10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2013

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM                 TO                

Commission File Number: 0-23245

CAREER EDUCATION CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	36-3932190
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
231 N. Martingale Road Schaumburg, Illinois	60173
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (847) 781-3600

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨	Accelerated filer  x	Non-accelerated filer  ¨	Smaller reporting company  ¨
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company, as defined in Rule 12b-2 of the Exchange Act.    Yes  ¨    No  x

Number of shares of registrant’s common stock, par value $0.01, outstanding as of October 31, 2013: 67,153,597

CAREER EDUCATION CORPORATION

FORM 10-Q

TABLE OF CONTENTS

		Page
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements
	Unaudited Consolidated Balance Sheets		1
	Unaudited Consolidated Statements of Loss and Comprehensive Loss		2
	Unaudited Consolidated Statements of Cash Flows		3
	Notes to Unaudited Consolidated Financial Statements		4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		31
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		46
Item 4.	Controls and Procedures		47
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings		48
Item 1A.	Risk Factors		48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		48
Item 6.	Exhibits		48
SIGNATURES			49

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	September 30, 2013			December 31, 2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents, unrestricted	$	30,924		$	112,880
Restricted cash		12,564			97,878
Short-term investments		52,210			63,876
Total cash and cash equivalents and short-term investments		95,698			274,634
Student receivables, net of allowance for doubtful accounts of $23,172 and $28,172 as of September 30, 2013 and December 31, 2012, respectively		41,694			54,935
Receivables, other, net		39,845			2,096
Prepaid expenses		112,836			38,296
Inventories		7,146			8,437
Deferred income tax assets, net		—			7,095
Other current assets		5,885			4,393
Assets of discontinued operations		254,097			153,675
Total current assets		557,201			543,561
NON-CURRENT ASSETS:
Property and equipment, net		202,125			247,976
Goodwill		87,356			87,356
Intangible assets, net		40,387			56,006
Student receivables, net of allowance for doubtful accounts of $8,071 and $11,982 as of September 30, 2013 and December 31, 2012, respectively		5,552			6,832
Deferred income tax assets, net		47,932			47,703
Other assets, net		25,916			30,276
Assets of discontinued operations		18,714			102,993
TOTAL ASSETS	$	985,183		$	1,122,703
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Short-term borrowings	$	—		$	80,000
Accounts payable		33,723			32,094
Accrued expenses:
Payroll and related benefits		37,285			38,772
Advertising and production costs		25,733			20,963
Other		61,383			35,060
Deferred tuition revenue		69,051			69,806
Deferred income tax liabilities, net		32,752			—
Liabilities of discontinued operations		95,975			76,020
Total current liabilities		355,902			352,715
NON-CURRENT LIABILITIES:
Deferred rent obligations		85,805			94,072
Other liabilities		29,794			28,648
Liabilities of discontinued operations		22,555			35,478
Total non-current liabilities		138,154			158,198
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.01 par value; 1,000,000 shares authorized; none issued or outstanding		—			—
Common stock, $0.01 par value; 300,000,000 shares authorized; 81,876,758 and 81,616,987 shares issued, 67,158,417 and 67,069,734 shares outstanding as of September 30, 2013 and December 31, 2012, respectively		819			816
Additional paid-in capital		602,735			596,826
Accumulated other comprehensive income (loss)		2,798			(4,785	)
Retained earnings		99,264			232,921
Cost of 14,718,341 and 14,547,253 shares in treasury as of September 30, 2013 and December 31, 2012, respectively		(214,489	)		(213,988	)
Total stockholders’ equity		491,127			611,790
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	985,183		$	1,122,703

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(In thousands, except per share amounts)

	For the Quarter Ended September 30,						For the Year to Date Ended September 30,
	2013			2012			2013			2012
REVENUE:
Tuition and registration fees	$	246,777		$	309,947		$	797,748		$	1,025,014
Other		4,536			6,208			13,160			22,752
Total revenue		251,313			316,155			810,908			1,047,766
OPERATING EXPENSES:
Educational services and facilities		100,053			117,929			310,948			375,705
General and administrative		191,301			219,919			591,382			639,280
Depreciation and amortization		17,023			18,749			52,221			55,593
Goodwill and asset impairment		11,585			—			15,708			85,464
Total operating expenses		319,962			356,597			970,259			1,156,042
Operating loss		(68,649	)		(40,442	)		(159,351	)		(108,276	)
OTHER (EXPENSE) INCOME:
Interest income		194			319			1,199			953
Interest expense		(209	)		(23	)		(1,127	)		(91	)
Loss on sale of business		(39	)		—			(6,973	)		—
Miscellaneous (expense) income		(62	)		74			(17	)		7
Total other (expense) income		(116	)		370			(6,918	)		869
PRETAX LOSS		(68,765	)		(40,072	)		(166,269	)		(107,407	)
Benefit from income taxes		(25,333	)		(13,925	)		(70,145	)		(27,959	)
LOSS FROM CONTINUING OPERATIONS		(43,432	)		(26,147	)		(96,124	)		(79,448	)
LOSS FROM DISCONTINUED OPERATIONS, net of tax		(43,632	)		(6,999	)		(37,533	)		(1,856	)
NET LOSS		(87,064	)		(33,146	)		(133,657	)		(81,304	)
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
Foreign currency translation adjustments		6,474			743			7,542			(3,553	)
Unrealized gains (losses) on investments		36			(206	)		41			(326	)
Total other comprehensive income (loss)		6,510			537			7,583			(3,879	)
COMPREHENSIVE LOSS	$	(80,554	)	$	(32,609	)	$	(126,074	)	$	(85,183	)
NET LOSS PER SHARE—BASIC and DILUTED:
Loss from continuing operations	$	(0.65	)	$	(0.40	)	$	(1.44	)	$	(1.20	)
Loss from discontinued operations		(0.65	)		(0.10	)		(0.56	)		(0.03	)
Net loss per share	$	(1.30	)	$	(0.50	)	$	(2.00	)	$	(1.23	)
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic and Diluted		66,849			66,100			66,663			66,325

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	For the Year to Date Ended September 30,
	2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(133,657	)	$	(81,304	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Goodwill and asset impairment		15,708			85,661
Loss on sale of student receivables		—			930
Depreciation and amortization expense		56,619			60,555
Bad debt expense		22,028			28,967
Compensation expense related to share-based awards		5,119			7,302
Loss on sale of business		6,973			—
Loss on disposition of property and equipment		103			293
Changes in operating assets and liabilities		(50,735	)		(69,910	)
Net cash (used in) provided by operating activities		(77,842	)		32,494
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale investments		(40,842	)		(117,188	)
Sales of available-for-sale investments		52,485			146,873
Purchases of property and equipment		(16,602	)		(29,496	)
Proceeds on the sale of assets		(2,525	)		—
Business acquisition, net of acquired cash		—			(3,094	)
Other		31			(1,533	)
Net cash used in investing activities		(7,453	)		(4,438	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock		—			(56,431	)
Issuance of common stock		792			1,262
Payments of assumed loans upon business acquisition		—			(318	)
Payments of contingent consideration		—			(5,818	)
Payment on borrowings		(80,000	)		—
Change in restricted cash		85,314			—
Payments of capital lease obligations		(210	)		(741	)
Net cash provided by (used in) financing activities		5,896			(62,046	)
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS:		1,518			(3,774	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(77,881	)		(37,764	)
DISCONTINUED OPERATIONS CASH ACTIVITY INCLUDED ABOVE:
Add: Cash balance of discontinued operations, beginning of the period		127,742			154,668
Less: Cash balance of discontinued operations, end of the period		131,817			109,683
CASH AND CASH EQUIVALENTS, beginning of the period		112,880			125,924
CASH AND CASH EQUIVALENTS, end of the period	$	30,924		$	133,145

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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CAREER EDUCATION CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF THE COMPANY

The colleges, schools and universities that are part of the Career Education Corporation (“CEC”) family offer high-quality education to a diverse student population across the world in a variety of career-oriented disciplines through online, on-ground and hybrid learning program offerings. The more than 90 campuses that serve these students are located throughout the United States, and in France and Monaco, and offer doctoral, master’s, bachelor’s and associate degrees and diploma and certificate programs.

We are an industry leader whose institutions are recognized globally. Those institutions include, among others, American InterContinental University (“AIU”); Brooks Institute; Colorado Technical University (“CTU”); Harrington College of Design; INSEEC Group (“INSEEC”) Schools; International University of Monaco (“IUM”); International Academy of Design & Technology (“IADT”); Le Cordon Bleu North America (“LCB”); and Sanford-Brown Institutes and Colleges (“SBI” and “SBC”, respectively). Through our schools, we are committed to providing high-quality education, enabling students to graduate and pursue rewarding career opportunities.

For more information, see our website at www.careered.com. The website includes a detailed listing of individual campus locations and web links to our colleges, schools and universities.

As used in this Quarterly Report on Form 10-Q, the terms “we”, “us”, “our”, “the Company” and “CEC” refer to Career Education Corporation and our wholly-owned subsidiaries. The terms “school” and “university” refer to an individual, branded, proprietary educational institution, owned by us and includes its campus locations. The term “campus” refers to an individual main or branch campus operated by one of our schools or universities.

2. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included. Operating results for the quarter and year to date ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

The unaudited consolidated financial statements presented herein include the accounts of CEC. All intercompany transactions and balances have been eliminated.

During the third quarter of 2013, we made the decision to commit to a plan to sell our International Schools, which are comprised of the Paris-based INSEEC Group and the International University of Monaco. As a result of the decision to sell our International Schools, the assets and liabilities of the entities to be sold are classified as held for sale within discontinued operations as of September 30, 2013. All prior period financials have been recast to be comparable to the current period.

The results of our International Schools are now reported within discontinued operations due to our decision in the third quarter of 2013 to commit to a plan to sell these assets. We have six remaining reporting segments: CTU, AIU (comprises University Schools); Health Education, Culinary Arts, Design & Technology (comprises Career Schools); and Transitional Schools. The campuses included within the Transitional Schools segment employ a gradual teach-out process, enabling them to continue to operate while current students complete their

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course of study; they no longer enroll new students. The results of operations for campuses within the Transitional Schools segment will be reported within continuing operations for all periods presented until they complete their teach-out. As campuses within Transitional Schools cease operations, the results of operations for all periods presented will be reflected within discontinued operations. All prior period results have been recast to reflect our reporting segments on a comparable basis.

As of April 1, 2013, we completed the sale of our AIU campus in London, England. AIU London is considered to be part of the AIU asset group and as such the sale has been reported within continuing operations in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 205 – Presentation of Financial Statements. We received no consideration for the sale of AIU London resulting in a fair market value of zero and recorded a loss on sale of $7.0 million for the year to date ended September 30, 2013. This loss is reported within other (expense) income on our unaudited consolidated statements of loss and comprehensive loss. The terms of the sales agreement provided that we make payments to the buyer in consideration of negative working capital and obligate us to make payments to offset future rent payments made by the buyer related to leases assigned to the buyer; accordingly, these amounts were included in the loss calculation. Also included in the loss on the sale was approximately $3.3 million of expense related to the cumulative translation loss resulting from the effects of foreign currency on AIU London’s balance sheet as of the date of sale. This loss had previously been recorded within accumulated other comprehensive loss as a component of stockholders’ equity.

3. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2013, the FASB issued Accounting Standards Update (“ASU”) No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This ASU standardizes the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists; it does not require new recurring disclosures. ASU 2013-11 requires that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward unless specific criteria exist, in which case the unrecognized tax benefit should be presented as a liability and should not be combined with deferred tax assets. For public entities, ASU 2013-11 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013; early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date; retrospective application is permitted. We are currently evaluating this guidance and do not believe the adoption will significantly impact the presentation of our financial condition, results of operation and disclosures.

In March 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. ASU 2013-05 provides guidance on releasing cumulative translation adjustments (“CTA”) when an entity ceases to have a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity, and also provides guidance on releasing CTA in partial sales of equity method investments and in step acquisitions. For public entities, ASU 2013-05 is effective prospectively for fiscal years, and interim reporting periods within those years, beginning after December 15, 2013. If early adoption is elected, the guidance in this ASU should be applied as of the beginning of the entity’s fiscal year of adoption. We are currently evaluating this guidance and do not believe the adoption will significantly impact the presentation of our financial condition, results of operation and disclosures.

In February 2013, the FASB issued ASU No. 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date. The guidance in ASU 2013-04 requires entities to measure obligations resulting from joint and several liability arrangements, for which the total obligation amount is fixed at the reporting date, as the sum of the

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amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount it expects to pay on behalf of its co-obligors. ASU 2013-04 also specifies disclosure requirements. For public entities, ASU 2013-04 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013 and should be applied retrospectively to all prior periods presented for obligations resulting from joint and several liability arrangements that exist at the beginning of the entity’s fiscal year of adoption. Early adoption is permitted. We have adopted this guidance which did not materially impact the presentation of our financial condition, results of operation and disclosures.

In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220) – Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The amendments in this ASU require entities to provide information about amounts reclassified out of accumulated other comprehensive income by component, and to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income, or cross-reference to other disclosures, based on certain criteria. ASU 2013-02 is effective prospectively for reporting periods beginning after December 15, 2012; early adoption is permitted. We have adopted this guidance which did not materially impact the presentation of our financial condition, results of operation and disclosures.

In addition, we have evaluated and adopted the guidance of ASU No. 2012-02, Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment issued in July 2012. The amendments in this ASU give entities the option to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that an indefinite-lived intangible asset is impaired. If impairment is indicated, the fair value of the indefinite–lived intangible asset should be determined and the quantitative impairment test should be performed by comparing the fair value with the carrying amount in accordance with Subtopic 350-30; if impairment is not indicated, the entity is not required to take further action. The adoption of this ASU did not impact the presentation of our financial condition, results of operation and disclosures.

4. DISCONTINUED OPERATIONS

As of September 30, 2013, the results of operations for campuses that are held for sale or that have ceased operations or were sold, and are considered distinct operations as defined under FASB ASC Topic 205 – Presentation of Financial Statements, are presented within discontinued operations.

Assets Held for Sale

During the third quarter of 2013, we made the decision to commit to a plan of sale of our International Schools. Accordingly, the assets and liabilities for these schools are included in the assets and liabilities of discontinued operations on our unaudited consolidated balance sheets and the results of operations are reported within discontinued operations. As we anticipate the sale of these assets to be completed within one year, we have recorded the assets and liabilities related to these schools within current assets and liabilities of discontinued operations as of September 30, 2013.

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Results of Discontinued Operations

The summary of unaudited results of operations for our discontinued operations for the quarters and years to date ended September 30, 2013 and 2012 were as follows (dollars in thousands):

	For the Quarter Ended September 30,						For the Year to Date Ended September 30,
	2013			2012			2013			2012
Revenue	$	20,086		$	16,602		$	95,899		$	88,099
Pretax loss	$	(7,936	)	$	(10,541	)	$	(2,875	)	$	(5,467	)
Income tax provision (benefit) (1)		35,696			(3,542	)		34,658			(3,611	)
Loss from discontinued operations, net of tax	$	(43,632	)	$	(6,999	)	$	(37,533	)	$	(1,856	)

(1) During the third quarter of 2013, we made the decision to commit to a plan to sell our International Schools. Previously, we considered our investment in foreign subsidiaries to be permanent in duration. The decision to sell our foreign subsidiaries triggered the requirement under ASC 740 – Income Taxes to record the tax effect of the difference in basis for financial reporting purposes versus tax reporting. Accordingly, we recorded $39.9 million of income tax expense during the quarter ended September 30, 2013 on the excess basis. This expense was recorded within discontinued operations.

Assets and Liabilities of Discontinued Operations

Assets and liabilities of discontinued operations on our unaudited consolidated balance sheets as of September 30, 2013 and December 31, 2012 include the following (dollars in thousands):

	September 30, 2013		December 31, 2012
Assets:
Current assets:
Cash and cash equivalents	$	—	$	63
Receivables, net		232		571
Other current assets		50		247
Deferred income tax assets, net		3,447		3,447
Assets held for sale		250,368		149,347
Total current assets		254,097		153,675
Non-current assets:
Property and equipment, net		5		276
Deferred income tax assets		17,446		17,446
Other assets, net		1,263		1,604
Assets held for sale		—		83,667
Total assets of discontinued operations	$	272,811	$	256,668
Liabilities:
Current liabilities:
Accounts payable	$	239	$	32
Accrued expenses		143		710
Deferred tuition revenue		—		142
Remaining lease obligations		12,575		9,174
Liabilities held for sale		83,018		65,962
Total current liabilities		95,975		76,020
Non-current liabilities:
Remaining lease obligations		22,354		33,103
Other		201		223
Liabilities held for sale		—		2,152
Total liabilities of discontinued operations	$	118,530	$	111,498

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The major components of assets and liabilities held for sale presented above were (dollars in thousands):

	September 30, 2013		December 31, 2012
Assets:
Cash and cash equivalents	$	131,817	$	127,679
Receivables, net		24,768		15,604
Property and equipment, net (1)		32,599		29,326
Goodwill (1)		46,817		45,669
Other intangible assets (1)		5,693		5,664
Other assets, net (1)		8,674		9,072
Total assets held for sale	$	250,368	$	233,014
Liabilities:
Capital lease obligations	$	—	$	211
Accounts payable and accrued expenses		23,395		23,661
Deferred revenue		57,453		42,090
Other liabilities (2)		2,170		2,152
Total liabilities held for sale	$	83,018	$	68,114

(1) Property and equipment, net, goodwill, other intangible assets and a portion of other assets, net are classified within non-current assets held for sale as of December 31, 2012.

(2) Other liabilities are classified within non-current liabilities held for sale as of December 31, 2012.

Remaining Lease Obligations

A number of the campuses that ceased operations have remaining lease obligations that expire over time with the latest expiration in 2019. A liability is recorded representing the fair value of the remaining lease obligation at the time the space is no longer being utilized. Changes in our future remaining lease obligations, which are reflected within current and non-current liabilities of discontinued operations on our unaudited consolidated balance sheets, for the quarters and years to date ended September 30, 2013 and 2012, were as follows (dollars in thousands):

	Balance, Beginning of Period		Charges Incurred  (1)		Net Cash Payments			Other (2)			Balance, End of Period
For the quarter ended September 30, 2013	$	37,660	$	214	$	(2,945	)	$	—		$	34,929
For the quarter ended September 30, 2012	$	41,212	$	2,531	$	(2,511	)	$	—		$	41,232
For the year to date ended September 30, 2013	$	42,277	$	1,060	$	(8,357	)	$	(51	)	$	34,929
For the year to date ended September 30, 2012	$	45,961	$	3,270	$	(7,999	)	$	—		$	41,232

(1) Includes charges for newly vacated spaces and subsequent adjustments for accretion, revised estimates, and variances between estimated and actual charges, net of any reversals for terminated lease obligations.

(2) Includes existing prepaid rent and deferred rent liability balances for newly vacated spaces that are netted with the losses incurred in the period recorded.

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5. FINANCIAL INSTRUMENTS

Cash and Cash Equivalents and Investments

Cash and cash equivalents from our continuing operations consist of the following as of September 30, 2013 and December 31, 2012 (dollars in thousands):

	September 30, 2013		December 31, 2012
Cash	$	19,062	$	112,759
Money market funds		11,862		121
Cash and cash equivalents, unrestricted		30,924		112,880
Restricted cash		12,564		97,878
Total cash and cash equivalents	$	43,488	$	210,758

Restricted cash balances as of September 30, 2013 and December 31, 2012 are comprised of (dollars in thousands):

	September 30, 2013		December 31, 2012
Cash collateral for amounts under:
Credit Agreement	$	—	$	88,000
Letters of credit		12,564		7,376
Funds restricted for legal matter		—		2,502
Total restricted cash	$	12,564	$	97,878

Investments from our continuing operations consist of the following as of September 30, 2013 and December 31, 2012 (dollars in thousands):

	September 30, 2013
			Gross Unrealized
	Cost		Gain		(Loss)			Fair Value
Short-term investments (available for sale):
U.S. Treasury bills	$	52,202	$	8	$	—		$	52,210
Long-term investments (available for sale):
Municipal bond		7,850		—		(468	)		7,382
Total investments (available for sale)	$	60,052	$	8	$	(468	)	$	59,592
	December 31, 2012
			Gross Unrealized
	Cost		Gain		(Loss)			Fair Value
Short-term investments (available for sale):
U.S. Treasury bills	$	63,879	$	4	$	(7	)	$	63,876
Long-term investments (available for sale):
Municipal bond		7,850		—		(468	)		7,382
Total investments (available for sale)	$	71,729	$	4	$	(475	)	$	71,258

In the table above, unrealized holding losses as of September 30, 2013 relate to short-term investments that have been in a continuous unrealized loss position for less than one year. The table also includes an unrealized holding loss, greater than one year that relates to our long-term investment in a municipal bond, which is an

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auction rate security (“ARS”). When evaluating our investment for possible impairment, we review factors such as the length of time and extent to which fair value has been less than the cost basis, the financial condition of the investee, and our ability and intent to hold the investment for a period of time that may be sufficient for anticipated recovery in fair value. The unrealized loss attributable to our municipal bond at September 30, 2013 is attributable to the continued lack of activity in the ARS market, exposing this investment to liquidity risk.

Our municipal bond is comprised of debt obligations issued by states, cities, counties, and other governmental entities, which earn federally tax-exempt interest. Our investment in ARS has a stated term to maturity of greater than one year, and as such, we classify our investment in ARS as non-current on our unaudited consolidated balance sheets within other assets. Auctions can “fail” when the number of sellers of the security exceeds the buyers for that particular auction period. In the event that an auction fails, the interest rate resets at a rate based on a formula determined by the individual security. The ARS for which auctions have failed continues to accrue interest and is auctioned on a set interval until the auction succeeds, the issuer calls the security, or it matures. As of September 30, 2013, we have determined this investment is at risk for impairment due to the nature of the liquidity of the market over the past year. Cumulative unrealized losses as of September 30, 2013 amount to $0.5 million and are reflected within accumulated other comprehensive income (loss) as a component of stockholders’ equity. We believe this impairment is temporary, as we do not intend to sell the investment and it is unlikely we will be required to sell the investment before recovery of its amortized cost basis.

Fair Value Measurements

FASB ASC Topic 820 – Fair Value Measurements establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of September 30, 2013, we held investments that are required to be measured at fair value on a recurring basis. These investments (available-for-sale) consist of U.S. Treasury bills that are publicly traded and for which market prices are readily available.

As of September 30, 2013, our investment in a municipal bond is classified as available-for-sale and reflected at fair value. The auction event for this investment has failed for multiple years. The fair value of this security is estimated utilizing a discounted cash flow analysis as of September 30, 2013. This analysis considers, among other items, the collateralization underlying the security investment, the credit worthiness of the counterparty, the timing of expected future cash flows, and the expectation of the next time the security is expected to have a successful auction. This security was also compared, when possible, to other observable market data with similar characteristics.

Investments measured at fair value on a recurring basis subject to the disclosure requirements of FASB ASC Topic 820 at September 30, 2013 and December 31, 2012 were as follows (dollars in thousands):

	As of September 30, 2013
	Level 1		Level 2		Level 3		Total
U.S. Treasury bills	$	52,210	$	—	$	—	$	52,210
Municipal bond		—		—		7,382		7,382
Totals	$	52,210	$	—	$	7,382	$	59,592

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	As of December 31, 2012
	Level 1		Level 2		Level 3		Total
U.S. Treasury bills	$	63,876	$	—	$	—	$	63,876
Municipal bond		—		—		7,382		7,382
Totals	$	63,876	$	—	$	7,382	$	71,258

The following table presents a rollforward of our assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as defined in FASB ASC Topic 820 for the year to date ended September 30, 2013 (dollars in thousands):

Balance at December 31, 2012	$	7,382
Unrealized gain (loss)		—
Balance at September 30, 2013	$	7,382

Credit Agreement

During the fourth quarter of 2012, we entered into a revolving credit facility pursuant to a Credit Agreement with BMO Harris Bank N.A., in its capacities as the initial lender thereunder and the administrative agent for the lenders which from time to time may be parties to the Credit Agreement. The revolving credit facility under the Credit Agreement is scheduled to mature on January 31, 2014. As of September 30, 2013, there were no outstanding borrowings under the Credit Agreement.

6. STUDENT RECEIVABLES

Student receivables represent funds owed to us in exchange for the educational services provided to a student. Student receivables are reflected net of an allowance for doubtful accounts and net of deferred tuition revenue. Student receivables, net are reflected on our unaudited consolidated balance sheets as components of both current and non-current assets.

Generally, a student receivable balance is written off once it reaches greater than 90 days past due. Although we analyze past due receivables, it is not practical to provide an aging of our non-current student receivable balances as a result of the methodology utilized in determining our earned student receivable balances. Student receivables are recognized on our unaudited consolidated balance sheets as they are deemed earned over the course of a student’s program and/or term, and therefore cash collections are not applied against specifically dated transactions.

We do not accrue interest on past due student receivables; interest is recorded only upon collection. Interest rates are determined at the time a payment plan is extended to a student.

Our standard student receivable allowance estimation methodology considers a number of factors that, based on our collection experience, we believe have an impact on our repayment risk and ability to collect student receivables. Changes in the trends in any of these factors may impact our estimate of the allowance for doubtful accounts. These factors include, but are not limited to: internal repayment history, repayment practices of previous extended payment programs and information provided by a third-party institution who previously offered similar extended payment programs, changes in the current economic, legislative or regulatory environments and credit worthiness of our students. These factors are monitored and assessed on a regular basis. Overall, our allowance estimation process for student receivables is validated by trending analysis and comparing estimated and actual performance. The repayment risk associated with student receivables under extended payment plans is generally higher than those not related to extended payment plans; as such, the allowance for doubtful accounts for these student receivables as a percentage of outstanding student receivables is higher.

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Student Receivables Under Extended Payment Plans and Recourse Loan Agreements

To assist students in completing their educational programs, we had previously provided extended payment plans to certain students and also had loan agreements with Sallie Mae and Stillwater National Bank and Trust Company (“Stillwater”) which required us to repurchase loans originated by them to our students after a certain period of time. We no longer provide extended payment plans to students and the recourse loan agreements with Sallie Mae and Stillwater ended in March 2008 and April 2007, respectively.

As of September 30, 2013 and December 31, 2012, the amount of non-current student receivables under these programs, net of allowance for doubtful accounts and net of deferred tuition revenue, was $5.6 million and $6.8 million, respectively.

Student Receivables Valuation Allowance

Changes in our current and non-current receivables allowance for the quarters and years to date ended September 30, 2013 and 2012 were as follows (dollars in thousands):

	Balance, Beginning of Period		Charges to Expense (1)		Amounts Written-off			Balance, End of Period
For the quarter ended September 30, 2013	$	33,460	$	7,884	$	(10,101	)	$	31,243
For the quarter ended September 30, 2012	$	46,229	$	10,847	$	(15,180	)	$	41,896
For the year to date ended September 30, 2013	$	40,154	$	21,187	$	(30,098	)	$	31,243
For the year to date ended September 30, 2012	$	57,232	$	27,240	$	(42,576	)	$	41,896

(1) Charges to expense include an offset for recoveries of amounts previously written off of $1.5 million and $2.0 million for the quarters ended September 30, 2013 and 2012, respectively and $5.8 million and $6.5 million for the years to date ended September 30, 2013 and 2012, respectively.

Fair Value Measurements

The carrying amount reported in our unaudited consolidated balance sheets for the current portion of student receivables approximates fair value because of the nature of these financial instruments as they generally have short maturity periods. It is not practicable to estimate the fair value of the non-current portion of student receivables, since observable market data is not readily available, and no reasonable estimation methodology exists.

7. INTANGIBLE ASSETS

During the third quarter of 2013, in conjunction with the quarterly review process, we concluded that certain indicators, including variation from previously projected revenue results, existed to suggest the Le Cordon Bleu trade name was at risk of its carrying value exceeding its respective fair value as of September 30, 2013. A significant amount of judgment is involved in determining if an indicator of impairment has occurred.

We calculate the fair value of each of our trade names in accordance with FASB ASC Topic 820 – Fair Value Measurement, by utilizing the relief from royalty method under the income approach. The determination of estimated fair value for trade names requires significant estimates and assumptions, and as such, these fair value measurements are categorized as Level 3 as defined in FASB ASC Topic 820. The assumptions utilized in determining the fair value of the Le Cordon Bleu trade name included utilizing projected revenue growth rates, a discount rate of approximately 30%, a royalty rate of 4.5%, and a terminal growth rate of approximately 3%. As a result of our assessment, we recorded a $10.7 million trade name impairment charge, resulting in a remaining fair value of $27.3 million for the Le Cordon Bleu trade name. Due to the inherent uncertainty involved in

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deriving those estimates, actual results could differ from those estimates. We evaluate the merits of each significant assumption used, both individually and in the aggregate, to determine the fair value for reasonableness. Although we believe our projected future operating results and cash flows and related estimates regarding fair value are based on reasonable assumptions, historically projected operating results and cash flows have not always been achieved. However, for sensitivity purposes, and with all other inputs remaining equal, a 0.5% change in the royalty rate assumed in the calculation would result in a change in the fair value of approximately $3.0 million. A 1% change in the discount rate utilized in the calculation would result in a change in the fair value of approximately $0.3 million. We continue to monitor the operating results and revenue projections related to our trade names on a quarterly basis for signs of possible further declines in estimated fair value and trade name impairment.

The current quarter impairment is in addition to the amounts recorded in the second quarter of 2013 of $2.3 million and $1.7 million for the Le Cordon Bleu and Sanford-Brown trade names, respectively. We concluded that no indicators for the remaining goodwill and long-lived assets existed during the third quarter of 2013 that would suggest that it is more likely than not that these assets would be impaired.

8. RESTRUCTURING CHARGES

During the current year to date, we have carried out reductions in force related to the continued reorganization of our corporate and campus functions to better align with current total enrollments. Most notably, we have recorded charges within our Career Schools segments and our corporate functions as we continue to align our overall management structure. Additionally, during the third quarter of 2013 we announced the teach out of SBI White Plains, currently reported within Health Education. Severance and related costs of $1.7 million were recorded during the third quarter of 2013 as a result of all of these actions.

During 2012, we made the decision to teach out a number of campuses, meaning gradually close the campuses through an orderly process. We anticipate that a majority of these campus closures will be completed by the second quarter of 2014. Additionally, during the fourth quarter of 2012, we made the decision to carry out a reduction in force as we reorganize our campus and corporate functions to common operating structures across our ground campuses, most notably within our Career Schools, as well as to better align with current total enrollments.

The following table details the changes in our accrual for severance and related costs associated with all of these restructuring events for our continuing operations during the year to date ended September 30, 2013 (dollars in thousands):

Balance as of December 31, 2012	$	10,234
Severance & related charges		4,592
Payments (1)		(7,339	)
Non-cash adjustments (2)		(775	)
Balance as of September 30, 2013	$	6,712

(1) Includes payments related to COBRA and outplacement services which are assumed to be completed by the third month following an employee’s departure.

(2) Includes cancellations due to employee departures prior to agreed upon end dates, employee transfers to open positions within the organization and subsequent adjustments to severance and related costs.

The current portion of the accrual for severance and related charges was $5.2 million and $7.5 million as of September 30, 2013 and December 31, 2012, respectively, which is recorded within current accrued expenses – payroll and related benefits; the long-term portion of $1.5 million and $2.7 million, respectively, is recorded within other non-current liabilities on our unaudited consolidated balance sheets. In addition, as of September 30,

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2013 and December 31, 2012, we have accrued approximately $2.0 million and $0.3 million, respectively, related to retention bonuses that have been offered to certain employees. These amounts have been recorded ratably over the period the employees are retained.

In addition to the charges detailed above, a number of these campuses will have remaining lease obligations following the eventual campus closure, with the longest lease term being through 2021. The total gross remaining lease obligations for these campuses once they complete the close process is expected to approximate $77.0 million, which includes amounts for base rent and estimated expenses for certain occupancy charges such as common area maintenance. At the time each campus completes the close process, a charge will be recorded representing the net present value of the remaining lease obligation reduced by an estimated amount for sublease income. The final amount related to each campus will be finalized at each campus closure date.

9. COMMITMENTS AND CONTINGENCIES

An accrual for estimated legal fees and settlements of $38.5 million and $5.8 million at September 30, 2013 and December 31, 2012, respectively, is presented within other current liabilities on our unaudited consolidated balance sheets. The increase in the accrual as of September 30, 2013 is primarily related to the preliminary settlements reached in the Securities Litigation and Shareholder Derivative Actions and Demands disclosed below. As of September 30, 2013, a receivable of $32.5 million was recorded for insurance recoveries related to these matters and is reflected within other current receivables on our unaudited consolidated balance sheets.

We record a liability when we believe that it is both probable that a loss will be incurred and the amount of loss can be reasonably estimated. We evaluate, at least quarterly, developments in our legal matters that could affect the amount of liability that was previously accrued, and make adjustments as appropriate. Significant judgment is required to determine both probability and the estimated amount. We may be unable to estimate a possible loss or range of possible loss due to various reasons, including, among others: (1) if the damages sought are indeterminate; (2) if the proceedings are in early stages; (3) if there is uncertainty as to the outcome of pending appeals, motions, or settlements; (4) if there are significant factual issues to be determined or resolved; and (5) if there are novel or unsettled legal theories presented. In such instances, there is considerable uncertainty regarding the ultimate resolution of such matters, including a possible eventual loss, if any.

Litigation

We are, or were, a party to the following legal proceedings that are outside the scope of ordinary routine litigation incidental to our business. Due to the inherent uncertainties of litigation, we cannot predict the ultimate outcome of these matters. An unfavorable outcome of any one or more of these matters could have a material adverse impact on our business, results of operations, cash flows and financial position.

Securities Litigation

Ross, et al. v. Career Education Corporation, et al. On January 13, 2012, a class action complaint was filed in the U.S. District Court for the Northern District of Illinois, naming the Company and various individuals as defendants and claiming that the defendants violated Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) by making material misstatements in and omitting material information from the Company’s public disclosures concerning its campuses’ job placement rates and its compliance with accreditation standards. The complaint further claimed that the individual defendants violated Section 20(a) of the Exchange Act by virtue of their positions as control persons of the Company. Plaintiff asks for unspecified amounts in damages, interest, and costs, as well as ancillary relief. On March 23, 2012, the Court appointed KBC Asset Management NV, the Oklahoma Police Pension & Retirement Systems, and the Oklahoma Law Enforcement Retirement System, as lead plaintiffs in the action. On May 3, 2012, lead plaintiffs filed a consolidated amended complaint, asserting the same claims alleged in the initial complaint, and naming the Company and two former executive officers as defendants. Lead plaintiffs seek damages on behalf of all persons who purchased the Company’s

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common stock between February 19, 2009 and November 21, 2011 (the “Class”). On October 30, 2012, the Court ruled on defendants’ motion to dismiss, granting it as to one of the former executive officer defendants and denying it as to the other defendants. On January 28, 2013, defendants filed answers to the consolidated amended complaint. Defendants have denied and continue to deny each and all of the claims and contentions alleged by plaintiffs in the action and all charges of wrongdoing or liability against them.

On June 12, 2013, the parties agreed to settle the litigation, subject to Court approval and settlement of the shareholder derivative actions and subsequent related claims described below (“Proposed Derivative Settlement”). Pursuant to the terms of the agreement, the plaintiff class will receive a total of $27.5 million in consideration of the proposed settlement and for the benefit of the class members participating in the settlement. We believe it is probable that the Company’s directors’ and officers’ liability insurers will pay $22.5 million, $10.0 million of which is to be funded by the terms of the Proposed Derivative Settlement, and therefore recorded a receivable for this amount in the second quarter of 2013. The Company may initially pay the remaining $5.0 million for the benefit of the Class. However, the Company anticipates seeking recovery of the remaining $5.0 million from one of its insurers but has not recorded a receivable for this additional amount as of September 30, 2013. In exchange for the $27.5 million cash consideration, among other things, the lead plaintiffs will dismiss the litigation with prejudice and the parties will release all claims. On October 31, 2013, plaintiffs moved for preliminary Court approval of the settlement reached by the parties.

Shareholder Derivative Actions and Demands

Bangari v. Lesnik, et al. On December 7, 2011, a derivative action was filed in the Circuit Court of Cook County, Chancery Division on behalf of the Company naming the Company’s Board of Directors at that time as individual defendants and the Company as a nominal defendant. Plaintiff alleges breach of fiduciary duty and abuse of control by the individual defendants in connection with the Company’s alleged ongoing failure to have proper internal controls in place to appropriately determine its campuses’ placement rates or to comply with relevant accreditation standards regarding placement practices and determinations. Plaintiff asks for unspecified amounts in damages, interest, and costs, as well as ancillary relief. On February 10, 2012, defendants filed motions to dismiss or stay the complaint. On August 21, 2012, the Court denied defendants’ motions to dismiss, and granted defendants’ request for a stay. A status hearing is scheduled for November 5, 2013, at which a motion for a stay of proceedings pending approval of the Proposed Derivative Settlement described below will be presented to the Court.

Cook v. McCullough, et al. On December 22, 2011, a derivative action was filed in the U.S. District Court for the Northern District of Illinois on behalf of the Company naming the Company’s Board of Directors at that time as well as various current and former officers as individual defendants and the Company as a nominal defendant. Plaintiff alleges breach of fiduciary duty, abuse of control and gross mismanagement by all of the individual defendants based on allegations similar to those asserted in Bangari, described above, and on defendants’ alleged failure to prevent the Company’s disclosure of allegedly misleading statements relating to placement rates. Plaintiff also asserts a claim of unjust enrichment against certain individual defendants due to their receipt of incentive-based compensation based on allegedly inflated short-term financial performance. Plaintiff asks for unspecified amounts in damages, interest, and costs, as well as ancillary relief. On March 16, 2012, defendants filed motions to dismiss or stay the complaint. The Court granted the motions to stay pending resolution of the motions to dismiss. On August 13, 2012, the Court denied defendants’ motions to dismiss and ordered the parties to engage in certain preliminary discovery. Defendants filed answers to the complaint on October 22, 2012. On October 31, 2013, plaintiff moved for preliminary Court approval of the Proposed Derivative Settlement described below.

Alex v. McCullough, et al. On November 5, 2012, a derivative action was filed in the U.S. District Court for the Northern District of Illinois on behalf of the Company naming the Company’s Board of Directors at that time as well as various current and former officers as individual defendants and the Company as a nominal defendant. Plaintiff alleges breach of fiduciary duty, waste of corporate assets and unjust enrichment by all of the individual defendants based on allegations similar to those asserted in Bangari and Cook, described above. In addition, in connection with the Company’s reporting of placement rates, plaintiff also asserts violations of Sections 10(b)

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and 20(a) of the Exchange Act against certain individual defendants. Plaintiff asks for unspecified amounts in damages, interest, and costs, as well as ancillary relief. On September 17, 2013, the Court stayed the case in light of the parties’ continuing settlement discussions. On October 31, 2013, the Cook plaintiff moved for preliminary Court approval of the Proposed Derivative Settlement described below, which includes this action.

On May 24, 2013, the Company’s Board of Directors formed a Special Committee for the purpose of conducting an independent inquiry with respect to the Proposed Derivative Settlement. The Board of Directors delegated to the Special Committee the full authority to take such actions as the Special Committee deems appropriate and in the best interests of the Company and its shareholders regarding such Proposed Derivative Settlement.

On June 12, 2013, the parties to the derivative actions described above and subsequent related claims (“Derivative Litigation”) agreed to the Proposed Derivative Settlement, subject to agreement to corporate governance terms and Court approval, pursuant to which the Company’s directors’ and officers’ liability insurers will pay the Company $20.0 million, $10.0 million of which is to be applied to the settlement of the securities litigation described above. With the remaining $10.0 million, the Company will be required to pay $5 million in attorneys’ fees and expenses to derivative plaintiffs’ counsel, subject to Court approval. Any net recovery from the Proposed Derivative Settlement may be used by the Company for any purpose. In exchange for this cash consideration, among other things, plaintiffs will dismiss the Derivative Litigation with prejudice and the parties will release all claims.

Student Litigation

Amador, et al. v. California Culinary Academy and Career Education Corporation; Adams, et al. v. California Culinary Academy and Career Education Corporation. On September 27, 2007, Allison Amador and 36 other current and former students of the California Culinary Academy (“CCA”) filed a complaint in the California Superior Court in San Francisco. Plaintiffs plead their original complaint as a putative class action and allege four causes of action: fraud; constructive fraud; violation of the California Unfair Competition Law; and violation of the California Consumer Legal Remedies Act. Plaintiffs contend that CCA made a variety of misrepresentations to them, primarily oral, during the admissions process. The alleged misrepresentations relate generally to the school’s reputation, the value of the education, the competitiveness of the admissions process, and the students’ employment prospects upon graduation, including the accuracy of statistics published by CCA.

On April 3, 2008, the same counsel representing plaintiffs in the Amador action filed the Adams action on behalf of Jennifer Adams and several other unnamed members of the Amador putative class. The Adams action also was styled as a class action and was based on the same allegations underlying the Amador action and attempted to plead the same four causes of action pled in the Amador action. The Adams action was deemed related to the Amador action and was being handled by the same judge.

The parties executed a formal settlement agreement as of November 1, 2010. On April 18, 2012, the Court issued an order granting final approval of the settlement and on April 19, 2012, the Court entered a final judgment on the settlement.

On June 3, 2011, the same attorneys representing the class in the Amador action filed a separate complaint in the San Francisco County Superior Court entitled Abarca v. California Culinary Academy, Inc., et al, on behalf of 115 individuals. On June 15, 2011, the same attorneys filed another action in the San Francisco County Superior Court entitled Andrade, et al. v. California Culinary Academy, Inc., et al., on behalf of another 31 individuals. On August 12, 2011, plaintiffs’ counsel filed a third action on behalf of five individuals entitled Aprieto, et al. v. California Culinary Academy. New counsel has substituted in to represent 78 of the individuals and the Court has entered orders allowing class counsel to withdraw from representing the remaining individuals. On January 18, 2013, new counsel filed a complaint entitled Coleman, et al. v. California Culinary Academy on

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behalf of two individuals. All of the plaintiffs in these four suits are opt outs in the Amador action and/or non-class members, and therefore not subject to the Amador settlement. None of these four suits are being prosecuted as a class action. They each allege the same claims as were previously alleged in the Amador action, plus claims for breach of contract and violations of the repealed California Education Code. The plaintiffs in these cases seek damages, including consequential damages, punitive damages and attorneys’ fees. All of these cases have been deemed related and transferred to the same judge who handled the Amador case.

Claims by individual plaintiffs who are not represented by counsel have been dismissed. There are 80 plaintiffs who have not settled or dismissed their claims. The Company has filed answers to the complaints filed by the remaining 80 individual plaintiffs.

The Court has set a trial date on eight test cases for March 24, 2014. The test cases will be tried to the Court and not to a jury. The parties are engaged in discovery relating to the test cases.

Because of the many questions of fact and law that may arise as discovery and pre-trial proceedings progress, the outcome of the Abarca, Andrade, Aprieto and Coleman legal proceedings with respect to the remaining plaintiffs is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of potential loss, if any, for these actions because these matters are in their early stages and involve many unresolved issues of fact and law. Accordingly, we have not recognized any future liability associated with these actions.

Enea, et al. v. Career Education Corporation, California Culinary Academy, Inc., SLM Corporation, and Sallie Mae, Inc. Plaintiffs filed this putative class action in the Superior Court State of California, County of San Francisco, on or about June 27, 2013. Plaintiffs allege that CCA materially misrepresented the placement rates of its graduates, falsely stated that admission to the culinary school was competitive and that the school had an excellent reputation among restaurants and other food service providers, represented that the culinary schools were well-regarded institutions producing skilled graduates who employers eagerly hired, and lied by telling students that the school provided graduates with career placement services for life. The plaintiffs or putative class members here co-signed the loans for students to attend CCA, some of whom were Amador class members. Plaintiffs seek restitution, damages, civil penalties, and attorneys’ fees.

Defendants filed a motion to dismiss and to strike class action allegations on October 31, 2013. Discovery is stayed pending a ruling on those motions.

Because of the many questions of fact and law that may arise in the future, the outcome of this legal proceeding is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of potential loss, if any, for this action because, among other things, our potential liability depends on whether a class is certified and, if so, the composition and size of any such class, as well as on an assessment of the appropriate measure of damages if we were to be found liable. Accordingly, we have not recognized any liability associated with this action.

Surrett, et al. v. Western Culinary Institute, Ltd. and Career Education Corporation. On March 5, 2008, a complaint was filed in Portland, Oregon in the Circuit Court of the State of Oregon in and for Multnomah County naming Western Culinary Institute, Ltd. and the Company as defendants. Plaintiffs filed the complaint individually and as a putative class action and alleged two claims for equitable relief: violation of Oregon’s Unlawful Trade Practices Act (“UTPA”) and unjust enrichment. Plaintiffs filed an amended complaint on April 10, 2008, which added two claims for money damages: fraud and breach of contract. Plaintiffs allege that Western Culinary Institute, Ltd. (“WCI”) made a variety of misrepresentations to them, relating generally to WCI’s placement statistics, students’ employment prospects upon graduation from WCI, the value and quality of an education at WCI, and the amount of tuition students could expect to pay as compared to salaries they could expect to earn after graduation. WCI subsequently moved to dismiss certain of plaintiffs’ claims under Oregon’s

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UTPA; that motion was granted on September 12, 2008. On February 5, 2010, the Court entered a formal Order granting class certification on part of plaintiff’s UTPA and fraud claims purportedly based on omissions, denying certification of the rest of those claims and denying certification of the breach of contract and unjust enrichment claims. The class consists of students who enrolled at WCI between March 5, 2006 and March 1, 2010, excluding those who dropped out or were dismissed from the school for academic reasons.

Plaintiffs filed a Fifth Amended Complaint on December 7, 2010, which included individual and class allegations by Nathan Surrett. Class notice was sent on April 22, 2011, and the opt-out period expired on June 20, 2011. The class consisted of approximately 2,600 members. They are seeking tuition refunds, interest and certain fees paid in connection with their enrollment at WCI.

On May 23, 2012, WCI filed a motion to compel arbitration of claims by 1,062 individual class members who signed enrollment agreements containing express class action waivers. The Court issued an Order denying the motion on July 27, 2012. WCI filed an appeal from the Court’s Order and on August 30, 2012, the Court of Appeals issued an Order granting WCI’s motion to compel the trial court to cease exercising jurisdiction in the case. Thus, all proceedings with the trial court have been stayed pending the outcome of the appeal.

Because of the many questions of fact and law that have already arisen and that may arise in the future, the outcome of this legal proceeding is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of potential loss, if any, for this action because of the inherent difficulty in assessing the appropriate measure of damages and the number of class members who might be entitled to recover damages, if we were to be found liable. Accordingly, we have not recognized any liability associated with this action.

Vasquez, et al. v. California School of Culinary Arts, Inc. and Career Education Corporation. On June 23, 2008, a putative class action lawsuit was filed in the Los Angeles County Superior Court entitled Daniel Vasquez and Cherish Herndon v. California School of Culinary Arts, Inc. and Career Education Corporation. The plaintiffs allege causes of action for fraud, constructive fraud, violation of the California Unfair Competition Law and violation of the California Consumer Legal Remedies Act. The plaintiffs allege improper conduct in connection with the admissions process during the alleged class period. The alleged class is defined as including “all persons who purchased educational services from California School of Culinary Arts, Inc. (“CSCA”), or graduated from CSCA, within the limitations periods applicable to the alleged causes of action (including, without limitation, the period following the filing of the action).” Defendants successfully demurred to the constructive fraud claim and the Court has dismissed it. Defendants also successfully demurred to plaintiffs’ claims based on alleged violations of California’s former Private Postsecondary and Vocational Educational Reform Act of 1989 (“the Reform Act”). Plaintiffs’ motion for class certification was denied by the Court on March 6, 2012.

