INVESTMENT IN AFFILIATES:

3 Months Ended

Sep. 30, 2013

INVESTMENT IN AFFILIATES:

INVESTMENT IN AFFILIATES:

3. INVESTMENT IN AFFILIATES:

Investment in affiliates

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

	September 30, 2013		June 30, 2013
	(Dollars in thousands)
Empire Education Group, Inc.	$	44,108	$	43,098
MY Style	223		221
	$	44,331	$	43,319

Empire Education Group, Inc.

During the three months ended September 30, 2013 and 2012, the Company recorded $1.0 and ($0.1) million, respectively, of equity earnings (loss) related to its investment in Empire Education Group, Inc. (EEG). The exposure to loss related to the Company’s involvement with EEG is the carrying value of the investment.

Based on the Company’s fiscal year 2013 assessment of the carrying value of its investment in EEG, the Company’s estimate of EEG’s fair value exceeds carrying value by approximately 5 percent. During the three months ended September 30, 2013, the Company monitored and assessed the performance of EEG and comparable companies and noted an improvement in EEG’s financial performance and overall industry trends.  The Company will continue to closely monitor EEG’s performance and trends in the for-profit secondary educational market to assess the carrying value of its investment.  In the event these favorable trends were to reverse in the future, EEG could be required to impair its goodwill.  As of September 30, 2013, the Company’s share of EEG’s goodwill balance is approximately $16 million.

The table below presents the summarized Statement of Operations information for EEG:

	Three Months Ended September 30,
	2013		2012
	(Dollars in thousands)
Gross revenues	$	43,965	$	41,351
Gross profit	14,912		12,750
Operating income (loss)	2,904		(228		)
Net income (loss)	1,938		(181		)

MY Style

During the three months ended September 30, 2013, the Company recovered $1.0 million on its previously impaired investment in MY Style’s parent company, Yamano Holding Corporation (“Yamano”), which is reported in equity in income of affiliated companies on the Condensed Consolidated Statement of Operations. During fiscal year 2011, the Company had estimated the fair value of the Yamano Class A Preferred Stock to be negligible and recorded an other than temporary impairment.