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 JUNE 30, 2016

OR

o 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  o

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  o

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

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

Number of shares of registrant’s common stock, par value $0.01, outstanding as of July 29, 2016: 68,458,130

CAREER EDUCATION CORPORATION

FORM 10-Q

TABLE OF CONTENTS

		Page
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets	1
	Unaudited Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)	2
	Unaudited Condensed Consolidated Statements of Cash Flows	3
	Notes to Unaudited Condensed Consolidated Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	37
Item 4.	Controls and Procedures	37
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 5.	Other Information	39
Item 6.	Exhibits	39
SIGNATURES		40

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

	June 30,			December 31,
	2016			2015
ASSETS	(unaudited)
CURRENT ASSETS:
Cash and cash equivalents, unrestricted	$	49,663		$	66,919
Restricted cash		1,375			49,821
Restricted short-term investments		9,610			-
Short-term investments		140,812			114,901
Total cash and cash equivalents, restricted cash and short-term investments		201,460			231,641
Student receivables, net of allowance for doubtful accounts of $19,233 and $18,013    as of June 30, 2016 and December 31, 2015, respectively		27,502			31,618
Receivables, other, net		781			5,194
Prepaid expenses		16,160			14,380
Inventories		2,107			3,353
Other current assets		1,537			2,523
Assets of discontinued operations		159			254
Total current assets		249,706			288,963
NON-CURRENT ASSETS:
Property and equipment, net		48,574			58,249
Goodwill		87,356			87,356
Intangible assets, net		8,900			9,300
Student receivables, net of allowance for doubtful accounts of $1,775    and $2,216 as of June 30, 2016 and December 31, 2015, respectively		3,333			3,958
Deferred income tax assets, net		130,188			137,716
Other assets		16,043			16,562
Assets of discontinued operations		8,694			8,811
TOTAL ASSETS	$	552,794		$	610,915
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings	$	-		$	38,000
Accounts payable		13,831			25,906
Accrued expenses:
Payroll and related benefits		32,120			38,789
Advertising and marketing costs		10,325			11,788
Income taxes		1,600			1,061
Other		24,701			24,082
Deferred tuition revenue		37,398			40,112
Liabilities of discontinued operations		9,376			13,067
Total current liabilities		129,351			192,805
NON-CURRENT LIABILITIES:
Deferred rent obligations		39,152			45,927
Other liabilities		23,192			25,197
Liabilities of discontinued operations		6,940			9,376
Total non-current liabilities		69,284			80,500
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; 83,431,251    and 82,996,585 shares issued, 68,418,122 and 68,098,654 shares    outstanding as of June 30, 2016 and December 31, 2015, respectively		834			830
Additional paid-in capital		612,449			610,784
Accumulated other comprehensive loss		(330	)		(880	)
Accumulated deficit		(42,668	)		(57,518	)
Cost of 15,013,129 and 14,897,931 shares in treasury as of June 30, 2016    and December 31, 2015, respectively		(216,126	)		(215,606	)
Total stockholders' equity		354,159			337,610
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	552,794		$	610,915

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

1

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE   INCOME (LOSS)

(In thousands, except per share amounts)

	For the Quarter Ended June 30,						For the Year to Date Ended June 30,
	2016			2015			2016			2015
REVENUE:
Tuition and registration fees	$	181,432		$	215,747		$	379,217		$	441,438
Other		1,194			1,081			2,295			2,404
Total revenue		182,626			216,828			381,512			443,842
OPERATING EXPENSES:
Educational services and facilities		58,062			73,064			119,600			147,958
General and administrative		102,072			145,171			225,635			308,844
Depreciation and amortization		5,202			7,113			11,771			13,899
Asset impairment		-			11,372			237			17,391
Total operating expenses		165,336			236,720			357,243			488,092
Operating income (loss)		17,290			(19,892	)		24,269			(44,250	)
OTHER INCOME (EXPENSE):
Interest income		301			224			566			384
Interest expense		(116	)		(170	)		(352	)		(332	)
Loss on sale of business		-			(917	)		-			(917	)
Miscellaneous (expense) income		(231	)		5			(14	)		(375	)
Total other (expense) income		(46	)		(858	)		200			(1,240	)
PRETAX INCOME (LOSS)		17,244			(20,750	)		24,469			(45,490	)
Provision for (benefit from) income taxes		4,620			(747	)		8,755			(958	)
INCOME (LOSS) FROM CONTINUING OPERATIONS		12,624			(20,003	)		15,714			(44,532	)
LOSS FROM DISCONTINUED OPERATIONS, net of tax		(785	)		(720	)		(864	)		(1,072	)
NET INCOME (LOSS)		11,839			(20,723	)		14,850			(45,604	)
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
Foreign currency translation adjustments		(97	)		-			96			-
Unrealized gains (losses) on investments		131			(43	)		454			152
Total other comprehensive income (loss)		34			(43	)		550			152
COMPREHENSIVE INCOME (LOSS)	$	11,873		$	(20,766	)	$	15,400		$	(45,452	)
NET INCOME (LOSS) PER SHARE - BASIC and DILUTED:
Income (loss) from continuing operations	$	0.18		$	(0.29	)	$	0.23		$	(0.66	)
Loss from discontinued operations		(0.01	)		(0.02	)		(0.01	)		(0.01	)
Net income (loss) per share	$	0.17		$	(0.31	)	$	0.22		$	(0.67	)
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		68,368			67,893			68,261			67,714
Diluted		69,015			67,893			68,627			67,714

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

2

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	For the Year to Date Ended June 30,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	14,850		$	(45,604	)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Asset impairment		237			17,391
Depreciation and amortization expense		11,771			13,899
Bad debt expense		14,769			9,138
Compensation expense related to share-based awards		1,391			1,470
Loss on sale of businesses, net		-			917
(Gain) loss on disposition of property and equipment		(238	)		3
Changes in operating assets and liabilities		(36,733	)		(23,809	)
Net cash provided by (used in) operating activities		6,047			(26,595	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale investments		(93,689	)		(33,707	)
Sales of available-for-sale investments		58,330			36,051
Purchases of property and equipment		(1,970	)		(4,994	)
Proceeds on the sale of assets		3,400			-
Payments of cash upon sale of businesses		(62	)		(2,018	)
Net cash used in investing activities		(33,991	)		(4,668	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock		278			939
Payment on borrowings		(38,000	)		(10,000	)
Change in restricted cash		48,446			9,500
Net cash provided by financing activities		10,724			439
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE    CHANGES ON CASH AND CASH EQUIVALENTS:		(36	)		258
NET DECREASE IN CASH AND CASH EQUIVALENTS		(17,256	)		(30,566	)
CASH AND CASH EQUIVALENTS, beginning of the period		66,919			93,832
CASH AND CASH EQUIVALENTS, end of the period	$	49,663		$	63,266

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

3

CAREER EDUCATION CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF THE COMPANY

Career Education’s academic institutions offer a quality education to a diverse student population in a variety of disciplines through online, campus-based and hybrid learning programs. Our two universities – American InterContinental University (“AIU”) and Colorado Technical University (“CTU”) – provide degree programs through the master’s or doctoral level as well as associate and bachelor’s levels. Both universities predominantly serve students online with career-focused degree programs that are designed to meet the educational demands of today’s busy adults. AIU and CTU continue to show innovation in higher education, advancing new personalized learning technologies like their intellipath™ adaptive learning platform that allow students to more efficiently pursue earning a degree by receiving course credit for knowledge they can already demonstrate. Career Education is committed to providing quality education that closes the gap between learners who seek to advance their careers and employers needing a qualified workforce.

Additionally, CEC is in the process of teaching out campuses within our Transitional Group and Culinary Arts segments. Students enrolled at these campuses are afforded the reasonable opportunity to complete their program of study prior to the final teach-out date.

A listing of individual campus locations and web links to Career Education’s colleges, institutions and universities can be found at www.careered.com.

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 “college,” “institution” and “university” refer to an individual, branded, for-profit 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 colleges, institutions or universities.

2. BASIS OF PRESENTATION

The accompanying unaudited condensed 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 June 30, 2016 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2016.

The unaudited condensed consolidated financial statements presented herein include the accounts of Career Education Corporation and our wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated.

Our reporting segments are determined in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280 – Segment Reporting and are based upon how the Company analyzes performance and make decisions. We organize our business across four reporting segments: CTU, AIU (comprises University Group); Culinary Arts and Transitional Group (comprises Career Schools Group). Campuses included in our Transitional Group and Culinary Arts segments are currently being taught out and no longer enroll new students. These campuses employ a gradual teach-out process, enabling them to continue to operate while current students have a reasonable opportunity to complete their course of study. All prior periods have been recast to reflect our segments on a comparable basis.  

During the second quarter of 2016, the Company completed the teach-out of three Transitional Group campuses: Collins College, International Academy of Design & Technology Sacramento and Sanford-Brown Institute New York, which continue to be reported within the Transitional Group as of June 30, 2016 in accordance with ASC Topic 360 – Property, Plant and Equipment, which limits discontinued operations reporting.

3. RECENT ACCOUNTING PRONOUNCEMENTS

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this ASU require a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected and credit losses relating to available-for-sale debt securities to be recorded through an allowance for credit losses. For all public business entities, ASU 2016-13 is effective for annual periods and interim periods beginning after December 15, 2019; early adoption is permitted for all organizations for annual periods and interim periods beginning after December 15, 2018. We are currently evaluating this guidance and believe the adoption will not significantly impact the presentation of our financial condition, results of operations and disclosures.

4

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This ASU simplified several aspects of accounting for share-based payment award transactions including income tax consequences, classification of excess tax benefits on the statement of cash flows, classification of employee taxes paid on the statement of cash flows when the employer withholds shares, forfeiture policy election and payroll minimum statutory tax withholding. For all public business entities, ASU 2016-09 is effective for annual periods and interim periods beginning after December 15, 2016. We are currently evaluating this guidance and believe the adoption will significantly impact the presentation of our financial condition, results of operations and disclosures.

In March 2016, the FASB issued ASU No. 2016-07, Investments – Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting. The amendments in this ASU eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investments, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method was in effect during all previous periods. The amendments require an equity method investor to add the cost of acquisition and requires available-for-sale equity securities that qualify for the equity method of accounting to recognize earnings as unrealized holding gain or loss in accumulated other comprehensive income. For all entities, ASU 2016-07 is effective for annual periods and interim periods beginning after December 15, 2016. We are currently evaluating this guidance and do not believe the adoption will significantly impact the presentation of our financial condition, results of operations and disclosures.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. The core principle of Topic 842 is that lessees should recognize the assets and liabilities that arise from leases. All leases create an asset and liability for the lessee in accordance with FASB Concept Statements No. 6 Elements of Financial Statements, and, therefore, recognition of those lease assets and liabilities represents an improvement over previous GAAP. The accounting applied for lessors largely remained unchanged. The amendment in this ASU requires recognition of a lease liability and a right to use asset at the commencement date. For all public business entities, ASU 2016-02 is effective for annual periods and interim periods beginning after December 15, 2018; early adoption is permitted. We are currently evaluating this guidance and believe the adoption will significantly impact the presentation of our financial condition, results of operations and disclosures.  

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. The amendments in this ASU require an entity to measure in-scope inventory at the lower of cost and net realizable value, further clarifying consideration for net realizable value as estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation. This ASU more closely aligns the measurement of inventory in GAAP with the measurement of inventory in International Financial Reporting Standards (“IFRS”). For public business entities, ASU 2015-11 is effective for annual periods and interim periods beginning after December 15, 2016. The amendment in this ASU is prospectively applied with earlier adoption permitted. We are currently evaluating this guidance and do not believe the adoption will significantly impact the presentation of our financial condition, results of operations and disclosures.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This ASU provides guidance to an organization’s management, intended to define management’s responsibility to evaluate whether there is a substantial doubt about an organization’s ability to continue as a going concern and to provide guidance regarding related footnote disclosure. In connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. For all entities, ASU 2014-15 is effective for annual periods and interim periods within those annual periods beginning after December 15, 2016; early adoption is permitted. We are currently evaluating the impact that the adoption of ASU 2014-15 will have on the presentation of our financial condition, results of operations and disclosures.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 is principles based guidance that can be applied to all contracts with customers, enhancing comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. The core principle of the guidance is that entities should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The guidance details the steps entities should apply to achieve the core principle. Subsequently, FASB issued four additional Updates to the guidance as follows: In August 2015, the FASB issued ASU 2015-14 approving a one-year deferral of the effective date for its new revenue standard for public and nonpublic entities reporting under US GAAP. In March 2016, the FASB issued ASU 2016-08, providing clarity to improve operability and understandability of the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, to add further guidance on identifying performance obligations and the licensing implementation while retaining the related core principles for those areas. In May 2016, the FASB issued ASU 2016-12, amendments to provide clarity on the objective of the collectability criterion, permit an entity to exclude amounts collected from customers for all sales taxes from the transaction price,

5

specify a measurement date for non-cash consideration, provide a practical expedient permitting an entity to reflect the aggregate effect of all modifications, clarify a completed contract during transition and clarify disclosure requirements for retrospectively applied guidance in Topic 606. The standard will be effective for public business entities for annual reporting periods beginning after December 15, 2017 and interim periods therein. Nonpublic entities would be required to adopt the new standard for annual reporting periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019. Additionally, the FASB approved the option to early adopt prior to the original effective date (fiscal years beginning after December 15, 2016). We are currently evaluating the impact that the adoption of ASU 2014-09 will have on the presentation of our financial condition, results of operations and disclosures.

