Noncontrolling Interests

6 Months Ended

Dec. 31, 2014

NOTE 5. NONCONTROLLING INTERESTS

On July 2, 2013, the Company, through a subsidiary (the "EA USC Subsidiary"), invested $6.0 million in US Cosmeceutechs, LLC ("USC"), a skin care company that develops and sells skin care products into the professional dermatology and spa channels. The investment, which is in the form of a collateralized convertible note (the Convertible Note) that bears interest at 1.5%, was convertible into 50% of the fully diluted equity interest of USC at any time at the option of the EA USC Subsidiary and also converted automatically upon the satisfaction of certain conditions.

On July 11, 2013, the EA USC Subsidiary purchased a 30% equity interest in USC from the sole equity member (the "Member") for $3.6 million under the terms of a put-call agreement with the USC Member. Under the terms of the put-call agreement, the EA USC Subsidiary has an option to purchase the Member's remaining equity interest in USC at specified prices under certain circumstances based on USC's performance, and similarly the Member has the ability to put its interest in USC to the Company at specified prices under certain circumstances based on USC's performance. Based on the terms of the put-call agreement, it is likely that the EA USC Subsidiary would exercise its call option prior to the Member exercising his put option. In accordance with Topic 480, Distinguishing Liabilities from Equity, the Company is required to classify the noncontrolling interest in USC as a "redeemable noncontrolling interest" in the mezzanine section of the Company's consolidated balance sheet.

In December 2014, the EA USC Subsidiary invested an additional $2.0 million in USC and an existing $1.0 million demand loan to USC was incorporated as part of the Convertible Note. As a result of these transactions, the Convertible Note was amended and restated to reflect (i) an aggregate principal amount of $9 million (including the previously outstanding demand loan), and (ii) that once converted, the Convertible Note will result in the Company owning 85.45% of the fully diluted equity interests in USC (inclusive of EA USCs current equity interest). The other terms of the Convertible Note remained unchanged. As a result of the December 2014 transactions, the Members remaining equity interest in USC that is subject to the put and call option is now 14.55%. As of December 31, 2014, the Convertible Note had not been converted.

Under the terms of the operating agreement of USC, the EA USC Subsidiary has control of the board of managers of USC and the power to direct activities that could have a substantial impact on the economic performance of USC, including those that could result in the obligation to absorb losses or the right to receive benefits that could potentially be significant to USC. Based on the investment in USC and the EA USC Subsidiary's controlling rights under the operating agreement, the Company has determined that USC is a VIE, of which the Company is the primary beneficiary, requiring consolidation of USC's financial statements in accordance with Topic 810, Consolidation.

The following provides an analysis of the change in the redeemable noncontrolling interest liability for the six months ended December 31, 2014:


*(Amounts in thousands)*		Amount
Beginning as of June 30, 2014	$	5,553
Net loss attributable to noncontrolling interests		(915	)
Balance at December 31, 2014	$	4,638

- Definition

The entire disclosure for noncontrolling interest in consolidated subsidiaries, which could include the name of the subsidiary, the ownership percentage held by the parent, the ownership percentage held by the noncontrolling owners, the amount of the noncontrolling interest, the location of this amount on the balance sheet (when not reported separately), an explanation of the increase or decrease in the amount of the noncontrolling interest, the noncontrolling interest share of the net Income or Loss of the subsidiary, the location of this amount on the income statement (when not reported separately), the nature of the noncontrolling interest such as background information and terms, the amount of the noncontrolling interest represented by preferred stock, a description of the preferred stock, and the dividend requirements of the preferred stock.

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