recorded within the equity in (loss) income of affiliated companies during the twelve months ended June 30, 2012. Regis did not receive a tax benefit on the net impairment charge.

        In connection with the Agreement, the Company reassessed the consolidation of variable interest entities guidance to determine whether the Company will now be considered the primary beneficiary of the VIE. Consistent with the previous assessment, the Company has determined the Frank Provost Group continues to meet the power criterion and is considered the primary beneficiary of Provalliance as of June 30, 2012.

        The tables below contain details related to the Company's investment in Provalliance for the twelve months ended June 30, 2012, 2011, and 2010:

Impact on Consolidated Balance Sheet

		Carrying Value at June 30,
	Classification	2012		2011
		(Dollars in thousands)
Investment in Provalliance	Investment in and loans to affiliates	$	101,304	$	149,245
Equity Put Option—Provalliance	Other noncurrent liabilities		633		22,700

Impact on Consolidated Statement of Operations

		For the Twelve Months Ended June 30,
	Classification	2012			2011		2010
		(Dollars in thousands)
Equity in (loss) income, net of income taxes	Equity in (loss) income of affiliated companies, net of income taxes		(9,759	)		7,752		4,134

Impact on Consolidated Statement of Cash Flows

		For the Twelve Months Ended June 30,
	Classification	2012		2011			2010
		(Dollars in thousands)
Equity in loss (income), net of income taxes	Equity in loss (income) of affiliated companies	$	9,759	$	(7,752	)	$	(4,134	)
Cash dividends received	Dividends received from affiliated companies		2,769		4,814			1,141

Investment in Empire Education Group, Inc.

        On August 1, 2007, the Company contributed its 51 wholly-owned accredited cosmetology schools to Empire Education Group, Inc. (EEG) in exchange for a 49.0 percent equity interest in EEG. In January 2008, the Company's effective ownership interest increased to 55.1 percent related to the buyout of EEG's minority interest shareholder. EEG operates 105 accredited cosmetology schools, has revenues of approximately $180 million annually and is overseen by the Empire Beauty School management team.

        At June 30, 2012 and 2011, the Company had an outstanding loan receivable with EEG totaling $11.4 and $21.4 million, respectively. During fiscal year 2012, the outstanding loan receivable was reclassified in the Consolidated Balance Sheet as other current assets as the loan is due in January 2013. The Company has also provided EEG with a $15.0 million revolving credit facility, against which there were $15.0 million and zero outstanding borrowings as of June 30, 2012 and 2011, respectively. The Company reviews the outstanding loan with EEG for changes in circumstances or the occurrence of events that suggest the Company's loan may not be recoverable. The outstanding loan and revolving credit facility with EEG as of June 30, 2012 is in good standing with no associated valuation allowance. During fiscal year 2012, 2011, and 2010, the Company recorded $0.5, $0.7, and $0.7 million, respectively, of interest income related to the loan and revolving credit facility. In addition, the Company received $10.0 million in principal payments on the loan during the twelve months ended June 30, 2012. The Company has also guaranteed a credit facility of EEG that expires on December 31, 2012 with a maximum exposure of $9 million. The Company has determined the exposure to the risk of loss on the guaranteed credit facility to be immaterial to the financial statements.

        The proprietary school industry has seen broad changes the past few years in regulations resulting in challenges in the areas of student populations, revenue and profitability. Due to the regulatory changes, EEG experienced a decline in revenue and profitability in fiscal year 2012 and is projecting further declines in fiscal year 2013. As a result, during fiscal year 2012, the Company recorded a $19.4 million other than temporary impairment charge on its investment in EEG for the excess of the carrying value of its investment in EEG over the fair value. Regis did not receive a tax benefit on the impairment charge. The Company also recorded its $8.7 million share of an intangible asset impairment recorded directly by EEG. The exposure to loss related to the Company's involvement with EEG is the carrying value of the investment, the outstanding loan and the guarantee of the credit facility. Due to economic and other factors, the Company may be required to record additional impairment charges related to our investment in EEG and such impairments could be material to our consolidated balance sheet and results of operations. In addition, EEG may be required to record impairment charges related to long-lived assets and goodwill, and our share of such impairment charges could be material to our consolidated balance sheet and results of operations.

        The Company utilized consolidation of variable interest entities guidance to determine whether or not its investment in EEG was a variable interest entity (VIE), and if so, whether the Company was the primary beneficiary of the VIE. The Company concluded that EEG was not a VIE based on the fact that EEG had sufficient equity at risk. As the substantive voting control relates to the voting rights of the Board of Directors, the Company granted the other shareholder a proxy to vote such number of the Company's shares such that the other shareholder would have voting control of 51.0 percent of the common stock of EEG. The Company accounts for EEG as an equity investment under the voting interest model. During fiscal years ended June 30, 2012, 2011, and 2010, the Company recorded $(4.0), $5.5, and $6.4 million of equity (loss) earnings related to its investment in EEG. During the twelve months ended June 30, 2011, EEG declared and distributed a dividend in which the Company received $4.1 million in cash and recorded tax expense of $0.3 million.

Investment in MY Style

        In April 2007, the Company purchased exchangeable notes issued by Yamano Holding Corporation (Exchangeable Note) and a loan obligation of a Yamano Holdings subsidiary, MY Style, formally known as Beauty Plaza Co. Ltd., (MY Style Note) for an aggregate amount of $11.3 million (1.3 billion Yen as of April 2007). The Exchangeable Note contains an option for the Company to exchange a portion of the Exchangeable Note for 27.1 percent of the 800 outstanding shares of common stock of MY Style. This exchange feature is akin to a deep-in-the-money option permitting the Company to purchase shares of common stock of MY Style. The option is embedded in the Exchangeable Note and does not meet the criteria for separate accounting under accounting for derivative instruments and hedging activities. In connection with the issuance of the Exchangeable Note, the Company paid a premium of approximately $5.5 million (573,000,000 Yen as of April 2007).

        In March 2010 the Company amended the agreement with Yamano for which the Company purchased one share of Yamano Class A Preferred Stock with a subscription amount of $1.1 million (100,000,000 Yen) and one share of Yamano Class B Preferred Stock with a subscription amount of $2.3 million (211,131,284 Yen), collectively the "Preferred Shares". Portions of the Exchangeable Note that became due as a result of the March 2010 amendments were contributed in-kind as payment for the Preferred Shares. The Preferred Shares have the same terms and rights, yield a 5.0 percent dividend that accrues if not paid and have no voting rights. The preferred shares are accounted for as an available for sale debt security.

        Due to the natural disasters in Japan that occurred in March 2011, the Company was required to assess the preferred shares and premium for other than temporary impairment. The fair value of the collateral which is the equity value of MY Style, declined due to changes in projected revenue growth rates after the natural disasters. As MY Style is highly leveraged, any change in growth rates has a significant impact on fair value. The estimated fair value was negligible. The Company recorded an other than temporary impairment during the third quarter of fiscal year 2011 for the carrying value of the preferred shares and premium of $3.9 million (326,700,000 Yen) and $5.3 million (435,000,000 Yen), respectively.

        Exchangeable Note.    As of June 30, 2012, the principal amount outstanding under the Exchangeable Note is $1.3 million (100,000,000 Yen) and is due September 30, 2012. The Company reviews the Exchangeable Note with Yamano for changes in circumstances or the occurrence of events that suggest the Company's note may not be recoverable. The $1.3 million outstanding Exchangeable Note with Yamano as of June 30, 2012 is in good standing with no associated valuation allowance. The Company has determined the future cash flows of Yamano support the ability to make payments on the Exchangeable Note. The Exchangeable Note accrues interest at 1.845 percent and interest is payable on September 30, 2012 with the final principal payment. The Company recorded approximately $0.1 million in interest income related to the Exchangeable Note during fiscal years 2012, 2011, and 2010.

        MY Style Note.    As of June 30, 2012, the principal amount outstanding under the MY Style Note is $0.7 million (52,164,000 Yen). Principal payments of 52,164,000 Yen along with accrued interest are due annually on May 31 through May 31, 2013. The Company reviews the outstanding note with MY Style for changes in circumstances or the occurrence of events that suggest the Company's note may not be recoverable. The $0.7 million outstanding note with MY Style as of June 30, 2012 is in good standing with no associated valuation allowance. The Company has determined the future cash flows of MY Style support the ability to make payments on the outstanding note. The MY Style Note accrues interest at 3.0 percent. The Company recorded less than $0.1 million in interest income related to the MY Style Note during fiscal years 2012, 2011, and 2010.

        As of June 30, 2012, $2.3 million is recorded in the Consolidated Balance Sheet as current assets representing the Company's Exchangeable Note and outstanding note with MY Style. The exposure to loss related to the Company's involvement with MY Style is the carrying value of the outstanding notes.

        All foreign currency transaction gains and losses on the Exchangeable Note and MY Style Note are recorded through other income within the Consolidated Statement of Operations. The foreign currency transaction gain (loss) was $0.5, $(1.1), and $3.1 million during fiscal years 2012, 2011, and 2010, respectively.

Investment in Hair Club for Men, Ltd.

        The Company acquired a 50.0 percent interest in Hair Club for Men, Ltd. through its acquisition of Hair Club in fiscal year 2005. The Company accounts for its investment in Hair Club for Men, Ltd. under the equity method of accounting. Hair Club for Men, Ltd. operates Hair Club centers in Illinois and Wisconsin. During fiscal years 2012, 2011, and 2010, the Company recorded income and received dividends of $0.8 and $1.3 million, $0.6 and $1.1 million, and $0.9 and $1.3 million, respectively. The exposure to loss related to the Company's involvement with Hair Club for Men, Ltd. is the carrying value of the investment. See Note 17 for discussion of the purchase agreement subsequent to June 30, 2012 that includes Hair Club for Men, Ltd.

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GOODWILL

12 Months Ended

Jun. 30, 2012

GOODWILL

GOODWILL

5. GOODWILL

        The table below contains details related to the Company's recorded goodwill for the years ended June 30, 2012 and 2011:

	Salons
							Hair Restoration Centers
	North America			International						Consolidated
	(Dollars in thousands)
Gross goodwill at June 30, 2010	$	700,012		$	41,661		$	150,380		$	892,053
Accumulated impairment losses		(113,403	)		(41,661	)		—			(155,064	)
Net goodwill at June 30, 2010		586,609			—			150,380			736,989
Goodwill acquired(1)		10,070			—			2,419			12,489
Translation rate adjustments		5,137			—			(3	)		5,134
Goodwill impairment(2)		(74,100	)		—			—			(74,100	)
Gross goodwill at June 30, 2011		715,219			41,661			152,796			909,676
Accumulated impairment losses		(187,503	)		(41,661	)		—			(229,164	)
Net goodwill at June 30, 2011		527,716			—			152,796			680,512
Goodwill acquired(1)		4,978			—			—			4,978
Translation rate adjustments		(2,731	)		—			6			(2,725	)
Goodwill impairment(3)(4)		(67,684	)		—			(78,426	)		(146,110	)
Gross goodwill at June 30, 2012		717,466			41,661			152,802			911,929
Accumulated impairment losses		(255,187	)		(41,661	)		(78,426	)		(375,274	)
Net goodwill at June 30, 2012	$	462,279		$	—		$	74,376		$	536,655

(1)

See Note 4 to the Consolidated Financial Statements.

(2)

As a result of the Company's annual impairment testing of goodwill, a $74.1 million impairment charge was recorded within continuing operations for the excess of the carrying value of goodwill over the implied fair value of goodwill for the Promenade salon concept.

(3)

As a result of the Company's interim impairment testing of goodwill during the three months ended December 31, 2011, a $78.4 million impairment charge was recorded within continuing operations for the excess of the carrying value of goodwill over the implied fair value of goodwill for the Hair Restoration Centers reporting unit.

(4)

As a result of the Company's annual impairment testing of goodwill, a $67.7 million impairment charge was recorded within continuing operations for the excess of the carrying value of goodwill over the implied fair value of goodwill for the Regis salon concept.

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SUBSEQUENT EVENTS

12 Months Ended

Jun. 30, 2012

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

17. SUBSEQUENT EVENTS

        On July 11, 2012, the Company announced that Mr. Daniel J. Hanrahan was appointed President and Chief Executive Officer of the Company, effective August 6, 2012. He was also appointed to the Board of Directors, effective August 6, 2012.

        On July 13, 2012, the Company entered into a definitive agreement to sell Hair Club to Aderans, Co., Ltd. for cash of $163.5 million excluding closing adjustments and transaction fees. Subsequent to fiscal year 2012, the net assets of Hair Club to be sold met the accounting criteria to be classified as held for sale and will be aggregated and reported in accordance with authoritative guidance in the Company's fiscal year 2013 first quarter Form 10-Q. The Company is currently anticipating recognizing a gain upon closing of the deal. The transaction is expected to close in the first or second fiscal quarter of 2013, and is subject to customary closing conditions.

        On July 17, 2012, Mr. Daniel G. Beltzman was appointed to the Board of Directors of the Company, effective August 1, 2012.