4. DISCONTINUED OPERATIONS

As of June 30, 2016, the results of operations for campuses that have ceased operations prior to 2015 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. Since the January 2015 effective date of the updated guidance within ASC Topic 360, we have not had any campuses that met the criteria to be considered a discontinued operation.  

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, 2016 and 2015 were as follows (dollars in thousands):

	For the Quarter Ended June 30,						For the Year to Date Ended June 30,
	2016			2015			2016			2015
Revenue	$	-		$	(29	)	$	-		$	3
Total operating expenses	$	1,255		$	698		$	1,381		$	1,089
Loss before income tax	$	(1,255	)	$	(720	)	$	(1,381	)	$	(1,072	)
Benefit from income tax		(470	)		-			(517	)		-
Loss from discontinued operations, net of tax	$	(785	)	$	(720	)	$	(864	)	$	(1,072	)
Net loss per share - Basic and Diluted	$	(0.01	)	$	(0.02	)	$	(0.01	)	$	(0.01	)

Assets and Liabilities of Discontinued Operations

Assets and liabilities of discontinued operations on our condensed consolidated balance sheets as of June 30, 2016 and December 31, 2015 include the following (dollars in thousands):

	June 30,		December 31,
	2016		2015
Assets:
Current assets:
Receivables, net	$	159	$	254
Total current assets		159		254
Non-current assets:
Other assets, net		603		720
Deferred income tax assets, net		8,091		8,091
Total assets of discontinued operations	$	8,853	$	9,065
Liabilities:
Current liabilities:
Accounts payable and accrued expenses	$	2	$	528
Remaining lease obligations		9,374		12,539
Total current liabilities		9,376		13,067
Non-current liabilities:
Remaining lease obligations		6,775		9,212
Other		165		164
Total liabilities of discontinued operations	$	16,316	$	22,443

6

Remaining Lease Obligations of Discontinued Operations

A number of the campuses that ceased operations prior to January 1, 2015 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 on our condensed consolidated balance sheets, for the quarters and years to date ended June 30, 2016 and 2015 were as follows (dollars in thousands):

	Balance, Beginning of Period		Charges Incurred (1)			Net Cash Payments			Other		Balance, End of Period
For the quarter ended June 30, 2016	$	17,669	$	743		$	(2,263	)	$	-	$	16,149
For the quarter ended June 30, 2015	$	31,605	$	157		$	(3,769	)	$	-	$	27,993
For the year to date ended June 30, 2016	$	21,751	$	401		$	(6,003	)	$	-	$	16,149
For the year to date ended June 30, 2015	$	37,616	$	(413	)	$	(9,210	)	$	-	$	27,993

(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. 

5. FINANCIAL INSTRUMENTS

Investments consist of the following as of June 30, 2016 and December 31, 2015 (dollars in thousands):

	June 30, 2016
			Gross Unrealized
	Cost		Gain		(Loss)			Fair Value
Short-term investments (available for sale):
Non-governmental debt securities	$	105,475	$	69	$	(33	)	$	105,511
Treasury and federal agencies		35,260		47		(6	)		35,301
Total short-term investments		140,735		116		(39	)		140,812
Restricted short-term investments (available for sale):
Non-governmental debt securities		9,610		-		-			9,610
Long-term investments (available for sale):
Municipal bond		7,850		-		(476	)		7,374
Total investments (available for sale)	$	158,195	$	116	$	(515	)	$	157,796

	December 31, 2015
			Gross Unrealized
	Cost		Gain		(Loss)			Fair Value
Short-term investments (available for sale):
Municipal bonds	$	1,500	$	-	$	(11	)	$	1,489
Non-governmental debt securities		76,999		-		(242	)		76,757
Treasury and federal agencies		36,779		3		(127	)		36,655
Total short-term investments		115,278		3		(380	)		114,901
Long-term investments (available for sale):
Municipal bond		7,850		-		(476	)		7,374
Total investments (available for sale)	$	123,128	$	3	$	(856	)	$	122,275

In the table above, unrealized holding gains (losses) as of June 30, 2016 relate to short-term investments that have been in a continuous unrealized gain (loss) position for less than one year. The table also includes an unrealized holding loss, greater than one year, which relates to our long-term investment in a municipal bond, which is an auction rate security (“ARS”).

Our unrestricted non-governmental debt securities primarily consist of corporate bonds and commercial paper. Our treasury and federal agencies primarily consist of U.S. Treasury bills and federal home loan debt securities. We do not intend to sell our investments in these securities and it is not likely that we will be required to sell these investments before recovery of the amortized cost basis.

7

Our restricted short-term investments are comprised entirely of certificates of deposit, which secure our letters of credit. Prior to the second quarter of 2016, these funds were held as cash by the letter of credit issuer and reported by the Company as restricted cash on our condensed consolidated balance sheets.

Our ARS is comprised of debt obligations issued by states, cities, counties and other governmental entities, which earn federally tax-exempt interest. Our 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 condensed 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 June 30, 2016, we have determined this investment is at risk for impairment due to the nature of the liquidity of the market over the past several years. Cumulative unrealized losses as of June 30, 2016 amount to $ 0.5 million and are reflected within accumulated other comprehensive 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 June 30, 2016, we held investments that are required to be measured at fair value on a recurring basis. These investments (available-for-sale) consist of non-governmental debt securities, treasury and federal agencies and municipal bonds that are publicly traded and our investment in an ARS. Available for sale securities included in Level 1 are valued at quoted prices in active markets for identical assets and liabilities. Available for sale securities included in Level 2 are estimated based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Our investment in an ARS is categorized as Level 3 and fair value is estimated utilizing a discounted cash flow analysis as of June 30, 2016 which considers, among other items, the collateralization underlying the security investment, the credit worthiness of the counterparty, the time of expected future cash flows, and the expectation of the next time the security is expected to have a successful auction. The auction event for our ARS investment has failed for multiple years. The 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 – Fair Value Measurements at June 30, 2016 and December 31, 2015 were as follows (dollars in thousands):

	As of  June 30, 2016
	Level 1		Level 2		Level 3		Total
Municipal bonds	$	-	$	-	$	7,374	$	7,374
Non-governmental debt securities		35,368		79,753		-		115,121
Treasury and federal agencies		-		35,301		-		35,301
Totals	$	35,368	$	115,054	$	7,374	$	157,796
	As of  December 31, 2015
	Level 1		Level 2		Level 3		Total
Municipal bonds	$	-	$	1,489	$	7,374	$	8,863
Non-governmental debt securities		-		76,757		-		76,757
Treasury and federal agencies		-		36,655		-		36,655
Totals	$	-	$	114,901	$	7,374	$	122,275

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 June 30, 2016 (dollars in thousands):

Balance at December 31, 2015	$	7,374
Unrealized gain (loss)		-
Balance at June 30, 2016	$	7,374

8

Equity Method Investment

Our investment in an equity affiliate, which is recorded within other noncurrent assets on our condensed consolidated balance sheets, represents an international investment in a private company. As of June 30, 2016, our investment in an equity affiliate equated to a 30.7%, or $3.5 million, non-controlling interest in CCKF, a Dublin-based educational technology company providing intelligent adaptive systems to power the delivery of individualized and personalized learning.

During the quarters ended June 30, 2016 and 2015, we recorded approximately $0.7 million and less than $0.1 million of loss, respectively, and during the years to date ended June 30, 2016 and June 30, 2015, we recorded approximately $0.8 million and $0.2 million of loss, respectively, related to our proportionate investment in CCKF within miscellaneous income (expense) on our unaudited condensed consolidated statements of income (loss) and comprehensive income (loss).

We make periodic operating maintenance payments for our use of intellipath^TM. The total fees paid to CCKF for the quarters and years to date ended June 30, 2016 and 2015 were as follows (dollars in thousands):

	Maintenance Fee Payments
For the quarter ended June 30, 2016	$	345
For the quarter ended June 30, 2015	$	343
For the year to date ended June 30, 2016	$	687
For the year to date ended June 30, 2015	$	699

Credit Agreement

During the fourth quarter of 2015, the Company; its wholly-owned subsidiary, CEC Educational Services, LLC (“CEC-ES”); and the subsidiary guarantors thereunder entered into a Fourth Amendment to its Amended and Restated Credit Agreement dated as of December 30, 2013 (as amended, the “Credit Agreement”) with BMO Harris Bank N.A., in its capacities as the initial lender and letter of credit issuer thereunder and the administrative agent for the lenders which from time to time may be parties to the Credit Agreement, to among other things, decrease the revolving credit facility to $95.0 million and require pre-approval by the lenders for each credit extension (other than letter of credit extensions) occurring after December 31, 2015. The revolving credit facility under the Credit Agreement is scheduled to mature on December 31, 2018. The loans and letter of credit obligations under the Credit Agreement are required to be secured by 100% cash collateral. As of June 30, 2016, there were no outstanding borrowings under the revolving credit facility.

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 as determined on a student-by-student basis at the end of the reporting period. Student receivables, net are reflected on our condensed consolidated balance sheets as components of both current and non-current assets. We do not accrue interest on past due student receivables; interest is recorded only upon collection.

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 condensed 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.

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, changes in the current economic, legislative or regulatory environments and the ability to complete the federal financial aid process with the student. 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. 

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

9

us to repurchase loans originated by them to our students after a certain period of time. We discontinued providing extended payment plans to students during the first quarter of 2011 and the recourse loan agreements with Sallie Mae and Stillwater ended in March 2008 and April 2007, respectively.

As of June 30, 2016 and December 31, 2015, the amount of non-current student receivables under these programs, net of allowance for doubtful accounts and net of deferred tuition revenue, was $3.3 million and $4.0 million, respectively.

Student Receivables Valuation Allowance

Changes in our current and non-current receivables allowance for the quarters and years to date ended June 30, 2016 and 2015 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 June 30, 2016	$	22,768	$	5,268	$	(7,028	)	$	21,008
For the quarter ended June 30, 2015	$	18,249	$	4,956	$	(4,702	)	$	18,503
For the year to date ended June 30, 2016	$	20,229	$	14,875	$	(14,096	)	$	21,008
For the year to date ended June 30, 2015	$	19,097	$	9,225	$	(9,819	)	$	18,503

(1) Charges to expense include an offset for recoveries of amounts previously written off of $1.6 million and $1.7 million for the quarters ended June 30, 2016 and 2015, respectively, and $3.6 million and $3.7 million for the years to date ended June 30, 2016 and 2015, respectively.

Fair Value Measurements

The carrying amount reported in our condensed 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. RESTRUCTURING CHARGES

During the past several years, 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 and made decisions to teach out a number of campuses, meaning gradually close the campuses through an orderly process. As part of the process to wind down these teach-out campuses, the Company also announced that it will align its corporate overhead to support a more streamlined and focused operating entity. Most notably, we have recorded charges within our Transitional Group and Culinary Arts segments and our corporate functions as we continue to align our overall management structure. Each of our teach-out campuses offer current students the reasonable opportunity to complete their course of study. The majority of these teach-out campuses are expected to cease operations by 2017 with the remainder expected to cease operations in 2018.

The following table details the changes in our accrual for severance and related costs associated with all restructuring events for our continuing operations during the quarters and years to date ended June 30, 2016 and 2015 (dollars in thousands):

	Balance, Beginning of Period		Severance & Related Charges (1) (2)		Payments			Non-cash Adjustments(3)			Balance, End of Period
For the quarter ended June 30, 2016	$	14,353	$	57	$	(2,305	)	$	(815	)	$	11,290
For the quarter ended June 30, 2015	$	2,596	$	12,761	$	(2,293	)	$	(201	)	$	12,863
For the year to date ended June 30, 2016	$	18,985	$	272	$	(7,630	)	$	(337	)	$	11,290
For the year to date ended June 30, 2015	$	2,712	$	13,645	$	(3,064	)	$	(430	)	$	12,863

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

(2) Severance payments will result in future cash expenditures through 2018.

10

(3) 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.