Plaintiffs’ counsel have filed eight separate but related “multiple plaintiff actions” originally involving a total of approximately 1,000 former students entitled Banks, et al. v. California School of Culinary Arts; Abrica v. California School of Culinary Arts; Aguilar, et al. v. California School of Culinary Arts; Alday v. California School of Culinary Arts; Ackerman, et al. v. California School of Culinary Arts; Arechiga, et al. v. California School of Culinary Arts; Anderson, et al., v. California School of Culinary Arts; and Allen v. California School of Culinary Arts. All eight cases are pending in the Los Angeles County Superior Court and the allegations in these cases are essentially the same as those asserted in the Vasquez class action case. The individual plaintiffs in these cases seek compensatory and punitive damages, disgorgement and restitution of tuition monies received, attorneys’ fees, costs and injunctive relief. All of these cases have been deemed related to the Vasquez class action and therefore are pending before the same judge who is presiding over the Vasquez case.

On June 15, 2012, pursuant to a stipulation by the parties, the plaintiffs filed a consolidated amended complaint in the Vasquez action consolidating all eight of the separate actions referenced above. Defendants’ response to the consolidated complaint was filed on July 13, 2012. The Court has lifted the stay on actions that were consolidated and the parties are now engaged in discovery.

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On June 22, 2012, defendants filed motions to compel arbitration of plaintiffs’ claims. On August 10, 2012, the Court granted the motions with respect to approximately 54 plaintiffs. Nine of those individuals have filed arbitration demands before the American Arbitration Association to date. One of those arbitrations has been tried to a final award, and the remaining eight have settled. The total liability for these nine arbitrations was an immaterial amount.

Defendants issued offers to compromise pursuant to the California Code of Civil Procedure to 1,438 individual plaintiffs, 346 of which were accepted. The total amount that has been or will be paid to eliminate these claims is approximately $2.1 million. This aggregate amount was recorded in the third quarter of 2012 and the majority of the payments were made by September 30, 2012. There are currently approximately 1,047 active plaintiffs in the consolidated action.

Because of the many questions of fact and law that already have arisen and that may arise in the future, the outcome of these legal proceedings is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of potential loss, if any, for these actions with respect to the current plaintiffs because our possible liability depends on an assessment of the appropriate measure of damages, if we were to be found liable. Accordingly, we have not recognized any liability associated with these actions except as described above.

False Claims Act

United States of America, ex rel. Melissa Simms Powell, et al. v. American InterContinental University, Inc., a Georgia Corporation, Career Education Corp., a Delaware Corporation and John Doe Nos. 1-100. On July 28, 2009, we were served with a complaint filed in the U.S. District Court for the Northern District of Georgia, Atlanta Division. The complaint was originally filed under seal on July 14, 2008 by four former employees of the Dunwoody campus of our American InterContinental University on behalf of themselves and the federal government. On July 27, 2009, the Court ordered the complaint unsealed and we were notified that the U.S. Department of Justice declined to intervene in the action. When the federal government declines to intervene in a False Claims Act action, as it has done in this case, the private plaintiffs (or “relators”) may elect to pursue the litigation on behalf of the federal government and, if they are successful, receive a portion of the federal government’s recovery. The action alleges violations of the False Claims Act and promissory fraud, including allegedly providing false certifications to the federal government regarding compliance with certain provisions of the Higher Education Act and accreditation standards. Relators claim that defendants’ conduct caused the government to pay federal funds to defendants and to make payments to third-party lenders, which the government would not have made if not for defendants’ alleged violation of the law. Relators seek treble damages plus civil penalties and attorneys’ fees. The lawsuit is currently in the discovery phase. On July 12, 2012, the Court granted our motion to dismiss for a lack of jurisdiction, the claims related to incentive compensation and proof of graduation. Thus, the only claim that remains pending against defendants is based on relators’ contention that defendants misled the school’s accreditor, Southern Association of Colleges and Schools, during the accreditation process.

Because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of potential loss, if any, for this action because the complaint does not seek a specified amount of damages and it is unclear how damages would be calculated, if we were to be found liable. Moreover, the case presents novel legal issues and discovery is in its early stages. Accordingly, we have not recognized any liability associated with this action.

United States of America, ex rel. Brent M. Nelson v. Career Education Corporation, Sanford-Brown, Ltd., and Ultrasound Technical Services, Inc. On April 18, 2013, we were served with a complaint filed in the U.S. District Court for the Eastern District of Wisconsin. The complaint was originally filed under seal on July 30, 2012 by a former employee of Sanford-Brown College Milwaukee on behalf of himself and the federal

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government. On February 27, 2013, the Court ordered the complaint unsealed and we were notified that the U.S. Department of Justice declined to intervene in the action. After the federal government declined to intervene in this case, the relator elected to pursue the litigation on behalf of the federal government. If he is successful he will receive a portion of the federal government’s recovery. The relator filed an amended complaint on April 12, 2013. The amended complaint alleges violations of the False Claims Act, including allegedly providing false certifications to the federal government regarding compliance with certain provisions of the Higher Education Act and accreditation standards. Relator claims that defendants’ conduct caused the government to pay federal funds to defendants, and to make payments to third-party lenders, which the government would not have made if not for defendants’ alleged violation of the law. Relator seeks treble damages plus civil penalties and attorneys’ fees. On June 11, 2013, we filed a motion to dismiss the case on a variety of grounds. Both the relator and the government have filed briefs in opposition to our motion to dismiss. The Court has set the case for jury trial beginning April 14, 2014.

Because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of potential loss, if any, for this action because the complaint does not seek a specified amount of damages and it is unclear how damages would be calculated, if we were to be found liable. Moreover, the case presents novel legal issues and is in its early stages. Accordingly, we have not recognized any liability associated with this action.

Employment Litigation

Wilson, et al. v. Career Education Corporation. On August 11, 2011, Riley Wilson, a former admissions representative based in Minnesota, filed a complaint in the U.S. District Court for the Northern District of Illinois. The two-count complaint asserts claims of breach of contract and unjust enrichment arising from our decision to terminate our admissions representative Supplemental Compensation Plan. In addition to his individual claims, Wilson also seeks to represent a nationwide class of similarly situated Admissions Representatives who also were affected by termination of the plan. On October 6, 2011, we filed a motion to dismiss the complaint. On April 13, 2012, the Court granted our motion to dismiss in its entirety and dismissed plaintiff’s complaint for failure to state a claim. The Court dismissed this action with prejudice on May 14, 2012. On June 11, 2012, plaintiff filed a Notice of Appeal with the U.S. Court of Appeals for the Seventh Circuit appealing the final judgment of the trial court. Briefing was completed on October 30, 2012, and oral argument was held on December 3, 2012. On August 30, 2013, the Seventh Circuit affirmed the district court’s ruling on plaintiff’s unjust enrichment claim but reversed and remanded for further proceedings on plaintiff’s breach of contract claim. On September 13, 2013, we filed a petition for rehearing to seek review of the panel’s decision on the breach of contract claim and for certification of question to the Illinois Supreme Court. The Seventh Circuit has not ruled on our petition.

Because the matter remains on appeal and because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of potential loss, if any, for this action. Accordingly, we have not recognized any liability associated with this action.

Nimely, et al. v. Randstad General Partners, Randstad USA, Randstad Inhouse Services L.P., and Career Education Corporation. On December 30, 2012, April R. Nimely, a former hourly, non-exempt call center employee based in Illinois filed a putative class and collective action complaint in the U.S. District Court for the Northern District of Illinois against the Company and various entities of the staffing firm Randstad, which the Company used to supplement its own staff at some of its call centers. The complaint asserts claims under the Fair Labor Standards Act, the Illinois Minimum Wage Law, and the Illinois Wage Payment and Collection Act (“IWPCA”) arising from the alleged failure to pay wages for work performed before and after shifts and during breaks. The putative collective class was defined as “[a]ll persons who worked for Defendants as telephone dedicated employees, however titled, who were compensated, in part or in full, on an hourly basis throughout the United States at any time between December 30, 2009 and the present who did not receive the full amount of overtime wages earned and owed to them.”

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On February 27, 2013, defendants filed their answers to the complaint and motion to dismiss the IWPCA count of the complaint. On June 14, 2013, plaintiff filed her motion for class certification. The parties subsequently reached an agreement to settle the matter for an immaterial amount and are in the process of finalizing the settlement documents. A status hearing is scheduled for November 8, 2013.

Sumrall and Tavares Vickers, et al. v. Career Education Corporation, International Academy of Merchandising & Design, Inc., d/b/a International Academy of Design and Technology and d/b/a IADT-Online. On April 25, 2013, a putative collection action was filed in the United States District Court for the Middle District of Florida. Plaintiffs alleged a cause of action under the Fair Labor Standards Act for unpaid overtime. Specifically, plaintiffs alleged they were misclassified as exempt employees and denied overtime compensation and/or required to work “off the clock.” The putative class was defined as including all admissions representatives employed by the Company and International Academy of Merchandising & Design, Inc., who worked in excess of forty hours per week from April 25, 2010, to the present. Plaintiffs sought to recover alleged unpaid wages, liquidated damages, prejudgment interest and attorneys’ fees, as well as declaratory relief. On May 30, 2013, defendants filed their answer and affirmative defenses, denying the plaintiffs’ claims.

On July 31, 2013, the parties reached an agreement to settle this matter, pursuant to which plaintiffs agreed to amend their complaint to remove any reference to a purported collective action, stipulate to the dismissal of the amended complaint, and sign a full and complete release of all claims and potential claims against the Company. In exchange, the Company agreed to pay each plaintiff a de minimis amount in back wages, liquidated damages, and attorneys’ fees. The Court approved the settlement and dismissed the amended complaint, with prejudice, on October 7, 2013.

Other Litigation

In addition to the legal proceedings and other matters described above, we are also subject to a variety of other claims, suits and investigations that arise from time to time in the ordinary conduct of our business, including, but not limited to, claims involving students or graduates and routine employment matters. While we currently believe that such claims, individually or in aggregate, will not have a material adverse impact on our financial position, cash flows or results of operations, these other matters are subject to inherent uncertainties, and management’s view of these matters may change in the future. Were an unfavorable final outcome to occur in any one or more of these matters, there exists the possibility of a material adverse impact on our business, reputation, financial position, cash flows, and the results of operations for the period in which the effect becomes probable and reasonably estimable.

State Investigations

The Company received from the Attorney General of the State of New York (“NYAG”) a Subpoena Duces Tecum dated May 17, 2011 (the “Subpoena”), relating to the NYAG’s investigation of whether the Company and certain of its schools have complied with certain New York state consumer protection, securities, finance and other laws. The documents and information sought by the NYAG in connection with its investigation cover the time period from May 17, 2005 to the present. Pursuant to the Subpoena, the NYAG requested from the Company, and certain of its schools, documents and detailed information on a broad spectrum of business practices, including such areas as marketing and advertising, student recruitment and admissions, education financing, training and compensation of admissions and financial aid personnel, programmatic accreditation, student employment outcomes, placement rates of graduates and other disclosures made to students.

On August 19, 2013, the Company entered into an Assurance of Discontinuance (the “NYAG Settlement’) with the NYAG. Under the terms of the NYAG Settlement, without admitting or denying the NYAG’s findings, the Company has agreed to pay $9.3 million into a restitution fund to be distributed to eligible consumers; an additional $1.0 million for fees, costs, and penalties; and up to an additional $0.2 million for the costs to administer the restitution claims process. The Company recorded $10.0 million related to this matter during the

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second quarter of 2013 when the matter was deemed both probable and estimable. $10.3 million was paid during the third quarter of 2013 related to this matter. As part of the NYAG Settlement, the Company has also agreed to, among other things: calculate and disclose placement rates according to agreed upon procedures and retain an independent consultant or audit firm to independently verify and report on such placement rates; provide specified levels of placement assistance to students; provide certain additional training to admissions personnel regarding placement rates; teach out certain programs going forward that do not achieve specified minimum placement rates; provide additional disclosure concerning institutional and programmatic accreditation; and provide additional disclosure concerning transferability of credits to other colleges or universities.

The Florida campuses of Sanford-Brown Institute received a notice on November 5, 2010 from the State of Florida Office of the Attorney General (“FL AG”) that it has commenced an investigation into possible unfair and deceptive trade practices at these schools. The notice includes a subpoena to produce documents and detailed information for the time period from January 1, 2007 to the present about a broad spectrum of business practices at such schools. The Florida campuses of Sanford-Brown Institute have responded to the subpoena and continue to cooperate with the Florida Attorney General with a view towards resolving this inquiry as promptly as possible.

The Company received from the Attorney General of the State of Illinois (“IL AG”) a Civil Investigative Demand (“CID”) dated December 9, 2011. The CID relates to the IL AG’s investigation of whether the Company and its schools operating in Illinois have complied with certain Illinois state consumer protection laws. Pursuant to the CID, the IL AG has requested from the Company and its schools documents and detailed information on a broad spectrum of business practices, including such areas as marketing and advertising, student recruitment and admissions, education financing, training and compensation of admissions and financial aid personnel, programmatic accreditation, student employment outcomes, placement rates of graduates and other financial and organizational information. The documents and information sought by the IL AG in connection with its investigation cover the time period from January 1, 2006 to the present. The Company is cooperating with the IL AG’s office with a view towards resolving this inquiry as promptly as possible.

The Company received from the Commonwealth of Massachusetts Office of the Attorney General (“MA AG”) a Civil Investigative Demand dated September 27, 2012. The CID relates to the MA AG’s investigation of whether certain of the Company’s schools have complied with Massachusetts consumer protection laws in connection with marketing and advertising, job placement and student outcomes, the recruitment of students, and the financing of education. Pursuant to the CID, the MA AG has requested from the Company documents and detailed information covering a broad spectrum of areas, including student information, programs of study, externships, tuition, financial aid, default rates, graduation rates, employment outcomes, recruitment and admissions, career services, student disclosures, employee compensation, accreditation, advertising, and complaints relating to operations, recruitment, placement, retention, graduation and quality of education. The documents and information sought by the MA AG in connection with its investigation generally cover the time period from January 1, 2008 to the present, with some specific requests covering time periods as early as January 1, 2003 to the present. The Company is cooperating with the MA AG’s office with a view towards resolving this inquiry as promptly as possible.

The Company received from the Colorado Attorney General’s Office (“CO AG”) a CID dated August 27, 2013. The CID relates to the CO AG’s investigation of whether the Company and CTU have complied with certain Colorado state consumer protection laws. Pursuant to the CID, the CO AG has requested from the Company and the schools at issue documents and detailed information on a broad spectrum of business practices, including such areas as recruitment, enrollment, education financing, and the handling of funds issued through the United States Department of Veterans Affairs. The documents and information sought by the CO AG in connection with its investigation cover the time period from January 1, 2009 to the present, with some specific requests covering time periods as early as when CTU began enrolling students. The Company is cooperating with the CO AG’s office with a view towards resolving this inquiry as promptly as possible.

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We cannot predict the scope, duration or outcome of the FL AG, IL AG, MA AG, and CO AG investigations. At the conclusion of these matters, the Company or certain of its schools may be subject to claims of failure to comply with state laws or regulations and may be required to pay significant financial penalties and/or curtail or modify their operations. Other state attorneys general may also initiate inquiries into the Company or its schools. If any of the foregoing occurs, our business, reputation, financial position, cash flows and results of operations could be materially adversely affected. Based on information available to us at present, we cannot reasonably estimate a range of potential monetary or non-monetary impact these investigations might have on the Company because it is uncertain what remedies, if any, these regulators might ultimately seek in connection with these investigations.

SEC Inquiry and Other Information Requests

During the second quarter of 2012, the Company was advised by the Chicago Regional Office of the Securities and Exchange Commission (“SEC”) that it is conducting an inquiry pertaining to our previously reported 2011 investigation and review of student placement rate determination practices and related matters. We are cooperating fully with the inquiry. We cannot determine the eventual duration, scope or outcome of this matter.

The Company and its institutions have responded to requests for information regarding its 2011 investigation and review of placement determination practices and related matters from the Higher Learning Commission of the North Central Association of Colleges and Schools, Middle States Commission on Higher Education, Commonwealth of Pennsylvania Department of Education Division of Higher and Career Education, the Arizona State Board for Private Postsecondary Education, the Minnesota Office of Higher Education and the Florida Commission for Independent Education. We cannot predict the outcome of these information requests and any legal proceeding, claim or other matter that may arise relating thereto.

Regulatory Matters

ED Inquiry and HCM1 Status

In December 2011, ED advised the Company that it is conducting an inquiry concerning possible violations of ED misrepresentation regulations related to placement rates reported by certain of the Company’s institutions to accrediting bodies, students and potential students. This inquiry stems from the Company’s self-reporting to ED of its internal investigation into student placement determination practices at the Company’s Health Education segment campuses and review of placement determination practices at all of the Company’s other domestic campuses in 2011. The Company has been cooperating with ED in connection with this inquiry. If ED determines that the Company or any of its institutions violated ED misrepresentation regulations with regard to the publication of placement rates or other disclosures to students or prospective students, ED may revoke, limit, suspend or deny the institution’s Title IV eligibility, or impose fines. Any such action would first likely require reasonable prior notice and an opportunity for an administrative hearing (as recently confirmed by the U.S. Court of Appeals for the District of Columbia), and would be subject to appeal.

In December 2011, ED also moved all of the Company’s institutions from the “advance” method of payment of Title IV Program funds to cash monitoring status (referred to as Heightened Cash Monitoring 1, or HCM1, status). Although the Company’s prior practices substantially conformed to the requirements of this more restrictive method of drawing down students’ Title IV Program funds, if ED finds violations of the HEA or related regulations, ED may impose monetary or program level sanctions, or transfer the Company’s schools to the “reimbursement” or Heightened Cash Monitoring 2 (“HCM2”) methods of payment of Title IV Program funds. While on HCM2 status, an institution must disburse its own funds to students, document the students’ eligibility for Title IV Program funds and comply with certain waiting period requirements before receiving such funds from ED, which results in a significant delay in receiving those funds. The process of re-establishing a regular schedule of cash receipts for the Title IV Program funds if ED places our schools on “reimbursement” or HCM2 payment status could take several months, and would require us to fund ongoing operations substantially

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out of existing cash balances. If our existing cash balances are insufficient to sustain us through this transition period, we would need to pursue other sources of liquidity, which may not be available or may be costly.

OIG Audit

Our schools and universities are also subject to periodic audits by various regulatory bodies, including the U.S. Department of Education’s Office of Inspector General (“OIG”). The OIG audit services division commenced a compliance audit of CTU in June 2010, covering the period July 5, 2009 to May 16, 2010, to determine whether CTU had policies and procedures to ensure that CTU administered Title IV Program and other federal program funds in accordance with applicable federal law and regulation. On January 13, 2012, the OIG issued a draft report identifying three findings, including one regarding the documentation of attendance of students enrolled in online programs and one regarding the calculation of returns of Title IV Program funds arising from student withdrawals without official notice to the institution. CTU submitted a written response to the OIG, contesting these findings, on March 2, 2012. CTU disagreed with the OIG’s proposed determination of what constitutes appropriate documentation or verification of online academic activity during the time period covered by the audit. CTU’s response asserted that this finding was based on the retroactive application of standards adopted as part of the program integrity regulations that first went into effect on July 1, 2011. The OIG final report, along with CTU’s response to the draft report, was forwarded to ED’s Office of Federal Student Aid on September 21, 2012. On October 24, 2012, CTU provided a further response challenging the findings of the report directly to ED’s Office of Federal Student Aid. As a result of ED’s review of these materials, on January 31, 2013, CTU received a request from ED that it perform two file reviews to determine potential liability on two discrete issues associated with one of the above findings. The first file review relates to any potential aid awarded to students who engaged in virtual classroom attendance activities prior to the official start date of a course and for which no further attendance was registered during the official class term. The second file review relates to students that were awarded and paid Pell funds for enrollment in two concurrent courses, while only registering attendance in one of the two courses. The Company has completed these file reviews and provided supporting documentation to ED on April 10, 2013. As of September 30, 2013, the Company has a $0.8 million liability related to this matter.

10. INCOME TAXES

The determination of the annual effective tax rate is based upon a number of significant estimates and judgments, including the estimated annual pretax income (loss) in each tax jurisdiction in which we operate and the ongoing development of tax planning strategies during the year. In addition, our provision for (benefit from) income taxes can be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, as well as other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions.

The following is a summary of our income tax benefits and effective tax rates from continuing operations for the quarters and years to date ended September 30, 2013 and 2012 (dollars in thousands):

	For the Quarter Ended September 30,						For the Year to Date Ended September 30,
	2013			2012			2013			2012
Pretax loss	$	(68,765	)	$	(40,072	)	$	(166,269	)	$	(107,407	)
Benefit from income taxes	$	(25,333	)	$	(13,925	)	$	(70,145	)	$	(27,959	)
Effective rate		-36.8	%		-34.7	%		-42.2	%		-26.0	%

The increase in the effective rate for the quarter ended September 30, 2013 as compared to the prior year quarter was primarily due to earnings mix changes for our ground-based institutions versus our online institutions. The increase in the effective rate for the year to date ended September 30, 2013 as compared to the prior year was primarily due to the write-off of nondeductible goodwill in the prior year. The year to date rate was impacted by a $8.6 million favorable tax adjustment, which is comprised of $11.2 million related to the resolution of various state

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tax audits and exposures offset by $2.6 million of tax benefits recaptured due to the sale of AIU London. The effect of these discrete items was to increase the effective rate benefit by 5.2%. In addition, the cumulative effect of state and foreign valuation losses decreased the quarter’s effective rate benefit by 1.0%.

We estimate that it is reasonably possible that the liability for unrecognized tax benefits for a variety of uncertain tax positions will decrease by up to $0.9 million in the next twelve months as a result of the completion of various tax audits currently in process and the expiration of the statute of limitations in several jurisdictions. The income tax rate for the quarter and year to date ended September 30, 2013 does not take into account the possible reduction of the liability for unrecognized tax benefits. The impact of a reduction to the liability will be treated as a discrete item in the period the reduction occurs. We recognize interest and penalties related to unrecognized tax benefits in tax expense. As of September 30, 2013, we had accrued $3.1 million as an estimate for reasonably possible interest and accrued penalties.

Our tax returns are routinely examined by federal, state and foreign tax authorities and these audits are at various stages of completion at any given time. The Internal Revenue Service completed its examination of our U.S. income tax returns through our tax year ended December 31, 2007.

See Note 4 “Discontinued Operations” of the notes to our unaudited consolidated financial statements for income tax expense disclosures related to the pending sale of our International Schools.

11. SHARE-BASED COMPENSATION

Overview of Share-Based Compensation Plans

The Career Education Corporation 2008 Incentive Compensation Plan (the “2008 Plan”) authorizes awards of stock options, stock appreciation rights, restricted stock, restricted stock units, deferred stock, performance units, annual incentive awards, and substitute awards, which generally may be settled in cash or shares of our common stock. Any shares of our common stock that are subject to awards of stock options or stock appreciation rights payable in shares will be counted as 1.0 share for each share issued for purposes of the aggregate share limit and any shares of our common stock that are subject to any other form of award payable in shares will be counted as 1.67 shares for each share issued for purposes of the aggregate share limit. As of September 30, 2013, there were approximately 10.2 million shares of common stock available for future share-based awards under the 2008 Plan. This amount does not reflect 4.6 million shares underlying restricted stock units and stock options outstanding as of September 30, 2013, which upon vesting or exercise will be settled in shares of our common stock and thus reduce the common stock available for future share-based awards under the 2008 Plan by the amount vested, multiplied by the applicable factor under the plan.

As of September 30, 2013, we estimate that compensation expense of approximately $8.0 million will be recognized over the next four years for all unvested share-based awards that have been granted to participants, including stock options, shares of restricted stock and restricted stock units to be settled in shares of stock but excluding restricted stock units to be settled in cash.

Stock Options. The exercise price of stock options granted under each of the plans is equal to the fair market value of our common stock on the date of grant. Employee stock options generally become exercisable 25% per year over a four-year service period beginning on the date of grant and expire ten years from the date of grant. Non-employee directors’ stock options expire ten years from the date of grant and generally become exercisable as follows: one-third on the grant date, one-third on the first anniversary of the grant date, and one-third on the second anniversary of the grant date, or, one-fourth on the grant date and one-fourth for each of the first through third anniversaries of the grant date. Both employee stock options and non-employee director stock options are subject to possible earlier vesting and termination in certain circumstances. Generally, if a plan participant terminates his or her employment for any reason other than by death or disability during the vesting period, he or she forfeits the right to unvested stock option awards. Grants of stock options are generally only subject to the service conditions discussed previously.

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Stock option activity during the year to date ended September 30, 2013 under all of our plans was as follows (options in thousands):

	Options			Weighted Average Exercise Price
Outstanding as of December 31, 2012		2,592		$	25.96
Granted		1,934			2.58
Exercised		—			—
Forfeited		(244	)		4.98
Cancelled		(352	)		30.87
Outstanding as of September 30, 2013		3,930		$	15.31
Exercisable as of September 30, 2013		2,110		$	24.78

Restricted Stock and Restricted Stock Units to be Settled in Stock. Restricted stock and restricted stock units to be settled in shares of stock generally become fully vested either three years after the date of grant or 25% per year over a four-year service period beginning on the date of grant. Generally, if a plan participant terminates his or her employment for any reason other than by death or disability during the vesting period, he or she forfeits the right to the unvested restricted stock and restricted stock units. The vesting of restricted stock and restricted stock units is subject to possible acceleration in certain circumstances. Certain restricted stock awarded to plan participants referred to as “performance-based restricted stock” are subject to performance conditions that, even if the requisite service period is met, may reduce the number of shares or units of restricted stock that vest at the end of the requisite service period or result in all shares or units being forfeited.

The following table summarizes information with respect to all outstanding restricted stock and restricted stock units to be settled in shares of stock under our plans during the year to date ended September 30, 2013 (shares and units in thousands):

	Restricted Stock to be Settled in Shares of Stock
	Shares			Weighted Average Grant-Date Fair Value Per Share		Units			Weighted Average Grant-Date Fair Value Per Unit		Total
Outstanding as of December 31, 2012		854		$	24.74		1,144		$	8.27		1,998
Granted		—			—		43			2.72		43
Vested		(189	)		23.09		(306	)		8.62		(495	)
Forfeited		(399	)		27.21		(257	)		7.75		(656	)
Outstanding as of September 30, 2013		266		$	22.41		624		$	7.93		890

2013 Annual Grants. During the first quarter of 2013, as part of our annual long term incentive grants to employees, we issued restricted stock units to be settled in cash and cash-based performance unit awards in addition to stock option grants. The cash-settled restricted stock units are recorded as liabilities as the expense is recognized. Cash-settled restricted stock units are settled with a cash payment for each unit vested equal to the closing price on the vesting date. Cash-settled restricted stock units are not included in common shares reserved for issuance or available for issuance under the 2008 Plan. For cash-settled restricted stock units granted in 2013, vesting is primarily 25% per year over the four year period beginning on the grant date.

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The following table summarizes information with respect to all cash-settled restricted stock units during the year to date ended September 30, 2013 (units in thousands).

	Restricted Stock Units to be Settled in Cash
Outstanding as of December 31, 2012		—
Granted		2,938
Vested		—
Forfeited		(448	)
Outstanding as of September 30, 2013		2,490

Upon vesting, based on the conditions set forth in the award agreements, these units will be settled in cash. We valued these units in accordance with the guidance set forth by FASB ASC Topic 718 – Compensation-Stock as of September 30, 2013 based upon our stock price as of September 30, 2013. The fair value for our outstanding cash settled restricted stock units was $6.8 million as of September 30, 2013. The liability related to these outstanding units of $1.2 million was based on the number of days lapsed during the service period as of September 30, 2013; of which $0.5 million was recorded during the quarter ended September 30, 2013.

The performance unit awards granted during 2013 are long-term incentive, cash-based awards. Payment of these awards is based upon a calculation of Total Shareholder Return (“TSR”) of CEC as compared to TSR across a specified peer group of our competitors over a three-year performance period ending primarily on December 31, 2015. These awards are recorded as liabilities and fair value for these awards is determined at each period end date with changes in fair value recorded in our statement of loss and comprehensive loss in the current period. The fair value of outstanding performance unit awards as of September 30, 2013 was $2.5 million. The liability for the outstanding performance unit awards of $0.3 million was based on the number of days lapsed during the service period as of September 30, 2013; of which $0.1 million was recorded during the quarter ended September 30, 2013.

Stock Appreciation Rights. Stock Appreciation Rights (SAR) allow the recipient to receive stock or cash equal in value to the difference between the exercise price of the SAR and fair market value of our stock on the date of exercise. In the second quarter of 2013, and for the first time since inception of any of our plans, we granted approximately 0.2 million SARs to be settled in cash to our Chief Executive Officer with a grant date fair value of $0.2 million. These SARs vest 25% per year over a four year period beginning on the grant date and expire ten years from the date of grant.

12. WEIGHTED AVERAGE COMMON SHARES

Basic net loss per share is calculated by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net loss by the weighted average number of shares assuming dilution. Dilutive common shares outstanding is computed using the Treasury Stock Method and reflects the additional shares that would be outstanding if dilutive stock options were exercised and restricted stock and restricted stock units were settled for common shares during the period.

Due to the fact that we reported a loss from continuing operations for the quarters and years to date ended September 30, 2013 and 2012, respectively, potential common stock equivalents are excluded from the diluted common shares outstanding calculation. Per FASB ASC Topic 260 – Earnings Per Share, an entity that reports discontinued operations shall use income or loss from continuing operations as the benchmark for calculating diluted common shares outstanding, and as such, we have zero common stock equivalents since these shares would have an anti-dilutive effect on our net loss per share for the quarters and years to date ended September 30, 2013 and 2012, respectively.

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In addition to the common stock issued upon the exercise of employee stock options and the granting of restricted stock, we issued approximately 0.1 million and 0.4 million shares for the quarter and year to date ended September 30, 2013, respectively, less than 0.1 million shares for the quarter ended September 30, 2012 and 0.1 million shares for the year to date ended September 30, 2012 upon the purchase of common stock pursuant to our employee stock purchase plan.

13. SEGMENT REPORTING

Our segments are determined in accordance with FASB ASC Topic 280 – Segment Reporting and are based upon how the Company analyzes performance and makes decisions. Each segment represents a group of postsecondary education providers that offer a variety of degree and non-degree academic programs. These segments are organized by key market segments to enhance brand focus and operational alignment within each segment to more effectively execute our strategic plan. The results of our International Schools are now reported within discontinued operations due to our decision in the third quarter of 2013 to commit to a plan to sell these assets. The remaining six reporting segments are described below.

University Schools:

Colorado Technical University (CTU) schools collectively offer academic programs in the career-oriented disciplines of business studies, information systems and technologies, criminal justice, computer science and engineering, and health sciences in an online, classroom or laboratory setting.

American InterContinental University (AIU) schools collectively offer academic programs in the career-oriented disciplines of business studies, information technologies, criminal justice and design technologies in an online, classroom or laboratory setting.

Career Schools:

Health Education includes our Sanford-Brown schools, along with Brown College, Briarcliffe College and Missouri College. These schools collectively offer academic programs in the career-oriented disciplines of health education, complemented by certain programs in business studies and information technology in a classroom, laboratory or online setting.

Culinary Arts includes our Le Cordon Bleu schools in North America that collectively offer hands-on programs in the career-oriented disciplines of culinary arts and patisserie and baking in the commercial kitchens of Le Cordon Bleu; and advanced degree programs in culinary arts and hotel and restaurant management online.

Design & Technology includes IADT, Harrington College of Design and Brooks Institute schools. These schools collectively offer academic programs primarily in the career-oriented disciplines of fashion design, game design, graphic design, interior design, film and video production, photography and visual communications in a classroom, laboratory or online setting as well as job training in the field of energy conservation.

Transitional Schools includes our campuses that are currently being taught out.

We evaluate segment performance based on operating results. Adjustments to reconcile segment results to consolidated results are included under the caption “Corporate and Other”, which primarily includes unallocated corporate activity and eliminations.

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Summary financial information by reporting segment follows (dollars in thousands):

	For the Quarter Ended September 30,
	Revenue				Operating (Loss) Income
	2013		2012		2013			2012
CTU	$	82,424	$	86,484	$	9,208		$	10,324
AIU		56,284		71,204		(5,930	)		1,084
Total University Schools		138,708		157,688		3,278			11,408
Health Education		34,129		40,469		(14,783	)		(12,758	)
Culinary Arts (1)		44,256		54,415		(23,655	)		(10,136	)
Design & Technology		24,752		33,129		(10,036	)		(6,240	)
Total Career Schools		103,137		128,013		(48,474	)		(29,134	)
Corporate and Other		—		16		(7,561	)		(5,389	)
Subtotal		241,845		285,717		(52,757	)		(23,115	)
Transitional Schools		9,468		30,438		(15,892	)		(17,327	)
Total	$	251,313	$	316,155	$	(68,649	)	$	(40,442	)

	For the Year to Date Ended September 30,
	Revenue				Operating (Loss) Income
	2013		2012		2013			2012
CTU	$	259,520	$	274,652	$	41,708		$	41,584
AIU		182,518		238,985		(1,763	)		22,623
Total University Schools		442,038		513,637		39,945			64,207
Health Education (2)		107,439		140,018		(53,200	)		(64,660	)
Culinary Arts (1)		134,771		175,148		(52,809	)		(11,991	)
Design & Technology (3)		82,899		109,654		(24,787	)		(50,912	)
Total Career Schools		325,109		424,820		(130,796	)		(127,563	)
Corporate and Other (4)		—		50		(24,979	)		1,746
Subtotal		767,147		938,507		(115,830	)		(61,610	)
Transitional Schools (5)		43,761		109,259		(43,521	)		(46,666	)
Total	$	810,908	$	1,047,766	$	(159,351	)	$	(108,276	)

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	Total Assets as of (6)
	September 30, 2013		December 31, 2012
CTU	$	74,300	$	72,554
AIU		60,755		65,092
Total University Schools		135,055		137,646
Health Education		36,884		52,511
Culinary Arts		145,860		173,477
Design & Technology		32,108		30,720
Total Career Schools		214,852		256,708
Corporate and Other		342,734		433,233
Subtotal		692,641		827,587
Transitional Schools		19,731		38,448
Discontinued Operations		272,811		256,668
Total	$	985,183	$	1,122,703

(1) Year to date 2013 expenses include a $13.0 million trade name impairment charge, of which $10.7 million was recorded in the third quarter of 2013.

(2) Year to date 2013 expenses include $10.3 million related to the settlement of a legal matter and a $1.7 million trade name impairment charge. Year to date 2012 included a $41.9 million goodwill impairment charge.

(3) Year to date 2012 expenses include a $40.8 million goodwill impairment charge.

(4) The operating income for the year to date ended September 30, 2012 included a $19.0 million insurance recovery related to the settlement of claims under certain insurance policies.

(5) Year to date 2012 expenses include a $1.0 million trade name impairment charge, $0.9 million in asset impairment charges recorded as a result of the decision made in the second quarter of 2012 to teach out several schools, and a $0.7 million goodwill impairment charge.

(6) Total assets do not include intercompany receivable or payable activity between schools and corporate and investments in subsidiaries.

14. SUBSEQUENT EVENTS

During October 2013, we announced the teach out of five additional campuses, including three campuses within Health Education and two campuses within Design & Technology. We anticipate recording charges for these campuses of approximately $4.0 million related to asset impairment charges and severance and related costs during the fourth quarter of 2013. The results of operations for these five campuses and SBI White Plains, whose teach out was announced during the third quarter of 2013, will be reported within our Transitional Schools segment as of December 31, 2013.

On October 22, 2013, the Company and one of its subsidiaries entered into a Securities Purchase Agreement with Insignis, a company controlled by funds managed by Apax Partners, pursuant to which the Company will sell and transfer control of its Paris-based INSEEC Group and the International University of Monaco. Through movement of cash from our international operations prior to the closure of the transaction, along with payment expected to be received at closing, we anticipate that our domestic cash position will increase by approximately $290.0 million. The closing of the transaction is subject to customary closing conditions, including the receipt of anti-trust regulatory approvals in France, and the Purchase Agreement provides that closing is to occur no later than December 27, 2013. The Company expects to record a gain on sale related to this pending transaction of approximately $120.0 million – $130.0 million during the fourth quarter of 2013.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The discussion below contains “forward-looking statements”, as defined in Section 21E of the Securities Exchange Act of 1934, as amended, that reflect our current expectations regarding our future growth, results of operations, cash flows, performance and business prospects, and opportunities, as well as assumptions made by, and information currently available to, our management. We have tried to identify forward-looking statements by using words such as “anticipate”, “believe”, “plan”, “expect”, “intend”, “project”, “will”, “potential” and similar expressions, but these words are not the exclusive means of identifying forward-looking statements. These statements are based on information currently available to us and are subject to various risks, uncertainties, and other factors, including, but not limited to, those matters discussed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012 that could cause our actual growth, results of operations, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements. Except as expressly required by the federal securities laws, we undertake no obligation to update such factors or to publicly announce the results of any of the forward-looking statements contained herein to reflect future events, developments, or changed circumstances, or for any other reason.

Overview

We are an industry leader whose institutions are recognized globally. Those institutions include, among others, American InterContinental University (“AIU”); Brooks Institute; Colorado Technical University (“CTU”); Harrington College of Design; INSEEC Group (“INSEEC”) Schools; International University of Monaco (“IUM”); International Academy of Design & Technology (“IADT”); Le Cordon Bleu North America (“LCB”); and Sanford-Brown Institutes and Colleges (“SBI” and “SBC”, respectively). Through our schools, we are committed to providing high-quality education, enabling students to graduate and pursue rewarding career opportunities.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with our unaudited consolidated financial statements and the notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. The MD&A is intended to help investors understand the results of operations, financial condition and present business environment. The MD&A is organized as follows:

• 2013 Third Quarter Overview

• Consolidated Results of Operations

• Segment Results of Operations

• Summary of Critical Accounting Policies and Estimates

• Liquidity, Financial Position and Capital Resources

2013 THIRD QUARTER OVERVIEW

During the third quarter of 2013, we further developed and refined key aspects of our strategy, which include recapitalizing the business, simplifying our regulatory exposure and organization, positioning the Company for growth and profitability and enhancing and investing in technological innovations. Additionally, we continue to emphasize our key priorities around enrolling, educating and placing our students within each of our institutions. We believe that the strategic actions we have taken coupled with our continued focus on student outcomes will enable us to return to positive growth and combat the challenges that continue to face the industry, including extended student decision making cycle times, increased competition across the industry and the continued uncertain regulatory climate.

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As part of our efforts to recapitalize the business, during the third quarter of 2013 we made the decision to commit to a plan to sell our International Schools which include the Paris-based INSEEC Group and the International University of Monaco. As a result of this decision, the results of our International Schools are now reported as assets held for sale within discontinued operations for all periods presented.

Third Quarter Results Overview

For the third quarter of 2013, our revenue declined approximately 21% as compared to the prior year quarter. We reported an operating loss of $68.6 million for the third quarter of 2013 which included $11.6 million of asset impairment charges ($0.11 per diluted share) primarily related to $10.7 million of impairment for our Le Cordon Bleu trade name.

Our new student enrollments were down 18% as compared to the prior year quarter. Excluding our campuses within the Transitional Schools segment, which no longer enroll new students, new student enrollments were down 10% as compared to the prior year quarter. The decrease in new student enrollments is primarily related to our online institutions within our University Schools segments. Despite the declines in new student enrollments this quarter, we continue to experience positive trends in the number of applications received across all of our ongoing segments, attributed to changes that have been made to student intake models as well as shifts in marketing strategy across our institutions. Current year new student enrollments were also negatively impacted by our student readiness programs.

Our University Schools group, which includes both CTU and AIU, reported operating income of $3.3 million for the third quarter of 2013 while revenue decreased approximately 12% as compared to the prior year quarter. New student enrollments declined 13% for the third quarter of 2013 as compared to the prior year quarter and total enrollment decreased 12%. We believe that the current state of the economy and the uncertainty surrounding job prospects continues to impact many students’ decision to return to school and incur debt. We continue to analyze and implement operational changes to improve our student intake process, including embarking on new marketing campaigns and enhancements to our websites. These efforts are beginning to yield results as we are seeing positive trends in new student enrollment, with year-over-year declines growing smaller as we have progressed through the year to date ended September 30, 2013. Lastly, we are working toward expanding our pricing strategies aimed at providing students with varying alternatives to completing their course of studies in an affordable and efficient manner. We are targeting an introduction of these expanded offerings in early 2014.

Our Career Schools continue to show signs of stabilization. Overall new student enrollments were down 6% for the third quarter of 2013 as compared to the prior year quarter. Student applications showed positive improvements in all three Career Schools segments as compared to the prior year quarter and Health Education’s student retention rate increased as compared to the prior year. New student enrollments continue to be impacted by challenging market conditions and a decline in the effectiveness of our processes to enroll a new student once they have applied to one of our institutions, particularly within our Culinary Arts segment. We are making solid progress establishing more effective enrollment processes to combat this operational inefficiency. The leadership team within Career Schools continues to evaluate and make changes to enhance critical operations and academic processes across Career Schools through focus on new student intake initiatives, new programs and reengineering efforts.

During the third quarter of 2013, our Career Schools reported a 19% decrease in revenue as compared to the prior year quarter and collectively reported an operating loss of $48.5 million. In connection with our quarterly assessment of indicators of goodwill and asset impairment, we concluded that as of September 30, 2013, there were events or circumstances which occurred during the third quarter which indicated that the fair value of the Le Cordon Bleu trade name could be below its respective carrying value. An interim impairment test was performed for this trade name which resulted in a non-cash charge of $10.7 million during the third quarter of 2013. We continue to monitor the operating results and cash flows of each of our reporting units on a quarterly basis for signs of possible declines in estimated fair value.

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Additionally, the decision made during the third quarter of 2013 to commit to a plan of sale for our International Schools triggered the accounting requirement under FASB ASC Topic 740 – Income Taxes to record a liability for the tax effect of the difference in basis for financial reporting purposes versus tax reporting. Accordingly, we recorded $39.9 million of income tax expense ($0.60 per diluted share) during the current year quarter related to the excess basis. This expense was recorded within discontinued operations.

Recapitalization of the Business

On October 22, 2013, we agreed to sell our International Schools to the private equity group, Apax Partners, and expect the transaction to close by the end of 2013. Through the movement of cash from our International operations prior to closing the transaction, along with payment expected to be received at closing, we anticipate that our domestic cash position will increase by approximately $290 million. Upon the closing of this transaction, we estimate that the gain on sale will be approximately $120—$130 million. From a tax perspective, the taxes attributable to the expected gain on sale will be largely offset by the tax benefit recognized in 2013 related to our domestic operating losses reported in 2013. These estimated amounts are subject to change depending upon the timing of the pending transaction. We expect that this transaction will improve our options for accelerating growth, position us well to redeploy our assets to rebuild our domestic educational institutions, assist us in remaining compliant with our financial responsibility ratios to ED and to consider other potential ventures while overall reducing the complexity of our business.

Simplify Regulatory Exposure and Organization

During the third quarter, we made organizational changes to simplify our structure, particularly within our Career Schools segments. Lysa Clemens assumed the role of Chief Career Schools Officer. Lysa recently joined the Company as Senior Vice President of Strategic Initiatives and is a proven outstanding leader with years of experience within the postsecondary, proprietary education sector. Lysa has named experienced education leaders to key roles overseeing areas such as operations, academics and enrollments and has combined our Health Education and Design & Technology institutions under common leadership to align with our strategy and to gain efficiencies. With these leadership changes, we believe we are well positioned to continue to build upon and execute our turnaround strategy. Additionally, we have created market-specific operational oversight roles within our Culinary Arts segment which will enable us to drive best practices and operational consistency across more campuses.

In addition to simplifying our structure, we are taking action to consolidate some of our brands within our nationally accredited institutions within Health Education and Design & Technology. This consolidation will include expanding the mission and educational programs offered at certain campuses, allowing us to better respond to student interests and local workforce needs. Focusing our efforts on a smaller number of brands also allows us to become more efficient and effective from an operations perspective. We are planning on implementing this strategy first in locations where we have both a Health Education campus and a Design & Technology campus in close proximity of each other and we will work to combine the educational resources and programs of each campus to form a single, comprehensive institution.

Within our Transitional Schools reporting segment, we announced the teach-out of SBI White Plains during the third quarter of 2013 and during October 2013, we announced five additional schools to be taught out, including three Health Education campuses and two Design & Technology campuses. These additional six schools will be added to our Transitional Schools segment during the fourth quarter of 2013. These campuses were selected based on various considerations, including, enrollment, financial viability and employment opportunities for graduates in the local market. The aggregate annual revenue and operating losses of these six campuses were approximately $45 million and $8 million, respectively, for the year ended December 31, 2012. We anticipate recording a charge of approximately $4 million during the fourth quarter of 2013 related to the five additional teach-out campuses announced in October for impairment and severance-related expenses. Consistent with our existing teach-out methodology, we will ensure that students currently enrolled within these institutions are afforded the reasonable opportunity to complete their program of study before the campus is ultimately

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closed. With these moves, we believe we now have the core campuses upon which we will stabilize our organization and regain growth. We expect that we will incur operating losses for the campuses within the Transitional Schools segment, including the six campuses recently announced, of approximately $90 million for the year ending December 31, 2013, excluding the impact of remaining lease obligation charges and other unusual items. As we end 2013, we anticipate having 30 campuses remaining within Transitional Schools as two locations are scheduled to complete their teach-out process in the fourth quarter. Furthermore, 13 more campuses are scheduled to complete their teach-outs in the first half of 2014.

Position the Company for Growth and Profitability

We have made significant progress towards developing and implementing a business model and cost structure that is aligned with lower total enrollment and the closing of selected campuses across all of our institutions. We recorded an additional $1.7 million of severance and related costs during the third quarter of 2013 related to our restructuring and reengineering initiatives. As a result of our right-sizing and reengineering efforts, we expect approximately $35 million of cost savings for the full year 2013. These actions, combined with our decision to exit certain campus locations, our continued focus on lowering metrically driven costs and improving the utilization of our existing real estate footprint have resulted in over $100 million in operating expense reductions for the year to date ended September 30, 2013 as compared to the prior year period. For the full year ending December 31, 2013, we are expecting operating expenses, excluding impairment charges, to be lower than the prior year period by approximately $175 million. We are estimating an incremental $75 million—$100 million of costs to be reduced on an annualized basis for fiscal 2014 as we receive a full year benefit of our cost savings initiatives, complete the teach-out process at more campuses and generate other efficiencies.

Enhance and Invest in Technological Innovations

Earlier in the year, we announced the full-scale rollout of our intellipath adaptive learning platform. We had previously piloted certain adaptive learning courses within our CTU and AIU institutions and based on positive metrics reported by both student and faculty from the pilots, we have continued to implement this platform broadly within our University institutions, including orientation courses. Our Career Schools began to pilot this technology in general education courses and will continue the rollout to a greater number of courses throughout the remainder of the year. Based on positive results experienced to date, we continue to believe this technology will have a positive impact on student learning which we expect will lead to better overall performance for our schools.

As we exit the third quarter of 2013, we continue to focus on our key strategies, which we expect will position us for modest growth in new student enrollments within our University institutions and continued stabilization within our Career Schools institutions as we move through 2014. Our continued work surrounding optimization of our cost structure coupled with the strategic initiatives discussed above have positioned us well for future growth and a return to profitability. Throughout 2013, we anticipate we will continue to have a net usage of cash from operating activities but expect we will be cash flow positive as we exit 2015, excluding the impact of nonrecurring items.

Regulatory Updates

ED Rule-Making Initiatives. In September, ED held the first of two negotiating sessions as part of its effort to rewrite certain “gainful employment” regulations that the United States District Court for the District of Columbia vacated on June 30, 2012. The recent partial government shutdown delayed the second negotiating session originally scheduled to take place in October, and ED has rescheduled that session for November 18 – 20, 2013. We are monitoring the proposed regulations, as well as recommendations made by the negotiators, and evaluating their potential impact on our business. Because new regulations must be finalized by November 1 in order to be effective at the beginning of the next award year (July 1), we believe that it is unlikely that a final rule could go into effect prior to July 2015. See Item 1, “Business,” in our Annual Report on Form 10-K for the year

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ended December 31, 2012 for more information about ED’s earlier attempt to develop a regulatory definition for gainful employment, how portions of prior regulations on these matters were invalidated by the courts, and how these matters generally affect our business.

