Discontinued Operations

6 Months Ended

Jun. 30, 2015

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

5. DISCONTINUED OPERATIONS

As of June 30, 2015, the results of operations for campuses that have ceased operations prior to 2015 and our LCB campuses that are held for sale, are presented within discontinued operations. Prior to January 1, 2015, our Transitional Group campuses met the criteria for discontinued operations upon completion of their teach-out. Commencing January 1, 2015, in accordance with new guidance under ASC Topic 360, only campuses that meet the criteria of a strategic shift upon disposal will be classified within discontinued operations, among other criteria. During the second quarter of 2015, we did not have any campuses that met the criteria to be considered as a discontinued operation under the new guidance. Prior periods have not been recast for this change in guidance.

Results of Discontinued Operations

The summary of unaudited results of operations for our discontinued operations for the quarters and years to date ended June 30, 2015 and 2014 were as follows (dollars in thousands):

	For the Quarter Ended June 30, (1)						For the Year to Date Ended June 30, (1)
	2015			2014			2015			2014
Revenue	$	42,019		$	44,195		$	86,763		$	89,420
Operating expenses:
Educational services and facilities		19,531			29,519			39,404			62,166
General and administrative		24,014			35,083			49,074			78,991
Depreciation and amortization		74			5,025			1			10,511
Asset impairment (2)		9,687			7,451			9,687			7,444
Total operating expenses		53,306			77,078			98,166			159,112
Loss before income tax	$	(11,252	)	$	(33,046	)	$	(11,354	)	$	(69,527	)
Income tax expense (3)		—			—			—			—
Loss from discontinued operations, net of tax	$	(11,252	)	$	(33,046	)	$	(11,354	)	$	(69,527	)
Net loss per diluted share	$	(0.17	)	$	(0.49	)	$	(0.16	)	$	(1.04	)
Capital expenditures	$	80		$	419		$	319		$	604

(1) Includes the results of operations for our LCB campuses that are held for sale, which met the criteria to be considered discontinued operations under ASC Topic 360, in addition to our Transitional Group campuses that completed their teach-out prior to 2015.

(2) Asset impairment charges for the current year quarter relate to impairment recorded for our LCB campuses which are held for sale as a result of our fair value analysis.

(3) Due to the valuation allowance against our net deferred taxes, there is no income tax benefit reported for the quarters and years to date ended June 30, 2015 and 2014.

Assets and Liabilities of Discontinued Operations

Assets and liabilities of discontinued operations on our condensed consolidated balance sheets for campuses that have ceased operations or were sold as of June 30, 2015 and December 31, 2014 include the following (dollars in thousands):

	June 30, 2015		December 31, 2014
Assets:
Current assets:
Receivables, net	$	280	$	473
Total current assets		280		473
Non-current assets:
Other assets, net		853		975
Total assets of discontinued operations (1)	$	1,133	$	1,448
Liabilities:
Current liabilities:
Accounts payable and accrued expenses	$	170	$	579
Remaining lease obligations		13,173		14,927
Total current liabilities		13,343		15,506
Non-current liabilities:
Remaining lease obligations		14,820		22,689
Other		164		170
Total liabilities of discontinued operations (1)	$	28,327	$	38,365

(1) Excludes assets and liabilities for our LCB campuses which are presented within assets and liabilities held for sale on our condensed consolidated balance sheets as of June 30, 2015 and December 31, 2014. See Note 6 “Assets Held for Sale” for further details.

Remaining Lease Obligations

A number of the campuses that ceased operations prior to January 1, 2015 or vacated real estate properties for our LCB campuses held for sale, have remaining lease obligations that expire over time with the latest expiration in 2020. 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 and within liabilities held for sale on our unaudited condensed consolidated balance sheets, for the quarters and years to date ended June 30, 2015 and 2014 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 June 30, 2015	$	33,441	$	(215	)	$	(4,214	)	$	576	$	29,588
For the quarter ended June 30, 2014	$	50,745	$	6,100		$	(6,026	)	$	1,778	$	52,597
For the year to date ended June 30, 2015	$	39,869	$	(701	)	$	(10,156	)	$	576	$	29,588
For the year to date ended June 30, 2014	$	46,755	$	13,419		$	(12,790	)	$	5,213	$	52,597

(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.