Severance and related expenses for the quarters and years to date ended June 30, 2016 and 2015 by reporting segment is as follows (dollars in thousands):

	For the Quarter Ended June 30,				For the Year to Date Ended June 30,
	2016		2015		2016		2015
CTU	$	-	$	275	$	18	$	288
AIU		-		339		66		339
Total University Group		-		614		84		627
Corporate and Other		57		4,318		153		4,318
Subtotal		57		4,932		237		4,945
Culinary Arts		-		125		5		265
Transitional Group		-		7,704		30		8,435
Total	$	57	$	12,761	$	272	$	13,645

The current portion of the accrual for severance and related charges was $6.9 million as of June 30, 2016, which is recorded within current accrued expenses – payroll and related benefits; the long-term portion of $4.4 million is recorded within other non-current liabilities on our condensed consolidated balance sheet. In addition, as of June 30, 2016, we have accrued approximately $1.5 million related to retention bonuses that have been offered to certain employees. These amounts will be recorded ratably over the period the employees are retained.

In addition to the severance charges detailed above, a number of the teach-out campuses will have remaining lease obligations following the eventual campus closure, with the longest lease term being through 2023. The total remaining estimated charge as of June 30, 2016, for all restructuring events reported within continuing operations related to the remaining lease obligation for these leases, once the campus completes the close process, and adjusted for possible lease buyouts and sublease assumptions is approximately $50 million - $60 million. The amount related to each campus will be recorded at each campus closure date based on current estimates and assumptions related to the amount and timing of sublease income. This is in addition to approximately $26.5 million of charges related to remaining obligations that were recorded during 2015 through the second quarter of 2016.

Remaining Lease Obligations of Continuing Operations

         We have recorded lease exit costs associated with the exit of real estate space for certain campuses related to our continuing operations. These costs are recorded within educational services and facilities expense on our unaudited condensed consolidated statements of income (loss) and comprehensive income (loss). The current portion of the liability for these charges is reflected within other accrued expenses under current liabilities and the long-term portion of these charges are included in other liabilities under the non-current liabilities section of our condensed consolidated balance sheets. Changes in our future minimum lease obligations for exited space related to our continuing operations for the quarters and years to date ended June 30, 2016 and 2015 were as follows (dollars in thousands):

	Balance, Beginning of Period		Charges Incurred (1)		Net Cash Payments			Other		Balance, End of Period
For the quarter ended June 30, 2016	$	11,618	$	5,984	$	(2,723	)	$	2,261	$	17,140
For the quarter ended June 30, 2015	$	3,609	$	2,171	$	(1,619	)	$	1,319	$	5,480
For the year to date ended June 30, 2016	$	12,892	$	9,082	$	(8,000	)	$	3,166	$	17,140
For the year to date ended June 30, 2015	$	7,094	$	6,420	$	(9,713	)	$	1,679	$	5,480

_____________

(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.

8. CONTINGENCIES

An accrual for estimated legal fees and settlements of $2.2 million and $2.7 million at June 30, 2016 and December 31, 2015, respectively, is presented within other current liabilities on our condensed 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

11

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 we consider to be 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.

Student Litigation

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. (“WCI”) 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 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. On August 6, 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. The oral argument on the appeal was heard on May 9, 2014 and on January 21, 2016, the appellate court reversed the trial court and held that the claims by the 1,062 individual class members referenced above should be compelled to arbitration. The case has been remanded back to the trial court for further proceedings.

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.

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.

12

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 remained pending against defendants was based on relators’ contention that defendants misled the school’s accreditor, Southern Association of Colleges and Schools, during the accreditation process. On December 16, 2013, we filed a motion for summary judgment on a variety of substantive grounds. On September 29, 2014, the Court granted our motion for summary judgment and entered judgment in our favor. On October 2, 2014, relators filed a notice of appeal. The appeal was stayed pending the United States Supreme Court’s decision in Kellogg Brown & Root Servs., Inc. v. U.S. ex rel. Carter, No. 12-1497. The Supreme Court issued its decision and the case was remanded to the district court. After considering additional arguments regarding whether it has jurisdiction over relators’ remaining claims, on June 8, 2016, the district court issued an order finding that it does not have jurisdiction over the relators’ proof of graduation claim. The Court additionally found that it does not have jurisdiction over the incentive compensation claim as to three of the four relators, but that it does have jurisdiction over that claim with respect to the fourth relator. The Court ordered, and the parties submitted further briefing as to whether and to what extent the Court’s June 8, 2016 order affected its September 29, 2014 order granting summary judgment to defendants on the accreditation claim.

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 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. 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, defendants were served with an amended complaint filed in the U.S. District Court for the Eastern District of Wisconsin. The original complaint was 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 would receive a portion of the federal government’s recovery. An amended complaint was filed by the relator on April 12, 2013 and 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, defendants filed a motion to dismiss the case on a variety of grounds. The Court ruled on that motion, dismissing CEC from the case and dismissing several of the relator’s factual claims. On November 27, 2013, Sanford Brown, LTD., and Ultrasound Technical Services, Inc., the remaining Company defendants, filed a motion to dismiss the case for lack of subject matter jurisdiction due to prior public disclosures of the relator’s alleged claims. On March 17, 2014, the Court granted this motion in part, limiting the timeframe and geographical scope of the relator’s claims. On June 13, 2014, the Court granted the remaining Company defendants’ motion for summary judgment and entered judgment in their favor. On July 9, 2014, relator filed a notice of appeal. On June 8, 2015, the appellate court affirmed the district court. On July 2, 2015, relator filed a petition for rehearing, which was denied on August 4, 2015. On December 2, 2015, relator filed his petition for certiorari to the United States Supreme Court. Defendants filed their opposition to the petition on February 3, 2016. On June 27, 2016, the Supreme Court entered an order granting the petition, vacating the appellate court’s judgment and remanding the case back to the appellate court for further consideration.

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 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. Accordingly, we have not recognized any liability associated with this action.

United States of America, ex rel. Ann Marie Rega v. Career Education Corporation, et al. On May 16, 2014, Relator Ann Marie Rega, a former employee of Sanford-Brown Iselin, filed an action in the U.S. District Court for the District of New Jersey against the Company and almost all of the Company’s individual schools on behalf of herself and the federal government. She alleges claims under the False Claims Act, including that the defendants allegedly provided 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. Relator failed to comply with the statutory requirement that all False Claims Act cases be filed under seal. On June 16, 2014, defendants filed a motion to dismiss the complaint with prejudice as to relator for failure to file her complaint under seal in accordance with the requirements of the False Claims Act.

The Company has been contacted by the Civil Division of the U.S. Department of Justice (“DOJ”) with a request for certain documents and information relating to relator’s claims. The Company is cooperating with the DOJ.  

Because it is in the early stages 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 because the complaint does not seek a specified amount of damages and it is unclear how damages

13

would be calculated, if we were to be found liable. Moreover, the case presents novel legal issues. 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 (“ARSC”) 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, but the petition was denied.

The case was remanded to the district court for further proceedings on the sole question of whether CEC’s termination of the ARSC Plan violated the implied covenant of good faith and fair dealing. The parties completed fact discovery as to the issue of liability. On March 24, 2015, we filed a motion for summary judgment which the Court granted on December 18, 2015. Plaintiff filed his notice of appeal on January 16, 2016.  

Because of the many questions of fact and law that may arise on appeal, 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.

Other Litigation

In addition to the legal proceedings and other matters described above, we are also subject to a variety of other claims, lawsuits and investigations that arise from time to time out of the conduct of our business, including, but not limited to, claims involving prospective students, students or graduates, alleged violations of the Telephone Consumer Protection Act, both individually and on behalf of a putative class, 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 Attorney General of Connecticut is serving as the point of contact for inquiries received from the attorneys general of the following: Arkansas, Arizona, Connecticut, Idaho, Iowa, Kentucky, Missouri, Nebraska, North Carolina, Oregon, Pennsylvania, Washington (January 24, 2014); Illinois (December 9, 2011); Tennessee (February 7, 2014); Hawaii (May 28, 2014 ); New Mexico (May 2014); Maryland (March 16, 2015); and the District of Columbia (June 3, 2015) (these 18 attorneys general are collectively referred to as the “Multi-State AGs”). In addition, the Company has received inquiries from the attorneys general of Florida (November 5, 2010), Massachusetts (September 27, 2012), Colorado (August 27, 2013) and Minnesota (September 18, 2014). The inquiries are civil investigative demands or subpoenas which relate to the investigation by the attorneys general of whether the Company and its schools have complied with certain state consumer protection laws, and generally focus on the Company's practices relating to the recruitment of students, graduate placement statistics, graduate certification and licensing results and student lending activities, among other matters. Depending on the state, the documents and information sought by the attorneys general in connection with their investigations cover time periods as early as 2006 to the present. The Company intends to cooperate with the states involved with a view towards resolving these inquiries as promptly as possible. In this regard, over the past several months the Company has participated in several meetings with representatives of the Multi-State AGs about the Company’s business and to engage in a dialogue towards a resolution of these inquiries.

We cannot predict the scope, duration or outcome of these attorney general investigations. At the conclusion of any 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. In addition, all of the Company’s institutions have been issued provisional program participation agreements that extend through December 31, 2016. Each of our institutions will need to apply for recertification by September 30, 2016 in order to continue its eligibility to participate in Title IV Programs. We cannot predict whether, or to what extent, any of these inquiries or future resolutions of these inquiries might impact our Title IV eligibility. Depending on the circumstances of any resolution of these inquiries, ED may revoke, limit, suspend, delay or deny the institution’s or all of the

14

Company’s institutions’ Title IV eligibility, or impose fines. 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.

In addition to the aforementioned inquiries, from time to time, we receive informal requests from state Attorneys General and other government agencies relating to specific complaints they have received from students or former students which seek information about the student, our programs, and other matters relating to our activities in the relevant state. These requests can be broad and time consuming to respond to, and there is a risk that they could expand and/or lead to a formal inquiry or investigation into our practices in a particular state.

Federal Trade Commission Inquiry

On August 20, 2015, the Company received a request for information pursuant to a Civil Investigative Demand from the U.S. Federal Trade Commission (“FTC”). The request was made pursuant to a November 2013 resolution by the FTC directing an investigation to determine whether unnamed persons, partnerships, corporations, or others have engaged or are engaging in deceptive or unfair acts or practices in or affecting commerce in the advertising, marketing or sale of secondary or postsecondary educational products or services, or educational accreditation products or services. The information request requires the Company to provide documents and information regarding a broad spectrum of the business and practices of its subsidiaries and institutions for the time period of January 1, 2010 to the present. The Company is cooperating with the FTC with a view towards resolving these inquiries as promptly as possible.

Because the FTC inquiry is in the early stages and because of the many questions of fact and law that may arise, we cannot predict the outcome of the inquiry. Based on information available to us at present, we cannot reasonably estimate a range of potential monetary or non-monetary impact this inquiry might have on the Company because it is uncertain what remedies, if any, the FTC might ultimately seek in connection with this inquiry.

SEC Inquiry

          As previously disclosed, on June 21, 2016, the Company received a request for documents and information from the Denver Regional Office of the Securities and Exchange Commission (“SEC”) regarding the Company’s fourth quarter 2014 classification of the Company’s Le Cordon Bleu Culinary Arts campuses as held for sale within discontinued operations, subsequent sales process and CEC’s related public disclosures. The Company is cooperatingwith the SEC’s inquiry. Because the inquiry is in the early stages, we cannot predict its outcomeor estimate the nature or amount of possible remedies, if any, the SEC might ultimately seek in connection with this inquiry.

Regulatory Matters

ED Inquiry and HCM1 Status

In December 2011, the U.S. Department of Education (“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 previous 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 or reporting of placement rates or other disclosures to students or prospective students or finds any other basis in the materials we are providing, ED may revoke, limit, suspend, delay or deny the institution’s or all of the Company’s institutions Title IV eligibility, or impose fines. In addition, all of the Company’s institutions have been issued provisional program participation agreements that extend through December 31, 2016. Each of our institutions will need to apply for recertification by September 30, 2016 in order to continue its eligibility to participate in Title IV Programs. We cannot predict whether, or to what extent, ED’s inquiry might impact this recertification process.

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). If ED finds violations of the Higher Education Act or related regulations, ED may impose monetary or program level sanctions, impose some period of delay in the Company’s receipt of Title IV funds 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

15

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 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 (the “Audit Period”), 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 covering the Audit Period 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 completed these file reviews and provided supporting documentation to ED on April 10, 2013. On April 29, 2016, ED directed CTU to perform these same two file reviews for an additional time period that extended from the end of the Audit Period through June 30, 2011, which CTU has completed and submitted to ED. On April 29, 2016, ED also requested an additional file review related to whether CTU appropriately performed calculations regarding any required return of Title IV Program funds for students that failed to earn passing grades within a term. This additional file review covers the period from July 5, 2009 to June 30, 2011 and is a review of whether students should be deemed to have unofficially withdrawn from the institution based on each student’s last known academically-related activity. CTU is seeking reconsideration of the request for this additional file review. As of June 30, 2016, the Company has a $1.0 million reserve recorded related to this matter. This reserve does not include any amount relating to the additional file review requested by ED on April 29, 2016 because it is uncertain.