Annual Reporting to ACICS. Our campuses have been preparing annual reports for filing with the Accrediting Council for Independent Colleges and Schools (“ACICS”), including graduate employment placement rates and student retention rates for the 2013 reporting year. Approximately 90% of our ACICS-accredited campuses that are not in teach-out expect to report higher campus level placement and retention rates than they reported for the ACICS 2012 reporting year. For its 2013 reporting year, ACICS increased the minimum acceptable placement rate compliance standard from 47% to 60%, and increased the benchmark placement rate from 64% to 70%. ACICS also increased the minimum acceptable campus retention rate compliance standard from 52% to 60%, and increased the corresponding benchmark retention rate from 67% to 70%. Under the increased standards for the 2013 reporting year, 15 of our 38 ACICS-accredited campuses that are not in teach-out expect to report campus level rates below ACICS’ benchmark placement or retention rate, including 3 campuses that expect to report rates below the placement rate minimum compliance standard. While we believe that some of these campuses may qualify for the waiver of accreditation standards (for minimum acceptable retention or placement rates) as a result of mitigating circumstances that were beyond the control of the campus, if waivers are not granted, we anticipate that these 15 campuses will continue to be subject to increased levels of accreditation monitoring and reporting. Campuses below the minimum compliance standard must come into compliance within a timeframe established by ACICS, or could face additional sanctions, including potentially the loss of accreditation.

Cohort Default Rates. In late September 2013, ED released the official two-year cohort default rates for the 2011 cohort and the official three-year cohort default rates for the 2010 cohort. These official rates were in line with our draft rates released earlier this year. The 2011 two-year cohort marks the conclusion of the two-year reporting metric, as subsequent years will focus solely on the three-year rate. None of our institutions exceeded ED’s annual threshold for the two-year rates. Across our institutions, our three-year rates for 2010 decreased (i.e., improved) from the three-year rates for 2009. Only one institution, which is currently in teach-out, had a three-year official rate for 2010 in excess of 30%. None of our continuing institutions had rates in excess of ED’s thresholds. See Item 1, “Business – Student Financial Aid and Related Federal Regulation – Compliance with Federal Regulatory Standards and Effect of Federal Regulatory Violations – Student Loan Default Rates” in our Annual Report on Form 10-K for the year ended December 31, 2012 for more information about cohort default rates, our prior year rates and ED’s standards applicable to the two-year and three-year rates.

CONSOLIDATED RESULTS OF OPERATIONS

The summary of selected financial data table below should be referenced in connection with a review of the following discussion of our results of operations for the quarters and years to date ended September 30, 2013 and

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2012. Results for the prior year periods have been reclassified to be comparable to the current year presentation (dollars in thousands).

	For the Quarter Ended September 30,												For the Year to Date Ended September 30,
	2013			% of Total Revenue			2012			% of Total Revenue			2013			% of Total Revenue			2012			% of Total Revenue
TOTAL REVENUE	$	251,313					$	316,155					$	810,908					$	1,047,766
OPERATING EXPENSES
Educational services and facilities (1)		100,053			39.8	%		117,929			37.3	%		310,948			38.3	%		375,705			35.9	%
General and administrative (2)
Advertising		74,005			29.4	%		79,673			25.2	%		214,065			26.4	%		229,846			21.9	%
Admissions		32,719			13.0	%		40,311			12.8	%		102,618			12.7	%		130,178			12.4	%
Administrative		76,693			30.5	%		89,088			28.2	%		253,512			31.3	%		252,016			24.1	%
Bad debt		7,884			3.1	%		10,847			3.4	%		21,187			2.6	%		27,240			2.6	%
Total general and administrative expense		191,301			76.1	%		219,919			69.6	%		591,382			72.9	%		639,280			61.0	%
Depreciation and amortization		17,023			6.8	%		18,749			5.9	%		52,221			6.4	%		55,593			5.3	%
Goodwill and asset impairment		11,585			4.6	%		—			0.0	%		15,708			1.9	%		85,464			8.2	%
OPERATING LOSS		(68,649	)		-27.3	%		(40,442	)		-12.8	%		(159,351	)		-19.7	%		(108,276	)		-10.3	%
PRETAX LOSS		(68,765	)		-27.4	%		(40,072	)		-12.7	%		(166,269	)		-20.5	%		(107,407	)		-10.3	%
BENEFIT FROM INCOME TAXES		(25,333	)		-10.1	%		(13,925	)		-4.4	%		(70,145	)		-8.7	%		(27,959	)		-2.7	%
Effective tax rate		-36.8	%					-34.7	%					-42.2	%					-26.0	%
LOSS FROM CONTINUING OPERATIONS		(43,432	)		-17.3	%		(26,147	)		-8.3	%		(96,124	)		-11.9	%		(79,448	)		-7.6	%
LOSS FROM DISCONTINUED OPERATIONS, net of tax		(43,632	)		-17.4	%		(6,999	)		-2.2	%		(37,533	)		-4.6	%		(1,856	)		-0.2	%
NET LOSS	$	(87,064	)		-34.6	%	$	(33,146	)		-10.5	%	$	(133,657	)		-16.5	%	$	(81,304	)		-7.8	%

(1) Educational services and facilities expense includes costs directly attributable to the educational activities of our schools, including: salaries and benefits of faculty, academic administrators, and student support personnel, and costs of educational supplies and facilities, including rents on school leases, certain costs of establishing and maintaining computer laboratories, costs of student housing, and owned and leased facility costs. Also included in educational services and facilities expense are costs of other goods and services provided by our schools, including costs of textbooks, laptop computers, restaurant services and contract training.

(2) General and administrative expense includes salaries and benefits of personnel in corporate and school administration, marketing, admissions, financial aid, accounting, human resources, legal and compliance. Other expenses within this expense category include costs of advertising and production of marketing materials, occupancy of the corporate offices and bad debt expense.

Revenue

All of our segments reported a decline in revenue as compared to both the prior year quarter and the prior year to date. This decline was driven by approximately 25% fewer students enrolled within our institutions at the beginning of the year and approximately 18% and 24% fewer new enrollments for the third quarter of 2013 and year to date 2013, respectively, as compared to the corresponding prior year periods. Excluding the impact of Transitional Schools which no longer enroll new students, we had approximately 10% fewer new enrollments for the third quarter of 2013 and 16% fewer new enrollments year to date 2013 when compared to the same periods in 2012. In addition, our institutions implemented certain operational changes during 2013 that have, in the short-term, negatively impacted our new enrollments, including certain programs which we had established to enable

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students to assess their readiness to commit to enrolling in college-level courses. We expect, however, that these changes will positively impact student outcomes as enrolled students have more awareness of the tools and rigor of the educational program that they are enrolled in. Finally, we have experienced certain operational execution issues related to student intake and orientation that have negatively impacted the rate at which students are converted from prospective applicants to new enrollments. The Company is actively addressing these issues.

Educational Services and Facilities Expense

The decrease in educational services and facilities expense as compared to both the prior year quarter and prior year to date is primarily driven by lower academic costs, most notably faculty and bookstore costs. The decrease in faculty and bookstore costs is caused by a combination of factors, including lower student enrollment across all of our institutions, our initiative to implement self-published textbooks and procurement renegotiations for books and supplies. We continue to closely monitor the variable costs while maintaining optimal student-teacher ratios. As a percentage of revenue, educational services and facilities expense increased as compared to the prior year quarter and year to date primarily due to fixed costs, including occupancy costs.

General and Administrative Expense

General and administrative expenses have decreased in both the third quarter of 2013 and year to date 2013 when compared to the same prior year periods, mainly due to lower admissions and advertising expenses for both periods and lower administrative expenses for the quarter. Admission costs have decreased primarily in salary related expenses due to cost reductions made in response to decreasing enrollments as well as Transitional Schools no longer enrolling new students. The lower advertising expense is substantially related to the Transitional Schools segment which was partially offset with increased advertising expense within our Career Schools segments in certain marketing channels to generate additional new student lead volume.

Administrative expenses were favorably impacted for the quarter and year to date ended September 30, 2013 as a result of the reductions in force carried out late 2012 through the current year to date to reorganize our campus and corporate functions to common operating structures and to better align with the current enrollment. This favorability was offset with $10.3 million of expenses related to the settlement of a legal matter, recorded within Health Education during the year to date 2013. Year to date 2012 administrative expense included a $19.0 million insurance recovery, recorded within Corporate and Other, related to the settlement of claims under certain insurance policies.

Bad debt expense incurred by each of our segments during the quarters and years to date ended September 30, 2013 and 2012 was as follows (dollars in thousands):

	For the Quarter Ended September 30,												For the Year to Date Ended September 30,
	2013			% of Segment Revenue			2012			% of Segment Revenue			2013			% of Segment Revenue			2012			% of Segment Revenue
Bad debt expense:
CTU	$	2,850			3.5	%	$	2,386			2.8	%	$	7,795			3.0	%	$	6,557			2.4	%
AIU		2,133			3.8	%		1,807			2.5	%		5,167			2.8	%		4,348			1.8	%
Total University Schools		4,983			3.6	%		4,193			2.7	%		12,962			2.9	%		10,905			2.1	%
Health Education		1,056			3.1	%		1,390			3.4	%		2,511			2.3	%		3,147			2.2	%
Culinary Arts		1,093			2.5	%		3,042			5.6	%		4,229			3.1	%		7,376			4.2	%
Design & Technology		480			1.9	%		590			1.8	%		1,181			1.4	%		1,788			1.6	%
Total Career Schools		2,629			2.5	%		5,022			3.9	%		7,921			2.4	%		12,311			2.9	%
Corporate and Other		(374	)		NM			(394	)		NM			(1,186	)		NM			(1,116	)		NM
Subtotal		7,238			3.0	%		8,821			3.1	%		19,697			2.6	%		22,100			2.4	%
Transitional Schools		646			6.8	%		2,026			6.7	%		1,490			3.4	%		5,140			4.7	%
Total	$	7,884			3.1	%	$	10,847			3.4	%	$	21,187			2.6	%	$	27,240			2.6	%

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Total bad debt expense decreased for the current year quarter and year to date as compared to the corresponding prior year periods primarily as a result of the decreasing total enrollments across our segments. Within our University segments, bad debt expense as a percent of revenue increased as compared to the prior year periods due to an increased amount of in-school payment plans, resulting from an overall reduction in Pell grants available to students as a result of changes in eligibility requirements.

Goodwill and Asset Impairment

During the third quarter of 2013, in conjunction with our quarterly review process, we concluded that certain indicators existed to suggest the Le Cordon Bleu trade name was at risk of its carrying value exceeding its fair value as of September 30, 2013. As a result of our assessment, we recorded a $10.7 million trade name impairment charge for Le Cordon Bleu (Culinary Arts segment). The current quarter trade name impairment charge is in addition to the amounts recorded in the second quarter of 2013 of $2.3 million and $1.7 million for the Le Cordon Bleu and Sanford-Brown (Health Education segment) trade names, respectively. See Note 7 “Intangible Assets” of the notes to our unaudited consolidated financial statements for additional information. Also during the third quarter of 2013, we recorded asset impairment charges approximating $0.9 million primarily related to exiting certain facilities to optimize existing real estate.

During the year to date ended September 30, 2012, we recorded a goodwill impairment charge of $83.4 million ($41.9 million within Health Education, $40.8 million within Design & Technology and $0.7 million within Transitional Schools), a trade name impairment charge of $1.0 million and asset impairment charges of $1.1 million.

Operating Loss

The operating loss reported for the quarter and year to date ended September 30, 2013 resulted principally from the decline in revenues across all of our segments which was only partially offset by lower operating expenses. Initiatives to align expenses with the declining enrollment, changes in marketing strategies and implementation of efficiencies in our support functions continue to partially offset the impact of declining revenues and deleveraging of the business. In addition, the asset impairment charges and the $1.7 million and $4.6 million of severance and related costs, recorded in the current quarter and year to date, respectively, as well as the $10.3 million of expenses related to a legal settlement recorded primarily in the second quarter of 2013, negatively impacted the quarter and year to date ended September 30, 2013 operating results.

The prior year to date operating loss of $108.3 million includes $85.5 million of goodwill and asset impairment charges primarily recorded in the second quarter of 2012 and an insurance recovery of $19.0 million related to the settlement of claims under certain insurance policies recorded in the first quarter of 2012.

Benefit from Income Taxes

The increase in the effective rate for the quarter ended September 30, 2013 as compared to the prior year quarter was primarily due to earnings mix changes for our ground-based institutions versus our online institutions. The increase in the effective rate for the year to date ended September 30, 2013 as compared to the prior year was primarily due to the write-off of nondeductible goodwill in the prior year. The year to date rate was impacted by a $8.6 million favorable tax adjustment, which is comprised of $11.2 million related to the resolution of various state tax audits and exposures offset by $2.6 million of tax benefits recaptured due to the sale of AIU London. The effect of these discrete items was to increase the effective rate benefit by 5.2%. In addition, the cumulative effect of state and foreign valuation losses decreased the quarter’s effective rate benefit by 1.0%.

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Loss from Discontinued Operations

The results of operations for campuses that are held for sale or that have ceased operations or were sold, and are considered distinct operations as defined under FASB ASC Topic 205 – Presentation of Financial Statements, are presented within discontinued operations. During the third quarter of 2013, we made the decision to commit to a plan to sell our International Schools. Accordingly, the results of operations for these schools are reported within discontinued operations. Also, during the 2013 quarters ended June 30 and March 31, we completed the teach-out of our SBI Landover and SBC Hazelwood campuses, respectively. All current and prior period financial statements and the related notes herein, including segment reporting, include the results of operations and financial position of these campuses as components of discontinued operations.

The increase in the loss from discontinued operations as compared to the prior year quarter and prior year to date is primarily due to $39.9 million of tax expense recorded during the quarter ended September 30, 2013 related to the excess of the book basis over the tax basis of investments in foreign subsidiaries that are currently held for sale. See Note 4 “Discontinued Operations” of the notes to our unaudited consolidated financial statements for further discussion.

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SEGMENT RESULTS OF OPERATIONS

The following tables present unaudited segment results for the reported periods (dollars in thousands). Results for the prior year periods have been reclassified to be comparable to the current year presentation.

	For the Quarter Ended September 30,									For the Year to Date Ended September 30,
	2013			2012			% Change			2013			2012			% Change
REVENUE:
CTU	$	82,424		$	86,484			-4.7	%	$	259,520		$	274,652			-5.5	%
AIU		56,284			71,204			-21.0	%		182,518			238,985			-23.6	%
Total University Schools		138,708			157,688			-12.0	%		442,038			513,637			-13.9	%
Health Education		34,129			40,469			-15.7	%		107,439			140,018			-23.3	%
Culinary Arts		44,256			54,415			-18.7	%		134,771			175,148			-23.1	%
Design & Technology		24,752			33,129			-25.3	%		82,899			109,654			-24.4	%
Total Career Schools		103,137			128,013			-19.4	%		325,109			424,820			-23.5	%
Corporate and Other		—			16			NM			—			50			NM
Subtotal		241,845			285,717			-15.4	%		767,147			938,507			-18.3	%
Transitional Schools		9,468			30,438			-68.9	%		43,761			109,259			-59.9	%
Total	$	251,313		$	316,155			-20.5	%	$	810,908		$	1,047,766			-22.6	%
OPERATING (LOSS) INCOME:
CTU	$	9,208		$	10,324			-10.8	%	$	41,708		$	41,584			0.3	%
AIU		(5,930	)		1,084			NM			(1,763	)		22,623			-107.8	%
Total University Schools		3,278			11,408			-71.3	%		39,945			64,207			-37.8	%
Health Education		(14,783	)		(12,758	)		-15.9	%		(53,200	)		(64,660	)		17.7	%
Culinary Arts		(23,655	)		(10,136	)		-133.4	%		(52,809	)		(11,991	)		NM
Design & Technology		(10,036	)		(6,240	)		-60.8	%		(24,787	)		(50,912	)		51.3	%
Total Career Schools		(48,474	)		(29,134	)		-66.4	%		(130,796	)		(127,563	)		-2.5	%
Corporate and Other		(7,561	)		(5,389	)		NM			(24,979	)		1,746			NM
Subtotal		(52,757	)		(23,115	)		-128.2	%		(115,830	)		(61,610	)		-88.0	%
Transitional Schools		(15,892	)		(17,327	)		8.3	%		(43,521	)		(46,666	)		6.7	%
Total	$	(68,649	)	$	(40,442	)		-69.7	%	$	(159,351	)	$	(108,276	)		-47.2	%
OPERATING (LOSS) MARGIN:
CTU		11.2	%		11.9	%					16.1	%		15.1	%
AIU		-10.5	%		1.5	%					-1.0	%		9.5	%
Total University Schools		2.4	%		7.2	%					9.0	%		12.5	%
Health Education		-43.3	%		-31.5	%					-49.5	%		-46.2	%
Culinary Arts		-53.5	%		-18.6	%					-39.2	%		-6.8	%
Design & Technology		-40.5	%		-18.8	%					-29.9	%		-46.4	%
Total Career Schools		-47.0	%		-22.8	%					-40.2	%		-30.0	%
Corporate and Other		NM			NM						NM			NM
Subtotal		-21.8	%		-8.1	%					-15.1	%		-6.6	%
Transitional Schools		-167.8	%		-56.9	%					-99.5	%		-42.7	%
Total		-27.3	%		-12.8	%					-19.7	%		-10.3	%

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	For the Quarter Ended September 30,							For the Year to Date Ended September 30,
	2013		2012		% Change			2013		2012		% Change
NEW ENROLLMENTS:
CTU		4,780		5,150		-7	%		13,710		16,620		-18	%
AIU		2,880		3,700		-22	%		9,600		13,390		-28	%
Total University Schools		7,660		8,850		-13	%		23,310		30,010		-22	%
Health Education		3,150		3,310		-5	%		7,470		7,940		-6	%
Culinary Arts		3,650		3,920		-7	%		8,720		9,490		-8	%
Design & Technology		990		1,060		-7	%		2,510		2,750		-9	%
Total Career Schools		7,790		8,290		-6	%		18,700		20,180		-7	%
Subtotal		15,450		17,140		-10	%		42,010		50,190		-16	%
Transitional Schools (1)		20		1,720		NM			120		5,330		NM
Total		15,470		18,860		-18	%		42,130		55,520		-24	%

	As of September 30,
	2013		2012		% Change
TOTAL ENROLLMENTS:
CTU		20,500		22,000		-7	%
AIU		12,000		14,900		-19	%
Total University Schools		32,500		36,900		-12	%
Health Education		9,000		10,600		-15	%
Culinary Arts		8,000		11,200		-29	%
Design & Technology		5,000		6,500		-23	%
Total Career Schools		22,000		28,300		-22	%
Subtotal		54,500		65,200		-16	%
Transitional Schools		1,800		7,300		NM
Total		56,300		72,500		-22	%

(1) Campuses within the Transitional Schools segment no longer enroll new students; students who re-enter after 365 days are reported as new enrollments.

University Schools. Current quarter and year to date revenue for our AIU and CTU segments decreased approximately 12.0% and 13.9%, respectively. Lower student enrollment at the beginning of the year, coupled with lower new enrollments throughout 2013, partially resulting from certain programs which we had established to enable students to assess their readiness to commit to enrolling in college-level courses and certain operational execution issues related to student intake and orientation that have negatively impacted the rate at which students are converted from prospective applicants to new enrollments, contributed to this decline.

Operating income for the third quarter of 2013 for the University Schools decreased $8.1 million, or 71.3%, as compared to the prior year quarter. Current year to date operating income decreased $24.4 million for AIU and remained relatively flat for CTU as compared to the prior year. The decreases in operating income are driven by the declines in revenue, which were only partially offset by decreases in operating expenses. Most expense categories were lower when compared to the prior year periods, as cost reduction efforts were implemented in response to the continued decline in total enrollments. Bad debt expense increased for both the current year quarter and year to date due to an increased amount of in-school payment plans within both segments, resulting from an overall reduction in Pell grants available to students as a result of changes in eligibility requirements. Additionally, approximately $2.8 million of expense was recorded within both reporting segments during the third quarter of 2013 as a result of the decision to vacate space and optimize our real estate footprint.

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Career Schools. Current quarter and year to date revenue for our Design & Technology, Culinary Arts, and Health Education segments decreased 19.4% and 23.5%, respectively, as compared to the corresponding prior year periods. The decrease in revenue is primarily due to lower total enrollments at the beginning of the year and lower new enrollments throughout 2013. Although applications are slightly higher in 2013 as compared to 2012, new enrollments lag the prior year due in part to the economic conditions, the impact of our student readiness programs and certain operational inefficiencies affecting the rate at which we convert prospective students to new enrollments. The current year quarter was impacted by the announcement of the teach-out of our SBI White Plains campus and therefore did not include a full quarter of new enrollments and as a result accounted for approximately 4% of the 5% decline in new enrollments for Health Education and approximately 1% of the 6% in new enrollments for Career Schools as compared to the prior year quarter. In addition, the lower student enrollments within our Culinary Arts and Design & Technology segments are primarily within programs which yield a higher revenue per student.

For the third quarter of 2013, Career Schools reported an operating loss of $48.5 million versus a $29.1 million operating loss for the third quarter of 2012. The current year quarter includes a $10.7 million trade name impairment recorded within the Culinary Arts segment. Career Schools’ operating losses year to date 2013 and 2012, were $130.8 million and $127.6 million, respectively. Decreases in certain expense categories, including academics and admissions as a result of our restructuring and re-engineering initiatives carried out to better align with current total enrollments, were offset with the increase in legal expense, primarily related to the settlement of a legal matter for $10.3 million as well as increased advertising expenses to assist in generating greater new student interest. Additionally, the current year to date includes trade name impairment charges of $14.7 million ($13.0 million and $1.7 million recorded within the Culinary Arts and Health Education segments, respectively). The prior year to date included $82.7 million of goodwill impairment charges.

Transitional Schools. This segment includes our campuses that are currently being taught out. Current quarter and year to date revenue declined as compared to the prior year periods due to the campuses no longer enrolling students. We expect revenue to continue to decline as compared to the prior year as campuses continue to wind down their operations. We anticipate that the majority of these campus closures will be completed by the second quarter of 2014.

Operating losses are reported for both the quarter and year to date ended 2013 as the lower revenues exceed reductions in operating expenses. Reduced admissions and advertising expenses as a result of discontinuing enrollments, as well as other cost savings actions, have resulted in the operating losses for both the quarter and year to date ended 2013 improving as compared to the prior year periods.

Corporate and Other. This category includes unallocated costs that are incurred on behalf of the entire company. The approximate $26.7 million increase in year to date expenses as compared to the prior year results primarily from the $19.0 million insurance recovery recorded in 2012 related to the settlement of claims under certain insurance policies and additional current year to date expenses related to the change in leadership, outside services expense associated with our continuing efforts to reorganize our campus and corporate functions to better align with the current total enrollment, and higher insurance costs.

SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

A detailed discussion of the accounting policies and estimates that we believe are most critical to our financial condition and results of operations that require management’s most subjective and complex judgments in estimating the effect of inherent uncertainties is included under the caption “Summary of Critical Accounting Policies and Estimates” included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2012. Note 2 “Summary of Significant Accounting Policies” of the notes to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2012 also includes a discussion of these and other significant accounting policies.

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LIQUIDITY, FINANCIAL POSITION, AND CAPITAL RESOURCES

As of September 30, 2013, cash, cash equivalents and short-term investments totaled $95.7 million. Our cash flows from operations have historically been adequate to fulfill our liquidity requirements. We historically have financed our operating activities, organic growth and acquisitions primarily through cash generated from operations, existing cash balances and credit facility borrowings. The recent declines in operating performance have resulted in an increase in net cash used in operating activities. As we execute on our strategic imperatives, we expect that there will be continued pressure on our domestic operating cash flows in the short term. We anticipate that we will be able to satisfy the cash requirements associated with, among other things, our working capital needs, capital expenditures and lease commitments through at least the next 12 months primarily with cash generated by operations and existing cash balances.

Restricted cash balances as of September 30, 2013 approximate $12.6 million and are comprised of certificates of deposit to provide securitization for letters of credit.

On October 22, 2013, the Company and one of its subsidiaries entered into a Securities Purchase Agreement with Insignis, a company controlled by funds managed by Apax Partners, pursuant to which the Company will sell and transfer control of its Paris-based INSEEC Group and the International University of Monaco. Through movement of cash from our international operations prior to the closure of the transaction, along with payment expected to be received at closing, we anticipate that our domestic cash position will increase by approximately $290.0 million. As of September 30, 2013, these foreign entities had approximately $131.8 million of cash and cash equivalents. Upon the closing of this transaction, the net cash proceeds would be utilized to continue to support our investment in our domestic operations as well as provide flexibility as we seek opportunities to return to growth. Subsequent to the closing of this transaction, total domestic cash is expected to be approximately $375.0 million as of December 31, 2013.

The discussion above reflects management’s expectations regarding liquidity; however, we are not able to assess the effect of loss contingencies on future cash requirements and liquidity. See Note 9 “Commitments and Contingencies” of the notes to our unaudited consolidated financial statements. Further, as a result of the significance of the Title IV Program funds received by our students, we are highly dependent on these funds to operate our business. Any reduction in the level of Title IV funds that our students are eligible to receive or any impact on timing or our ability to receive Title IV Program funds would have a significant impact on our operations and our financial condition. See Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012.

We continue to focus on identifying strategic alternatives which will position CEC for a return to sustainable growth. Along those lines, we are working to complete the sale of our foreign assets, assess our real estate footprint, evaluate the portfolio of campuses and extend or replace our existing line of credit. We have received a commitment from BMO Harris N.A. to extend our existing credit agreement to January 2015 under the same terms and conditions as the current facility. We are also discussing revised terms and conditions for a facility which would replace our existing facility subject to the consummation of the sale of our International operations. The decisions we make will be reached by balancing our short-term needs against our long-term strategies to return to growth.

Sources and Uses of Cash

Operating Cash Flows

During the year to date ended September 30, 2013, net cash flows used in operating activities totaled $77.8 million. During the year to date ended September 30, 2012, net cash flows provided by operating activities totaled $32.5 million. The increase in our use of operating cash flows is driven by the operating loss for the current year to date as well as payments of legal settlements and severance and related costs.

Our primary source of cash flows from operating activities is tuition collected from our students. Our students derive the ability to pay tuition costs through the use of a variety of funding sources, including, among others, federal loan and grant programs, state grant programs, private loans and grants, school payment plans,

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private and institutional scholarships and cash payments. For the years to date ended September 30, 2013 and 2012, approximately 78% and 80%, respectively, of our U.S. schools’ cash receipts from tuition payments come from Title IV Program funding.

For further discussion of Title IV Program funding and alternative private loan funding sources for our students, see “Student Financial Aid And Related Federal Regulation” in Item 1, “Business”, in our Annual Report on Form 10-K for the year ended December 31, 2012.

Our primary uses of cash to support our operating activities include, among other things, cash paid and benefits provided to our employees for services, to vendors for products and services, to lessors for rents and operating costs related to leased facilities, to suppliers for textbooks and other school supplies, and to federal, state and local governments for income and other taxes.

During the year to date ended September 30, 2013, we recorded a loss on the sale of AIU London of $7.0 million. Included in the loss on sale was $3.3 million relating to the cumulative translation loss resulting from the effects of foreign currency on AIU London’s balance sheet.

Investing Cash Flows

During the years to date ended September 30, 2013 and 2012, net cash flows used in investing activities totaled $7.5 million and $4.4 million, respectively.

Purchases and Sales of Available-for-Sale Investments. Purchases and sales of available-for-sale investments resulted in a net cash inflow of $11.6 million and $29.7 million during the years to date ended September 30, 2013 and 2012, respectively.

Capital Expenditures. Capital expenditures decreased to $16.6 million for the year to date ended September 30, 2013 as compared to $29.5 million for the year to date ended September 30, 2012. Capital expenditures represented 1.8% and 2.6% of total revenue of continuing and discontinued operations during the years to date ended September 30, 2013 and 2012, respectively. The decrease in capital expenditures as compared to the prior year to date is primarily due to the investment made in 2012 in our IT infrastructure and online student platforms as well as the elimination of capital expenditures at campuses included in our Transitional Schools segment in 2013.

Payments of Cash upon Sale of Business. In conjunction with the sale of AIU London, we paid $2.5 million in cash to the buyer in consideration of negative working capital.

Financing Cash Flows

During the year to date ended September 30, 2013, net cash flows provided by financing activities approximated $5.9 million. During the year to date ended September 30, 2012, net cash flows used in financing activities totaled $62.0 million.

Credit Agreement. During the fourth quarter of 2012, we entered into a revolving credit facility pursuant to a Credit Agreement with BMO Harris Bank N.A., in its capacities as the initial lender thereunder and the administrative agent for the lenders which from time to time may be parties to the Credit Agreement. The Credit Agreement requires that interest and fees are payable quarterly in arrears and principal is payable at maturity.

We borrowed the maximum amount of $80.0 million under the Credit Agreement in December 2012 and repaid this amount in full during the first quarter of 2013. As of September 30, 2013, we have no borrowings outstanding under this Agreement.

Restricted Cash. During 2012, we established restricted cash balances of approximately $97.9 million, of which $88.0 million represented the 110% cash collateral for the loans secured under our Credit Agreement that was entered into during the fourth quarter of 2012. In the first quarter of 2013, we repaid the revolving credit facility thereby releasing the $88.0 million of restricted cash.

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Repurchases of Stock. We did not repurchase any shares of our common stock during the year to date ended September 30, 2013. During the year to date ended September 30, 2012, we repurchased 6.1 million shares of our common stock for approximately $56.4 million at an average price of $9.29 per share. Repurchases of stock in 2012 were funded by cash generated from operating activities.

Contractual Obligations

As of September 30, 2013 there were no significant changes to our contractual obligations from December 31, 2012. We are not a party to any off-balance sheet financing or contingent payment arrangements, nor do we have any unconsolidated subsidiaries.

Changes in Financial Position – September 30, 2013 compared to December 31, 2012

Selected unaudited consolidated balance sheet account changes from December 31, 2012 to September 30, 2013 were as follows (dollars in thousands):

	As of
	September 30, 2013		December 31, 2012		% Change
ASSETS
CURRENT ASSETS:
Total cash and cash equivalents and short-term investments	$	95,698	$	274,634		-65	%
Receivables, other, net		39,845		2,096		NM
Prepaid expenses		112,836		38,296		NM
Assets of discontinued operations		254,097		153,675		65	%
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accrued expenses, other		61,383		35,060		75	%
Deferred income tax liabilities, net		32,752		—		100	%
Liabilities of discontinued operations		95,975		76,020		26	%

Total cash and cash equivalents and short-term investments: The decrease is primarily driven by the first quarter of 2013 $80.0 million repayment of borrowings under our Credit Agreement and an increase in the net cash used in operating activities as a result of the current year to date operating loss.

Receivables, other, net: The increase is primarily due to an insurance recovery receivable related to the proposed settlement of our Securities and Shareholder Derivative litigation matters recorded in the second quarter of 2013. See Note 9, “Commitments and Contingencies”.

Prepaid expenses: The increase is mainly due to the year to date income tax benefit of $82.9 million.

Assets of discontinued operations: The increase is due to non-current assets held for sale as of December 31, 2012 being classified as current assets held for sale as of September 30, 2013 upon the determination that the sale of our International Schools is expected to be completed within one year.

Accrued expenses, other: The increase is primarily due to $32.5 million of litigation accruals being recorded in the second quarter of 2013. See Note 9, “Commitments and Contingencies”.

Deferred income tax liabilities, net: A deferred income tax liability was recorded during the current year quarter in the amount of $39.9 million related to the tax effect of the difference in book basis versus tax basis for our assets held for sale. This liability was recorded within continuing operations during the third quarter of 2013.

Liabilities of discontinued operations: This increase is primarily due to an increase in deferred revenue for our assets held for sale as those institutions typically bill students up front at the beginning of the fall session. This balance decreases over the term as revenues are earned.

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ITEM  3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to financial market risks, including changes in interest rates and foreign currency exchange rates. We use various techniques to manage our market risk, including, from time to time, the use of derivative financial instruments. We do not use derivative financial instruments for speculative purposes.

Our municipal bond investment in auction rate securities (“ARS”) has a stated term to maturity of greater than one year. We classify our investment in ARS on our unaudited consolidated balance sheets within other non-current assets. An auction can “fail” when the number of sellers of the security exceeds the buyers for that particular auction period. In the event that an auction fails, the interest rate resets at a rate based on a formula determined by the individual security. The ARS for which an auction has failed continues to accrue interest and is auctioned on a set interval until the auction succeeds, the issuer calls the securities, or it matures. As of September 30, 2013, we have determined this investment is at risk for impairment due to the nature of the liquidity of the market over the past year. As a result, we recorded a cumulative unrealized loss reflected within accumulated other comprehensive income (loss) on our unaudited consolidated balance sheet of approximately $0.5 million as of September 30, 2013. We believe this impairment is temporary, as we do not intend to sell the investment and it is unlikely we will be required to sell the investment before recovery of its amortized cost basis.

Interest Rate Exposure

Any outstanding borrowings under our Credit Agreement bear annual interest at fluctuating rates as determined by the Base Loan Rate or the London Interbank Offered Rate (LIBOR) for the relevant currency, plus the applicable rate based on the type of loan. As of September 30, 2013, we had no outstanding borrowings under this agreement.

Our financial instruments are recorded at their fair values as of September 30, 2013 and December 31, 2012. We believe that the exposure of our consolidated financial position and results of operations and cash flows to adverse changes in interest rates is not significant.

Foreign Currency Exposure

We are subject to foreign currency exchange exposures arising from current and anticipated transactions denominated in currencies other than the U.S. dollar, and from the translation of foreign currency balance sheet accounts into U.S. dollar balance sheet accounts. Specifically, we are subject to risks associated with fluctuations in the value of the Euro versus the U.S. dollar.

As a percentage of total continuing and discontinued operations for the year to date ended September 30, 2013, our international operations represented approximately 11% of revenue and contributed $2.3 million of earnings before tax within discontinued operations. Total assets of our international operations represent 25% of total consolidated assets as of September 30, 2013. Our current year to date discontinued operations results included a $1.5 million favorable impact of foreign currency exchange rates related to revenue versus the prior year to date. The impact of foreign currency exchange rates on operating income was not material when compared to the prior year to date.

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ITEM  4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We completed an evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q (“Report”) under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2013, our disclosure controls and procedures were effective to provide reasonable assurance that (i) the information required to be disclosed by us in this Report was recorded, processed, summarized, and reported within the time periods specified in the rules and forms provided by the U.S. Securities and Exchange Commission (“SEC”) and (ii) information required to be disclosed by us in our reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on the Effectiveness of Controls

Our management does not expect that our disclosure controls and procedures or our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in a cost-effective control system, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our Company have been detected.

These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Note 9 “Commitments and Contingencies” to our unaudited consolidated financial statements is incorporated herein by reference.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, the reader should carefully consider the factors discussed in Part I, Item 1A “Risk Factors”, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, which was filed with the Securities and Exchange Commission on February 28, 2013.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth information regarding purchases made by us of shares of our common stock on a monthly basis during the year to date ended September 30, 2013:

Issuer Purchases of Equity Securities

Period	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)		Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
December 31, 2012							$	183,296,772
January 1, 2013—January 31, 2013		—	$	—		—		183,296,772
February 1, 2013—February 28, 2013		—		—		—		183,296,772
March 1, 2013—March 31, 2013		155,423		2.92		—		183,296,772
April 2013—April 30, 2013		—		—		—		183,296,772
May 1, 2013—May 31, 2013		15,429		3.07		—		183,296,772
June 1, 2013—June 30, 2013		236		2.98		—		183,296,772
July 1, 2013—July 31, 2013		—		—		—		183,296,772
August 1, 2013—August 31, 2013		—		—		—		183,296,772
September 1, 2013—September 30, 2013		—		—		—		183,296,772
Total		171,088				—

(1) Includes 171,088 shares delivered back to the Company for payment of withholding taxes from employees for vesting restricted shares and restricted stock units issued pursuant to the terms of the Career Education Corporation 2008 Incentive Compensation Plan.

(2) As of September 30, 2013, approximately $183.3 million was available under our previously authorized repurchase program. Stock repurchases under this program may be made on the open market or in privately negotiated transactions from time to time, depending on various factors, including market conditions and corporate and regulatory requirements. The stock repurchase program does not have an expiration date and may be suspended or discontinued at any time.

Item 6. Exhibits

The exhibits required to be filed by Item 601 of Regulation S-K are listed in the “Exhibit Index”, which is attached hereto and incorporated by reference herein.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CAREER EDUCATION CORPORATION
Date: November 6, 2013	By:	/S/ SCOTT W. STEFFEY
		Scott W. Steffey President and Chief Executive Officer (Principal Executive Officer)
Date: November 6, 2013	By:	/S/ COLLEEN M. O’SULLIVAN
		Colleen M. O’Sullivan Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

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INDEX TO EXHIBITS

Exhibit Number	Exhibit
+3.2	Sixth Amended and Restated By-laws of Career Education Corporation (as amended as of October 24, 2013).
+*10.1	Letter Agreement between Career Education Corporation and Diane Auer Jones dated July 17, 2013.
+*10.2	Separation Agreement and General Release between Career Education Corporation and Daniel Hurdle dated September 5, 2013.
+*10.3	Executive Retention Agreement between Organisation et Developpement and Catherine Lespine dated September 30, 2013.
+*10.4	Employment Contract between INSEEC and Catherine Lespine dated June 27, 2013.
+*10.5	Employment Contract between Organisation et Developpement and Catherine Lespine dated June 27, 2013.
+*10.6	Executive Retention Agreement between INSEEC and Catherine Lespine dated March 4, 2013.
+*10.7	Executive Retention Agreement between Organisation et Developpement and Catherine Lespine dated March 4, 2013.
+31.1	Certification of CEO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
+31.2	Certification of CFO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
+32.1	Certification of CEO Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
+32.2	Certification of CFO Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
+101	The following financial information from our Quarterly Report on Form 10-Q for the nine months ended September 30, 2013, filed with the SEC on November 6, 2013, formatted in Extensible Business Reporting Language (XBRL): (i) the Unaudited Consolidated Balance Sheets as of September 30, 2013 and December 31, 2012, (ii) the Unaudited Consolidated Statements of Loss and Comprehensive Loss for the quarter and year to date ended September 30, 2013 and September 30, 2012, (iii) the Unaudited Consolidated Statements of Cash Flows for the year to date ended September 30, 2013 and September 30, 2012, and (iv) Notes to Unaudited Consolidated Financial Statements.

* Management contract or compensatory plan or arrangement required to be filed as an Exhibit on this Form 10-Q.

+ Filed herewith.

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EX-3.2

Exhibit 3.2

SIXTH AMENDED AND RESTATED BY-LAWS

OF

CAREER EDUCATION CORPORATION

(as amended as of October 24, 2013)

ARTICLE I

OFFICES

Section 1.1 Registered Office. The registered office of Career Education Corporation (the “Corporation”) shall be in the City of Wilmington, County of New Castle, State of Delaware.

Section 1.2 Other Offices. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 2.1 Place of Meeting. All meetings of the stockholders for the election of directors shall be held at such place either within or without the State of Delaware as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated by the Board of Directors in its notice of the meeting or in a duly executed waiver of notice thereof.

Section 2.2 Time of Annual Meeting. Annual meetings of stockholders shall be held on the third Thursday in May, if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, at which stockholders shall elect directors to hold office for the term provided in Section 3.2 of these By-laws and conduct such other business as shall be considered.

Section 2.3 Notice of Annual Meetings. Except as otherwise required by law, written notice of the annual meeting stating the place, date and hour of the meeting, and stating the record date for determining stockholders entitled to vote at the meeting if such record date is different from the record date for determining the stockholders entited to notice of the meeting, shall be given to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting not fewer than ten (10) nor more than sixty (60) days before the date of the meeting.

Section 2.4 Director Nominations. (a) Nominations of persons for election to the Board of Directors of the Corporation at an annual meeting of stockholders may be made (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the Corporation who is a

stockholder of record at the time of the giving of notice provided herein, is entitled to vote in the election of directors at the meeting and complies with the notice procedures set forth in this Article II, Section 2.4. For the avoidance of doubt, clause (ii) above shall be the exclusive means for a stockholder to make nominations at an annual meeting of stockholders.

For nominations to be properly brought at an annual meeting by a stockholder pursuant to clause (ii) of the foregoing paragraph, (A) the stockholder must have given timely notice thereof in writing pursuant to the requirements set forth herein, (B) if the stockholder, or beneficial owner on whose behalf any such nomination is made, has provided the Corporation with a “Solicitation Notice” (as defined herein), such stockholder or beneficial owner must have delivered a proxy statement and form of proxy to the holders of a percentage of the Corporation’s voting shares reasonably believed by such stockholder or beneficial owner, if any, on whose behalf the nomination is made, to be sufficient to elect the nominee or nominees proposed to be nominated by such stockholder and must have included in such materials the Solicitation Notice and (C) if no Solicitation Notice relating thereto has been timely provided pursuant to this Section 2.4, such stockholder or beneficial owner must not have solicited a number of proxies sufficient to have required the delivery of such a Solicitation Notice under this Section 2.4.

To be timely, a stockholder’s notice must be delivered to, or mailed and received by, the Secretary of the Corporation at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the first anniversary of the date of the previous year’s annual meeting of stockholders; provided, however, that, subject to the last sentence of this paragraph, if no annual meeting of stockholders was held in the previous year or if the meeting is convened more than thirty (30) days before or after such anniversary date, notice by the stockholder to be timely must be so delivered, or mailed and received, not later than the close of business on the later of (a) the ninetieth (90th) day prior to such annual meeting or (b) the tenth (10th) day following the day on which the date of such meeting has been first “publicly disclosed” (in the manner provided herein) by the Corporation. Notwithstanding anything in the preceding sentence to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased and neither the names of all of the nominees for director positions nor notice specifying the size of the Board of Directors is “publicly disclosed” by the Corporation at least ten (10) days before the last day a record stockholder may deliver notice of nomination in accordance with the preceding sentence, a stockholder’s notice pursuant to this Article II, Section 2.4 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to, or mailed and received by, the Secretary of the Corporation at the principal executive offices of the Corporation not later than the close of business on the tenth (10th) day following the day on which such names or notice specifying the size of the Board of Directors has been first “publicly disclosed” by the Corporation. In no event shall an adjournment, or postponement of an annual meeting for which notice has been given, commence a new time period for the giving of a record stockholder’s notice.

Such stockholder’s notice pursuant to this Article II, Section 2.4 shall set forth: (i) as to each person whom the stockholder proposes to nominate for election or re-election as a director: (1) the name, age, business address and residence address of such person; (2) the principal

occupation or employment of such person; (3) (A) the class or series and number of all shares of stock of the Corporation which are owned beneficially or of record by such person and any affilates or associates of such person, (B) the name of each nominee holder of shares of all stock of the Corporation owned beneficially but not of record by such person or any affiliates or associates of such person, and the number of shares of stock of the Corporation held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or associates of such person, with respect to stock of the Corporation and (D) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock of the Corporation) has been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person, or any affiliates or associates of such person, with respect to stock of the Corporation; (4) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (including such person’s written consent to being named in the proxy statement as a nominee and to serving as director if elected); and (5) a statement whether such person, if elected, intends to tender, promptly following such person’s election or re-election, an irrevocable resignation effective upon such person’s failure to receive the required vote for re-election at the next meeting at which such person would face re-election and acceptance of such resignation by the Board of Directors, in accordance with the Corporation’s Corporate Governance Guidelines; and (ii) as to the stockholder giving notice and the beneficial owner, if any, on whose behalf the nomination is made: (1) the name and record address of such person; (2) (A) the class, series, and number of shares of the Corporation which are owned beneficially or of record by such person and any affiliates or associates of such person; (B) the name of each nominee holder of shares of the Corporation owned beneficially but not of record by such person or any affiliates or associates of such person, and the number of shares of stock of the Corporation held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or associates of such person, with respect to stock of the Corporation and (D) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock of the Corporation) has been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person, or any affiliates or associates of such person, with respect to stock of the Corporation; (3) a description of all agreements, arrangements, or understandings (whether written or oral) between such person, or any affiliates or associates of such person, and any proposed nominee or any other person or persons (including their names) pursuant to which the nomination(s) are being made by such person, and any material interest of such person, or any affiliates or associates of such person, in such nomination, including any anticipated benefit therefrom to such person, or any affiliates or associates of such person; (4) a

representation that the stockholder giving notice intends to appear in person or by proxy at the Annual Meeting or Special Meeting to nominate the persons named in its notice; (5) any other information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with the solicitation of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder and (6) a statement whether either such person will deliver a proxy statement and form of proxy to a percentage of the Corporation’s voting shares reasonably believed by such stockholder or beneficial owner, as the case may be, to be sufficient to elect such nominee or nominees (an affirmative statement of such intent, a “Solicitation Notice”). The information set forth in clause (ii)(2) of this paragraph shall be supplemented by such stockholder or such beneficial owner, as the case may be, not later than ten (10) days after the record date for giving notice of the meeting to disclose such ownership as of the record date.

At the request of the Board of Directors, any person nominated by the Board of Directors for election as a director shall furnish to the Secretary of the Corporation that information required to be set forth in a stockholder’s notice of nomination which pertains to the nominee. No person shall be eligible to serve as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 2.4(a) or in Section 2.4(b) herein. The presiding officer shall, if the facts so warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by these By-laws, and if such officer should so determine, such officer shall so declare to the meeting, and the defective nomination shall be disregarded. For purposes of these By-laws, “publicly disclosed” or “public disclosure” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission.

(b) Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected (i) by or at the direction of the Board of Directors or (ii) by any stockholder of record of the Corporation who is a stockholder of record at the time of giving of notice provided for in this paragraph, who shall be entitled to vote at the meeting and who delivers a written notice to the Secretary setting forth the information set forth in the fourth paragraph of Section 2.4(a). For the avoidance of doubt, clause (ii) above shall be the exclusive means for a stockholder to make nominations at a special meeting of stockholders.

Nominations by stockholders of persons for election to the Board of Directors may be made at such a special meeting of stockholders if the stockholder’s notice required by the foregoing paragraph shall be received by the Secretary of the Corporation at the principal executive offices of the Corporation not later than the close of business on the later of the ninetieth (90th) day prior to such special meeting or the tenth (10th) day following the day on which public disclosure is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall an adjournment, or postponement of a special meeting for which notice has been given, commence a new time period for the giving of a record stockholder’s notice.

(c) Notwithstanding the foregoing provisions of this Article II, Section 2.4, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to matters set forth herein.

Section 2.5 Annual Meeting Business Proposals. At an annual meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting (i) pursuant to the Corporation’s proxy materials with respect to such meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the Corporation who is a stockholder of record at the time of the giving of notice provided for herein, is entitled to vote at the meeting and complies with the procedures set forth in this Article II, Section 2.5. For the avoidance of doubt, clause (iii) above shall be the exclusive means for a stockholder to propose business (other than business included in the Corporation’s proxy materials pursuant to Rule 14a-8 under the Exchange Act) at an annual meeting of stockholders and nominations by a stockholder of persons for election to the Board of Directors of the Corporation at an annual meeting of stockholders shall be made only in accordance with Section 2.4(a) of these By-laws.

For business to be properly brought an annual meeting by a stockholder pursuant to clause (iii) of the foregoing paragraph, (A) the stockholder must have given timely notice thereof in writing pursuant to the requirements set forth herein, (B) if the stockholder, or beneficial owner, if any, on whose behalf such proposal is made, has provided the Corporation with a Business Solicitation Notice (as defined herein), such stockholder or beneficial owner must have delivered a proxy statement and form of proxy to holders of at least the percentage of the Corporation’’s voting shares required under applicable law, the Corporation’s Certificate of Incorporation or these By-laws to carry any such proposal, and (C) if no Business Solicitation Notice relating thereto has been timely provided pursuant to this Section 2.5, the stockholder or beneficial owner, if any, on whose behalf such proposal is made, proposing such business must not have solicited a number of proxies sufficient to have required the delivery of such a Business Solicitation Notice under this Section 2.5.