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BENEFIT PLANS

12 Months Ended

Jun. 30, 2012

BENEFIT PLANS

BENEFIT PLANS

13. BENEFIT PLANS

Regis Retirement Savings Plan

        The Company maintains a defined contribution 401(k) plan, the Regis Retirement Savings Plan (RRSP Plan). The RRSP Plan is a defined contribution profit sharing plan with a 401(k) feature that is intended to qualify with the Internal Revenue Code (Code) and is subject to the Employee Retirement Income Security Act of 1974.

        The 401(k) portion of the Plan is a contributory defined contribution plan under which eligible employees may elect to contribute a percentage of their eligible compensation. Employees who are 18 years of age or older and who were not highly compensated employees as defined by the Code during the preceding Plan year are eligible to participate in the Plan commencing with the first day of the month following their completion of one month of service.

        The discretionary employer contribution profit sharing portion of the Plan is a noncontributory defined contribution component covering full-time and part-time employees of the Company who have at least one year of eligible service, 1,000 hours of service during the Plan year, are employed by the Employer on the last day of the Plan year and are employed at the home office or distribution centers, or as area or regional supervisors, artistic directors or educators, and that are not highly compensated employees as defined by the Code. Participants' interest in the noncontributory defined contribution component become 20.0 percent vested after completing two years of service with vesting increasing 20.0 percent for each additional year of service, and with participants becoming fully vested after six full years of service.

Nonqualified Deferred Salary Plan:

        The Company maintains a Nonqualified Deferred Salary Plan (Executive Plan), which covers Company officers, field supervisors, warehouse and corporate office employees who are highly compensated. The discretionary employer contribution profit sharing portion of the Executive Plan is a noncontributory defined contribution component in which participants interest become 20.0 percent vested after completing two years of service with vesting increasing 20.0 percent for each additional year of service, and with participants becoming fully vested after six full years of service.

Stock Purchase Plan:

        The Company has an employee stock purchase plan (ESPP) available to substantially all employees. Under the terms of the ESPP, eligible employees may purchase the Company's common stock through payroll deductions. The Company contributes an amount equal to 15.0 percent of the purchase price of the stock to be purchased on the open market and pays all expenses of the ESPP and its administration, not to exceed an aggregate contribution of $10.0 million. As of June 30, 2012, the Company's cumulative contributions to the ESPP totaled $8.9 million.

Franchise Stock Purchase Plan:

        The Company has a franchise stock purchase plan (FSPP) available to substantially all franchisee employees. 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 to exceed an aggregate contribution of $0.7 million. As of June 30, 2012, the Company's cumulative contributions to the FSPP totaled $0.2 million.

Deferred Compensation Contracts:

        The Company has agreed to pay its former Chief Executive Officer, a lump sum amount equal to 60.0 percent of his salary for the remainder of his life. Compensation associated with this agreement was charged to expense as services were provided. Associated costs included in general and administrative expenses on the Consolidated Statement of Operations totaled $3.7, $1.8 and $3.0 million for fiscal years 2012, 2011, and 2010, respectively. As of June 30, 2012 and 2011, zero and $11.4 million is included in other noncurrent liabilities, respectively. As of June 30, 2012 and 2011, $15.1 million and zero of the balance is included in accrued liabilities, respectively

        In addition, the Company has other unfunded deferred compensation contracts covering key executives within the Company. The key executives' benefits are based on years of service and the employee's compensation prior to departure. Effective June 30, 2012, the Company amended the deferred compensation contracts such that the benefits are based on years of service and employee's compensation as of June 30, 2012. The Company utilizes a June 30 measurement date for these deferred compensation contracts, a discount rate based on the Aa Bond index rate (4.0 and 5.5 percent at June 30, 2012 and 2011, respectively) and projected salary increases of 4.0 percent at June 30, 2011 to estimate the obligations associated with these deferred compensation contracts.

        Compensation associated with these agreements is charged to expense as services are provided. Associated costs included in general and administrative expenses on the Consolidated Statement of Operations totaled $5.9, $2.5 and $2.2 million for fiscal years 2012, 2011, and 2010, respectively. The projected benefit obligation of these deferred compensation contracts totaled $21.3 and $22.2 million at June 30, 2012 and 2011, respectively, in the Consolidated Balance Sheet. As of June 30, 2012 and 2011, $11.8 and $17.2 million is included in other noncurrent liabilities, respectively. As of June 30, 2012 and 2011, $9.5 and $5.0 million of the balance is included in accrued liabilities, respectively. The tax-affected accumulated other comprehensive loss for the deferred compensation contracts, consisting of primarily unrecognized actuarial loss, was $0.5 and $1.6 million at June 30, 2012 and 2011, respectively. The Company intends to fund its future obligations under these arrangements through company-owned life insurance policies on the participants. Cash values of these policies totaled $24.4 and $22.3 million at June 30, 2012 and 2011, respectively, and are included in other assets in the Consolidated Balance Sheet.

        The Company has agreed to pay the former Vice Chairman an annual amount of $0.6 million, adjusted for inflation to $0.9 million in fiscal years 2012 and 2011, for the remainder of his life. The former Vice Chairman has agreed that during the period in which payments are made, as provided in the agreement, he will not engage in any business competitive with the business conducted by the Company. Additionally, the Company has a survivor benefit plan for the former Vice Chairman's spouse, payable upon his death, at a rate of one half of his deferred compensation benefit, adjusted for inflation, for the remaining life of his spouse. Estimated associated costs included in general and administrative expenses on the Consolidated Statement of Operations totaled $0.8, $0.7 and $0.6 million for fiscal years 2012, 2011, and 2010, respectively. Related obligations totaled $4.9 and $5.9 million at June 30, 2012 and 2011, respectively, and are included in other noncurrent liabilities in the Consolidated Balance Sheet. The Company intends to fund all future obligations under this agreement through company-owned life insurance policies on the former Vice Chairman. Cash values of these policies totaled $4.5 and $4.2 million at June 30, 2012 and 2011, respectively, and are included in other assets in the Consolidated Balance Sheet. The policy death benefits exceed the obligations under this agreement.

        Compensation expense included in (loss) income before income taxes and equity in (loss) income of affiliated companies related to the aforementioned plans, excluding amounts paid for expenses and administration of the plans, for the fiscal years ended June 30, 2012, 2011, and 2010, included the following:

	2012		2011		2010
	(Dollars in thousands)
RRSP Plan profit sharing	$	—	$	1,907	$	3,206
Executive Plan profit sharing		—		477		654
ESPP		449		494		484
FSPP		9		8		8
Deferred compensation contracts		10,452		4,977		5,814

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DERIVATIVE FINANCIAL INSTRUMENTS

12 Months Ended

Jun. 30, 2012

DERIVATIVE FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

9. DERIVATIVE FINANCIAL INSTRUMENTS

        The Company's primary market risk exposures in the normal course of business are changes in interest rates and foreign currency exchange rates. The Company has established policies and procedures that govern the management of these exposures through the use of a variety of strategies, including the use of derivative financial instrument contracts. By policy, the Company does not enter into such contracts for the purpose of speculation or trading. Hedging transactions are limited to an underlying exposure. The Company has established an interest rate management policy that manages the interest rate mix of its total debt portfolio and related overall cost of borrowing. The Company's foreign currency exchange rate risk management policy includes frequently monitoring market data and external factors that may influence exchange rate fluctuations in order to minimize fluctuation in earnings due to changes in exchange rates. The Company enters into arrangements with counterparties that the Company believes are creditworthy. Generally, derivative contract arrangements settle on a net basis. The Company assesses the effectiveness of its hedges on a quarterly basis using the critical terms method in accordance with guidance for accounting for derivative instruments and hedging activities.

        The Company has primarily utilized derivatives, which are designated as either cash flow or fair value hedges and qualify for hedge accounting treatment. For cash flow hedges and fair value hedges, changes in fair value are deferred in accumulated other comprehensive income (loss) within shareholders' equity until the underlying hedged item is recognized in earnings. Any hedge ineffectiveness is recognized immediately in current earnings. To the extent the changes offset, the hedge is effective. Any hedge ineffectiveness the Company has historically experienced has not been material. By policy, the Company designs its derivative instruments to be effective as hedges and aims to minimize fluctuations in earnings due to market risk exposures. If a derivative instrument is terminated prior to its contract date, the Company continues to defer the related gain or loss and recognizes it in current earnings over the remaining life of the related hedged item.

        The Company also utilizes freestanding derivative contracts, which do not qualify for hedge accounting treatment. The Company marks to market such derivatives with the resulting gains and losses recorded within current earnings in the Consolidated Statement of Operations. For purposes of the Consolidated Statement of Cash Flows, cash flows associated with all derivatives (designated as hedges or freestanding economic hedges) are classified in the same category as the related cash flows subject to the hedging relationship.

Cash Flow Hedges

        As of June 30, 2012, the Company's cash flow hedges consist of forward foreign currency contracts.

        In the past, the Company used interest rate swaps to maintain its variable to fixed rate debt ratio in accordance with its established policy. The Company repaid variable and fixed rate debt during the twelve months ended June 30, 2011. Prior to the repayments, the Company had two outstanding interest rate swaps totaling $40.0 million on $85.0 million aggregate variable rate debt with maturity dates in fiscal year 2012. The interest rate swaps were terminated prior to the maturity dates in conjunction with the repayments of debt and were settled for an aggregate loss of $0.1 million. The $0.1 million loss was recorded during the fourth quarter of fiscal year 2011 on the termination of the interest rate swaps and was recorded within interest expense in the Consolidated Statement of Operations.

        The Company uses forward foreign currency contracts to manage foreign currency rate fluctuations associated with certain forecasted intercompany transactions. The Company's primary forward foreign currency contracts hedge approximately $0.6 million of monthly payments in Canadian dollars for intercompany transactions. The Company's forward foreign currency contracts hedge transactions through September 2012.

        These cash flow hedges were designed and are effective as cash flow hedges. They were recorded at fair value within other noncurrent liabilities or other current assets in the Consolidated Balance Sheet, with corresponding offsets primarily recorded in other comprehensive income (loss), net of tax.

Net Investment Hedges

        The Company has numerous investments in foreign subsidiaries, and the net assets of these subsidiaries are exposed to exchange rate volatility. The Company frequently evaluates its foreign currency exchange risk by monitoring market data and external factors that may influence exchange rate fluctuations. As a result, the Company may engage in transactions involving various derivative instruments to hedge assets, liabilities and purchases denominated in foreign currencies.

        During September 2006, the Company's cross-currency swap (which had a notional amount of $21.3 million and hedged a portion of the Company's net investment in its foreign operations) was settled, resulting in a cash outlay of $8.9 million. This cash outlay was recorded within investing activities within the Consolidated Statement of Cash Flows. The related cumulative tax-effected net loss of $7.9 million was recorded in accumulated other comprehensive income (AOCI) in fiscal year 2007. The amount will remain deferred within AOCI until an event which would trigger its release from AOCI and recognition in earnings being the sale or liquidation of the Company's international operations that the cross-currency swap hedged.

Freestanding Derivative Forward Contracts

        The Company uses freestanding derivative forward contracts to offset the Company's exposure to the change in fair value of certain foreign currency denominated investments and intercompany assets and liabilities. These derivatives are not designated as hedges and therefore, changes in the fair value of these forward contracts are recognized currently in earnings, thereby offsetting the current earnings effect of the related foreign currency denominated assets and liabilities.

        The Company had the following derivative instruments in its Consolidated Balance Sheet as of June 30, 2012 and 2011:

	Asset					Liability
		Fair Value					Fair Value
Type	Classification	June 30, 2012		June 30, 2011		Classification	June 30, 2012		June 30, 2011
		(Dollars in thousands)					(Dollars in thousands)
Designated as hedging instruments—Cash Flow Hedges:
Forward foreign currency contracts	Other current assets	$	37	$	—	Other current liabilities	$	—	$	(599	)
Freestanding derivative contracts—not designated as hedging instruments:
Forward foreign currency contracts	Other current assets	$	108	$	212	Other current liabilities	$	—	$	—
Total		$	145	$	212		$	—	$	(599	)

        The table below sets forth the gain (loss) on the Company's derivative instruments recorded within AOCI in the Consolidated Balance Sheet for the twelve months ended June 30, 2012 and 2011. The table also sets forth the gain (loss) on the Company's derivative instruments that has been reclassified from AOCI into current earnings during the twelve months ended June 30, 2012 and 2011 within the following line items in the Consolidated Statement of Operations.

	Gain (Loss) Recognized in Other Comprehensive (Loss) Income For the Years Ended June 30,								Gain (Loss) Reclassified from Accumulated OCI into (Loss) Income at June 30,
Type	2012		2011			2010			Classification	2012		2011		2010
	(Dollars in thousands)									(Dollars in thousands)
Designated as hedging instruments—Cash Flow Hedges:
Interest rate swaps	$	—	$	(636	)	$	(2,967	)		$	—	$	—	$	—
Forward foreign currency contracts		393		456			519		Cost of sales		—		48		(261	)
Treasury lock contracts		—		—			(146	)	Interest income		—		—		388
Total	$	393	$	(180	)	$	(2,594	)		$	—	$	48	$	127

        As of June 30, 2012 the Company estimates that it will reclassify into earnings during the next 12 months a gain of less than $0.1 million from the pretax amount recorded in AOCI as the anticipated cash flows occur.