9. INCOME TAXES

The determination of the annual effective tax is based upon a number of significant estimates and judgments, including the estimated annual pretax income in each tax jurisdiction in which we operate and the ongoing development of tax planning strategies during the year. In addition, our provision for 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 provision for (benefit from) income taxes and effective tax rate from continuing operations:

	For the Quarter Ended June 30,						For the Year to Date Ended June 30,
	2016			2015			2016			2015
Pretax income (loss)	$	17,244		$	(20,750	)	$	24,469		$	(45,490	)
Provision for (benefit from) income taxes	$	4,620		$	(747	)	$	8,755		$	(958	)
Effective rate		26.8	%		-3.6	%		35.8	%		-2.1	%

As of December 31, 2015, we determined that it was more likely than not that we will realize most of our deferred tax assets and, as a result, reversed a significant portion of our valuation allowance during the fourth quarter of 2015. As of December 31, 2015, a valuation allowance of $47.5 million was maintained with respect to our foreign tax credits, separate state net operating losses and Illinois edge credits. After considering both positive and negative evidence related to the realization of these deferred tax assets we have determined that it is necessary to continue to record the valuation allowance against these credits and separate state net operating losses as of June 30, 2016.

The effective tax rate for the quarter and year to date ended June 30, 2016 includes a $2.1 million favorable tax adjustment related to the recent closure of a federal tax audit for the tax years 2013 and 2014. The effect of this discrete item was to decrease the quarter and year to date effective rate by 12.2% and 8.6%, respectively. The effective rate for the quarter and year to date ended June 30, 2015, was primarily driven by maintaining a full valuation allowance against our deferred tax assets. For the quarter and year to

16

date ended June 30, 2015, the effect of federal and state valuation losses reduced the effective tax rate benefit by 28.0% and 37.1%, respectively.

We estimate that it is reasonably possible that the gross liability for unrecognized tax benefits for a variety of uncertain tax positions will decrease by up to $1.3 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 June 30, 2016 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 June 30, 2016, we had accrued $1.8 million as an estimate for reasonably possible interest and accrued penalties.

Our tax returns are routinely examined by federal, state, local and foreign tax authorities and these audits are at various stages of completion at any given time. The Internal Revenue Service recently completed its examination of our U.S. income tax returns for the 2013 and 2014 tax years.

10. SHARE-BASED COMPENSATION

Overview of Share-Based Compensation Plans

The Career Education Corporation 2016 Incentive Compensation Plan (the “2016 Plan”) was approved by the Company’s stockholders on May 24, 2016. The 2016 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 1.35 shares for each share issued for purposes of the aggregate share limit. As of June 30, 2016, there were approximately 4.1 million shares of common stock available for future share-based awards under the 2016 Plan, which is net of (i) 0.2 million shares issuable upon exercise of outstanding options and (ii) less than 0.1 million shares underlying restricted stock units, which will be settled in shares of our common stock if the vesting conditions are met and thus reduce the common stock available for future share-based awards under the 2016 Plan by the amount vested. These shares have been multiplied by the applicable factor under the 2016 Plan to determine the remaining shares available as of June 30, 2016. Additionally, as of June 30, 2016, there were approximately 3.0 million shares issuable upon exercise of outstanding options and 1.8 million shares underlying restricted and deferred stock units outstanding, which will be settled in shares of our common stock if the vesting conditions are met under the previous Career Education Corporation 2008 Incentive Compensation Plan. This plan was replaced by the 2016 Plan and effective May 24, 2016, all future awards will be made under the 2016 Plan. The vesting of all types of equity awards (stock options, stock appreciation rights, restricted stock awards, restricted stock units and deferred stock units) is subject to possible acceleration in certain circumstances. Generally, if a plan participant terminates employment for any reason other than by death or disability during the vesting period, the right to unvested equity awards is forfeited.

As of June 30, 2016, we estimate that compensation expense of approximately $6.0 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 and deferred 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 and stock appreciation rights 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: 100% after first anniversary of grant date or one-fourth on the grant date and one-fourth for each of the first through third anniversary of the grant date. Grants of stock options are generally only subject to the service conditions discussed previously.

Stock option activity during the year to date ended June 30, 2016 under all of our plans was as follows (options in thousands):

	Options			Weighted Average Exercise Price
Outstanding as of December 31, 2015		2,658		$	14.27
Granted		906			4.79
Exercised		(26	)		2.65
Forfeited		(41	)		4.30
Cancelled		(263	)		25.36
Outstanding as of June 30, 2016		3,234		$	10.93
Exercisable as of June 30, 2016		1,810		$	15.78

17

Restricted Stock Units to be Settled in Stock. Restricted stock units to be settled in shares of stock generally become fully vested as follows: 25% per year over a four-year service period or one-third for each of the first through third anniversary of the grant date. Certain awards granted in 2016 vest 20% after the first year, 50% after the second year and 30% after the third year and are “performance-based” awards which are subject to performance conditions that, even if the requisite service period is met, may reduce the number of units of restricted stock that vest at the end of the requisite service period or result in all units being forfeited. Also, certain awards granted in the second quarter of 2015 for retention purposes are subject to accelerated vesting and cash settlement in the event of an involuntary not-for-cause termination of employment by the Company.

The following table summarizes information with respect to all outstanding restricted stock units to be settled in shares of stock under our plans during the year to date ended June 30, 2016 (units in thousands):

	Restricted Stock to be Settled in Shares of Stock
	Units			Weighted Average Grant-Date Fair Value Per Unit
Outstanding as of  December 31, 2015		758		$	5.55
Granted		1,556			4.58
Vested (1)		(363	)		6.07
Forfeited		(124	)		5.25
Outstanding as of  June 30, 2016		1,827		$	4.64

_____________

(1) The total vested awards include 9.2 thousand of vested stock settled in cash. As a result of the termination provision for certain awards, certain termination scenarios allow for cash-settlement.

Deferred Stock Units to be Settled in Stock. During 2014, we granted deferred stock units to our non-employee directors. The deferred stock units are to be settled in shares of stock and generally vest one-third per year over a three-year service period beginning on the date of grant. Settlement of the deferred stock units and delivery of the underlying shares of stock to the plan participants does not occur until he or she ceases to provide services to the Company in the capacity of a director, employee or consultant.

The following table summarizes information with respect to all deferred stock units during the year to date ended June 30, 2016 (units in thousands):

	Deferred Stock Units to be Settled in Shares			Weighted Average Grant-Date Fair Value Per Unit
Outstanding as of  December 31, 2015 (1)		91		$	4.43
Granted		-			-
Vested		(15	)		4.39
Forfeited		-			-
Outstanding as of  June 30, 2016 (1)		76		$	4.44

(1) Includes vested but unreleased awards. These awards are included in total outstanding awards until they are released under the terms of the agreement.

Restricted Stock Units to be Settled in Cash. Restricted stock units to be settled in cash generally become fully vested 25% per year over a four-year service period beginning on the date of grant. Certain awards granted to our Chief Executive Officer in 2015 outside of the 2008 Plan vest 50% per year over a two-year service period. Cash-settled restricted stock units are recorded as liabilities as the expense is recognized and the fair value for these awards is determined at each period end date with changes in fair value recorded in our unaudited condensed consolidated statements of income (loss) and comprehensive income (loss) in the current period. 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 2016 Plan.

18

The following table summarizes information with respect to all cash-settled restricted stock units during the year to date ended June 30, 2016 (units in thousands):

	Restricted Stock Units to be Settled in Cash
Outstanding as of December 31, 2015		1,575
Granted		461
Vested		(331	)
Forfeited		(181	)
Outstanding as of  June 30, 2016		1,524

          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 Compensation and recognized $2.0 million of expense for the year to date 2016 for all cash-settled restricted stock units, of which $1.1 million was recorded during the quarter ended June 30, 2016.

Stock-Based Compensation Expense. Total stock-based compensation expense for the quarters and years to date ended June 30, 2016 and 2015 for all types of awards was as follows (dollars in thousands):

	For the Quarter Ended June 30,				For the Year to Date Ended June 30,
Award Type	2016		2015  (1)		2016		2015  (1)
Stock options	$	348	$	124	$	589	$	394
Restricted stock or units settled in stock		494		239		791		1,527
Restricted stock units settled in cash		1,088		256		2,021		544
Total stock-based compensation expense	$	1,930	$	619	$	3,401	$	2,465

(1) Stock-based compensation expense for the year to date 2015 does not reflect $1.5 million of forfeitures related to our former Chief Executive Officer’s departure which was applied against the separation agreement payment of $2.5 million.

Performance Unit Awards. Performance unit awards granted during 2014, 2015 and 2016 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, 2016, 2017 and 2018, respectively. These awards are recorded as liabilities as the expense is recognized and fair value for these awards is revalued at each period end date with changes in fair value recorded in our unaudited condensed consolidated statements of income (loss) and comprehensive income (loss) in the current period. We recorded $0.9 million of expense and $0.3 million of credit related to these awards for the years to date ended June 30, 2016 and June 30, 2015, respectively, with $0.6 million and $0.1 million of expense for the quarters ended June 30, 2016 and June 30, 2015, respectively.  

11. WEIGHTED AVERAGE COMMON SHARES

Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income (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.

The weighted average number of common shares used to compute basic and diluted net income (loss) per share for the quarters and years to date ended June 30, 2016 and 2015 were as follows:

	For the Quarter Ended June 30,				For the Year to Date Ended June 30,
	2016		2015 (1)		2016		2015 (1)
Basic common shares outstanding		68,368		67,893		68,261		67,714
Common stock equivalents		647		-		366		-
Diluted common shares outstanding		69,015		67,893		68,627		67,714

___________________

19

(1)    Due to the fact that we reported a loss from continuing operations for the quarter and year to date ended June 30, 2015, 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 havezero common stock equivalents since these shares would have an anti-dilutive effect on our net loss per share for the quarter and year to date ended June 30, 2015.

For the quarter and year to date ended June 30, 2016, certain unexercised stock option awards are excluded from our computations of diluted earnings per share, as these shares were out-of-the-money and their effect would have been anti-dilutive. The anti-dilutive options that were excluded from our computations of diluted earnings per share were 2.8 million and 2.6 million shares for the quarter and year to date ended June 30, 2016, respectively.

12. 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 operational alignment and, for our two universities, to enhance brand focus within each segment to more effectively execute our strategic plan. As of June 30, 2016, our four segments are:

University Group:

¨ Colorado Technical University (CTU) places a strong focus on providing industry-relevant degree programs to meet the needs of our students for employment and of employers for a well-educated workforce and offers academic programs in the career-oriented disciplines of business studies, information systems and technologies, criminal justice, computer science and engineering, and health sciences. Students pursue their degrees through fully-online programs through CTU Online, local campuses and blended formats, which combine campus-based and online education. As of June 30, 2016, students enrolled at CTU represented approximately 56% of our total enrollments. Approximately 92% of CTU’s enrollments are fully online.

¨ American InterContinental University (AIU) focuses on helping busy professionals get the degree they need to move forward in their career as efficiently as possible and collectively offers academic programs in the career-oriented disciplines of business studies, information technologies, criminal justice and design technologies. Students pursue their degrees through fully-online programs through AIU Online, local campuses and blended formats, which combine campus-based and online education. As of June 30, 2016, students enrolled at AIU represented approximately 27% of our total enrollments. Approximately 99% of AIU’s enrollments are fully online.

Career Schools Group:

          Campuses included in our Career Schools segments include those which are currently being taught out or those which have completed their teach-out activities or have been sold subsequent to January 1, 2015. As a result of a change in accounting guidance, campuses which have closed or have been sold subsequent to January 1, 2015 no longer meet the criteria for discontinued operations and remain reported within continuing operations on our unaudited condensed consolidated financial statements. Campuses in teach-out employ a gradual teach-out process, enabling them to continue to operate while current students have a reasonable opportunity to complete their course of study; they no longer enroll new students.

¨      Culinary Arts includes our Le Cordon Bleu institutions in North America (“LCB”) which offer hands on educational programs in the career-oriented disciplines of culinary arts and patisserie and baking in the commercial-grade kitchens of Le Cordon Bleu. LCB also provides online programs in culinary arts and hotel and restaurant management. These campuses are all expected to complete their teach-out activities during 2017. As of June 30, 2016, students enrolled at LCB represented approximately 13% of our total enrollments.