To be timely, the stockholder must deliver written notice to, or mail such written notice so that it is received by, the Secretary of the Corporation, at the principal executive offices of the Corporation, not less than ninety (90) days nor more than one hundred twenty (120) days prior to the first anniversary of the date of the previous year’s annual meeting of stockholders; provided, however, that, subject to the last sentence of this paragraph, if no annual meeting of stockholders was held in the previous year or if the annual meeting is convened more than thirty (30) days before or after such anniversary date, notice by the stockholder to be timely must be so delivered, or mailed and received, not later than the close of business on the later of (a) the ninetieth (90th) day prior to such annual meeting or (b) the tenth (10th) day following the day on which the date of the meeting has been first “publicly disclosed” (in the manner provided in Article II, Section 2.4 above) by the Corporation. In no event shall an adjournment, or postponement of an annual meeting for which notice has been given, commence a new time period for the giving of a record stockholder’s notice.

Such stockholder’s notice pursuant to this Article II, Section 2.5 shall set forth (i) as to each matter the stockholder proposes to bring at the annual meeting, a brief description of the business desired to be brought at the annual meeting, and the reasons for conducting such

business at the annual meeting; and (ii) as to the stockholder giving notice and the beneficial owner, if any, on whose behalf the proposal is made: (1) the name and record address of such person;(2) (A) the class, series, and number of shares of the Corporation which are wned beneficially or of record by such person; (B) the name of each nominee holder of shares of the Corporation owned beneficially but not of record by such person or any affiliates or associates of such person, and the number of shares of stock of the Corporation held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or associates of such person, with respect to stock of the Corporation and (D) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock of the Corporation) has been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person, or any affiliates or associates of such person, with respect to stock of the Corporation; (3) a description of all agreements, arrangements, or understandings (whether written or oral) between or among such person, or any affiliates or associates of such person, and any other person or persons (including their names) in connection with the proposal of such business and any material interest of such person or any affiliates or associates of such person, in such business, including any anticipated benefit therefrom to such person, or any affiliates or associates of such person; (4) a representation that the stockholder giving notice intends to appear in person or by proxy at the Annual Meeting to bring such business before the meeting; (5) any other information relating to such person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies by such person with respect to the proposed business to be brought by such person before the Annual Meeting pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder and (6) whether either such person will deliver a proxy statement and form of proxy to holders of at least the percentage of the Corporation’s voting shares required under applicable law, the Corporation’s Certificate of Incorporation or these By-laws to carry any such proposal (an affirmative statement of such intent, a “Business Solicitation Notice”). The information set forth in clause (ii)(2) of this paragraph shall be supplemented by such stockholder or such beneficial owner, as the case may be, not later than ten (10) days after the record date for giving notice of the meeting to disclose such ownership as of the record date.

Whether or not the foregoing procedures are followed, no matter which is not a proper matter for stockholder consideration shall be brought at the meeting. At an annual meeting, the presiding officer shall, if the facts warrant, determine and declare to the meeting that business was not properly brought at the meeting in accordance with the provisions of this Article II, Section 2.5, and if such officer should so determine, such officer shall so declare to the meeting, and any such business not properly brought at the meeting shall not be transacted. Notwithstanding the foregoing provisions of this Section 2.5, a stockholder shall also comply with all applicable requirements and regulations of the Exchange Act and the rules and regulations thereunder with respect to matters set forth in this paragraph. Nothing in this paragraph shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

Section 2.6 Special Meetings of the Stockholders.

(i) Special meetings of the stockholders of the Corporation may be called only (A) by the Board of Directors pursuant to a resolution approved by the Board of Directors or (B) subject to the terms and conditions set forth below, at the request of holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting power of the issued and outstanding shares of stock of the Corporation entitled to vote at an election of directors (the “Required Number” of shares) if such election were held on the date the first such request is delivered to the Corporation; provided, however, that with respect to this clause (B), such meeting shall be held only (x) to take action on the item or items of business set forth in such request and (y) to take action on such other item or items of business proposed by the Board of Directors if such action can be taken by such holders. The business transacted at any special meeting of the stockholders shall be limited to the purposes stated in the notice of the meeting transmitted to stockholders.

(ii) Stockholders may call a special meeting of stockholders by delivery, either by personal delivery or by United States mail, postage pre-paid, to the Secretary of the Corporation of one or more written demands, each signed by the appropriate number of record holder or holders thereof. Each such demand must include : (1) a brief description of the business to be conducted at a special meeting and the reasons for conducting the business at a special meeting; (2) the name and address of each stockholder who has signed the demand and the date of such signature and the name and address of the beneficial owner, if any, on whose behalf such demand is made; (3) as to each stockholder who has signed the demand and any beneficial owner on whose behalf such demand is made: (A) the class, series, and number of shares of the Corporation that are owned beneficially and of record by such person and any affiliates or associates of such person; (B) the name of each nominee holder of shares of the Corporation owned beneficially but not of record by such person or any affiliates or associates of such person, and the number of shares of stock of the Corporation held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or associates of such person, with respect to stock of the Corporation and (D) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock of the Corporation) has been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person, or any affiliates or associates of such person, with respect to stock of the Corporation; (3) a description of all agreements, arrangements, or understandings (whether written or oral) between or among such person, or any affiliates or associates of such person, and any other person or persons (including their names) in connection with the proposal of such business and any material interest of such person or any affiliates or associates of such person, in such business, including any anticipated benefit therefrom to such person, or any affiliates or associates of such person; (4) a representation that the stockholder giving notice intends to appear in person or by proxy at the Special Meeting to bring such business before the meeting; and (5) any other information relating to such person that would be required to be disclosed in a proxy statement or other filing

required to be made in connection with the solicitation of proxies by such person with respect to the proposed business to be brought by such person before the Special Meeting pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. The information set forth in clause (ii)(2) of this paragraph shall be supplemented by such stockholder or such beneficial owner, as the case may be, not later than ten (10) days after the record date for giving notice of the meeting to disclose such ownership as of the record date. The Board of Directors shall (x) determine the place, and fix the date and time, of any stockholder-called special meeting, which shall be held not more than ninety (90) days after the date the Secretary receives a demand or demands that comply with this Section 2.6(ii) and are signed by the holders of the Required Number of shares, (y) fix a record date to determine the stockholders entitled to notice of such meeting and (z) fix a record date to determine the stockholders entitled to vote at such meeting.

(iii) Each item of business to be transacted at a special meeting must be lawful and be an appropriate subject for stockholder action under applicable law, the Corporation’s Certificate of Incorporation and these By-laws.

(iv) Notwithstanding anything in these By-laws to the contrary, no business shall be conducted at a special meeting except in accordance with the procedures set forth in this Section 2.6. The Secretary of the Corporation shall determine in good faith whether the requirements set forth in Sections 2.6(i), (ii) and (v) have been satisfied, and such good faith determination shall be binding on the Corporation and the stockholders. Prior to fixing the record date for a special meeting called by the stockholders, the Board shall determine in good faith whether the items of business to be transacted at such meeting satisfy the requirements of Section 2.6(iii). If the Board of Directors determines that the requirements of Section 2.6(iii) have not been satisfied with respect to one or more items of business, the Corporation shall send notice of such determination to each stockholder who delivered to the Corporation a demand with respect to such item or items of business. If none of the items of business satisfy such requirements, the Board of Directors shall not convene a special meeting. The Board of Director’s good faith determination whether an item of business satisfies the requirements set forth in Section 2.6(iii) shall be binding on the Corporation and its stockholders.

(v) In the event that the Secretary of the Corporation does not receive demands from the holders of the Required Number of shares on or before the sixtieth (60th) day after the Secretary’s receipt of the first written demand for a special meeting of stockholders (the “Initial Demand Date”), then, for purposes of demanding a special meeting of stockholders with respect to the item or items of business listed in such first written demand: (i) all such demands delivered to the Secretary on or before such sixtieth (60th) day shall thereafter be of no effect and (ii) all demands delivered after such sixtieth (60th) day and before the one-year anniversary of the Initial Demand Date shall be of no effect.

Section 2.7 Notice of Special Meetings. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given by the Secretary of the Corporation, not fewer than ten (10) nor more than sixty (60) days before the date of the meeting, to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting.

Section 2.8 Fixing of Record Date. (a) In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than 60nor less than 10 days before the date of such meeting. If the Board of Directors so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board of Directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of and to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of, or to vote at, a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance with the foregoing provisions of this subsection (a) at the adjourned meeting.

(b) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

Section 2.9 Voting Lists. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of meeting, or (ii) during ordinary business hours at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present.

Section 2.10 Quorum and Adjournments. The holders of a majority of the voting power of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by statute or by the Corporation’s Certificate of Incorporation. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum.

Any meeting of stockholders may be adjourned, whether or not a quorum is present, by either the presiding officer of the meeting or by the affirmative vote of the holders of a majority of the voting power of the stock entitled to vote thereat, present in person or represented by proxy at such meeting. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for stockholders entitled to vote is fixed for the adjourned meeting, the Board of Directors shall fix a new record date for notice of such adjourned meeting in accordance with Section 213(a) of the DGCL, and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at such adjourned meeting as of the record date fixed for notice of such adjourned meeting.

Section 2.11 Vote Required. When a quorum is present at any meeting of all stockholders, the affirmative vote of the holders of a majority of the voting power of the stock issued and outstanding and entitled to vote the subject matter, present in person or represented by proxy, shall decide any question brought at such meeting, unless the question is one upon which, by express provision of statute, rule, or regulation (including rules and regulations of a national securities exchange upon which the Corporation’s stock is listed) or of the Corporation’s Certificate of Incorporation, a lesser vote is provided or a greater vote is required, in which case such express provision shall govern and control the decision of such question; provided, however, all elections of directors shall be determined in accordance with Article III, Section 3.2 of these By-laws.

Section 2.12 Voting Rights. Unless otherwise provided in the Corporation’’s Certificate of Incorporation, each stockholder having voting power shall at every meeting of the stockholders be entitled to one (1) vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three (3) years from its date, unless the proxy provides for a longer period. At any meeting of the stockholders, every stockholder entitled to vote may vote in person or by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting. Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission created pursuant to this paragraph may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used; provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission. All voting, including on the election of directors, may (except where otherwise required by law) be by a voice vote; provided, however, that upon demand therefor by a stockholder entitled to vote or by his or her proxy, a stock vote shall be taken. Every stock vote

shall be taken by ballots, each of which shall state the name of the stockholder or proxy voting and such other information as may be required under the procedure established for the meeting. The Corporation may, and to the extent required by law shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at the meeting and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the person presiding at the meeting may, and to the extent required by law shall, appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath to faithfully execute the duties of inspector with strict impartiality and according to the best of his or her ability. Every vote taken by ballots shall be counted by an inspector or inspectors appointed by the chairman of the meeting.

Section 2.13 Presiding Over Meetings. The Chairman of the Board of Directors or his designee shall preside at all meetings of the stockholders. In the absence or inability to act of the Chairman or his designee, the Vice Chairman, the President or a Vice President (in that order) shall preside, and in their absence or inability to act another person designated by one of them shall preside. The Secretary of the Corporation shall act as Secretary of each meeting of the stockholders. In the event of his or her absence or inability to act, the chairman of the meeting shall appoint a person who need not be a stockholder to act as Secretary of the meeting.

Section 2.14 Conducting Meetings. Meetings of the stockholders shall be conducted in a fair manner but need not be governed by any prescribed rules of order. The presiding officer of the meeting shall establish an agenda for the meeting. The presiding officer’s rulings on procedural matters shall be final. The presiding officer is authorized to impose reasonable time limits on the remarks of individual stockholders. The presiding officer may take such steps as such officer may deem necessary or appropriate to assure that the business of the meeting is conducted in a fair and orderly manner including, without limitation, (i) the determination of when the polls shall open and close for any given matter to be voted on at the meeting, (ii) rules and procedures for maintaining the safety of those present, (iii) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the presiding officer of the meeting shall determine and (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof.

ARTICLE III

DIRECTORS

Section 3.1 General Powers. The business and affairs of the Corporation shall be under the direction of, and managed by, a board comprised of directors, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not required by statute, by the Corporation’s Certificate of Incorporation or by these By-laws to be done by the stockholders. Directors need not be residents of the State of Delaware or stockholders of the Corporation. The number of directors shall be determined in the manner provided in the Corporation’’s Certificate of Incorporation.

Section 3.2 Election.

(a) Election By Majority Vote In An Uncontested Election: Except as otherwise provided herein, a nominee for director shall be elected to the Board of Directors if the votes cast “for” such nominee’s election exceed the votes cast “against” such nominee’s election.

(b) Election By Plurality Vote In A Contested Election. Directors shall be elected by a plurality of the votes cast at any meeting of stockholders for which (i) the Secretary of the Corporation receives a notice that a stockholder has nominated a person for election to the Board of Directors in compliance with the advance notice requirements for stockholder nominees for director set forth in Article II of these By-laws and (ii) such nomination has not been withdrawn by such stockholder on or before the tenth day before the Corporation first mails its notice of meeting for such meeting to the stockholders. If directors are to be elected by a plurality of the votes cast, stockholders shall not be permitted to vote against a nominee.

(c) Term. Each director elected shall hold office during the term for which he or she is elected and until his or her successor is elected and qualified, subject, however, to his or her prior death, resignation, retirement or removal from office.

Section 3.3 Removal. Except as provided in the Corporation’s Certificate of Incorporation with respect to Continuing Classified Directors (as defined in the Corporation’s Certificate of Incorporation), any director or the entire Board of Directors may be removed from office, with or without cause, by holders of at least a majority of the voting power of the shares outstanding and entitled to vote at an election of directors; provided, however, that whenever the holders of any class or series are entitled to elect 1 or more directors by the Corporation’s Certificate of Incorporation, this section shall apply, in respect to the removal without cause of a director or directors so elected, to the vote of the holders of the outstanding shares of that class or series and not to the vote of the outstanding shares as a whole.

Section 3.4 Vacancies. Any vacancies occurring in the Board of Directors and newly created directorships shall be filled in the manner provided in the Corporation’s Certificate of Incorporation.

Section 3.5 Place of Meetings. The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Delaware. The first meeting of each newly elected Board of Directors shall be held immediately following the adjournment of the annual meeting of the stockholders at the same place as such annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order to legally constitute the meeting, provided a quorum shall be present. In the event such meeting is not held at such time and place, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors, or as shall be specified in a written waiver signed by all of the directors.

Section 3.6 Participation by Conference Telephone. Unless otherwise restricted by the Corporation’s Certificate of Incorporation or these By-laws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation by such means shall constitute presence in person at such meeting.

Section 3.7 Regular Meetings. Regular meetings of the Board of Directors may be held, without notice, at such time and at such place as shall from time to time be determined by the Board of Directors.

Section 3.8 Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, the Chief Executive Officer or the President on at least one day’s notice to each director, either personally, or by mail, courier, telephone, telefax, mailgram, telex, telecopier or electronic transmission. Special meetings shall be called by the Chairman, the Chief Executive Officer or the President in like manner and on like notice at the request, in writing or by electronic transmission, of two or more of the directors comprising the Board of Directors stating the purpose or purposes for which such meeting is requested. Notice of any meeting of the Board of Directors for which a notice is required may be waived by electronic transmission or in a writing signed by the person or persons entitled to such notice, whether before or after the time of such meeting, and such waiver shall be equivalent to the giving of such notice. Attendance of a director at any such meeting shall constitute a waiver of notice thereof, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because such meeting is not lawfully convened. Neither the business to be transacted at, nor the purpose of, any meeting of the Board of Directors for which a notice is required need be specified in the notice, or waiver of notice, of such meeting. The Chairman shall preside at all meetings of the Board of Directors. In the absence or inability to act of the Chairman, then the Vice Chairman (if one shall have been chosen by the Board), the Chief Executive Officer, the President or the Chief Financial Officer (in that order) shall preside, and in their absence or inability to act, another director designated by one of them shall preside.

Section 3.9 Quorum; No Action on Certain Matters. At all meetings of the Board of Directors, (i) a majority of the then duly elected directors shall constitute a quorum for the transaction of business (provided, however, that in no event shall a quorum for the transaction of business be constituted if less than one-third (1/3) of the total number of authorized directors (including vacancies and newly created director seats) are present at the meeting), and (ii) the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Corporation’s Certificate of Incorporation. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

Section 3.10 Resignations. Any director of the Corporation may resign at any time by giving written notice, or notice by electronic transmission, to the Board of Directors, the Chairman or the President. Such resignation shall take effect at the time specified therein and, unless tendered to take effect upon acceptance thereof, the acceptance of such resignation shall not be necessary to make it effective.

Section 3.11 Informal Action. Unless otherwise restricted by the Corporation’s Certificate of Incorporation or these By-laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or committee consent thereto in writing or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

Section 3.12 Presumption of Assent. A director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be conclusively presumed to have assented to the action taken unless his or her dissent shall be entered in the minutes of the meeting or unless he or she shall file his or her written dissent to such action with the person acting as the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action.

Section 3.13 Compensation of Directors. In the discretion of the Board of Directors, the directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors or a committee thereof, may be paid a stated salary or a fixed sum for attendance at each meeting of the Board of Directors or a committee thereof and may be awarded other compensation for their service as directors. No such payment or award shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.

ARTICLE IV

COMMITTEES OF DIRECTORS

Section 4.1 Appointment and Powers. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (a) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the Delaware General Corporation Law to be submitted to stockholders for approval or (b) adopting, amending or repealing any of the By-laws.

Section 4.2 Committee Minutes. Each committee shall keep regular minutes of its meetings and shall file such minutes and all written consents executed by its members with the Secretary of the Corporation. Each committee may determine the procedural rules for meeting and conducting its business and shall act in accordance therewith, except as otherwise provided herein or required by law. Adequate provision shall be made for notice to members of all meetings; one-third of the members shall constitute a quorum unless the committee shall consist of one or two members, in which event one member shall constitute a quorum; and all matters shall be determined by the affirmative vote of a majority of the members present. Action may be taken by any committee without a meeting if all members thereof consent thereto in writing or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the minutes of the proceedings of such committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

ARTICLE V

NOTICES

Section 5.1 Manner of Notice. Whenever, under applicable law or the Corporation’’s Certificate of Incorporation or these By-laws, notice is required to be given to any director or stockholder, unless otherwise provided in the Corporation’s Certificate of Incorporation or these By-laws, such notice may be given in writing, by courier or mail, addressed to such director or stockholder, at such director’s or stockholder’s address as it appears on the records of the Corporation, with freight or postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall have been deposited with such courier or in the United States mail. Notice may be given orally if such notice is confirmed in writing in a manner provided therein. Notice to directors may also be given by mail, courier, telephone, telefax, mailgram, telex, telecopier or electronic transmission. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders may be given by electronic transmission in the manner provided in Section 232 of the Delaware General Corporation Law.

Section 5.2 Waiver. Whenever any notice is required to be given under applicable law or the provisions of the Corporation’s Certificate of Incorporation or these By-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, or a waiver by electronic transmission by such person or persons, whether before or after the time stated therein, shall be deemed equivalent thereto. Neither the business nor the purpose of any meeting need be specified in such a waiver. Attendance at any meeting shall constitute waiver of notice except attendance for the sole purpose of objecting to the timeliness of notice.

ARTICLE VI

OFFICERS

Section 6.1 Number and Qualifications. The officers of the Corporation shall be chosen by the Board of Directors and shall be a Chairman of the Board, a Chief Executive Officer, a President, a Chief Financial Officer, one or more Vice Presidents, a Secretary and a Treasurer. The Board of Directors may also choose a Vice Chairman for the Board (or Vice Chairman), one or more Assistant Secretaries and Assistant Treasurers and such additional officers as the Board of Directors may deem necessary or appropriate from time to time. Membership on the Board of Directors shall not be a prerequisite to the holding of any other office. Any number of offices may be held by the same person, unless the Corporation’s Certificate of Incorporation or these By-laws otherwise provide.

Section 6.2 Election. The Board of Directors at its first meeting after each annual meeting of stockholders shall elect a Chairman of the Board, a Chief Executive Officer, a President, a Chief Financial Officer, one or more Vice Presidents, a Secretary and a Treasurer, and may choose a Vice Chairman of the Board, one or more Assistant Secretaries and Assistant Treasurers and such other officers as the Board of Directors shall deem desirable.

Section 6.3 Other Officers and Agents. The Board of Directors may choose such other officers and agents as it shall deem necessary, which officers and agents shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors.

Section 6.4 Salaries. The salaries or other compensation of the officers and agents of the Corporation shall be fixed from time to time by the Board of Directors, and no officer shall be prevented from receiving such salary or other compensation by reason of the fact that such officer is also a director of the Corporation.

Section 6.5 Term of Office. The officers of the Corporation shall hold office until their successors are chosen and qualified or until their earlier resignation or removal. Any officer elected or appointed by the Board of Directors may be removed at any time, either with or without cause, by the affirmative vote of a majority of the directors then in office at any meeting of the Board of Directors. If a vacancy shall exist in the office of the

Corporation, the Board of Directors may elect any person to fill such vacancy, such person to hold office as provided in Section 6.1 of this Article VI.

Section 6.6 The Chairman of the Board. The Chairman of the Board (or Chairman) shall preside at all meetings of the stockholders and of the Board of Directors and shall see that orders and resolutions of the Board of Directors are carried into effect. The Chairman of the Board shall perform such duties as may be assigned to him by the Board of Directors.

Section 6.7 The Chief Executive Officer. The Chief Executive Officer shall be the principal executive officer of the Corporation and shall, in general, supervise and control all of the business and affairs of the Corporation, unless otherwise provided by the Board of Directors. In the absence of the Chairman of the Board, the Chief Executive Officer shall preside at all

meetings of the stockholders and of the Board of Directors and shall see that orders and resolutions of the Board of Directors are carried into effect. The Chief Executive Officer may sign bonds, mortgages, certificates for shares and all other contracts and documents, whether or not under the seal of the Corporation, except in cases where the signing and execution thereof shall be expressly delegated by law, by the Board of Directors or by these By-laws to some other officer or agent of the Corporation. The Chief Executive Officer shall have general powers of supervision and shall be the final arbiter of all differences between officers of the Corporation, and the Chief Executive Officer’s decision as to any matter affecting the Corporation shall be final and binding as between the officers of the Corporation, subject only to its Board of Directors.

Section 6.8 The President. Unless another party has been designated as Chief Operating Officer, the President shall be the Chief Operating Officer of the Corporation responsible for the day-to-day active management of the business of the Corporation, under the general supervision of the Chief Executive Officer. In the absence of the Chief Executive Officer, the President shall perform the duties of the Chief Executive Officer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Chief Executive Officer. The President shall have concurrent power with the Chief Executive Officer to sign bonds, mortgages, certificates for shares and other contracts and documents, whether or not under the seal of the Corporation, except in cases where the signing and execution thereof shall be expressly delegated by law, by the Board of Directors or by these By-laws to some other officer or agent of the Corporation. In general, the President shall perform all duties incident to the office of the President and such other duties as the Chief Executive Officer or the Board of Directors may from time to time prescribe.

Section 6.9 The Chief Financial Officer. The Chief Financial Officer shall be the principal financial officer of the Corporation. The Chief Financial Officer shall: (a) have charge of and be responsible for the maintenance of adequate books of account for the Corporation; (b) have charge and custody of all funds and securities of the Corporation, and be responsible therefor and for the receipt and disbursement thereof; and (c) perform all the duties incident to the office of the Chief Financial Officer and such other duties as from time to time may be assigned to him by the President or by the Board of Directors. If required by the Board of Directors, the Chief Financial Officer shall give a bond for the faithful discharge of the Chief Financial Officer’s duties in such sum and with such surety or sureties as the Board of Directors may determine.

Section 6.10 The Vice Presidents. In the absence of the President, or in the event of the President’s inability or refusal to act, the Vice Presidents (in the order designated, or in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting, shall have all the powers of, and be subject to all the restrictions upon, the President. The Vice Presidents shall perform such other duties and have such other powers as the Chief Executive Officer or the Board of Directors may from time to time prescribe.

Section 6.11 The Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all the proceedings of the meetings of the Corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Executive Officer, under whose supervision the Secretary shall be. The Secretary shall have custody of the corporate seal of the Corporation and the Secretary or an Assistant Secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the Secretary’s signature or by the signature of such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by such officer’s signature.

Section 6.12 The Treasurer. In the event that the Chief Financial Officer is unavailable to perform his duties or in the event of the Chief Financial Officer’s inability or refusal to act, the Treasurer shall perform the duties of the Chief Financial Officer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Chief Financial Officer. The Treasurer shall perform such other duties and have such other powers as the Chief Executive Officer, Chief Financial Officer or the Board of Directors may from time to time prescribe.

Section 6.13 The Controller. The Controller shall have such duties as are incident to such office of the Controller or as may be assigned from time to time by the Chief Financial Officer or the Board of Directors.

Section 6.14 The Principal Accounting Officer. The Audit Committee of the Board shall designate either the Chief Financial Officer or the Controller as the principal accounting officer of the Corporation with such duties as may be assigned from time to time by the Audit Committee of the Board of Directors.

Section 6.15 The Assistant Secretary. The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election), shall, in the absence of the Secretary or in the event of the Secretary’s inability or refusal to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Chief Executive Officer or the Board of Directors may from time to time prescribe.

Section 6.16 The Assistant Treasurer. The Assistant Treasurer, or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election), shall, in the absence of the Treasurer or in the event of the Treasurer’s inability or refusal to act, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Chief Executive Officer or the Board of Directors may from time to time prescribe.

ARTICLE VII

CERTIFICATES OF STOCK, TRANSFERS AND RECORD DATES

Section 7.1 Certificates of Stock; Uncertificated Shares. The shares of stock of the Corporation shall be represented by certificates, or by uncertificated shares that may be evidenced by a book-entry system maintained by the registrar of such stock, or a combination of both. If shares are represented by certificates (if any), such certificates shall be in the form approved by the Board of Directors. The certificates representing shares of stock of each class shall be signed by, or in the name of, the Corporation by the Chairman, the President or any Vice President, and by the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer.

Section 7.2 Facsimile Signatures. Any or all signatures on a certificate representing stock of the Corporation may be a facsimile. In case any officer, transfer agent or registrar who has signed, or whose facsimile signature has been placed upon, a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.

Section 7.3 Lost Certificates. The Board of Directors may direct that a new certificate or certificates or uncertificated shares be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or such owner’s legal representative, to advertise the same in such manner as the Corporation shall require and/or give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation or its transfer agent or registrar with respect to the certificate alleged to have been lost, stolen or destroyed.

Section 7.4 Transfers of Stock. Transfers of stock shall be made only on the stock transfer books of the Corporation and (i) with respect to stock represented by a certificate, upon surrender of the certificate previously issued therefor which is outstanding and not canceled, duly endorsed or accompanied by appropriate evidence of succession, assignment or authority to transfer, and (ii) with respect to uncertificated shares, upon receipt of proper transfer instructions from the record holder thereof. To the fullest extent provided by law, and subject to the provisions of the Corporation’s Certificate of Incorporation and these By-Laws, the Board of Directors may prescribe such additional rules and regulations as it may deem appropriate relating to the issue, transfer and registration of shares of the Corporation.

Section 7.5 Registered Stockholders. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not the Corporation shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

ARTICLE VIII

CONFLICT OF INTERESTS

Section 8.1 Contract or Relationship Not Void. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers are directors or officers or have a financial interest shall be void or voidable solely for this reason, or solely because such director or officer is present at, or participates in, the meeting of the Board of Director’s or committee thereof which authorizes the contract or transaction, or solely because such director’s or officer’s vote is counted for such purpose, if: (i) The material facts as to such director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the board or committee in good faith authorizes the contract or transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) The material facts as to such director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (iii) The contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board of Directors, a committee thereof, or the stockholders.

Section 8.2 Quorum. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.

ARTICLE IX

GENERAL PROVISIONS

Section 9.1 Dividends. Dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation, if any, may be declared out of funds legally available therefor by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property or in shares of the capital stock or rights to acquire same, subject to the provisions of the Corporation’s Certificate of Incorporation. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the directors shall think conducive to the interest of the Corporation, and the directors may modify or abolish any such reserve in the manner in which it was created.

Section 9.2 Checks. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

Section 9.3 Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

Section 9.4 Seal. The corporate seal shall have inscribed thereon the name of the Corporation and the words “Corporate Seal, Delaware.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

Section 9.5 Stock in Other Corporations. Shares of any other corporation which may from time to time be held by this Corporation may be represented and voted at any meeting of stockholders of such corporation by the Chairman, the Chief Executive Officer, the President, the Chief Financial Officer or a Vice President of the Corporation, or by any proxy appointed in writing by the Chairman, the Chief Executive Officer, the President, the Chief Financial Officer or a Vice President of the Corporation, or by any other person or persons thereunto authorized by the Board of Directors. Shares represented by certificates standing in the name of the Corporation may be endorsed for sale or transfer in the name of the Corporation by the Chairman, the Chief Executive Officer, the President, the Chief Financial Officer or any Vice President of the Corporation or by any other officer or officers thereunto authorized by the Board of Directors. Shares belonging to the Corporation need not stand in the name of the Corporation, but may be held for the benefit of the Corporation in the individual name of the Chief Financial Officer or of any other nominee designated for the purpose of the Board of Directors.

Section 9.6 Forum for Adjudication of Certain Disputes. Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, or employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation or any director, officer, or employee of the Corporation arising pursuant to any provision of the General Corporation Law of Delaware or the Corporation’s Certificate of Incorporation or By-laws, or (iv) any action asserting a claim against the Corporation or any director, officer, or employee of the Corporation governed by the internal affairs doctrine of the State of Delaware; provided, however, that, in the event that the Court of Chancery of the State of Delaware lacks jurisdiction over any such action or proceeding, the sole and exclusive forum for such action or proceeding shall be another state or federal court located within the State of Delaware. Failure to enforce the foregoing provisions would cause the Corporation irreparable harm and the Corporation shall be entitled to equitable relief, including injunctive relief and specific performance, to enforce the foregoing provisions. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Section 9.6 of these By-laws.

ARTICLE X

AMENDMENTS

These By-laws may be altered, amended or repealed or new by-laws may be adopted only in the manner provided in the Corporation’s Certificate of Incorporation.

EX-10.1

Exhibit 10.1

July 17, 2013

Diane Auer Jones

22 Old Granary Court

Catonsville MD, 21228

Dear Diane:

Congratulations on your upcoming promotion to Senior Vice President, & Chief External Affairs Officer at Career Education Corporation (“CEC” or the “Company”). In relation thereto and in consideration of the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and you hereby agree as follows (“Agreement”):

1. Your base annual salary will be increased to three hundred and five thousand dollars ($305,000.00), effective as of July 18^th, 2013. This will be paid in accordance with the Company’s normal payroll practices on a semi-monthly basis.

2. Your Annual Incentive Award Program (“AIP”) target opportunity will be increased to forty five percent (45%) of your eligible earnings effective July 18^th, 2013

3. Your Long Term Incentive Award Program (“LTIP”) target opportunity will be increased to eighty percent (80%) of your eligible earnings.

4. In consideration of receiving the benefits described in Paragraphs 1 and 2, above, and as a term and condition of your employment with the Company, You agree to adhere to, and be bound by, the following restrictions. You hereby acknowledge that Your job responsibilities give You access to confidential and proprietary information belonging to the Company and/or its subsidiaries, and that this and other confidential information to which You have access would be of value, and provide an unfair advantage, to a competitor in competing against the Company or its subsidiaries in any of the markets in which the Company or its subsidiaries maintains schools, provides on-line education classes or otherwise conducts business. You further acknowledge that the following restrictions will not cause You undue hardship. Consequently, You agree that the restrictions below (the “Restrictive Covenants”) are reasonable and necessary to protect the Company’s and/or its subsidiaries’ legitimate business interests.

During Your employment with the Company and/or any of its subsidiaries and continuing thereafter for the post-termination periods specified below, You will not, in any way, directly or indirectly, either for You or any other person or entity, whether paid or unpaid:

(a) For two (2) years following Your voluntary resignation from Your employment with the Company or Your termination from employment by the Company for Cause (as defined in the Executive Severance Plan), accept employment with, own, manage, operate, consult or provide expert services to any person or entity that competes with the Company or any of its subsidiaries in any capacity that involves any responsibilities or activities involving or relating to any Competing Educational Service, as defined herein. “Competing Educational Service” means any educational service that competes with the educational services provided by the Company and/or any of its subsidiaries, including but not limited to coursework in the areas of visual communication and design technologies; information technology; business studies; culinary arts; and health education, or any education service. You hereby acknowledge that the following organizations, among others, provide Competing Educational Services and, should

You accept employment with, own, manage, operate, consult or provide expert services to any of these organizations, it would inevitably require the use and/or disclosure of confidential information belonging to the Company and/or its subsidiaries and would provide such organizations with an unfair business advantage over the Company: American Public Education, Inc., Apollo Group, Inc., Bridgepoint Education, Inc., Capella Education Company, Corinthian Colleges, Inc., DeVry, Inc., Education Management Corporation, EmbanetCompass, Grand Canyon Education Inc., ITT Educational Services Inc., Kaplan, Inc., Laureate Education, Inc., Learning Tree International Inc., Lincoln Education Services Corporation, National American University Holdings Inc., Strayer Education Inc., Universal Technical Institute Inc. and each of their respective subsidiaries, affiliates and successors. You further acknowledge that the Company and/or its subsidiaries provide career-oriented education through physical and web-based virtual campuses throughout the world and, therefore, it is impracticable to identify a limited, specific geographical scope for this Restrictive Covenant. For avoidance of doubt, in the event You are involuntarily terminated from employment with the Company other than for Cause, You will not be subject to any post-termination noncompete restriction under this Paragraph 3.

(b) For two (2) years following Your termination of employment with the Company for any reason, solicit, attempt to solicit, assist with the solicitation of, direct another to solicit, or otherwise entice any employee of the Company or any of its subsidiaries to leave his/her employment.

Should You breach the terms of these Restrictive Covenants, the Company reserves the right to enforce the terms herein in court and seek any and all remedies available to it in equity and law, and You agree to pay the Company’s attorneys’ fees and costs should it succeed on its claim(s). Further, should You breach the terms of these Restrictive Covenants, You will forfeit any right to the payments made or remaining due hereunder and You agree to pay the Company’s attorneys’ fees and costs incurred in recovering such payments made pursuant hereto.

It is the intention of You and the Company that in the event any of the covenants contained in this Paragraph 3 are determined to be unreasonable and/or unenforceable with respect to scope, time or geographical coverage, You and the Company agree that such covenants may be modified and narrowed by a court, so as to provide the maximum legally enforceable protection of the Company’s and any of its subsidiaries’ interests as described in this Agreement.

5. Your employment by the Company is “at will.” This Agreement does not create an employment contract or affect the right of the Company to terminate your employment, or change the terms and conditions of such employment, at any time without notice.

If you agree to the terms of this Agreement, please sign and date it and return it to me via email. Send the original to me at the address below. By signing this Agreement, you represent and agree that you have taken advantage of your right to consult with an attorney or have declined to do so, that you have carefully read and fully understand all of the provisions of this Agreement and that you are voluntarily entering into this Agreement.

Sincerely,

/s/ Jennifer A. Campe

Jennifer A. Campe

Sr. VP & Chief HR Officer

Accepted and Agreed to:

/s/ Diane Auer Jones	7/17/13
Diane Auer Jones	Date

EX-10.2

Exhibit 10.2

SEPARATION AGREEMENT AND GENERAL RELEASE

This Separation Agreement and General Release (“Agreement”) is made and entered into by and between Daniel Hurdle (the “Executive”) and Career Education Corporation, a Delaware corporation (the “Company”).

1. Separation and Effective Dates. The Executive’s employment with the Company and, to the extent applicable, with its direct and indirect subsidiaries, affiliates, companies, divisions, units, schools, and affiliated schools (the “Company Affiliates”), terminates effective August 30, 2013 (the “Separation Date”). The Executive understands and agrees that from and after the Separation Date, he is no longer authorized to incur any expenses, obligations or liabilities on behalf of the Company or the Company Affiliates. This Agreement shall not become effective or enforceable until all parties have signed an original of this Agreement and the revocation period referenced in Paragraph 18 has expired. The Executive may not sign this agreement until close of business on August 30, 2013.

2. No Claims. The Executive represents and agrees that he has not filed any notices, claims, complaints, charges, or lawsuits of any kind whatsoever against the Releasees (as defined in Paragraph 11) with any court, any governmental agency, any regulatory body or any other third party with respect to any matter related to the Company, a Company Affiliate or a Releasee, or arising out of his employment with and/or separation from the Company.

3. Payment of Moneys Owed. The Executive and the Company acknowledge that the Company has paid, or will pay no later than September 15, 2013, all remuneration owed to the Executive as a result of his employment with and separation from the Company, related to (a) his salary through the Separation Date, (b) all accrued (but unused) vacation pay for 2013 through the Separation Date, and (c) all business expenses, if any, incurred by him through the Separation Date as a result of his employment with the Company, provided that such expenses are authorized under and consistent with the expense reimbursement policies of the Company. Except as specifically provided for in this Paragraph 3 and in Paragraphs 6 and 9, the Executive shall not be entitled to receive any compensation or benefits of employment from the Company or any Company Affiliate following the Separation Date.

4. Non-Admission of Liability and Acknowledgement of Compliance. This Agreement and the fact that it was offered are not and shall not in any way be construed as admissions by the Company that it violated any federal, state or local law, statute or regulation, or that it acted wrongfully with respect to the Executive or to any other person or entity in any manner. The Company specifically disclaims any liability to or wrongful acts against the Executive or any other person or entity. Further, the Executive acknowledges and agrees that it is the policy of the Company to comply with all applicable federal, state and local laws and regulations. The Executive affirms that he has reported all compliance issues and violations of federal, state and local laws or regulations or Company policy of which he had knowledge during the term of his employment, if any. The Executive represents and acknowledges that he has no further or additional knowledge or information regarding compliance issues or possible violations of federal, state or local laws or regulations or Company policy other than what the Executive has previously raised, if any.

5. Non-Admissibility. Neither this Agreement nor anything in this Agreement shall be construed to be or shall be admissible in any proceeding as evidence of or an admission by the Company or the Executive of any violation of any state, federal or local laws or regulations or any rules, regulations, criteria or standards of any regulatory body. This Agreement may be introduced, however, in any proceeding to enforce the Agreement.

6. Consideration. In exchange for the promises and agreements made by the Executive contained in this Agreement and in addition to the benefits provided there under, the Company will:

(a) Within ten (10) days following the date this Agreement may no longer be revoked by the Executive as described in Paragraph 18 of this Agreement (and provided that this Agreement has not been revoked), pay to the Executive a lump-sum payment of $330,000.00 (which amount is equal to fifty-two (52) weeks of pay calculated based on the Executive’s base salary as of the Separation Date), less all applicable taxes and other withholdings;

(b) Pay to the Executive a lump-sum pro-rated bonus payment, less all applicable taxes and other withholdings, calculated in accordance with the method for determining bonuses for other similarly situated employees and based on the Executive’s employment through the Separation Date, paid in accordance with the normal procedures at the time such payments are made to Employees of the Company, but not later than March 15, 2014;

(c) Pay to the Executive that portion of his Retention Bonus payable on the Third Payment Date, less all applicable taxes and other withholdings, paid in accordance with the payment schedule contained in the Executive Retention Agreement between the Executive and the Company dated August 10, 2012;

(d) If the Executive is currently a participant in the Company health and/or dental insurance plan(s) and the Executive timely elects to continue insurance coverage under federal COBRA law, the Company will partially subsidize such COBRA coverage such that the Executive will only pay the same cost that similarly situated active employees of the Company pay for such insurance coverage for the following month(s): September 2013 through August 2014; and

(e) For a period not to exceed one (1) year after the Separation Date, reimburse the Executive for outplacement services to be provided to the Executive by an organization selected by the Company in an amount up to, but not exceeding, $30,000.00, which amount will be paid directly to the outplacement services provider.

The Executive acknowledges that the monies and benefits set forth in this Paragraph 6 constitute additional consideration above and beyond anything to which the Executive is already entitled, in exchange for Executive’s execution of this Agreement.

7. No Disparagement or Encouragement of Claims. The Executive agrees that Executive will not, nor will he cause anyone else to, make any statement or issue any communication, written or otherwise, that disparages, criticizes or otherwise reflects adversely on or encourages any adverse action against the Company, any Company Affiliate or any Releasee (as defined in Paragraph 11), to either the press, the media or any other third party, except if testifying truthfully under oath pursuant to any lawful court order or subpoena or otherwise responding to or providing disclosures required by law.

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8. Non-Solicitation and Confidential Information.

8.1 Confidential Information and Protection of Confidential Information. The Executive acknowledges that, throughout and as an incident to his employment with the Company, the Executive has become acquainted with and received Confidential Information relating to the Company, including trade secrets, processes, methods of operation, business models and plans, advertising and marketing plans and strategies, Company records, research techniques and results, academic programs, academic course development, methods of instruction, training programs, computer programs, databases, software codes, systems and models, marketing, promotional and sales programs, and financial information concerning the business of the Company, which information is not readily available to the public and gives the Company an opportunity to gain an advantage over competitors who do not know or use this information in the same manner as the Company, and which the Company regards as confidential and proprietary (collectively “Confidential Information”). Such Confidential Information includes, but is not limited to: (i) information relating to the Company’s past and existing students and vendors and the development of prospective students and vendors, including, but not limited to, specific student service and product requirements, pricing, arrangements, payment terms, student lists and other similar information; (ii) inventions, designs, methods, discoveries, works of authorship, creations, improvements or ideas developed or otherwise produced, acquired or used by the Company; (iii) advertising and marking plans and strategies; (iv) the Company’s proprietary programs, processes or software; (v) the subject matter of any patents, design patents, copyrights, trade secrets, trademarks, service marks, trade names, trade dress, manuals, operating instructions, training materials, and other industrial property; and (vi) other confidential and proprietary information or documents relating to the Company or its students or vendors which the Company reasonably regards as being confidential. Confidential Information does not include: (a) information known in general to the Executive’s profession, or that becomes known thereafter, other than by an unauthorized act of the Executive; (b) information that was lawfully in the Executive’s possession before his employment with the Company; or (c) information obtained lawfully and in good faith from another party after such disclosure emanating from an original source other than the Company.

The Executive acknowledges that the Confidential Information is of incalculable value to the Company and is the exclusive property of the Company, and that the Company would suffer irreparable damage if any of the Confidential Information is improperly disclosed or used. Accordingly, the Executive will not, at any time during Executive’s employment with, or after the Executive’s separation from employment with, the Company, reveal, divulge, or make known to any person, firm or corporation any Confidential Information made known to the Executive or of which the Executive has become aware, regardless of whether developed, prepared, devised, or otherwise created in whole or in part by the efforts of the Executive. The Executive further agrees that he will retain all Confidential Information in trust for the sole benefit of the Company, and will not divulge or deliver any Confidential Information to any unauthorized person including, without limitation, any other employer of the Executive except as required by the order of any court or similar tribunal or any other governmental body or agency of appropriate jurisdiction; provided, that the Executive will, to the extent practicable, give the

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Company prior written notice of any such disclosure and will cooperate with the Company in obtaining a protective order or such similar protection as the Company may deem appropriate to preserve the confidential nature of such information. The foregoing obligations to maintain the Confidential Information shall not apply to any Confidential Information that is, or without any action by the Executive becomes, generally available to the public.

8.2 Non-Solicitation/Non-Hire. Commencing on the Separation Date and for eighteen (18) months thereafter, the Executive will not, directly or indirectly, individually or on behalf of any Person (as defined below) (a) hire, solicit, aid or induce any then-current employee of the Company or Company Affiliates to leave the Company or Company Affiliates to accept employment with or render services for the Executive or such Person, or (b) solicit, aid or induce any then-current student, customer, client, vendor, lender, supplier or sales representative of the Company or Company Affiliates or similar persons engaged in business with the Company or Company Affiliates to discontinue the relationship or reduce the amount of business done with the Company or Company Affiliates. “Person” means any individual, a partnership, a corporation, an association, a limited liability company, a joint stock company, a trust, a joint venture, an unincorporated organization, a governmental entity, or any department, agency or political subdivision thereof, or an accrediting body.

8.3 Acknowledgements. The Executive fully understands the nature and burdens of this Paragraph 8. The Executive acknowledges that the provisions of this Paragraph 8 are fair, reasonable, and not excessively broad, that they are necessary to protect important and legitimate business interests of the Company, Company Affiliates and each school, and that in light of the Executive’s education, experience, and capabilities, the Executive can honor all parts of this Paragraph 8 without being prevented from earning a fully adequate livelihood for the Executive and the Executive’s dependents from now throughout any period during which the Executive’s activities are restricted hereunder. The Executive agrees that the covenants in this Paragraph 8 are in addition to any common law, statutory or contractual obligations of the Executive.

8.4 Remedies and Enforcement. The Executive acknowledges that a breach on his part of the terms of the Restrictive Covenants set forth in this Paragraph 8 will cause irreparable damage to the Company and that monetary damages will not provide an adequate remedy to the Company. Accordingly, the Executive agrees that the Company will be entitled to enforce the terms herein in court and seek any and all remedies available to it in equity and law, including, but not limited to, injunctive relief, without the posting of any bond or other security. The parties agree that the prevailing party in any action related to enforcement of such Restrictive Covenants shall be entitled to reimbursement from the non-prevailing party for attorneys fees and costs incurred related to such action. The Executive further acknowledges and agrees that in the event any of the Restrictive Covenants contained in this Paragraph 8, or any part thereof, hereafter is construed to be illegal, invalid or unenforceable, the same shall not affect the remainder of such covenant or any other covenants. The Executive and the Company expressly empower a court of competent jurisdiction to modify any Restrictive Covenant in this Paragraph 8 to the extent necessary to make it legal, valid, and enforceable.

9. Indemnity and Cooperation. In the event of a lawsuit or claim by a third party in which the Executive is sued either jointly or separately for acts arising out of the scope of the Executive’s employment with the Company, the Company agrees to defend the Executive and

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hold the Executive harmless in accordance with the Executive’s rights to indemnification under the Company’s certificate of incorporation or bylaws of the Company or any existing Indemnification Agreement between the Executive and the Company. In turn, in the event of any pending or threatened legal action against the Company or the Company Affiliates or Releasees relating to events which occurred during the Executive’s employment, including but not limited to Michael R. LaBelle v. Career Education Corporation, et al., U.S. District Court Southern District of Florida, Case No. 13-cv-80338, the Executive acknowledges and agrees that he will cooperate to the fullest extent possible in the investigation, preparation, prosecution, or defense of the Company’s or the Company Affiliate’s case, including, but not limited to, the execution of affidavits or documents or providing of information requested by the Company or the Company’s counsel. Reasonable out-of-pocket expenses related to such assistance will be reimbursed by the Company, if the Company’s written approval is obtained in advance. In addition, the Executive will be compensated by the Company for his time, at the rate of $100/hour, when requested by the Company to prepare to provide testimony or spend time assisting the Company in any of the foregoing activities or with such matters. The Executive will not, however, be compensated for the time he spends providing testimony. Nothing in this Paragraph should be construed as suggesting or implying that the Executive should testify in any way other than truthfully or provide anything other than accurate, truthful information. The Executive further agrees to provide truthful and timely answers to any reasonable questions the Company may have from time to time about the work the Executive performed during his employment. A failure on the part of the Executive to reasonably cooperate with the Company shall constitute and be treated as a material breach of this Agreement. Any amount paid to the Executive pursuant to this Paragraph 9 for his time shall be paid promptly, and in any event no later than March 15 of the year following the year in which such services occurred. For purposes of complying with Section 409A, with respect to any reimbursement required to be made pursuant to this Paragraph 9, (i) the provision of such reimbursements during one calendar year shall not affect the reimbursements made available in a different calendar year, (ii) such reimbursements shall not be subject to liquidation or exchange for other benefits, and (iii) any reimbursements shall be paid as soon as administratively feasible (or in accordance with the timing prescribed under the applicable Company policy) after the applicable expense is incurred but no later than the last day of the calendar year following the calendar year in which the applicable expense was incurred.

