Paul Finkelstein - Chairman, President & Chief Executive Officer Randy Pearce - Senior EVP & Chief Financial and Administrative Advisor

Jeff Stein - Soleil Securities William Armstrong - C.L. King & Associates Jill Caruthers - Johnson Rice & Company Mike Hamilton - RBC Capital Erika Maschmeyer - Robert Baird

Good morning. My name is Mikayla and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Regis Corporation Second Quarter 2009 Conference Call. All lines have been placed on mute to prevent any background noise. If anyone has not received a copy of yesterday’s press release, please call Regis Corporation at 952-806-2154 and a copy will be faxed to you immediately. If you wish to access the replay for this call, you may do so by dialing 800-405-2236, using the access code 11124042#. The replay will be available 60 minutes after the conclusion of today’s call. I would like to remind you to the extent the company’s statements or comments this morning represent forward-looking statements. I refer you to the risk factors and other cautionary factors in yesterday’s news release as well as the company’s SEC filings. Reconciliation to non-GAAP financial measures mentioned in the following presentation can be found on their website at www.regiscorp.com. With us today are Paul Finkelstein, Chairman, President and Chief Executive Officer; and Randy Pearce, Senior Executive, Vice President and Chief Financial Administrative Advisor. After management has completed its review of the quarter, we will open the call for questions. (Operator Instructions) I would now like to turn the conference over to Paul Finkelstein, for his comments. Paul, you may begin.

