Dan Hanrahan - Chief Executive Officer, President Steve Spiegel - Chief Financial Officer, Executive Vice President Eric Bakken - Executive Vice President, Chief Administrative Officer, General Counsel Jim Lain - Chief Operating Officer, Executive Vice President Mark Fosland - Senior Vice President - Finance

Paul Alexander - Bank of America Merrill Lynch Jeff Stein - Northcoast Research Bill Armstrong - CL King & Associates Daniel Hofkin - William Blair Jill Nelson - Johnson Rice & Company Jeremy Kahan - Bow Street Ravi Devisetty - Nidhi Capital

Good morning. My name is George, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Regis Corporation Fiscal 2014 Second Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. If anyone has not received a copy of today’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 800 406 7325, using the access code of 4662033#. The replay will be available 60 minutes after the conclusion of today's call. I would like to remind everyone that to the extent the company's statements or comments this morning represent forward-looking statements. I refer to you to the risk factors and other cautionary factors in today's news release, as well as the company's SEC filings. Reconciliation to non-GAAP financial measures mentioned in the following presentation, as well as others, can be found on their website at www.regiscorp.com. Speaking today will be Dan Hanrahan, Chief Executive Officer; and Steve Spiegel, Chief Financial Officer. 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 call over to Mr. Hanrahan for his comments. Dan, you may begin.

