Welcome to the Regis Corporation fourth quarter and fiscal year 2008 conference call. (Operator Instructions) I would like to remind you that to the extent the company’s statements or comments this afternoon represent forward-looking statements. I refer 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 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 and Administrative Officer. After management has completed its review of the quarter and year we will open the call for questions. I would now like to turn the conference over to Paul Finkelstein for his comment.

I’d like to review our financial results for the quarter and for the year. Our fourth quarter revenues increased 5% to $709 million. Revenues would have increased slightly over 10% absent of deconsolidation of European franchise business and beauty schools. For the fiscal year, revenues increased 4.3% to $2.7 billion. They would have increased almost 8% absent of deconsolidation of Europe and schools. Fourth quarter reported EPS was $0.54 versus $0.62 last year. However, there is some noise in the quarter for items such as workers’ comp and insurance reserves as well as a $0.06 per share charge associated with a write off of certain fixed assets related to our store closing program. Thus, operationally EPS for the quarter was $0.55 this year compared to $0.53 last year. Likewise, EPS for the year on an operational basis was $1.99 versus $2.05 last year. EBITDA for the year was $313 million compared to $317 million last year. The deconsolidation of Europe and schools resulted in our booking $12 million less in EBITDA than we would have had deconsolidation not occurred. Information found in today’s press released coupled with information on our website will give you additional input to help you analyze our financial results. During the quarter we acquired 54 locations, built 72 and closed or relocated 62. Our franchisees built 29 and sold, closed or relocated 75 locations, resulting in a decrease of 46 franchise locations during the quarter. During the year we acquired 388 locations, built 328 corporate locations and closed or relocated 225 units. Our North American franchisees added 131 locations and closed or relocated 79. As of June 30, we had 2,198 North American franchise locations. We ended the year with 10,837 company owned and franchise salons and total locations, including ownership interests, of 13,551. For the…

Good afternoon everyone. As you are aware our quarterly earnings guidance always will directly correlate to our same store sales guidance. At the beginning of our fourth fiscal quarter we had forecasted our earnings to be in the range of $0.55 to $0.62 per share and that was based on an assumed same store sales range of positive 50 basis points to 2.5% with actual same store sales growth coming in at the low end of our range for the quarter. One would expect our earnings to also be at the low end of our range and they were. Today, as Paul mentioned, we’re reporting fourth quarter operational earnings of $0.55 a share, up from operational earnings of $0.53 a year ago. Our reported earnings for the fourth quarter this year as well as last year in the fourth quarter includes some non-operational items and Paul touched on them there. We had some non-cash fixed asset write offs associated with our previously announced plan to close up to 160 underperforming salons and we also had an unplanned favorable adjustment to our prior year workers’ comp and insurance claim reserves. We’re always trying to make this as transparent as possible and so to make it simple for everyone we have included in today’s press release, as well as on our corporate website, a concise reconciliation of our reported earnings to our operational earnings both for the quarter as well as for the full fiscal year. Absent these non-operational items I believe we had a relatively straightforward quarter from an operational perspective. I’m going to transition my comments by giving you a bit more detail behind our fourth quarter operating results for each of our business segments. A breakout of our segment performance is found in today’s press release and my comments…

(Operator Instructions) Your first question is from Jeffery Stein – Soleil Securities. Jeffery Stein – Soleil Securities: Paul and Randy, you stated that declining mall traffic has reduced your customer counts in your salons and I presume you’re referring mainly to Regis and MasterCuts and Trade Secret. I was wondering if you could comment on traffic trends, visitation patterns in your strip center salons and at Wal-Mart? Are they too seeing drops?

We had very, very strong service comps for the fourth quarter in Wal-Mart, I think they were in excess of 7% and Wal-Mart, if anything, has increased share certainly over Target. The strip center business, our promenade division, and Supercuts have had better comps than our mall business and that’s been the case for the last several quarters.

Jeff, just to add to Paul’s comments there, looking at customer count declines, Paul is right. We’re seeing customer count declines across all of our divisions but on a far less basis in Wal-Mart as well as Supercuts and in promenade. We’re seeing somewhere in the 2%, 3% customer decline range in those three concepts. Overall in the fourth quarter our customer counts were off 4.6% in North America. Jeffery Stein – Soleil Securities: So is visitation then continuing to drop across the industry at a higher rate because you’re suggesting that you‘re not losing market share? Are people, I guess is the frequency visitation which has been an issue for several years now, is that continuing? It sounds like it’s continuing, perhaps even getting worse.

I don’t think it’s getting worse. It’s a bad statement. Let’s assume it’s stable, Jeff. It’s so hard to get industry statistics because half the industry is underground. You look at Department of Commerce numbers of the industry is 22, 23 billion. We know it’s in excess of 50 billion. But customer visitation patterns now I think are affected not only by lifestyle but the fact that people are traveling less, making less visits, so there’s less traffic. Therefore we get less walk ins. But there’s no question, we’re not losing share. We’re very close to the senior players at Hair Cuttery, their comps mirror ours. Share is not an issue.