Thank you, very much and good morning everyone. I would like to give you an overview of our financial results for the quarter. Although we reported an EPS loss of $3.34 a share and our operational earnings per share were $0.36 compared to the $0.46 last year. Reported EPS include several non-operational items including the loss related to the sale of Trade Secret and impairment charges related to the U.K. Intelligent Nutrients. Randy will discuss these on operational charges in detail during his presentation. I’ll forgo my usual reporting of capital expenditures, acquisitions, store openings and closings as all of these items are embodied in our press release, which was issued yesterday. I’ll go right to the heart of the matter, which relates to the sale of our Trade Secret business. As we all know, the current economic environment is quite severe. We do not know how severe and how long this recession will last. Consumers are spending less and it is impacting our business, especially in product. For this and other reasons, we made a decision to sell our Trade Secret division. We’re very proud to have built this division into $270 million business with 721 stores. Trade Secrets Chief Operating Officer, Norma Knudsen and our team did an excellent job and the business has been highly profitable over many years. During the last several years, we have had significant challenges in the professional hair care industry. As you know, from previous conference calls, product diversion has been a big issue. Most of our manufacturers have a done a poor job of controlling diversion. As a result, the entire category has become somewhat blurred in the eyes of the consumer between professional and mass retail. Salon chain, such as ours, helps create a huge demand and subsequently goods were diverted to inappropriate channels of distribution. Also the category has become so big, that many retailers and manufacturers wanted a piece of their premium hair care market. In addition, the category has become incredibly competitive. Alta, Sephora, Victoria’s Secret and others have had significant growth further eroding our share. We have tested new ideas and implemented changes such as enhancing royalty programs, expanding our product mix and acquiring PureBeauty and BeautyFirst, to-date we have had limited success. The overall economic environment contributed to a perfect storm for the Trade division. The division is now operating at loss. Our full-year fiscal 2009 operating losses are now projected at over $23 million on a fully allocated basis. We believe that in the current economic environment, the ongoing operating losses are likely to worsen and there is a need for a multi-million dollar investment to turn the business with no certainty of success. After considering all of our strategic and financial options, we now feel our best strategy is to sell the Trade division, included in the sale, our Beauty Express, PureBeauty and BeautyFirst. I’ve always believed that long-term investment decisions should not be made in a period of time when the economy is strong. Moving to recession, however, there are other significant factors that push the timing of this transaction onto the front burner. Regis is financially strong. We have an obligation to our stakeholders, to our shareholders, employees, landlords and vendors to maintain our financial strength, especially in these turbulent times when banks and insurance companies, which should finance our growth are also under financial stress. The decision to sell Trade was a very difficult one, especially emotionally, but pragmatically it is the right decision. The sale on Trade will significantly add to our financial strength. Trade accounts for only 10% of our sales, but has a significant drag on our recent consolidated operating results. Regis’s liquidity remains very strong. However, like most other companies, we are closely monitoring our compliance with financial debt covenants. The sale of this division will immediately and significantly strengthen our financial ratios and improve our overall profitability, which obviously is in the company’s best interest and the best interest of our shareholders and lenders as well. The sale should give great comfort to our employees, landlords and suppliers, because we will become a stronger company financially. The purchasers, Premier Salons Beauty, Inc. owned and operated by Brian Luborsky. Brian has been in the beauty salon business for 25 years and understands the business extremely well. Thus with the exception as a very profitable and well run Hair Club, for Men and Women division, Regis is now solely a beauty salon company and we are the most successful beauty salon company in the world by far. We still have over 12,700 system-wide salons serving over 165 million customers per year and generating system-wide sales in excess of $3.5 billion annually. We have 8,000 company-owned salons with over 60,000 employees generating annual revenues in excess of $2.3 billion with substantial cash flow. We have a great business model. We are in a quintessential replenishment business, but highly predictable and no one can outsource a haircut, as it is the cut and color hair at home as an exercise in utility. Our average customer spends less than $200 a year on salon services. The beauty salon business is largely a variable cost business. We can discount services such as hair color without any negative impact on margins since our stylists are paid on a commission basis. This dynamic gives us comfort in recessionary periods. Once the economy rebounds, Regis’s strategy will be to resume its salon growth worldwide. Although, we are ten times larger than our nearest competitor, we only have a 4% share of the North American market and a 2% share at the worldwide market. We will still be the leading seller of professional retail product and we’ll be one of the few retailers without a ceiling restricting growth. Our long-term future is bright indeed. And we’ve been a privately held company, we may not have sold our Trade Secret division, we probably would have downsized it, but as a public company with significant growth opportunities ahead of us, we do not want to have a division that could not grow at least initially in our portfolio. Before I move on, I’d like to provide several details regarding the transaction. First, the sale price for this division is essentially zero. As I discussed earlier, this business would likely have lost $23 million in fiscal 2009 and would have had required significant investments. In all of the actions we explored, it was highly unlikely that Regis could have received any type of cash flow proceeds from the sale of Trade. Regis did incur $172 million pre-tax non-cash charge as a result of the sale. However, we will receive a tax benefit on corresponding cash refund of $56 million as a result of the transaction. Half of this amount will be received in fiscal 2009 and the other half in fiscal 2010. The sale of Trade is stock transaction and we expect to close on February 15, 2009. As we all know, the current economic environment creates huge challenges for virtually all industries. Basically, the consumers stop shopping. It’s impossible to predict how long and how deep this recession will be. Thus we have made a decision, not to provide quarterly sales and earnings guidance or even annual guidance, at least until conditions normalize and we believe they will normalize especially for our industry. This is the first year on our 87-year history that we’ll have a negative service same-store-sales, sales decrease. However, our industry had larger challenges 30 or 40 years ago, when our basic client shifted from being a weekly client, to a monthly client due to wash away hair pioneered by Vidal Sassoon, thus reduced visitation patterns will eventually anniversary, we don’t know if they will anniversary in six months or in two years, but as day follows night customer councils stabilize and also our entire population will have to remove mirrors from their homes. It is interesting to note that while our higher priced North American salon concepts, Vidal Sassoon, Regis Salons and Carlton in particular has suffered to a greater degree than our affordable price concepts, the reserve is still in Europe. As we know, we have a 30% interest in the 2,400 salon business in continental Europe and our higher price concepts namely, Jean Louis David and Franck Provost had positive comps in December, while the lower price concepts have significantly lower comps. Overall, our business on the continental is flat during the month of December. I personally believe that Europeans are far more accustomed to shocks than those of us in North America, they live in a higher liquidity of turmoil and they barely normalize. For the remainder of 2009 and fiscal 2010, our strategy continues to be, to strengthen our balance, reduce that levels and focus on expense control. We are right on plan to achieve our targets for reducing the cost on capital expend. $21 million of annual cost savings have been implemented this year with the elimination of 160 supervisor personnel at home office positions. In addition, we have reduced marketing travel budgets and charitable contributions by a significant amount. As you know the great majority of our 2009 CapEx and acquisition budgets were spent during the first and second quarters and our $807 million of debt, which existed at the end of the first quarter should be reduced to under $700 million by the end of our fiscal year on June 30th. This debt reduction plan includes our contractual obligation to purchase Cool Cuts 4 Kids. The purchase price will be in $10 million to $15 million range. This transaction will be completed in the third quarter. The 68 Cool Cuts 4 Kids stores are profitable and this business is quite scaleable and certainly the office has growth potential in the future. As you know last July, we announced the closing of up to 160 stores, prior to the end of their lease terms. Today, we have closed 35 stores and have negotiated fund relief for four stores. We’ll continue to work diligently on our negotiations and feel we’ll make substantial progress by the end of the year. As you know, traditionally we have raised prices annually and about 2,500 of our company-owned stores per year. In fiscal 2008, we increased prices in 6,000 of our stores and are planning to increase prices in 5,000 stores in fiscal 2009. Over the last 12 months, price increases have had a favorable impact on our average service ticket of over 4.5%. For the next 12 months, we expect the price increase to have a favorable impact on average service ticket of 2.5% to 3%. Our U.K. business continues to struggle. This business that had negative comps for several years and was unprofitable in the quarter. We did take an impairment charge in this business of $42 million. While the U.K. operating model has many similarities to the North American model, more of the cost structure in the U.K. is fixed. We realize that changes must be made to this cost structure. We’ll be aggressively seeking cost reductions and we’ll need the help of our landlords and external business partners to participate. Changes of the cost structure are necessary as we will not operate unprofitable divisions. The Empire Education Group is performing well and we expect them to be on plan for the year. Fiscal 2000 EBITDA showed approximately $15 million compared to $9 million in fiscal 2008. As you know, we have 55% equity interest in Empire, Empire is extremely well run. Obviously, the world is going through dramatic changes, I do believe as a mater of public policy that once we get through this very stressful period of time that we’ll become a stronger and more fruitful nation. I don’t think that consumers are going to have the same immediate desire to spend and going through debt, this bodes extremely well for us, as most of our concepts are affordably priced and the quality of our service along with the locations of our salons are the very best that exist in our industry. Regis also has strong staying power. Many independent salons and small salons have limited financial resources, many of them will fail, thus we’ll gain market share. Before passing the call onto Randy, I’d like to briefly comment on retail product sales. This has been a core competency of ours with Regis selling 15% of all retail products sold in beauty salons and barber shops in North America. Obviously, with the sale of Trade this percentage will decrease. However, we will still be the worlds leading seller of professional product. We do not expect any impact on our retail product gross margins as we will sell well over $500 million of professional product. We have a huge advantage of other retailers with respect to selling product as $60,000 of our stylists are touching people everyday and recommending product. Obviously, with the sale of Trade, 28% of our sales will not be comprised of product, but whether our retail product sales encompass 17% of our total sales, while 20% of our total sales this component will be very profitable. So, on the long run, I’m just as bullish as ever. This business has wonderful balance sheet dynamics with virtually no receivables, all our inventory levels are well under $200 million supporting system-wide sales in excess of $3.5 billion. We use other retailers who have had significant reduction in market cap, however, I’m quite confident that as we perform in the future our stock price will respond accordingly. Randy, please continue on.