Thank you, George. Good morning everyone and thank you for joining us. With me today are Steve Spiegel, our Executive Vice President and Chief Financial Officer; Eric Bakken, our Executive Vice President and Chief Administrative Officer; and Mark Fosland, our Senior Vice President of Finance. Before I get started, let me take a minute to discuss the one-off non-cash charges that impacted our second quarter, while I would normally not address technical accounting matters that’s important for me to comment on the $112 million of non-cash charges we reported during the quarter to impair goodwill and establish a valuation allowance against our deferred tax asset. I know the investment community understands these charges but as we have employees and business partners also listening in on the call, I wanted to make sure they understand these adjustments did not have a cash impact on our business. Our business model is sound, our balance sheet is strong and our business continues to generate positive cash flow. In fact our business generated $21.6 million in EBITDA as adjusted for the quarter. I’m confident in our ability to restore Regis to sustainable growth and improved profitability. As I have discussed and presented in detail on the past few conference calls for Regis to improve its long-term financial performance we need to become a best in class operator. On today’s call, I won’t reiterate all the details of our strategy, but I will quickly recap the three initiatives rolled out during the fourth quarter of fiscal 2013 that laid the foundation for us to execute our key strategies and the transition Regis into a best in class operator. For those of you who have been following us for a while you will note our strategy remains the same. First, we rolled out SuperSalon point-of-sale system in salon workstations to all of our North American salon. When fully utilized SuperSalon will provide a standardized platform enabling vastly improved salon management, measurement and transparency. Second, we reorganized our field leadership, our new structure reduces span of control, improves geographic proximity of our field leaders to their salon, enables localized management, mentoring and decision-making and incents profitable growth. Third, we standardized planogram in order to optimize our retail performance and enable efficiencies throughout our supply chain. These initiatives were based on many months of learnings working with our best franchisees and operators and we remain confident these will ultimately deliver our long-term strategy. While these initiatives impacted our results during the first and second quarters of this fiscal year, they will transform Regis into a best in class operator and position the company for a long-term success. We continue to be focused on building executional excellence throughout our organization. My focus for the rest of the call will be to first explain, why our business continues to be impacted by this initiative, and second, the work we are doing to stabilize these impacts and further our progress in becoming a best in class operator. Afterwards, I will turn the call over to Steve to review our second quarter financial results in greater detail. Now let’s turn our focus to why our business continues to be impacted? First, and as I have said in the past, Regis’ greatest challenge is adapting to an executing change. Historically there was no infrastructure in place to ensure that change was effectively cascaded throughout our organization. We have a new field leadership organization comprised of many leaders taking on new roles and responsibility. Our good leaders are executing and winning fast. However, expanding the learning curve has been challenging for many. During this period of change employee attraction, retention and development have proven to be more challenging, recognizing that stylist are the company’s product offering, there was a high correlation in net turnover and same-store sales performance. Second, our retail performance demonstrates we have further work to do to optimize our merchandising tactics and associated promotional strategy. And third, we have made progress in optimizing SuperSalon but we still have work ahead of us before we begin to realize the benefits of a standardized platform. Our priority center around improving connectivity speed, ongoing stylist training and simplifying the user interfaces. Let’s take a look specifically at each one of these and what we are doing. To reach the full potential of each our salon, Regis will become an organization that excels in developing our field in salon leaders. In the past few months, we hired Jim Lain, our Chief Operating Officer and Carmen Thiede, Regis’ first ever Chief Human Resources Officer, the two most critical roles and helping us to improve our ability to manage change and execute and also develop talent. We have begun to look deeply at the training needs of our Regional Vice President, Regional Directors, District Leaders and Salon Managers in order to develop training programs that will help them all improve and be successful. Because the company historically did not emphasize standardization across salon platforms, we have diverse operating processes and performance metrics which have made training and developing field leadership more cumbersome than necessary. While we’ve made progress on this front during the past year, we are now developing and enhancing operational tools like salon training and execution guide, salon KPI reporting and leadership standard to assist field leaders and standardizing operating prophecies across our salon and using consistent performance metrics to diagnose the business more effectively. As I said last quarter, we began using a new execution program across all of our salon. This program is designed to develop leaders teach good executional behaviors at the salon level and throughout our field organization, drive accountability and provide the foundation for change management. As a reminder, each week our salons make one or two commitments to drive improvement in the guest experience and resulting guest traffic. These commitments cascade up to field leadership, our Chief Operating Officer and ultimately to me. Leveraging an intranet site to monitor weekly progress on commitments, everyone can see who is and is not delivering. This is the first time in our history we have a common business language from our stylist to me and we now have a foundation for change management. In the earlier stages of training our people on this program, our team can be divided into three categories, early adaptors and succeeding, learning and improving and challenge and struggling. While in the minority earlier adaptors are indicative of the kind of results we can expect as our entire organization developed executional competency to manage change. For example, a number of our district leaders are producing positive year-to-date same-store service sales in excess of 3%, while admittedly two few this is an encouraging sign. Each week I’m seeing greater focus on winning throughout our field organization. Changing the culture takes time and patients; we are in the midst of developing performance based culture which executes and delivers a great guest experience. We made significant progress as our Regional Vice President and Regional Directors are in the process of changing our culture in 7000 salon. To accelerate this process, our Regional Directors are leading efforts to improve underperforming salon. Equipped with operational tools I mentioned previously early results indicates this work is improving trends in these salon. Our opportunity is to sustain these improvements with ongoing training and development across all salon. One of the impacts of our initiatives and changing the culture was increased turnover. Our turnover rose in the second quarter and we did not keep pace with our staffing. As we created culture of accountabilities stylist turnover remains skewed towards our lower producers. Our field and human resources teams are laser focused on addressing staffing levels on all our salons and have been given new tools to help identify and capitalize on staffing opportunity. In addition, Carmen Thiede and her team are analyzing why our stylist are leaving. Shifting our focus to retail performance, retail sales trends remain challenged and we have taken a number of steps to further address these trends. We have begun to search for a new Senior Vice President of Merchandising, in addition, the field execution training we discussed earlier was intentionally focused on driving service guest traffic and delivering a great guest experience as our teams become more depth of using the platform, we added a retail component to this training to ensure we remain focused and accountable for delivering retail sales. We also listened to feedback from our stylist and have begun to modify monthly retail concept to generate more excitement among our stylist to drive retail sales. Now let’s discuss our SuperSalon progress. Last quarter, we discussed improved help desk call volume associated with this implementation. Our call levels have returned to pre-SuperSalon days, while the larger technical issues have been mitigated, we continue to focus on the areas to enhance SuperSalon’s performance and to make it easier for our stylist to use and help us realize the full benefits of this tool to manage our business. I personally lead a steering committee that meets weekly to prioritize the most important enhancements we can make. While we will always be looking for ways to enhance our use of technology, our immediate priorities are focused on consistency performance meet across all salons and ease of use. In order to make SuperSalon easier to use, we are eliminating steps that will reduce time and complexity of transaction. SuperSalon also provides us the opportunity to improve our focus on loss prevention. We are making excellent progress in providing salon level analytics and support of loss prevention. I believe there is a significant opportunity to improve in this area and expect these enhancements coupled with the decision to hire a Vice President of Loss Prevention reporting directly to me will improve our executional focus and awareness in this area. Before turning the call over to Steve, I would like to summarize my thoughts. Everything I discussed today comes back to people in execution. For each and every one of our salons to reach its potential we have to become an organization that excels in developing our field and salon leaders. Our strategies remain the same but we are increasing our focus on training and development as a center delivering an ideal guest experience that creates guest for life. In the near term, we will simplify what we ask our salons and fields to take on and limit this to areas that add value in our turnkey. Our financial performance for the quarter is not where I wanted it to be, however, the performance of our best operators assures me that as we develop a culture focused on talent, development and execution, we will realize increased growth and profitability across our entire portfolio. I would now like to turn the call over to Steve. Steve?

