BUSINESS ACQUISITIONS

12 Months Ended

Dec. 31, 2012

BUSINESS ACQUISITIONS

3. BUSINESS ACQUISITIONS

Ecoles Supérieures de Commerce Chambéry

On December 18, 2012 we assumed operation of the European-based business school Ecoles Supérieures de Commerce Chambéry (“ESC Chambéry”). ESC Chambéry is part of the national network of graduate business schools in France and is certified by the French Ministry of Education. This operation represents a strategic opportunity to expand geographically within Europe, providing our INSEEC group schools with an opportunity to leverage existing programs and management infrastructure to drive growth.

The preliminary allocation of purchase price resulted in a bargain purchase of $0.7 million, which was recorded as a gain on purchase within other income (expense) on our consolidated statement of income and comprehensive income for the year ended December 31, 2012. We believe this association resulted in a bargain purchase gain, given that the purchase price was less than the fair market value of the net assets acquired, as a result of the prior entity’s history of operating losses and the inability to self-sustain without government subsidies.

The preliminary allocation of purchase price was based upon a preliminary estimated closing balance sheet. The preliminary purchase price allocation is subject to change upon finalization of the closing balance sheet. ESC Chambéry’s operating results are immaterial to our consolidated results and are included in the consolidated financial statements from the date of purchase.

Luxury Attitude

On May 2, 2012, we acquired the European-based corporate training firm Luxury Attitude for approximately $3.1 million in cash. Luxury Attitude specializes in service and customer relations training for premium and luxury companies.

The allocation of purchase price resulted in approximately $2.9 million of goodwill being recorded. This amount represents the premium paid over the fair value of the net assets acquired. We paid this premium as this strategic acquisition enables Luxury Attitude to pursue expansion of its client base through the international reach of INSEEC and IUM. There are also plans to incorporate the premium customer relations curriculum into the online education platforms in the IUM and INSEEC programs. Providing innovative digital delivery of education through online and mobile platforms is a core competency of CEC.

Luxury Attitude’s operating results are immaterial to our consolidated results and are included in the consolidated financial statements from the date of acquisition.

Everblue Training Institute

On December 1, 2011, we acquired Everblue Training Institute for approximately $9.8 million. Everblue specializes in providing job training in energy conservation fields primarily for the building and construction industry and offers educational sessions in more than 70 U.S. cities and seven international locations. It provides U.S. Green Building Council education programs – including Leadership in Energy and Environmental Design (LEED) training – for contractors, owners, operators, architects, engineers and government workers, as well as Building Performance Institute (BPI) training.

The purchase agreement also included a contingent consideration provision which is calculated based upon future revenue growth and operating margins. The amount due is also dependent upon the period of time the previous owners of Everblue remain with CEC. As such, the contingent consideration is accounted for as compensation; it was not part of the consideration paid for the business. As of December 31, 2012, $1.6 million has been recognized related to this contingent consideration provision, due to the previous owners’ termination of employment with CEC in February 2012. The amount of actual contingent consideration is in dispute with the previous owners and may be subject to further adjustment.

The following table summarizes the final fair values of assets acquired and liabilities assumed in connection with the acquisition of Everblue as of December 1, 2011:

	(Dollars in thousands)
Current assets:
Receivables	$	1,185
Other current assets		285
Non-current assets:
Property and equipment		147
Goodwill		8,853
Total assets acquired		10,470
Deferred tuition revenue		681
Total liabilities assumed		681
Net assets acquired	$	9,789