Thanks Paul, good morning everyone. After discussing our second quarter operating results with you, I’d planned to address a few other topics, such as providing more detail behind our second quarter charges and providing an update on our debt covenants. Let me begin by saying that the divesture of Trade Secret has created some unique complexities this quarter, in terms of our financial reporting and our related discussion of the operating performance. Under generally accepted accounting principles, the sale of our entire Trade Secret division is required to be accounted for using an accounting treatment called Discontinued Operations. Even though, the sale transaction will not be completed until February 15, the Trade Secret assets were deemed to be held for sale at the end of our December quarter. What this means is that effective with our second quarter, which is our December quarter, all historical and future results of Trade Secret must be removed from the operating results of our continuing business segments, aggregated and separately reported below the line on an after-tax basis. That’s true for our overall consolidated results, as well as for our North American Salon segment P&L. As a result, you will find a new line item today on our P&L called loss on discontinued operations. That will appear on both the current and prior year period P&L’s. Our net income doesn’t change, but the individual revenue and expense items above it will change. Our December 31 balance sheet has also been adjusted to remove the assets and liabilities of Trade Secret that we will be disposing. For those of you working with financial models; please go to our corporate website and you will find a reconciliation that removes Trade Secret results from our ongoing operations. The same reconciliation also bridges our overall reported results for the second quarter to our operational earnings. We’re trying to be as transparent and as helpful as possible. Also feel free as always to contact either Mark Fosland or Alex Forliti here at Regis, should you have any additional questions regarding your models. Okay let’s talk about our second quarter results. Our actual reported result for the quarter was a net loss of $3.34 a share. However, as Paul mentioned this included pretax charges of nearly $218 million or $3.70 a share, primarily related to our divesture of Trade Secret. These charges were essentially all non-cash in nature. Excluding these charges, our operational earnings in the second quarter came in at $0.36 a share. At the beginning of the quarter, we had forecasted the low-end of our operational earnings to be at $0.42 per share and that was based on a related same-store sales assumption of negative 1%. As you recall, every one percentage point change in comps has an annual impact of about $0.13 a share or just over $0.03 on a quarterly basis. Therefore, with actual comps for the quarter coming in below plan at negative 5.4% one would therefore expect our operational earnings to fall above $0.14 below the low-end of our guidance. Instead, our operational earnings of $0.36 per share fell only $0.06 short. Offsetting the impact of our second quarter sales shortfall with a benefit of $5.3 million or $0.08 a share from cost saving initiatives, we announced and quickly implemented at the end of October. Parenthetically, we expect these cost saving initiatives will continue to provide benefit in our third and fourth quarters’ of our current fiscal year perhaps to the tune of about $7 million or so each quarter. Let me now transition my comments by giving you some detail behind our second quarter operating results for each of our business segments and you can find a breakout of our segment performance in the press release that we issued last night. Let’s begin with our largest segment, our North American salons. Remember, Trade Secret results have been removed from the individual revenue and expense line items on the North American P&L as required by the discontinued operations accounting treatment. On a continuing operations basis, North American salon revenue which represented 87% of our consolidated second quarter revenue grew 1% during the quarter to $511 million. This revenue growth was primarily the result of a 5% quarter-over-quarter increase in the number of company-owned salons that we operated, partially offset by a decline in total same-store sales of 330 basis points. Service revenue in our North American salons grew 2% during the quarter to $400 million. This growth was entirely due to an increase in salon counts, largely the result of acquisitions we completed over the last 12-months. Partially offsetting this increase was negative service comps during the quarter of 2.5%. Average ticket grew 4.6% during the quarter, largely due to price increases we implemented in the last half of our previous 2008 fiscal year. However, offsetting this increase in average ticket was a 7.1% decline in same-store customer counts during the quarter. While same-store customer counts in the months of October and November were slightly lower than recent trends, we experienced an unprecedented decline in visits of nearly 11% during the month of December. Product revenue from our continuing operations fell 4% in the quarter to $102 million due to a decline in product same-store sales of 7%. Royalties and fees from our North American franchise salons fell 8% during the quarter to $9 million. New franchise units that were added to the system over the past 12 months were more than offset by franchise buy-backs, franchise unit closures and relocations. Our combined gross margin rate for North American salons came in on plan at 43.3% and down 30 basis points from what we reported last year in our second quarter. As I’ll discuss in a moment, most of this margin decline related to product. We are very pleased to report that our second quarter service margin rate came in at exactly 42%, down only 10 basis points from the same quarter last year. Despite the challenging sales environment, our service margin rate came in better than plan. We had planned for a small decrease in our service margin rate due to certain manufacturers passing along slightly higher costs increases in our service supplies. However, offsetting this slight cost increase was an improvement in our labor expense. Once again, we were extremely pleased with our ability to control our labor cost in this extremely difficult sales environment. Our retail product margin rate for the second quarter came in below plan at 48.5% of product sales and was down 70 basis points from the rate we reported in the same period a year ago. The primary reason for this unplanned decline relates to promotional sales in the month of October and November in our SmartStyle and Strip Center salon businesses. This was largely a mixed play, as a larger than expected percentage of our sales came from lower margin promotional items. We are not promoting or discounting at a higher rate, but we’re seeing consumers continuing to be more