INVESTMENT IN AFFILIATES:

Investment in affiliates

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



	December 31, 2013		June 30, 2013
	(Dollars in thousands)
Empire Education Group, Inc.	$	44,760	$	43,098
MY Style	207		221
	$	44,967	$	43,319

Empire Education Group, Inc.

During the three months ended December 31, 2013 and 2012, the Company recorded $0.7 and $0.2 million, respectively, of equity earnings related to its investment in Empire Education Group, Inc. (EEG). During the six months ended December 31, 2013 and 2012, the Company recorded $1.7 and $0.1 million, respectively, of equity earnings related to its investment in EEG. The exposure to loss related to the Company’s involvement with EEG is the carrying value of the investment.

During the three months ended December 31, 2012, the Company recorded an other than temporary impairment charge on its investment in EEG of $17.9 million. This non-cash charge was the result of EEG updating its financial projections for future periods to reflect the declining enrollment, revenue and profitability in the for-profit secondary educational market during the three months ended December 31, 2012.

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 six months ended December 31, 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 reverse in the future, EEG could be required to impair its goodwill. As of December 31, 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:



	For the Periods Ended December 31,
	Three Months				Six Months
	2013		2012		2013		2012
(Unaudited)	(Dollars in thousands)
Gross revenues	$	41,928	$	40,543	$	85,893	$	81,894
Gross profit	13,197		12,909		28,109		25,659
Operating income	2,190		1,119		5,094		891
Net income	989		603		2,927		422

MY Style

During the three and six months ended December 31, 2013, the Company recovered $2.1 and $3.1 million on its previously impaired investments in MY Style’s parent company, Yamano Holding Corporation (Yamano), which is reported in equity in income (loss) of affiliated companies on the Condensed Consolidated Statement of Operations. 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.