        The table below sets forth the (loss) gain on the Company's derivative instruments for the years ended June 30, 2012, 2011 and 2010 recorded within interest income and other, net in the Consolidated Statement of Operations.

	Derivatives Impact on (Loss) Income at June 30,
Type	Classification	2012			2011		2010
		(Dollars in thousands)
Freestanding derivative contracts—not designated as hedging instruments:
Forward foreign currency contracts	Interest income and other, net	$	(105	)	$	613	$	(811	)

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DERIVATIVE FINANCIAL INSTRUMENTS (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Derivative fair values
Derivative Asset, Fair Value	$ 145	$ 212
Derivative Liability, Fair Value		(599)
Cash Flow Hedges | Forward foreign currency contracts
Derivative fair values
Derivative Asset, Fair Value	37
Derivative Liability, Fair Value		(599)
Freestanding derivative contracts | Forward foreign currency contracts
Derivative fair values
Derivative Asset, Fair Value	$ 108	$ 212

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FAIR VALUE MEASUREMENTS

12 Months Ended

Jun. 30, 2012

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

7. FAIR VALUE MEASUREMENTS

        The fair value measurement guidance for financial and nonfinancial assets and liabilities defines fair value, establishes a framework for measuring fair value and expands disclosure requirements about fair value measurements. This guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy prescribed by this guidance contains three levels as follows:

• Level 1—Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date.

  Level 2—Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including:

  • •

    Quoted prices for similar assets or liabilities in active markets;

    •

    Quoted prices for identical or similar assets in non-active markets;

    •

    Inputs other than quoted prices that are observable for the asset or liability; and

    •

    Inputs that are derived principally from or corroborated by other observable market data.

  Level 3—Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management's estimates of market participant assumptions.

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

        The fair value hierarchy requires the use of observable market data when available. In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability. The following tables sets forth by level within the fair value hierarchy, the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis at June 30, 2012 and June 30, 2011, according to the valuation techniques the Company used to determine their fair values.

			Fair Value Measurements Using Inputs Considered as
	Fair Value at June 30, 2012
			Level 1		Level 2		Level 3
			(Dollars in thousands)
ASSETS
Current assets
Derivative instruments	$	145	$	—	$	145	$	—
Noncurrent assets
Equity call option—Roosters		117		—		—		117
LIABILITIES
Noncurrent liabilities
Equity put option—Provalliance	$	633	$	—	$	—	$	633
Equity put option—Roosters		161		—		—		161

			Fair Value Measurements Using Inputs Considered as
	Fair Value at June 30, 2011
			Level 1		Level 2		Level 3
			(Dollars in thousands)
ASSETS
Current assets
Derivative instruments	$	212	$	—	$	212	$	—
LIABILITIES
Current liabilities
Derivative instruments	$	599	$	—	$	599	$	—
Noncurrent liabilities
Equity put option—Provalliance	$	22,700	$	—	$	—	$	22,700

Changes in Financial Instruments Measured at Level 3 Fair Value on a Recurring Basis

        The following tables present the changes during the twelve ended June 30, 2012 and 2011 in our Level 3 financial instruments that are measured at fair value on a recurring basis.

	Changes in Financial Instruments Measured at Level 3 Fair Value Classified as
	Roosters Equity Call Option		Roosters Equity Put Option		Provalliance Equity Put Option
	(Dollars in thousands)
Balance at July 1, 2011	$	—	$	—	$	22,700
Total realized and unrealized gains (losses):
Included in other comprehensive (loss) income		—		—		(1,845	)
Issuances		—		161		—
Purchases		117		—		—
Included in equity in (loss) income of affiliated companies		—		—		(20,222	)
Balance at June 30, 2012	$	117	$	161	$	633

	Changes in Financial Instruments Measured at Level 3 Fair Value Classified as
	Preferred Shares			Provalliance Equity Put Option
	(Dollars in thousands)
Balance at July 1, 2010	$	3,502		$	22,009
Total realized and unrealized gains (losses):
Included in other comprehensive income (loss)		433			3,847
Included in equity in (loss) income of affiliated companies		—			(2,442	)
Transfer out of Level 3		—			(714	)
Other than temporary impairment		(3,935	)		—
Balance at June 30, 2011	$	—		$	22,700

        The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

        Derivative instruments.    The Company's derivative instrument assets and liabilities consist of cash flow hedges represented by forward foreign currency contracts. The instruments are classified as Level 2 as the fair value is obtained using observable inputs available for similar liabilities in active markets at the measurement date that are reviewed by the Company. See breakout by type of contract and reconciliation to the balance sheet line item that each contract is classified within Note 9 of the Consolidated Financial Statements.

        Equity put option—Provalliance.    The Company's merger of the European franchise salon operations with the operations of the Franck Provost Salon Group on January 31, 2008 contained an equity put (Provalliance Equity Put) and an equity call. The Provalliance Equity Put is valued using binomial lattice models that incorporate assumptions including the business enterprise value at that date and future estimates of volatility and earnings before interest, taxes, and depreciation and amortization multiples. During fiscal year 2011, a portion of the Provalliance Equity Put was settled. During the twelve months ended June 30, 2012, the fair value of the Provalliance Equity Put decreased by $20.2 million to $0.6 million and is classified within other noncurrent liabilities on the Consolidated Balance Sheet. The remaining Provalliance Equity Put liability as of June 30, 2012 is associated with the probability of the share purchase agreement in which the Company will sell the 46.7 percent equity interest in Provalliance not closing and the Provalliance Equity Put remaining effective. The sensitivity of the underlying assumptions to the Provalliance Equity Put is not material to the Consolidated Financial Statements. See Note 6 to the Consolidated Financial Statements for discussion of the share purchase agreement.

        Equity put and call options—Roosters.    The purchase agreement for the Company's acquisition of a 60.0 percent ownership interest in Roosters MGC International LLC (Roosters) on July 1, 2011 contained an equity put (Roosters Equity Put) and an equity call (Roosters Equity Call). See further discussion within Note 4 to the Consolidated Financial Statements. The Roosters Equity Put and Roosters Equity Call are valued using binomial lattice models that incorporate assumptions including the business enterprise value at that date and future estimates of volatility and earnings before interest, taxes, and depreciation and amortization multiples. The sensitivity of the underlying assumptions to the Roosters Equity put and Roosters Equity Call is not material to the Consolidated financial statements. At June 30, 2012, the fair value of the Roosters Equity Put and Roosters Equity Call were $0.2 and $0.1 million, respectively, and are classified within noncurrent liabilities and other assets, respectively, on the Consolidated Balance Sheet.

        Preferred Shares.    The Company has preferred shares in Yamano Holding Corporation. The preferred shares are classified as Level 3 as there are no quoted market prices and minimal market participant data for preferred shares of similar rating. The fair value of the preferred shares is based on the financial health of Yamano Holding Corporation and terms within the preferred share agreement which allow the Company to convert the subscription amount of the preferred shares into equity of MY Style, a wholly owned subsidiary of Yamano Holding Corporation. The Company recorded an other than temporary impairment for the full carrying value of the preferred shares during the twelve months ended June 30, 2011. See further discussion within Note 6 to the Consolidated Financial Statements.

        Financial Instruments.    In addition to the financial instruments listed above, the Company's financial instruments also include cash, cash equivalents, receivables, accounts payable and debt.

        The fair value of cash and cash equivalents, receivables and accounts payable approximated the carrying values as of June 30, 2012 and 2011. At June 30, 2012, the estimated fair values and carrying amounts of debt were $307.5 and $287.7 million, respectively. At June 30, 2011, the estimated fair values and carrying amounts of debt were $335.4 and $313.4 million, respectively. The estimated fair value of debt was determined based on internal valuation models, which utilize quoted market prices and interest rates for the same or similar instruments (Level 2).

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

        We measure certain assets, including the Company's equity method investments, tangible fixed assets and goodwill, at fair value on a nonrecurring basis when they are deemed to be other than temporarily impaired. The fair values of our investments are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted cash flow projections.

        The following tables present the fair value in our assets measured at fair value on a nonrecurring basis during the twelve months ended June 30, 2012 and 2011, respectively:

	June 30, 2012		Level 1		Level 2		Level 3		Total Losses
	(Dollars in thousands)
Assets
Goodwill—Regis(1)	$	35,083	$	—	$	—	$	35,083	$	(67,684	)
Goodwill—Hair Restoration Centers(2)		74,376		—		—		74,376		(78,426	)
Investment in affiliates—EEG(3)		59,683		—		—		59,683		(19,426	)
Investment in affiliates—Provalliance(4)		101,304		—		—		101,304		(37,383	)
Total	$	270,446	$	—	$	—	$	270,446	$	(202,919	)

(1)

Goodwill of the Regis salon concept with a carrying value of $102.8 million was written down to its implied fair value, resulting in an impairment charge of $67.7 million, which was recorded during fiscal year 2012. See Note 1 to the Consolidated Financial Statements for further information.

(2)

Goodwill of the Hair Restoration Centers reporting unit with a carrying value of $152.8 million was written down to its implied fair value of $74.4 million, resulting in an impairment charge of $78.4 million. See Note 1 to the Consolidated Financial Statements for further information.

(3)

The Company's investment in EEG with a carrying value of $79.1 million was written down to its implied fair value of $59.7 million, resulting in an impairment charge of $19.4 million. See Note 6 to the Consolidated Financial Statements for further information.

(4)

The Company's investment in Provalliance was written down to its implied fair value, resulting in an impairment charge of $37.4 million. See Note 6 to the Consolidated Financial Statements for further information.

	June 30, 2011		Level 1		Level 2		Level 3		Total Losses
	(Dollars in thousands)
Assets
Goodwill—Promenade(1)	$	240,910	$	—	$	—	$	240,910	$	(74,100	)
Total	$	240,910	$	—	$	—	$	240,910	$	(74,100	)

(1)

Goodwill of the Promenade salon concept with a carrying value of $315.0 million was written down to its implied fair value, resulting in an impairment charge of $74.1 million, which was recorded during fiscal year 2011. The Company recorded $0.3 million of translation rate adjustments during the fourth quarter of fiscal year 2011 on the Promenade salon concept goodwill balance.

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FINANCING ARRANGEMENTS

12 Months Ended

Jun. 30, 2012

FINANCING ARRANGEMENTS

FINANCING ARRANGEMENTS

8. FINANCING ARRANGEMENTS

        The Company's long-term debt as of June 30, 2012 and 2011 consists of the following:

		Interest rate %		Amounts outstanding
	Maturity Dates	2012	2011	2012			2011
	(fiscal year)			(Dollars in thousands)
Senior term notes	2013 - 2018	6.69 - 8.50%	6.69 - 8.50%	$	111,429		$	133,571
Convertible senior notes	2015	5.00	5.00		161,134			156,248
Revolving credit facility	2016	—	—		—			—
Equipment and leasehold notes payable	2015 - 2016	4.90 - 8.75	8.80 - 9.14		14,780			22,273
Other notes payable	2013	5.75 - 8.00	5.75 - 8.00		331			1,319
					287,674			313,411
Less current portion					(28,937	)		(32,252	)
Long-term portion				$	258,737		$	281,159

        The debt agreements contain covenants, including limitations on incurrence of debt, granting of liens, investments, merger or consolidation, and transactions with affiliates. In addition, the Company must adhere to specified fixed charge coverage and leverage ratios, as well as minimum net worth levels. The Company was in compliance with all covenants and other requirements of our financing arrangements as of June 30, 2012. Additional details are included below with the discussion of the specific categories of debt.

        Aggregate maturities of long-term debt, including associated capital lease obligations of $14.8 million at June 30, 2012, are as follows:

Fiscal year	(Dollars in thousands)
2013	$	28,937
2014		24,918
2015		180,245
2016		17,860
2017		17,857
Thereafter		17,857
	$	287,674

Senior Term Notes

Private Shelf Agreement

        At June 30, 2012 and 2011, the Company had $111.4 and $133.6 million, respectively, in unsecured, fixed rate, senior term notes outstanding under a Private Shelf Agreement, of which $22.1 million were classified as part of the current portion of the Company's long-term debt at June 30, 2012 and 2011. The notes require quarterly payments, and final maturity dates range from June 2013 through December 2017.

        The Private Shelf Agreement includes financial covenants including debt to EBITDA ratios, fixed charge coverage ratios and minimum net equity tests (as defined within the Private Shelf Agreement), as well as other customary terms and conditions. The maturity date for the debt may be accelerated upon the occurrence of various events of default, including breaches of the agreement, certain cross-default situations, certain bankruptcy related situations, and other customary events of default.

        In April 2012, the Company amended the Restated Private Shelf Agreement. The amendments included increasing the Company's minimum net worth covenant from $800.0 to $850.0 million and amending certain definitions, including EBITDA and Rental Expenses. Under the new agreement, indebtedness related to Capital Leases is limited to $50.0 million.