value focused and are buying our promotions at an increased rate. Let me now address our site operating expense, which includes cost directly incurred by our salons, such as advertising, insurance, utilities and janitorial cost. During our second quarter, we recorded an unplanned benefit to this expense category of $6.7 million, primarily related to prior years’ workers compensation reserves. I’ll address that a bit more later on. Absent this benefit, our second quarter site operating expense came in at 9.7% of sales, which were 130 basis points higher than the rate we reported in the same period a year ago. This increase in rate was solely due to a P&L reclassification we made during the quarter. Certain expense items, which had previously been categorized with our rent expense, have now been appropriately reclassified into our site operating expense. These items primarily related to utilities and rubbish removal costs for which Regis pays its landlords as part of our lease agreements. Our North American salon G&A expense came in at 5.9% of revenue, there is not much to discuss here as our second quarter rate came in on plan and was comparable to the rate of 6% we reported last year in the second quarter. Rent expense which is primarily a fixed expense, came in at 13.5% of total second quarter sales, which was 80 basis points lower than the same period a year ago. The reclassification of certain expenses from rent into site operating expense that we just discussed favorably reduced our second quarter rent rate by 170 basis points. However, partially offsetting this rate improvement was negative leverage in this fixed cost category caused from reduced sales volume. Depreciation and amortization came in at 3.6%, which was essentially on plan and was identical to the rate we recorded last year on our second quarter, so there is not much further to discuss in this line item. The net effect of all of the items I just discussed caused our operational operating income from continuing North American salons to come in at 11.6% of second quarter revenue compared to 12.4% in the comparable period last year. Next let’s review the second quarter performance of our international salon segment. As we discussed with you during the last few quarters, analyzing the quarter-over-quarter line item comparisons for this business is very difficult. This segment includes our company-owned salons located primarily in the United Kingdom. Historically, our international salon segments had also included results from our franchise business on the continent of Europe. However, following our joint venture transaction with Franck Provost, the European business was deconsolidated about a year ago on January 31st of 2008. As a result, our second quarter fiscal 2009 international segment does not include any continental Europe activity, whereas this activity was fully consolidated in the comparable period a year ago. For this reason, the quarter-over-quarter comparisons are tough. However, I will provide a bit more color behind the quarterly change in revenue and also give you some high level comments on any expense categories that may have surprised us during the quarter. Once again those of you who build segment models may want to speak to Alex or Mark here at Regis and they can certainly help you. The first thing you will notice is that we recorded a $42 million non-cash charge in the second quarter associated with the full impairment of U.K. goodwill. This likely did not come as surprise to many of you. Today, as well as in previous quarters, Paul has discussed the economic factors in England that continue to impact our U.K. salon business. Although, we were slightly cash flow positive in the second quarter, our international salon segment nevertheless lost money at the operating income level. Total revenue from this segment represented 7% of our consolidated second quarter revenue and came in at $41 million, a reduction of $32 million from the same period a year ago. More than half of this decline or $17 million was due to the deconsolidation of continental Europe, which I just discussed. The balance of the quarter-over-quarter sales decline was largely due to two factors. The first, related to foreign currency, as $10.5 million of the overall revenue decrease was due to a quarter-over-quarter decline in the British pound exchange rate against the U.S dollar. The second factor related to declining sales in our core business, with our U.K. salons experiencing a 10.7% decrease in overall second quarter same-store sales. On a brighter note, our Hair Club business continues to perform well and came in better than planned and let me highlight a couple of items. Our second quarter revenue from our hair restoration centers increased 5% to nearly $35 million and represented 6% of our consolidated second quarter sales. Hair Club’s revenue growth benefited from the acquisition of seven franchise centers and the construction of four new corporate locations over the past year. Our second quarter, operating margin rate for Hair Club, came in at 18.3%. Although, this rate was down from the rate of 21% we reported last year in our second quarter, it nevertheless was better than planned. As expected, we experienced lower operating margins at the seven recently acquired franchise centers as well as the four recently built locations. Hair Club’s second quarter EBITDA margin, came in at over 26%, we remained very pleased with the performance of this segment of our business. Let me switch gears now and make a quick comment regarding our corporate G&A expense. The major component within our corporate G&A continues to be salaries and related benefits for the nearly 900 employees working here in Minneapolis and the 500 associates that work in our two distribution centers. Centralized back office support functions provide leverage to our operating model. As I stated last quarter, over the last five years, our company-owned salon counts have increased at a compound annual rate of over 9% and our sales have grown double-digit, yet our home office headcount has experienced a much slower annual growth rate of 5%. Despite this leverage, we continued to be very aggressive with expense control, during these challenging times of slow sales growth. I’m pleased to report that our corporate G&A expense came in at $30 million in the second quarter, down $3.3 million or 10% from last year. The primary reasons for this expense reduction were due to our recent cost savings initiatives, as well as a current year decline in professional fees. Recall that last year on our second quarter; we incurred one-time professional fees as a result of the merger of our European franchise business with Franck Provost as well as fees we paid to Deloitte Consulting. Once again, we continue to focus on expense control and controlling our corporate overhead. We are very pleased with the results of our efforts. Now, that concludes my comments concerning our individual business segments, but let me make a few comments