10. Company Property. The Executive represents, warrants and covenants that the Executive has returned to the Company (or will return to the Company on or before the Separation Date) all Company property in the Executive’s possession or control, including, without limitation, all telephones, keys, access cards, security badges, credit cards, phone cards, equipment, computer hardware and encryption devices (including, but not limited to, all computers, Blackberry devices, and personal data assistants), all contents of all such hardware, all passwords and codes needed to obtain access to or operate all or part of any such hardware, all electronic storage devices (including but not limited to all hard drives, disk drives, diskettes, CDs, CD-ROMs, DVDs, and DVD-ROMs), all contents of all such electronic storage devices, all passwords and codes needed to obtain access to or use all or part of any such electronic storage device, all computer software and programs, financial information, accounting records, computer printouts, manuals, data, materials, papers, books, files, documents, records, policies, student information and lists, customer information and lists, marketing information, specifications and plans, data base information and lists, mailing lists, and notes, including but not limited to any property describing or containing any Confidential Information, and the Executive agrees that the Executive will not retain any copies, duplicates, reproductions or excerpts thereof in any form whatsoever.

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11. General Release, Discharge of All Claims and Agreement Not to Sue. In consideration of the payments and benefits referred to in Paragraph 6 from the Company to the Executive as set forth herein and other consideration the receipt and sufficiency of which is hereby acknowledged, the Executive, on behalf of himself, his dependents, heirs, executors, administrators, assigns and successors, and each of them hereby:

(a) voluntarily, fully and unconditionally releases and forever discharges the Company, the Company Affiliates, and associated organizations, past and present, and each of them, as well as its and their trustees, directors, officers, agents, attorneys, employees, contractors, insurers, representatives, assigns, and successors, past and present, and each of them, (hereinafter “Releasees”), with respect to and from any and all legally waivable claims, wages, demands, rights, liens, agreements, contracts, covenants, actions, suits, causes of action, obligations, debts, costs, expenses, attorneys’ fees, damages, judgments, orders, liabilities, complaints, and promises whatsoever, in law or equity, known or unknown, suspected or unsuspected, and whether or not concealed or hidden (collectively, “Claims”), which he now owns or holds or he has at any time heretofore owned or held or may in the future hold as against any or all said Releasees, arising on or before the date this Agreement is executed, including, but not limited to, any Claims arising out of or in any way connected with his employment with and/or separation from the Company, any Claims arising under the Sarbanes-Oxley Act of 2002, Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, the Civil Rights Act of 1866, the Age Discrimination in Employment Act of 1967, as amended (the “ADEA”), the Americans with Disabilities Act, the Family and Medical Leave Act of 1993, the Fair Labor Standards Act, the False Claims Act, as amended, the Employee Retirement Income Security Act, as amended, Illinois civil rights laws and regulations, Illinois wage/hour laws and regulations, or any other federal, state or local law, regulation, ordinance or public policy, and any Claims for severance pay, bonus pay, sick leave, holiday pay, vacation pay, life insurance, health, medical or disability insurance or any other fringe benefit or the common law of any state relating to employment contracts, wrongful discharge, defamation or any other matter; and

(b) agrees not to sue any or all of the Releasees with respect to any matter released or discharged herein, except that the Executive may seek a determination of the validity of the waiver of his rights under the ADEA. Nothing in this Agreement is intended to reflect any party’s belief that the waiver of the Executive’s claims under the ADEA is invalid or unenforceable, it being the intent of the parties that such claims are waived.

12. Exclusions from General Release and Discharge. Notwithstanding the above, the Executive does not release and discharge (a) any right to continue his group health insurance coverage pursuant to applicable law; (b) any vested benefits in any qualified retirement plan; (c) any claim for breach of this Agreement; and (d) any claim that cannot be released by law, including but not limited to the right to file a charge with or participate in an investigation by the Equal Employment Opportunity Commission (“EEOC”). The Executive does, however, hereby waive any right to recover any money should the EEOC or any other agency or individual pursue any claims on his behalf.

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13. No Representation. The Executive agrees and acknowledges that in executing this Agreement he does not rely and has not relied on any representation or statement by any of the Releasees or by any of the Releasees’ agents, representatives or attorneys with regard to the subject matter, basis or effect of this Agreement.

14. No Assignment. The Executive represents that he has not heretofore assigned or transferred, or purported to assign or transfer, to any person or entity, any claim or any portion thereof or interest therein, and the Executive agrees to indemnify, defend and hold harmless each and all of the Releasees against any and all disputes based on, arising out of, or in connection with any such transfer or assignment, or purported transfer or assignment, of any claims or any portion thereof or interest therein.

15. Severability. If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of the Agreement which can be given their intended effect without the invalid provisions or applications and to this end the provisions of this Agreement are declared to be severable. If, however, a court of competent jurisdiction finds that any release by the Executive in Paragraph 11 above is illegal, void, or unenforceable, the Executive will promptly sign a release, waiver, and/or agreement that is legal and enforceable to the greatest extent permitted by law.

16. No Continuing Relationship. The Executive and the Company acknowledge that any employment, contractual or other relationship between the Executive and the Company terminated as of the Separation Date and that they have no further employment, contractual or other relationship except as may arise out of this Agreement. The Executive waives any right or claim to reinstatement as an employee of the Company, and will not seek employment, an independent contractor relationship or any relationship in the future with the Company.

17. Voluntary Execution of Agreement and Consultation with Counsel. The Executive is hereby advised to consult with an attorney prior to executing this Agreement. The Executive represents, warrants and agrees that he has carefully read the Agreement and understands its meaning and has had the opportunity to seek independent legal advice from an attorney of his choice with respect to the advisability of this Agreement and is signing this Agreement, knowingly, voluntarily and without any coercion or duress. The Executive further acknowledges that he has been given a period of twenty-one (21) days within which to consider whether to sign this Agreement. The Executive may execute this Agreement at any time within the twenty-one day period and by doing so The Executive waives any right to the remaining days.

18. Revocability of Agreement. The Executive has the right to revoke this Agreement, solely with respect to his release of claims under the Age Discrimination in Employment Act and the Older Workers Benefit Protection Act, for up to seven (7) days after the Executive signs it. In order to revoke this Agreement, the Executive must sign and send a written notice of the decision to do so, following the notice provisions set forth in Paragraph 19, below, which must be received no later than the eighth day after the Executive executes the Agreement. If the Executive revokes this Agreement, the Executive will not be entitled to the consideration from the Company described herein.

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19. Notice. All notices, requests, demands and other communications hereunder to either party shall be in writing and shall be delivered, either by hand, by facsimile, by overnight courier or by certified mail, return receipt requested, duly addressed as indicated below or to such changed address as the party may subsequently designate:

To the Company:

Jennifer Campe

SVP & Chief Human Resources Officer

Career Education Corporation

231 N. Martingale Road

Schaumburg, IL 60173

(FAX) 847-551-7674

To the Executive:

Daniel Hurdle

1605 W. Broadland Lane

Lake Forest, IL 60045

20. Governing Law. This Agreement is made and entered into in the State of Illinois and shall be interpreted, enforced and governed under Illinois law, without regard to its conflict of laws principles.

21. Binding Effect. This Agreement shall be binding upon the Executive and upon the Executive’s dependents, heirs, representatives, executors, administrators, successors and assigns, and shall inure to the benefit of the Company and others released in this Agreement, and to their respective dependents, heirs, representatives, executors, administrators, successors and assigns.

22. No Presumption. This Agreement shall be construed and interpreted as if all of its language were prepared jointly by the Executive and the Company. No language in this Agreement shall be construed against a party on the ground that such party drafted or proposed that language.

23. Violation of Agreement. If the Executive or the Company prevails in a legal or equitable action claiming that the other party has breached this Agreement, the prevailing party shall be entitled to recover from the other party the reasonable attorneys’ fees and costs incurred by the prevailing party in connection with such action.

24. Execution of Counterparts. This Agreement may be executed in counterparts, but shall be construed as if signed in one document.

25. Entire Agreement. This Agreement constitutes and contains the entire agreement and understanding concerning the Executive’s employment with and separation from the Company and the other subject matters addressed herein between the parties, and supersedes and replaces all prior negotiations and all agreements proposed or otherwise, whether written or oral, concerning the subject matters hereof, except for the parties’ agreements relating to

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indemnification, trade secrets, confidential and proprietary information, copyrights, and the like, if any, which shall remain in force and effect in accordance with the terms thereof. The Executive represents and agrees that no promises, statements or inducements have been made to him which caused him to sign this Agreement other than those which are expressly stated in this Agreement. This is an integrated document and may not be altered except by written agreement signed by an officer designated by the Company, and the Executive.

I have carefully read the entire Agreement and accept and agree to the provisions it contains and hereby execute it voluntarily and with full understanding of its consequences.

Executed this 5th day of Sep, 2013.

	/s/ Daniel Hurdle
	Daniel Hurdle
	CAREER EDUCATION CORPORATION
DATED: 9/5/13	By:	/s/ Jennifer Campe
	Name:	Jennifer Campe
	Title:	SVP & CHRO

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EX-10.3

Exhibit 10.3

EXECUTIVE RETENTION AGREEMENT

THIS EXECUTIVE RETENTION AGREEMENT (this “Agreement”), dated as of the September 30, 2013 (the “Effective Date”), is by and among ORGANISATION ET DEVELOPPEMENT, a “société par actions simplifiée” duly existing and organized under the laws of France, with a share capital of € 352,695, having its registered offices at 14, rue de Prony – 75017 Paris – France, registered with the Corporate register of Paris under identification number 335 133 872, represented by its President, Mr. Jeffrey AYERS, duly empowered for the purposes hereof (the “Company”), and Catherine Lespine, (the “Executive”).

WHEREAS, the Executive is currently the Group Managing Director within the Company; and

WHEREAS, the CEC Group is currently considering the possible sale of its French schools and operations and the Company (the “French Entities”), as part of its international businesses (the “Transaction”);

WHEREAS, the Company desires to ensure the Executive’s continued assistance through the Transaction closing (the “First Retention Date”) and his continued employment with the Company for six months following the First Retention Date (the “Second Retention Date”) (together, the “Retention Dates”); and

WHEREAS, in order to help ensure such continued employment, the Company desires to grant the Executive the Retention Bonus (as defined below) which shall be payable pursuant to the terms hereof.

NOW, THEREFORE, the parties hereto hereby agree as follows:

1. Retention Bonus. The Executive shall receive a retention bonus in a target amount of €737,500 (the “Target Retention Bonus”), providing the conditions set in section 2 are met.

The final Retention Bonus to be paid (the “Retention Bonus”) will be adjusted based on the net Transaction value (i.e. the final sales price value after deduction of Transaction and advisor fees, the “Net Transaction Value”) received for the sale of the French Entities as follows:

Net Transaction Value		Percent of Target Retention Bonus paid
$	175 Million		50	%
$	200 Million		65	%
$	225 Million		85	%
$	250 Million		100	%

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The Retention Bonus shall be paid in cash in Euros and will be subject to applicable social security contributions and income tax.

2. Retention Conditions. In order for the Executive to receive payment of the Retention Bonus, the following conditions must be met (the “Retention Conditions”):

• The Net Transaction Value of the French Entities must be comprised between $175 Million and $250 Million$;

• The closing of the Transaction must take place before or on 31 December 2013 at the latest;

• The Executive must remain in continued until the First Retention Date to receive payment of the first payment of the Retention Bonus;

• The Executive must remain in continued employment with the Company or the INSEEC Group until the Second Retention Date to receive payment of the second payment of the Retention Bonus.

3. Payment Dates. The Retention Bonus will be paid in cash in two installments as follows:

• 75% of the Retention Bonus will be paid to the Executive on the First Retention Date (the “First Payment Date”);

• The remaining 25% of the Retention Bonus will be paid to the Executive on the Second Retention Date (the “Second Payment Date”).

4. Forfeitability of the Retention Bonus. In all cases, to the extent the Executive voluntarily terminates employment with the Company, for any reason, or the Executive is terminated by the Company, for any reason, prior to the Retention Dates, the amount due to be paid to the Executive on the corresponding Payment Date shall be forfeited by the Executive.

5. Change in Control. Following a Change in Control, the Retention Bonus will remain payable on the Payment Dates specified in Section 3 hereof.

A Change in Control is the occurrence of any one or more of the following:

(i) CEC Group ceases to hold, directly or indirectly, the majority of the voting shares in the Company; or

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(ii) the Company is merged, acquired or consolidated and CEC Group does not hold, directly or indirectly, the majority of the voting shares in the surviving entity; or

(iii) the sale, transfer or other disposition of all or substantially all of the business or assets of the Company.

CEC Group means Career Education Corporation, a Delaware corporation, (“CEC US”) and all the worldwide legal entities in which CEC US has a majority of the voting rights, whether directly or indirectly.

6. Confidentiality of Agreement. This Agreement and its terms are confidential and the Executive agrees not to discuss or disclose the existence or terms of this Agreement to anyone. Notwithstanding the foregoing, the Company and the Employee may disclose this Agreement and the terms thereof to the extent required by applicable law or to the extent necessary to ensure its enforceability.

7. No Alteration of Employment Status. This Agreement does not alter the nature of the relationship between the Executive and the Company. Neither this Agreement nor any retention period stated herein in any way constitute a contract of employment or a promise of a term of employment of any length.

8. Severability. If any provision of this Agreement is construed to be invalid, illegal or unenforceable, then the remaining provisions hereof shall not be affected thereby and shall be enforceable without regard thereto.

9. Social security withholding and income tax. The Company will withhold from any amount payable under this Agreement all applicable social contributions as must be withheld pursuant to any applicable law or regulation. French income tax will be paid by the Executive.

10. Inadmissibility. This Agreement, its execution, and its implementation may not be used as evidence, and will not be admissible, in any proceeding except one brought by the Executive or the Company claiming a violation of this Agreement.

11. Entire Agreement. This Agreement contains the entire agreement and understanding between the Executive and the Company concerning any of the matters described herein and therein, and except as specifically provided herein, supersedes any and all prior agreements, discussions, negotiations, understandings, and proposals of the parties relating to a retention bonus. The terms of this Agreement cannot be changed except in a later document signed by the Executive and an authorized officer of the Company.

12. Controlling Law. This Agreement will be governed by the laws of France. Any dispute relating hereto shall be subject to the exclusive jurisdiction of the French courts.

The present agreement has been drafted in French and English. In the event of disagreement in the interpretation of this agreement or discrepancies between the two version, the French version shall prevail.

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IN WITNESS WHEREOF, the parties have executed this Agreement on the date first set forth above.

	ORGANISATION & DEVELOPPEMENT
/s/ Catherine Lespine	/s/ Jeffrey Ayers
Catherine Lespine	Jeffrey Ayers
Group Managing Director	President

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EX-10.4

Exhibit 10.4

EMPLOYMENT CONTRACT	CONTRAT DE TRAVAIL
BETWEEN THE UNDERSIGNED:	ENTRE LES SOUSSIGNES :
(1) INSEEC Association, whose registered office is at 14, rue de Prony, 75017 Paris, represented by Mr. Louis de Fouchier acting in the capacity of President	(1) L’Association INSEEC, ayant son siège social 14, rue de Prony – 75017 Paris, représentée par Monsieur Louis de Fouchier en sa qualité de Président
Hereinafter referred to “The Association” ON THE ONE HAND	Ci-après dénommée « 1’Association » D’UNE PART
AND	ET
(2) Ms. Catherine Lespine, of French citizenship, residing at 37, rue Camille Corot – 92500 Rueil Malmaison, whose social security number is 2 61 06 19 028 023 93,	(2) Madame Catherine Lespine, de nationalité française, demeurant 37, rue Camille Corot – 92500 Rueil Malmaison, immatriculée sous le numéro de sécurité sociale 2 61 06 19 028 023 93,
Hereinafter referred to as “Ms. Lespine” ON THE OTHER HAND	Ci-après désigné « Madame Lespine » D’AUTRE PART
WHEREAS	IL A PREALABLEMENT ETE EXPOSE CE QUI SUIT :
Ms. Lespine was hired on October 1, 2001 by the Association pursuant to an indefinite term contract; as of February 18, 2003, she has been General Manager.	Madame Lespine a été engagée par 1’Association à compter du ler octobre 2001 par contrat à durée indéterminée ; depuis le 18 février 2003, elle exerce les fonctions de Directrice Générale.
Ms. Lespine benefits from her rights to seniority accrued since she joined the INSEEC Group, i.e., from September 15, 1986.	Madame Lespine bénéficie de la reprise de son ancienneté depuis son entrée dans le Groupe INSEEC soit depuis le 15 septembre 1986.
Article 1 – PURPOSE	Article 1 – OBJET
The purpose of this contract is to set out Ms. Lespine’s working conditions.	Le présent contrat a pour objet de préciser les conditions de travail de Madame Lespine.
The present contract cancels and supersedes any previous document, including the contracts concluded in 2001 and 2003.	Le présent contrat annule et remplace tout document contractuel antérieur et notamment les contrats conclus en 2001 et 2003.
The employment contract is concluded in accordance with the provisions of the collective bargaining agreement for Private education institutions and schools without state subsidies, and which is applicable within the Association on the date of the conclusion of this employment contract.	Le présent contrat est conclu conformément à la convention collective nationale de l’Enseignement privé hors contrat, applicable au sein de l’Association à la date de signature des présentes.

Article 2 – DUTIES	Article 2 – FONCTIONS
As General Manager of the Association, Ms. Lespine has to implement the decisions taken by the Board of Directors and which are notably detailed in the strategic plan and in the budgets. She benefits from a corporate office with a delegation of power and responsibilities, attached to this contract and signed by the Board of Directors of INSEEC.	En sa qualité de Directrice Générale de 1’Association, Madame Lespine est chargée de mettre en œuvre les décisions prises par le Conseil d’administration et qui figurent notamment dans le plan stratégique et dans les budgets. Elle bénéficie à cet effet d’un mandat portant délégation de pouvoirs et de responsabilités, annexée au présent contrat et signé par le Conseil d’administration de l’INSEEC.
Her functions concern in particular:	Ses fonctions concernent notamment:
•   The supervision of (i) the two INSEEC schools of Paris and Bordeaux, (ii) the INSEEC head office, and (iii) theirs managers,	•   la supervision des deux établissements Paris, Bordeaux, du siège de l’INSEEC et de ses directeurs,
•   The implementation of the strategy of the INSEEC schools,	•   la mise en œuvre de la stratégic des établissements INSEEC,
•   The review of the academic orientations and programs and the good coordination between the two schools,	•   le contrôle des choix académiques et la bonne coordination entre les deux établissements,
•   The responsibility of the major administrative files,	•   la responsabilité des grands dossiers administratifs,
•   Broad responsibilities within the scope of external relations (with institutions such as Ministries, the Prefecture and the Rectorate in particular, banks, service providers, etc.),	•   de larges responsabilités dans le cadre des relations extérieures (institutionnelles – ministères – prefécture – rectorat notamment, bancaires, avec les prestataires de services, etc.),
•   Supervision the financial managements of the Association.	•   la supervision de la gestion budgétaire et financière de l’Association.
Considering her position, Ms. Lespine is under the obligation to participate to any relevant board within the INSEEC Group, since her participation to these boards is justified.	Compte tenu de la nature de ses fonctions, Madame Lespine devra participer aux différents organes mis en place par le groupe INSEEC dès lors que sa présence au sein de ces organes se justifie.
The Parties expressly agree that the duties as described are not exclusively limited and are not intended to restrict management’s right to assign or reassign duties to this job, which Ms. Lespine acknowledges and accepts. As a consequence she agrees to follow any training that the Association require her to follow.	Il est précisé que ces fonctions ne présentent aucun caractère exhaustif, l’Association se réserve le droit de pouvoir en modifier le contenu, ce que Madame Lespine reconnaît et accepte expressément, étant précisé qu’elle s’engage, en conséquence, à accomplir toute formation que l’Association pourrait lui demander de suivre.
Ms. Lespine will perform her duties, in accordance with policies, procedure and standards established by the Board of Directors of the Association, and under the supervision of the Chairman or any other person appointed by the Chairman.	Madame Lespine exerce ses fonctions, conformément aux instructions et procédures établies par le Conseil d’administration de l’Association, sous la supervision hiérarchique du Président ou de toute autre personne désignée à cet effet par ce dernier.

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Article 3 – PLACE OF WORK	Article 3 – LIEU DE TRAVAIL
Ms. Lespine performs her duties within the Association located at present at 14, rue Prony – 75017 Paris.	Madame Lespine exerce ses fonctions au sein de l’Association située actuellement 14, rue Prony – 75017 Paris.
However, as the Association may reasonably require, the place of work may be changed to any other place in the Paris region, without said change being construed as a modification of this employment contract ; Ms. Lespine shall be informed of this change two (2) months before the modification.	Toutefois, en fonction de l’évolution et des nécessités de l’Association, le lieu de travail pourra etre modifié dans tout autre lieu en région parisienne sans que ce transfert constitue une modification du présent contrat, étant précisé que l’Association s’engage à informer Madame Lespine dans un délai de deux (2) mois avant la date de modification.
Furthermore, Ms. Lespine’s duties require her to be mobile. Therefore, Ms. Lespine agrees to undertake regular business trips in France and abroad, and thus to be away from her home for limited periods of time.	De même, les fonctions de Madame Lespine rendent indispensables la mobilité de celle-ci. En conséquence, Madame Lespine accepte d’effectuer des voyages réguliers en France et à ĺ’étranger et done d’être éloignée de son domicile pour des périodes de courte durée.
Article 4 – WORKING TIME	Article 4 – DUREE DU TRAVAIL
Considering the responsibilities and the duties entrusted to Ms. Lespine, and which involve great independence in the organization of her timetable, as well as the autonomy with which she makes her decisions within the framework of her functions, and taking into consideration the amount of her compensation, Ms. Lespine benefits from the status of Manager Executive (“Cadre Dirigeant”).	Compte tenu des responsabilités et des fonctions confiées à Madame Lespine impliquant une grande indépendance dans 1’organisation de son emploi du temps, de l’autonomie dont elle dispose pour prendre les décisions dans le cadre de ses fonctions, et compte tenu enfin de son niveau de rémunération, Madame Lespine bénéficie du statut de cadre dirigeant.
Ms. Lespine is consequently not subject to the legal and regulatory provisions governing the duration of work pursuant to Section L. 3111-2 of the French Labor Code.	A ce titre, elle est exclue des dispositions légales et réglementaires concernant la durée du travail, conformément à 1’article L. 3111-2 du Code du travail.
Article 5 – COMPENSATION	Article 5 – REMUNERATION
As of March 1 2013, Ms. Lespine’s shall receive a gross annual compensation of €147,500 (one hundred and forty seven thousand five hundred euros) which shall be paid over 12 months, i.e., a gross amount of €12,291.66 per month (twelve thousand two hundred ninety one and 66/100 euros).	A compter du ler mars 2013, Madame Lespine percoit une rémunération annuelle brute de 147.500 euros (cent quarante-sept mille cinq cent euros), versée sur 12 mois, soit une somme de 12.291,66 euros (douze mille deux cent quatre-vingt-onze euros et soixante-six centimes) par mois.

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Ms. Lespine may also benefit, for 2013 and the subsequent years, of a variable remuneration, the calculation and payment of such remuneration being specified every year. For 2013 the target variable remuneration is 30% of her gross annual base salary. The parties hereby agree that said bonus which Ms. Lespine may receive for 2013 and the subsequent years, shall be in lieu of the annual management bonus paid to Ms. Lespine until 2008.	Madame Lespine pourra par ailleurs bénéficie d’une rémunération variable à compter de 2013 dont les modalités de calcul et de paiement seront fixées chaque année. Pour 2013, l’objectif de rémunération variable est de 30% de son salaire annuel brut de base. I1 est expréssement convenu entre les parties que la rémunération variable dont pourra bénéficier Madame Lespine à compter de 2013, annule et remplace la prime de management annuel qui lui a été versée jusqu’en 2008.
Article 6 – PROFESSIONAL EXPENSES AND BUSINESS TRAVELS	Article 6 – FRAIS PROFESSIONNELS ET DEPLACEMENTS
Ms. Lespine shall benefit from the reimbursement of her reasonable travel expenses incurred in order to perform her duties.	Madame Lespine bénéficie du remboursement des frais raisonnables de déplacement engagés pour 1’accomplissement de ses fonctions.
Moreover, she benefits from a visa card for business purposes, said visa card being the property of the Association. She is obliged to provide the accounting department with invoices and supporting documents, for all expenses incurred with such professional card.	Elle bénéficie en outre d’une carte visa professionnelle qui reste la propriété de l’Association. Elle doit présenter a la comptabilité les factures et piéces justificatives pour toute dépense effectuée avec cette carte professionnelle.
The visa card will have to be returned to the Association upon effective termination of her duties for any reason whatsoever, without any need for a prior request to be made in this respect.	Cette carte devra être restituée à l’Association à la cessation effective de ses fonctions pour quelque raison que ce soit sans qu’il soit besoin d’une mise en demeure préalable.
Article 7 – COMPANY CAR	Article 7 – VEHICULE DE FONCTION
Ms. Lespine benefits from a company car corresponding to the category of “intermediate type cars”.	Madame Lespine bénéficie d’une voiture de fonction entrant dans la catégorie des « véhicules de type intermédiaire ».
Ms. Lespine is authorized to use this car for personal purposes. The private use of such company car constitutes a benefit in kind which shall be taken into account from a tax standpoint to calculate the social charges in accordance with the French legal provisions.	Madame Lespine est autorisée à utiliser ce véhicule à des fins privées. L’usage personnel de ce véhicule professionnel constitue un avantage en nature dont il sera tenu compte tant sur le plan fiscal que pour le calcul des charges sociales conformément aux dispositions légales.
The Association shall be responsible for the costs of the insurance policy for professional and personal uses of the vehicle.	Les frais d’assurance correspondant à la couverture du risque déplacement professionnel et personnel sont pris en charge par l’Association.
The car thus made available to Ms. Lespine remains the property of the Association. Therefore, it must be returned to the Association in the event of the termination of the employment contract, for any reason whatsoever, as soon as Ms. Lespine actually ceases to perform her activity.	Le véhicule mis à la disposition de Madame Lespine reste la propriété de l’Association. I1 devra donc lui être restitué en cas de rupture du contrat de travail pour quelque motif que ce soit, dés la cessation effective de l’activité.

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Article 8 – PAID LEAVE	Article 8 – CONGES PAYES
Ms. Lespine is entitled to the annual paid leave in compliance with the applicable provisions of the French Labor Law and of the collective bargaining agreement.	Madame Lespine a droit à des congés payés annuels dans le respect des dispositions légales et conventionnelles applicables.
When taking such leave, she shall comply with (i) the internal regulations applicable within the Association and (ii) the provisions of the collective bargaining agreement applicable within the Association.	Pour la prise de ses congés payés, elle respectera les régles en vigueur au sein de 1’Association ainsi que les dispositions de la convention collective applicable au sein de l’Association.
Article 9 – SOCIAL COVERAGE	Article 9 – AVANTAGES SOCIAUX
As regards the applicable statutes governing Social Security, and pension and providence schemes, the parties agree to abide by any and all current or future legal and CBA-based provision in connection thereto.	En ce qui concerne 1’application des lois sur la sécurité sociale et les régimes de retraite et de prévoyance, les parties conviennent de se soumettre aux prescriptions légales et conventionnelles, actuelles et futures, régissant ces matiéres.
Consequently, Ms. Lespine benefits from the complementary retirement scheme and from the providence scheme in force within the Association.	En conséquence, Madame Lespine bénéficie des régimes de prévoyance et de retraite complémentaire souscrits en vigueur au sein de l’Association.
Furthermore, Ms. Lespine agrees to have any and all payroll taxes relating to the employees’ contributions of social charges for any such schemes apply to her compensation, whether in connection with current or future schemes within the Association.	Par ailleurs, Madame Lespine accepte expressément que soient prélevées mensuellement sur sa paye les retenues correspondantes à la quote-part salariale des cotisations à ces différents régimes, tant en ce qui concerne ceux actuellement en vigueur que ceux qui pourraient être ultérieurement mis en place au sein de l’Association.
Article 10 – PROFESSIONAL OBLIGATIONS	Article 10 – OBLIGATIONS PROFESSIONNELLES
Except through prior written approval of the legal representative of the Association, or any validly authorized substitute, Ms. Lespine undertakes, for the duration of her employment, to devote all her efforts to the Association and accordingly, shall not have any other professional activity that competes with that of the Association.	Madame Lespine s’engage à consacrer tous ses efforts au profit de l’Association et ne pourra donc exercer aucune autre activité professionnelle concurrente à celle de l’Association pendant la durée du présent contrat, sauf accord préalable exprés et écrit d’un représentant légal de l’Association, plus particuliérement du Président de l’Association ou de toute personne pouvant valablement s’y substituer.
Unless authorized through prior written approval, Ms. Lespine undertakes not to use, publish or divulge to any third party party at the expiration or termination of her employment agreement, any technical, scientific, commercial, strategic or financial information relating to the Association.	Madame Lespine s’engage à ne pas utiliser, publier ou divulguer à des tiers, sans autorisation expresse préalable de l’Association, y compris aprés la cessation du présent contrat de travail, toutes informations notamment techniques, scientifiques, commerciales, stratégiques ou financiéres relatives à l’Association.

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All documents and reports prepared by, or provided to, Ms. Lespine shall remain the property of the Association. Ms. Lespine shall not retain any copy of such material or disseminate information in connection thereto to any third party.	Les documents ou rapports établis par Madame Lespine, ou dont communication lui sera donnée, sont la propriété de 1’Association. Elle ne pourra en conserver copie ni en dornner communication à des tiers.
Ms. Lespine further undertakes to comply, without limitation, with confidentiality obligations as regards any and all documents, list of clients, and more generally all information of any kind and to which she may have had access due to her position within the Association.	Elle s’ engage en outre formellement à respecter le secret professionnel et à conserver strictement confidentielles sans limitation tous les documents, listes de clients, et plus généralement toutes les informations de quelque nature qu’elles soient dont elle a pu avoir connaissance du fait de ses fonctions au sein de 1’Association.
Article 11 – SEVERANCE	Article 11 – INDEMNITE DE RUPTURE
In the event of dismissal, other than for serious misconduct (“faute grave”), gross misconduct (“faute lourde”) or force majeure, Ms. Lespine shall benefit from an indemnity equals to nine (9) months of her monthly gross salary.	En cas de licenciement, sauf pour faute grave, faute lourde ou force majeure, Madame Lespine bénéficiera d’une indemnité de rupture égale à neuf (9) mois de rémunération mensuelle brute.
To calculate this indemnity, the average salary and bonus paid over the twelve (12) months preceding the notification shall be taken into account.	Pour le calcul de cette indemnité, il sera retenu l’ensemble des éléments de salaires versés au cours des douze (12) derniers mois précédant la notification de la rupture.
This indemnity shall be awarded in addition to the dismissal indemnities provided for by French law.	Cette indemnité s’ajoutera aux indemnités de départ prévues par la loi.
This indemnity will not be paid in case of resignation or retirement.	Cette indemnité ne sera pas due en cas de démission ou de départ / mise à la retraite.
Article 12 – NON COMPETITION	Article 12 – NON CONCURRENCE
In case of termination of the employment contract by one of the parties, for any reason whatsoever, Ms. Lespine expressly undertakes not to take interest or to participate, directly or indirectly, whatever her capacity in particular as an employee or as a manager of a company, in any company or activity which is likely to compete with the Association’s activity; that is to say any company / association engaged notably in Business or Marketing Schools, Health Education Schools, Advertising Schools, Culinary Schools, or in any activity of the Association at the date of the termination of this employment contract such as, for instance, potential activities in Fashion Schools or in Art & Design Schools.	Au cas où le présent contrat viendrait à être rompu par l’un ou l’autre des contractants pour quelque cause que ce soit, Madame Lespine s’interdit expressément de s’interesser et/ou de participer directement ou indirectement, quelle que soit sa qualité et notamment en qualité de salarié ou d’exploitant d’une entreprise, à toute entreprise ou activité susceptible de concurrencer 1’activité de l’Association, c’est-à-dire toute entreprise / association située notamment dans le domaine des Ecoles de Commerce et de Marketing, des Ecoles d’enseignement de santé, des Ecoles de publicité et des Ecoles enseignant la restauration, ou de toute autre activité exercée par l’Association à la date de rupture du présent contrat de travail telles que, par exemple, d’éventuelles activités dans les Ecoles de mode ou d’art et de design.

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This restriction applies for a period of twelve (12) mois, from the last day of effective work.	Cette interdiction s’appliquera pendant une durée de douze (12) mois à compter du dernier jour de travail effectif.
This covenant not to compete will be limited within the French territory.	Cette clause de non concurrence sera limitée au territoire français.
In consideration for this non-compete obligation, Ms. Lespine shall receive a monthly allowance of 20% of her monthly base salary (potential variable compensation (bonus), gifts and benefits in kind being excluded)in case of termination of her employment contract.	En contrepartie de cette obligation de non-concurrence visée ci-dessus, Madame Lespine percevra une indemnité mensuelle égale à 20% de son salaire mensuel brut de base (excluant l’éventuelle rémunération variable (bonus), des libéralités à caractère aléatoire ou temporaire et des avantages en nature) en cas de rupture du contrat de travail.
Such allowance shall be in lieu of the compensation paid to Ms. Lespine in the amount of 10% of her annual gross compensation, and which was paid every month until the date of conclusion of this employment contract, as a financial consideration of the non-competition clause.	Cette indemnité annule et remplace le paiement de la somme correspondant à 10% de la rémunération brute annuelle de Madame Lespine qui lui a été versée tous les mois jusqu’à la date de signature du présent contrat en contrepartie du respect de cette clause de non concurrence.
Should Ms. Lespine fail to observe this covenant, she shall be automatically be liable towards the Association for repayment of whole sums paid to her as financial compensation for such obligation.	En cas de violation de l’obligation de non concurrence, Madame Lespine sera automatiquement redevable envers l’Association des sommes versées à titre de compensation financière à cette obligation.
Furthermore, the Association reserves the right to sue for obtaining damages to compensate any prejudice suffered from the competitive activity and also to sue for stopping such competitive activity.	En outre, l’Association se réserve la possibilité de sollicker la réparation du préjudice subi du fait de l’activité concurrentielle et de faire cesser cette activité concurrentielle.
In any circumstances, the Association shall have the possibility, either to reduce the duration of the non-competition clause, or to waive such clause on the condition however that Ms. Lespine is informed of such waiver by registered letter with acknowledgment of receipt within the 15 days following the notification of the termination of the employment contract.	I1 est entendu qu’en toutes circonstances, l’Association aura la possibilité, soit de réduire la durée de la période d’application de la clause de non-concurrence, soit de renoncer à cette dernière à condition toutefois que cette dénonciation soit signalée à Madame Lespine par lettre recommandée avec accusé de réception dans les 15 jours suivant la notification de la rupture du contrat de travail.
Article 13 – INTELLECTUAL PROPERTY	Article 13 – PROPRIETE INTELLECTUELLE
Ms. Lespine expressly acknowledges that the programmes, course materials, teaching methods and specific pedagogical techniques, business plan, advertisement or promotion documents and any other documents which she may have access within the scope of the performance of her duties, remain the full property of the Association which holds exclusive rights over the intellectual property rights in this respect.	Madame Lespine reconnaît expressément que les programmes, supports de cours, les méthodes d’enseignement ou encore les techniques particulières de pédagogie, les business plans, documents publicitaires ou de promotions et tous documents qu’elle pourrait avoir eu en sa possession à l’occasion de ses fonctions restent la propriété pleine et entière de 1’Association qui dispose, à ce titre, de l’exclusivité des droits de propriété intellectuelle.

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Throughout the term of this employment contract and after termination hereof, without any limitation of time, Ms. Lespine undertakes not to reproduce, reuse, in any manner whatsoever, the teaching programs or course materials or any other document belonging to the Association.	Madame Lespine s’interdit, pendant toute l’exécution du présent contrat de travail ou encore après sa rupture et sans limitation de durée, de reproduire ou réutiliser, sous quelque forme que ce soit, les programmes ou supports de cours ou documents de toute nature appartenant à l’Association.
Article 14 – COMPETENCE	Article 14 – COMPETENCE
Any disputes that may occur at the time of the application of the present contract will fall within the competence of the French courts.	Les litiges pouvant survenir à l’occasion de 1’application du présent contrat de travail relèveront de la compétence des tribunaux français.
Article 15 – NOTICE PERIOD	Article 15 – PREAVIS
In case of termination of the employment contract by either party, a 3-month notice period shall be complied with.	En cas de rupture du contrat de travail par l’une ou l’autre des parties, un préavis de trois mois devra être respecté.
Article 16 – MISCELLANEOUS PROVISIONS	Article 16 – DISPOSITIONS DIVERSES
Ms. Lespine expressly affirms that (i) she was informed that the collective bargaining agreement of Private education institutions and schools without sate subsidies is applicable within the Association at the date of the conclusion of this employment contract, and (ii) she had had an opportunity to review it.	Madame Lespine déclare avoir été informée que la convention collective nationale de l’Enseignement privé hors contrat est applicable, à la date de signature du présent contrat de travail, aux relations contractuelles, et déclare avoir pu en prendre connaissance.
For any provisions non-provided by this employment contract contract, the parties shall apply the collective bargaining agreement for Private education institutions and schools without state subsidies.	Pour toutes dispositions non prévues au présent contrat, les parties se réfèreront aux dispositions de la convention collective nationale de l’Enseignement privé hors contrat.
Ms. Lespine undertakes to inform the Association without delay of any modification in her personal status.	Madame Lespine s’engage à faire connaître dans les plus brefs délais à l’Association tout changement dans sa situation personnelle.
The present contract is drafted in the French and the English language. In the event of any contradiction between the two versions, the French version shall prevail.	Le présent contrat est établi en langue française et anglaise. En cas de contradiction entre les deux textes, la version française fera foi.
Place: Paris	Signé à Paris
Date: June, 27th, 2013	Le 27 June 2013
In two (2) original copies, one for each party.	En deux exemplaires, un pour chacune des parties.

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Ms. Catherine Lespine	Madame Catherine Lespine
The INSEEC Association	L’Association INSEEC

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EX-10.5

Exhibit 10.5

EMPLOYMENT CONTRACT	CONTRAT DE TRAVAIL
BETWEEN THE UNDERSIGNED :	ENTRE LES SOUSSIGNES :
(1) ORGANISATION ET DEVELOPPEMENT, a “société par actions simplifiée” duly existing and organized under the laws of France, with a share capital of € 352,695, having its registered offices at 14, rue de Prony – 75017 Paris – France, registered with the Corporate register of Paris under identification number 335 133 872, represented by its President, Mr. Jeffrey AYERS,	(1) ORGANISATION ET DEVELOPPEMENT, société par actions simplifiée au capital de 352.695 euros, dont le siège social est 14 rue de Prony—75017 Paris, immatriculée sous le numéro unique d’identification 335 133 872 RCS PARIS, représentée par son Président Monsieur Jeffrey AYERS,
Hereinafter referred to “The Company” ON THE ONE HAND	Ci-après dénommée « la Société » D’UNE PART
AND	ET
(2) Ms. Catherine Lespine, of French citizenship, residing at 37, rue Camille Corot – 92500 Rueil Malmaison, whose social security number is 2 61 06 19 028 023 93,	(2) Madame. Catherine Lespine, de nationalité française, demeurant 37, rue Camille Corot -92500 Rueil Malmaison, immatriculée sous le numéro de sécurité sociale 2 61 06 19 028 023 93,
Hereinafter referred to as “Ms. Lespine”	Ci-après désigné « Madame Lespine »
ON THE OTHER HAND	D’AUTRE PART
WHEREAS	IL A PREALABLEMENT ETE EXPOSE CE QUI SUIT :
Ms. Lespine was hired on October 1, 2000 by the Company pursuant to an indefinite term contract; as of February 18, 2003, she has been Group General Manager.	Madame Lespine a été engagée par la Société à compter du ler octobre 2000 par contrat à durée indéterminée; depuis le 18 février 2003, elle exerce les fonctions de Directrice Générale Groupe
Ms. Lespine benefits from her rights to seniority accrued since she joined the INSEEC Group, i.e., from September 15, 1986.	Madame Lespine bénéficie de la reprise de son ancienneté depuis son entrée dans le Groupe INSEEC soit depuis le 15 septembre 1986.
Article 1 – PURPOSE	Article 1 – OBJET
The purpose of this contract is to set out Ms. Lespine’s working conditions.	Le présent contrat a pour objet de préciser les conditions de travail de Madame Lespine.
The present contract cancels and supersedes any previous document, including the contracts concluded in 2000 and 2003.	Le présent contrat annule et remplace tout document contractuel antérieur et notamment les contrats conclus en 2000 et 2003.
The employment contract is concluded in accordance with the provisions of the collective bargaining agreement for Advertising, and which is applicable within the Company on the date of the conclusion of this employment contract.	Le présent contrat est conclu conformément à la convention collective nationale de la Publicité applicable au sein de la Société à la date de signature des présentes.

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Article 2 – DUTIES	Article 2 – FONCTIONS
Ms. Lespine performs the duties of Group General Manager within the Company.	Madame Lespine exerce les fonctions de Directrice Générale Groupe au sein de la Société.
Her functions concern in particular:	Ses fonctions concernent notamment:
•   The definition of he development strategy of the schools of the Group Organisation et Développement, the direct participation in all decisions and work in terms of positioning and marketing, internal and external growth,	•   la définition de la stratégie de développement des écoles du Groupe Organisation et Développement, la participation directe à toutes les décisions et travaux en matière de positionnement et de marketing, croissance interne et externe,
•   The supervision of the pedagogical and administrative teams of the schools of the Group Organisation et Développement,	•   la supervision des équipes pédagogiques et administratives des écoles du Groupe Organisation et Développement,
•   The responsibilities and the monitoring of specific files (visa applications, recognition, approval of the school, etc.),	•   les responsabilités et le suivi des dossiers particuliers (dossiers visa, reconnaissance, homologation, etc.),
•   Broad responsibilities within the scope of external relations (with institutions such as Ministries, the Prefecture and the Rectorate in particular, banks, service providers, etc.),	•   de larges responsabilités dans le cadre des relations extérieures (institutionnelles – ministères – préfecture – rectorat notamment, bancaires, avec les prestataires de services, etc.),
•   The monitoring of the budgetary and financial management of the schools of the Group Organisation et Développement.	•   le suivi de la gestion budgétaire et financière du Groupe Organisation et Développement.
Considering her position, Ms. Lespine is under the obligation to participate to any relevant board within the CEC Group since her participation to these boards is justified.	Compte tenu de la nature de ses fonctions, Madame Lespine devra participer aux différents organes mis en place par le Groupe CEC dès lors que sa présence au sein de ces organes se justifie.
At the present date, Ms. Lespine participates to the CEC France Strategy Committee.	A ce jour, Madame Lespine reconnaît participer au Comité Stratégique de CEC France.
The Parties expressly agree that the duties as described are not exclusively limited and are not intended to restrict management’s right to assign or reassign duties to this job, which Ms. Lespine acknowledges and accepts. As a consequence she agrees to follow any training that the Company require her to follow.	I1 est précisé que ces fonctions ne présentent aucun caractère exhaustif, la Société se réserve le droit de pouvoir en modifier le contenu, ce que Madame Lespine reconnaît et accepte expressément, étant précisé qu’elle s’engage, en conséquence, à accomplir toute formation que la Société pourrait lui demander de suivre.
Ms. Lespine will perform her duties, in accordance with policies, procedure and standards established	Madame Lespine exerce ses fonctions, , conformément aux instructions et procédures

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by the Company, and under the supervision of the Chairman or any other person appointed by the Chairman.	établies par la Société sous la supervision hiérarchique du Président ou de toute autre personne désignée à cet effet par ce dernier.
Article 3 – PLACE OF WORK	Article 3 – LIEU DE TRAVAIL
Ms. Lespine performs her duties within the Company located at present at 14 rue de Prony, 75017 Paris.	Madame Lespine exerce ses fonctions au sein de la Société située actuellement 14 rue de Prony, 75017 Paris.
However, as the Company may reasonably require, the place of work may be changed to any other place in the Paris region, without said change being construed as a modification of this employment contract ; Ms. Lespine shall be informed of this change two (2) months before the modification.	Toutefois, en fonction de l’évolution et des nécessités de la Société, le lieu de travail pourra être modifié dans tout autre lieu en région parisienne sans que ce transfert constitue une modification du présent contrat, étant précisé que la Société s’engage à informer Madame Lespine dans un délai de deux (2) mois avant la date de modification.
Furthermore, Ms. Lespine’s duties require her to be mobile. Therefore, Ms. Lespine agrees to undertake regular business trips in France and abroad, and thus to be away from her home for limited periods of time.	De même, les fonctions de Madame Lespine rendent indispensables la mobilité de celle-ci. En conséquence, Madame Lespine accepte d’effectuer des voyages réguliers en France et à l’étranger et donc d’être éloignée de son domicile pour des périodes de courte durée.
Article 4 – WORKING TIME	Article 4 – DUREE DU TRAVAIL
Considering the responsibilities and the duties entrusted to Ms. Lespine, and which involve great independence in the organization of her timetable, as well as the autonomy with which she makes her decisions within the framework of her functions, and taking into consideration the amount of her compensation, Ms. Lespine benefits from the status of Manager Executive (“Cadre Dirigeant”).	Compte tenu des responsabilités et des fonctions confiées à Madame Lespine impliquant une grande indépendance dans l’organisation de son emploi du temps, de l’autonomie dont elle dispose pour prendre les décisions dans le cadre de ses fonctions, et compte tenu enfin de son niveau de rémunération, Madame Lespine bénéficie du statut de cadre dirigeant.
Ms. Lespine is consequently not subject to the legal and regulatory provisions governing the duration of work pursuant to Section L. 3111-2 of the French Labor Code.	A ce titre, elle est exclue des dispositions légales et réglementaires concernant la durée du travail, conformément à l’article L. 3111-2 du Code du travail.
The parties recognize expressly that Ms. Lespine is also working for the INSEEC Association.	Les parties reconnaissent expressément que Madame Lespine travaille aussi pour le compte de 1’association INSEEC.
Article 5 – COMPENSATION	Article 5 – REMUNERATION
From March 1 2013, Ms. Lespine’s shall receive a gross annual compensation of €147,500 (one hundred and forty seven thousand five hundred euros) which shall be paid over 12 months, i.e., a gross amount of €12,291.66 per month (twelve thousand two hundred ninety one and 66/100 euros).	A compter du ler mars 2013, Madame Lespine perçoit une rémunération annuelle brute de 147.500 euros (cent quarante-sept mille cinq cent euros), versée sur 12 mois, soit une somme de 12.291,66 euros (douze mille deux cent quatre-vingt-onze euros et soixante-six centimes) par mois.

