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INVESTMENTS IN AND LOANS TO AFFILIATES | 12 Months Ended
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Jun. 30, 2013
INVESTMENTS IN AND LOANS TO AFFILIATES |
INVESTMENTS IN AND LOANS TO AFFILIATES | 5. INVESTMENTS IN AND LOANS TO AFFILIATES The table below presents the carrying amount of investments in and loans to affiliates:
|  | June 30, |
--- | --- | --- | ---
|  | 2013 |  | 2012 |
|  | (Dollars in thousands) |
Empire Education Group, Inc. |  | $ | 43,098 |  | $ | 59,683 |
Provalliance |  |  | — |  |  | 101,304 |
MY Style |  |  | 221 |  |  | — |
|  | $ | 43,319 |  | $ | 160,987 |
The table below presents the notes receivable from affiliates recorded within other current assets on the Consolidated Balance Sheet:
|  | June 30, |
--- | --- | --- | ---
|  | 2013 |  | 2012 |
|  | (Dollars in thousands) |
Empire Education Group, Inc. |  | $ | — |  | $ | 26,412 |
MY Style |  |  | — |  |  | 2,251 |
|  | $ | — |  | $ | 28,663 |
The table below presents summarized financial information of equity method investees based on audited results.
|  | Greater Than 50 Percent Owned |  | Less Than 50 Percent Owned |
--- | --- | --- | --- | --- | ---
|  | 2013 |  | 2012 |  | 2011 |  | 2013 |  | 2012 |  | 2011 |
|  | (Dollars in thousands) |
Summarized Balance Sheet Information: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current assets |  | $ | 35,900 |  | $ | 56,516 |  | $ | 34,715 |  | $ | — |  | $ | 84,700 |  | $ | 93,072 |
Noncurrent assets |  |  | 91,847 |  |  | 96,639 |  |  | 113,249 |  |  | — |  |  | 316,282 |  |  | 313,508 |
Current liabilities |  |  | 25,317 |  |  | 61,074 |  |  | 29,340 |  |  | — |  |  | 106,995 |  |  | 108,708 |
Noncurrent liabilities |  |  | 21,560 |  |  | 13,947 |  |  | 33,658 |  |  | — |  |  | 78,815 |  |  | 98,269 |
Summarized Statement of Operations Information: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gross revenue |  | $ | 170,964 |  | $ | 182,326 |  | $ | 192,864 |  | $ | — |  | $ | 305,515 |  | $ | 271,747 |
Gross profit |  |  | 58,457 |  |  | 67,201 |  |  | 73,068 |  |  | — |  |  | 132,647 |  |  | 116,354 |
Operating (loss) income |  |  | 4,981 |  |  | (1,335 | ) |  | 18,994 |  |  | — |  |  | 35,569 |  |  | 30,084 |
Net (loss) income |  |  | 2,359 |  |  | (7,211 | ) |  | 11,023 |  |  | — |  |  | 24,067 |  |  | 21,154 |
Investment in Empire Education Group, Inc. As of June 30, 2013 and 2012, the Company's ownership interest in Empire Education Group, Inc. (EEG) was 55.1 percent. EEG operates accredited cosmetology schools and is overseen by the Empire Beauty School management team. The Company accounts for EEG as an equity investment under the voting interest model. During fiscal years 2013 and 2012, the company recorded other than temporary impairment charges on its investment in EEG of $17.9 and $19.4 million, respectively, to reflect the negative business impacts associated with 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. The Company did not record an impairment charge during the fiscal year 2011. In addition, during fiscal years 2013 and 2012 the Company recorded its share, $2.1 and $8.7 million, respectively, of fixed and intangible asset impairments recorded directly by EEG. Due to economic, regulatory and other factors, 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. In addition, EEG may be required to record noncash impairment charges related to long-lived assets and goodwill, and our share of such noncash impairment charges could be material to the Company's consolidated balance sheet and results of operations. The Company's share of EEG's goodwill balances as of June 30, 2013 is approximately $16 million. Based on the Company's work associated with the investment impairment recorded during the fiscal year 2013, the Company's estimate of EEG's fair value exceeds carrying value by approximately 5 percent. 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 a goodwill impairment charge recorded by EEG for which the Company would record 55.1 percent of the impairment given the Company's present ownership. During fiscal years 2013, 2012, and 2011, the Company recorded $1.3, $(4.0), and $5.5 million, respectively, of equity earnings (loss) 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, 2012, and 2011, the Company recorded less than $0.1, $0.5, and $0.7 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 percent equity interest in Provalliance for $103.4 million. The Company previously had a right (Provalliance Equity Put), if exercised, would require the Company to purchase an additional ownership interest in Provalliance between specified dates in 2010 to 2018. 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 million 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 years 2012 and 2011, the Company recorded $9.8, and $7.8 million, respectively, of equity earnings related to its investment in Provalliance. During fiscal years 2012 and 2011, the Company received $2.8 and $4.8 million, of cash dividends. 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 the 27.1 percent ownership interest in MY Style as a cost method investment. The Company previously had an outstanding note with MY Style, which matured during the fiscal year 2013. The Company recorded less than $0.1 million in interest income related to the note during fiscal years 2013, 2012, and 2011, respectively.

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- Definition The entire disclosure for the information summarizing investments in and advances to majority-owned subsidiaries, other controlled companies, and other affiliates. It reflects specified information about ownership, financial results from, and financial position in such entities. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -Section S99 -Paragraph 6 -Subparagraph (SX 210.12-14) -URI http://asc.fasb.org/extlink&oid=6955306&loc=d3e611322-123010 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 14 -Article 12 + Details
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