¨      Transitional Group includes our non-LCB campuses which are in teach-out or those which have been closed or sold subsequent to January 1, 2015. Our Transitional Group offers academic programs primarily in the career-oriented discipline of health education complemented by certain programs in business studies and information technology, as well as fashion design, film and video production, graphic design, interior design and visual communications. The campuses within the Transitional Group that have not yet ceased operations as of June 30, 2016 will complete their teach-outs on varying dates through 2018. As of June 30, 2016, students enrolled at the Transitional Group campuses represented approximately 4% of our total enrollments. During the second quarter of 2016, the Company completed the teach-out of three Transitional Group campuses: Collins College, International Academy of Design & Technology Sacramento and Sanford-Brown Institute New York, which continue to be reported as part of the Transitional Group as of June 30, 2016.

20

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

	For the Quarter Ended June 30,
	Revenue										Operating (Loss) Income
	2016		% of Total			2015		% of Total			2016			2015
CTU (1)	$	91,736		50.2	%	$	86,174		39.7	%	$	29,970		$	24,263
AIU (2)		50,608		27.7	%		52,024		24.0	%		6,838			5,174
Total University Group		142,344		77.9	%		138,198		63.7	%		36,808			29,437
Corporate and Other		-		0.0	%		39		0.0	%		(5,761	)		(7,036	)
Subtotal		142,344		77.9	%		138,237		63.8	%		31,047			22,401
Culinary Arts		29,998		16.4	%		42,048		19.4	%		361			(10,560	)
Transitional Group		10,284		5.6	%		36,543		16.9	%		(14,118	)		(31,733	)
Total	$	182,626		100.0	%	$	216,828		100.0	%	$	17,290		$	(19,892	)

	For the Year to Date Ended June 30,
	Revenue										Operating (Loss) Income
	2016		% of Total			2015		% of Total			2016			2015
CTU (1)	$	183,702		48.2	%	$	171,301		38.6	%	$	49,207		$	38,879
AIU (2)		103,581		27.2	%		105,090		23.7	%		8,745			2,287
Total University Group		287,283		75.3	%		276,391		62.3	%		57,952			41,166
Corporate and Other		-	NM				78		0.0	%		(11,573	)		(12,896	)
Subtotal		287,283		75.3	%		276,469		62.3	%		46,379			28,270
Culinary Arts		68,621		18.0	%		86,760		19.5	%		3,467			(10,317	)
Transitional Group		25,608		6.7	%		80,613		18.2	%		(25,577	)		(62,203	)
Total	$	381,512		100.0	%	$	443,842		100.0	%	$	24,269		$	(44,250	)

	Total Assets as of  (3)
	June 30, 2016		December 31, 2015
CTU	$	75,469	$	76,577
AIU		53,404		53,087
Total University Group		128,873		129,664
Corporate and Other		327,345		372,405
Subtotal		456,218		502,069
Culinary Arts		64,554		71,197
Transitional Group		23,169		28,584
Discontinued Operations		8,853		9,065
Total	$	552,794	$	610,915

(1) Bad debt increased approximately 0.3% and 2.4% as a percentage of revenue for the quarter and year to date ended June 30, 2016 as compared to the respective prior periods, primarily driven by students who are experiencing a greater time lag while completing the financial aid application process due to increased verification procedures implemented by ED.

(2) Bad debt increased approximately 1.4% and 1.7% as a percentage of revenue for the quarter and year to date ended June 30, 2016 as compared to the respective prior periods, primarily driven by students who are experiencing a greater time lag while completing the financial aid application process due to increased verification procedures implemented by ED.

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

21

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

The discussion below and other items in this Quarterly Report on Form 10-Q contain “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 “estimate,” “believe,” “expect,” “trend,” “will,” “focused on,” “continue to,” 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 Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2015 and our subsequent filings with the Securities and Exchange Commission 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. Among the factors that could cause actual results to differ materially from those expressed in, or implied by, our forward-looking statements are the following:

· declines in enrollment;

· increased competition;

· negative trends in the real estate market which could impact the costs related to teaching out campuses and the success of our initiatives to reduce our real estate obligations;

· our ability to achieve anticipated cost savings and business efficiencies;

· rulemaking by the U.S. Department of Education (“ED”) or any state or accreditor and increased focus by Congress, the President and governmental agencies on for-profit education institutions;

· our continued compliance with and eligibility to participate in Title IV Programs under the Higher Education Act of 1965, as amended, and the regulations thereunder (including the gainful employment, 90-10, financial responsibility and administrative capability standards prescribed by ED), as well as applicable accreditation standards and state regulatory requirements;

· the impact of management changes;

· our ability to successfully defend litigation and other claims brought against us; and

· changes in the overall U.S. or global economy.

Readers are also directed to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and its subsequent filings with the Securities and Exchange Commission for information about other risks and uncertainties, including, but not limited to, those matters discussed in Item 1A, “Risk Factors,” in our Form 10-K.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the Company’s unaudited condensed 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:

· Overview

· Consolidated Results of Operations

· Segment Results of Operations

· Summary of Critical Accounting Policies and Estimates

· Liquidity, Financial Position and Capital Resources

OVERVIEW

Our academic institutions offer a quality education to a diverse student population in a variety of disciplines through online, campus-based and hybrid learning programs. Our two universities – American InterContinental University (“AIU”) and Colorado Technical University (“CTU”) – provide degree programs through the master’s or doctoral level as well as associate and bachelor’s levels. Both universities predominantly serve students online with career-focused degree programs that are designed to meet the educational demands of today’s busy adults. AIU and CTU continue to show innovation in higher education, advancing new

22

personalized learning technologies like their intellipath™ adaptive learning platform that allow students to more efficiently pursue earning a degree by receiving course credit for knowledge they can already demonstrate. Career Education is committed to providing quality education that closes the gap between learners who seek to advance their careers and employers needing a qualified workforce.

Regulatory Environment

We operate in a highly regulated industry, which has significant impacts on our business and creates risks and uncertainties. In recent years, there has been substantial and increasing focus by various members of the U.S. Congress and federal agencies, including ED, the Consumer Financial Protection Bureau and the Federal Trade Commission, on the role that for-profit educational institutions play in higher education. Congressional hearings and roundtable discussions have been held regarding various aspects of the education industry and reports have been issued that are highly critical of for-profit institutions and include a number of recommendations to be considered by Congress in connection with the upcoming reauthorization of the Higher Education Act. A group of influential U.S. senators has strongly and repeatedly encouraged the Departments of Education, Defense and Veterans Affairs to take action to limit or terminate the participation of for-profit educational institutions, including Career Education Corporation, in existing tuition assistance programs.

In addition, ED has formed an inter-agency task force focused on the for-profit sector involving multiple federal agencies and departments including the Federal Trade Commission, the U.S. Departments of Justice, Treasury and Veterans Affairs, the Consumer Financial Protection Bureau, the Securities and Exchange Commission, and numerous state Attorneys General, to coordinate activities and share information to protect students from unfair, deceptive and abusive policies and practices. We believe that the recent actions by the Federal Trade Commission and the multiple Attorney Generals’ offices may be related to or coordinated with this task force. We expect that this challenging regulatory environment will continue for for-profit educational institutions, including Career Education Corporation, for the foreseeable future and we cannot predict what legislation, if any, may emanate from Congressional committee hearings or what impact such legislation or the investigations involving us, might have on for-profit institutions and our business in particular.

We encourage you to review Item 1, “Business,” and Item 1A, “Risk Factors,” in our Annual Report on Form 10-K to learn more about our highly regulated industry and related risks and uncertainties, in addition to the MD&A in our 2016 Quarterly Reports on Form 10-Q.

Note Regarding Non-GAAP measures

We believe it is useful to present non-GAAP financial measures which exclude certain significant items as a means to understand the performance of our core business. As a general matter, we use non-GAAP financial measures in conjunction with results presented in accordance with GAAP to help analyze the performance of our core business, assist with preparing the annual operating plan, and measure performance for some forms of compensation. In addition, we believe that non-GAAP financial information is used by analysts and others in the investment community to analyze our historical results and to provide estimates of future performance and that failure to report non-GAAP measures could result in a misplaced perception that our results have underperformed or exceeded expectations.

We believe adjusted EBITDA allows us to compare our current operating results with corresponding historical periods and with the operational performance of other companies in our industry because it does not give effect to potential differences caused by items we do not consider reflective of underlying operating performance. We also present adjusted EBITDA because we believe it is frequently used by securities analysts, investors and other interested parties as a measure of performance. In evaluating adjusted EBITDA, investors should be aware that in the future we may incur expenses similar to the adjustments presented below. Our presentation of adjusted EBITDA should not be construed as an inference that our future results will be unaffected by expenses that are unusual, non-routine or non-recurring. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for net income (loss), operating income (loss), or any other performance measure derived in accordance with and reported under GAAP or as an alternative to cash flow from operating activities or as a measure of our liquidity.

Non-GAAP financial measures, when viewed in a reconciliation to corresponding GAAP financial measures, provide an additional way of viewing the Company's results of operations and the factors and trends affecting the Company's business. Non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding financial results presented in accordance with GAAP.

2016 Second Quarter Overview

During the second quarter of 2016, we have continued to focus on and invest in our University platforms with the goal of further enhancing student retention and outcomes. Our second quarter results reflect the dedication that our team has towards creating value for our students, employees and stockholders. As a result of our recent performance trends, we have updated our outlook for the full year 2016 and 2017.

23

Revenue from continuing operations declined $34.2 million or 15.8% due to an overall 17.1% decrease in total student enrollments for the second quarter of 2016 as compared to the prior year quarter, primarily as a result of our decision to divest or teach out our Career Schools. Excluding our Transitional Group and Culinary Arts campuses which are in teach-out, revenue increased $4.1 million or 3.0% for the current year quarter as compared to the prior year quarter. For the current year quarter, we reported operating income of $17.3 million as compared to an operating loss of $19.9 million for the prior year quarter. This improvement was driven by increased revenues and operational efficiencies within our University Group, as well as decreased admissions and marketing expenses for our campuses in teach-out. Additionally, the prior year quarter included $12.8 million of severance and related costs primarily related to our May 2015 restructuring decisions. Lastly, we reported cash generated from operations for the current year to date of $6.0 million, an improvement of $32.6 million from the prior year to date’s cash usage of $26.6 million. We expect our future operating cash flow to remain subject to typical seasonal trends.

For our University Group, revenue increased $4.1 million or 3.0% as compared to the prior year quarter, primarily driven by an increase in total student enrollments for CTU. Total enrollments for the University Group increased slightly as of June 30, 2016 as compared to June 30, 2015 as CTU’s increase of 2.9% was partially offset with a decrease for AIU’s total enrollments of 2.8%. We believe we maintained relatively flat total student enrollments as of the quarter end despite a decline in new student enrollments as a result of our continued focus on student retention and outcomes and providing our students with positive experiences. We have continued to enhance our mobile platform with added functionality and have further leveraged and integrated technologies like intellipath^TM into our course offerings, leveraged technology to optimize our student in-take processes to improve the onboarding experience for students, increased faculty interaction with students, refocused orientation processes for new students and made progressive updates to curriculum and course sequencing. We have committed incremental investments in various student-serving areas to further improve overall student experience.

New student enrollments for the University Group decreased 4.0% for the current year quarter as compared to the prior year quarter. AIU’s increase of 11.8% for new student enrollments was more than offset with CTU’s decline of 10.4%. We believe AIU’s new student enrollment increase for the quarter was due, in part, to changes within our operating and management structure at AIU. Additionally, the implementation of a new student advising model, which provides dedicated personal instruction and coaching to new students, should continue to help improve student engagement and translate into improvements in retention. New student enrollments for CTU decreased 10.4% for the current quarter as compared to the prior year quarter. We believe this decrease was due, in part, to execution in various front-end, student onboarding processes. We are currently analyzing the relevant processes to address any issues prospectively. Operating income for the University Group improved by $7.4 million to $36.8 million for the current year quarter driven by increased revenue and improved efficiency in operations.

Our efforts surrounding improving our enrollment operations to make the student onboarding process more effective and efficient are ongoing within both our universities. Improving the student experience both before and after a student is enrolled in one of our programs will help provide stronger engagement by incoming students. We believe stronger student engagement will further enhance student retention and student outcomes and ultimately increase the long-term academic value of our University platforms.

We believe the use of an adjusted EBITDA measure allows us to compare our current operating results for our operations with corresponding historical periods and with the operational performance of other companies in our industry because it does not give effect to potential differences caused by items we do not consider reflective of underlying operating performance. As the Transitional Group and Culinary Arts segments have been announced for teach-out, we view these operations as not reflective of the ongoing business. As a result, management views adjusted EBITDA from the University Group and Corporate separately from the remainder of the organization, to assess results and make decisions. Adjusted EBITDA for the current quarter and year to date as compared to the respective prior periods is presented below.