Thank you, Dan, and good morning. Before discussing our consolidated financial and operating performance for the second quarter, I want to remind everyone of a change we made as a result of our field reorganization. District leaders labor costs are now reported within cost of service and their travel cost are now reported within site operating expenses. Previously, these costs were reported as general and administrative expenses. We included on our corporate website, re-casted historical annual and quarterly financial statements to better assist you with your comparisons. For the second quarter, we just reported a net loss of $110 million or $1.95 per diluted share. This excluded net discrete after-tax charges most of which were non-cash of $107.5 million or $1.91 per diluted share. Excluding discrete items, second quarter diluted net loss per share as adjusted was $0.04 compared to earnings of $0.03 in the prior year quarter. Adjusted EBITDA for the quarter came in at $21.6 million compared to $31.1 million in the prior year quarter. The second quarter same-store sales declines of 6.2% and all other things being equal to the prior year, one would expect diluted earnings per share is adjusted to decline by approximately $0.13 per share. Actual earnings per share as adjusted declined by $0.07 per share. The $0.06 per share improvement is primarily related to cost savings initiatives, cost reductions related to our field reorganization, reduced bonus expense, lower interest expense and certain tax credits partly offsetting these items were higher labor cost due to deleveraging cost by lower sales volumes. Increased depreciation expense, continued investment in salon connectivity, increased product and marketing cost due to increased promotional activity and increased health insurance cost. I will discuss these items in more detail shortly. We included in today’s press release as well as in our corporate website, a reconciliation that bridges reported results to earnings as adjusted for the impact of discrete items for the second quarter of the current and prior years. Moving on to second quarter operating results, my comments this morning will focus on as adjusted results references to prior year numbers will be on a re-casted basis for our field reorganization. Revenue in the quarter of $468.4 million declined $37.8 million or 7.5% compared to the prior year quarter. Same-store sales declined 6.2% compared to the prior year quarter. Year-over-year total company owned store counts decreased by 213 locations. During the quarter, we built 29 company on salons closed or relocated 62 other company owned locations and sold a net two locations to franchisees. Service revenues were $361 million, a $27.3 million decline or 7% from the prior year quarter mainly driven by declines in North American salons. Compared to the prior year quarter, same-store service sales declined 5.5% driven by a decline in guest traffic of 6.6% partly offset by an increase in average ticket price of 1.1%. The remaining 150 basis points decline in service revenues compared to the prior year quarter was primarily due to a net reduction in store counts partly offset by last year’s impact of Hurricane Sandy. Product revenues were $97.8 million, a decrease of $10.5 million or 9.7% compared to the prior year quarter. Product same-store sales declined 9.2% representing 560 basis points of trend improvement since the last quarter increased promotional activity drove some of this improvement. Dan outlined earlier a number of key steps we are taking to further improve these trends. Royalties and fees of $9.6 million were flat when compared to the prior year quarter. Our franchisees posted positive same-store sales during the quarter and added 84 net locations in the last 12 months. In the quarter and last 12 months, we added 39 and 127 new franchisees to the system respectively. Moving on cost of sales, cost of service to product as a percent of associated revenues increased 50 basis points compared to the prior year quarter coming in at 59.9%. I will discuss this increase in greater detail by reviewing service and product components. Cost of service as a percent of service revenues for the quarter increased 40 basis points versus the prior year quarter coming in at 52.1%. Negative leverage of stylist hours caused by same-store service sales declined an increased healthcare costs were partly offset by cost savings due to our field reorganization and lower levels of bonuses. We also lapped disaster pay last year related to Hurricane Sandy and a full commission coupon event that was not repeated this year. Cost of product as a percent of product revenues was 51.6% an increase of 70 basis points compared to the prior year quarter. This increase was mainly driven by higher promotional activity in the quarter partly offset by reduced sales commissions to lower product sales. Site operating expenses of $50.9 million decreased to $2.5 million compared to the prior year quarter. The decrease was primarily driven by cost savings initiatives due to lower utilities, repairs and maintenance expenses and reduced travel expense due to the field reorganization. In addition, lower volumes reduced our freight cost and we realized a favorable impact from the timing of certain expenses including self-insurance. These were partly offset by increased connectivity cost to support SuperSalon and Salon workstations. General and administrative expenses of $42.3 million decreased $4.7 million compared to the prior year quarter almost half of this improvement relates to cost savings initiatives and benefits from the field reorganization. The remaining benefit is primarily driven by reduced bonus expense, resulting from lower sales and profit and reduced corporate health insurance costs. We’ve done a nice job managing our costs and remain focused on ways to simplify to drive further efficiencies. Let’s shift for a few moments to liquidity. In November, we issued a $120 million of 5.75% senior unsecured notes maturing in 2017. These notes strengthened our balance sheet and provide significant covenant like liquidity for us to execute our turnaround strategy and manage the upcoming maturation of our convertible debt. While no definitive decisions have been made we intend to use proceeds from the notes along with the existing cash to settle our $172.5 million convertible debt maturing in July of 2014. At December 31, 2013, we have $339 million of cash, total debt of $294 million and no outstanding borrowings under our $400 million revolving credit facility. Our business generated $33 million of operating cash flow during the quarter. Next I want to cover two non-cash charges that impacted our second quarter earnings by $112.1 million. First, we recognized this after-tax non-cash goodwill impairment charge of $28.6 million for the Regis Salon concept. We normally perform our goodwill assessment during the fourth quarter of each year. We were required to perform this assessment early because we redefined our operating segments during the quarter and our performance trends are down. As a result of this non-cash charge we have no further goodwill on our books associated with the Regis Salon concept. We remain focused on improving the performance of this business as we stabilize and turn around our overall business. Second, the company incurred a non-cash charge of $83.5 million to establish a valuation allowance against our U.S. deferred tax assets. These assets are mostly comprised of items that expire many years into the future or have no definite expiration periods. As Dan noted earlier this was a highly technical accounting matter that does not reflect the underlying economics of our business model. Our business model is sound, our balance sheet is strong and our business generates positive cash flow. In fact the business is cash flow positive through the first six months of this fiscal year and generated $21.6 million in EBITDA as adjusted for the second quarter. We are in the early stages of our turnaround strategy and are focused on restoring Regis to sustainable growth and profitability. When this occurs accounting rules permit us to reverse this allowance until the valuation allowance is reversed, our GAAP tax rate will likely fluctuate from quarter-to-quarter. In the meantime, this is a non-cash charge and the allowance is no impact on our ability to claim or eventually utilized underlying tax deductions and credits. It is also noted that legislation authorizing various federal employment tax credits expired as of December 31, 2013. [Active] [ph] legislation retroactively reinstating these employment tax credits our tax rate could be further impacted. Finally, as we look towards our third quarter call, I want to remind everyone that in last year’s third fiscal quarter, we benefited from an early Easter. As we reported this shift impacted same-store sales comps by approximately 70 basis points. This is important to remember because this year Easter will fall in our fourth fiscal quarter complicating year-over-year comparisons. This concludes the financial portion of the call. We would now like to answer any questions you may have. Operator, can you please provide the instructions for the Q&A potion of the call?

