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…

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…

Your first question comes from 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.

Are there any conditions in sale in the Trade Secret transaction that potentially could jeopardize the closing of that transaction?

No.

So, they take it as it is?

As it is.

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.

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.

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.

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%.

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.

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.

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.

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.

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.

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.