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 Third Quarter earnings call. [Operator Instructions] If anyone has not received a copy of today's press release, please call Regis Corp. 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 4679962 followed by the # sign. 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 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'd now like to turn the call over to Mr. Hanrahan for his comments. Dan, you may begin.

Thank you, George. Good morning, and thank you, everyone, for joining us today. With me 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 we begin our discussion, I'm excited to share with you the new look and feel of Regis that you see on the screen. We are a company that is focused on the development and success of our people. I know all companies depend on their people and my statement is a bit obvious. However, our people are truly our great asset, because without them, we cannot deliver our product, which is service to millions of guests. This new look and feel present the compelling image of the people we depend upon for our success. It also demonstrates the energy and enthusiasm they have for this company. We will incorporate this imagery into our communications, including one of our most important recruiting materials. As I've said in the past, our employees are our most important asset, and building a winning organization through developing your talent is key to our success. Today, I want to talk about people, process and metrics, and what we are doing to improve in each of these areas. They are completely interrelated, and we need all 3 firing in a market or salon to drive execution and results. Before I begin that discussion, I would like to put in perspective the path Regis has traveled during the past couple of years, and most specifically since I joined. Doing so helps explain where we are in our turn around, where we are headed and what we need to do. Our journey began with a proxy contest in November 2011 that provided the…

Thank you, Dan, and good morning. Before discussing our consolidated financial and operating performance for the third quarter, I want to address 2 housekeeping items. First, as a result of our field reorganization, District Leaders' labor costs are now reported within cost of service and their travel costs are now reported within site operating expenses. Previously, these costs were reported as general and administrative expenses. We included on our corporate website recasted historic annual and quarterly financial statements to better assist you with your comparisons. Second, because of the valuation allowance against most of our deferred tax assets, associated reported and as adjusted results of operations are not tax affected. Consequently, current period results are not comparable to tax affected prior periods. For the third quarter, Regis reported a net loss of $9.5 million or $0.17 per diluted share. Adjusted EBITDA for the quarter came in at $26 million compared to $26.8 million in the prior year quarter. Excluding net discrete charges, third quarter net loss -- net diluted net loss per share, as adjusted was $0.15 compared to earnings of $0.01 in the prior year quarter, declining by $0.16 per share. This decline includes negative noncash impacts of $0.07 per share, due to not recording a tax benefit and $0.07 per share relating to accelerated depreciation. The remaining $0.02 per share decline is comprised of $0.12 per share, associated with negative same-store sales, offset by $0.10 per share improvement on the cost side of our business. Cost improvement is primarily related to cost savings, reduced bonuses, improved cost of product, cost reductions related to our field reorganization, lower health care costs and lower marketing costs, partly offset by higher salon labor costs, relative to lower sales volumes. I will discuss these items in more detail shortly. We included in…

[Operator Instructions] Our first question is from the line of Lorraine Hutchinson with Bank of America Merrill Lynch.

It's Paul Alexander for Lorraine. Dan, just, very big picture here. I think your tone is much more confident and positive today than it's been in recent quarters, but there is still some big similarities between this quarter and recent quarters. You're executing on your strategies, but things aren't totally filtering all the way down to the salon level yet, and it doesn't seem you're really seeing the traction yet. So can you explain a little more why you feel like you're now on the verge of going from transition to execution? When you see another quarter of one step forward in something positive, but then one step back, what gives you confidence that you're really closer to seeing the traction and meaningful improvement?

Good question. The -- and I think you've captured pretty well where we are. We know that we still have a great deal of work to do to turn the 7,000 salons and 50,000 stylists into the most productive group they can be. What makes us feel better about the strategy and that it's the right strategy, is where we do have good operators and very solid people executing against it. We're seeing the kind of results that I described in those couple of slides. What gives us pause and makes us know that we still have a lot of work to do is that we've got to execute that across the entire portfolio, and across all of our people. We've done an awful lot of work on assessing our talent. Having Carmen here has really been helpful. We've assessed all of our regional vice presidents, and put together development plans for them, to help them be better. We're doing the same thing at the regional director and the district leader level. So what I'm feeling better about is the fact that where, when we're assessing talent, we're assessing them against their ability to deliver that strategy, and if people have opportunity areas, we're putting plans together. So I don't want to get out over my skis by any stretch of the imagination, but I do feel good about the strategy, but I want you to understand that what we've got to do is be able to execute it across the entire portfolio.