Convertible Senior Notes

        In July 2009, the Company issued $172.5 million aggregate principal amount of 5.0 percent convertible senior notes due July 2014. The notes are unsecured, senior obligations of the Company and interest is payable semi-annually in arrears on January 15 and July 15 of each year at a rate of 5.0 percent per year. Upon the July 2009 issuance the notes were convertible subject to certain conditions further described below at an initial conversion rate of 64.6726 shares of the Company's common stock per $1,000 principal amount of notes (representing an initial conversion price of approximately $15.46 per share of the Company's common stock). As of June 30, 2012, the conversion rate was 65.1432 shares of the Company's common stock per $1,000 principal amount of notes (representing a conversion price of approximately $15.35 per share of the Company's common stock).

        Holders may convert their notes at their option prior to April 15, 2014 if the Company's stock price meets certain price triggers or upon the occurrence of specified corporate events as defined in the convertible senior note agreement. On or after April 15, 2014, holders may convert each of their notes at their option at any time prior to the maturity date for the notes.

        The Company has the choice of net-cash settlement, settlement in its own shares or a combination thereof and concluded the conversion option is indexed to its own stock. As a result, the Company allocated $24.7 million of the $172.5 million principal amount of the convertible senior notes to equity, which resulted in a $24.7 million debt discount. The allocation was based on measuring the fair value of the convertible senior notes using a discounted cash flow analysis. The discount rate was based on an estimated credit rating for the Company. The estimated fair value of the convertible senior notes was $147.8 million, and the resulting $24.7 million debt discount will be amortized over the period the convertible senior notes are expected to be outstanding, which is five years, as additional non-cash interest expense. The combined debt discount amortization and the contractual interest coupon resulted in an effective interest rate on the convertible debt of 8.9 percent.

        The following table provides equity and debt information for the convertible senior notes:

	Convertible Senior Notes Due July 2014 at
(Dollars in thousands)	June 30, 2012			June 30, 2011
Principal amount on the convertible senior notes	$	172,500		$	172,500
Unamortized debt discount		(11,366	)		(16,252	)
Net carrying amount of convertible debt	$	161,134		$	156,248

        The following table provides interest rate and interest expense amounts related to the convertible senior notes:

	Convertible Senior Notes Due July 2014 For the Years Ended June 30,
(Dollars in thousands)	2012		2011
Interest cost related to contractual interest coupon—5.0%	$	8,625	$	8,625
Interest cost related to amortization of the discount		4,886		4,488
Total interest cost	$	13,511	$	13,113

Revolving Credit Facility

        On June 30, 2011, the Company amended its revolving credit agreement, which now provides for a $400.0 million senior unsecured five-year revolving credit facility. The revolving credit facility has rates tied to a LIBOR credit spread and a quarterly facility fee on the average daily amount of the facility (whether used or unused). Both the LIBOR credit spread and the facility fee are based on the Company's debt to EBITDA ratio at the end of each fiscal quarter. The amendments included increasing the Company's minimum net worth covenant from $800.0 to $850.0 million, and amending or adding certain definitions, including Change in Law, Defaulting Lender, EBITDA, Fronting Exposure, Replacement Lender, and Accounting Principles. In addition, the Company may request an increase in revolving credit commitments under the facility of up to $200.0 million under certain circumstances. Under the new agreement, indebtedness related to Capital Leases is limited to $50.0 million, and Restricted Payments are tiered based on Debt to EBITDA. Events of default under the Credit Agreement include change of control of the Company and the Company's default of other debt exceeding $10.0 million. The facility expires in July 2016. We were in compliance with all covenants and other requirements of our credit agreement and senior notes as of June 30, 2012.

        As of June 30, 2012 and 2011, the Company had no outstanding borrowings under this facility. Additionally, the Company had outstanding standby letters of credit under the facility of $26.1 and $26.0 million at June 30, 2012 and 2011, respectively, primarily related to its self-insurance program. Unused available credit under the facility at June 30, 2012 and 2011 was $373.9 and $374.0 million, respectively.

Equipment and Leasehold Notes Payable

        The equipment and leasehold notes payable are primarily comprised of capital lease obligations. In September 2011, the Company entered into an agreement to refinance existing capital leases to a three year term with a contract rate of 4.9 percent. Capital leases of $20.5 million are amortized at the historical rate of 9.2 percent. There was no gain or loss recorded on the refinance. The Company entered into the refinancing to reduce cash interest payments.

Other Notes Payable

        The Company had $0.3 and $1.3 million in unsecured outstanding notes at June 30, 2012 and 2011, respectively, related to debt assumed in acquisitions.

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COMMITMENTS AND CONTINGENCIES:

12 Months Ended

Jun. 30, 2012

COMMITMENTS AND CONTINGENCIES:

COMMITMENTS AND CONTINGENCIES:

10. COMMITMENTS AND CONTINGENCIES:

Operating Leases:

        The Company is committed under long-term operating leases for the rental of most of its company-owned salon and hair restoration center locations. The original terms of the leases range from one to 20 years, with many leases renewable for an additional five to ten year term at the option of the Company, and certain leases include escalation provisions. For certain leases, the Company is required to pay additional rent based on a percent of sales in excess of a predetermined amount and, in most cases, real estate taxes and other expenses. Rent expense for the Company's international department store salons is based primarily on a percent of sales.

        The Company also leases the premises in which the majority of its franchisees operate and has entered into corresponding sublease arrangements with the franchisees. These leases, generally with terms of approximately five years, are expected to be renewed on expiration. All additional lease costs are passed through to the franchisees.

        During fiscal year 2005, the Company entered into a lease agreement for a 102,448 square foot building, located in Edina, Minnesota. The Company began to recognize rent expense related to this property during the three months ended September 30, 2005, which was the date that it obtained the legal right to use and control the property. The original lease term ends in May 2016 and the aggregate amount of lease payments to be made over the remaining original lease term are approximately $4.5 million. The lease agreement includes an option to purchase the property or extend the original term for two successive periods of five years.

        In addition, the Company leases an 89,900 square foot building near the company-owned distribution center located in Chattanooga, Tennessee. The original lease term ends in August 2013 and the aggregate amount of lease payments to be made over the remaining original lease term are approximately $0.6 million

        Sublease income was $28.3, $28.4, and $29.2 million in fiscal years 2012, 2011 and 2010, respectively. Rent expense on premises subleased was $27.9, $27.9, and $28.8 million in fiscal years 2012, 2011 and 2010, respectively. Rent expense and the related rental income on the sublease arrangements with franchisees is netted within the rent expense line item on the Consolidated Statement of Operations. In most cases, the amount of rental income related to sublease arrangements with franchisees approximates the amount of rent expense from the primary lease, thereby having no net impact on rent expense or net (loss) income. However, in limited cases, the Company charges a ten percent mark-up in its sublease arrangements. The net rental income resulting from such arrangements totaled $0.4, $0.5, and $0.4 million for fiscal year 2012, 2011 and 2010, respectively, and was classified in the royalties and fees caption of the Consolidated Statement of Operations.

        Total rent expense, excluding rent expense on premises subleased to franchisees, includes the following:

	2012		2011		2010
	(Dollars in thousands)
Minimum rent	$	259,522	$	260,644	$	259,984
Percentage rent based on sales		8,938		9,225		10,138
Real estate taxes and other expenses		72,345		72,417		73,976
	$	340,805	$	342,286	$	344,098

        As of June 30, 2012, future minimum lease payments (excluding percentage rents based on sales) due under existing noncancelable operating leases with remaining terms of greater than one year are as follows:

Fiscal year	Corporate leases		Franchisee leases		Guaranteed leases
	(Dollars in thousands)
2013	$	259,975	$	45,677	$	816
2014		208,992		37,898		553
2015		157,154		29,038		343
2016		106,887		20,250		225
2017		62,016		10,861		193
Thereafter		76,675		8,754		198
Total minimum lease payments	$	871,699	$	152,478	$	2,328

Salon Development Program:

        As a part of its salon development program, the Company continues to negotiate and enter into leases and commitments for the acquisition of equipment and leasehold improvements related to future salon locations, and continues to enter into transactions to acquire established hair care salons.

Contingencies:

        The Company is self-insured for most workers' compensation, employment practice liability, and general liability. Workers' compensation and general liability losses are subject to per occurrence and aggregate annual liability limitations. The Company is insured for losses in excess of these limitations. The Company is also self-insured for health care claims for eligible participating employees subject to certain deductibles and limitations. The Company determines its liability for claims incurred but not reported on an actuarial basis.

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INCOME TAXES (Details) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2011	Jun. 30, 2012 Y	Jun. 30, 2011	Jun. 30, 2010
(Loss) income before income taxes:
U.S.		$ (100,792,000)	$ (31,963,000)	$ 35,289,000
International		10,364,000	6,334,000	17,925,000
(Loss) income from continuing operations before income taxes and equity in (loss) income of affiliated companies		(90,428,000)	(25,629,000)	53,214,000
Current:
U.S.		6,493,000	3,658,000	5,580,000
International		2,399,000	1,557,000	14,882,000
Deferred:
U.S.		(13,984,000)	(17,882,000)	4,007,000
International		(187,000)	3,171,000	1,108,000
Income taxes		(5,279,000)	(9,496,000)	25,577,000
Provision for income taxes reconciliation
U.S. statutory rate (benefit) (as a percent)		(35.00%)	(35.00%)	35.00%
State income taxes, net of federal income tax benefit (as a percent)		0.80%	0.70%	5.90%
Tax effect of goodwill impairment (as a percent)		37.90%	10.40%	12.10%
Foreign income taxes at other than U.S. rates (as a percent)		(0.20%)	7.90%	(0.80%)
Work Opportunity and Welfare-to-Work Tax Credits (as a percent)		(5.40%)	(15.70%)	(7.00%)
Adjustment of prior year income tax balances (as a percent)				3.90%
Other, net (as a percent)		(3.90%)	(5.40%)	(1.00%)
Total (as a percent)		(5.80%)	(37.10%)	48.10%
Goodwill impairment	74,100,000	146,110,000	74,100,000	35,277,000
Unrecognized tax benefits (as a percent)		(2.80%)	(3.70%)
Miscellaneous items (as a percent)		(1.10%)	(1.50%)
Meals and entertainment expense disallowance (as a percent)			2.70%
Donated inventory (as a percent)			(2.90%)
Deferred tax assets:
Deferred rent		15,226,000	15,233,000
Payroll and payroll related costs		44,454,000	37,852,000
Net operating loss carryforwards		797,000	1,210,000
Salon asset impairment		5,038,000	5,176,000
Inventories		3,027,000	2,968,000
Deferred gift card revenue		745,000	1,536,000
Federal and state benefit on uncertain tax positions		2,113,000	8,549,000
Allowance for doubtful accounts/notes		5,180,000	9,855,000
Insurance		6,439,000	5,669,000
Other		6,963,000	6,396,000
Total deferred tax assets		89,982,000	94,444,000
Deferred tax liabilities:
Depreciation		(17,984,000)	(29,348,000)
Amortization of intangibles		(86,431,000)	(94,257,000)
Accrued property taxes		(2,079,000)	(1,942,000)
Deferred debt issuance costs		(4,336,000)	(6,215,000)
Other		(23,000)	(3,000)
Total deferred tax liabilities		(110,853,000)	(131,765,000)
Net deferred tax liabilities		(20,871,000)	(37,321,000)
State operating loss carryforwards		14,800,000
Foreign operating loss carryforwards		3,700,000
Income Taxes
Undistributed earnings of international subsidiaries		60,400,000
Statute of limitation period for state tax audits, low end of range (in years)		3
Statute of limitation period for state tax audits, high end of range (in years)		4
Statute of limitation period for international tax audits, low end of range (in years)		3
Statute of limitation period for international tax audits, high end of range (in years)		5
Rollforward of unrecognized tax benefits
(Reductions) additions based on tax positions of prior years		(7,000)	(759,000)	(185,000)
Reductions on tax positions related to the expiration of the statue of limitations		(1,571,000)	(2,718,000)	(2,993,000)
Settlements		(8,016,000)	(682,000)	(302,000)
Balance at end of period		4,381,000	13,493,000	16,856,000
Balance at beginning of period		13,493,000	16,856,000	14,787,000
Additions based on tax positions related to the current year		482,000	796,000	5,549,000
Reserve on unrecognized tax benefits that would benefit the effective tax rate		2,800,000
Income tax (benefit) expense recorded for the reversal of previously accrued interest and penalties		(1,200,000)	(600,000)	(1,100,000)
Accrued interest and penalties related to unrecognized tax benefits		1,500,000
State
Income Taxes
Valuation allowance related to foreign tax losses		2,600,000
Foreign
Income Taxes
Valuation allowance related to foreign tax losses		$ 3,100,000