We also see it in the franchise salons that we have as they report royalties to us based on sales. We see it in the stores that we acquire throughout the year, that their performance is many times worse than ours. So again we’re convinced, Jeff, we’re not losing share. Jeffery Stein – Soleil Securities: With regard to PureBeauty, you’re taking a $0.03 to $0.05 hit in the first quarter and then you’re going to stand pat with 17 conversions, should we assume as we build our models that there will not be additional conversion costs over the balance of the year in second through fourth quarter or should we build something in for additional conversions?

There’s not going to be a ton of additional conversions, but there’s not going to be zero either. Let me give you an example, we have not been able to get into North Park and Dallas for many, many years and that’s probably the best mall in Dallas, if it’s not the best, it’s the second best with Trade Secret. But we have secured space for PureBeauty and obviously there will be a PureBeauty expansion into North Park and Dallas but we’re going to go very slow in terms of our Trade Secret lease driven remodels converting them to the PureBeauty brand. There’s a lot of brand equity in Trade Secret and what we’re going to do is take the PureBeauty footprint and their fixture designs and as we rebuild Trade Secret locations we’ll use that architecture and increase our assortments but we’ll probably maintain the Trade Secret brand. This is a work in progress, Jeff, it’s just too early to make a determination of exactly how many PureBeauty salons there will be. We’ll keep you posted. Jeffery Stein – Soleil Securities: Final question, guys, this relates to your joint venture with Intelligent Nutrients. It sounds to me like it’s not rolling out as you planned it. I’m wondering what kind of drag are you building into the model for this year for that piece of the business? I presume it is dilutive to earnings.

You’re talking about, Mark, what a couple of million dollars, our share? Mark Yes, I think we experienced a drag of about, on an after-tax basis, probably $0.04 in our 2008 fiscal year. I would expect it would be less than that, maybe a couple cents, $0.02 to $0.03, Jeff.

But that’s been budgeted, Jeff. Jeffery Stein – Soleil Securities: Do you think that Trade Secret, it almost sounds to me like Trade Secret is going to have a hard time making money this year with all of this stuff going on. Does that sound realistic?

We certainly have positive EBITDA but whether the operating earnings will be, call it break even at best. But I guarantee you there are other companies like The Limited having similar discussions. This is a very, very crowded category today and we’re going to have to work our way through it. Jeffery Stein – Soleil Securities: Obviously you’ve done the homework, you believe that converting it is better than standing pat and just waiting for the economy to get better.

It’s not a question of converting it, it’s a question of broadening our assortments. We can’t totally be in the hair business. We have to be in the beauty business and our beauty related items are performing better than planned. Jane [Arydale] is a blockbuster in the Mall of America. That’s the issue, it’s not really converting the brand name, it’s broadening our assortments, that’s our challenge and that’s our opportunity.

Our next question is from of Neely Tamminga – Piper Jaffray. Neely Tamminga – Piper Jaffray: Couple questions here on, I hope I didn’t miss this, there was a lot discussed in terms of some of these numbers on comps, but of the 3.3 comp that you guys experienced for Q4, Randy, how much of that is actually attributable to the price increase?

Average ticket was up in North America 5.6% and I would say that most of that, Neely, is going to be attributable to price increase. There’s also a mix play higher price point services like hair color, etc. but most of that’s going to be price.

For the fourth quarter North American same store service sales increased 3.3%, prices were a positive 4.3% factor and mix was 1.7% positive factor. Neely Tamminga – Piper Jaffray: In looking at the guidance for this coming year have you in aggregate for the year I know you do pricing in different markets at different times, but is that a similar sort of dynamic that we should be expecting in terms of some of the comp metrics that go into service?

One of the things that I would expect is that for the first half of the year we should see similar trends as we saw in the second half of fiscal 2008. We’re having discussions now, Paul seems to be as he said on his conference call, bullish about the prospects of being able to continue to increase prices, that’s not a decision that’s been made yet in terms of how many stores but that would affect the second half of the fiscal year. Neely Tamminga – Piper Jaffray: Similarly the product comp side, you guys have the advantage of having so much data to really analyze, I’m just wondering is there within the product comps, is there a price point differential? If you’re choosing some of your lower price point brands versus your higher price point brands in terms of the product mix? I think I have a follow up to that.

I think it’s all price categories, Neely.