Great. Just on that topic of people and cascading this role clarity and expectations down the line, you focused a little bit on cascading this communication down to district leaders and salon managers, how much longer does it then take to get down to the stylist level?

Well, I believe that once we get it to the salon manager level, and we get salon managers operating well, we're at the stylist level. Because all of our salon managers are there, shoulder to shoulder with stylists, cutting hair, and when we get to that point where we're all the way to salon managers were there, I would tell you that I feel very good about where we are with our regional vice president. I would say that we feel better about where we are with our regional directors -- still work to do. Where we haven't gotten all the way through is to our district leaders. And the reason I say that about the salon managers, we see that in our franchisees, where they've got, and they, for the most part, they have it in all their salons, where they have a really solid salon manager, they're clicking on all cylinders. And we see that. So when we've got the connection from regional vice president, all the way down to the salon, we're seeing terrific results. We just have to be able to execute that across the entire portfolio.

And then just one last follow-up. Any color on how visitation, or your comps trended throughout the quarter, month-to-month?

I'm sorry. Say that again? You lost me.

Do you have any color on how the sales trends sequentially went through the quarter?

No, we don't get into the month-to-month, Paul. I'm sorry, I misunderstood the question.

And our next question is from the line of Jeff Stein with Northcoast Research.

Hey Dan, just following up on the last question. What percent of the portfolio is working right now? And how would that compare with where you were 3 months ago and 6 months ago?

Well, last quarter, we won't get -- I won't get into the specifics, Jeff, on that, but -- on the percentages. But I can tell you, the last quarter we described a fairly large number of district leaders that were performing positively. That same group was positive again in -- as a whole, and that, in our third quarter. Some of them more so than others. I think you can see by our results that we just don't have enough of our districts performing at a positive level. What we do see -- and I don't mean to sound like a broken record, but what we do see is where we've got good leadership in place over the salons, and we get the kind of results that we showed you in that one region, where the person running that region is up substantially. They've done a good job developing and upgrading their talent at the district leader level, and in turn, the district leaders that put all good salon managers in place. Our opportunity and it's our challenge as well, is to get our leadership in the field to execute effectively across their entire portfolio, and that's really around developing and upgrading their talent.

Okay. Can you talk about the turnover at the stylist level? Has -- have you been able to slow that at all? And as you bring new stylists in, I would presume there's a learning curve before they may even be able to equal or exceed the productivity of the people they're replacing? Where are you there?

Yes, good question. Yes, on both counts. We have -- in the last call, we had talked about the challenges that we had in the fourth quarter, with stylist turnover. And then, in this prior quarter, we -- I'm really proud of the work the team did. I think Jim Lain and his regional vice president team, really got that message across, all the way through the system. And what we -- and I think what it shows is that where we get alignment on people, process and metrics, we can deliver. So we did a -- we outpaced our declines pretty substantially in, our departures, I'm sorry, pretty substantially in the prior -- in past quarter. And you're right, it does take some time for those people to get up to speed, and it's one of the reasons that Carmen and her team are very, very focused on developing a much more powerful training program, so that we can get those stylists up to speed more quickly. But we've done a good job hiring, but you are right, that a brand new stylist -- and it depends on if the stylist was experienced, or one coming right out of school, but in general, stylist coming right out of school is not as productive right off the bat as somebody that's been there for some time.

Okay, and where are they primarily coming from? Are they coming from school, or are you hiring experienced stylists?

It's a mix. If we can hire -- if we have a choice between somebody right out of school or an experienced stylist, as long as there's a good cultural fit in the salon, we'll always take that experienced stylist, but we get them from both places. And it ebbs and it flows, and it depends upon where their school is in place. We worked -- we're working much harder, Jeff, with Empire Education Group, who is -- is a good partner of ours. We're, as you know, a part owner in that, but we've really worked hard on developing the relationship and becoming the place where their students go. And Eric, Eric sits on the board there, and we've got a great relationship with that group, and that's a gold mine for us, what we haven't mined very effectively in the past, that we're very focused on now.

Okay, and I've got just one real quick question for Steve, and that is, your gross profit margins on the product side of 51%. I just wonder, you mentioned, Steve, that you expect your gross margins to be up in the fourth quarter because you're going up against liquidations last year. But with the sales trend you're seeing, how can you sustain margins at that level? And is it possible that, that's part of the problem, that you're just charging too much for your products?