regarding a couple of other things and let’s start with our effective income tax rate. Our second quarter rate that we reported was skewed upward by the tax impact of the non-cash charges; absented the charges, our underlying effective tax rate came in on plan at 39%. Maybe even more importantly, looking-forward, we anticipate the underlying rate for our entire 2009 fiscal year should be about the same somewhere in that 39% range. I’d now like to update you on our debt covenant ratios and our initiatives to strengthen our balance sheet. Despite a tough economy, we are fortunate to have a number of things going for us. Our liquidity remains strong; we have no need to access the capital or credit markets. Our cash flow remains significant and is generally been quite predictable. We enjoy strong long-term relationships with our lending institutions and maintain open lines of communication with them. Our debt agreements contain a number of customary covenants and Regis remains in full compliance with all of them. As you are aware, the one covenant that we are trying to build additional cushion is our fixed charge coverage ratio. This covenant calls for a minimum ratio of 1.5 times. At December 31, our ratio was well above the minimum threshold standing at 1.59 times. The Trade Secret sale transaction and the related discontinued operation accounting treatment have provided us additional cushion. We did meet with all of our banks and noteholders during the month of December to provide them a business update. These were very positive meetings and we are confident that if in the future, we were to request a waver or covenant amendment; we would be successful in obtaining one. The obvious question is at what cost, especially in this uncertain credit environment? For this reason, we continue to monitor this very closely and we’re aggressively exploring and implementing measures that provide us additional cushion with respect to this one covenant until such times as the economy and our sales rebound. We’ve made significant strides in achieving the expense reduction and cash flow enhancement initiatives we announced and discussed with you last quarter and let me update you on our progress. Our second quarter debt levels came in at $732 million, down $75 million from our debt balance just three months ago at the end of the first quarter. We remain committed to bring our debt levels down to less than $700 million by June 30, the end of our current fiscal year. : During the second quarter, we achieved over $5 million of expense savings and now project total fiscal ‘09 savings to exceed $ $21 million. The major categories of savings include items that Paul’s discussed, a reduction of 160 home office and field positions thereby eliminating nearly $7 million of salaries and benefits in our current fiscal year. A reduction in profit sharing, bonus plans and charitable contributions of nearly $7 million, a reduction in current year marketing expenditures of nearly $4 million, a reduction in travel cost of $3.5 million in fiscal 2009. We also repatriated $68 million of international cash in the second quarter and used these proceeds to pay down debt. Year-to-date, our capital expenditures, loans and acquisitions spend has totaled $93 million. Recall that most of these expenditures either took place or were committed to during the first half of our current year, prior to implementing our cost reduction initiatives. We remain on track to spend about $135 million for the full fiscal year, which is a significant reduction from our original plan of $170 million. We are very pleased with the success we have achieved and are confident we will meet or exceed our targets and I think it also speaks to our ability to quickly redirect our cash flow. Finally, I would like to provide you a bit more details supporting the $218 pretax charge we’re reporting today. Again, virtually all of the charge was non-cash. : In addition, our second quarter results included $1.9 million of non-operational costs associated with our Trade Secret transformation initiatives. On a fully loaded basis, we had projected Trade Secret to lose over $0.30 per share in fiscal 2009. As a result, this transaction will significantly and immediately add to our financial strength and our profitability. We have discussed this transaction with our lending institutions and it has been very well received, we have their full support. Anecdotally, we annually incur and allocate over $7 million of home office and warehouse costs to support the Trade Secret operations consisting mostly of salaries and benefits. When you are reviewing our financial statements, the discontinued operations line item on our P&L does not include these allocated costs, as accounting rules do not permit for allocations, rather these costs are embedded in our corporate G&A expense. For a short period of time after the Trade Secret transaction closes, we will continue to provide transitional back office services to Brian Luborsky’s business for which we will be fully reimbursed. As time goes on, we expect to eventually reduce our overhead by $7 million to $8 million. The next largest item of the charge related to our U.K. business and as we’ve already discussed, we recorded a pretax charge of $42 million in the second quarter related to the full impairment of goodwill due to recent business results. During the second quarter, we also wrote-off our remaining investment in loans in Intelligent Nutrients, resulting in a pretax charge of $8 million. Our initial hope of developing a professional organic brand of shampoo and conditioner with broad consumer appeal has not materialized and we now feel it’s unlikely that we will recoup our investment. So again, we wrote it off in the quarter. Lastly, our second quarter charge included just over $1 million of lease termination costs associated with our current year store closure initiative. As Paul previously mentioned, during the second quarter, we were successful in closing 19 salons. These closed locations were generating annual EBITDA losses of $800,000 and based on this run rate, we would have incurred cumulative EBITDA losses of nearly $3 million over the remaining lease term. We continue to aggressively work with our landlords to close additional salons or obtain rent reductions. We will continue to keep you posted in the quarters ahead as to our progress. Offsetting the items, I’d just mentioned, was a $6.8 million benefit we recorded to reduce our prior year worker compensation reserves following a periodic review by our independent insurance actuaries. As you know, over the past several years, our actuaries have allowed us to record significant reductions to our workers’ comp insurance reserves due to benefits derived from our aggressive salon safety and return to work programs. So, that is it that completes my prepared remarks. Paul and I would now be happy to answer any questions you may have. Mikayla, if you could step in and provide some instructions, we’d appreciate it.

