Restructuring and Related Charges

6 Months Ended

Jun. 30, 2019

Restructuring and Related Activities [Abstract]

In October 2013, the Company implemented a restructuring to better align the Company’s resources with student enrollments at the time. This restructuring included the closing of 20 physical locations and reductions in the number of campus-based and corporate employees. At the time of this restructuring, a liability for lease obligations, some of which continue through 2022, was recorded and measured at fair value using a discounted cash flow approach encompassing significant unobservable inputs (Level 3). The estimation of future cash flows included non-cancelable contractual lease costs over the remaining terms of the leases discounted at the Company’s marginal borrowing rate of 4.5%, partially offset by estimated future sublease rental income discounted at credit-adjusted rates.

In addition, the Company has incurred personnel-related restructuring charges due to cost reduction efforts and management changes. These changes are primarily intended to integrate CEC successfully and establish an efficient ongoing cost structure for the Company.

The following details the changes in the Company’s restructuring liability during the six months ended June 30, 2018 and 2019 (in thousands):



	Lease and Related Costs, Net			Severance and Other Employee Separation Costs			Total
Balance at December 31, 2017	$	8,781		$	—		$	8,781
Restructuring and other charges⁽¹⁾	—			—			—
Payments	(1,401		)	—			(1,401		)
Adjustments⁽²⁾	74			—			74
Balance at June 30, 2018	$	7,454		$	—		$	7,454

Balance at December 31, 2018⁽³⁾	$	6,540		$	14,347		$	20,887
Restructuring and other charges⁽¹⁾	—			2,086			2,086
Payments	—			(5,764		)	(5,764		)
Adjustments⁽²⁾	(6,540		)	—			(6,540		)
Balance at June 30, 2019⁽³⁾	$	—		$	10,669		$	10,669

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⁽¹⁾	Restructuring and other charges of $0.2 million and $2.1 million for the three and six months ended June 30, 2019, respectively, are included in Merger and integration costs on the unaudited condensed consolidated statements of income. There were no restructuring and other charges for the three and six months ended June 30, 2018.

⁽²⁾

For the three and six months ended June 30, 2018, adjustments include accretion of interest on lease costs, partially offset by changes in the timing and expected income from subleases. For the three and six months ended June 30, 2019, adjustments represent the impact of adopting ASC 842 on January 1, 2019. In accordance with ASC 842, the lease related restructuring liability balance as of December 31, 2018 was netted against the initial ROU lease asset recognized upon adoption. Asset retirement obligations related to these restructured properties are also included in the adjustments amount.

⁽³⁾

The current portion of restructuring liabilities was $9.8 million and $6.8 million as of December 31, 2018 and June 30, 2019, respectively, which are included in accounts payable and accrued expenses. The long-term portion is included in other long-term liabilities.