Thank you, Dan and Steve. The question-answer will begin at this time. (Operator Instructions) Our first question is from the line of Lorraine Hutchinson with Bank of America Merrill Lynch. Please go ahead. Paul Alexander - Bank of America Merrill Lynch: Hi. It’s Paul Alexander for Lorraine, thank you. Hi, Dan, you spoke about why there continue to be operational issues during the turnaround. But can you talk a little bit about why there was a sequential deceleration in service comp this quarter? And if it’s about the turnover and field management issues, why do you think these issues has got worse now when you’ve already been working on your key strategies for a couple of quarters? And then do you think the sequential slowdown, was it all about the external environment, the cold weather? Thank you.

Thanks Paul. In terms of the deceleration in -- as you put it in our service comp and I think it was driven primarily by the turnover that we talked about I mentioned and Steve mentioned. And we did not do as good a job keeping up with the turnover, I think we normally would. Fourth quarter is a little bit tougher time to hire than other quarters. One of the things that we did see is that as we put this business platform in that allows us to manage people, productivity and ask them to make commitments and hold them much more accountable we did see an increase in turnover in our lower performing people. So I don’t think there is ever any good turnover but if we are going to have turnover I would rather have it in our lowest performers. And then in regards to the external, we’ve - as a company have tried to stay away from blaming the weather for anything that’s going on, I mean we’re going to have weather every year. It seems like it’s probably is particularly bad this year in the upper Midwest, but we are going to have weather challenges ongoing. I think that that probably had an impact but I can’t quantify Paul exactly what the weather impact was. I would say it’s more that we just have to continue to train and upgrade our people where we have good people operating the strategies we are doing extremely well as I noted and we just need to continue to focus on training and developing our people and I remain very confident that as we do that we will get the kind of results that we want going forward. Paul Alexander - Bank of America Merrill Lynch: All right. Thank you very much.

Thank you, Paul.

Thank you. And our next question is from the line of Jeff Stein with Northcoast Research. Please go ahead. Jeff Stein - Northcoast Research: Hey, Dan couple of things. First, you identified the three buckets of performers and indicated that a minority or early adaptors and I'm just kind of curious roughly what percent you would place on that in terms of how many are kind of in the lower end of the bucket, the middle range of the bucket and then the upper end? And then wondering if you could talk a little bit about what your viewing and what you think are some of the issues on the product side that you’ve been able to identify and how you’re planning to correct those issues?

Sure. Let me start with what you asked about on the three buckets of performers on our business platform. I would without getting into exact numbers I mean we won’t give exact numbers but think of it as a bell shaped curve with the majority in the middle Jeff. Most of the people are pretty good people here and they’re really focused on understanding what it is that they need to do to be successful, they’ve adapted well, we’ve got some of that adapted extremely well just hit the ground running with it and are getting, we got, we talked about 3% comps within that bucket but we’ve got a range we’ve got people that are in the 10% to 15% to 25% range. So what it shows is that the strategy work and we need to train and develop our people to get them there. The last thing, I would say on that Jeff is that that bucket of good performers that is really nailing it. It’s larger than the bucket on the other end that are really struggling and not getting it. Most of the people sit right in the middle very focused on trying to understand what it is that they need to do with this, with these performance tools that we’ve given them at the -- mainly at the District Leader and the Salon Manger level and what we need to do is just make sure we give them the training that they need to develop. And we’re very, very focused on that. On the product side there is a number of things that we’re doing that we think can impact product positively. We talked about this platform and I think that is fundamental to the change there. We need to get our people in the field selling retail and selling it effectively. And again, I talked about those three buckets; those three buckets are not dissimilar on the product side as that they were on the service side. So a lot of this is driven by how well we execute in the field and that platform is a really strong tool that our best leaders are often running with. And then as I mentioned, we do have a search out for a new Chief Merchandising Officer and we think that will also help us. I’m meeting regularly with the team now and helping guide us through this as we look for a new Chief Merchandising Officer. So we think that that combination of those two things and just a better understating as we go forward of our promotional activity will be the thing that get us going in the right direction on products again. Jeff Stein - Northcoast Research: Okay. And Dan with respect to your multi salons, you got roughly 25% of your revenues that come out of your Regis and MasterCuts Divisions and weather has been an issue for everybody but the other issue is just the ongoing secular drop that we’re seeing in mall traffic and I'm wondering what strategies you have in place to combat the general weakness we’re seeing in mall traffic because that’s something that is likely to continue good weather or bad weather?