Your first question comes from Jeff Stein - Soleil Securities. Jeff Stein - Soleil Securities: It looks to me like on a pro forma basis; you are still going to be doing about 20% of your total revenues in products sales. So, the question is what do you do about that and do you have any strategies in mind to try to stem the sales weakness you are seeing particularly in light of a fact that it looks like you’re abandoning your efforts to develop your own product line through the Intelligent Nutrients joint venture?

Jeff, it is probably going to be more affordable stuff. Our private label business is up 9% this year and that is a $40 million business. So, it’s a question of mix, the higher price categories are going to suffer, but there is no empirical evidence at this point in time that there has been a permanent shift; there is just not enough time, Jeff. I eluded on my conference call speech, the fact that the higher price service concepts are doing just fine in Europe and not fine here. There is no rationale for it other than it’s just too early to make a definitive decision. We have some numbers from the target, which show that they aren’t necessarily going into lower price goods at this point in time. So, it’s totally too early to tell. I think the most important thing we can do is to make sure that our combo tickets increase. Fewer than 10% of our service customers buy product at the time of a transaction and this is something we’re focusing on big time, and we’re getting some good results with respect to it, but it will take time.

Paul maybe just to add to that, obviously, we do not experience the same level of impact on product sales in our traditional salon concepts, when compared to Trade Secret. Trade Secret has very much a fixed cost infrastructure associated with the rents and utilities and the payrolls they pay their associates. In a salon environment, it’s more of an add-on sale and as Paul said, we’re focusing on increasing combo tickets. So, the issue we have to address is the decline in product sales in our traditional salon concepts, but it’s not going to adversely impact our P&L to the extent the trade has recently done.