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SHAREHOLDERS' EQUITY (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Weighted average common and common equivalent shares outstanding:
Weighted average shares for basic earnings per share									57,137,000	56,704,000	55,806,000
Effect of dilutive securities:
Dilutive effect of convertible debt (in shares)											10,730,000
Dilutive effect of stock-based compensation (in shares)											217,000
Weighted average shares for diluted earnings per share									57,137,000	56,704,000	66,753,000
Awards excluded from earnings per share calculations
Awards excluded from basic earnings per share computation	420,000				1,077,000				420,000	1,077,000	1,146,000
Awards excluded from diluted earnings per share computation (in shares)									13,197,000	13,717,000	2,747,000
Reconciliation of the net (loss) income available to common shareholders and the net (loss) income for diluted earnings per share
Net (loss) income from continuing operations available to common shareholders	$ (63,634)	$ (2,468)	$ (57,427)	$ 8,337	$ (16,395)	$ (25,335)	$ 14,505	$ 18,320	$ (115,192)	$ (8,905)	$ 39,579
Effect of dilutive securities:
Interest on convertible debt											7,520
Net (loss) income from continuing operations for diluted earnings per share									$ (115,192)	$ (8,905)	$ 47,099
Stock options
Awards excluded from earnings per share calculations
Awards excluded from diluted earnings per share computation (in shares)									789,000	890,000	960,000
SARs
Awards excluded from earnings per share calculations
Awards excluded from diluted earnings per share computation (in shares)									957,000	1,084,000	1,110,000
Shares issuable upon conversion of debt
Awards excluded from earnings per share calculations
Awards excluded from diluted earnings per share computation (in shares)									11,209,000	11,163,000
Common stock equivalents of potentially dilutive common stock
Awards excluded from earnings per share calculations
Awards excluded from diluted earnings per share computation (in shares)									182,000	334,000
RSAs
Awards excluded from earnings per share calculations
Awards excluded from basic earnings per share computation	403,120				862,000				403,120	862,000	931,000
Awards excluded from diluted earnings per share computation (in shares)									242,000	580,000	677,000
RSUs
Awards excluded from earnings per share calculations
Awards excluded from basic earnings per share computation	17,000				215,000				17,000	215,000	215,000

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LITIGATION (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2012 defendant	Jun. 30, 2011 Customer and employee legal matters	Jun. 30, 2010 Customer and employee legal matters settlement	Jun. 30, 2011 Former owner of Hair Club
LITIGATION
Number of current and former directors and officers who are named defendants	9
Amount awarded in conjunction with a class-action lawsuit	$ 1.1
Litigation
Legal claims settlement agreement				1.7
Number of legal claims settled			2
Legal claims settlement charge			5.2
Legal claims settlement payment		$ 4.3	$ 0.9

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COMMITMENTS AND CONTINGENCIES: (Tables)

12 Months Ended

Jun. 30, 2012

COMMITMENTS AND CONTINGENCIES:

Schedule of total rent expense, excluding sublease rent expense

	2012		2011		2010
	(Dollars in thousands)
Minimum rent	$	259,522	$	260,644	$	259,984
Percentage rent based on sales		8,938		9,225		10,138
Real estate taxes and other expenses		72,345		72,417		73,976
	$	340,805	$	342,286	$	344,098

Schedule of future minimum lease payments under noncancelable operating leases

Fiscal year	Corporate leases		Franchisee leases		Guaranteed leases
	(Dollars in thousands)
2013	$	259,975	$	45,677	$	816
2014		208,992		37,898		553
2015		157,154		29,038		343
2016		106,887		20,250		225
2017		62,016		10,861		193
Thereafter		76,675		8,754		198
Total minimum lease payments	$	871,699	$	152,478	$	2,328

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OTHER FINANCIAL STATEMENT DATA (Details 2) (USD $)	12 Months Ended
	Jun. 30, 2012 Y	Jun. 30, 2011 Y	Jun. 30, 2010
Amortized intangible assets:
Other intangibles, cost	$ 175,161,000	$ 175,449,000
Other intangibles, accumulated amortization	(73,371,000)	(64,121,000)
Other intangibles, net	101,790,000	111,328,000
Intangible assets expected period of benefit, minimum (in years)	1
Intangible assets expected period of benefit, maximum (in years)	40
Weighted Average Amortization Period (in years)	26	26
Total amortization expense related to amortizable intangible assets	9,700,000	9,800,000	9,900,000
Future estimated amortization expense related to amortizable intangible assets
2013	9,413,000
2014	9,199,000
2015	6,157,000
2016	3,999,000
2017	3,996,000
Cash paid (received) during the year for:
Interest	28,448,000	33,493,000	53,547,000
Income taxes, net of refunds	14,754,000	(15,083,000)	17,058,000
Significant non-cash investing and financing activities
Capital expenditures financed through capital leases		6,000,000	7,900,000
Brand assets and trade names
Amortized intangible assets:
Other intangibles, cost	79,995,000	80,310,000
Other intangibles, accumulated amortization	(16,325,000)	(14,329,000)
Other intangibles, net	63,670,000	65,981,000
Weighted Average Amortization Period (in years)	39	39
Guest lists
Amortized intangible assets:
Other intangibles, cost	53,189,000	53,188,000
Other intangibles, accumulated amortization	(39,676,000)	(34,096,000)
Other intangibles, net	13,513,000	19,092,000
Weighted Average Amortization Period (in years)	10	10
Franchise agreements
Amortized intangible assets:
Other intangibles, cost	22,335,000	22,221,000
Other intangibles, accumulated amortization	(9,768,000)	(8,909,000)
Other intangibles, net	12,567,000	13,312,000
Weighted Average Amortization Period (in years)	22	22
Lease intangibles
Amortized intangible assets:
Other intangibles, cost	14,896,000	14,948,000
Other intangibles, accumulated amortization	(5,885,000)	(5,168,000)
Other intangibles, net	9,011,000	9,780,000
Weighted Average Amortization Period (in years)	20	20
Non-compete agreements
Amortized intangible assets:
Other intangibles, cost	207,000	353,000
Other intangibles, accumulated amortization	(117,000)	(232,000)
Other intangibles, net	90,000	121,000
Weighted Average Amortization Period (in years)	6	5
Other
Amortized intangible assets:
Other intangibles, cost	4,539,000	4,429,000
Other intangibles, accumulated amortization	(1,600,000)	(1,387,000)
Other intangibles, net	$ 2,939,000	$ 3,042,000
Weighted Average Amortization Period (in years)	21	25

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SEGMENT INFORMATION

12 Months Ended

Jun. 30, 2012

SEGMENT INFORMATION

SEGMENT INFORMATION

15. SEGMENT INFORMATION

        As of June 30, 2012, the Company owned, franchised or held ownership interests in approximately 12,600 worldwide locations. The Company's locations consisted of 9,340 North American salons (located in the U.S., Canada and Puerto Rico), 398 international salons, 98 hair restoration centers, and 2,811 locations in which the Company maintains a non-controlling ownership interest through its investments in affiliates.

        The Company operates its North American salon operations through five primary concepts: Regis Salons, MasterCuts, SmartStyle, Supercuts and Promenade salons. The concepts offer similar products and services, concentrate on the mass market consumer marketplace and have consistent distribution channels. All of the company-owned and franchise salons within the North American salon concepts are located in high traffic, retail shopping locations that attract mass market consumers, and the individual salons display similar long-term economic characteristics. The salons share interdependencies and a common support base.

        The Company operates its International salon operations, primarily in the United Kingdom, through three primary concepts: Regis, Supercuts, and Sassoon salons. Consistent with the North American concepts, the international concepts offer similar products and services, concentrate on the mass market consumer marketplace and have consistent distribution channels. All of the international salon concepts are company-owned and are located in malls, leading department stores, and high-street locations. Individual salons display similar long-term economic characteristics. The salons share interdependencies and a common support base.

        The Company's company-owned and franchise hair restoration centers are located in the U.S. and Canada. The Company's hair restoration centers offer three hair restoration solutions; hair systems, hair transplants, and hair therapy, which are targeted at the mass market consumer. Hair restoration centers are located primarily in office and professional buildings within larger metropolitan areas.

        Based on the way the Company manages its business, it has reported its North American salons, International salons, and Hair Restoration Centers as three separate reportable segments.

        The accounting policies of the reportable operating segments are the same as those described in Note 1 to the Consolidated Financial Statements. Intersegment sales and transfers are not significant. Summarized financial information concerning the Company's reportable operating segments is shown in the following table as of June 30, 2012, 2011, and 2010:

	For the Year Ended June 30, 2012
	Salons
					Hair Restoration Centers			Unallocated Corporate
	North America		International								Consolidated
	(Dollars in thousands)
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 Year Ended June 30, 2011
	Salons
					Hair Restoration Centers		Unallocated Corporate
	North America		International							Consolidated
	(Dollars in thousands)
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
Lease termination costs		—		—		—		—			—
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 (loss) income of affiliated companies	$	166,683	$	6,738	$	18,230	$	(217,280	)	$	(25,629	)

	For the Year Ended June 30, 2010
	Salons
					Hair Restoration Centers		Unallocated Corporate
	North America		International							Consolidated
	(Dollars in thousands)
Revenues:
Service	$	1,605,979	$	111,833	$	66,325	$	—		$	1,784,137
Product		417,363		44,252		72,978		—			534,593
Royalties and fees		37,221		—		2,483		—			39,704
		2,060,563		156,085		141,786		—			2,358,434
Operating expenses:
Cost of service		920,905		57,657		37,158		—			1,015,720
Cost of product		219,745		22,570		21,568		—			263,883
Site operating expenses		183,881		10,152		5,305		—			199,338
General and administrative		113,956		13,115		36,207		128,713			291,991
Rent		294,263		38,681		9,013		2,141			344,098
Depreciation and amortization		72,681		4,986		12,198		18,899			108,764
Goodwill impairment		35,277		—		—		—			35,277
Lease termination costs		—		2,145		—		—			2,145
Total operating expenses		1,840,708		149,306		121,449		149,753			2,261,216
Operating income (loss)		219,855		6,779		20,337		(149,753	)		97,218
Other income (expense):
Interest expense		—		—		—		(54,414	)		(54,414	)
Interest income and other, net		—		—		—		10,410			10,410
Income (loss) from continuing operations before income taxes and equity in (loss) income of affiliated companies	$	219,855	$	6,779	$	20,337	$	(193,757	)	$	53,214

        Total revenues and long-lived assets associated with business operations in the U.S. and all other countries in aggregate were as follows:

	Year Ended June 30,
	2012				2011				2010
	Total Revenues		Long-lived Assets		Total Revenues		Long-lived Assets		Total Revenues		Long-lived Assets
	(Dollars in thousands)
U.S.	$	1,967,349	$	291,972	$	2,007,042	$	314,406	$	2,055,059	$	327,753
Other countries		306,430		31,088		318,827		33,405		303,375		31,497
Total	$	2,273,779	$	323,060	$	2,325,869	$	347,811	$	2,358,434	$	359,250

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DISCONTINUED OPERATIONS (Tables)

12 Months Ended

Jun. 30, 2012

DISCONTINUED OPERATIONS

Schedule of income from discontinued operations

	For the Years Ended June 30,
	2012		2011		2010
	(Dollars in thousands)
Revenues	$	—	$	—	$	—
Income from discontinued operations, before income taxes		—		—		154
Income tax benefit on discontinued operations		1,099		—		3,007
Income from discontinued operations, net of income taxes	$	1,099	$	—	$	3,161

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DISCONTINUED OPERATIONS (Details) (USD $)	3 Months Ended	12 Months Ended			3 Months Ended		12 Months Ended		1 Months Ended	12 Months Ended			3 Months Ended		12 Months Ended
	Mar. 31, 2012	Jun. 30, 2012	Jun. 30, 2010	Jun. 30, 2011	Mar. 31, 2012 Trade Secret	Sep. 30, 2009 Trade Secret	Jun. 30, 2012 Trade Secret Lease	Jun. 30, 2010 Trade Secret	Mar. 31, 2012 Purchaser of Trade Secret	Jun. 30, 2012 Purchaser of Trade Secret	Jun. 30, 2011 Purchaser of Trade Secret	Jun. 30, 2010 Purchaser of Trade Secret	Jun. 30, 2011 Purchaser of Trade Secret Notes receivable	Mar. 31, 2011 Purchaser of Trade Secret Notes receivable	Jun. 30, 2011 Purchaser of Trade Secret Notes receivable
Discontinued operations
Valuation allowance													$ (22,200,000)	$ (9,000,000)	$ (31,200,000)
Principal balance of notes receivable before reduction									35,700,000
Principal balance of notes receivable									18,000,000
Quarterly payments due on notes receivable									500,000
Extraordinary principal payment										800,000
Warehouse services income										1,500,000	2,700,000	3,000,000
Warehouse services receivables		31,578,000		27,149,000						200,000	300,000
Number of operating leases guaranteed							20
Income from discontinued operations
Income from discontinued operations, before income taxes								154,000
Income tax benefit on discontinued operations					1,100,000		1,099,000	3,007,000
Income from discontinued operations, net of income taxes	1,099,000	1,099,000	3,161,000				1,099,000	3,161,000
Tax benefit in discontinued operations to correct the prior year calculation of the income tax benefit						$ 3,000,000

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BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Cash and Cash Equivalents:
Maximum term of original maturity to classify instrument as cash equivalents (in months)	3
Allowance for doubtful accounts
Activity in the allowance for doubtful accounts
Beginning balance	$ 1,482	$ 3,170	$ 2,382
Bad debt expense	454	853	1,040
Write-offs or claim payments	(714)	(2,549)	(252)
Other (primarily the impact of foreign currency fluctuations)	10	8
Ending balance	$ 1,232	$ 1,482	$ 3,170