Yes. And I want to reiterate that we don’t want to use weather as an excuse. The weather is going to be what the weather is going to be and we have to figure out how to manage our business regardless of what the weather is. On the mall based business, we’re seeing the same thing as we see with this business platform that we put in place. Our good mall-based operators can take this thing and run with it and can grow their business. We haven’t seen as many Jeff on the success side as we have on our value based business. The bell shaped curve is still pretty similar to what we see in our business in general. We need to execute well in those salons regardless of what where they’re placed whether they’re in a mall or a strip center or a power center. And we believe that with good execution we can make our Regis and our MasterCuts business work as well. There is enough traffic in those malls walking by everyday for us to get that business right. So that’s how we’re looking at it, its all about execution and delivering the great guest experience very similar programs that we’re executing in terms of training development in our value basis. Jeff Stein - Northcoast Research: Okay. And store closings, that’s my final question, any thoughts in terms of the back half of the year, how many locations you might close and what the annualized losses of those locations might be?

We don’t typically give guidance on store closings. But we continue to opportunistically look at locations that are underperforming and that are right for closure and I would anticipate the pace will be very similar to what you’ve seen in the last 12 months. Jeff Stein - Northcoast Research: Got it. Thank you.

Thank you. And our next question is from the line of Bill Armstrong with CL King & Associates. Please go ahead. Bill Armstrong - CL King & Associates: Good morning, gentlemen. You talked about a steep learning curve with these, with the field organizational changes. I was wondering if may be you could describe for the typical stylist in one of your salons what sort of learning curve he or she may be under going that? And what the timeline might be for an individual getting up that learning curve?

Yes, it’s not, I wouldn’t say it was a stylist. I think our stylists are good stylists where we’ve got a good group of stylists across our portfolio of brands that do a very, very good job cutting hair, delivering a good guest experience. Its more around leadership and what we’ve learned in the past six months is that leadership is an extremely important part of this equation and just like any business, if the teams are positively motivated and feeling good about themselves they do a better job and where we have put people in new rolls, they are, some of them are struggling, some of them are struggling to understand the different operating procedures within the different brands. Some of them are struggling to be good leaders and that’s where our training and development work is primarily focused is around leadership. And so that’s what I talk about when I'm talking about the steeper learning curve. It’s not at the stylist level, it’s at the District Leader level and at the Salon Manager level on some respect because we have good people in place and strong Salon Mangers, strong District Leader, we deliver very good results. And it’s incumbent upon us to do a good job training them so that they can be successful. But I don’t want to leave you with the impression that the stylists are on a learning curve because of the organizational change we made. Bill Armstrong - CL King & Associates: Okay. Thanks for that clarification. So what do you think is causing the increased turnover in the stylists than in -- and as it related, on a related point why do you think you’re struggling to replace them?

Let me start with struggling to replace. I think that’s the combination of being in the fourth quarter during the holiday season and again training and development of our newest leaders. We got to make sure that they’re well focused on training and developing our people. And if we get new stylist in and we’re not doing a good job training and developing them that’s when we see them move off to another location. And what we will become over time is we will become a company where stylists want to come because of the training and development that we give them. We’re not there yet today and that’s an opportunity area for us to make sure that we deliver the kind of training and development at the stylist level that they need and then again it gets back to this idea leadership. If we’ve got strong leaders focused on creating a good work environment, we can keep people. So we can track through the organization and we can see where we’ve got leaders -- where we’ve got turnover and it pretty much equates to our leadership development opportunity. And I mentioned in my work that we’ve done a lot of digging into training and development and the work that needed so that we can have that kind of leaders that can not only attract good people but retain them and deliver the kind of results our best operators are giving us. Bill Armstrong - CL King & Associates: Okay. And then one final question, probably to Steve and that just concerns royalties -- the franchise royalties so your franchisee had positive comps and it looks like you had an approximate 4% increase in the number of franchise salon opened during the quarter compared to a year ago so but franchise royalties were flat. Did you, are the rates lower or what’s -- how do you reconcile that?

Well, actually our franchise revenue for the quarter was up about 150 bps year-over-year and its hard to see this when you look at the face of our financial statements because the prior year line item also includes income from booth rental that’s less significant in the current year.

And this is Eric, I would add to that. There is a lower royalty fee in the first year. So when our franchisees come on generally the royalty rate is 4% in the first year and 6% thereafter. So as we’re adding more and more new franchisees and new store openings you get that 4% royalty in the first year and that’s really for a half year. So you’ll continue to see that build over time but it takes a little while to ramp it up. Bill Armstrong - CL King & Associates: I see, and when you say booth rental you’re talking about in your company owned stores or --

On booth rental in company owned stores yes. Bill Armstrong - CL King & Associates: Okay. And that’s being, are you facing that out or what’s causing a reduction there?

Its just -- it’s not a strategic emphasis for us. Bill Armstrong - CL King & Associates: Okay. Thanks.

Thank you. And our next question is from the line of Daniel Hofkin with William Blair. Please go ahead. Daniel Hofkin - William Blair: Good morning. Just going back to the comment about kind of your early adaptors, I haven’t, obviously you haven’t called that out specifically in prior calls. But I’d be interested in what you’re seeing in terms of the sequential trend for them and also the share of the total pie that they’re representing lets say this quarter versus the fiscal first quarter? That’s my first question.