And by the way, one more fact there Jeff; our fastest growing concepts are Strip Center concepts and product sales of about 10% of our sales and total sales in those concepts. So, the negative impact is far less and trade on product sales comprised almost 90% of our total sales. Jeff Stein - Stein Research: Are there any conditions in sale in the Trade Secret transaction that potentially could jeopardize the closing of that transaction?

No. Jeff Stein - Stein Research: So, they take it as it is?

As it is. Jeff Stein - Stein Research: Okay and then final question Paul. Can you address the issue on a go-forward basis of your acquisition program? Historically, you’ve talked about $70 million to $90 million or so that you’re going to spend annually on acquisitions. Is that going to change in the current environment?

Yes, it will. Temporarily, I mean we’re focusing on debt reduction. We’re focusing on liquidity and we haven’t yet created our budget for 2010, but Jeff I would be shocked if it would be north of $30 million. There are certain acquisitions that are essential, if we have a franchisee that has to get out or someone passed away or whatever and it’s a good business, we want to protect our income stream. So, I mean, we will definitely have $10 million to $20 million with those kinds of deals, but the others will be probably put on hold at this point in time how things can change. Jeff Stein - Stein Research: What is your maintenance CapEx roughly?

We are about $55 million.

That’s been our historical level; it was pulled back here that will likely comedown a bit Jeff Ex-Trade.

Your next question comes from William Armstrong - C.L. King & Associates. William Armstrong - C.L. King & Associates: January comps are running less than there were in the quarter down 5%. I was wondering if you could comment on that. What were you thinking?

It’s a same old, same old. It is the same story that existed last quarter. There is no material change. Obviously, Trade has a greater impact, but they had a bigger impact in the second quarter as well. William Armstrong - C.L. King & Associates: Are you seeing it getting weaker in product versus service?

There is no material difference and let’s not forget that both categories; service and product, quintessential replenishment businesses. Most people shampoo their hair daily and most people cut their hair on a regular basis. It will moderate overtime. William Armstrong - C.L. King & Associates: In your release, you say that if sales trends continue, you still expect to generate earnings in excess of $0.40 a share. What would the year ago number be, just stripping out Trade Secret?

51.

Your next question comes from Jill Caruthers - Johnson Rice & Company. Jill Caruthers - Johnson Rice & Company: Could you talk about the product margins you are expecting now without Trade Secret? It seems as though you’ve got the biggest pressure on promotionals and what not on the Trade Secret side. Are you still expecting to reach product margins in the 50% range?

Yes, we are. I think again, we’re looking at some models that may show a little bit north of 50% range, but I think if you were to model something, it would be, I think you could look at something consistent to what we experienced in our second quarter. Jill Caruthers - Johnson Rice & Company: Okay and with the sale of Trade Secret, does that impact any relationships you have with particular vendors or any price pressures in that respect?