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Ms. Lespine may also benefit, for 2013 and the subsequent years, of a variable remuneration, the calculation and payment of such remuneration being specified every year. For 2013 the target variable remuneration is 30% of her gross annual base salary. The parties hereby agree that said bonus which Ms. Lespine may receive for 2013 and the subsequent years, shall be in lieu of the annual management bonus paid to Ms. Lespine until 2008.	Madame Lespine pourra par ailleurs bénéficier d’une rémunération variable à compter de 2013 dont les modalités de calcul et de paiement seront fixées chaque année. Pour 2013, l’objectif de rémunération variable est de 30% de son salaire annuel brut de base. 11 est expressément convenu entre les parties que la rémunération variable dont pourra bénéficier Madame Lespine à compter de 2013, annule et remplace la prime de management annuel qui lui a été versée jusqu’en 2008.
Article 6 – PROFESSIONAL EXPENSES AND BUSINESS TRAVELS	Article 6 – FRAIS PROFESSIONNELS ET DEPLACEMENTS
Ms. Lespine shall benefit from the reimbursement of her reasonable travel expenses incurred in order to perform her duties.	Madame Lespine bénéficie du remboursement des frais raisonnables de déplacement engagés pour l’accomplissement de ses fonctions.
Moreover, she benefits from a visa card for business purposes, said visa card being the property of the Company. She is obliged to provide the accounting department with invoices and supporting documents, for all expenses incurred with such professional card.	Elle bénéficie en outre d’une carte visa professionnelle qui reste la propriété de la Société. Elle doit présenter à la comptabilité les factures et pièces justificatives pour toute dépense effectuée avec cette carte professionnelle.
The visa card will have to be returned to the Company upon effective termination of her duties for any reason whatsoever, without any need for a prior request to be made in this respect.	Cette carte devra être restituée à la Société à la cessation effective de ses fonctions pour quelque raison que ce soit sans qu’il soit besoin d’une mise en demeure préalable.
Article 7 – PAID LEAVE	Article 7 – CONGES PAYES
Ms. Lespine is entitled to the annual paid leave in compliance with the applicable provisions of the French Labor Law and of the collective bargaining agreement	Madame Lespine a droit à des congés payés annuels dans le respect des dispositions légales et conventionnelles applicables
When taking such leave, she shall comply with (i) the internal regulations applicable within the Company and (ii) with the provisions of the collective bargaining agreement applicable within the Company	Pour la prise de ses congés payés, elle respectera (i) les règles en vigueur au sein de la Société ainsi que (ii) les dispositions de la convention collective applicable au sein de la Société.
Article 8 – SOCIAL COVERAGE	Article 8 – AVANTAGES SOCIAUX
As regards the applicable statutes governing Social Security, and pension and providence schemes, the parties agree to abide by any and all current or future legal and CBA-based provision in connection thereto.	En ce qui concerne 1’application des lois sur la sécurité sociale et les régimes de retraite et de prévoyance, les parties conviennent de se soumettre aux prescriptions légales et conventionnelles, actuelles et futures, régissant ces matières.

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Consequently, Ms. Lespine benefits from the complementary retirement scheme and from the providence scheme in force within the Company.	En conséquence, Madame Lespine bénéficie des régimes de prévoyance et de retraite complémentaire souscrits en vigueur au sein de la Société.
Furthermore, Ms. Lespine agrees to have any and all payroll taxes relating to the employees’ contributions of social charges for any such schemes apply to her compensation, whether in connection with current or future schemes within the Company.	Par ailleurs, Madame Lespine accepte expressément que soient prélevées mensuellement sur sa paye les retenues correspondantes à la quote-part salariale des cotisations à ces différents régimes, tant en ce qui concerne ceux actuellement en vigueur que ceux qui pourraient être ultérieurement mis en place au sein de la Société.
Article 9 – PROFESSIONAL OBLIGATIONS	Article 9 – OBLIGATIONS PROFESSIONNELLES
Except through prior written approval of the legal representative of the Company, or any validly authorized substitute, Ms. Lespine undertakes, for the duration of her employment, to devote all her efforts to the Company and accordingly, shall not have any other professional activity that competes with that of the Company.	Madame Lespine s’engage à consacrer tous ses efforts au profit de la Société et ne pourra donc exercer aucune autre activité professionnelle concurrente à celle de la Société pendant la durée du présent contrat, sauf accord préalable exprès et écrit d’un représentant légal de la Société, plus particulièrement du Président de la Société ou de toute personne pouvant valablement s’y substituer.
Unless authorized through prior written approval, Ms. Lespine undertakes not to use, publish or divulge to any third party party at the expiration or termination of her employment agreement, any technical, scientific, commercial, strategic or financial information relating to the Company.	Madame Lespine s’engage à ne pas utiliser, publier ou divulguer à des tiers, sans autorisation expresse préalable de la Société, y compris après la cessation du présent contrat de travail, toutes informations notamment techniques, scientifiques, commerciales, stratégiques ou financières relatives à la Société.
All documents and reports prepared by, or provided to, Ms. Lespine shall remain the property of the Company. Ms. Lespine shall not retain any copy of such material or disseminate information in connection thereto to any third party.	Les documents ou rapports établis par Madame Lespine, ou dont communication lui sera donnée, sont la propriété de la Société. Elle ne pourra en conserver copie ni en donner communication à des tiers.
Ms. Lespine further undertakes to comply, without limitation, with confidentiality obligations as regards any and all documents, list of clients, and more generally all information of any kind and to which she may have had access due to her position within the Company.	Elle s’engage en outre formellement à respecter le secret professionnel et à conserver strictement confidentielles sans limitation tous les documents, listes de clients, et plus généralement toutes les informations de quelque nature qu’elles soient dont elle a pu avoir connaissance du fait de ses fonctions au sein de la Société.

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Article 10 – SEVERANCE	Article 10 – INDEMNITE DE RUPTURE
In the event of dismissal, other than for serious misconduct (“faute grave”), gross misconduct (“faute lourde”) or force majeure, Ms. Lespine shall benefit from an indemnity equals to nine (9) months of her monthly gross salary.	En cas de licenciement, sauf pour faute grave, faute lourde ou force majeure, Madame Lespine bénéficiera d’une indemnité de rupture égale à neuf (9) mois de rémunération mensuelle brute.
To calculate this indemnity, the average salary and bonus paid over the twelve (12) months preceding the notification shall be taken into account.	Pour le calcul de cette indemnité, il sera retenu l’ensemble des éléments de salaires versés au cours des douze (12) derniers mois précédant la notification de la rupture.
This indemnity shall be awarded in addition to the dismissal indemnities provided for by French law.	Cette indemnité s’ajoutera aux indemnités de départ prévues par la loi.
This indemnity will not be paid in case of resignation or retirement.	Cette indemnité ne sera pas due en cas de démission ou de départ / mise à la retraite.
Article 11 – NON COMPETITION	Article 11 – NON CONCURRENCE
In case of termination of the employment contract by one of the parties, for any reason whatsoever, Ms. Lespine expressly undertakes not to take interest or to participate, directly or indirectly, whatever her capacity in particular as an employee or as a manager of a company, in any company or activity which is likely to compete with the Company’s activity.	Au cas où le présent contrat viendrait à être rompu par l’un ou l’autre des contractants pour quelque cause que ce soit, Madame Lespine s’interdit expressément de s’intéresser et/ou de participer directement ou indirectement, quelle que soit sa qualité et notamment en qualité de salarié ou d’exploitant d’une entreprise, à toute entreprise ou activité susceptible de concurrencer l’activité de la Société.
This restriction applies for a period of twelve (12) months, from the last day of effective work.	Cette interdiction s’appliquera pendant une durée de douze (12) mois à compter du dernier jour de travail effectif.
This covenant not to compete will be limited within the French territory.	Cette clause de non concurrence sera limitée au territoire français.
In consideration for this non-compete obligation, Ms. Lespine shall receive a monthly allowance of 20% of her monthly gross base salary (potential variable compensation (bonus), gifts and benefits in kind being excluded) in case of termination of her employment contract.	En contrepartie de cette obligation de non-concurrence visée ci-dessus, Madame Lespine percevra une indemnité mensuelle égale à 20% de son salaire mensuel brut de base (excluant l’éventuelle rémunération variable (bonus), des libéralités à caractère aléatoire ou temporaire et des avantages en nature) en cas de rupture du contrat de travail.
Such allowance shall be in lieu of the compensation paid to Ms. Lespine in the amount of 10% of her annual gross compensation, and which was paid every month until the date of conclusion of this employment contract, as a financial consideration of the non-competition clause.	Cette indemnité annule et remplace le paiement de la somme correspondant à 10% de la rémunération brute annuelle de Madame Lespine, qui lui a été versée tous les mois jusqu’à la date de signature du présent contrat, en contrepartie du respect de cette clause de non concurrence.
Should Ms. Lespine fail to observe this covenant, she shall be automatically be liable towards the Company for repayment of whole sums paid to her as financial compensation for such obligation.	En cas de violation de 1’obligation de non concurrence, Madame Lespine sera automatiquement redevable envers la Société des sommes versées à titre de compensation financière à cette obligation.

6

Furthermore, the Company reserves the right to sue for obtaining damages to compensate any prejudice suffered from the competitive activity and also to sue for stopping such competitive activity.	En outre, la Société se réserve la possibilité de solliciter la réparation du préjudice subi du fait de l’activité concurrentielle et de faire cesser cette activité concurrentielle.
In any circumstances, the Company shall have the possibility, either to reduce the duration of the non-competition clause, or to waive such clause on the condition however that Ms. Lespine is informed of such waiver by registered letter with acknowledgment of receipt within the 15 days following the notification of the termination of the employment contract.	Il est entendu qu’en toutes circonstances, la Société aura la possibilité, soit de réduire la durée de la période d’application de la clause de non-concurrence, soit de renoncer à cette dernière à condition toutefois que cette dénonciation soit signalée à Madame Lespine par lettre recommandée avec accusé de réception dans les 15 jours suivant la notification de la rupture du contrat de travail
Article 12 – INTELLECTUAL PROPERTY	Article 12 – PROPRIETE INTELLECTUELLE
Ms. Lespine expressly acknowledges that the programmes, course materials, teaching methods and specific pedagogical techniques, business plan, advertisement or promotion documents and any other documents which she may have access within the scope of the performance of her duties, remain the full property of the Company which holds exclusive rights over the intellectual property rights in this respect.	Madame Lespine reconnaît expressément que les programmes, supports de cours, les méthodes d’enseignement ou encore les techniques particulières de pédagogie, les business plans, documents publicitaires ou de promotions et tous documents qu’elle pourrait avoir eu en sa possession à l’occasion de ses fonctions restent la propriété pleine et entière de la Société qui dispose, à ce titre, de l’exclusivité des droits de propriété intellectuelle.
Throughout the term of this employment contract and after termination hereof, without any limitation of time, Ms. Lespine undertakes not to reproduce, reuse, in any manner whatsoever, the teaching programs or course materials or any other document belonging to the Company.	Madame Lespine s’interdit, pendant toute 1’exécution du présent contrat de travail ou encore après sa rupture et sans limitation de durée, de reproduire ou réutiliser, sous quelque forme que ce soit, les programmes ou supports de cours ou documents de toute nature appartenant à la Société.
Article 13 – COMPETENCE	Article 13 – COMPETENCE
Any disputes that may occur at the time of the application of the present contract will fall within the competence of the French courts.	Les litiges pouvant survenir à l’occasion de 1’application du présent contrat de travail relèveront de la compétence des tribunaux français.
Article 14 – NOTICE PERIOD	Article 14 – PREAVIS
In case of termination of the employment contract by either party, a 3-month notice period shall be complied with.	En cas de rupture du contrat de travail par l’une ou l’autre des parties, un préavis de trois mois devra être respecté.

7

Article 15 – MISCELLANEOUS PROVISIONS	Article 15 – DISPOSITIONS DIVERSES
Ms. Lespine expressly affirms that (i) she was informed that the collective bargaining agreement of Advertising is applicable within the Company at the date of the conclusion of this employment contract, and (ii) she had had an opportunity to review it.	Madame Lespine déclare avoir été informée que la convention collective nationale de la Publicité est applicable, à la date de signature du présent contrat de travail, aux relations contractuelles, et déclare avoir pu en prendre connaissance.
For any provisions non-provided by this employment contract, the parties shall apply the Collective Bargaining Agreement for Advertising.	Pour toutes dispositions non prévues au présent contrat, les parties se réfèreront aux dispositions de la Convention Collective Nationale de la Publicité.
Ms. Lespine undertakes to inform the Company without delay of any modification in her personal status.	Madame Lespine s’engage à faire connaître dans les plus brefs délais à la Société tout changement dans sa situation personnelle.
The present contract is drafted in the French and the English language. In the event of any contradiction between the two versions, the French version shall prevail.	Le présent contrat est établi en langue française et anglaise. En cas de contradiction entre les deux textes, la version française fera foi.
Place: Paris	Signé à Paris
Date: June 27th, 2013	Le 27 June, 2013
In two (2) original copies, one for each party.	En deux exemplaires, un pour chacune des parties.
Ms. Catherine Lespine	Madame Catherine Lespine
Organisation et Développement	Organisation et Développement

8

EX-10.6

Exhibit 10.6

EXECUTIVE RETENTION AGREEMENT

THIS EXECUTIVE RETENTION AGREEMENT (this “Agreement”), dated as of the 4 March 2013 (the “Effective Date”), is by and among INSTITUT D’ETUDES ECONOMIQUES ET COMMERCIALES (INSEEC), a French « association régie par la loi de 1901 », registered under number 312 409 030 00011, whose offices are located 14 rue de Prony – 75017 Paris – France, represented by Mr. Louis de Fouchier, President, duly empowered for the purposes hereof, (the “Association”), and Catherine Lespine, (the “Executive”).

WHEREAS, the Executive is currently the General Manager within the Association; and

WHEREAS, the Association desires to ensure the Executive’s continued employment with the Association through March 31, 2014, (the “Retention Date”); and

WHEREAS, in order to help ensure such continued employment, the Association desires to grant the Executive the Retention Bonus (as defined below) which shall be payable pursuant to the terms hereof.

NOW, THEREFORE, the parties hereto hereby agree as follows:

1. Retention Bonus. The Executive shall receive a retention bonus in an amount of $50,000 (the “Retention Bonus”). The Retention Bonus shall be paid in cash in United States dollars and will be subject to applicable social security contributions and income tax.

2. Payment Date. The Retention Bonus will be paid within thirty (30) days of the Retention Date.

3. Forfeitabilitv of the Retention Bonus. In all cases, to the extent the Executive voluntarily terminates employment with the Association, for any reason, or the Executive is terminated by the Association, for any reason, prior to the Retention Date, the amount due to be paid to the Executive on such Payment Date shall be forfeited by the Executive.

4. Change in Control. Following a Change in Control, the Retention Bonus will remain payable on the Payment Date specified in Section – hereof.

A Change in Control is the occurrence of any one or more of the following:

(i) CEC Group ceases to hold, directly or indirectly, the majority of the voting shares in the Association; or

Page 1 of 3

(ii) the Association is merged, acquired or consolidated and CEC Group does not hold, directly or indirectly, the majority of the voting shares in the surviving entity; or

(iii) the sale, transfer or other disposition of all or substantially all of the business or assets of the Association.

CEC Group means Career Education Corporation, a Delaware corporation, (“CEC US”) and all the worldwide legal entities in which CEC US has a majority of the voting rights, whether directly or indirectly.

5. Confidentiality of Agreement. This Agreement and its terms are confidential and the Executive agrees not to discuss or disclose the existence or terms of this Agreement to anyone. Notwithstanding the foregoing, the Association and the Employee may disclose this Agreement and the terms thereof to the extent required by applicable law or to the extent necessary to ensure its enforceability.

6. No Alteration of Employment Status. This Agreement does not alter the nature of the relationship between the Executive and the Association. Neither this Agreement nor any retention period stated herein in any way constitute a contract of employment or a promise of a term of employment of any length.

7. Severability. If any provision of this Agreement is construed to be invalid, illegal or unenforceable, then the remaining provisions hereof shall not be affected thereby and shall be enforceable without regard thereto.

8. Social security withholding and income tax. The Association will withhold from any amount payable under this Agreement all applicable social contributions as must be withheld pursuant to any applicable law or regulation. French income tax will be paid by the Executive.

9. Inadmissibility. This Agreement, its execution, and its implementation may not be used as evidence, and will not be admissible, in any proceeding except one brought by the Executive or the Association claiming a violation of this Agreement.

10. Entire Agreement. This Agreement contains the entire agreement and understanding between the Executive and the Association concerning any of the matters described herein and therein, and except as specifically provided herein, supersedes any and all prior agreements, discussions, negotiations, understandings, and proposals of the parties relating to a retention bonus. The terms of this Agreement cannot be changed except in a later document signed by the Executive and an authorized officer of the Association.

11. Controlling Law. This Agreement will be governed by the laws of France. Any dispute relating hereto shall be subject to the exclusive jurisdiction of the French courts.

The present agreement has been drafted in French and English. In the event of disagreement in the interpretation of this agreement or discrepancies between the two versions, the French version shall prevail.

Page 2 of 3

IN WITNESS WHEREOF, the parties have executed this Agreement on the date first set forth above.

	INSEEC
Catherine LESPINE General Manager	Louis de FOUCHIER President

Page 3 of 3

EX-10.7

Exhibit 10.7

EXECUTIVE RETENTION AGREEMENT

THIS EXECUTIVE RETENTION AGREEMENT (this “Agreement”), dated as of the 4 March 2013 (the “Effective Date”), is by and among ORGANISATION ET DEVELOPPEMENT, a “société par actions simplifiée” duly existing and organized under the laws of France, with a share capital of € 352,695, having its registered offices at 14, rue de Prony – 75017 Paris – France, registered with the Corporate register of Paris under identification number 335 133 872, represented by its President, Mr. Jeffrey AYERS, duly empowered for the purposes hereof,(the “Company”), and Catherine Lespine, (the “Executive”).

WHEREAS, the Executive is currently the Group General Manager within the Company; and

WHEREAS, the Company desires to ensure the Executive’s continued employment with the Company through March 31, 2014, (the “Retention Date”); and

WHEREAS, in order to help ensure such continued employment, the Company desires to grant the Executive the Retention Bonus (as defined below) which shall be payable pursuant to the terms hereof.

NOW, THEREFORE, the parties hereto hereby agree as follows:

1. Retention Bonus. The Executive shall receive a retention bonus in an amount of $50,000 (the “Retention Bonus”). The Retention Bonus shall be paid in cash in United States dollars and will be subject to applicable social security contributions and income tax.

2. Payment Date. The Retention Bonus will be paid within thirty (30) days of the Retention Date.

3. Forfeitability of the Retention Bonus. In all cases, to the extent the Executive voluntarily terminates employment with the Company, for any reason, or the Executive is terminated by the Company, for any reason, prior to the Retention Date, the amount due to be paid to the Executive on such Payment Date shall be forfeited by the Executive.

4. Change in Control. Following a Change in Control, the Retention Bonus will remain payable on the Payment Date specified in Section – hereof.

Page 1 of 3

A Change in Control is the occurrence of any one or more of the following:

(i) CEC Group ceases to hold, directly or indirectly, the majority of the voting shares in the Company; or

(ii) the Company is merged, acquired or consolidated and CEC Group does not hold, directly or indirectly, the majority of the voting shares in the surviving entity; or

(iii) the sale, transfer or other disposition of all or substantially all of the business or assets of the Company.

CEC Group means Career Education Corporation, a Delaware corporation, (“CEC US”) and all the worldwide legal entities in which CEC US has a majority of the voting rights, whether directly or indirectly.

5. Confidentiality of Agreement. This Agreement and its terms are confidential and the Executive agrees not to discuss or disclose the existence or terms of this Agreement to anyone. Notwithstanding the foregoing, the Company and the Employee may disclose this Agreement and the terms thereof to the extent required by applicable law or to the extent necessary to ensure its enforceability.

6. No Alteration of Employment Status. This Agreement does not alter the nature of the relationship between the Executive and the Company. Neither this Agreement nor any retention period stated herein in any way constitute a contract of employment or a promise of a term of employment of any length.

7. Severability. If any provision of this Agreement is construed to be invalid, illegal or unenforceable, then the remaining provisions hereof shall not be affected thereby and shall be enforceable without regard thereto.

8. Social security withholding and income tax. The Company will withhold from any amount payable under this Agreement all applicable social contributions as must be withheld pursuant to any applicable law or regulation. French income tax will be paid by the Executive.

9. Inadmissibility. This Agreement, its execution, and its implementation may not be used as evidence, and will not be admissible, in any proceeding except one brought by the Executive or the Company claiming a violation of this Agreement.

10. Entire Agreement. This Agreement contains the entire agreement and understanding between the Executive and the Company concerning any of the matters described herein and therein, and except as specifically provided herein, supersedes any and all prior agreements, discussions, negotiations, understandings, and proposals of the parties relating to a retention bonus. The terms of this Agreement cannot be changed except in a later document signed by the Executive and an authorized officer of the Company.

11. Controlling Law. This Agreement will be governed by the laws of France. Any dispute relating hereto shall be subject to the exclusive jurisdiction of the French courts.

Page 2 of 3

The present agreement has been drafted in French and English. In the event of disagreement in the interpretation of this agreement or discrepancies between the two version, the French version shall prevail.

IN WITNESS WHEREOF, the parties have executed this Agreement on the date first set forth above.

	ORGANISATION & DEVELOPPEMENT
Catherine Lespine	Jeffrey D. Ayers
Director General	President

Page 3 of 3

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Scott W. Steffey, President and Chief Executive Officer of Career Education Corporation, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Career Education Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2013

/s/    SCOTT W. STEFFEY        

Scott W. Steffey

President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Colleen M. O’Sullivan, Senior Vice President and Chief Financial Officer of Career Education Corporation, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Career Education Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2013

/s/    COLLEEN M. O’SULLIVAN        

Colleen M. O’Sullivan

Senior Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Career Education Corporation (the “Company”) for the quarter ended September 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott W. Steffey, President and Chief Executive Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(i) the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/    SCOTT W. STEFFEY        

Scott W. Steffey

President and Chief Executive Officer

November 6, 2013

This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Career Education Corporation (the “Company”) for the quarter ended September 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Colleen M. O’Sullivan, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(i) the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/    COLLEEN M. O’SULLIVAN        

Colleen M. O’Sullivan

Senior Vice President and Chief Financial Officer

November 6, 2013

This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

WEIGHTED AVERAGE COMMON SHARES

9 Months Ended

Sep. 30, 2013

Earnings Per Share [Abstract]

WEIGHTED AVERAGE COMMON SHARES

12. WEIGHTED AVERAGE COMMON SHARES

Basic net loss per share is calculated by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net loss by the weighted average number of shares assuming dilution. Dilutive common shares outstanding is computed using the Treasury Stock Method and reflects the additional shares that would be outstanding if dilutive stock options were exercised and restricted stock and restricted stock units were settled for common shares during the period.

Due to the fact that we reported a loss from continuing operations for the quarters and years to date ended September 30, 2013 and 2012, respectively, potential common stock equivalents are excluded from the diluted common shares outstanding calculation. Per FASB ASC Topic 260 – Earnings Per Share, an entity that reports discontinued operations shall use income or loss from continuing operations as the benchmark for calculating diluted common shares outstanding, and as such, we have zero common stock equivalents since these shares would have an anti-dilutive effect on our net loss per share for the quarters and years to date ended September 30, 2013 and 2012, respectively.

In addition to the common stock issued upon the exercise of employee stock options and the granting of restricted stock, we issued approximately 0.1 million and 0.4 million shares for the quarter and year to date ended September 30, 2013, respectively, less than 0.1 million shares for the quarter ended September 30, 2012 and 0.1 million shares for the year to date ended September 30, 2012 upon the purchase of common stock pursuant to our employee stock purchase plan.

XML

Share-Based Compensation - Schedule of Information with Respect to all Outstanding Restricted Stock (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding as of December 31, 2012, Shares	1,998
Granted, Shares	43
Vested, Shares	(495)
Forfeited, Shares	(656)
Outstanding as of September 30, 2013, Shares	890
Restricted Stock Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding as of December 31, 2012, Shares	854
Granted, Shares
Vested, Shares	(189)
Forfeited, Shares	(399)
Outstanding as of September 30, 2013, Shares	266
Outstanding as of December 31, 2012, Weighted Average Grant-Date Fair Value Per Share	$ 24.74
Granted, Weighted Average Grant-Date Fair Value Per Share
Vested, Weighted Average Grant-Date Fair Value Per Share	$ 23.09
Forfeited, Weighted Average Grant-Date Fair Value Per Share	$ 27.21
Outstanding as of September 30, 2013, Weighted Average Grant-Date Fair Value Per Share	$ 22.41
Restricted Stock Units RSU [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding as of December 31, 2012, Shares	1,144
Granted, Shares	43
Vested, Shares	(306)
Forfeited, Shares	(257)
Outstanding as of September 30, 2013, Shares	624
Outstanding as of December 31, 2012, Weighted Average Grant-Date Fair Value Per Share	$ 8.27
Granted, Weighted Average Grant-Date Fair Value Per Share	$ 2.72
Vested, Weighted Average Grant-Date Fair Value Per Share	$ 8.62
Forfeited, Weighted Average Grant-Date Fair Value Per Share	$ 7.75
Outstanding as of September 30, 2013, Weighted Average Grant-Date Fair Value Per Share	$ 7.93

XML

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
REVENUE:
Tuition and registration fees	$ 246,777	$ 309,947	$ 797,748	$ 1,025,014
Other	4,536	6,208	13,160	22,752
Total revenue	251,313	316,155	810,908	1,047,766
OPERATING EXPENSES:
Educational services and facilities	100,053	117,929	310,948	375,705
General and administrative	191,301	219,919	591,382	639,280
Depreciation and amortization	17,023	18,749	52,221	55,593
Goodwill and asset impairment	11,585		15,708	85,464
Total operating expenses	319,962	356,597	970,259	1,156,042
Operating loss	(68,649)	(40,442)	(159,351)	(108,276)
OTHER (EXPENSE) INCOME:
Interest income	194	319	1,199	953
Interest expense	(209)	(23)	(1,127)	(91)
Loss on sale of business	(39)		(6,973)
Miscellaneous (expense) income	(62)	74	(17)	7
Total other (expense) income	(116)	370	(6,918)	869
PRETAX LOSS	(68,765)	(40,072)	(166,269)	(107,407)
Benefit from income taxes	(25,333)	(13,925)	(70,145)	(27,959)
LOSS FROM CONTINUING OPERATIONS	(43,432)	(26,147)	(96,124)	(79,448)
LOSS FROM DISCONTINUED OPERATIONS, net of tax	(43,632)	(6,999)	(37,533)	(1,856)
NET LOSS	(87,064)	(33,146)	(133,657)	(81,304)
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
Foreign currency translation adjustments	6,474	743	7,542	(3,553)
Unrealized gains (losses) on investments	36	(206)	41	(326)
Total other comprehensive income (loss)	6,510	537	7,583	(3,879)
COMPREHENSIVE LOSS	$ (80,554)	$ (32,609)	$ (126,074)	$ (85,183)
NET LOSS PER SHARE-BASIC and DILUTED:
Loss from continuing operations	$ (0.65)	$ (0.40)	$ (1.44)	$ (1.20)
Loss from discontinued operations	$ (0.65)	$ (0.10)	$ (0.56)	$ (0.03)
Net loss per share	$ (1.30)	$ (0.50)	$ (2.00)	$ (1.23)
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic and Diluted	66,849	66,100	66,663	66,325

XML

FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

FINANCIAL INSTRUMENTS

5. FINANCIAL INSTRUMENTS

Cash and Cash Equivalents and Investments

Cash and cash equivalents from our continuing operations consist of the following as of September 30, 2013 and December 31, 2012 (dollars in thousands):

	September 30, 2013		December 31, 2012
Cash	$	19,062	$	112,759
Money market funds		11,862		121
Cash and cash equivalents, unrestricted		30,924		112,880
Restricted cash		12,564		97,878
Total cash and cash equivalents	$	43,488	$	210,758

Restricted cash balances as of September 30, 2013 and December 31, 2012 are comprised of (dollars in thousands):

	September 30, 2013		December 31, 2012
Cash collateral for amounts under:
Credit Agreement	$	—	$	88,000
Letters of credit		12,564		7,376
Funds restricted for legal matter		—		2,502
Total restricted cash	$	12,564	$	97,878

Investments from our continuing operations consist of the following as of September 30, 2013 and December 31, 2012 (dollars in thousands):

	September 30, 2013
			Gross Unrealized
	Cost		Gain		(Loss)			Fair Value
Short-term investments (available for sale):
U.S. Treasury bills	$	52,202	$	8	$	—		$	52,210
Long-term investments (available for sale):
Municipal bond		7,850		—		(468	)		7,382
Total investments (available for sale)	$	60,052	$	8	$	(468	)	$	59,592
	December 31, 2012
			Gross Unrealized
	Cost		Gain		(Loss)			Fair Value
Short-term investments (available for sale):
U.S. Treasury bills	$	63,879	$	4	$	(7	)	$	63,876
Long-term investments (available for sale):
Municipal bond		7,850		—		(468	)		7,382
Total investments (available for sale)	$	71,729	$	4	$	(475	)	$	71,258

In the table above, unrealized holding losses as of September 30, 2013 relate to short-term investments that have been in a continuous unrealized loss position for less than one year. The table also includes an unrealized holding loss, greater than one year that relates to our long-term investment in a municipal bond, which is an auction rate security (“ARS”). When evaluating our investment for possible impairment, we review factors such as the length of time and extent to which fair value has been less than the cost basis, the financial condition of the investee, and our ability and intent to hold the investment for a period of time that may be sufficient for anticipated recovery in fair value. The unrealized loss attributable to our municipal bond at September 30, 2013 is attributable to the continued lack of activity in the ARS market, exposing this investment to liquidity risk.

Our municipal bond is comprised of debt obligations issued by states, cities, counties, and other governmental entities, which earn federally tax-exempt interest. Our investment in ARS has a stated term to maturity of greater than one year, and as such, we classify our investment in ARS as non-current on our unaudited consolidated balance sheets within other assets. Auctions can “fail” when the number of sellers of the security exceeds the buyers for that particular auction period. In the event that an auction fails, the interest rate resets at a rate based on a formula determined by the individual security. The ARS for which auctions have failed continues to accrue interest and is auctioned on a set interval until the auction succeeds, the issuer calls the security, or it matures. As of September 30, 2013, we have determined this investment is at risk for impairment due to the nature of the liquidity of the market over the past year. Cumulative unrealized losses as of September 30, 2013 amount to $0.5 million and are reflected within accumulated other comprehensive income (loss) as a component of stockholders’ equity. We believe this impairment is temporary, as we do not intend to sell the investment and it is unlikely we will be required to sell the investment before recovery of its amortized cost basis.

Fair Value Measurements

FASB ASC Topic 820 – Fair Value Measurements establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of September 30, 2013, we held investments that are required to be measured at fair value on a recurring basis. These investments (available-for-sale) consist of U.S. Treasury bills that are publicly traded and for which market prices are readily available.

As of September 30, 2013, our investment in a municipal bond is classified as available-for-sale and reflected at fair value. The auction event for this investment has failed for multiple years. The fair value of this security is estimated utilizing a discounted cash flow analysis as of September 30, 2013. This analysis considers, among other items, the collateralization underlying the security investment, the credit worthiness of the counterparty, the timing of expected future cash flows, and the expectation of the next time the security is expected to have a successful auction. This security was also compared, when possible, to other observable market data with similar characteristics.

Investments measured at fair value on a recurring basis subject to the disclosure requirements of FASB ASC Topic 820 at September 30, 2013 and December 31, 2012 were as follows (dollars in thousands):

	As of September 30, 2013
	Level 1		Level 2		Level 3		Total
U.S. Treasury bills	$	52,210	$	—	$	—	$	52,210
Municipal bond		—		—		7,382		7,382
Totals	$	52,210	$	—	$	7,382	$	59,592

	As of December 31, 2012
	Level 1		Level 2		Level 3		Total
U.S. Treasury bills	$	63,876	$	—	$	—	$	63,876
Municipal bond		—		—		7,382		7,382
Totals	$	63,876	$	—	$	7,382	$	71,258

The following table presents a rollforward of our assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as defined in FASB ASC Topic 820 for the year to date ended September 30, 2013 (dollars in thousands):

Balance at December 31, 2012	$	7,382
Unrealized gain (loss)		—
Balance at September 30, 2013	$	7,382

Credit Agreement

During the fourth quarter of 2012, we entered into a revolving credit facility pursuant to a Credit Agreement with BMO Harris Bank N.A., in its capacities as the initial lender thereunder and the administrative agent for the lenders which from time to time may be parties to the Credit Agreement. The revolving credit facility under the Credit Agreement is scheduled to mature on January 31, 2014. As of September 30, 2013, there were no outstanding borrowings under the Credit Agreement.

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RESTRUCTURING CHARGES (Tables)

9 Months Ended

Sep. 30, 2013

Restructuring And Related Activities [Abstract]

Accrual for Severance and Related Costs

The following table details the changes in our accrual for severance and related costs associated with all of these restructuring events for our continuing operations during the year to date ended September 30, 2013 (dollars in thousands):

Balance as of December 31, 2012	$	10,234
Severance & related charges		4,592
Payments (1)		(7,339	)
Non-cash adjustments (2)		(775	)
Balance as of September 30, 2013	$	6,712

(1) Includes payments related to COBRA and outplacement services which are assumed to be completed by the third month following an employee’s departure.

(2) Includes cancellations due to employee departures prior to agreed upon end dates, employee transfers to open positions within the organization and subsequent adjustments to severance and related costs.

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Segment Reporting - Summary Financial Information by Reporting Segment (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Segment Reporting Information [Line Items]
Revenue	$ 251,313	$ 316,155	$ 810,908	$ 1,047,766
Operating (Loss) Income	(68,649)	(40,442)	(159,351)	(108,276)
Total Assets	985,183		985,183		1,122,703
CTU [Member]
Segment Reporting Information [Line Items]
Revenue	82,424	86,484	259,520	274,652
Operating (Loss) Income	9,208	10,324	41,708	41,584
Total Assets	74,300		74,300		72,554
AIU [Member]
Segment Reporting Information [Line Items]
Revenue	56,284	71,204	182,518	238,985
Operating (Loss) Income	(5,930)	1,084	(1,763)	22,623
Total Assets	60,755		60,755		65,092
University Schools [Member]
Segment Reporting Information [Line Items]
Revenue	138,708	157,688	442,038	513,637
Operating (Loss) Income	3,278	11,408	39,945	64,207
Total Assets	135,055		135,055		137,646
Health Education [Member]
Segment Reporting Information [Line Items]
Revenue	34,129	40,469	107,439	140,018
Operating (Loss) Income	(14,783)	(12,758)	(53,200)	(64,660)
Total Assets	36,884		36,884		52,511
Culinary Arts [Member]
Segment Reporting Information [Line Items]
Revenue	44,256	54,415	134,771	175,148
Operating (Loss) Income	(23,655)	(10,136)	(52,809)	(11,991)
Total Assets	145,860		145,860		173,477
Design & Technology [Member]
Segment Reporting Information [Line Items]
Revenue	24,752	33,129	82,899	109,654
Operating (Loss) Income	(10,036)	(6,240)	(24,787)	(50,912)
Total Assets	32,108		32,108		30,720
Career Schools [Member]
Segment Reporting Information [Line Items]
Revenue	103,137	128,013	325,109	424,820
Operating (Loss) Income	(48,474)	(29,134)	(130,796)	(127,563)
Total Assets	214,852		214,852		256,708
Corporate and Other [Member]
Segment Reporting Information [Line Items]
Revenue		16		50
Operating (Loss) Income	(7,561)	(5,389)	(24,979)	1,746
Total Assets	342,734		342,734		433,233
Subtotal [Member]
Segment Reporting Information [Line Items]
Revenue	241,845	285,717	767,147	938,507
Operating (Loss) Income	(52,757)	(23,115)	(115,830)	(61,610)
Total Assets	692,641		692,641		827,587
Transitional Schools [Member]
Segment Reporting Information [Line Items]
Revenue	9,468	30,438	43,761	109,259
Operating (Loss) Income	(15,892)	(17,327)	(43,521)	(46,666)
Total Assets	19,731		19,731		38,448
Discontinued Operations [Member]
Segment Reporting Information [Line Items]
Total Assets	$ 272,811		$ 272,811		$ 256,668

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SEGMENT REPORTING

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

SEGMENT REPORTING

13. SEGMENT REPORTING

Our segments are determined in accordance with FASB ASC Topic 280 – Segment Reporting and are based upon how the Company analyzes performance and makes decisions. Each segment represents a group of postsecondary education providers that offer a variety of degree and non-degree academic programs. These segments are organized by key market segments to enhance brand focus and operational alignment within each segment to more effectively execute our strategic plan. The results of our International Schools are now reported within discontinued operations due to our decision in the third quarter of 2013 to commit to a plan to sell these assets. The remaining six reporting segments are described below.

University Schools:

Colorado Technical University (CTU) schools collectively offer academic programs in the career-oriented disciplines of business studies, information systems and technologies, criminal justice, computer science and engineering, and health sciences in an online, classroom or laboratory setting.

American InterContinental University (AIU) schools collectively offer academic programs in the career-oriented disciplines of business studies, information technologies, criminal justice and design technologies in an online, classroom or laboratory setting.

Career Schools:

Health Education includes our Sanford-Brown schools, along with Brown College, Briarcliffe College and Missouri College. These schools collectively offer academic programs in the career-oriented disciplines of health education, complemented by certain programs in business studies and information technology in a classroom, laboratory or online setting.

Culinary Arts includes our Le Cordon Bleu schools in North America that collectively offer hands-on programs in the career-oriented disciplines of culinary arts and patisserie and baking in the commercial kitchens of Le Cordon Bleu; and advanced degree programs in culinary arts and hotel and restaurant management online.

Design & Technology includes IADT, Harrington College of Design and Brooks Institute schools. These schools collectively offer academic programs primarily in the career-oriented disciplines of fashion design, game design, graphic design, interior design, film and video production, photography and visual communications in a classroom, laboratory or online setting as well as job training in the field of energy conservation.

Transitional Schools includes our campuses that are currently being taught out.

We evaluate segment performance based on operating results. Adjustments to reconcile segment results to consolidated results are included under the caption “Corporate and Other”, which primarily includes unallocated corporate activity and eliminations.

Summary financial information by reporting segment follows (dollars in thousands):

	For the Quarter Ended September 30,
	Revenue				Operating (Loss) Income
	2013		2012		2013			2012
CTU	$	82,424	$	86,484	$	9,208		$	10,324
AIU		56,284		71,204		(5,930	)		1,084
Total University Schools		138,708		157,688		3,278			11,408
Health Education		34,129		40,469		(14,783	)		(12,758	)
Culinary Arts (1)		44,256		54,415		(23,655	)		(10,136	)
Design & Technology		24,752		33,129		(10,036	)		(6,240	)
Total Career Schools		103,137		128,013		(48,474	)		(29,134	)
Corporate and Other		—		16		(7,561	)		(5,389	)
Subtotal		241,845		285,717		(52,757	)		(23,115	)
Transitional Schools		9,468		30,438		(15,892	)		(17,327	)
Total	$	251,313	$	316,155	$	(68,649	)	$	(40,442	)

	For the Year to Date Ended September 30,
	Revenue				Operating (Loss) Income
	2013		2012		2013			2012
CTU	$	259,520	$	274,652	$	41,708		$	41,584
AIU		182,518		238,985		(1,763	)		22,623
Total University Schools		442,038		513,637		39,945			64,207
Health Education (2)		107,439		140,018		(53,200	)		(64,660	)
Culinary Arts (1)		134,771		175,148		(52,809	)		(11,991	)
Design & Technology (3)		82,899		109,654		(24,787	)		(50,912	)
Total Career Schools		325,109		424,820		(130,796	)		(127,563	)
Corporate and Other (4)		—		50		(24,979	)		1,746
Subtotal		767,147		938,507		(115,830	)		(61,610	)
Transitional Schools (5)		43,761		109,259		(43,521	)		(46,666	)
Total	$	810,908	$	1,047,766	$	(159,351	)	$	(108,276	)

	Total Assets as of (6)
	September 30, 2013		December 31, 2012
CTU	$	74,300	$	72,554
AIU		60,755		65,092
Total University Schools		135,055		137,646
Health Education		36,884		52,511
Culinary Arts		145,860		173,477
Design & Technology		32,108		30,720
Total Career Schools		214,852		256,708
Corporate and Other		342,734		433,233
Subtotal		692,641		827,587
Transitional Schools		19,731		38,448
Discontinued Operations		272,811		256,668
Total	$	985,183	$	1,122,703

(1) Year to date 2013 expenses include a $13.0 million trade name impairment charge, of which $10.7 million was recorded in the third quarter of 2013.

(2) Year to date 2013 expenses include $10.3 million related to the settlement of a legal matter and a $1.7 million trade name impairment charge. Year to date 2012 included a $41.9 million goodwill impairment charge.

(3) Year to date 2012 expenses include a $40.8 million goodwill impairment charge.

(4) The operating income for the year to date ended September 30, 2012 included a $19.0 million insurance recovery related to the settlement of claims under certain insurance policies.

(5) Year to date 2012 expenses include a $1.0 million trade name impairment charge, $0.9 million in asset impairment charges recorded as a result of the decision made in the second quarter of 2012 to teach out several schools, and a $0.7 million goodwill impairment charge.

(6) Total assets do not include intercompany receivable or payable activity between schools and corporate and investments in subsidiaries.

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Commitments and Contingencies - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended	9 Months Ended				3 Months Ended	1 Months Ended	6 Months Ended					3 Months Ended	1 Months Ended	9 Months Ended						1 Months Ended						3 Months Ended
	Sep. 30, 2013 Person Plaintiff	Sep. 30, 2013 Plaintiff Person	Jun. 30, 2013	Dec. 31, 2012	Jan. 13, 2012 Findings	Sep. 30, 2013 NYAG [Member]	Jun. 12, 2013 Derivatives [Member]	Jun. 30, 2013 Ross [Member]	May 03, 2012 Ross [Member] Defendant	Sep. 30, 2013 Vasquez [Member] Claim	Aug. 10, 2012 Vasquez [Member] Arbitration Person	Jun. 15, 2012 Vasquez [Member] Claim	Sep. 30, 2012 Code of Civil Procedure [Member] Plaintiff	Apr. 25, 2010 Sumrall [Member]	Sep. 30, 2013 Amador [Member] Plaintiff Lawsuits	Sep. 27, 2007 Amador [Member] Plaintiff	Jun. 03, 2011 Abarca [Member] Person	Jun. 15, 2011 Andrade [Member] Person	Aug. 12, 2011 Aprieto [Member] Person	Jan. 18, 2013 Coleman case [Member] Person	Apr. 22, 2011 Surrett [Member] Student	May 23, 2012 Surrett [Member] Members	Apr. 10, 2008 Surrett [Member] Claim	Mar. 05, 2008 Surrett [Member] Claim	Jul. 14, 2008 False Claims Act Lawsuit [Member] Employees	Sep. 30, 2013 OIG Audit [Member]	Sep. 30, 2013 Additional Costs [Member] NYAG [Member]	Sep. 30, 2013 Administrative Fees [Member] NYAG [Member]
Product Liability Contingency [Line Items]
Accrual for legal fees and settlements	$ 38.5	$ 38.5		$ 5.8
Insurance recovery pending settlement of legal matters		32.5					20.0	22.5
Number of executive officers as defendants									2
Loss contingency range of possible loss maximum								27.5																		0.8
Insurance recovery to be transferred							10.0	10.0
Remaining settlement amount to be paid								5.0
Insurance recovery in dispute								5.0
Insurance recovery to be allocated to other liabilities							10.0
Attorney fees and expenses							5
Number of student plaintiffs	1,000	1,000														36
Number of opt-out Individuals																	115	31	5
Number of individuals represented new counsel	78	78																		2
Number of suits prosecuted															4
Number of plaintiffs who have not settled															80
Number of test cases to be tried to the Court		8
Number of alleged claims for equitable relief																								2
Number of claims added for money damages																							2
Number of students in class																					2,600
Opt-out period expiration date																					2011-06-20
Number of individuals WCI file motion to compel arbitration																						1,062
Number of mass action filed										8		8
Number of individuals that signed arbitration agreement											54
Number of individuals have filed arbitration demands											9
Number of arbitrations which have been tried to final award											1
Number of arbitrations which have settled											8
Number of individual plaintiffs sent offers to compromise													1,438
Number of offers to compromise accepted to date													346
Aggregate amount of payments made													2.1
Number of active plaintiffs in consolidated action													1,047
Number of former employees who filed complaint																									4
Number Of Hours Per Week														40 hours
Loss contingency, amount paid into fund						9.3																					1.0	0.2
Loss contingency, estimable loss			10.0
Loss contingency, amount paid	$ 10.3
Number of OIG Findings					3
Number of documentation of attendance of students enrolled in CTU's					1
Number of calculation of returns of Title IV Program funds					1

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Segment Reporting - Summary Financial Information by Reporting Segment (Parenthetical) (Detail) (USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2013	Sep. 30, 2012
Segment Reporting Information [Line Items]
Goodwill and asset impairment		$ 15,708,000	$ 85,661,000
Indefinite lived intangible assets impairment charges	11,585,000	15,708,000	85,464,000
Health Education [Member]
Segment Reporting Information [Line Items]
Goodwill and asset impairment		1,700,000	41,900,000
Preliminary settlement legal matters		10,300,000
Culinary Arts [Member]
Segment Reporting Information [Line Items]
Goodwill and asset impairment	10,700,000	13,000,000
Design & Technology [Member]
Segment Reporting Information [Line Items]
Goodwill Impairment			40,800,000
Corporate and Other [Member]
Segment Reporting Information [Line Items]
Insurance recovery related to the settlement of claims under certain insurance policies			19,000,000
Transitional Schools [Member]
Segment Reporting Information [Line Items]
Goodwill and asset impairment			1,000,000
Goodwill Impairment			700,000
Indefinite lived intangible assets impairment charges			$ 900,000

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Financial Instruments - Investments from Continuing Operations (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Total investments (available for sale), Cost	$ 60,052	$ 71,729
Short-term investments (available-for-sale), Gross Unrealized, Gain	8	4
Short-term investments (available-for-sale), Gross Unrealized (Loss)	(468)	(475)
Short-term investments (available-for-sale), Fair value	59,592	71,258
U.S. Treasury bills [Member]
Schedule of Available-for-sale Securities [Line Items]
Short-term investments (available-for-sale), Cost	52,202	63,879
Short-term investments (available-for-sale), Gross Unrealized, Gain	8	4
Short-term investments (available-for-sale), Gross Unrealized (Loss)		(7)
Short-term investments (available-for-sale), Fair value	52,210	63,876
Municipal bond [Member]
Schedule of Available-for-sale Securities [Line Items]
Long-term investments (available-for-sale), Cost	7,850	7,850
Long-term investments (available-for-sale), Gross Unrealized, Gain
Long-term investments (available-for-sale), Gross Unrealized (Loss)	(468)	(468)
Short-term investments (available-for-sale), Fair value	7,382	7,382
Long-term investments (available-for-sale), Fair value	$ 7,382	$ 7,382

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SEGMENT REPORTING (Tables)

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

Summary Financial Information by Reporting Segment

Summary financial information by reporting segment follows (dollars in thousands):

	For the Quarter Ended September 30,
	Revenue				Operating (Loss) Income
	2013		2012		2013			2012
CTU	$	82,424	$	86,484	$	9,208		$	10,324
AIU		56,284		71,204		(5,930	)		1,084
Total University Schools		138,708		157,688		3,278			11,408
Health Education		34,129		40,469		(14,783	)		(12,758	)
Culinary Arts (1)		44,256		54,415		(23,655	)		(10,136	)
Design & Technology		24,752		33,129		(10,036	)		(6,240	)
Total Career Schools		103,137		128,013		(48,474	)		(29,134	)
Corporate and Other		—		16		(7,561	)		(5,389	)
Subtotal		241,845		285,717		(52,757	)		(23,115	)
Transitional Schools		9,468		30,438		(15,892	)		(17,327	)
Total	$	251,313	$	316,155	$	(68,649	)	$	(40,442	)
	For the Year to Date Ended September 30,
	Revenue				Operating (Loss) Income
	2013		2012		2013			2012
CTU	$	259,520	$	274,652	$	41,708		$	41,584
AIU		182,518		238,985		(1,763	)		22,623
Total University Schools		442,038		513,637		39,945			64,207
Health Education (2)		107,439		140,018		(53,200	)		(64,660	)
Culinary Arts (1)		134,771		175,148		(52,809	)		(11,991	)
Design & Technology (3)		82,899		109,654		(24,787	)		(50,912	)
Total Career Schools		325,109		424,820		(130,796	)		(127,563	)
Corporate and Other (4)		—		50		(24,979	)		1,746
Subtotal		767,147		938,507		(115,830	)		(61,610	)
Transitional Schools (5)		43,761		109,259		(43,521	)		(46,666	)
Total	$	810,908	$	1,047,766	$	(159,351	)	$	(108,276	)

	Total Assets as of (6)
	September 30, 2013		December 31, 2012
CTU	$	74,300	$	72,554
AIU		60,755		65,092
Total University Schools		135,055		137,646
Health Education		36,884		52,511
Culinary Arts		145,860		173,477
Design & Technology		32,108		30,720
Total Career Schools		214,852		256,708
Corporate and Other		342,734		433,233
Subtotal		692,641		827,587
Transitional Schools		19,731		38,448
Discontinued Operations		272,811		256,668
Total	$	985,183	$	1,122,703

(1) Year to date 2013 expenses include a $13.0 million trade name impairment charge, of which $10.7 million was recorded in the third quarter of 2013.