All right Daniel. So in terms of the early adopters I'm not going to get into the -- what share it is or what percentage of our business it is. Daniel Hofkin - William Blair: Whether it got bigger in the --

Well, I can’t talk about that. What I can tell you is that, that group improved not only are they growing but they did improve over the first quarter and that first quarter of the year was an improvement over the last six months of the prior year. And so that’s what gives a confidence about the strategy that we have in place is because the people that are our best operators are showing improvement in the business consistently quarter-on-quarter-on-quarter and I think that’s what your question was. Is that are they able to sustain it and are they able to maintain it and the answer to that is yes and we’ve seen, we’ve actually seen the improvement increase. And so it’s not like it’s a steady state steady percentage up but over that time period we’ve seen these good operators improve it. Daniel Hofkin - William Blair: Can you put any just rough number on like you said in some cases well in excess of 3% positive in the fiscal second quarter was that flat in the first quarter just some --

Sure, sure I understand the question. Yes, we had in the, these are operators in the first quarter where and I can get down to individuals but I don’t think that will be helpful to you. You think that what we’ve seen is, we’ve seen people getting as high as 25% comp that are executing against the strategy and that those people are pretty consistent first quarter to second quarter but that’s substantially above what they were in the last six months of the prior year those best operators. And what we’re doing is, our field leaders are spending a lot of time with those folks understanding how they’ve been able to adapt to the strategy so easily and comfortably and that’s how we’re developing the training program for the rest of our people. And for example we had all of our Regional Directors and Regional VPs in last week and helping to develop the training program for the field and then that’s the work that they’ll go back out and then they’ll train their district leaders. And I'm talking about district people with five to eight salons that are able to get that kind of traction. Daniel Hofkin - William Blair: Okay. Is there anything, I mean have you been able to identify anything about the leadership in these salons because you’re basically putting it on the leadership more than the individual stylists. In terms of what it is about them that’s making them perform better so far to be early adapters and how you can kind of hire people – what to look for in terms of hiring?

Yes, that’s an excellent question. Now we have a Chief Human Resources Officer for the first time and she is spending a lot of her time understanding the consist – what’s the similar makeup of our best leaders and what are those skill sets that they have. So if we do have to go outside the hire what will that look like. And what it really all boils down to Daniel is good leadership. And we’ve got, we have technical training here we just, we haven’t ever really done any work around leadership training and that’s what that’s the work we did last week with our folks. We looked at what we need to do for each of our district leaders to train them and help them be more successful than they are today. So we have a training program all the way down to the individual district leader. As we get them trained we’ll cascade that down further down in all the way to the Salon Manager. But these good once what they’re doing is they’re keeping their salon fully staffed with well-motivated stylists and they’re creating the kind of environment in the salon where people want to be and they’re showing their people how to deliver a great guest experience. Those are the common themes that we’re seeing across these folks. Daniel Hofkin - William Blair: Okay. And then I guess my last question is back to an earlier question about the mall based concepts. Is there, it’s obviously minority of the total company but would you think in terms of the possibility of closing or relocating in material number of those over time?

We would, we evaluate every salon if it comes up but we’re not thinking today about closing or relocating a large number of them. A lot of the malls especially we have a relationship with the landlords that has a lot of mall and so it isn’t, it is something that we work on with landlord by landlord. But what we haven’t found is relocating them outside the mall to be a great solution. We just need to execute better inside those malls Daniel and result -- even in the B and C malls, we’ve got salons that are performing extremely well and then they execute well, they work the lease line as potential guest walk past the lease line and they’re growing their business. So it’s a little bit like weather, I want to be hesitant to blame anything on the weather or blame anything on mall traffic because I think that when we get our act together and we execute well we can move the dial inside the malls as well as in strip centers and power centers. Daniel Hofkin - William Blair: Okay. Thank you very much.

Thank you, Daniel.

Thank you. And our next question is from the line of Jill Nelson with Johnson Rice & Company. Please go ahead. Jill Nelson - Johnson Rice & Company: Good morning. My first question relates to both service and product margins. It appeared that you had some stabilization in the first quarter but entering the second quarter you faced some additional pressures on both those margin lines. I know you’re seeing some de-leverage on a weaker comp could you talk about maybe some other issues that are playing into that number?

Yes, I think the largest impact that affected our service comps sequentially was the fact that we didn’t get the leverage out of stylist hours that we got in the first quarter based on our sales declines. On the product side, as we mentioned we were a bit more promotional in the quarter in order to start to turnaround the performance of retail comps and that directly impacted our margins. Jill Nelson - Johnson Rice & Company: And are these factors if we continue to see these similar comps for a couple quarters out, are these factors, I mean do we think these margins levels are kind of the current run rate that we should see or is it something you can fix in the near term?

In our business, I think that the way to improve our margins is to leverage growing comps. So we believe that as we begin to see the business turnaround and our comps improve, we’ll start to see improvement in that percentage. Jill Nelson - Johnson Rice & Company: Okay. And then last question, a follow up on the incremental turnover you saw on the stylist this quarter. Was it more of kind of management’s control of trying to improve the workforce that you feel like it was the stylists choice wanting to leave?