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CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME (USD $) In Thousands, except Share data, unless otherwise specified	Total	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income	Retained Earnings	Comprehensive Income
Balance at Jun. 30, 2009	$ 802,860	$ 2,194	$ 151,394	$ 51,855	$ 597,417
Balance (in shares) at Jun. 30, 2009		43,881,364
Increase (Decrease) in Stockholders' Equity
Net (loss) income	42,740				42,740	42,740
Foreign currency translation adjustments	(5,416)			(5,416)		(5,416)
Changes in fair market value of financial instruments designated as cash flow hedges, net of taxes	2,467			2,467		2,467
Issuance of common stock	163,593	661	162,932
Issuance of common stock (in shares)		13,225,000
Equity component of convertible debt, net of taxes	15,245		15,245
Proceeds from exercise of stock options	3,065	10	3,055
Proceeds from exercise of stock options (in shares)	202,700	202,700
Stock-based compensation	9,337		9,337
Shares issued through franchise stock incentive program	291	1	290
Shares issued through franchise stock incentive program (in shares)		16,053
Recognition of deferred compensation and other, net of taxes (Note 13)	(1,874)			(1,874)		(1,874)
Tax benefit realized upon exercise of stock options	262		262
Issuance of restricted stock		15	(15)
Issuance of restricted stock (in shares)		304,200
Restricted stock forfeitures (in shares)		(1,976)
Taxes related to restricted stock	(1,713)	(3)	(1,710)
Taxes related to restricted stock (in shares)		(66,161)
Dividends	(9,146)				(9,146)
Equity issuance costs	(8,154)		(8,154)
Adjustment to stock option tax benefit	(264)		(264)
Total Comprehensive Income						37,917
Balance at Jun. 30, 2010	1,013,293	2,878	332,372	47,032	631,011
Balance (in shares) at Jun. 30, 2010		57,561,180
Increase (Decrease) in Stockholders' Equity
Net (loss) income	(8,905)				(8,905)	(8,905)
Foreign currency translation adjustments	30,405			30,405		30,405
Changes in fair market value of financial instruments designated as cash flow hedges, net of taxes	132			132		132
Proceeds from exercise of stock options	682	2	680
Proceeds from exercise of stock options (in shares)	45,933	45,933
Stock-based compensation	9,596		9,596
Shares issued through franchise stock incentive program	398	1	397
Shares issued through franchise stock incentive program (in shares)		24,472
Recognition of deferred compensation and other, net of taxes (Note 13)	377			377		377
Tax benefit realized upon exercise of stock options	67		67
Issuance of restricted stock		14	(14)
Issuance of restricted stock (in shares)		277,300
Restricted stock forfeitures		(6)	6
Restricted stock forfeitures (in shares)		(121,343)
Taxes related to restricted stock	(1,790)	(3)	(1,787)
Taxes related to restricted stock (in shares)		(76,731)
Vested stock option expirations	(127)		(127)
Dividends	(11,509)				(11,509)
Total Comprehensive Income						22,009
Balance at Jun. 30, 2011	1,032,619	2,886	341,190	77,946	610,597
Balance (in shares) at Jun. 30, 2011	57,710,811	57,710,811
Increase (Decrease) in Stockholders' Equity
Net (loss) income	(114,093)				(114,093)	(114,093)
Foreign currency translation adjustments	(24,254)			(24,254)		(24,254)
Changes in fair market value of financial instruments designated as cash flow hedges, net of taxes	393			393		393
Proceeds from exercise of stock options (in shares)		60
Stock-based compensation	7,597		7,597
Shares issued through franchise stock incentive program	306	1	305
Shares issued through franchise stock incentive program (in shares)		18,844
Recognition of deferred compensation and other, net of taxes (Note 13)	1,029			1,029		1,029
Issuance of restricted stock		3	(3)
Issuance of restricted stock (in shares)		55,000
Restricted stock forfeitures		(15)	15
Restricted stock forfeitures (in shares)		(290,087)
Taxes related to restricted stock	(1,442)	(4)	(1,438)
Taxes related to restricted stock (in shares)		(79,387)
Vested stock option expirations	(723)		(723)
Cumulative minority interest (Note 4)	1,580				1,580
Dividends	(13,855)				(13,855)
Total Comprehensive Income						(136,925)
Balance at Jun. 30, 2012	$ 889,157	$ 2,871	$ 346,943	$ 55,114	$ 484,229
Balance (in shares) at Jun. 30, 2012	57,415,241	57,415,241

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ACQUISITIONS

12 Months Ended

Jun. 30, 2012

ACQUISITIONS

ACQUISITIONS

4. ACQUISITIONS

        During fiscal years 2012, 2011, and 2010, the Company made acquisitions and the purchase prices have been allocated to assets acquired and liabilities assumed based on their estimated fair values at the dates of acquisition. These acquisitions individually and in the aggregate are not material to the Company's operations. Operations of the acquired companies have been included in the operations of the Company since the date of the respective acquisition.

        Based upon purchase price allocations, the components of the aggregate purchase prices of the acquisitions made during fiscal years 2012, 2011, and 2010 and the allocation of the purchase prices were as follows:

	For the Years Ended June 30,
	2012			2011			2010
	(Dollars in thousands)
Components of aggregate purchase prices:
Cash (net of cash acquired)	$	2,587		$	17,990		$	3,664
Liabilities assumed or payable		—			561			—
	$	2,587		$	18,551		$	3,664
Allocation of the purchase prices:
Current assets	$	344		$	641		$	178
Property and equipment		534			4,232			873
Goodwill		4,978			12,489			2,581
Identifiable intangible assets		594			1,964			134
Accounts payable and accrued expenses		(1,117	)		(534	)		(102	)
Other noncurrent liabilities		(1,246	)		(241	)		—
Noncontrolling interest		(1,500	)		—			—
	$	2,587		$	18,551		$	3,664

        The value and related weighted average amortization periods for the intangibles acquired during fiscal years 2012 and 2011 business acquisitions, in total and by major intangible asset class, are as follows:

	Purchase Price Allocation				Weighted Average Amortization Period
	For the Years Ended June 30,
	2012		2011		2012		2011
	(Dollars in thousands)				(in years)
Amortized intangible assets:
Brand assets and trade names	$	31	$	159		20		10
Guest lists		—		1,207		—		7
Franchise agreements		513		269		30		40
Lease intangibles		13		151		20		20
Non-compete agreements		10		—		5		—
Other		27		178		20		20
Total value and weighted average amortization period	$	594	$	1,964		28		14

        The majority of the purchase price in salon acquisitions is accounted for as residual goodwill rather than identifiable intangible assets. This stems from the value associated with the walk-in guest base of the acquired salons, which is not recorded as an identifiable intangible asset under current accounting guidance, as well as the limited value and guest preference associated with the acquired hair salon brand. Key factors considered by guests of hair salon services include personal relationships with individual stylists, service quality and price point competitiveness. These attributes represent the "going concern" value of the salon.

        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 guests through its expansion strategies. In the acquisitions of international salons and hair restoration centers, the residual goodwill primarily represents the growth prospects that are not captured as part of acquired tangible or identified intangible assets. Generally, the goodwill recognized in the North American salon transactions is expected to be fully deductible for tax purposes and the goodwill recognized in the international salon transactions is not deductible for tax purposes. Goodwill generated in certain acquisitions, such as the acquisition of hair restoration centers, is not deductible for tax purposes due to the acquisition structure of the transaction.

        During fiscal years 2012, 2011, and 2010, the Company purchased salon operations from its franchisees. The Company evaluated the effective settlement of the pre-existing franchise contracts and associated rights afforded by those contracts. The Company determined that the effective settlement of the pre-existing franchise contracts at the date of the acquisition did not result in a gain or loss, as the agreements were neither favorable nor unfavorable when compared to similar current market transactions, and no settlement provisions exist in the pre-existing contracts. Therefore, no settlement gain or loss was recognized with respect to the Company's franchise buybacks.

        On July 1, 2011, the Company acquired 31 franchise salon locations through its acquisition of a 60.0 percent ownership interest in Roosters for $2.3 million. The purchase agreement contains a right, Roosters Equity Put, to require the Company to purchase additional ownership interest in Roosters between specified dates in 2012 to 2015, and an option, Roosters Equity Call, whereby the Company can acquire additional ownership interest in Roosters beginning in 2015. The acquisition price is determined based on a multiple of the earnings before interest, taxes, depreciation and amortization of Roosters for a trailing twelve month period adjusted for certain items as defined in the agreement which is intended to approximate fair value. The initial estimated fair values as of July 1, 2011 of the Roosters Equity Put and Roosters Equity Call were $0.2 and $0.1 million, respectively. Any changes in the estimated fair value of the Roosters Equity Put and Roosters Equity Call are recorded in the Company's Consolidated Statement of Operations.

        The Company utilized the consolidation of variable interest entities guidance to determine whether or not its investment in Roosters was a VIE, and if so, whether the Company was the primary beneficiary of the VIE. The Company concluded that Roosters is a VIE based on the fact that the holders of the equity investment at risk, as a group, lack the obligation to absorb the expected losses of the entity. The Roosters Equity Put is based on a formula that may or may not be at market when exercised, therefore, it could prevent the minority interest owners from absorbing its share of expected losses by transferring such obligation to the Company. Under certain circumstances, including a decline in the fair value of Roosters, the Roosters Equity Put could be exercised and the minority interest owners could be protected from absorbing the downside of the equity interest. As the Roosters Equity Put absorbs a large amount of variability this characteristic results in Roosters being a VIE.

        Regis determined that the Company has met the power criterion due to the Company having the authority to direct the activities that most significantly impact Roosters' economic performance. The Company concluded based on the considerations above that it is the primary beneficiary of Roosters and therefore the financial positions, results of operations, and cash flows of Roosters are consolidated in the Company's financial statements from the acquisition date. Total assets, total liabilities and total shareholders' equity of Roosters as of June 30, 2012 were $5.9, $2.0 and $3.9 million, respectively. Net income attributable to the noncontrolling interest in Roosters was $0.1 million for the twelve months ended June 30, 2012, and was recorded within interest income and other, net in the Consolidated Statement of Operations. Shareholders' equity attributable to the noncontrolling interest in Roosters was $1.6 million as of June 30, 2012 and was recorded within retained earnings on the Consolidated Balance Sheet.

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FINANCING ARRANGEMENTS (Details) (USD $)			12 Months Ended					1 Months Ended	12 Months Ended		1 Months Ended	12 Months Ended		1 Months Ended	12 Months Ended			12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012 Senior term notes	Jun. 30, 2011 Senior term notes	Jun. 30, 2012 Private Shelf Agreement	Apr. 30, 2012 Private Shelf Agreement	Jun. 30, 2011 Private Shelf Agreement	Jul. 31, 2009 Convertible senior notes Y	Jun. 30, 2012 Convertible senior notes Y	Jun. 30, 2011 Convertible senior notes	Jun. 30, 2011 Revolving credit facility	Jun. 30, 2011 Revolving credit facility	Jun. 30, 2012 Revolving credit facility	Sep. 30, 2011 Equipment and leasehold notes payable	Jun. 30, 2012 Equipment and leasehold notes payable	Jun. 30, 2011 Equipment and leasehold notes payable	Sep. 29, 2011 Equipment and leasehold notes payable	Jun. 30, 2012 Other notes payable	Jun. 30, 2011 Other notes payable
Long-term debt
Interest rate percentage, minimum			6.69%	6.69%											4.90%	8.80%		5.75%	5.75%
Interest rate percentage, maximum			8.50%	8.50%											8.75%	9.14%		8.00%	8.00%
Interest rate percentage								5.00%	5.00%	5.00%							4.90%
Net carrying amount of long-term debt	$ 287,674,000	$ 313,411,000	$ 111,429,000	$ 133,571,000	$ 111,400,000		$ 133,600,000		$ 161,134,000	$ 156,248,000					$ 14,780,000	$ 22,273,000		$ 331,000	$ 1,319,000
Less current portion	(28,937,000)	(32,252,000)			22,100,000		22,100,000
Long-term portion	258,737,000	281,159,000
Aggregate maturities of long-term debt, including capital lease obligations
Capital lease obligations	14,800,000
Fiscal year, 2013	28,937,000
Fiscal year, 2014	24,918,000
Fiscal year, 2015	180,245,000
Fiscal year, 2016	17,860,000
Fiscal year, 2017	17,857,000
Thereafter	17,857,000
Net carrying amount of long-term debt	287,674,000	313,411,000	111,429,000	133,571,000	111,400,000		133,600,000		161,134,000	156,248,000					14,780,000	22,273,000		331,000	1,319,000
Long-term debt, additional disclosures
Minimum net worth covenant on long-term debt						800,000,000					800,000,000	800,000,000
Minimum net worth covenant on long-term debt after amendment						850,000,000					850,000,000	850,000,000
Principal amount of long-term debt								172,500,000	172,500,000	172,500,000							20,500,000
Long-term debt conversion ratio								64.6726	65.1432
Principal amount applied to conversion ratio								1,000	1,000
Long-term debt conversion price (in dollars per share)								$ 15.46	$ 15.35
Convertible long-term debt amount allocated to equity								24,700,000
Fair value of long-term debt								147,800,000
Effective interest rate on the convertible debt (as a percent)								8.90%
Debt discount amortization period (in years)									5
Unamortized debt discount								(24,700,000)	(11,366,000)	(16,252,000)
Interest cost related to contractual interest coupon									8,625,000	8,625,000
Interest cost related to amortization of the discount									4,886,000	4,488,000
Total interest cost									13,511,000	13,113,000
Revolving credit facility maximum borrowing capacity											400,000,000	400,000,000
Debt instrument term											5 years			3 years
Variable interest rate basis												LIBOR
Maximum borrowing capacity, optional expansion											200,000,000
Indebtedness related to capital leases, maximum						50,000,000					50,000,000	50,000,000
Threshold default of other debt to trigger event of default											10,000,000
Outstanding standby letters of credit											26,000,000	26,000,000	26,100,000
Revolving credit facility remaining borrowing capacity											$ 374,000,000	$ 374,000,000	$ 373,900,000
Capital lease amortization rate (as a percent)														9.20%