(2) Year to date 2013 expenses include $10.3 million related to the settlement of a legal matter and a $1.7 million trade name impairment charge. Year to date 2012 included a $41.9 million goodwill impairment charge.

(3) Year to date 2012 expenses include a $40.8 million goodwill impairment charge.

(4) The operating income for the year to date ended September 30, 2012 included a $19.0 million insurance recovery related to the settlement of claims under certain insurance policies.

(5) Year to date 2012 expenses include a $1.0 million trade name impairment charge, $0.9 million in asset impairment charges recorded as a result of the decision made in the second quarter of 2012 to teach out several schools, and a $0.7 million goodwill impairment charge.

(6) Total assets do not include intercompany receivable or payable activity between schools and corporate and investments in subsidiaries.

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SHARE-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2013

Schedule of Restricted Stock Units to be Settled in Cash

The following table summarizes information with respect to all cash-settled restricted stock units during the year to date ended September 30, 2013 (units in thousands).

	Restricted Stock Units to be Settled in Cash
Outstanding as of December 31, 2012		—
Granted		2,938
Vested		—
Forfeited		(448	)
Outstanding as of September 30, 2013		2,490

Employee Stock [Member]

Summary of Stock Option Activity

Stock option activity during the year to date ended September 30, 2013 under all of our plans was as follows (options in thousands):

	Options			Weighted Average Exercise Price
Outstanding as of December 31, 2012		2,592		$	25.96
Granted		1,934			2.58
Exercised		—			—
Forfeited		(244	)		4.98
Cancelled		(352	)		30.87
Outstanding as of September 30, 2013		3,930		$	15.31
Exercisable as of September 30, 2013		2,110		$	24.78

Restricted Stock Shares [Member]

Schedule of Information with Respect to all Outstanding Restricted Stock

The following table summarizes information with respect to all outstanding restricted stock and restricted stock units to be settled in shares of stock under our plans during the year to date ended September 30, 2013 (shares and units in thousands):

	Restricted Stock to be Settled in Shares of Stock
	Shares			Weighted Average Grant-Date Fair Value Per Share		Units			Weighted Average Grant-Date Fair Value Per Unit		Total
Outstanding as of December 31, 2012		854		$	24.74		1,144		$	8.27		1,998
Granted		—			—		43			2.72		43
Vested		(189	)		23.09		(306	)		8.62		(495	)
Forfeited		(399	)		27.21		(257	)		7.75		(656	)
Outstanding as of September 30, 2013		266		$	22.41		624		$	7.93		890

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Restructuring Charges - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Restructuring And Related Activities [Abstract]
Severance and related costs	$ 1.7
Accrual for severance and related charges	5.2	7.5
Long term amount	1.5	2.7
Accrued retention bonuses	2.0	0.3
Gross remaining lease obligations	$ 77.0

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Discontinued Operations - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2013
Discontinued Operations And Disposal Groups [Abstract]
Lease expiration year	2019

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Financial Instruments - Investments Measured at Fair Value on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments at fair value	$ 59,592	$ 71,258
U.S. Treasury bills [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments at fair value	52,210	63,876
Municipal bond [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments at fair value	7,382	7,382
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments at fair value	52,210	63,876
Level 1 [Member] | U.S. Treasury bills [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments at fair value	52,210	63,876
Level 1 [Member] | Municipal bond [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments at fair value
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments at fair value
Level 2 [Member] | U.S. Treasury bills [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments at fair value
Level 2 [Member] | Municipal bond [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments at fair value
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments at fair value	7,382	7,382
Level 3 [Member] | U.S. Treasury bills [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments at fair value
Level 3 [Member] | Municipal bond [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investments at fair value	$ 7,382	$ 7,382

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Income Taxes - Summary of Income Tax Provision and Effective Tax Rate for Continuing Operations (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Income Tax Disclosure [Abstract]
Pretax loss	$ (68,765)	$ (40,072)	$ (166,269)	$ (107,407)
Benefit from income taxes	$ (25,333)	$ (13,925)	$ (70,145)	$ (27,959)
Effective rate	(36.80%)	(34.70%)	(42.20%)	(26.00%)

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Discontinued Operations - Summary Results of Operations for Discontinued Operations (Parenthetical) (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 30, 2013
Discontinued Operations And Disposal Groups [Abstract]
Income tax expense recorded in discontinued operations	$ 39.9

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Student Receivables - Changes in Current and Non-Current Receivables Allowance (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Receivables [Abstract]
Balance, Beginning of Period	$ 33,460	$ 46,229	$ 40,154	$ 57,232
Charges to Expense	7,884	10,847	21,187	27,240
Amounts Written-off	(10,101)	(15,180)	(30,098)	(42,576)
Balance, End of Period	$ 31,243	$ 41,896	$ 31,243	$ 41,896

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INCOME TAXES (Tables)

9 Months Ended

Sep. 30, 2013

Income Tax Disclosure [Abstract]

Summary of Income Tax Provision and Effective Tax Rate for Continuing Operations

The following is a summary of our income tax benefits and effective tax rates from continuing operations for the quarters and years to date ended September 30, 2013 and 2012 (dollars in thousands):

	For the Quarter Ended September 30,						For the Year to Date Ended September 30,
	2013			2012			2013			2012
Pretax loss	$	(68,765	)	$	(40,072	)	$	(166,269	)	$	(107,407	)
Benefit from income taxes	$	(25,333	)	$	(13,925	)	$	(70,145	)	$	(27,959	)
Effective rate		-36.8	%		-34.7	%		-42.2	%		-26.0	%

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DESCRIPTION OF THE COMPANY

9 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

DESCRIPTION OF THE COMPANY

1. DESCRIPTION OF THE COMPANY

The colleges, schools and universities that are part of the Career Education Corporation (“CEC”) family offer high-quality education to a diverse student population across the world in a variety of career-oriented disciplines through online, on-ground and hybrid learning program offerings. The more than 90 campuses that serve these students are located throughout the United States, and in France and Monaco, and offer doctoral, master’s, bachelor’s and associate degrees and diploma and certificate programs.

We are an industry leader whose institutions are recognized globally. Those institutions include, among others, American InterContinental University (“AIU”); Brooks Institute; Colorado Technical University (“CTU”); Harrington College of Design; INSEEC Group (“INSEEC”) Schools; International University of Monaco (“IUM”); International Academy of Design & Technology (“IADT”); Le Cordon Bleu North America (“LCB”); and Sanford-Brown Institutes and Colleges (“SBI” and “SBC”, respectively). Through our schools, we are committed to providing high-quality education, enabling students to graduate and pursue rewarding career opportunities.

For more information, see our website at www.careered.com. The website includes a detailed listing of individual campus locations and web links to our colleges, schools and universities.

As used in this Quarterly Report on Form 10-Q, the terms “we”, “us”, “our”, “the Company” and “CEC” refer to Career Education Corporation and our wholly-owned subsidiaries. The terms “school” and “university” refer to an individual, branded, proprietary educational institution, owned by us and includes its campus locations. The term “campus” refers to an individual main or branch campus operated by one of our schools or universities.

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RECENT ACCOUNTING PRONOUNCEMENTS

9 Months Ended

Sep. 30, 2013

Accounting Changes And Error Corrections [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS

3. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2013, the FASB issued Accounting Standards Update (“ASU”) No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This ASU standardizes the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists; it does not require new recurring disclosures. ASU 2013-11 requires that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward unless specific criteria exist, in which case the unrecognized tax benefit should be presented as a liability and should not be combined with deferred tax assets. For public entities, ASU 2013-11 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013; early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date; retrospective application is permitted. We are currently evaluating this guidance and do not believe the adoption will significantly impact the presentation of our financial condition, results of operation and disclosures.

In March 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. ASU 2013-05 provides guidance on releasing cumulative translation adjustments (“CTA”) when an entity ceases to have a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity, and also provides guidance on releasing CTA in partial sales of equity method investments and in step acquisitions. For public entities, ASU 2013-05 is effective prospectively for fiscal years, and interim reporting periods within those years, beginning after December 15, 2013. If early adoption is elected, the guidance in this ASU should be applied as of the beginning of the entity’s fiscal year of adoption. We are currently evaluating this guidance and do not believe the adoption will significantly impact the presentation of our financial condition, results of operation and disclosures.

In February 2013, the FASB issued ASU No. 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date. The guidance in ASU 2013-04 requires entities to measure obligations resulting from joint and several liability arrangements, for which the total obligation amount is fixed at the reporting date, as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount it expects to pay on behalf of its co-obligors. ASU 2013-04 also specifies disclosure requirements. For public entities, ASU 2013-04 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013 and should be applied retrospectively to all prior periods presented for obligations resulting from joint and several liability arrangements that exist at the beginning of the entity’s fiscal year of adoption. Early adoption is permitted. We have adopted this guidance which did not materially impact the presentation of our financial condition, results of operation and disclosures.

In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220) – Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The amendments in this ASU require entities to provide information about amounts reclassified out of accumulated other comprehensive income by component, and to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income, or cross-reference to other disclosures, based on certain criteria. ASU 2013-02 is effective prospectively for reporting periods beginning after December 15, 2012; early adoption is permitted. We have adopted this guidance which did not materially impact the presentation of our financial condition, results of operation and disclosures.

In addition, we have evaluated and adopted the guidance of ASU No. 2012-02, Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment issued in July 2012. The amendments in this ASU give entities the option to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that an indefinite-lived intangible asset is impaired. If impairment is indicated, the fair value of the indefinite–lived intangible asset should be determined and the quantitative impairment test should be performed by comparing the fair value with the carrying amount in accordance with Subtopic 350-30; if impairment is not indicated, the entity is not required to take further action. The adoption of this ASU did not impact the presentation of our financial condition, results of operation and disclosures.

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STUDENT RECEIVABLES

9 Months Ended

Sep. 30, 2013

Receivables [Abstract]

STUDENT RECEIVABLES

6. STUDENT RECEIVABLES

Student receivables represent funds owed to us in exchange for the educational services provided to a student. Student receivables are reflected net of an allowance for doubtful accounts and net of deferred tuition revenue. Student receivables, net are reflected on our unaudited consolidated balance sheets as components of both current and non-current assets.

Generally, a student receivable balance is written off once it reaches greater than 90 days past due. Although we analyze past due receivables, it is not practical to provide an aging of our non-current student receivable balances as a result of the methodology utilized in determining our earned student receivable balances. Student receivables are recognized on our unaudited consolidated balance sheets as they are deemed earned over the course of a student’s program and/or term, and therefore cash collections are not applied against specifically dated transactions.

We do not accrue interest on past due student receivables; interest is recorded only upon collection. Interest rates are determined at the time a payment plan is extended to a student.

Our standard student receivable allowance estimation methodology considers a number of factors that, based on our collection experience, we believe have an impact on our repayment risk and ability to collect student receivables. Changes in the trends in any of these factors may impact our estimate of the allowance for doubtful accounts. These factors include, but are not limited to: internal repayment history, repayment practices of previous extended payment programs and information provided by a third-party institution who previously offered similar extended payment programs, changes in the current economic, legislative or regulatory environments and credit worthiness of our students. These factors are monitored and assessed on a regular basis. Overall, our allowance estimation process for student receivables is validated by trending analysis and comparing estimated and actual performance. The repayment risk associated with student receivables under extended payment plans is generally higher than those not related to extended payment plans; as such, the allowance for doubtful accounts for these student receivables as a percentage of outstanding student receivables is higher.

Student Receivables Under Extended Payment Plans and Recourse Loan Agreements

To assist students in completing their educational programs, we had previously provided extended payment plans to certain students and also had loan agreements with Sallie Mae and Stillwater National Bank and Trust Company (“Stillwater”) which required us to repurchase loans originated by them to our students after a certain period of time. We no longer provide extended payment plans to students and the recourse loan agreements with Sallie Mae and Stillwater ended in March 2008 and April 2007, respectively.

As of September 30, 2013 and December 31, 2012, the amount of non-current student receivables under these programs, net of allowance for doubtful accounts and net of deferred tuition revenue, was $5.6 million and $6.8 million, respectively.

Student Receivables Valuation Allowance

Changes in our current and non-current receivables allowance for the quarters and years to date ended September 30, 2013 and 2012 were as follows (dollars in thousands):

	Balance, Beginning of Period		Charges to Expense (1)		Amounts Written-off			Balance, End of Period
For the quarter ended September 30, 2013	$	33,460	$	7,884	$	(10,101	)	$	31,243
For the quarter ended September 30, 2012	$	46,229	$	10,847	$	(15,180	)	$	41,896
For the year to date ended September 30, 2013	$	40,154	$	21,187	$	(30,098	)	$	31,243
For the year to date ended September 30, 2012	$	57,232	$	27,240	$	(42,576	)	$	41,896

(1) Charges to expense include an offset for recoveries of amounts previously written off of $1.5 million and $2.0 million for the quarters ended September 30, 2013 and 2012, respectively and $5.8 million and $6.5 million for the years to date ended September 30, 2013 and 2012, respectively.

Fair Value Measurements

The carrying amount reported in our unaudited consolidated balance sheets for the current portion of student receivables approximates fair value because of the nature of these financial instruments as they generally have short maturity periods. It is not practicable to estimate the fair value of the non-current portion of student receivables, since observable market data is not readily available, and no reasonable estimation methodology exists.

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DISCONTINUED OPERATIONS

9 Months Ended

Sep. 30, 2013

Discontinued Operations And Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

4. DISCONTINUED OPERATIONS

As of September 30, 2013, the results of operations for campuses that are held for sale or that have ceased operations or were sold, and are considered distinct operations as defined under FASB ASC Topic 205 – Presentation of Financial Statements, are presented within discontinued operations.

Assets Held for Sale

During the third quarter of 2013, we made the decision to commit to a plan of sale of our International Schools. Accordingly, the assets and liabilities for these schools are included in the assets and liabilities of discontinued operations on our unaudited consolidated balance sheets and the results of operations are reported within discontinued operations. As we anticipate the sale of these assets to be completed within one year, we have recorded the assets and liabilities related to these schools within current assets and liabilities of discontinued operations as of September 30, 2013.

Results of Discontinued Operations

The summary of unaudited results of operations for our discontinued operations for the quarters and years to date ended September 30, 2013 and 2012 were as follows (dollars in thousands):

	For the Quarter Ended September 30,						For the Year to Date Ended September 30,
	2013			2012			2013			2012
Revenue	$	20,086		$	16,602		$	95,899		$	88,099
Pretax loss	$	(7,936	)	$	(10,541	)	$	(2,875	)	$	(5,467	)
Income tax provision (benefit) (1)		35,696			(3,542	)		34,658			(3,611	)
Loss from discontinued operations, net of tax	$	(43,632	)	$	(6,999	)	$	(37,533	)	$	(1,856	)

(1) During the third quarter of 2013, we made the decision to commit to a plan to sell our International Schools. Previously, we considered our investment in foreign subsidiaries to be permanent in duration. The decision to sell our foreign subsidiaries triggered the requirement under ASC 740 – Income Taxes to record the tax effect of the difference in basis for financial reporting purposes versus tax reporting. Accordingly, we recorded $39.9 million of income tax expense during the quarter ended September 30, 2013 on the excess basis. This expense was recorded within discontinued operations.

Assets and Liabilities of Discontinued Operations

Assets and liabilities of discontinued operations on our unaudited consolidated balance sheets as of September 30, 2013 and December 31, 2012 include the following (dollars in thousands):

	September 30, 2013		December 31, 2012
Assets:
Current assets:
Cash and cash equivalents	$	—	$	63
Receivables, net		232		571
Other current assets		50		247
Deferred income tax assets, net		3,447		3,447
Assets held for sale		250,368		149,347
Total current assets		254,097		153,675
Non-current assets:
Property and equipment, net		5		276
Deferred income tax assets		17,446		17,446
Other assets, net		1,263		1,604
Assets held for sale		—		83,667
Total assets of discontinued operations	$	272,811	$	256,668
Liabilities:
Current liabilities:
Accounts payable	$	239	$	32
Accrued expenses		143		710
Deferred tuition revenue		—		142
Remaining lease obligations		12,575		9,174
Liabilities held for sale		83,018		65,962
Total current liabilities		95,975		76,020
Non-current liabilities:
Remaining lease obligations		22,354		33,103
Other		201		223
Liabilities held for sale		—		2,152
Total liabilities of discontinued operations	$	118,530	$	111,498

The major components of assets and liabilities held for sale presented above were (dollars in thousands):

	September 30, 2013		December 31, 2012
Assets:
Cash and cash equivalents	$	131,817	$	127,679
Receivables, net		24,768		15,604
Property and equipment, net (1)		32,599		29,326
Goodwill (1)		46,817		45,669
Other intangible assets (1)		5,693		5,664
Other assets, net (1)		8,674		9,072
Total assets held for sale	$	250,368	$	233,014
Liabilities:
Capital lease obligations	$	—	$	211
Accounts payable and accrued expenses		23,395		23,661
Deferred revenue		57,453		42,090
Other liabilities (2)		2,170		2,152
Total liabilities held for sale	$	83,018	$	68,114

(1) Property and equipment, net, goodwill, other intangible assets and a portion of other assets, net are classified within non-current assets held for sale as of December 31, 2012.

(2) Other liabilities are classified within non-current liabilities held for sale as of December 31, 2012.

Remaining Lease Obligations

A number of the campuses that ceased operations have remaining lease obligations that expire over time with the latest expiration in 2019. A liability is recorded representing the fair value of the remaining lease obligation at the time the space is no longer being utilized. Changes in our future remaining lease obligations, which are reflected within current and non-current liabilities of discontinued operations on our unaudited consolidated balance sheets, for the quarters and years to date ended September 30, 2013 and 2012, were as follows (dollars in thousands):

	Balance, Beginning of Period		Charges Incurred  (1)		Net Cash Payments			Other (2)			Balance, End of Period
For the quarter ended September 30, 2013	$	37,660	$	214	$	(2,945	)	$	—		$	34,929
For the quarter ended September 30, 2012	$	41,212	$	2,531	$	(2,511	)	$	—		$	41,232
For the year to date ended September 30, 2013	$	42,277	$	1,060	$	(8,357	)	$	(51	)	$	34,929
For the year to date ended September 30, 2012	$	45,961	$	3,270	$	(7,999	)	$	—		$	41,232

(1) Includes charges for newly vacated spaces and subsequent adjustments for accretion, revised estimates, and variances between estimated and actual charges, net of any reversals for terminated lease obligations.

(2) Includes existing prepaid rent and deferred rent liability balances for newly vacated spaces that are netted with the losses incurred in the period recorded.

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Financial Instruments - Assets Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs (Level3) (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Investments Debt And Equity Securities [Abstract]
Balance	$ 7,382
Unrealized gain (loss)
Balance	$ 7,382

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Description of the Company - Additional Information (Detail)	Sep. 30, 2013 Campus
Nature Of Operations [Abstract]
Number of campuses	90

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Discontinued Operations - Assets and Liabilities of Discontinued Operations on Consolidated Balance Sheets (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Disposal Group Including Discontinued Operation Balance Sheet Disclosures [Abstract]
Cash and cash equivalents	$ 0	$ 63
Receivables, net	232	571
Other current assets	50	247
Deferred income tax assets, net	3,447	3,447
Assets held for sale	250,368	149,347
Total current assets	254,097	153,675
Property and equipment, net	5	276
Deferred income tax assets	17,446	17,446
Other assets, net	1,263	1,604
Assets held for sale		83,667
Total assets of discontinued operations	272,811	256,668
Accounts payable	239	32
Accrued expenses	143	710
Deferred tuition revenue		142
Remaining lease obligations	12,575	9,174
Liabilities held for sale	83,018	65,962
Total current liabilities	95,975	76,020
Remaining lease obligations	22,354	33,103
Other	201	223
Liabilities held for sale		2,152
Total liabilities of discontinued operations	$ 118,530	$ 111,498

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Financial Instruments - Restricted Cash Balances (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Cash collateral for amounts under:
Restricted cash	$ 12,564	$ 97,878
Credit Agreement [Member]
Cash collateral for amounts under:
Restricted cash		88,000
Letter of credit [Member]
Cash collateral for amounts under:
Restricted cash	12,564	7,376
Funds restricted for legal matter [Member]
Cash collateral for amounts under:
Restricted cash		$ 2,502

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Weighted Average Common Shares - Additional Information (Detail) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Earnings Per Share Basic And Diluted [Line Items]
Anti-dilutive awards excluded from computations of diluted earnings per share	0	0	0	0
Weighted average number of shares issued	0.1		0.4	0.1
Maximum [Member]
Earnings Per Share Basic And Diluted [Line Items]
Weighted average number of shares issued		0.1

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Income Taxes - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2013
Income Tax Contingency [Line Items]
Effective tax rate includes favorable tax adjustment		$ 8.6
Increase in effective income tax rate Reconciliation		5.20%
Cumulative effect of state and foreign valuation losses	1.00%
Decrease in unrecognized tax positions	0.9	0.9
Possible interest and accrued penalties	3.1	3.1
State Exposures [Member]
Income Tax Contingency [Line Items]
Effective tax rate includes favorable tax adjustment		11.2
AIU London [Member]
Income Tax Contingency [Line Items]
Effective tax rate includes favorable tax adjustment		$ 2.6

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Intangible Assets - Additional Information (Detail) (USD $)	3 Months Ended	9 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 Sanford Brown Trade Name [Member]	Jun. 30, 2013 Le Cordon Bleu Trade Name [Member]	Sep. 30, 2013 Le Cordon Bleu Trade Name [Member]	Sep. 30, 2013 Royalty Rate [Member]	Sep. 30, 2013 Discount Rate [Member]
Indefinite-lived Intangible Assets [Line Items]
Determining fair value discount rate						30.00%
Royalty rate						4.50%
Fair value terminal growth rate						3.00%
Trade name impairment charge	$ 0			$ 1,700,000	$ 2,300,000	$ 10,700,000
Fair value of trade name impairment charge	40,387,000	40,387,000	56,006,000			27,300,000
Percentage change in royalty rate		0.50%
Percentage change in discount rate		1.00%
Change in fair value							$ 3,000,000	$ 300,000

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Statement Of Financial Position [Abstract]
Student receivables, allowance for doubtful accounts, current	$ 23,172	$ 28,172
Student receivables, allowance for doubtful accounts, non-current	$ 8,071	$ 11,982
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	81,876,758	81,616,987
Common stock, shares outstanding	67,158,417	67,069,734
Treasury, Shares in treasury	14,718,341	14,547,253

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2013

Commitments And Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

9. COMMITMENTS AND CONTINGENCIES

An accrual for estimated legal fees and settlements of $38.5 million and $5.8 million at September 30, 2013 and December 31, 2012, respectively, is presented within other current liabilities on our unaudited consolidated balance sheets. The increase in the accrual as of September 30, 2013 is primarily related to the preliminary settlements reached in the Securities Litigation and Shareholder Derivative Actions and Demands disclosed below. As of September 30, 2013, a receivable of $32.5 million was recorded for insurance recoveries related to these matters and is reflected within other current receivables on our unaudited consolidated balance sheets.

We record a liability when we believe that it is both probable that a loss will be incurred and the amount of loss can be reasonably estimated. We evaluate, at least quarterly, developments in our legal matters that could affect the amount of liability that was previously accrued, and make adjustments as appropriate. Significant judgment is required to determine both probability and the estimated amount. We may be unable to estimate a possible loss or range of possible loss due to various reasons, including, among others: (1) if the damages sought are indeterminate; (2) if the proceedings are in early stages; (3) if there is uncertainty as to the outcome of pending appeals, motions, or settlements; (4) if there are significant factual issues to be determined or resolved; and (5) if there are novel or unsettled legal theories presented. In such instances, there is considerable uncertainty regarding the ultimate resolution of such matters, including a possible eventual loss, if any.

Litigation

We are, or were, a party to the following legal proceedings that are outside the scope of ordinary routine litigation incidental to our business. Due to the inherent uncertainties of litigation, we cannot predict the ultimate outcome of these matters. An unfavorable outcome of any one or more of these matters could have a material adverse impact on our business, results of operations, cash flows and financial position.

Securities Litigation

Ross, et al. v. Career Education Corporation, et al. On January 13, 2012, a class action complaint was filed in the U.S. District Court for the Northern District of Illinois, naming the Company and various individuals as defendants and claiming that the defendants violated Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) by making material misstatements in and omitting material information from the Company’s public disclosures concerning its campuses’ job placement rates and its compliance with accreditation standards. The complaint further claimed that the individual defendants violated Section 20(a) of the Exchange Act by virtue of their positions as control persons of the Company. Plaintiff asks for unspecified amounts in damages, interest, and costs, as well as ancillary relief. On March 23, 2012, the Court appointed KBC Asset Management NV, the Oklahoma Police Pension & Retirement Systems, and the Oklahoma Law Enforcement Retirement System, as lead plaintiffs in the action. On May 3, 2012, lead plaintiffs filed a consolidated amended complaint, asserting the same claims alleged in the initial complaint, and naming the Company and two former executive officers as defendants. Lead plaintiffs seek damages on behalf of all persons who purchased the Company’s common stock between February 19, 2009 and November 21, 2011 (the “Class”). On October 30, 2012, the Court ruled on defendants’ motion to dismiss, granting it as to one of the former executive officer defendants and denying it as to the other defendants. On January 28, 2013, defendants filed answers to the consolidated amended complaint. Defendants have denied and continue to deny each and all of the claims and contentions alleged by plaintiffs in the action and all charges of wrongdoing or liability against them.

On June 12, 2013, the parties agreed to settle the litigation, subject to Court approval and settlement of the shareholder derivative actions and subsequent related claims described below (“Proposed Derivative Settlement”). Pursuant to the terms of the agreement, the plaintiff class will receive a total of $27.5 million in consideration of the proposed settlement and for the benefit of the class members participating in the settlement. We believe it is probable that the Company’s directors’ and officers’ liability insurers will pay $22.5 million, $10.0 million of which is to be funded by the terms of the Proposed Derivative Settlement, and therefore recorded a receivable for this amount in the second quarter of 2013. The Company may initially pay the remaining $5.0 million for the benefit of the Class. However, the Company anticipates seeking recovery of the remaining $5.0 million from one of its insurers but has not recorded a receivable for this additional amount as of September 30, 2013. In exchange for the $27.5 million cash consideration, among other things, the lead plaintiffs will dismiss the litigation with prejudice and the parties will release all claims. On October 31, 2013, plaintiffs moved for preliminary Court approval of the settlement reached by the parties.

Shareholder Derivative Actions and Demands

Bangari v. Lesnik, et al. On December 7, 2011, a derivative action was filed in the Circuit Court of Cook County, Chancery Division on behalf of the Company naming the Company’s Board of Directors at that time as individual defendants and the Company as a nominal defendant. Plaintiff alleges breach of fiduciary duty and abuse of control by the individual defendants in connection with the Company’s alleged ongoing failure to have proper internal controls in place to appropriately determine its campuses’ placement rates or to comply with relevant accreditation standards regarding placement practices and determinations. Plaintiff asks for unspecified amounts in damages, interest, and costs, as well as ancillary relief. On February 10, 2012, defendants filed motions to dismiss or stay the complaint. On August 21, 2012, the Court denied defendants’ motions to dismiss, and granted defendants’ request for a stay. A status hearing is scheduled for November 5, 2013, at which a motion for a stay of proceedings pending approval of the Proposed Derivative Settlement described below will be presented to the Court.

Cook v. McCullough, et al. On December 22, 2011, a derivative action was filed in the U.S. District Court for the Northern District of Illinois on behalf of the Company naming the Company’s Board of Directors at that time as well as various current and former officers as individual defendants and the Company as a nominal defendant. Plaintiff alleges breach of fiduciary duty, abuse of control and gross mismanagement by all of the individual defendants based on allegations similar to those asserted in Bangari, described above, and on defendants’ alleged failure to prevent the Company’s disclosure of allegedly misleading statements relating to placement rates. Plaintiff also asserts a claim of unjust enrichment against certain individual defendants due to their receipt of incentive-based compensation based on allegedly inflated short-term financial performance. Plaintiff asks for unspecified amounts in damages, interest, and costs, as well as ancillary relief. On March 16, 2012, defendants filed motions to dismiss or stay the complaint. The Court granted the motions to stay pending resolution of the motions to dismiss. On August 13, 2012, the Court denied defendants’ motions to dismiss and ordered the parties to engage in certain preliminary discovery. Defendants filed answers to the complaint on October 22, 2012. On October 31, 2013, plaintiff moved for preliminary Court approval of the Proposed Derivative Settlement described below.

Alex v. McCullough, et al. On November 5, 2012, a derivative action was filed in the U.S. District Court for the Northern District of Illinois on behalf of the Company naming the Company’s Board of Directors at that time as well as various current and former officers as individual defendants and the Company as a nominal defendant. Plaintiff alleges breach of fiduciary duty, waste of corporate assets and unjust enrichment by all of the individual defendants based on allegations similar to those asserted in Bangari and Cook, described above. In addition, in connection with the Company’s reporting of placement rates, plaintiff also asserts violations of Sections 10(b) and 20(a) of the Exchange Act against certain individual defendants. Plaintiff asks for unspecified amounts in damages, interest, and costs, as well as ancillary relief. On September 17, 2013, the Court stayed the case in light of the parties’ continuing settlement discussions. On October 31, 2013, the Cook plaintiff moved for preliminary Court approval of the Proposed Derivative Settlement described below, which includes this action.

On May 24, 2013, the Company’s Board of Directors formed a Special Committee for the purpose of conducting an independent inquiry with respect to the Proposed Derivative Settlement. The Board of Directors delegated to the Special Committee the full authority to take such actions as the Special Committee deems appropriate and in the best interests of the Company and its shareholders regarding such Proposed Derivative Settlement.

On June 12, 2013, the parties to the derivative actions described above and subsequent related claims (“Derivative Litigation”) agreed to the Proposed Derivative Settlement, subject to agreement to corporate governance terms and Court approval, pursuant to which the Company’s directors’ and officers’ liability insurers will pay the Company $20.0 million, $10.0 million of which is to be applied to the settlement of the securities litigation described above. With the remaining $10.0 million, the Company will be required to pay $5 million in attorneys’ fees and expenses to derivative plaintiffs’ counsel, subject to Court approval. Any net recovery from the Proposed Derivative Settlement may be used by the Company for any purpose. In exchange for this cash consideration, among other things, plaintiffs will dismiss the Derivative Litigation with prejudice and the parties will release all claims.

Student Litigation

Amador, et al. v. California Culinary Academy and Career Education Corporation; Adams, et al. v. California Culinary Academy and Career Education Corporation. On September 27, 2007, Allison Amador and 36 other current and former students of the California Culinary Academy (“CCA”) filed a complaint in the California Superior Court in San Francisco. Plaintiffs plead their original complaint as a putative class action and allege four causes of action: fraud; constructive fraud; violation of the California Unfair Competition Law; and violation of the California Consumer Legal Remedies Act. Plaintiffs contend that CCA made a variety of misrepresentations to them, primarily oral, during the admissions process. The alleged misrepresentations relate generally to the school’s reputation, the value of the education, the competitiveness of the admissions process, and the students’ employment prospects upon graduation, including the accuracy of statistics published by CCA.

On April 3, 2008, the same counsel representing plaintiffs in the Amador action filed the Adams action on behalf of Jennifer Adams and several other unnamed members of the Amador putative class. The Adams action also was styled as a class action and was based on the same allegations underlying the Amador action and attempted to plead the same four causes of action pled in the Amador action. The Adams action was deemed related to the Amador action and was being handled by the same judge.

The parties executed a formal settlement agreement as of November 1, 2010. On April 18, 2012, the Court issued an order granting final approval of the settlement and on April 19, 2012, the Court entered a final judgment on the settlement.

On June 3, 2011, the same attorneys representing the class in the Amador action filed a separate complaint in the San Francisco County Superior Court entitled Abarca v. California Culinary Academy, Inc., et al, on behalf of 115 individuals. On June 15, 2011, the same attorneys filed another action in the San Francisco County Superior Court entitled Andrade, et al. v. California Culinary Academy, Inc., et al., on behalf of another 31 individuals. On August 12, 2011, plaintiffs’ counsel filed a third action on behalf of five individuals entitled Aprieto, et al. v. California Culinary Academy. New counsel has substituted in to represent 78 of the individuals and the Court has entered orders allowing class counsel to withdraw from representing the remaining individuals. On January 18, 2013, new counsel filed a complaint entitled Coleman, et al. v. California Culinary Academy on behalf of two individuals. All of the plaintiffs in these four suits are opt outs in the Amador action and/or non-class members, and therefore not subject to the Amador settlement. None of these four suits are being prosecuted as a class action. They each allege the same claims as were previously alleged in the Amador action, plus claims for breach of contract and violations of the repealed California Education Code. The plaintiffs in these cases seek damages, including consequential damages, punitive damages and attorneys’ fees. All of these cases have been deemed related and transferred to the same judge who handled the Amador case.

Claims by individual plaintiffs who are not represented by counsel have been dismissed. There are 80 plaintiffs who have not settled or dismissed their claims. The Company has filed answers to the complaints filed by the remaining 80 individual plaintiffs.

The Court has set a trial date on eight test cases for March 24, 2014. The test cases will be tried to the Court and not to a jury. The parties are engaged in discovery relating to the test cases.

Because of the many questions of fact and law that may arise as discovery and pre-trial proceedings progress, the outcome of the Abarca, Andrade, Aprieto and Coleman legal proceedings with respect to the remaining plaintiffs is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of potential loss, if any, for these actions because these matters are in their early stages and involve many unresolved issues of fact and law. Accordingly, we have not recognized any future liability associated with these actions.

Enea, et al. v. Career Education Corporation, California Culinary Academy, Inc., SLM Corporation, and Sallie Mae, Inc. Plaintiffs filed this putative class action in the Superior Court State of California, County of San Francisco, on or about June 27, 2013. Plaintiffs allege that CCA materially misrepresented the placement rates of its graduates, falsely stated that admission to the culinary school was competitive and that the school had an excellent reputation among restaurants and other food service providers, represented that the culinary schools were well-regarded institutions producing skilled graduates who employers eagerly hired, and lied by telling students that the school provided graduates with career placement services for life. The plaintiffs or putative class members here co-signed the loans for students to attend CCA, some of whom were Amador class members. Plaintiffs seek restitution, damages, civil penalties, and attorneys’ fees.

Defendants filed a motion to dismiss and to strike class action allegations on October 31, 2013. Discovery is stayed pending a ruling on those motions.

Because of the many questions of fact and law that may arise in the future, the outcome of this legal proceeding is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of potential loss, if any, for this action because, among other things, our potential liability depends on whether a class is certified and, if so, the composition and size of any such class, as well as on an assessment of the appropriate measure of damages if we were to be found liable. Accordingly, we have not recognized any liability associated with this action.

Surrett, et al. v. Western Culinary Institute, Ltd. and Career Education Corporation. On March 5, 2008, a complaint was filed in Portland, Oregon in the Circuit Court of the State of Oregon in and for Multnomah County naming Western Culinary Institute, Ltd. and the Company as defendants. Plaintiffs filed the complaint individually and as a putative class action and alleged two claims for equitable relief: violation of Oregon’s Unlawful Trade Practices Act (“UTPA”) and unjust enrichment. Plaintiffs filed an amended complaint on April 10, 2008, which added two claims for money damages: fraud and breach of contract. Plaintiffs allege that Western Culinary Institute, Ltd. (“WCI”) made a variety of misrepresentations to them, relating generally to WCI’s placement statistics, students’ employment prospects upon graduation from WCI, the value and quality of an education at WCI, and the amount of tuition students could expect to pay as compared to salaries they could expect to earn after graduation. WCI subsequently moved to dismiss certain of plaintiffs’ claims under Oregon’s UTPA; that motion was granted on September 12, 2008. On February 5, 2010, the Court entered a formal Order granting class certification on part of plaintiff’s UTPA and fraud claims purportedly based on omissions, denying certification of the rest of those claims and denying certification of the breach of contract and unjust enrichment claims. The class consists of students who enrolled at WCI between March 5, 2006 and March 1, 2010, excluding those who dropped out or were dismissed from the school for academic reasons.

Plaintiffs filed a Fifth Amended Complaint on December 7, 2010, which included individual and class allegations by Nathan Surrett. Class notice was sent on April 22, 2011, and the opt-out period expired on June 20, 2011. The class consisted of approximately 2,600 members. They are seeking tuition refunds, interest and certain fees paid in connection with their enrollment at WCI.

On May 23, 2012, WCI filed a motion to compel arbitration of claims by 1,062 individual class members who signed enrollment agreements containing express class action waivers. The Court issued an Order denying the motion on July 27, 2012. WCI filed an appeal from the Court’s Order and on August 30, 2012, the Court of Appeals issued an Order granting WCI’s motion to compel the trial court to cease exercising jurisdiction in the case. Thus, all proceedings with the trial court have been stayed pending the outcome of the appeal.

Because of the many questions of fact and law that have already arisen and that may arise in the future, the outcome of this legal proceeding is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of potential loss, if any, for this action because of the inherent difficulty in assessing the appropriate measure of damages and the number of class members who might be entitled to recover damages, if we were to be found liable. Accordingly, we have not recognized any liability associated with this action.

Vasquez, et al. v. California School of Culinary Arts, Inc. and Career Education Corporation. On June 23, 2008, a putative class action lawsuit was filed in the Los Angeles County Superior Court entitled Daniel Vasquez and Cherish Herndon v. California School of Culinary Arts, Inc. and Career Education Corporation. The plaintiffs allege causes of action for fraud, constructive fraud, violation of the California Unfair Competition Law and violation of the California Consumer Legal Remedies Act. The plaintiffs allege improper conduct in connection with the admissions process during the alleged class period. The alleged class is defined as including “all persons who purchased educational services from California School of Culinary Arts, Inc. (“CSCA”), or graduated from CSCA, within the limitations periods applicable to the alleged causes of action (including, without limitation, the period following the filing of the action).” Defendants successfully demurred to the constructive fraud claim and the Court has dismissed it. Defendants also successfully demurred to plaintiffs’ claims based on alleged violations of California’s former Private Postsecondary and Vocational Educational Reform Act of 1989 (“the Reform Act”). Plaintiffs’ motion for class certification was denied by the Court on March 6, 2012.

Plaintiffs’ counsel have filed eight separate but related “multiple plaintiff actions” originally involving a total of approximately 1,000 former students entitled Banks, et al. v. California School of Culinary Arts; Abrica v. California School of Culinary Arts; Aguilar, et al. v. California School of Culinary Arts; Alday v. California School of Culinary Arts; Ackerman, et al. v. California School of Culinary Arts; Arechiga, et al. v. California School of Culinary Arts; Anderson, et al., v. California School of Culinary Arts; and Allen v. California School of Culinary Arts. All eight cases are pending in the Los Angeles County Superior Court and the allegations in these cases are essentially the same as those asserted in the Vasquez class action case. The individual plaintiffs in these cases seek compensatory and punitive damages, disgorgement and restitution of tuition monies received, attorneys’ fees, costs and injunctive relief. All of these cases have been deemed related to the Vasquez class action and therefore are pending before the same judge who is presiding over the Vasquez case.

On June 15, 2012, pursuant to a stipulation by the parties, the plaintiffs filed a consolidated amended complaint in the Vasquez action consolidating all eight of the separate actions referenced above. Defendants’ response to the consolidated complaint was filed on July 13, 2012. The Court has lifted the stay on actions that were consolidated and the parties are now engaged in discovery.

On June 22, 2012, defendants filed motions to compel arbitration of plaintiffs’ claims. On August 10, 2012, the Court granted the motions with respect to approximately 54 plaintiffs. Nine of those individuals have filed arbitration demands before the American Arbitration Association to date. One of those arbitrations has been tried to a final award, and the remaining eight have settled. The total liability for these nine arbitrations was an immaterial amount.

Defendants issued offers to compromise pursuant to the California Code of Civil Procedure to 1,438 individual plaintiffs, 346 of which were accepted. The total amount that has been or will be paid to eliminate these claims is approximately $2.1 million. This aggregate amount was recorded in the third quarter of 2012 and the majority of the payments were made by September 30, 2012. There are currently approximately 1,047 active plaintiffs in the consolidated action.

Because of the many questions of fact and law that already have arisen and that may arise in the future, the outcome of these legal proceedings is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of potential loss, if any, for these actions with respect to the current plaintiffs because our possible liability depends on an assessment of the appropriate measure of damages, if we were to be found liable. Accordingly, we have not recognized any liability associated with these actions except as described above.

False Claims Act

United States of America, ex rel. Melissa Simms Powell, et al. v. American InterContinental University, Inc., a Georgia Corporation, Career Education Corp., a Delaware Corporation and John Doe Nos. 1-100. On July 28, 2009, we were served with a complaint filed in the U.S. District Court for the Northern District of Georgia, Atlanta Division. The complaint was originally filed under seal on July 14, 2008 by four former employees of the Dunwoody campus of our American InterContinental University on behalf of themselves and the federal government. On July 27, 2009, the Court ordered the complaint unsealed and we were notified that the U.S. Department of Justice declined to intervene in the action. When the federal government declines to intervene in a False Claims Act action, as it has done in this case, the private plaintiffs (or “relators”) may elect to pursue the litigation on behalf of the federal government and, if they are successful, receive a portion of the federal government’s recovery. The action alleges violations of the False Claims Act and promissory fraud, including allegedly providing false certifications to the federal government regarding compliance with certain provisions of the Higher Education Act and accreditation standards. Relators claim that defendants’ conduct caused the government to pay federal funds to defendants and to make payments to third-party lenders, which the government would not have made if not for defendants’ alleged violation of the law. Relators seek treble damages plus civil penalties and attorneys’ fees. The lawsuit is currently in the discovery phase. On July 12, 2012, the Court granted our motion to dismiss for a lack of jurisdiction, the claims related to incentive compensation and proof of graduation. Thus, the only claim that remains pending against defendants is based on relators’ contention that defendants misled the school’s accreditor, Southern Association of Colleges and Schools, during the accreditation process.

Because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of potential loss, if any, for this action because the complaint does not seek a specified amount of damages and it is unclear how damages would be calculated, if we were to be found liable. Moreover, the case presents novel legal issues and discovery is in its early stages. Accordingly, we have not recognized any liability associated with this action.

United States of America, ex rel. Brent M. Nelson v. Career Education Corporation, Sanford-Brown, Ltd., and Ultrasound Technical Services, Inc. On April 18, 2013, we were served with a complaint filed in the U.S. District Court for the Eastern District of Wisconsin. The complaint was originally filed under seal on July 30, 2012 by a former employee of Sanford-Brown College Milwaukee on behalf of himself and the federal government. On February 27, 2013, the Court ordered the complaint unsealed and we were notified that the U.S. Department of Justice declined to intervene in the action. After the federal government declined to intervene in this case, the relator elected to pursue the litigation on behalf of the federal government. If he is successful he will receive a portion of the federal government’s recovery. The relator filed an amended complaint on April 12, 2013. The amended complaint alleges violations of the False Claims Act, including allegedly providing false certifications to the federal government regarding compliance with certain provisions of the Higher Education Act and accreditation standards. Relator claims that defendants’ conduct caused the government to pay federal funds to defendants, and to make payments to third-party lenders, which the government would not have made if not for defendants’ alleged violation of the law. Relator seeks treble damages plus civil penalties and attorneys’ fees. On June 11, 2013, we filed a motion to dismiss the case on a variety of grounds. Both the relator and the government have filed briefs in opposition to our motion to dismiss. The Court has set the case for jury trial beginning April 14, 2014.

Because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of potential loss, if any, for this action because the complaint does not seek a specified amount of damages and it is unclear how damages would be calculated, if we were to be found liable. Moreover, the case presents novel legal issues and is in its early stages. Accordingly, we have not recognized any liability associated with this action.

Employment Litigation

Wilson, et al. v. Career Education Corporation. On August 11, 2011, Riley Wilson, a former admissions representative based in Minnesota, filed a complaint in the U.S. District Court for the Northern District of Illinois. The two-count complaint asserts claims of breach of contract and unjust enrichment arising from our decision to terminate our admissions representative Supplemental Compensation Plan. In addition to his individual claims, Wilson also seeks to represent a nationwide class of similarly situated Admissions Representatives who also were affected by termination of the plan. On October 6, 2011, we filed a motion to dismiss the complaint. On April 13, 2012, the Court granted our motion to dismiss in its entirety and dismissed plaintiff’s complaint for failure to state a claim. The Court dismissed this action with prejudice on May 14, 2012. On June 11, 2012, plaintiff filed a Notice of Appeal with the U.S. Court of Appeals for the Seventh Circuit appealing the final judgment of the trial court. Briefing was completed on October 30, 2012, and oral argument was held on December 3, 2012. On August 30, 2013, the Seventh Circuit affirmed the district court’s ruling on plaintiff’s unjust enrichment claim but reversed and remanded for further proceedings on plaintiff’s breach of contract claim. On September 13, 2013, we filed a petition for rehearing to seek review of the panel’s decision on the breach of contract claim and for certification of question to the Illinois Supreme Court. The Seventh Circuit has not ruled on our petition.

Because the matter remains on appeal and because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of potential loss, if any, for this action. Accordingly, we have not recognized any liability associated with this action.

Nimely, et al. v. Randstad General Partners, Randstad USA, Randstad Inhouse Services L.P., and Career Education Corporation. On December 30, 2012, April R. Nimely, a former hourly, non-exempt call center employee based in Illinois filed a putative class and collective action complaint in the U.S. District Court for the Northern District of Illinois against the Company and various entities of the staffing firm Randstad, which the Company used to supplement its own staff at some of its call centers. The complaint asserts claims under the Fair Labor Standards Act, the Illinois Minimum Wage Law, and the Illinois Wage Payment and Collection Act (“IWPCA”) arising from the alleged failure to pay wages for work performed before and after shifts and during breaks. The putative collective class was defined as “[a]ll persons who worked for Defendants as telephone dedicated employees, however titled, who were compensated, in part or in full, on an hourly basis throughout the United States at any time between December 30, 2009 and the present who did not receive the full amount of overtime wages earned and owed to them.”

On February 27, 2013, defendants filed their answers to the complaint and motion to dismiss the IWPCA count of the complaint. On June 14, 2013, plaintiff filed her motion for class certification. The parties subsequently reached an agreement to settle the matter for an immaterial amount and are in the process of finalizing the settlement documents. A status hearing is scheduled for November 8, 2013.

Sumrall and Tavares Vickers, et al. v. Career Education Corporation, International Academy of Merchandising & Design, Inc., d/b/a International Academy of Design and Technology and d/b/a IADT-Online. On April 25, 2013, a putative collection action was filed in the United States District Court for the Middle District of Florida. Plaintiffs alleged a cause of action under the Fair Labor Standards Act for unpaid overtime. Specifically, plaintiffs alleged they were misclassified as exempt employees and denied overtime compensation and/or required to work “off the clock.” The putative class was defined as including all admissions representatives employed by the Company and International Academy of Merchandising & Design, Inc., who worked in excess of forty hours per week from April 25, 2010, to the present. Plaintiffs sought to recover alleged unpaid wages, liquidated damages, prejudgment interest and attorneys’ fees, as well as declaratory relief. On May 30, 2013, defendants filed their answer and affirmative defenses, denying the plaintiffs’ claims.

On July 31, 2013, the parties reached an agreement to settle this matter, pursuant to which plaintiffs agreed to amend their complaint to remove any reference to a purported collective action, stipulate to the dismissal of the amended complaint, and sign a full and complete release of all claims and potential claims against the Company. In exchange, the Company agreed to pay each plaintiff a de minimis amount in back wages, liquidated damages, and attorneys’ fees. The Court approved the settlement and dismissed the amended complaint, with prejudice, on October 7, 2013.