Let me take that one. I think Jill, I think it was more stylist choice wanting to leave but at the end of the day that’s really what we need to control. So it wasn’t that we fired a large number of stylist by any stretch of imagination it’s more that as I would – as I mentioned earlier. We need to do a better job of providing the kind of leadership that will help our stylists be successful and that’s what drove the increased turnover is the combination of that. And I think that we are asking them to at the salon level be part of the solution and we did put that management’s performance program in place. And that’s a platform for accountability and we think that given that the lower – more lower producing stylists left us than higher producing stylists we think that some of it’s driven by the fact that and we’re holding them accountable. And that for their performance and so but we weren’t out firing stylists, this was more self selection. Jill Nelson - Johnson Rice & Company: Appreciate. Thank you.

Thank you.

Thank you. And our next question is from the line of Jeremy Kahan with Bow Street. Please go ahead. Jeremy Kahan - Bow Street: Hi, there. Can you give us an any indication of order to-date trends have started to stabilize? And then second, can you just give us an update on how we should be thinking about normalized CapEx levels? Thank you.

I’ll take the first one and then I’ll let Steve talk about CapEx Jeremy. As you can imagine we’re part ways to the first month of the first quarter. So I won’t comment on where we are in the quarter. What I can tell you is that we continue to see the same kind of thing that we saw with our strong performers. That our strong performers continue to perform very well with kind of results we would like to see that middle band is still struggling. It has been a crazy weather month so that would make it even more confusing for me to respond to it. But I can tell you we’re seeing on that bell shaped curve, we’re seeing similar things and I remain encouraged by how our best operators are performing. And as I mentioned earlier, we had all of our Regional Directors and Regional VPs in this week for further training. It’s a motivated group, they know what they need to do to be successful, they know how they need to train their District Leaders and their Salon Managers to be successful as well. Thank you. Jeremy Kahan - Bow Street: And I guess just a follow up on that. Was there any degradations throughout the quarter or is it pretty consistent over the last three months?

Are you talking about this quarter we just finished? Jeremy Kahan - Bow Street: Correct.

The results were pretty consistent. The results are pretty consistent over the three months. And you want Steve, I’ll give it to you for the second part of that.

Yes. Normalized capital spending is between $50 million and $60 million a year. Jeremy Kahan - Bow Street: Great. Thank you, very much.

You’re welcome.

Thank you.

Thank you. And we have Bill Armstrong with CL King. Please go ahead. Bill Armstrong - CL King & Associates: Hi, guys. Just a follow up that you mentioned that a lot of the stylists who left were sort of the lower tiers of productivity. And you mentioned creating a culture and accountability. How do you measure productivity of stylists and if I’m a stylist how would I go about increasing my productivity?

Sure. We measure in terms of dollars you generate per hour on the service side and then the total amount of retail you sell. With this platform that we put together, we’ve given them a number of what we call lead measures that can help drive productivity at the salon level depending upon the format that you’re in or the banner that you’re in that can range from working the lease line and engaging potential guests to come in and for a free consultation and get a service to passing out referral card collecting emails. And what we’ve seen is, I’ll give you a – this is admittedly a one-off example but I think it’s an important one that’s indicative of how quickly we can turn the business if we’re – we focused on it in the right way. And one of our SuperCuts, one of our Salon Managers decided that she like this idea of something that we called fishing, going out and if you’re happen to be in a mall you go out and you work with all the other retailers in the mall. If you happen to be in one of our salons like Wal-Mart it’s been on the lease line and as people walk by welcoming them into Wal-Mart and asking if they be interested in a consultation. And this particular SuperCut manager went to a closed by office building working in a strip center that building was about a mile down the road and literally in the – over the course of a quarter had her business up 70%. This was a fairly strong performing salon to begin with and had the business up 70% in that quarter just by going into that particular business – into that business building and passing our card. So they can’t impact their business. They just don’t have to wait to walk in and get traffic and that’s what we have been focused on training all the way through our system is to have them understand they can be accountable for driving traffic as well as delivering a great guest experience inside the salon. Bill Armstrong - CL King & Associates: Okay. Great, thanks very much for that illustration.

Thank you, Bill.

Thank you. And our next question is from Ravi Devisetty with Nidhi Capital. Please go ahead. Ravi Devisetty - Nidhi Capital: Hey, good morning gentlemen. Have a few questions, three questions. And I know you gave turnaround and all this stuff and my question is, what kind of benchmark we should evaluate you guys from looking at other than same-store sales and revenues. And what are your – what are the milestones you have and can you go over the timelines we should see those for your -- evaluating guys?