We are going to be handing a lot of Trade Secrets purchasing in back office and distribution for quite a while and about a third of our product sales are represented by Trade. So, we still have a huge, huge amount of business. We are still most vendors number one customer even without Trade and then the relationship between female and us a very strong one. So, I think a lot of vendors will look at us as though we are one company, but nevertheless Regis on its own is a major purchaser, we’ll still do over $0.5 billion worth of product business. Jill Caruthers - Johnson Rice & Company: Okay and last question just on the store portfolio, you have cut back acquisitions in the store growth. Maybe just what your target is for this year net growth and then also if you could comment on the number of leases you have up for renewal this year and if that provides an opportunity to close a chunk of stores?

We have the same number of leases up for renewal this year as we did last year. I don’t have it on the top of my head. However, our Strip Center leases and Wal-Mart are five-year leases. So, the average lease term would be two and a half, three years and malls of 10s of the average would be five. So you can call it 1000 stores, give or take 10% or 15% will be up for renewal, but that is consistent with past years. With respect to new salon additions…

I think if we take and Paul, I don’t have the exact numbers.

It will be about 150 in that range. Jill Caruthers - Johnson Rice & Company: For a net number for ‘09?

Well, we’re not giving you closures, I don’t have closures handy. Why don’t you call Mark Fosland, he will give you closures, but it should be embodied in the press release at least for the last quarter.

:

Other than the Wal-Mart and several Supercuts, that has been on the books for quite a while.

Your next question comes from Mike Hamilton - RBC Capital. Mike Hamilton - RBC Capital: I was wondering given the volatility of the environment if you could give a little picture in North American salons of trend by month in terms of comps?

Sure, hang on. Let me give you some of the more recent ones here, Mike. In the month of, well let me start with, I’ve only got October, November and December. Mike Hamilton - RBC Capital: That’s all I’m looking for, thanks.

That’s good. Again in the month of October, North American salons overall comps, negative 3.7%, went to negative 2.2% in the month of November and then the critical month of December, negative 9.1%. Mike Hamilton - RBC Capital: You covered a lot of detail in your one-time costs and benefits. Is there anything else in there worth noting in terms of one-time items for modeling purposes?

Zero. We ended up being too informative perhaps, but no we’ve laid it all out, nothing else. Mike Hamilton - RBC Capital: Okay, no I appreciate the detail. Finally, are there any potential triggers off of your debt covenants, where what’s going on with Trade Secret would trigger an event covenant?

No, absolutely not. Now we’ve addressed all of that. We’re fine on all the covenants.

Your next question comes from Erika Maschmeyer - Robert Baird. Erika Maschmeyer - Robert Baird: If I recall correctly in your last conference call last year, you mentioned that January had been a stronger month and I was wondering if you could give any color on last year’s Q3 that could help us sort of process your negative five comp to-date in the quarter?

Erika you are taxing our memories here, but I know that we had strong service comps, hang on a minute. Well, no I don’t have it here in front of me. I know, we had stronger service comps in January a year ago, that’s all I recall. Erika Maschmeyer - Robert Baird: Okay, I think that’s what’s you said.

Yes, and again that’s the change year-over-year in January service comps is going to be, part of that was because of recent price increase initiatives that we enjoyed a year ago, but also what we’re seeing, we’ve elaborated on this ad nauseam is the fact that the consumer is tightening her purse strings and stretching salon visitation visits and we talked about what we’re seeing on a average check basis, we’re very pleased with it. Even in January of this year, our average check as it relates to ticket is probably up 3%-4%, we’re pleased with that. That’s in our historic sweet spot; it’s the customer declines on a same-store basis due to the economy that’s really impacting us, certainly more this year than in last year in January. Erika Maschmeyer - Robert Baird: Okay and, then you mentioned the EPS in excess of 40% if comps sort of continued on the same trend this quarter. Does that exclude Trade Secret completely or would there be a partial quarter in discontinued ops?

Excludes it. Mike Hamilton - RBC Capital: Okay, and then could you talk a little bit more about Cool Cuts 4 Kids and elaborate on the ultimate potential?

Yes, 68 stores and it’s now a very scalable business. I mean years ago, one or two kids stores in New York City or Boston or whatever, now there are a dozen in Minneapolis not owned by us I might add and it’s a well-run business. It’s highly profitable and we are not going to grow it now, but eventually when the economy turns, it’s a very good revenue for growth, because it’s a very underserved market.

Thank you and at this time there are no further questions in the queue. I would like to turn the call back over to Mr. Paul Finkelstein.

Thank you for joining us this morning. Have a good day.

Ladies and gentlemen, if you wish to access the replay for this call you may do so by dialing 1800-405-2236 with an ID of 11124042#. This concludes our conference for today. Thank you all for participating and have a nice day. All parties may now disconnect.