24

	For the Quarter Ended June 30,						For the Year to Date Ended June 30,
Adjusted EBITDA ($ in thousands)	2016			2015			2016			2015
University Group and Corporate:
Income (loss) from continuing operations (1)	$	12,624		$	(20,003	)	$	15,714		$	(44,532	)
Provision for (benefit from) income taxes		4,620			(747	)		8,755			(958	)
Transitional Group pre-tax loss		14,014			32,624			25,330			63,094
Culinary Arts pre-tax (income) loss		(362	)		10,532			(3,469	)		10,282
Interest income, net (2)		(184	)		(52	)		(212	)		(50	)
Depreciation and amortization (2)		2,777			3,956			5,880			8,317
Stock-based compensation (2)		847			530			1,391			1,470
Asset impairments (2)		-			-			237			-
Unused space charges (2) (3)		(54	)		(348	)		855			208
Adjusted EBITDA--University Group and    Corporate	$	34,282		$	26,492		$	54,481		$	37,831
Memo: Advertising Expenses (2)	$	32,585		$	34,258		$	76,551		$	84,845
Transitional Group, Culinary Arts and Discontinued Operations:
Income (loss) from continuing operations (1)	$	(785	)	$	(720	)	$	(864	)	$	(1,072	)
Benefit from income taxes from discontinued operations		(470	)		-			(517	)		-
Transitional Group pre-tax loss		(14,014	)		(32,624	)		(25,330	)		(63,094	)
Culinary Arts pre-tax income (loss)		362			(10,532	)		3,469			(10,282	)
Interest income, net (4)		(1	)		-			(2	)		-
Loss on sale of business (4)		-			917			-			917
Depreciation and amortization (4)		2,425			3,231			5,891			5,582
Legal settlements (4) (5)		-			(166	)		-			1,319
Asset impairments (4)		-			11,372			-			17,391
Unused space charges (3) (4)		3,802			(2,305	)		1,694			(4,729	)
Adjusted EBITDA--Transitional, Culinary Arts and Discontinued Operations	$	(8,681	)	$	(30,827	)	$	(15,659	)	$	(53,968	)
Consolidated Adjusted EBITDA	$	25,601		$	(4,335	)	$	38,822		$	(16,137	)

_____________________

(1) Income (loss) from continuing operations and loss from discontinued operations make up the components of net income (loss). A reconciliation of these components for the quarters and years to to date ended June 30, 2016 and June 30, 2015 is presented below:

	For the Quarter Ended June 30,						For the Year to Date Ended June 30,
		2016			2015			2016			2015
Income (loss) from continuing operations	$	12,624		$	(20,003	)	$	15,714		$	(44,532	)
Loss from discontinued operations		(785	)		(720	)		(864	)		(1,072	)
Net income (loss)	$	11,839		$	(20,723	)	$	14,850		$	(45,604	)

(2) Amounts relate to ongoing operations, excluding the Transitional Group, Culinary Arts and discontinued operations. 

(3) Unused space charges represent the net present value of remaining lease obligations for vacated space less an estimated amount for sublease income as well as the subsequent accretion of these charges. These charges relate to exiting leased space as the Company continues to right-size the organization and therefore are not considered representative of ongoing operations.

(4) Amounts relate to the Transitional Group, Culinary Arts and discontinued operations.

(5) Legal settlement amounts are net of insurance recoveries.

Net income was $11.8 million for the current year quarter as compared to a net loss of $20.7 million in the prior year quarter. Consolidated adjusted EBITDA was $25.6 million for the current year quarter as compared to a negative consolidated adjusted EBITDA of $4.3 million in the prior year quarter, reflecting an improvement of $29.9 million. Adjusted EBITDA for the University Group and Corporate improved $7.8 million or 29.4% for the current year quarter as compared to the prior year quarter driven by increased revenue and improved efficiency in operations.

25

Within our teach-out segments, we are experiencing better than estimated total student enrollment as the campuses wind-down operations. Operating income for Culinary Arts improved by $10.9 million for the current quarter as compared to the prior year quarter and operating loss for the Transitional Group improved by $17.6 million for the same period. Adjusted EBITDA for the Transitional Group, Culinary Arts and discontinued operations improved to negative $8.7 million for the current year quarter as compared to negative $30.8 million in the prior year quarter as a result of the inherent economics of the wind-down of our Transitional Group and Culinary Arts campuses. As the teach-outs progress, we expect to see increased operating losses through the end of the teach-outs as the operating expenses to support and serve our students will exceed the revenue from these students as they continue to graduate. We have 22 campuses remaining within the Transitional Group and 17 campuses within the Culinary Arts segment at the end of the second quarter of 2016, which will complete their teach-out at varying dates through 2018 with the majority being complete by the end of 2017.

For the second half of 2016, our goals and priorities remain the same as previously disclosed. We are focused on continuing to improve the market position of our Universities by strengthening the breadth of program offerings, and leveraging faculty and technology, with the goal of continuing to enhance student retention and outcomes as well as continuing to responsibly manage the teach-outs of our Career School campuses to provide each student with the attention and resources needed to complete their chosen field of study.

          We expect year-over-year quarterly performance to start to become more normalized in the second half of the year as we begin to anniversary some of our strategic initiatives that were implemented in the prior year. As our teach-out strategy progresses, revenue will continue to decline while we maintain our commitments to students which will drive operating losses in future quarters as we maintain sufficient staffing and facilities to support our students. We continue to invest in our University Group to help them achieve their full potential and produce improved student outcomes and believe they are well-positioned as we progress through the year. As a result of the improvement in our retention trends, the continued efficiency and stability within the University Group and better than estimated total student enrollment at our teach-out campuses, we are increasing the outlook that we provided last quarter.

          Previously we disclosed expectations for 2016 adjusted EBITDA for consolidated operations to be a flat to modest increase as compared to 2015; we now expect 2016 adjusted EBITDA to improve for consolidated operations as compared to 2015 and to be positive. In line with this improvement we are raising our expectations surrounding our ending cash, cash equivalents, restricted cash and available-for-sale short-term and long-term investments, net of borrowings, to now be approximately $160 million to $170 million as of December 2016 as compared to the previous guidance of $150 million to $160 million. Additionally, we now expect 2017 adjusted EBITDA for consolidated operations to be flat as compared to 2016 and ending cash, cash equivalents, restricted cash and available-for-sale short-term and long-term investments, net of borrowings, to be $140 million to $155 million.

          Forward looking adjusted EBITDA expectations are estimated on a basis consistent with adjusted EBITDA calculations presented in the reconciliation of GAAP to non-GAAP items above. Net income, which is the most directly comparable GAAP measure to consolidated adjusted EBITDA, may not follow the same trends as discussed in our outlook above because of adjustments made for unused space charges that represent the present value of future remaining lease obligations for vacated space less an estimated amount for sublease income as well as income taxes, depreciation, amortization, asset impairment charges, interest income, interest expense and stock compensation. The expectations provided in the paragraph above for 2016 and beyond are based on the following updated key assumptions and factors, among others: (i) flat-to-modest total enrollment growth within the University Group while achieving the intended University Group efficiencies, (ii) teach-outs to progress as expected and performance consistent with current trends, (iii) achievement of recovery rates for the Company’s real estate obligations and timing of any associated lease termination payments consistent with the Company’s historical experiences, (iv) right-sizing of the Company’s corporate expense structure to serve primarily online institutions, (v) no material changes in the legal or regulatory environment and excludes legal settlements, regulatory settlements and any impact of new or proposed regulations, and (vi) consistent working capital movements in line with historical operating trends and potential impacts of teach-out campuses on working capital in line with expectations.Although these estimates and assumptions are based upon management’s good faith beliefs regarding current events and actions that may be undertaken in the future, actual results could differ materially from these estimates.

          Overall, our improved operating and financial stability continues to give us confidence to invest in our future. Our University Group continues to perform well despite industry challenges and we continue to make investments in the business and in improving the quality and depth of our curriculum. Our University Group remains well-positioned, with talented leadership, strong brands and excellent programs. We continue to responsibly manage our teach-outs as we support our students through the completion of their programs. With this improved stability and operating profile, we are investing more time, intellectual capital and dollars to help achieve our full potential and produce strong student retention and outcomes.

Regulatory Updates

26

Debt Forgiveness Rulemaking Initiatives. Earlier this year, a committee established by ED failed to reach consensus on proposed regulations for determining the criteria ED will use to identify acts or omissions of an institution that constitute defenses to repayment of Direct Loans, the standards and procedures to determine liability of an institution for amounts based on borrower defenses and the effect that borrower defenses to loan repayment may have on ED’s assessment of institutional capability. In June 2016, ED issued proposed regulations regarding these topics, which are commonly referred to as “defense to repayment.”  

          If adopted in the proposed form, the proposed regulations would provide repayment relief to students in respect of student loans first disbursed after July 1, 2017 where a school breaches contractual promises to a student; certain judgments are entered against a school related to the loan or the educational services after a contested proceeding; or the school makes substantial misrepresentations about the nature of its educational programs, financial charges or employability of graduates, or insubstantial misrepresentations where other factors are present, such as pressure to enroll quickly or taking advantage of students’ distress or lack of knowledge or sophistication. The proposed regulations also would allow ED to identify and grant relief to groups of students where there are common facts, including students who have not requested relief.

          As proposed, ED would be entitled to seek reimbursement from the school in most cases in respect of loans discharged under the new procedure, although certain questions may exist regarding its authority in this regard.

          In addition, the proposed regulations specify triggers regarding an institution’s financial responsibility and administrative capacity that would automatically require a school to post a letter of credit in the amount of at least 10% of the school’s annual Title IV disbursements. These triggers include: the commencement of a major lawsuit by a state or federal government entity, such as state Attorneys General, the Consumer Financial Protection Bureau or the Federal Trade Commission; the filing of a substantial number of borrower defense claims; default by the school on its debt obligations; failure of the school to satisfy the 90/10 Rule; and/or action by the school’s accreditor that could result in the school losing its accreditation. If a school experiences any of these triggers, the school would be required to warn prospective and current students that it has been required to provide enhanced financial protection to ED.

          The proposed regulations also would require disclosures by for-profit institutions if student loan repayment rates fall below specified levels. Student loan repayment rates for these purposes would be measured by ED as the percentage change in the original outstanding balance for a borrower upon entering repayment (including any accrued interest) and the current outstanding balance for the cohort of borrowers whose Title IV Program loans entered repayment during the fifth fiscal year preceding the most recently completed fiscal year. For each borrower in the cohort, ED would calculate the five-year change in those outstanding balances and then determine the median change for the cohort. Any for-profit institution with a rate that is negative, reflecting negative amortization for the cohort, or which is 0%, would be required to include warning language on its website and in all advertising and promotional materials, as well as provide the warning to prospective and enrolled students.

          The proposed regulations, if adopted, could result in significant potential risks for our business, since the precise standards for student loan discharge may be unclear or subject to interpretation in a manner that is adverse to us and not fully known or predictable in advance, and certain of the potential adverse consequences could arise from the mere commencement of enforcement actions by state or federal government entities, or the filing of student claims for debt relief, even if these actions and claims ultimately are found to lack merit. Furthermore, the potential significant discretion vested in ED to administer the regulations, including fact-finding, may result in unexpected outcomes that materially and adversely affect our business. If we are required to post letters of credit, we may not have the capacity to do so. In order to reduce the risk associated with these proposed regulations, if adopted, we may need to modify our practices or strategies and incur costs of compliance and of developing and implementing changes in operations, which in each case may be material. In addition, our flexibility in responding to state or federal and certain private lawsuits may be materially reduced because of the possible significant ancillary consequences of an adverse judgment or finding.

          The effective date of the proposed regulations, if adopted, cannot be determined at this time, but the proposed regulations could be effective as early as July 1, 2017. More information can be found at http://www2.ed.gov/policy/highered/reg/hearulemaking/2016/index.html.

HLC Rulemaking Initiatives. In April 2016, ED issued a “Dear Colleague Letter” to federally recognized accrediting agencies regarding the flexibility those agencies have in differentiating their reviews of institutions and programs. ED’s letter encourages accrediting agencies to use that flexibility to focus monitoring and resources on student achievement and problematic institutions or programs. ED also encourages regional accreditors, such as The Higher Learning Commission (“HLC”), to consider adding the use of quantitative measures, in addition to the qualitative measures of student achievement already utilized, in reviewing institutions’ processes for evaluating and validating student learning, and to consider licensing and placement rates in its accreditation of institutions that offer applied, professional and occupational programs.

We were notified on July 14, 2016 that the Board of HLC, at its June 30 – July 1, 2016 meeting, approved potential changes to its Special Monitoring Policy. The HLC Board has indicated it will take final action on these proposed changes at its late summer meeting after considering any comments it receives from an abbreviated comment period ending on August 1, 2016.

