INVESTMENTS IN AFFILIATES

The table below presents the carrying amount of investments in affiliates:



	June 30,
	2014		2013
	(Dollars in thousands)
Empire Education Group, Inc.	$	28,398	$	43,098
MY Style	213		221
	$	28,611	$	43,319

The table below presents summarized financial information of equity method investees based on audited results.



	Greater Than 50 Percent Owned (1)								Less Than 50 Percent Owned (2)
	2014			2013		2012			2014		2013		2012
	(Dollars in thousands)
Summarized Balance Sheet Information:
Current assets	$	54,774		$	35,900	$	56,516		$	—	$	—	$	84,700
Noncurrent assets	57,803			91,847		96,639			—		—		316,282
Current liabilities	24,797			25,317		61,074			—		—		106,995
Noncurrent liabilities	33,004			21,560		13,947			—		—		78,815
Summarized Statement of Operations Information:
Gross revenue	$	166,540		$	170,964	$	182,326		$	—	$	—	$	305,515
Gross profit	52,440			58,457		67,201			—		—		132,647
Operating (loss) income	(33,526		)	4,981		(1,335		)	—		—		35,569
Net (loss) income	(26,699		)	2,359		(7,211		)	—		—		24,067

_______________________________________________________________________________


(1)	Represents the summarized financial information of EEG. As EEG is a significant subsidiary for the fiscal year 2014 financial statements, the separate financial statements of EEG are included subsequent to the Company's financial statements. Gross profit includes depreciation and amortization expense of $5.8, $7.4, and $7.5 million for fiscal years 2014, 2013 and 2012, respectively.


(2)	The Company previously owned a 46.7% equity interest in Provalliance. During fiscal year 2013, the Company completed the sale of its investment in Provalliance.

Investment in Empire Education Group, Inc.

As of June 30, 2014 and 2013, the Company's ownership interest in Empire Education Group, Inc. (EEG) was 54.5%. EEG operates accredited cosmetology schools and is managed by the Empire Beauty School executive team. The Company accounts for EEG as an equity investment under the voting interest model.

During fiscal years 2014, 2013 and 2012 the Company recorded its share of pretax noncash impairment charges recorded by EEG for goodwill and fixed and intangible asset impairments of $21.2, $2.1 and $8.9 million, respectively. In addition, during fiscal years 2013 and 2012, the Company recorded other than temporary impairment charges of its investment in EEG of $17.9 and $19.4 million, respectively, to account for the negative business impacts resulting from regulatory changes including declines in enrollment, revenue and profitability in the for-profit secondary educational market. The Company did not receive a tax benefit on these impairment charges.

Due to economic, regulatory and other factors, including declines in enrollment, revenue and profitability in the for-profit secondary educational market, the Company may be required to record additional noncash impairment charges related to its investment in EEG and such noncash impairments could be material to the Company's consolidated balance sheet and results of operations. Based on EEG's annual goodwill impairment assessment during fiscal year 2014, the Company's portion of EEG's estimated fair value exceeds carrying value of its investment by approximately 10%. Any meaningful underperformance against plan or reduced outlook by EEG, changes to the carrying value of EEG or further erosion in valuations of the for-profit secondary educational market could lead to other than temporary impairments of the Company's investment in EEG. In addition, EEG may be required to record noncash impairment charges related to long-lived assets or establish valuation allowances against certain of its deferred tax assets and our share of such noncash impairment charges or valuation allowances could be material to the Company's consolidated balance sheet and results of operations. EEG does not have any goodwill recorded as of June 30, 2014. As of June 30, 2014, our share of EEG's deferred tax assets was $7.8 million.

During fiscal years 2014, 2013 and 2012, the Company recorded $(14.5), $1.3 and $(4.0) million, respectively, of equity (loss) earnings related to its investment in EEG.

The Company previously provided EEG with a $15.0 million revolving credit facility and outstanding loan, both of which matured during fiscal year 2013. At June 30, 2012, there was $15.0 and $11.4 million outstanding on the revolving credit facility and loan outstanding, respectively. The Company received $15.0 million in payments on the revolving credit facility during the fiscal year 2013. The Company received $11.4 and $10.0 million in principal payments on the loan during the fiscal years 2013 and 2012, respectively. During fiscal years 2013 and 2012, the Company recorded less than $0.1 and $0.5 million, respectively, of interest income related to the loan and revolving credit facility.

Investment in Provalliance

On September 27, 2012, the Company sold its 46.7% equity interest in Provalliance for $103.4 million. The Company previously had a right (Provalliance Equity Put), which if exercised, would require the Company to purchase an additional ownership interest in Provalliance between specified dates in 2010 to 2018. The Provalliance Equity Put was classified as a Level 3 fair value measurement as the fair value was determined based on unobservable inputs that could not be corroborated by observable market data. During fiscal year 2013, the Company recorded a $0.6 million decrease in the fair value of the Provalliance Equity Put that automatically terminated upon the sale.

In connection with the sale of Provalliance, the Company recorded a $37.4 million other than temporary impairment charge during fiscal year 2012. In addition, the fair value of the Provalliance Equity Put decreased by $20.2 to $0.6 million as of June 30, 2012. The other than temporary impairment charge and reduction in the fair value of the Provalliance Equity Put resulted in a net impairment charge of $17.2 million that is recorded within the equity in (loss) income of affiliated companies during fiscal year 2012. Regis did not receive a tax benefit on the net impairment charge.

During fiscal year 2012, the Company recorded $9.8 million of equity earnings and received $2.8 million of cash dividends related to its investment in Provalliance.

Due to the sale of the Company's investment in Provalliance, the Company liquidated its 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, 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 Company's European operations, and a $1.7 million net loss associated with cash repatriation, which netted to $33.8 million for fiscal year 2013, recorded within interest income and other, net on the Consolidated Statement of Operations.

Investment in MY Style

The Company accounts for its 27.1% ownership interest in MY Style as a cost method investment. The Company previously had an outstanding note with MY Style, which matured during fiscal year 2013. The Company recorded less than $0.1 million in interest income related to the note during fiscal years 2013 and 2012.

During fiscal year 2014, MY Style's parent company, Yamano Holdings Corporation (Yamano), redeemed its Class A and Class B Preferred Stock for $3.1 million. During fiscal year 2011, the Company had estimated the fair values of the Yamano Class A and Class B Preferred Stock to be negligible and recorded an other than temporary non-cash impairment. The Company reported the gain associated with Yamano's redemption within equity in loss of affiliated companies on the Consolidated Statement of Operations.