Actually, I think the promotional activity that we did in the prior year was probably not driven by a sound return on investment philosophy. And in addition to that, because we were doing a lot of it in advance of resetting our planograms, it was significant in nature. And so I don't believe that, that may -- is necessarily driving our retail sales specifically today. But I believe that, that as a result, when you're comparing, you're going to see improvement.

And our next question is from the line of Bill Armstrong with CL King & Associates. William R. Armstrong - CL King & Associates, Inc., Research Division: A follow-up on Jeff's question. So sounds like you're hiring -- pace of hiring's improved. What about stylist turnover? What are the trends there? I know that was an issue in the December quarter?

Yes, the way we -- Bill, the way we look at that is holistically. So we know that we're in a highly transitory business, right? And so we work, we're working very hard on stylist retention. I can tell you that we outpaced, by a fair amount, new hires over terminations, and that the terminations were down pretty substantially from the fourth quarter. And I attribute all that to our field leadership and our -- and the HR support that they are getting. We're focusing -- we're really focusing on providing a good -- making it a good place for a stylist to work here at Regis. We want to be known as the place to work, so that we're very attractive, and we want to be a very sticky place. But so we saw terms go down, but more encouraging, we saw new hires go up. So the 2 worked well together for us in the first quarter. William R. Armstrong - CL King & Associates, Inc., Research Division: Okay, that's great. And I guess for Steve, a couple of accounting questions. That depreciation you had, an asset repayment [ph] of $8.9 million. That was within the depreciation and amortization number, right?

That's correct. William R. Armstrong - CL King & Associates, Inc., Research Division: So going forward, are we looking at like a $19 million to $20 million quarterly run rate for depreciation?

We don't give guidance on what we are expecting in the future, but to address asset impairment, as our business begins to turn, we would anticipate that asset impairment would decline, and then -- but when our business turns, we wouldn't have the ability to take back that impairment. William R. Armstrong - CL King & Associates, Inc., Research Division: Right. So -- but the ongoing -- the ongoing depreciation, amortization excluding any impairments, looks like it's about $19 million, is that accurate?

Yes, that's accurate. William R. Armstrong - CL King & Associates, Inc., Research Division: Okay, okay. And then, on the tax rate going forward, so are we going to be non-taxed going forward for the foreseeable future? Or how does that work?

For the foreseeable future, we will not be tax affecting our numbers. So until such time as we're able to reverse the valuation allowance, which is predicated on us turning the business around and demonstrating sustainable results, we will be nontax affected.

And our next question is from the line of Jill Nelson with Johnson Rice. Jill R. Caruthers - Johnson Rice & Company, L.L.C., Research Division: If you could talk about -- you've done a really good job on the cost savings, kind of a run rate, it looks like you're running close $15 million, $20 million annually. Could you maybe quantify what you think that ongoing savings run rate could be? Or currently is?

We don't typically give guidance in our future results, but what I'll tell you is, is some of the savings are from tremendous efforts on the part of the organization to figure out how to work smarter and more efficiently. Some of them are being driven by the field organization, and I'd be cautious to want to want to pin a perspective run rate of savings, recognizing we haven't yet nailed complete execution in our salons. Jill R. Caruthers - Johnson Rice & Company, L.L.C., Research Division: Okay. And then, just following on the asset impairment you took in the quarter, and just kind of your opportunity for store closings, stores that are underperforming significantly, and kind of what's your optimum number of salons as you kind of look out long-term?

Well, we don't necessarily plan an optimum number of salons to exit, but we -- we're always looking at salons that are underperforming. And to the extent we have opportunities to fix the business, we first try to do that. If it's our understanding that we're unable to fix the business, our next opportunity is to try to turn that over to a franchisee, who could then potentially turn the business around more quickly than we could. And if that's not an option for us, then we allow the lease to expire. Generally, the cash flows that the underperforming salons are generating are, while they're negative, they're -- they tend to be less negative than if we had to pay the rent.

And as there are no further questions, I will now turn the conference back to Dan.

Thank you, George. Thank you, everybody, for joining us. We look forward to talking to you after our fourth quarter.

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 1 (800) 406-7325 with the access code of 4679962, followed by the # sign. This concludes our conference for today. Thank you for participating and have a nice day. All parties may now disconnect.