Well, Ravi, I can tell you that we won’t give a timeline, but I can tell you, how we look at ourselves and how we look at our business and hopefully that will give you some idea of what it is that we are doing. Clearly, as you pointed out is, comps right, but even more importantly than that is – we look at all salons. We look at where they sit in the geography. We look at the population. And we have an understanding of what the potential is just based on the kind of work that we have done in our marketing department to understand which guest are most interested in which of our different service offering. So if you look at, our SuperCuts through our SmartStyle business and you look at our Regis or all others, we have a pretty good understanding of what that should be. So we hold ourselves accountable for that. We look at guest retention. So we are at the point now where we have a pretty good handle on about 60% of the guest that come in. We are able to identify them. And we continue to build on that month after month after month. And so we look at guest retention and we evaluate ourselves on how well we are retaining guest. We look at stylist retention. We evaluate ourselves on how well we are retaining stylist. You heard some questions on margin, we look at margin a big and really important tool for us, is making sure that we have the schedules right. Are we properly scheduled on weekends versus the middle of the week, are we scheduling to the advantage of the consumer versus the advantage of our stylist. So a number of measures along those lines that are very important to us in terms of service. And then on the retail side, we look at something that we call combination sales. So what percentage of the sales that we get ourselves to somebody that’s also in for a service. What happens to our retail sales in terms of just walking? What percentage of those walk-in guest can we convert into a service guest? And then we also look at how well we are selling our promotional materials what correlation is between promotional and our full price sales. So all things along those lines Ravi is how we are evaluating ourselves. Ravi Devisetty - Nidhi Capital: Okay. And just on that question, but from our perspective you are looking at the numbers and obviously they are very challenging. But, we have absolutely no clue, okay, how many stores you have made any progress and I understand you don’t want to disclose any numbers in the first pie, second pie or third pie and we are sitting here. We don’t know how many people moved from second pie to first pie? How many are there in the first pie or second pie? So can you give us some visibility what’s going on, so that okay the management has made progress from first quarter to third quarter this much progress and some second quarter to third quarter. So I don’t have any visibility to judge you guys other than looking at same-store sales and the basic numbers. So that’s number one. Number two, couple of more questions, we also have is, I also noticed that your franchisees are doing obviously better comps than your company stores. Can you compare your comps versus franchisee comps every quarter and see why they are doing a better job versus yours. And number three, there are lot of companies that are selling their stores to franchisees, at what point would you decide and say, hey, our strategy is not working maybe franchisees can do a better job than us. Maybe we should move some of our stores to franchisees.

Okay. Let me start with the last one first, in terms of selling to franchisees, we have said on previous calls that we have done that. We continue to do that. We have a great relationship with our franchisees. And if there is a store that we can’t make a go of it, we have to sell that to franchisee. And we will continue to take advantage of that opportunity. And to build on – so to build on that question a little bit, we have been focused on growing our franchisee store locations, we have not been with the exception of our Wal-Mart partnership, we have not been growing our own salons. We have decided to focus salon growth in two areas. One is with Wal-Mart and others with our franchisees. So I think we are doing exactly what you are asking. We do compare ourselves to our franchisees, quarter after quarter after quarter Ravi. We do know they outperform us. But I can tell you that our good operators are performing at the same kind of levels that our franchisees are and getting the same kind of growth that our franchisees are. I think you probably know from your research that we do about $50,000 less a store than our franchisee is doing, its one other things that we used to measure the opportunity that we have to close the gap with our franchisees. Ravi Devisetty - Nidhi Capital: Okay.

That answered your question, sir? Ravi Devisetty - Nidhi Capital: No. There are other two questions I was talking about how many people will consider or your early adaptors, so those numbers would really help us to judge you guys how much progress you guys are making because other than same-store sales we cannot just judge. How you guys are progressing? You know what I mean?

Yes. I understand the question Ravi. I mean, we are not comfortable getting into that level of detail. I can tell you that that group is bigger. It’s not growing as fast as we would like to as evidenced by our results. But, we are getting more people into that group quarter-by-quarter that’s where we are focused, as we are focused on training and developing that organization. But, unfortunately I’m not going to be able to get into the individual detail on how many have moved from group, you know, A, B, and C.

All right. Thank you, again. The next question is from Fred Graham with Nomura Securities. Please go ahead. Fred Graham - Nomura Securities: Hi. Based on your disclosures doesn’t just look like you repurchased any of the convertible notes, can you please provide some more clarity around that?

Sure. The convertible notes mature in July of 2014, which is our fiscal year 2015. As we said last month it’s our intention to use the proceeds from the $120 million note issuance that we just entered into as well as some of our cash on the balance sheet to settle the converts, when they come due. The way they work mechanically is, they are non-callable and mature. They are non-callable until they mature prior to April 15, the holders can put the debt to Regis within some very unique incidences, one of which is if our stock trades above $19.82 a share for 20 out of 30 consecutive trading days. In addition to other limited instances, all this can convert their option at many time after April 25 for 2014. Before April 15, we have the options to settle in cash, stock or combination of both. While no definitive decisions have been made like I said we are going to opt to settle in cash to the extent that’s our intention at this time. We are required after April 15, 2014 to select a method and notify holders of that method and then honor that method. Fred Graham - Nomura Securities: Okay. With stock down here, would you ever think about tendering for the bonds or not just wait until they come to due in July until it happens?

I think we are going to keep our options open. Fred Graham - Nomura Securities: Okay. All right. Great. Thank you.

And I’m showing no further questions. I will turn the call back to Dan for closing comments.

Thank you for joining us on the call. I know that Mark will be available to answer any questions today and over the next few days. Thank you, operator.

Ladies and gentlemen, if you wish to access the replay for this presentation, you may do so by visiting regiscorp.com in the Investor Relations section of the website or by dialing 800 406 7325 with an ID of 4662033. This concludes our conference for today. Thank you, all, for participating, and have a nice day. All parties may now disconnect.