27

The proposed revisions to the Special Monitoring Policy, if adopted in their present form, would allow the President of HLC to publicly designate an institution as a school “in financial distress” or “under governmental investigation.” The financial distress designation could be triggered under various circumstances including several that may not constitute actual financial distress. The factors listed in the proposal include: diminished financial contribution from a state; escalation in institutional indebtedness; placement by ED on Heightened Cash Monitoring; formal declaration by the institution of financial exigency or emergency; or other similar financial situation. The governmental investigation designation could be triggered by any of the following: an investigation by one or more state attorneys general, the Federal Trade Commission, the U.S. Department of Justice or other federal agency; a notice of intended limitation, suspension or termination action by ED; or other significant investigations, litigation or enforcement action related to institutional or academic operations or activities. The proposal calls for additional monitoring and quarterly financial reporting by the institution and, most significantly, a restriction on HLC’s consideration of any requests for substantive change at the institution, unless the institution can demonstrate that the change is necessary to remedy its issues and that it has sufficient resources to support the change.  

The breadth of conditions in the proposal that could result in the public designation of an institution as “in financial distress” or “under governmental investigation” would likely cause our HLC-accredited institutions, AIU and CTU, to be labeled with one or both of these designations. See Note 8 “Contingencies” to our unaudited condensed consolidated financial statements for information regarding the current Heightened Cash Monitoring status imposed on our institutions and certain current pending governmental inquiries. The status and timing of certain investigations and other actions that could result in one of these designations may be unknown and open-ended and, in some cases, we are not informed when they are closed or completed. Therefore, it would be difficult to predict if and when our institutions would be in a position to remove these designations by HLC should they be applied in the manner described in the proposal. The imposition of these public designations and the potential restrictions on our ability to implement substantive changes at our HLC-accredited institutions could have a material adverse impact on our business, results of operations, cash flows and financial condition.

State Authorization Proposed Regulations. On July 25, 2016, ED released proposed regulations regarding state authorization of distance education, correspondence and foreign programs. These proposed regulations would require an institution offering distance education or correspondence courses to be authorized by each state in which the institution enrolls students, if such authorization is required by the state, in order to award Title IV Program financial aid to those students. An institution could obtain such authorization directly from the state or through a state authorization reciprocity agreement. In 2015, AIU and CTU were approved to participate in a consortia program called the State Authorization Reciprocity Agreement (“SARA”) by their home states (Illinois and Colorado, respectively), which we believe will meet ED’s new proposed definition of “state authorization reciprocity agreement." As of July 30, 2016, 39 states and the District of Columbia are SARA participants with additional states moving towards applying for membership (www.nc-sara.org). For those states that have not adopted laws to participate in SARA, AIU and CTU have sought confirmation of an exemption or separate state approval. Included in the proposed regulations are a number of general and individualized disclosures for prospective students including how programs are authorized, complaint processes, adverse actions by state and accrediting agencies, and prerequisites for licensure or certification for certain programs. Comments are due by August 24, 2016. The Company cannot predict the impact, if any, that these proposed regulations would have if adopted.

ACICS Recognition by ED. In order to participate in Title IV Programs, an institution must be accredited by an accrediting agency recognized by ED. All accrediting agencies that are recognized by ED are subject to periodic review by ED, at which time ED determines whether the agency continues to meet ED’s recognition criteria. The current approval for the Accrediting Council for Independent Colleges and Schools (“ACICS”) expires in 2016 and ED staff has recommended denial of ACICS’ request for renewal. There are several additional steps in the review process before this decision becomes final, and there is an opportunity for ACICS to appeal any negative decision. If ACICS loses recognition by ED as an approved Title IV accreditor, the institutions it accredits would have 18 months to become accredited by a different eligible agency in order to maintain Title IV eligibility. All of our ACICS-accredited campuses are in teach-out and we believe those teach-outs will be substantially complete prior to the expiration of this 18 month period of continued Title IV eligibility. Any remaining campuses are not expected to have a material impact to the Company.  Therefore, we do not plan to seek other institutional accreditation for our ACICS-accredited campuses. However, although Title IV eligibility continues during this 18 month period, there could be some impact regarding state licensure where it is linked to accreditation. We expect that ED and various states will provide additional information to ACICS-accredited institutions as this situation develops.

28

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 June 30, 2016 and 2015 (dollars in thousands):

	For the Quarter Ended June 30,												For the Year to Date Ended June 30,
		2016		% of Total Revenue				2015		% of Total Revenue				2016		% of Total Revenue				2015		% of Total Revenue
TOTAL REVENUE	$	182,626					$	216,828					$	381,512					$	443,842
OPERATING EXPENSES
Educational services and facilities (1)		58,062			31.8	%		73,064			33.7	%		119,600			31.3	%		147,958			33.3	%
General and administrative: (2)
Advertising		32,641			17.9	%		50,878			23.5	%		76,816			20.1	%		123,440			27.8	%
Admissions		20,484			11.2	%		28,085			13.0	%		43,510			11.4	%		57,155			12.9	%
Administrative		43,679			23.9	%		61,252			28.2	%		90,434			23.7	%		119,024			26.8	%
Bad debt		5,268			2.9	%		4,956			2.3	%		14,875			3.9	%		9,225			2.1	%
Total general and administrative    expense		102,072			55.9	%		145,171			67.0	%		225,635			59.1	%		308,844			69.6	%
Depreciation and amortization		5,202			2.8	%		7,113			3.3	%		11,771			3.1	%		13,899			3.1	%
Asset impairment		-			0.0	%		11,372			5.2	%		237			0.1	%		17,391			3.9	%
OPERATING INCOME (LOSS)		17,290			9.5	%		(19,892	)		-9.2	%		24,269			6.4	%		(44,250	)		-10.0	%
PRETAX INCOME (LOSS)		17,244			9.4	%		(20,750	)		-9.6	%		24,469			6.4	%		(45,490	)		-10.2	%
PROVISION FOR (BENEFIT FROM) INCOME TAXES		4,620			2.5	%		(747	)		-0.3	%		8,755			2.3	%		(958	)		-0.2	%
Effective tax rate		26.8	%					-3.6	%					35.8	%					-2.1	%
INCOME (LOSS) FROM CONTINUING    OPERATIONS		12,624			6.9	%		(20,003	)		-9.2	%		15,714			4.1	%		(44,532	)		-10.0	%
LOSS FROM DISCONTINUED    OPERATIONS, net of tax		(785	)		-0.4	%		(720	)		-0.3	%		(864	)		-0.2	%		(1,072	)		-0.2	%
NET INCOME (LOSS)	$	11,839			6.5	%	$	(20,723	)		-9.6	%	$	14,850			3.9	%	$	(45,604	)		-10.3	%

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

(2) General and administrative expense includes salaries and benefits of personnel in corporate and campus 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

Current quarter and current year to date revenue decreased 15.8% and 14.0%, respectively, as compared to the prior periods driven by the overall decline in total student enrollment. Excluding the Transitional Group and Culinary Arts, which no longer enroll new students as they teach out each campus, revenue increased approximately 3.0% for the current quarter and 3.9% for the current year to date as compared to the respective prior periods, driven by an increase in total student enrollments within CTU.

29

Educational Services and Facilities Expense (dollars in thousands)

	For the Quarter Ended June 30,										For the Year to Date Ended June 30,
		2016	% of Total Revenue				2015	% of Total Revenue				2016	% of Total Revenue				2015	% of Total Revenue
Educational services and facilities:
Academics & student related	$	34,140		18.7	%	$	49,187		22.7	%	$	73,711		19.3	%	$	98,385		22.2	%
Occupancy		23,922		13.1	%		23,877		11.0	%		45,889		12.0	%		49,573		11.2	%
Total educational services and facilities	$	58,062		31.8	%	$	73,064		33.7	%	$	119,600		31.3	%	$	147,958		33.3	%

The decrease in educational services and facilities expense as compared to the prior year quarter and year to date is primarily driven by lower academic costs within our teach-out campuses, most notably faculty and bookstore costs, partially offset with a slight increase within CTU as a result of the increase in total student enrollment. Additionally, the prior year quarter included severance charges related to the May 2015 restructuring decisions. The decrease in occupancy expenses for the current year to date was driven by the continued focus over the past several quarters to exit or sublease facilities as campuses complete their teach-out. The current quarter occupancy expense was impacted by approximately $6.0 million of real estate charges related to our teach-out campuses. The University Group experienced improvement in occupancy and academic costs as a percentage of revenue as we continue to closely monitor the variable costs while maintaining optimal student-teacher ratios.

General and Administrative Expense (dollars in thousands)

	For the Quarter Ended June 30,										For the Year to Date Ended June 30,
		2016	% of Total Revenue				2015	% of Total Revenue				2016	% of Total Revenue				2015	% of Total Revenue
General and administrative:
Advertising	$	32,641		17.9	%	$	50,878		23.5	%	$	76,816		20.1	%	$	123,440		27.8	%
Admissions		20,484		11.2	%		28,085		13.0	%		43,510		11.4	%		57,155		12.9	%
Administrative		43,679		23.9	%		61,252		28.2	%		90,434		23.7	%		119,024		26.8	%
Bad Debt		5,268		2.9	%		4,956		2.3	%		14,875		3.9	%		9,225		2.1	%
Total general and administrative expense	$	102,072		55.9	%	$	145,171		67.0	%	$	225,635		59.1	%	$	308,844		69.6	%

General and administrative expense has decreased for the current quarter and current year to date as compared to the respective prior periods, primarily due to decreases within advertising, administrative and admissions expenses. The lower advertising expense is substantially related to the elimination of advertising on Career Schools brands as a result of campus teach-outs as well as decreased expense within our University Group related to efficiencies developed within certain marketing channels. Administrative expenses were lower for the current quarter and current year to date as compared to the respective prior periods due to reductions associated with the teach-out of campuses and our continued focus to reduce costs throughout the organization. Additionally, the prior year quarter included severance charges related to the May 2015 restructuring decisions. Admissions costs have decreased primarily in salary and related expenses due to efficiencies developed within the student enrollment process as well as the Transitional Group and Culinary Arts campuses no longer enrolling new students.

Bad debt expense incurred by each of our segments during the quarters and years to date ended June 30, 2016 and 2015 was as follows (dollars in thousands):  

	For the Quarter Ended June 30,												For the Year to Date Ended June 30,
		2016		% of Segment Revenue				2015		% of Segment Revenue				2016	% of Segment Revenue				2015		% of Segment Revenue
Bad debt expense:
CTU	$	3,297			3.6	%	$	2,849			3.3	%	$	9,841		5.4	%	$	5,113			3.0	%
AIU		1,473			2.9	%		780			1.5	%		3,762		3.6	%		2,042			1.9	%
Total University Group		4,770			3.4	%		3,629			2.6	%		13,603		4.7	%		7,155			2.6	%
Corporate and Other		(70	)	NM				(225	)	NM				54	NM				(85	)	NM
Sub Total		4,700			3.3	%		3,404			2.5	%		13,657		4.8	%		7,070			2.6	%
Culinary Arts		406			1.4	%		560			1.3	%		999		1.5	%		807			0.9	%
Transitional Group		162			1.6	%		992			2.7	%		219		0.9	%		1,348			1.7	%
Total bad debt expense	$	5,268			2.9	%	$	4,956			2.3	%	$	14,875		3.9	%	$	9,225			2.1	%

30

          The current quarter and current year to date increase in bad debt expense as compared to the respective prior periods was primarily driven by an increase in reserve rates due to historical performance as well as an increase in reserve rates related to students who are experiencing a greater time lag while completing the financial aid application process due to increased verification procedures implemented by ED. We expect an additional adverse impact to bad debt expense as a result of ED program integrity and improvement regulations regarding cash management of Title IV federal student aid funds, in particular issuing Title IV credit balances, which became effective July 1, 2016.

Operating Income (Loss)

The operating income reported for the current quarter and current year to date improved by $37.2 million and $68.5 million as compared to the prior year quarter and year to date operating loss of $19.9 million and $44.3 million, respectively. Decreases in revenue during the current quarter and current year to date were more than offset by the decline in expenses for corresponding periods. Initiatives to align expenses with the new organizational structure, changes in marketing strategies and implementation of efficiencies in our support functions continue to drive improvements in operating margins within our University segments as well as ongoing completion of teach-out campuses.

Provision for (Benefit from) Income Taxes

For the quarter ended June 30, 2016, we recorded a provision for income taxes of $4.6 million or 26.8% as compared to a benefit from income taxes of $0.7 million or 3.6% for the prior year quarter. We recorded $8.8 million or 35.8% of provision for income taxes for the year to date ended June 30, 2016 as compared to a benefit of $1.0 million or 2.1% for the year to date ended June 30, 2015. The effective tax rate for the quarter and year to date ended June 30, 2016 was reduced by 12.2% and 8.6%, respectively, due to a $2.1 million favorable tax adjustment upon completion of a federal tax audit. The effective rate for the quarter and year to date ended June 30, 2015 was primarily driven by maintaining a full valuation allowance against our deferred tax assets. For the quarter and year to date ended June 30, 2015, the effect of federal and state valuation losses reduced the effective tax rate benefit by 28.0% and 37.1%, respectively.