Other Litigation

In addition to the legal proceedings and other matters described above, we are also subject to a variety of other claims, suits and investigations that arise from time to time in the ordinary conduct of our business, including, but not limited to, claims involving students or graduates and routine employment matters. While we currently believe that such claims, individually or in aggregate, will not have a material adverse impact on our financial position, cash flows or results of operations, these other matters are subject to inherent uncertainties, and management’s view of these matters may change in the future. Were an unfavorable final outcome to occur in any one or more of these matters, there exists the possibility of a material adverse impact on our business, reputation, financial position, cash flows, and the results of operations for the period in which the effect becomes probable and reasonably estimable.

State Investigations

The Company received from the Attorney General of the State of New York (“NYAG”) a Subpoena Duces Tecum dated May 17, 2011 (the “Subpoena”), relating to the NYAG’s investigation of whether the Company and certain of its schools have complied with certain New York state consumer protection, securities, finance and other laws. The documents and information sought by the NYAG in connection with its investigation cover the time period from May 17, 2005 to the present. Pursuant to the Subpoena, the NYAG requested from the Company, and certain of its schools, documents and detailed information on a broad spectrum of business practices, including such areas as marketing and advertising, student recruitment and admissions, education financing, training and compensation of admissions and financial aid personnel, programmatic accreditation, student employment outcomes, placement rates of graduates and other disclosures made to students.

On August 19, 2013, the Company entered into an Assurance of Discontinuance (the “NYAG Settlement’) with the NYAG. Under the terms of the NYAG Settlement, without admitting or denying the NYAG’s findings, the Company has agreed to pay $9.3 million into a restitution fund to be distributed to eligible consumers; an additional $1.0 million for fees, costs, and penalties; and up to an additional $0.2 million for the costs to administer the restitution claims process. The Company recorded $10.0 million related to this matter during the second quarter of 2013 when the matter was deemed both probable and estimable. $10.3 million was paid during the third quarter of 2013 related to this matter. As part of the NYAG Settlement, the Company has also agreed to, among other things: calculate and disclose placement rates according to agreed upon procedures and retain an independent consultant or audit firm to independently verify and report on such placement rates; provide specified levels of placement assistance to students; provide certain additional training to admissions personnel regarding placement rates; teach out certain programs going forward that do not achieve specified minimum placement rates; provide additional disclosure concerning institutional and programmatic accreditation; and provide additional disclosure concerning transferability of credits to other colleges or universities.

The Florida campuses of Sanford-Brown Institute received a notice on November 5, 2010 from the State of Florida Office of the Attorney General (“FL AG”) that it has commenced an investigation into possible unfair and deceptive trade practices at these schools. The notice includes a subpoena to produce documents and detailed information for the time period from January 1, 2007 to the present about a broad spectrum of business practices at such schools. The Florida campuses of Sanford-Brown Institute have responded to the subpoena and continue to cooperate with the Florida Attorney General with a view towards resolving this inquiry as promptly as possible.

The Company received from the Attorney General of the State of Illinois (“IL AG”) a Civil Investigative Demand (“CID”) dated December 9, 2011. The CID relates to the IL AG’s investigation of whether the Company and its schools operating in Illinois have complied with certain Illinois state consumer protection laws. Pursuant to the CID, the IL AG has requested from the Company and its schools documents and detailed information on a broad spectrum of business practices, including such areas as marketing and advertising, student recruitment and admissions, education financing, training and compensation of admissions and financial aid personnel, programmatic accreditation, student employment outcomes, placement rates of graduates and other financial and organizational information. The documents and information sought by the IL AG in connection with its investigation cover the time period from January 1, 2006 to the present. The Company is cooperating with the IL AG’s office with a view towards resolving this inquiry as promptly as possible.

The Company received from the Commonwealth of Massachusetts Office of the Attorney General (“MA AG”) a Civil Investigative Demand dated September 27, 2012. The CID relates to the MA AG’s investigation of whether certain of the Company’s schools have complied with Massachusetts consumer protection laws in connection with marketing and advertising, job placement and student outcomes, the recruitment of students, and the financing of education. Pursuant to the CID, the MA AG has requested from the Company documents and detailed information covering a broad spectrum of areas, including student information, programs of study, externships, tuition, financial aid, default rates, graduation rates, employment outcomes, recruitment and admissions, career services, student disclosures, employee compensation, accreditation, advertising, and complaints relating to operations, recruitment, placement, retention, graduation and quality of education. The documents and information sought by the MA AG in connection with its investigation generally cover the time period from January 1, 2008 to the present, with some specific requests covering time periods as early as January 1, 2003 to the present. The Company is cooperating with the MA AG’s office with a view towards resolving this inquiry as promptly as possible.

The Company received from the Colorado Attorney General’s Office (“CO AG”) a CID dated August 27, 2013. The CID relates to the CO AG’s investigation of whether the Company and CTU have complied with certain Colorado state consumer protection laws. Pursuant to the CID, the CO AG has requested from the Company and the schools at issue documents and detailed information on a broad spectrum of business practices, including such areas as recruitment, enrollment, education financing, and the handling of funds issued through the United States Department of Veterans Affairs. The documents and information sought by the CO AG in connection with its investigation cover the time period from January 1, 2009 to the present, with some specific requests covering time periods as early as when CTU began enrolling students. The Company is cooperating with the CO AG’s office with a view towards resolving this inquiry as promptly as possible.

We cannot predict the scope, duration or outcome of the FL AG, IL AG, MA AG, and CO AG investigations. At the conclusion of these matters, the Company or certain of its schools may be subject to claims of failure to comply with state laws or regulations and may be required to pay significant financial penalties and/or curtail or modify their operations. Other state attorneys general may also initiate inquiries into the Company or its schools. If any of the foregoing occurs, our business, reputation, financial position, cash flows and results of operations could be materially adversely affected. Based on information available to us at present, we cannot reasonably estimate a range of potential monetary or non-monetary impact these investigations might have on the Company because it is uncertain what remedies, if any, these regulators might ultimately seek in connection with these investigations.

SEC Inquiry and Other Information Requests

During the second quarter of 2012, the Company was advised by the Chicago Regional Office of the Securities and Exchange Commission (“SEC”) that it is conducting an inquiry pertaining to our previously reported 2011 investigation and review of student placement rate determination practices and related matters. We are cooperating fully with the inquiry. We cannot determine the eventual duration, scope or outcome of this matter.

The Company and its institutions have responded to requests for information regarding its 2011 investigation and review of placement determination practices and related matters from the Higher Learning Commission of the North Central Association of Colleges and Schools, Middle States Commission on Higher Education, Commonwealth of Pennsylvania Department of Education Division of Higher and Career Education, the Arizona State Board for Private Postsecondary Education, the Minnesota Office of Higher Education and the Florida Commission for Independent Education. We cannot predict the outcome of these information requests and any legal proceeding, claim or other matter that may arise relating thereto.

Regulatory Matters

ED Inquiry and HCM1 Status

In December 2011, ED advised the Company that it is conducting an inquiry concerning possible violations of ED misrepresentation regulations related to placement rates reported by certain of the Company’s institutions to accrediting bodies, students and potential students. This inquiry stems from the Company’s self-reporting to ED of its internal investigation into student placement determination practices at the Company’s Health Education segment campuses and review of placement determination practices at all of the Company’s other domestic campuses in 2011. The Company has been cooperating with ED in connection with this inquiry. If ED determines that the Company or any of its institutions violated ED misrepresentation regulations with regard to the publication of placement rates or other disclosures to students or prospective students, ED may revoke, limit, suspend or deny the institution’s Title IV eligibility, or impose fines. Any such action would first likely require reasonable prior notice and an opportunity for an administrative hearing (as recently confirmed by the U.S. Court of Appeals for the District of Columbia), and would be subject to appeal.

In December 2011, ED also moved all of the Company’s institutions from the “advance” method of payment of Title IV Program funds to cash monitoring status (referred to as Heightened Cash Monitoring 1, or HCM1, status). Although the Company’s prior practices substantially conformed to the requirements of this more restrictive method of drawing down students’ Title IV Program funds, if ED finds violations of the HEA or related regulations, ED may impose monetary or program level sanctions, or transfer the Company’s schools to the “reimbursement” or Heightened Cash Monitoring 2 (“HCM2”) methods of payment of Title IV Program funds. While on HCM2 status, an institution must disburse its own funds to students, document the students’ eligibility for Title IV Program funds and comply with certain waiting period requirements before receiving such funds from ED, which results in a significant delay in receiving those funds. The process of re-establishing a regular schedule of cash receipts for the Title IV Program funds if ED places our schools on “reimbursement” or HCM2 payment status could take several months, and would require us to fund ongoing operations substantially

out of existing cash balances. If our existing cash balances are insufficient to sustain us through this transition period, we would need to pursue other sources of liquidity, which may not be available or may be costly.

OIG Audit

Our schools and universities are also subject to periodic audits by various regulatory bodies, including the U.S. Department of Education’s Office of Inspector General (“OIG”). The OIG audit services division commenced a compliance audit of CTU in June 2010, covering the period July 5, 2009 to May 16, 2010, to determine whether CTU had policies and procedures to ensure that CTU administered Title IV Program and other federal program funds in accordance with applicable federal law and regulation. On January 13, 2012, the OIG issued a draft report identifying three findings, including one regarding the documentation of attendance of students enrolled in online programs and one regarding the calculation of returns of Title IV Program funds arising from student withdrawals without official notice to the institution. CTU submitted a written response to the OIG, contesting these findings, on March 2, 2012. CTU disagreed with the OIG’s proposed determination of what constitutes appropriate documentation or verification of online academic activity during the time period covered by the audit. CTU’s response asserted that this finding was based on the retroactive application of standards adopted as part of the program integrity regulations that first went into effect on July 1, 2011. The OIG final report, along with CTU’s response to the draft report, was forwarded to ED’s Office of Federal Student Aid on September 21, 2012. On October 24, 2012, CTU provided a further response challenging the findings of the report directly to ED’s Office of Federal Student Aid. As a result of ED’s review of these materials, on January 31, 2013, CTU received a request from ED that it perform two file reviews to determine potential liability on two discrete issues associated with one of the above findings. The first file review relates to any potential aid awarded to students who engaged in virtual classroom attendance activities prior to the official start date of a course and for which no further attendance was registered during the official class term. The second file review relates to students that were awarded and paid Pell funds for enrollment in two concurrent courses, while only registering attendance in one of the two courses. The Company has completed these file reviews and provided supporting documentation to ED on April 10, 2013. As of September 30, 2013, the Company has a $0.8 million liability related to this matter.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (133,657)	$ (81,304)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Goodwill and asset impairment	15,708	85,661
Loss on sale of student receivables		930
Depreciation and amortization expense	56,619	60,555
Bad debt expense	22,028	28,967
Compensation expense related to share-based awards	5,119	7,302
Loss on sale of business	6,973
Loss on disposition of property and equipment	103	293
Changes in operating assets and liabilities	(50,735)	(69,910)
Net cash (used in) provided by operating activities	(77,842)	32,494
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale investments	(40,842)	(117,188)
Sales of available-for-sale investments	52,485	146,873
Purchases of property and equipment	(16,602)	(29,496)
Proceeds on the sale of assets	(2,525)
Business acquisition, net of acquired cash		(3,094)
Other	31	(1,533)
Net cash used in investing activities	(7,453)	(4,438)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock		(56,431)
Issuance of common stock	792	1,262
Payments of assumed loans upon business acquisition		(318)
Payments of contingent consideration		(5,818)
Payment on borrowings	(80,000)
Change in restricted cash	85,314
Payments of capital lease obligations	(210)	(741)
Net cash provided by (used in) financing activities	5,896	(62,046)
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS:	1,518	(3,774)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(77,881)	(37,764)
DISCONTINUED OPERATIONS CASH ACTIVITY INCLUDED ABOVE:
Add: Cash balance of discontinued operations, beginning of the period	127,742	154,668
Less: Cash balance of discontinued operations, end of the period	131,817	109,683
CASH AND CASH EQUIVALENTS, beginning of the period	112,880	125,924
CASH AND CASH EQUIVALENTS, end of the period	$ 30,924	$ 133,145

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Subsequent Events - Additional Information (Detail) (USD $)	3 Months Ended	9 Months Ended	3 Months Ended		3 Months Ended
	Sep. 30, 2013	Sep. 30, 2013	Dec. 31, 2013 Subsequent Event [Member]	Oct. 31, 2013 Subsequent Event [Member] Campus	Dec. 31, 2013 Subsequent Event [Member] Minimum [Member] Forecast [Member]	Dec. 31, 2013 Subsequent Event [Member] Maximum [Member] Forecast [Member]	Oct. 31, 2013 Health Education [Member] Subsequent Event [Member] Campus	Oct. 31, 2013 Design & Technology [Member] Subsequent Event [Member] Campus
Subsequent Event [Line Items]
Asset impairment charges and severance and related costs			$ 4,000,000
Number of additional Campuses				5			3	2
Cash payment to pre-closing distribution and adjustment			290,000,000
Expected gain on sale of pending transactions	$ (39,000)	$ (6,973,000)			$ 120,000,000	$ 130,000,000

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
CURRENT ASSETS:
Cash and cash equivalents, unrestricted	$ 30,924	$ 112,880
Restricted cash	12,564	97,878
Short-term investments	52,210	63,876
Total cash and cash equivalents and short-term investments	95,698	274,634
Student receivables, net of allowance for doubtful accounts of $23,172 and $28,172 as of September 30, 2013 and December 31, 2012, respectively	41,694	54,935
Receivables, other, net	39,845	2,096
Prepaid expenses	112,836	38,296
Inventories	7,146	8,437
Deferred income tax assets, net		7,095
Other current assets	5,885	4,393
Assets of discontinued operations	254,097	153,675
Total current assets	557,201	543,561
NON-CURRENT ASSETS:
Property and equipment, net	202,125	247,976
Goodwill	87,356	87,356
Intangible assets, net	40,387	56,006
Student receivables, net of allowance for doubtful accounts of $8,071 and $11,982 as of September 30, 2013 and December 31, 2012, respectively	5,552	6,832
Deferred income tax assets, net	47,932	47,703
Other assets, net	25,916	30,276
Assets of discontinued operations	18,714	102,993
TOTAL ASSETS	985,183	1,122,703
CURRENT LIABILITIES:
Short-term borrowings		80,000
Accounts payable	33,723	32,094
Accrued expenses:
Payroll and related benefits	37,285	38,772
Advertising and production costs	25,733	20,963
Other	61,383	35,060
Deferred tuition revenue	69,051	69,806
Deferred income tax liabilities, net	32,752
Liabilities of discontinued operations	95,975	76,020
Total current liabilities	355,902	352,715
NON-CURRENT LIABILITIES:
Deferred rent obligations	85,805	94,072
Other liabilities	29,794	28,648
Liabilities of discontinued operations	22,555	35,478
Total non-current liabilities	138,154	158,198
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value; 1,000,000 shares authorized; none issued or outstanding
Common stock, $0.01 par value; 300,000,000 shares authorized; 81,876,758 and 81,616,987 shares issued, 67,158,417 and 67,069,734 shares outstanding as of September 30, 2013 and December 31, 2012, respectively	819	816
Additional paid-in capital	602,735	596,826
Accumulated other comprehensive income (loss)	2,798	(4,785)
Retained earnings	99,264	232,921
Cost of 14,718,341 and 14,547,253 shares in treasury as of September 30, 2013 and December 31, 2012, respectively	(214,489)	(213,988)
Total stockholders' equity	491,127	611,790
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 985,183	$ 1,122,703

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Share-Based Compensation - Additional Information (Detail) (USD $)	3 Months Ended	9 Months Ended			3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2013	Sep. 30, 2013 Employee Stock Option [Member]	Sep. 30, 2013 Restricted Stock Shares [Member]	Jun. 30, 2013 Stock Appreciation Rights (SARs) [Member]	Sep. 30, 2013 Restricted Stock Units to be Settled in Cash [Member]	Sep. 30, 2013 Restricted Stock Units to be Settled in Cash [Member]	Sep. 30, 2013 Non-Employee Directors' Stock Options [Member]	Sep. 30, 2013 Non-Employee Directors' Stock Options [Member] Scenario One [Member]	Sep. 30, 2013 Non-Employee Directors' Stock Options [Member] Scenario Two [Member]	Sep. 30, 2013 2008 Incentive Compensation Plan [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Common stock subject to awards of stock options or stock appreciation rights payable in shares											1.0
Common stock subject to any other form of award											1.67
Common stock available for future share-based awards											10,200,000
Number of shares to reduce shares available to grant by upon vesting of restricted stock units	4,600,000	4,600,000
Estimated pretax compensation expense	$ 8,000,000	$ 8,000,000
Estimated pretax compensation expenses expiration, years		4 years
Employee stock options exercisable in percentage			25.00%
Service period in years		4 years	4 years	4 years
Expiration period in years			10 years		10 years			10 years
Vesting period in years									3	4
Restricted stock awards exercisable in percentage				25.00%
Long-term incentive, cash-based awards		3 years		3 years	4 years
Restricted stock awards exercisable in percentage		25.00%
Fair value of outstanding cash settlement on RSU's						6.8	6.8
Compensation-Stock Compensation and recognized a liability						500,000	1,200,000
Grant date fair value of the performance unit awards granted during the first quarter		2,500,000
Fair value of the liability incurred through	100,000	300,000
SARs to be settled in cash granted					200,000
Grant date fair value of SARs to be settled in cash					$ 200,000
SARs vesting rate					25.00%

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Basis of Presentation - Additional Information (Detail) (USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2013 Segment
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Number of reporting segments		6
Fair market value	$ 0	$ 0
Loss on pending sale of business	(39,000)	(6,973,000)
Loss on the pending sale , related to the cumulative translation loss		$ 3,300,000

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STUDENT RECEIVABLES (Tables)

9 Months Ended

Sep. 30, 2013

Receivables [Abstract]

Changes in Current and Non-Current Receivables Allowance

Changes in our current and non-current receivables allowance for the quarters and years to date ended September 30, 2013 and 2012 were as follows (dollars in thousands):

	Balance, Beginning of Period		Charges to Expense (1)		Amounts Written-off			Balance, End of Period
For the quarter ended September 30, 2013	$	33,460	$	7,884	$	(10,101	)	$	31,243
For the quarter ended September 30, 2012	$	46,229	$	10,847	$	(15,180	)	$	41,896
For the year to date ended September 30, 2013	$	40,154	$	21,187	$	(30,098	)	$	31,243
For the year to date ended September 30, 2012	$	57,232	$	27,240	$	(42,576	)	$	41,896

(1) Charges to expense include an offset for recoveries of amounts previously written off of $1.5 million and $2.0 million for the quarters ended September 30, 2013 and 2012, respectively and $5.8 million and $6.5 million for the years to date ended September 30, 2013 and 2012, respectively.

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Student Receivables - Changes in Current and Non-Current Receivables Allowance (Parenthetical) (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Receivables [Abstract]
Recoveries of amounts previously written off	$ 1.5	$ 2.0	$ 5.8	$ 6.5

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Share-Based Compensation - Schedule of Restricted Stock Units to be Settled in Cash (Detail) (Restricted Stock Units to be Settled in Cash [Member]) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Restricted Stock Units to be Settled in Cash [Member]
Schedule Of Summary Of Restricted Stock Unit Activity [Line Items]
Outstanding as of December 31, 2012, Stock Units to be Settled in Cash
Stock Units to be Settled in Cash, Granted	2,938
Stock Units to be Settled in Cash, Vested
Stock Units to be Settled in Cash, Forfeited	(448)
Outstanding as of September 30, 2013, Stock Units to be Settled in Cash	2,490

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Financial Instruments - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Financial Instruments [Line Items]
Period cash equivalents and short-term investments have been in continuous unrealized loss position, years, maximum			1 year
Period cash equivalents and long-term investments have been in continuous unrealized loss position, years, minimum			1 year
Cumulative unrealized income (loss) on municipal bonds	$ (36,000)	$ 206,000	$ (41,000)	$ 326,000
Revolving credit facility maturity date			Jan. 31, 2014
Repayment of amount borrowed	0		0
Municipal bond [Member]
Financial Instruments [Line Items]
Period debt obligations mature, years, maximum			1 year
Cumulative unrealized income (loss) on municipal bonds			$ 500,000

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Discontinued Operations - Changes in Future Remaining Lease Obligations Discontinued Operations (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Discontinued Operations And Disposal Groups [Abstract]
Balance, Beginning of Period	$ 37,660	$ 41,212	$ 42,277	$ 45,961
Charges Incurred	214	2,531	1,060	3,270
Net Cash Payments	(2,945)	(2,511)	(8,357)	(7,999)
Other			(51)
Balance, End of Period	$ 34,929	$ 41,232	$ 34,929	$ 41,232

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Financial Instruments - Cash and Cash Equivalents and Investments from Continuing Operations (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2012	Jan. 01, 2012
Cash And Cash Equivalents [Abstract]
Cash	$ 19,062	$ 112,759
Money market funds	11,862	121
Cash and cash equivalents, unrestricted	30,924	112,880	133,145	125,924
Restricted cash	12,564	97,878
Total cash and cash equivalents	$ 43,488	$ 210,758

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RESTRUCTURING CHARGES

9 Months Ended

Sep. 30, 2013

Restructuring And Related Activities [Abstract]

RESTRUCTURING CHARGES

8. RESTRUCTURING CHARGES

During the current year to date, we have carried out reductions in force related to the continued reorganization of our corporate and campus functions to better align with current total enrollments. Most notably, we have recorded charges within our Career Schools segments and our corporate functions as we continue to align our overall management structure. Additionally, during the third quarter of 2013 we announced the teach out of SBI White Plains, currently reported within Health Education. Severance and related costs of $1.7 million were recorded during the third quarter of 2013 as a result of all of these actions.

During 2012, we made the decision to teach out a number of campuses, meaning gradually close the campuses through an orderly process. We anticipate that a majority of these campus closures will be completed by the second quarter of 2014. Additionally, during the fourth quarter of 2012, we made the decision to carry out a reduction in force as we reorganize our campus and corporate functions to common operating structures across our ground campuses, most notably within our Career Schools, as well as to better align with current total enrollments.

The following table details the changes in our accrual for severance and related costs associated with all of these restructuring events for our continuing operations during the year to date ended September 30, 2013 (dollars in thousands):

Balance as of December 31, 2012	$	10,234
Severance & related charges		4,592
Payments (1)		(7,339	)
Non-cash adjustments (2)		(775	)
Balance as of September 30, 2013	$	6,712

(1) Includes payments related to COBRA and outplacement services which are assumed to be completed by the third month following an employee’s departure.

(2) Includes cancellations due to employee departures prior to agreed upon end dates, employee transfers to open positions within the organization and subsequent adjustments to severance and related costs.

The current portion of the accrual for severance and related charges was $5.2 million and $7.5 million as of September 30, 2013 and December 31, 2012, respectively, which is recorded within current accrued expenses – payroll and related benefits; the long-term portion of $1.5 million and $2.7 million, respectively, is recorded within other non-current liabilities on our unaudited consolidated balance sheets. In addition, as of September 30, 2013 and December 31, 2012, we have accrued approximately $2.0 million and $0.3 million, respectively, related to retention bonuses that have been offered to certain employees. These amounts have been recorded ratably over the period the employees are retained.

In addition to the charges detailed above, a number of these campuses will have remaining lease obligations following the eventual campus closure, with the longest lease term being through 2021. The total gross remaining lease obligations for these campuses once they complete the close process is expected to approximate $77.0 million, which includes amounts for base rent and estimated expenses for certain occupancy charges such as common area maintenance. At the time each campus completes the close process, a charge will be recorded representing the net present value of the remaining lease obligation reduced by an estimated amount for sublease income. The final amount related to each campus will be finalized at each campus closure date.

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Discontinued Operations - Summary Results of Operations for Discontinued Operations (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Discontinued Operations And Disposal Groups [Abstract]
Revenue	$ 20,086	$ 16,602	$ 95,899	$ 88,099
Pretax loss	(7,936)	(10,541)	(2,875)	(5,467)
Income tax provision (benefit)	35,696	(3,542)	34,658	(3,611)
Loss from discontinued operations, net of tax	$ (43,632)	$ (6,999)	$ (37,533)	$ (1,856)

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Student Receivables - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Receivables [Abstract]
Student receivables write-off period, days past due	Greater than 90 days
Student receivables, net of allowance for doubtful accounts and net of deferred tuition revenue	$ 5.6	$ 6.8

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SHARE-BASED COMPENSATION

9 Months Ended

Sep. 30, 2013

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

SHARE-BASED COMPENSATION

11. SHARE-BASED COMPENSATION

Overview of Share-Based Compensation Plans

The Career Education Corporation 2008 Incentive Compensation Plan (the “2008 Plan”) authorizes awards of stock options, stock appreciation rights, restricted stock, restricted stock units, deferred stock, performance units, annual incentive awards, and substitute awards, which generally may be settled in cash or shares of our common stock. Any shares of our common stock that are subject to awards of stock options or stock appreciation rights payable in shares will be counted as 1.0 share for each share issued for purposes of the aggregate share limit and any shares of our common stock that are subject to any other form of award payable in shares will be counted as 1.67 shares for each share issued for purposes of the aggregate share limit. As of September 30, 2013, there were approximately 10.2 million shares of common stock available for future share-based awards under the 2008 Plan. This amount does not reflect 4.6 million shares underlying restricted stock units and stock options outstanding as of September 30, 2013, which upon vesting or exercise will be settled in shares of our common stock and thus reduce the common stock available for future share-based awards under the 2008 Plan by the amount vested, multiplied by the applicable factor under the plan.

As of September 30, 2013, we estimate that compensation expense of approximately $8.0 million will be recognized over the next four years for all unvested share-based awards that have been granted to participants, including stock options, shares of restricted stock and restricted stock units to be settled in shares of stock but excluding restricted stock units to be settled in cash.

Stock Options. The exercise price of stock options granted under each of the plans is equal to the fair market value of our common stock on the date of grant. Employee stock options generally become exercisable 25% per year over a four-year service period beginning on the date of grant and expire ten years from the date of grant. Non-employee directors’ stock options expire ten years from the date of grant and generally become exercisable as follows: one-third on the grant date, one-third on the first anniversary of the grant date, and one-third on the second anniversary of the grant date, or, one-fourth on the grant date and one-fourth for each of the first through third anniversaries of the grant date. Both employee stock options and non-employee director stock options are subject to possible earlier vesting and termination in certain circumstances. Generally, if a plan participant terminates his or her employment for any reason other than by death or disability during the vesting period, he or she forfeits the right to unvested stock option awards. Grants of stock options are generally only subject to the service conditions discussed previously.

Stock option activity during the year to date ended September 30, 2013 under all of our plans was as follows (options in thousands):

	Options			Weighted Average Exercise Price
Outstanding as of December 31, 2012		2,592		$	25.96
Granted		1,934			2.58
Exercised		—			—
Forfeited		(244	)		4.98
Cancelled		(352	)		30.87
Outstanding as of September 30, 2013		3,930		$	15.31
Exercisable as of September 30, 2013		2,110		$	24.78

Restricted Stock and Restricted Stock Units to be Settled in Stock. Restricted stock and restricted stock units to be settled in shares of stock generally become fully vested either three years after the date of grant or 25% per year over a four-year service period beginning on the date of grant. Generally, if a plan participant terminates his or her employment for any reason other than by death or disability during the vesting period, he or she forfeits the right to the unvested restricted stock and restricted stock units. The vesting of restricted stock and restricted stock units is subject to possible acceleration in certain circumstances. Certain restricted stock awarded to plan participants referred to as “performance-based restricted stock” are subject to performance conditions that, even if the requisite service period is met, may reduce the number of shares or units of restricted stock that vest at the end of the requisite service period or result in all shares or units being forfeited.

The following table summarizes information with respect to all outstanding restricted stock and restricted stock units to be settled in shares of stock under our plans during the year to date ended September 30, 2013 (shares and units in thousands):

	Restricted Stock to be Settled in Shares of Stock
	Shares			Weighted Average Grant-Date Fair Value Per Share		Units			Weighted Average Grant-Date Fair Value Per Unit		Total
Outstanding as of December 31, 2012		854		$	24.74		1,144		$	8.27		1,998
Granted		—			—		43			2.72		43
Vested		(189	)		23.09		(306	)		8.62		(495	)
Forfeited		(399	)		27.21		(257	)		7.75		(656	)
Outstanding as of September 30, 2013		266		$	22.41		624		$	7.93		890

2013 Annual Grants. During the first quarter of 2013, as part of our annual long term incentive grants to employees, we issued restricted stock units to be settled in cash and cash-based performance unit awards in addition to stock option grants. The cash-settled restricted stock units are recorded as liabilities as the expense is recognized. Cash-settled restricted stock units are settled with a cash payment for each unit vested equal to the closing price on the vesting date. Cash-settled restricted stock units are not included in common shares reserved for issuance or available for issuance under the 2008 Plan. For cash-settled restricted stock units granted in 2013, vesting is primarily 25% per year over the four year period beginning on the grant date.

The following table summarizes information with respect to all cash-settled restricted stock units during the year to date ended September 30, 2013 (units in thousands).

	Restricted Stock Units to be Settled in Cash
Outstanding as of December 31, 2012		—
Granted		2,938
Vested		—
Forfeited		(448	)
Outstanding as of September 30, 2013		2,490

Upon vesting, based on the conditions set forth in the award agreements, these units will be settled in cash. We valued these units in accordance with the guidance set forth by FASB ASC Topic 718 – Compensation-Stock as of September 30, 2013 based upon our stock price as of September 30, 2013. The fair value for our outstanding cash settled restricted stock units was $6.8 million as of September 30, 2013. The liability related to these outstanding units of $1.2 million was based on the number of days lapsed during the service period as of September 30, 2013; of which $0.5 million was recorded during the quarter ended September 30, 2013.

The performance unit awards granted during 2013 are long-term incentive, cash-based awards. Payment of these awards is based upon a calculation of Total Shareholder Return (“TSR”) of CEC as compared to TSR across a specified peer group of our competitors over a three-year performance period ending primarily on December 31, 2015. These awards are recorded as liabilities and fair value for these awards is determined at each period end date with changes in fair value recorded in our statement of loss and comprehensive loss in the current period. The fair value of outstanding performance unit awards as of September 30, 2013 was $2.5 million. The liability for the outstanding performance unit awards of $0.3 million was based on the number of days lapsed during the service period as of September 30, 2013; of which $0.1 million was recorded during the quarter ended September 30, 2013.

Stock Appreciation Rights. Stock Appreciation Rights (SAR) allow the recipient to receive stock or cash equal in value to the difference between the exercise price of the SAR and fair market value of our stock on the date of exercise. In the second quarter of 2013, and for the first time since inception of any of our plans, we granted approximately 0.2 million SARs to be settled in cash to our Chief Executive Officer with a grant date fair value of $0.2 million. These SARs vest 25% per year over a four year period beginning on the grant date and expire ten years from the date of grant.

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INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2013

Goodwill And Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS

7. INTANGIBLE ASSETS

During the third quarter of 2013, in conjunction with the quarterly review process, we concluded that certain indicators, including variation from previously projected revenue results, existed to suggest the Le Cordon Bleu trade name was at risk of its carrying value exceeding its respective fair value as of September 30, 2013. A significant amount of judgment is involved in determining if an indicator of impairment has occurred.

We calculate the fair value of each of our trade names in accordance with FASB ASC Topic 820 – Fair Value Measurement, by utilizing the relief from royalty method under the income approach. The determination of estimated fair value for trade names requires significant estimates and assumptions, and as such, these fair value measurements are categorized as Level 3 as defined in FASB ASC Topic 820. The assumptions utilized in determining the fair value of the Le Cordon Bleu trade name included utilizing projected revenue growth rates, a discount rate of approximately 30%, a royalty rate of 4.5%, and a terminal growth rate of approximately 3%. As a result of our assessment, we recorded a $10.7 million trade name impairment charge, resulting in a remaining fair value of $27.3 million for the Le Cordon Bleu trade name. Due to the inherent uncertainty involved in deriving those estimates, actual results could differ from those estimates. We evaluate the merits of each significant assumption used, both individually and in the aggregate, to determine the fair value for reasonableness. Although we believe our projected future operating results and cash flows and related estimates regarding fair value are based on reasonable assumptions, historically projected operating results and cash flows have not always been achieved. However, for sensitivity purposes, and with all other inputs remaining equal, a 0.5% change in the royalty rate assumed in the calculation would result in a change in the fair value of approximately $3.0 million. A 1% change in the discount rate utilized in the calculation would result in a change in the fair value of approximately $0.3 million. We continue to monitor the operating results and revenue projections related to our trade names on a quarterly basis for signs of possible further declines in estimated fair value and trade name impairment.

The current quarter impairment is in addition to the amounts recorded in the second quarter of 2013 of $2.3 million and $1.7 million for the Le Cordon Bleu and Sanford-Brown trade names, respectively. We concluded that no indicators for the remaining goodwill and long-lived assets existed during the third quarter of 2013 that would suggest that it is more likely than not that these assets would be impaired.

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BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

BASIS OF PRESENTATION

2. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included. Operating results for the quarter and year to date ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

The unaudited consolidated financial statements presented herein include the accounts of CEC. All intercompany transactions and balances have been eliminated.

During the third quarter of 2013, we made the decision to commit to a plan to sell our International Schools, which are comprised of the Paris-based INSEEC Group and the International University of Monaco. As a result of the decision to sell our International Schools, the assets and liabilities of the entities to be sold are classified as held for sale within discontinued operations as of September 30, 2013. All prior period financials have been recast to be comparable to the current period.

The results of our International Schools are now reported within discontinued operations due to our decision in the third quarter of 2013 to commit to a plan to sell these assets. We have six remaining reporting segments: CTU, AIU (comprises University Schools); Health Education, Culinary Arts, Design & Technology (comprises Career Schools); and Transitional Schools. The campuses included within the Transitional Schools segment employ a gradual teach-out process, enabling them to continue to operate while current students complete their course of study; they no longer enroll new students. The results of operations for campuses within the Transitional Schools segment will be reported within continuing operations for all periods presented until they complete their teach-out. As campuses within Transitional Schools cease operations, the results of operations for all periods presented will be reflected within discontinued operations. All prior period results have been recast to reflect our reporting segments on a comparable basis.

As of April 1, 2013, we completed the sale of our AIU campus in London, England. AIU London is considered to be part of the AIU asset group and as such the sale has been reported within continuing operations in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 205 – Presentation of Financial Statements. We received no consideration for the sale of AIU London resulting in a fair market value of zero and recorded a loss on sale of $7.0 million for the year to date ended September 30, 2013. This loss is reported within other (expense) income on our unaudited consolidated statements of loss and comprehensive loss. The terms of the sales agreement provided that we make payments to the buyer in consideration of negative working capital and obligate us to make payments to offset future rent payments made by the buyer related to leases assigned to the buyer; accordingly, these amounts were included in the loss calculation. Also included in the loss on the sale was approximately $3.3 million of expense related to the cumulative translation loss resulting from the effects of foreign currency on AIU London’s balance sheet as of the date of sale. This loss had previously been recorded within accumulated other comprehensive loss as a component of stockholders’ equity.

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Share-Based Compensation - Summary of Stock Option Activity (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Outstanding as of December 31, 2012, Options	2,592
Granted, Options	1,934
Exercised, Options
Forfeited, Options	(244)
Cancelled, Options	(352)
Outstanding as of September 30, 2013, Options	3,930
Exercisable as of September 30, 2013, Options	2,110
Outstanding as of December 31, 2012, Weighted Average Exercise Price	$ 25.96
Granted, Weighted Average Exercise Price	$ 2.58
Exercised, Weighted Average Exercise Price
Forfeited, Weighted Average Exercise Price	$ 4.98
Cancelled, Weighted Average Exercise Price	$ 30.87
Outstanding as of September 30, 2013, Weighted Average Exercise Price	$ 15.31
Exercisable as of September 30, 2013, Weighted Average Exercise Price	$ 24.78

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Restructuring Charges - Accrual for Severance and Related Costs (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Restructuring And Related Activities [Abstract]
Balance as of December 31, 2012	$ 10,234
Severance & related charges	4,592
Payments	(7,339)
Non-cash adjustments	(775)
Balance as of September 30, 2013	$ 6,712

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Discontinued Operations - Components of Assets and Liabilities Held for Sale (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Assets:
Cash and cash equivalents	$ 131,817	$ 127,679
Receivables, net	24,768	15,604
Property and equipment, net	32,599	29,326
Goodwill	46,817	45,669
Other intangible assets	5,693	5,664
Other assets, net	8,674	9,072
Total assets held for sale	250,368	233,014
Liabilities:
Capital lease obligations		211
Accounts payable and accrued expenses	23,395	23,661
Deferred revenue	57,453	42,090
Other liabilities	2,170	2,152
Total liabilities held for sale	$ 83,018	$ 68,114

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2013

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

14. SUBSEQUENT EVENTS

During October 2013, we announced the teach out of five additional campuses, including three campuses within Health Education and two campuses within Design & Technology. We anticipate recording charges for these campuses of approximately $4.0 million related to asset impairment charges and severance and related costs during the fourth quarter of 2013. The results of operations for these five campuses and SBI White Plains, whose teach out was announced during the third quarter of 2013, will be reported within our Transitional Schools segment as of December 31, 2013.

On October 22, 2013, the Company and one of its subsidiaries entered into a Securities Purchase Agreement with Insignis, a company controlled by funds managed by Apax Partners, pursuant to which the Company will sell and transfer control of its Paris-based INSEEC Group and the International University of Monaco. Through movement of cash from our international operations prior to the closure of the transaction, along with payment expected to be received at closing, we anticipate that our domestic cash position will increase by approximately $290.0 million. The closing of the transaction is subject to customary closing conditions, including the receipt of anti-trust regulatory approvals in France, and the Purchase Agreement provides that closing is to occur no later than December 27, 2013. The Company expects to record a gain on sale related to this pending transaction of approximately $120.0 million – $130.0 million during the fourth quarter of 2013.

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INCOME TAXES

9 Months Ended

Sep. 30, 2013

Income Tax Disclosure [Abstract]

INCOME TAXES

10. INCOME TAXES

The determination of the annual effective tax rate is based upon a number of significant estimates and judgments, including the estimated annual pretax income (loss) in each tax jurisdiction in which we operate and the ongoing development of tax planning strategies during the year. In addition, our provision for (benefit from) income taxes can be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, as well as other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions.

The following is a summary of our income tax benefits and effective tax rates from continuing operations for the quarters and years to date ended September 30, 2013 and 2012 (dollars in thousands):

	For the Quarter Ended September 30,						For the Year to Date Ended September 30,
	2013			2012			2013			2012
Pretax loss	$	(68,765	)	$	(40,072	)	$	(166,269	)	$	(107,407	)
Benefit from income taxes	$	(25,333	)	$	(13,925	)	$	(70,145	)	$	(27,959	)
Effective rate		-36.8	%		-34.7	%		-42.2	%		-26.0	%

The increase in the effective rate for the quarter ended September 30, 2013 as compared to the prior year quarter was primarily due to earnings mix changes for our ground-based institutions versus our online institutions. The increase in the effective rate for the year to date ended September 30, 2013 as compared to the prior year was primarily due to the write-off of nondeductible goodwill in the prior year. The year to date rate was impacted by a $8.6 million favorable tax adjustment, which is comprised of $11.2 million related to the resolution of various state tax audits and exposures offset by $2.6 million of tax benefits recaptured due to the sale of AIU London. The effect of these discrete items was to increase the effective rate benefit by 5.2%. In addition, the cumulative effect of state and foreign valuation losses decreased the quarter’s effective rate benefit by 1.0%.

We estimate that it is reasonably possible that the liability for unrecognized tax benefits for a variety of uncertain tax positions will decrease by up to $0.9 million in the next twelve months as a result of the completion of various tax audits currently in process and the expiration of the statute of limitations in several jurisdictions. The income tax rate for the quarter and year to date ended September 30, 2013 does not take into account the possible reduction of the liability for unrecognized tax benefits. The impact of a reduction to the liability will be treated as a discrete item in the period the reduction occurs. We recognize interest and penalties related to unrecognized tax benefits in tax expense. As of September 30, 2013, we had accrued $3.1 million as an estimate for reasonably possible interest and accrued penalties.

Our tax returns are routinely examined by federal, state and foreign tax authorities and these audits are at various stages of completion at any given time. The Internal Revenue Service completed its examination of our U.S. income tax returns through our tax year ended December 31, 2007.

See Note 4 “Discontinued Operations” of the notes to our unaudited consolidated financial statements for income tax expense disclosures related to the pending sale of our International Schools.

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FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Cash and Cash Equivalents and Investments from Continuing Operations

Cash and cash equivalents from our continuing operations consist of the following as of September 30, 2013 and December 31, 2012 (dollars in thousands):

	September 30, 2013		December 31, 2012
Cash	$	19,062	$	112,759
Money market funds		11,862		121
Cash and cash equivalents, unrestricted		30,924		112,880
Restricted cash		12,564		97,878
Total cash and cash equivalents	$	43,488	$	210,758

Restricted Cash Balances

Restricted cash balances as of September 30, 2013 and December 31, 2012 are comprised of (dollars in thousands):

	September 30, 2013		December 31, 2012
Cash collateral for amounts under:
Credit Agreement	$	—	$	88,000
Letters of credit		12,564		7,376
Funds restricted for legal matter		—		2,502
Total restricted cash	$	12,564	$	97,878

Investments from Continuing Operations

Investments from our continuing operations consist of the following as of September 30, 2013 and December 31, 2012 (dollars in thousands):

	September 30, 2013
			Gross Unrealized
	Cost		Gain		(Loss)			Fair Value
Short-term investments (available for sale):
U.S. Treasury bills	$	52,202	$	8	$	—		$	52,210
Long-term investments (available for sale):
Municipal bond		7,850		—		(468	)		7,382
Total investments (available for sale)	$	60,052	$	8	$	(468	)	$	59,592
	December 31, 2012
			Gross Unrealized
	Cost		Gain		(Loss)			Fair Value
Short-term investments (available for sale):
U.S. Treasury bills	$	63,879	$	4	$	(7	)	$	63,876
Long-term investments (available for sale):
Municipal bond		7,850		—		(468	)		7,382
Total investments (available for sale)	$	71,729	$	4	$	(475	)	$	71,258

Investments Measured at Fair Value on Recurring Basis

Investments measured at fair value on a recurring basis subject to the disclosure requirements of FASB ASC Topic 820 at September 30, 2013 and December 31, 2012 were as follows (dollars in thousands):

	As of September 30, 2013
	Level 1		Level 2		Level 3		Total
U.S. Treasury bills	$	52,210	$	—	$	—	$	52,210
Municipal bond		—		—		7,382		7,382
Totals	$	52,210	$	—	$	7,382	$	59,592
	As of December 31, 2012
	Level 1		Level 2		Level 3		Total
U.S. Treasury bills	$	63,876	$	—	$	—	$	63,876
Municipal bond		—		—		7,382		7,382
Totals	$	63,876	$	—	$	7,382	$	71,258

Assets Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs (Level 3)

The following table presents a rollforward of our assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as defined in FASB ASC Topic 820 for the year to date ended September 30, 2013 (dollars in thousands):

Balance at December 31, 2012	$	7,382
Unrealized gain (loss)		—
Balance at September 30, 2013	$	7,382

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FINANCIAL INSTRUMENTS (Policies)

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

FASB ASC Topic 820 – Fair Value Measurements establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2013	Oct. 31, 2013
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3
Trading Symbol	CECO
Entity Registrant Name	CAREER EDUCATION CORP
Entity Central Index Key	0001046568
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		67,153,597

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DISCONTINUED OPERATIONS (Tables)

9 Months Ended

Sep. 30, 2013

Discontinued Operations And Disposal Groups [Abstract]

Summary Results of Operations for Discontinued Operations

The summary of unaudited results of operations for our discontinued operations for the quarters and years to date ended September 30, 2013 and 2012 were as follows (dollars in thousands):

	For the Quarter Ended September 30,						For the Year to Date Ended September 30,
	2013			2012			2013			2012
Revenue	$	20,086		$	16,602		$	95,899		$	88,099
Pretax loss	$	(7,936	)	$	(10,541	)	$	(2,875	)	$	(5,467	)
Income tax provision (benefit) (1)		35,696			(3,542	)		34,658			(3,611	)
Loss from discontinued operations, net of tax	$	(43,632	)	$	(6,999	)	$	(37,533	)	$	(1,856	)

(1) During the third quarter of 2013, we made the decision to commit to a plan to sell our International Schools. Previously, we considered our investment in foreign subsidiaries to be permanent in duration. The decision to sell our foreign subsidiaries triggered the requirement under ASC 740 – Income Taxes to record the tax effect of the difference in basis for financial reporting purposes versus tax reporting. Accordingly, we recorded $39.9 million of income tax expense during the quarter ended September 30, 2013 on the excess basis. This expense was recorded within discontinued operations.

Assets and Liabilities of Discontinued Operations on Consolidated Balance Sheets

Assets and liabilities of discontinued operations on our unaudited consolidated balance sheets as of September 30, 2013 and December 31, 2012 include the following (dollars in thousands):

	September 30, 2013		December 31, 2012
Assets:
Current assets:
Cash and cash equivalents	$	—	$	63
Receivables, net		232		571
Other current assets		50		247
Deferred income tax assets, net		3,447		3,447
Assets held for sale		250,368		149,347
Total current assets		254,097		153,675
Non-current assets:
Property and equipment, net		5		276
Deferred income tax assets		17,446		17,446
Other assets, net		1,263		1,604
Assets held for sale		—		83,667
Total assets of discontinued operations	$	272,811	$	256,668
Liabilities:
Current liabilities:
Accounts payable	$	239	$	32
Accrued expenses		143		710
Deferred tuition revenue		—		142
Remaining lease obligations		12,575		9,174
Liabilities held for sale		83,018		65,962
Total current liabilities		95,975		76,020
Non-current liabilities:
Remaining lease obligations		22,354		33,103
Other		201		223
Liabilities held for sale		—		2,152
Total liabilities of discontinued operations	$	118,530	$	111,498

Components of Assets and Liabilities Held for Sale

The major components of assets and liabilities held for sale presented above were (dollars in thousands):

	September 30, 2013		December 31, 2012
Assets:
Cash and cash equivalents	$	131,817	$	127,679
Receivables, net		24,768		15,604
Property and equipment, net (1)		32,599		29,326
Goodwill (1)		46,817		45,669
Other intangible assets (1)		5,693		5,664
Other assets, net (1)		8,674		9,072
Total assets held for sale	$	250,368	$	233,014
Liabilities:
Capital lease obligations	$	—	$	211
Accounts payable and accrued expenses		23,395		23,661
Deferred revenue		57,453		42,090
Other liabilities (2)		2,170		2,152
Total liabilities held for sale	$	83,018	$	68,114

(1) Property and equipment, net, goodwill, other intangible assets and a portion of other assets, net are classified within non-current assets held for sale as of December 31, 2012.

(2) Other liabilities are classified within non-current liabilities held for sale as of December 31, 2012.

Changes in Future Remaining Lease Obligations Discontinued Operations

Changes in our future remaining lease obligations, which are reflected within current and non-current liabilities of discontinued operations on our unaudited consolidated balance sheets, for the quarters and years to date ended September 30, 2013 and 2012, were as follows (dollars in thousands):

	Balance, Beginning of Period		Charges Incurred (1)		Net Cash Payments			Other (2)			Balance, End of Period
For the quarter ended September 30, 2013	$	37,660	$	214	$	(2,945	)	$	—		$	34,929
For the quarter ended September 30, 2012	$	41,212	$	2,531	$	(2,511	)	$	—		$	41,232
For the year to date ended September 30, 2013	$	42,277	$	1,060	$	(8,357	)	$	(51	)	$	34,929
For the year to date ended September 30, 2012	$	45,961	$	3,270	$	(7,999	)	$	—		$	41,232

(1) Includes charges for newly vacated spaces and subsequent adjustments for accretion, revised estimates, and variances between estimated and actual charges, net of any reversals for terminated lease obligations.

(2) Includes existing prepaid rent and deferred rent liability balances for newly vacated spaces that are netted with the losses incurred in the period recorded.