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SEGMENT INFORMATION (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Jun. 30, 2012 salon	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2012 segment salon	Jun. 30, 2011	Jun. 30, 2010
Summarized financial information of reportable operating segments
Number of stores	12,600								12,600
Number of stores in which the entity maintains a non-controlling ownership interest through investments in affiliates	2,811								2,811
Revenues:
Service									$ 1,712,703	$ 1,762,974	$ 1,784,137
Product									520,467	523,194	534,593
Royalties and fees									40,609	39,701	39,704
Total revenues	568,168	573,584	563,278	568,749	591,985	581,267	574,372	578,245	2,273,779	2,325,869	2,358,434
Operating expenses:
Cost of service									985,154	1,012,868	1,015,720
Cost of product									249,655	249,979	263,883
Site operating expenses									198,725	197,722	199,338
General and administrative									302,572	339,857	291,991
Rent									340,805	342,286	344,098
Depreciation and amortization									118,071	105,109	108,764
Goodwill impairment						74,100			146,110	74,100	35,277
Lease termination costs											2,145
Total operating expenses									2,341,092	2,321,921	2,261,216
Operating (loss) income	(43,968)	25,200	(61,617)	13,072	7,154	(59,504)	22,864	33,434	(67,313)	3,948	97,218
Other income (expense):
Interest expense									(28,245)	(34,388)	(54,414)
Interest income and other, net									5,130	4,811	10,410
(Loss) income from continuing operations before income taxes and equity in (loss) income of affiliated companies									(90,428)	(25,629)	53,214
Number of reportable segments									3
North American Salons
Summarized financial information of reportable operating segments
Number of stores	9,340								9,340
Number of primary concepts									5
Revenues:
Service									1,541,491	1,588,690	1,605,979
Product									401,326	403,962	417,363
Royalties and fees									38,288	37,292	37,221
Total revenues									1,981,105	2,029,944	2,060,563
Operating expenses:
Cost of service									888,777	919,526	920,905
Cost of product									201,625	201,560	219,745
Site operating expenses									182,524	183,552	183,881
General and administrative									113,952	122,281	113,956
Rent									292,192	292,479	294,263
Depreciation and amortization									68,983	69,763	72,681
Goodwill impairment									67,684	74,100	35,277
Total operating expenses									1,815,737	1,863,261	1,840,708
Operating (loss) income									165,368	166,683	219,855
Other income (expense):
(Loss) income from continuing operations before income taxes and equity in (loss) income of affiliated companies									165,368	166,683	219,855
International Salons
Summarized financial information of reportable operating segments
Number of stores	398								398
Number of primary concepts									3
Revenues:
Service									102,400	106,734	111,833
Product									38,722	43,503	44,252
Total revenues									141,122	150,237	156,085
Operating expenses:
Cost of service									53,684	54,213	57,657
Cost of product									20,010	23,631	22,570
Site operating expenses									9,722	9,852	10,152
General and administrative									12,024	12,630	13,115
Rent									37,880	38,423	38,681
Depreciation and amortization									5,297	4,750	4,986
Lease termination costs											2,145
Total operating expenses									138,617	143,499	149,306
Operating (loss) income									2,505	6,738	6,779
Other income (expense):
(Loss) income from continuing operations before income taxes and equity in (loss) income of affiliated companies									2,505	6,738	6,779
Hair Restoration Centers
Summarized financial information of reportable operating segments
Number of stores	98								98
Number of hair restoration solutions									3
Revenues:
Service									68,812	67,550	66,325
Product									80,419	75,729	72,978
Royalties and fees									2,321	2,409	2,483
Total revenues									151,552	145,688	141,786
Operating expenses:
Cost of service									42,693	39,129	37,158
Cost of product									28,020	24,788	21,568
Site operating expenses									6,479	4,318	5,305
General and administrative									36,436	37,038	36,207
Rent									9,036	9,227	9,013
Depreciation and amortization									13,101	12,958	12,198
Goodwill impairment			78,400						78,426
Total operating expenses									214,191	127,458	121,449
Operating (loss) income									(62,639)	18,230	20,337
Other income (expense):
(Loss) income from continuing operations before income taxes and equity in (loss) income of affiliated companies									(62,639)	18,230	20,337
Unallocated Corporate
Operating expenses:
General and administrative									140,160	167,908	128,713
Rent									1,697	2,157	2,141
Depreciation and amortization									30,690	17,638	18,899
Total operating expenses									172,547	187,703	149,753
Operating (loss) income									(172,547)	(187,703)	(149,753)
Other income (expense):
Interest expense									(28,245)	(34,388)	(54,414)
Interest income and other, net									5,130	4,811	10,410
(Loss) income from continuing operations before income taxes and equity in (loss) income of affiliated companies									$ (195,662)	$ (217,280)	$ (193,757)

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OTHER FINANCIAL STATEMENT DATA (Tables)

12 Months Ended

Jun. 30, 2012

OTHER FINANCIAL STATEMENT DATA

Schedule of additional information concerning selected balance sheet accounts

	2012			2011
	(Dollars in thousands)
Accounts receivable	$	32,810		$	28,631
Less allowance for doubtful accounts		(1,232	)		(1,482	)
	$	31,578		$	27,149
Other current assets:
Prepaids	$	32,179		$	29,705
Notes receivable, primarily affiliates		29,043			2,413
	$	61,222		$	32,118
Property and equipment:
Land	$	3,864		$	3,864
Buildings and improvements		48,017			47,907
Equipment, furniture and leasehold improvements		794,353			775,527
Internal use software		106,264			94,507
Equipment, furniture and leasehold improvements under capital leases		84,757			88,297
		1,037,255			1,010,102
Less accumulated depreciation and amortization		(656,512	)		(611,669	)
Less amortization of equipment, furniture and leasehold improvements under capital leases		(57,683	)		(50,622	)
	$	323,060		$	347,811
Investment in and loans to affiliates:
Equity-method investments	$	166,176		$	258,930
Noncurrent loans to affiliates		—			2,210
	$	166,176		$	261,140
Other assets:
Notes receivable, net	$	1,584		$	1,072
Other noncurrent assets		57,904			57,328
	$	59,488		$	58,400
Accrued expenses:
Payroll and payroll related costs	$	80,649		$	89,788
Insurance		19,410			19,127
Deferred compensation		26,055			6,180
Deferred revenues		9,054			8,313
Taxes payable		5,673			8,113
Other		31,741			35,800
	$	172,582		$	167,321
Other noncurrent liabilities:
Deferred income taxes	$	38,266		$	55,208
Deferred rent		52,773			53,102
Deferred benefits		39,178			58,150
Insurance		32,459			30,925
Equity put options		794			22,700
Other		8,509			17,210
	$	171,979		$	237,295

Schedule of additional information concerning other intangibles, net

	June 30, 2012							June 30, 2011
	Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
	(Dollars in thousands)
Amortized intangible assets:
Brand assets and trade names	$	79,995	$	(16,325	)	$	63,670	$	80,310	$	(14,329	)	$	65,981
Guest lists		53,189		(39,676	)		13,513		53,188		(34,096	)		19,092
Franchise agreements		22,335		(9,768	)		12,567		22,221		(8,909	)		13,312
Lease intangibles		14,896		(5,885	)		9,011		14,948		(5,168	)		9,780
Non-compete agreements		207		(117	)		90		353		(232	)		121
Other		4,539		(1,600	)		2,939		4,429		(1,387	)		3,042
	$	175,161	$	(73,371	)	$	101,790	$	175,449	$	(64,121	)	$	111,328

Schedule of weighted average amortization periods of intangible assets

	Weighted Average Amortization Period June 30,
	2012		2011
	(In years)
Amortized intangible assets:
Brand assets and trade names		39		39
Guest lists		10		10
Franchise agreements		22		22
Lease intangibles		20		20
Non-compete agreements		6		5
Other		21		25
Total		26		26

Schedule of future estimated amortization expense related to amortizable intangible assets

Fiscal Year	(Dollars in thousands)
2013	$	9,413
2014		9,199
2015		6,157
2016		3,999
2017		3,996

Schedule of supplemental disclosures of cash flow activity

	For the Years Ended June 30,
	2012		2011			2010
	(Dollars in thousands)
Cash paid (received) during the year for:
Interest	$	28,448	$	33,493		$	53,547
Income taxes, net of refunds		14,754		(15,083	)		17,058

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SEGMENT INFORMATION (Tables)

12 Months Ended

Jun. 30, 2012

SEGMENT INFORMATION

Schedule of summarized financial information of reportable operating segments

	For the Year Ended June 30, 2012
	Salons
					Hair Restoration Centers			Unallocated Corporate
	North America		International								Consolidated
	(Dollars in thousands)
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 Year Ended June 30, 2011
	Salons
					Hair Restoration Centers		Unallocated Corporate
	North America		International							Consolidated
	(Dollars in thousands)
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
Lease termination costs		—		—		—		—			—
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 (loss) income of affiliated companies	$	166,683	$	6,738	$	18,230	$	(217,280	)	$	(25,629	)

	For the Year Ended June 30, 2010
	Salons
					Hair Restoration Centers		Unallocated Corporate
	North America		International							Consolidated
	(Dollars in thousands)
Revenues:
Service	$	1,605,979	$	111,833	$	66,325	$	—		$	1,784,137
Product		417,363		44,252		72,978		—			534,593
Royalties and fees		37,221		—		2,483		—			39,704
		2,060,563		156,085		141,786		—			2,358,434
Operating expenses:
Cost of service		920,905		57,657		37,158		—			1,015,720
Cost of product		219,745		22,570		21,568		—			263,883
Site operating expenses		183,881		10,152		5,305		—			199,338
General and administrative		113,956		13,115		36,207		128,713			291,991
Rent		294,263		38,681		9,013		2,141			344,098
Depreciation and amortization		72,681		4,986		12,198		18,899			108,764
Goodwill impairment		35,277		—		—		—			35,277
Lease termination costs		—		2,145		—		—			2,145
Total operating expenses		1,840,708		149,306		121,449		149,753			2,261,216
Operating income (loss)		219,855		6,779		20,337		(149,753	)		97,218
Other income (expense):
Interest expense		—		—		—		(54,414	)		(54,414	)
Interest income and other, net		—		—		—		10,410			10,410
Income (loss) from continuing operations before income taxes and equity in (loss) income of affiliated companies	$	219,855	$	6,779	$	20,337	$	(193,757	)	$	53,214

Schedule of total revenues and long-lived assets associated with business operations in the U.S. and all other countries in aggregate

	Year Ended June 30,
	2012				2011				2010
	Total Revenues		Long-lived Assets		Total Revenues		Long-lived Assets		Total Revenues		Long-lived Assets
	(Dollars in thousands)
U.S.	$	1,967,349	$	291,972	$	2,007,042	$	314,406	$	2,055,059	$	327,753
Other countries		306,430		31,088		318,827		33,405		303,375		31,497
Total	$	2,273,779	$	323,060	$	2,325,869	$	347,811	$	2,358,434	$	359,250

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SHAREHOLDERS' EQUITY

12 Months Ended

Jun. 30, 2012

SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY

14. SHAREHOLDERS' EQUITY

Net (Loss) Income Per Share:

        The Company's basic earnings per share is calculated as net (loss) income divided by weighted average common shares outstanding, excluding unvested outstanding RSAs and RSUs. The Company's dilutive earnings per share is calculated as net (loss) income divided by weighted average common shares and common share equivalents outstanding, which includes shares issuable under the Company's stock option plan and long-term incentive plan, and dilutive securities. Stock-based awards with exercise prices greater than the average market value of the Company's common stock are excluded from the computation of diluted earnings per share. The Company's dilutive earnings per share will also reflect the assumed conversion under the Company's convertible debt if the impact is dilutive, along with the exclusion of interest expense, net of taxes. The impact of the convertible debt is excluded from the computation of diluted earnings per share when interest expense per common share obtainable upon conversion is greater than basic earnings per share.

