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Regis Corp. Reports Operating Results (10-Q/A)

January 25, 2013 | About:
10qk

10qk

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Regis Corp. (RGS) filed Amended Quarterly Report for the period ended 2012-09-30.

Regis Corporation has a market cap of $994 million; its shares were traded at around $17.26 with a P/E ratio of 15.7 and P/S ratio of 0.5. The dividend yield of Regis Corporation stocks is 1.4%.

Highlight of Business Operations:

Subsequent to September 30, 2012, the Company determined that the $24.0 million foreign currency gain recognized during the quarter ended September 30, 2012 was understated by $9.9 million as the actual net gain was $33.8 million. The Company completed the sale of its investment in Provalliance and subsequently liquidated all foreign entities with Euro denominated operations during the three months ended September 30, 2012. Within the Original Filing, amounts previously classified within accumulated other comprehensive income that were recognized in earnings were foreign currency translation rate gain adjustments of $33.6 million, a cumulative tax-effected net loss of $7.9 million associated with a cross-currency swap that was settled in fiscal year 2007 that hedged the Companys European operations, and a $1.7 million net loss associated with cash repatriation from the Companys European operations. The foreign currency translation rate gain reflected within this Form 10-Q/A is $43.4 million, resulting in a net gain of $33.8 million.

The Company completed the sale of its investment in Provalliance during the three months ended September 30, 2012 and subsequently liquidated all foreign entities with Euro denominated operations. Amounts previously classified within accumulated other comprehensive income that were recognized in earnings were foreign currency translation rate gain adjustments of $43.4 million, as restated, a cumulative tax-effected net loss of $7.9 million associated with a cross-currency swap that was settled in fiscal year 2007 that hedged the Companys European operations, and a $1.7 million net loss associated with cash repatriation from the Companys European operations, which nets to $33.8 million, as restated.

Regis determined that the Company has met the power criterion due to the Company having the authority to direct the activities that most significantly impact Roosters economic performance. The Company concluded based on the considerations above that it is the primary beneficiary of Roosters and therefore the financial positions, results of operations, and cash flows of Roosters are consolidated in the Companys financial statements from the acquisition date. Total assets, total liabilities and total shareholders equity of Roosters as of September 30, 2012 were $5.8, $2.0 and $3.8 million, respectively. Net loss attributable to the noncontrolling interest in Roosters was less than $0.1 million for the three months ended September 30, 2012 and was recorded in interest income and other, net within the Condensed Consolidated Statement of Operations. Shareholders equity attributable to the noncontrolling interest in Roosters was $1.6 million as of September 30, 2012 and was recorded in retained earnings within the Condensed Consolidated Balance Sheet.

Subsequent to September 30, 2012, the Company determined that the $24.0 million foreign currency gain recognized during the quarter ended September 30, 2012 was understated by $9.9 million as the actual net gain was $33.8 million. The Company completed the sale of its investment in Provalliance during the three months ended September 30, 2012 and subsequently liquidated all foreign entities with Euro denominated operations. Within the Original Filing, amounts previously classified within accumulated other comprehensive income that were recognized in earnings were foreign currency translation rate gain adjustments of $33.6 million, a cumulative tax-effected net loss of $7.9 million associated with a cross-currency swap that was settled in fiscal year 2007 that hedged the Companys European operations, and a $1.7 million net loss associated with cash repatriation form the Companys European operations. The foreign currency translation rate gain recorded within this Form 10-Q/A is $43.4 million, resulting in a net gain of $33.8 million. All amounts impacted by the error included in Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A) have been restated.

The basis point improvement in interest income and other, net as a percent of consolidated revenues during the three months ended September 30, 2012 was primarily due to the recognition of a $33.8 million, as restated, net gain of amounts previously classified within accumulated other comprehensive income. The net gain was comprised of a $43.4 million, as restated, cumulative translation rate adjustment, a cumulative tax-effected net loss of $7.9 million associated with a cross currency swap and a $1.7 million net loss associated with cash repatriation. The recognition of the net gain into earnings was the result of the Companys liquidation of all foreign entities with Euro denominated operations.

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