But echoing that, we do see that the consumer is becoming a bit more promotional. We talked about that in recent quarters, that we’re not promoting more heavily but we do find that a proportionately slightly larger share of our product sales are those that we are promoting. It just echoes what the consumer is doing across all sectors today. I think they’re tightening the pocketbook and looking for value. Neely Tamminga – Piper Jaffray: I know it’s not something we want to get rid of necessarily in the store, but Paul a lot of the retailers that you cited that are also dealing with these negative comp trends and some of these categories are in process of pretty big scale skew reduction programs. Is that something that would be on the docket for you guys? Have you done that historically ever in the past from time to time or is it just not in the cards for your concepts?

It’s not in the cards short term. We’ll certainly look at it but we’re not [inaudible] right now. Neely Tamminga – Piper Jaffray: One last question, this Raze concept which I think is a very interesting one, I think one that could work well, just wondering if that’s another potential concept that you could actually maybe re-purpose some of your in-mall stores or is it that guys simply need things that are off-mall and on the way home or on the way to work or from work? Just wondering what the real estate strategy could be there?

It’s not going to in malls. We want lower occupancy costs and malls have a greater female clientele. This is not a mall concept. The first week sales were over $5,000 which is our breakeven point. Raze on the basis of the first week is certainly looking like it’s going to be a winner. But if we have 500 stores, 450 will be franchised and that franchise model really doesn’t work in malls, it works in the strips.

Your next question is from Daniel Hofkin – William Blair & Company, LLC. Daniel Hofkin – William Blair & Company, LLC: A couple questions regarding the amplifying the first question and the response regarding the sequential trend in customer traffic, have you seen a, it sounds like you have seen a more pronounced rate of deceleration in customer traffic within the malls as opposed to the strip centers or Wal-Mart, would that be correct? Second, just behind you comp guidance for the year, I understand you’re looking for some additional price increase opportunities, see that as a continued opportunity going forward but help us bridge the gap between the first quarter comp plan and the full year a little bit recognizing that you had price increases this past spring and then finally any light you can shed on additional customer loyalty initiatives either just within Trade Secret or beyond that in some of the more service based concepts.

Daniel, let me take a stab as it relates to customers, what I was saying is that the customer traffic is probably off 2% to 3% in strip center type environment including Wal-Mart which is a lower number than what we were seeing in the malls. We have not seen an increase in the deceleration of those numbers in recent quarters. Daniel Hofkin – William Blair & Company, LLC: Either at mall or off mall?

No, it’s been very consistent, unfortunately. I’m sorry, your second question was bridging the comps I think between. Daniel Hofkin – William Blair & Company, LLC: Just to better understand the full year guidance vis-à-vis the first quarter guidance specifically comp sales. Obviously I know that you’re lapping some easier comparisons later in the year, but help us understand that a little bit better looking for roughly a flattish comp in the first quarter or the midpoint and then something between 1% to 2% for the full year.

For the full year guidance still is 50 basis points on the low end, to 2.5% on the high end. We’re just having I think as we talked about in the release here the month of July we saw trends that were very consistent with the trends we experienced in the second half of fiscal 2008 including some nice increases in service comps. We’re having a tough month of August. One month or three weeks really hasn’t changed our outlook for the balance of this quarter or for the full fiscal year. I still believe that we talked about just a moment ago that there are some price initiatives that we may be able to implement in the second half of our fiscal year. That is yet to be determined. We have not factored that into our overall comp expectation but right now, again, we still expect that comps, which are very glacial in this industry, changes in this industry are glacial, we should expect to see comps in the positive side anywhere from 50 basis points or higher. Daniel Hofkin – William Blair & Company, LLC: With regard to customer loyalty? Any additional opportunities there that you’re seeing?

No, not yet. As you know most of the efforts have been implementing something on the Trade Secret division which we’ve done. We have started testing it in a couple hundred MasterCuts salons and early results look pretty good. We’ve tested it in another concept, a smaller one called, was it Famous Hair?

Holiday.

Holiday Hair, those results were not good so again we continue to learn from that. Having said that, we don’t really have any more initiatives in the short term to aggressively roll out any loyalty programs to our service salon business.

When Randy says the results weren’t good, Holiday Hair profit performance is excellent. We’re just not adding incremental profits based on the loyalty program at this point in time.

Out next question is from Mimi Noel – Sidoti & Co., LLC. Mimi Noel – Sidoti & Co., LLC: Randy, I just have one quick one and I apologize if I missed any commentary on it, but just in looking at the balance sheet and looking at the receivables, trending down starting in the December quarter, what’s taking place to make that happen? Does it have something to do with the partnerships that you’ve aligned with?

That’s exactly what it is. Our receivables are down $30 million entirely, Mimi, entirely due to the de-consolidation of our schools business as well as our franchise operations on the continent of Europe. Mimi Noel – Sidoti & Co., LLC: Assuming there is no change in the relationships there, what we saw at the end of fiscal 2008 should be a fair indication of the future balance there?

That’s right, more normalized level. Yes.

There are no further questions.

Thank you for joining us everyone. Have a good evening.