        The following table sets forth a reconciliation of shares used in the computation of basic and diluted earnings per share:

	2012		2011		2010
	(Shares in thousands)
Weighted average shares for basic earnings per share		57,137		56,704		55,806
Effect of dilutive securities:
Dilutive effect of convertible debt		—		—		10,730
Dilutive effect of stock-based compensation(1)		—		—		217
Weighted average shares for diluted earnings per share		57,137		56,704		66,753

(1)

For fiscal year 2012 and 2011, 182 and 334 common stock equivalents of potentially dilutive common stock were not included in the diluted earnings per share calculation because to do so would have been anti-dilutive.

        The following table sets forth the awards, which are excluded from the various earnings per share calculations:

	2012		2011		2010
	(Shares in thousands)
Basic earnings per share:
RSAs(1)		403		862		931
RSUs(1)		17		215		215
		420		1,077		1,146
Diluted earnings per share:
Stock options(2)		789		890		960
SARs(2)		957		1,084		1,110
RSAs(2)		242		580		677
Shares issuable upon conversion of debt(2)		11,209		11,163		—
		13,197		13,717		2,747

(1)

Shares were not vested

(2)

Share were anti-dilutive

        The following table sets forth a reconciliation of the net (loss) income from continuing operations available to common shareholders and the net (loss) income from continuing operations for diluted earnings per share under the if-converted method:

	2012			2011			2010
	(Dollars in thousands)
Net (loss) income from continuing operations available to common shareholders	$	(115,192	)	$	(8,905	)	$	39,579
Effect of dilutive securities:
Interest on convertible debt		—			—			7,520
Net (loss) income from continuing operations for diluted earnings per share	$	(115,192	)	$	(8,905	)	$	47,099

Stock-based Compensation Award Plans:

        In May of 2004, the Company's Board of Directors approved the 2004 Long Term Incentive Plan (2004 Plan). The 2004 Plan received shareholder approval at the annual shareholders' meeting held on October 28, 2004. The 2004 Plan provides for the granting of stock options, equity-based stock appreciation rights (SARs) and restricted stock, as well as cash-based performance grants, to employees and directors of the Company. On March 8, 2007, the Company's Board of Directors approved an amendment to the 2004 Plan to permit the granting and issuance of restricted stock units (RSUs). On October 28, 2010, the shareholders of Regis Corporation approved an amendment to the 2004 Plan to increase the maximum number of shares of the Company's common stock authorized for issuance pursuant to grants and awards from 2,500,000 to 6,750,000. The 2004 Plan expires on May 26, 2014. Stock options, SARs and restricted stock granted prior to fiscal year 2012 under the 2004 Plan generally vest at a rate of 20.0 percent annually on each of the first five anniversaries of the date of grant. The stock options and SARs have a maximum term of ten years. The RSUs granted prior to fiscal year 2012 cliff vest after five years and payment of the RSUs is deferred until January 31 of the year following vesting.

        During the fiscal year ended 2012, the Company granted 55,000 shares of restricted stock awards and 42,316 restricted stock units. Of the 55,000 restricted stock awards, 20,000 shares vest at a rate of 20.0 percent annually on the first five anniversaries of the date of grant with the remaining 35,000 shares cliff vest two years after the grant date. The grant of the 42,316 restricted stock units occurred in the last month of the fiscal year, with retroactive vesting on a monthly basis, generally from the Company's 2011 annual shareholder meeting date. As such, at the date of grant there were 25,704 vested restricted stock units. The distribution of the vested restricted stock units is deferred until separation of service from the Company.

        Unvested awards are subject to forfeiture in the event of termination of employment.

        The Company also has outstanding stock options under the 2000 Stock Option Plan (2000 Plan), although the plan terminated in 2010, which allowed the Company to grant both incentive and nonqualified stock options and replaced the Company's 1991 Stock Option Plan (1991 Plan). Total options covering 3,500,000 shares of common stock were available for grant under the 2000 Plan to employees of the Company for a term not to exceed ten years from the date of grant. The term may not exceed five years for incentive stock options granted to employees of the Company possessing more than ten percent of the total combined voting power of all classes of stock of the Company or any subsidiary of the Company. Options may 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 were granted at not less than fair market value on the date of grant. The Board of Directors determines the 2000 Plan participants and establishes the terms and conditions of each option.

        The terms and conditions of the shares granted under the 1991 Plan are similar to the 2000 Plan. The 1991 Plan terminated in 2001. All shares granted under the 1991 Plan have been exercised, forfeited, or cancelled as of June 30, 2011.

        Common shares available for grant under the following plans as of June 30 were:

	2012		2011		2010
	(Shares in thousands)
2000 Plan		—		—		4
2004 Plan		4,838		4,209		12
		4,838		4,209		16

        Stock options outstanding and weighted average exercise prices were as follows:

	Options Outstanding
	Shares			Weighted Average Exercise Price
	(in thousands)
Balance, June 30, 2009		1,385		$	25.55
Granted		135			18.90
Cancelled		(337	)		17.74
Exercised		(203	)		15.12
Balance, June 30, 2010		980			29.48
Granted		—			—
Cancelled		(96	)		18.89
Exercised		(46	)		15.04
Balance, June 30, 2011		838			31.48
Granted		—			—
Cancelled		(186	)		27.80
Exercised		—			—
Balance, June 30, 2012		652		$	32.53
Exercisable June 30, 2012		593		$	33.50

        Outstanding options of 651,578 at June 30, 2012 had an intrinsic value (the amount by which the stock price exceeded the exercise or grant date price) of zero and a weighted average remaining contractual term of 3.4 years. Exercisable options of 593,288 at June 30, 2012 had an intrinsic value of zero and a weighted average remaining contractual term of 3.0 years. Of the outstanding and unvested options and due to estimated forfeitures, 54,458 options are expected to vest with a $22.82 per share weighted average grant price and a weighted average remaining contractual life of 6.5 years that have a total intrinsic value of zero.

        All options granted relate to stock option plans that have been approved by the shareholders of the Company. Stock options granted in fiscal year 2010 were granted under the 2000 and 2004 plan.

        A rollforward of RSAs, RSUs and SARs outstanding, as well as other relevant terms of the awards, were as follows:

	Restricted Stock Outstanding					SARs Outstanding
	Shares/Units			Weighted Average Grant Date Fair Value		Shares			Weighted Average Exercise Price
	(in thousands)					(in thousands)
Balance, June 30, 2009		1,032			26.33		1,114			26.30
Granted		304			19.12		2			28.57
Cancelled		(2	)		20.02		(6	)		38.63
Vested/Exercised		(188	)		24.74		—			—
Balance, June 30, 2010		1,146			24.70		1,110			26.24
Granted		277			16.60		103			16.60
Cancelled		(118	)		20.42		(126	)		24.35
Vested/Exercised		(228	)		22.69		—			—
Balance, June 30, 2011		1,077			23.48		1,087			25.54
Granted		97			16.94		—			—
Forfeited or expired		(290	)		19.07		(352	)		24.57
Vested/Exercised		(224	)		20.58		(1	)		16.60
Balance, June 30, 2012		660		$	25.44		734		$	26.02

        Outstanding and unvested RSAs of 403,120 at June 30, 2012 had an intrinsic value of $7.2 million and a weighted average remaining vesting term of 1.7 years. Due to estimated forfeitures, 366,864 awards are expected to vest with a total intrinsic value of $6.6 million.

        Outstanding RSUs of 257,316 at June 30, 2012 had an intrinsic value of $4.6 million and a weighted average remaining vesting term of less than 0.1 years. Vested RSUs of 240,704 at June 30, 2012 had an intrinsic value of $4.3 million. Unvested RSUs of 16,612 at June 30, 2012 had an intrinsic value of $0.3 million and a weighted average remaining vesting term of 0.5 years. The payment of 215,000 vested RSUs is deferred until January 31, 2013. The payment of the remaining 25,704 vested RSUs is deferred six months after the respective award recipient is no longer an employee of the Company or serves on the Board of Directors.

        Outstanding SARs of 733,800 at June 30, 2012 had a total intrinsic value of $0.1 million and a weighted average remaining contractual term of 3.8 years. Exercisable SARs of 579,790 at June 30, 2012 had a total intrinsic value of less than $0.1 million and a weighted average contractual term of 2.9 years. Of the outstanding and unvested rights and due to estimated forfeitures, 147,035 SARs are expected to vest with a $18.99 per share weighted average grant price, a weighted average remaining contractual life of 6.9 years and a total intrinsic value of $0.1 million.

        During fiscal year 2011, the Company accelerated the vesting of 68,390 unvested RSAs held by the Company's former Chief Executive Officer and former Executive Vice President, Fashion and Education. Under the terms of the modifications, any unvested RSAs granted to the former Chief Executive Officer and former Executive Vice President, Fashion and Education fully vested on their last days of employment, which was February 8, 2012 and June 30, 2012, respectively. As a result of the modifications, the Company recognized an incremental compensation cost of $0.2 and less than $0.1 million during fiscal years 2012 and 2011, respectively.

        Total cash received from the exercise of share-based instruments in fiscal years 2012, 2011 and 2010 was less than $0.1, $0.7, and $3.1 million, respectively.

        As of June 30, 2012, the total unrecognized compensation cost related to all unvested stock-based compensation arrangements was $7.8 million. The related weighted average period over which such cost is expected to be recognized was approximately 2.6 years as of June 30, 2012.

        The total intrinsic value of all stock-based compensation that was exercised during fiscal years 2012, 2011, and 2010 was less than $0.1, $0.2, and $0.7 million, respectively.

        The total fair value of stock awards that vested and were distributed during fiscal years 2012, 2011, and 2010 was $4.8, $5.4, and $4.9 million, respectively.

        Using the fair value of each grant on the date of grant, the weighted average fair values per stock-based compensation award granted during fiscal years 2012, 2011 and 2010 were as follows:

	2012		2011		2010
Stock options	$	—	$	—	$	7.36
SARs		—		6.26		8.60
Restricted stock awards		16.15		16.60		19.12
Restricted stock units		17.96		—		—

        The expense associated with the RSA and RSU grants is based on the market price of the Company's stock at the date of grant. The significant assumptions used in determining the underlying fair value on the date of grant of each stock option and SAR grant issued during the fiscal years 2012, 2011 and 2010 is presented below:

	2012	2011			2010
Risk-free interest rate	N/A		2.29	%		2.79	%
Expected term (in years)	N/A		5.50			5.50
Expected volatility	N/A		44.00	%		42.00	%
Expected dividend yield	N/A		1.45	%		0.85	%

        The risk free rate of return is determined based on the U.S. Treasury rates approximating the expected life of the options and SARs granted. Expected volatility is established based on historical volatility of the Company's stock price. Estimated expected life was based on an analysis of historical stock options granted data which included analyzing grant activity including grants exercised, expired, and canceled. The expected dividend yield is determined based on the Company's annual dividend amount as a percentage of the strike price at the time of the grant. The Company uses historical data to estimate pre-vesting forfeiture rates.

        Compensation expense included in income before income taxes related to stock- based compensation was $7.6, $9.6, and $9.3 million for the three years ended June 30, 2012, 2011, and 2010, respectively.

Authorized Shares and Designation of Preferred Class:

        The Company has 100 million shares of capital stock authorized, par value $0.05, of which all outstanding shares, and shares available under the Stock Option Plans, have been designated as common.

        In addition, 250,000 shares of authorized capital stock have been designated as Series A Junior Participating Preferred Stock (preferred stock). None of the preferred stock has been issued.

Shareholders' Rights Plan:

        The Company has a shareholders' rights plan pursuant to which one preferred share purchase right is held by shareholders for each outstanding share of common stock. The rights become exercisable only following the acquisition by a person or group, without the prior consent of the Board of Directors, of 15.0 percent or more of the Company's voting stock, or following the announcement of a tender offer or exchange offer to acquire an interest of 15.0 percent or more. If the rights become exercisable, they entitle all holders, except the takeover bidder, to purchase one one-thousandth of a share of preferred stock at an exercise price of $140, subject to adjustment, or in lieu of purchasing the preferred stock, to purchase for the same exercise price common stock of the Company (or in certain cases common stock of an acquiring company) having a market value of twice the exercise price of a right.

Share Repurchase Program:

        In May 2000, the Company's Board of Directors (BOD) approved a stock repurchase program. Originally, the program authorized up to $50.0 million to be expended for the repurchase of the Company's stock. The BOD elected to increase this maximum to $100.0 million in August 2003, to $200.0 million on May 3, 2005, and to $300.0 million on April 26, 2007. The timing and amounts of any repurchases will depend on many factors, including the market price of the common stock and overall market conditions. Historically, the repurchases to date have been made primarily to eliminate the dilutive effect of shares issued in conjunction with acquisitions, restricted stock grants and stock option exercises. All repurchased shares become authorized but unissued shares of the Company. This repurchase program has no stated expiration date. As of June 30, 2012, 2011, and 2010, a total accumulated 6.8 million shares have been repurchased for $226.5 million. As of June 30, 2012, $73.5 million remains to be spent on share repurchases under this program.