SEGMENT RESULTS OF OPERATIONS

The following tables present unaudited segment results for the reported periods (dollars in thousands):

	For the Quarter Ended June 30,
	REVENUE							OPERATING INCOME (LOSS)									OPERATING MARGIN (LOSS)
		2016		2015	% Change				2016			2015		% Change				2016			2015
REVENUE:
CTU	$	91,736	$	86,174		6.5	%	$	29,970		$	24,263			23.5	%		32.7	%		28.2	%
AIU		50,608		52,024		-2.7	%		6,838			5,174			32.2	%		13.5	%		9.9	%
Total University Group		142,344		138,198		3.0	%		36,808			29,437			25.0	%		25.9	%		21.3	%
Corporate and Other		-		39		-100.0	%		(5,761	)		(7,036	)		18.1	%	NM			NM
Subtotal		142,344		138,237		3.0	%		31,047			22,401			38.6	%		21.8	%		16.2	%
Culinary Arts		29,998		42,048		-28.7	%		361			(10,560	)	NM				1.2	%		-25.1	%
Transitional Group		10,284		36,543		-71.9	%		(14,118	)		(31,733	)		55.5	%		-137.3	%		-86.8	%
Total	$	182,626	$	216,828		-15.8	%	$	17,290		$	(19,892	)		186.9	%		9.5	%		-9.2	%

31

	For the Year to Date Ended June 30,
	REVENUE							OPERATING INCOME (LOSS)									OPERATING MARGIN (LOSS)
		2016		2015	% Change				2016			2015		% Change				2016			2015
REVENUE:
CTU	$	183,702	$	171,301		7.2	%	$	49,207		$	38,879			26.6	%		26.8	%		22.7	%
AIU		103,581		105,090		-1.4	%		8,745			2,287			282.4	%		8.4	%		2.2	%
Total University Group		287,283		276,391		3.9	%		57,952			41,166			40.8	%		20.2	%		14.9	%
Corporate and Other		-		78		-100.0	%		(11,573	)		(12,896	)		10.3	%	NM			NM
Subtotal		287,283		276,469		3.9	%		46,379			28,270			64.1	%		16.1	%		10.2	%
Culinary Arts		68,621		86,760		-20.9	%		3,467			(10,317	)		133.6	%		5.1	%		-11.9	%
Transitional Group		25,608		80,613		-68.2	%		(25,577	)		(62,203	)		58.9	%		-99.9	%		-77.2	%
Total	$	381,512	$	443,842		-14.0	%	$	24,269		$	(44,250	)		154.8	%		6.4	%		-10.0	%

	NEW STUDENT ENROLLMENTS												TOTAL STUDENT ENROLLMENTS
	For the Quarter Ended June 30,						For the Year to Date Ended June 30,						As of  June 30,
		2016	2015	% Change				2016	2015	% Change				2016	2015	% Change
CTU		5,080	5,670		-10.4	%		9,850	10,710		-8.0	%		21,200	20,600		2.9	%
AIU		2,550	2,280		11.8	%		7,410	7,370		0.5	%		10,400	10,700		-2.8	%
Total University Group		7,630	7,950		-4.0	%		17,260	18,080		-4.5	%		31,600	31,300		1.0	%
Culinary Arts (1)		60	1,450		-95.9	%		990	3,490		-71.6	%		5,000	7,800		-35.9	%
Transitional Group (1)		20	830		-97.6	%		80	2,660		-97.0	%		1,600	7,000		-77.1	%
Total		7,710	10,230		-24.6	%		18,330	24,230		-24.3	%		38,200	46,100		-17.1	%

(1) Teach-out campuses within the Transitional Group and Culinary Arts segments no longer enroll new students upon teach out effective date. For Culinary Arts, teach-outs announced in December 2015 were effective beginning after the January 2016 new enrollment. Students who re-enter after 365 days are reported as new student enrollments.

University Group. Current quarter and year to date revenue increased by $4.1 million or 3.0% and $10.9 million or 3.9%, respectively, as compared to the respective prior periods. This increase in revenue was primarily driven by an increase in total student enrollments for CTU. The revenue for CTU for the current quarter and year to date increased by $5.6 million or 6.5% and $12.4 million or 7.2%, as compared to the corresponding prior periods. AIU experienced a current quarter and year to date decline of 2.7% and 1.4%, respectively, as compared to prior periods, primarily due to a slight decline in total enrollments of 2.8%. New enrollments increased within AIU for the current quarter and year to date compared to prior periods. This increase was driven by increased efficiencies and optimization within AIU’s enrollment processes. New enrollments decreased within CTU for the current quarter and year to date compared to prior periods. We believe this decrease was due, in part, to execution in various front-end, student onboarding processes, which we are currently analyzing to address any issues prospectively.

Current quarter and year to date operating income for the University Group increased $7.4 million or 25.0%, and $16.8 million or 40.8%, respectively, as compared to the respective prior year periods. The increase is primarily driven by an overall decrease in operating expenses and increases in revenue for CTU. The current quarter and year to date operating income increased within both of our segments with CTU contributing $5.7 million and $10.3 million of the increase, respectively, and AIU contributing $1.7 million and $6.5 million of the increase, respectively, as compared to the prior periods. Most expense categories were lower when compared to the prior year periods, except for bad debt expense which reflected an increase due to increased reserve rates.

Culinary Arts. This segment includes our LCB campuses which were announced for teach-out during December 2015. The current quarter and year to date declines in revenue as compared to respective prior year periods is primarily a result of the decision to teach-out the campuses. The current quarter occupancy expense included $3.3 million of charges related to reduction of space at certain of our campuses. We expect revenue and operating expenses to continue to decline as compared to prior periods as campuses wind down their operations through 2017. Operating losses will increase as the operating expenses to support and serve our students will exceed the revenue from these students as they continue to graduate.

Transitional Group.This segment includes our non-LCB campuses that are currently being taught-out. The current quarter and year to date decline in revenue as compared to the corresponding prior periods resulted from the decision to teach-out the campuses. The current quarter occupancy expense included $2.7 million of charges related to campus closures as well as reduction of space at

32

certain of our campuses. The prior year quarter included $7.7 million of severance and related costs as a result of the teach-out announcements made during the prior year period. We expect revenue and operating expenses to continue to decline compared to prior periods as campuses wind down their operations through 2018. Operating losses will increase as the operating expenses to support and serve our students will exceed the revenue from these students as they continue to graduate.

Corporate and Other.This category includes unallocated costs that are incurred on behalf of the entire company. Corporate and Other operating loss for the current quarter and year to date improved by $1.3 million or 18.1% and $1.3 million or 10.3%, respectively, as compared to the prior periods. The prior year quarter costs include severance and related costs due to the May 2015 restructuring decisions. The decrease in cost is primarily driven by reduced staff and ongoing efficiencies.

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, 2015. 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, 2015 also includes a discussion of these and other significant accounting policies.

LIQUIDITY, FINANCIAL POSITION AND CAPITAL RESOURCES

As of June 30, 2016, cash, cash equivalents, restricted cash and available-for-sale short-term and long-term investments totaled $208.8 million. Restricted cash and investment balances as of June 30, 2016 approximate $11.0 million and include restricted short-term investments for certificates of deposit in addition to restricted cash to provide securitization for letters of credit. Our cash flows from operating activities have historically been adequate to fulfill our liquidity requirements. We have historically financed our operating activities, organic growth and acquisitions primarily through cash generated from operations, existing cash balances and credit facility borrowings. The recent losses from our Transitional Group and Culinary Arts campuses have driven a net cash usage in recent years. However, as we execute on our transformation strategy, including the wind-down of our teach-out campuses, we expect our cash usage to moderate through the remainder of 2016 and 2017 and to begin generating cash in 2018. We expect to end 2016 with cash, cash equivalents, restricted cash and available-for-sale short-term and long-term investments, net of borrowings, in the range of $160 million to $170 million and to end 2017 with balances in the range of $140 million to $155 million. These expectations are based upon, and subject to, the key updated assumptions and factors discussed above in the Management’s Discussion and Analysis under the heading “2016 Second Quarter Overview.” 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.

We continue to focus on our transformation strategy which we believe will position CEC for a return to sustainable growth and optimize our capital structure. Our new credit facility allows us to borrow up to a maximum amount of $95 million and is scheduled to mature on December 31, 2018. Amounts borrowed under the Credit Agreement are required to be secured with 100% cash collateral.  

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 8 “Contingencies” to our unaudited condensed 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 may have a significant impact on our operations and our financial condition. In addition, our financial performance is dependent on the level of student enrollment which could be impacted by external factors. See Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2015.

Sources and Uses of Cash

Operating Cash Flows

During the year to date ended June 30, 2016, net cash flows provided by operating activities totaled $6.0 million compared to net cash flows used in operating activities of $26.6 million for the year to date ended June 30, 2015. The improvement in cash flow from operations as compared to the prior year is primarily driven by wind-down of our teach-out campuses and improved operating performance within the University Group.

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, institution payment plans, private and institutional scholarships and cash payments. For the

33

years to date ended June 30, 2016 and 2015, approximately 77% of our institutions’ cash receipts from tuition payments came from Title IV Program funding.

For further discussion of Title IV Program funding and alternative private loan funding sources for our students, see Item 1, “Business - Student Financial Aid and Related Federal Regulation,” in our Annual Report on Form 10-K for the year ended December 31, 2015.

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 institution supplies, and to federal, state and local governments for income and other taxes.

Investing Cash Flows

During the years to date ended June 30, 2016 and 2015, net cash used in investing activities totaled $34.0 million and $4.7 million, respectively.

Purchases and Sales of Available-for-Sale Investments. Purchases and sales of available-for-sale investments resulted in a $35.4 net cash outflow and $2.3 million net cash inflow during the years to date ended June 30, 2016 and 2015, respectively.

Capital Expenditures. Capital expenditures decreased to $2.0 million for the year to date ended June 30, 2016 as compared to $5.0 million for the year to date ended June 30, 2015. Capital expenditures represented approximately 1.0% of total revenue for each of the years to date ended June 30, 2016 and 2015.

Proceeds on sale of assets. We received $3.4 million during the second quarter of 2016 related to the sale of property which occurred in a prior period. This amount was previously recorded as a receivable within receivables, other, net on our condensed consolidated balance sheets.

Financing Cash Flows

During the years to date ended June 30, 2016 and 2015, net cash flows provided by financing activities totaled $10.7 million and $0.4 million, respectively.

Credit Agreement. On December 11, 2015, we entered into an amendment to our Amended and Restated Credit Agreement with BMO Harris Bank N.A., in its capacities as the initial lender and letter of credit issuer thereunder and the administrative agent for the lenders which from time to time may be parties to the Credit Agreement which, among other things, decreased the revolving credit facility to $95.0 million. The revolving credit facility under the Credit Agreement is scheduled to mature on December 31, 2018. Amounts borrowed under the Credit Agreement are required to be secured with 100% cash collateral. The Credit Agreement, which includes certain financial covenants, requires that fees and interest are payable monthly and quarterly in arrears, respectively, and principal is payable at maturity. During the first quarter of 2016, we repaid the $38.0 million which was borrowed under the revolving credit facility under the Credit Agreement during the fourth quarter of 2015. As of June 30, 2016, we have no outstanding borrowings under the revolving credit facility and we remain in compliance with the covenants of the Credit Agreement.  

Restricted Cash. As of June 30, 2016, we had approximately $1.4 million of restricted cash to secure outstanding letters of credit. As of December 31, 2015, our restricted cash balances approximated $49.8 million related to collateralization of borrowings under our Credit Agreement and certificates of deposit to secure outstanding letters of credit. A portion of the decrease in restricted cash relates to the repayment of our borrowings under the Credit Agreement discussed above as well as a change in classification for $9.6 million of restricted funds which are now invested in certificates of deposit which have maturity dates greater than 90 days and therefore are treated as short-term investments.

34

Changes in Financial Position

          Selected condensed consolidated balance sheet account changes from December 31, 2015 to June 30, 2016 were as follows (dollars in thousands):

	June 30,		December 31,
	2016		2015		% Change
ASSETS
CURRENT ASSETS:
Restricted cash	$	1,375	$	49,821		-97	%
Restricted short-term investments		9,610		-	NM
Receivables, other, net		781		5,194		-85	%
NON-CURRENT ASSETS:
Deferred income tax assets, net		130,188		137,716		-5	%
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings		-		38,000		-100	%
Liabilities of discontinued operations		9,376		13,067		-28	%
NON-CURRENT LIABILITIES:
Liabilities of discontinued operations		6,940		9,376		-26	%

35

          Restricted cash: The decrease is primarily driven by the repayment of borrowings under our Credit Agreement and the transfer of restricted funds to short-term investments.

          Restricted short-term investments: The increase is driven by the investment of restricted cash in short-term investments during the current quarter.

          Receivables, other, net: The decrease is primarily driven by the receipt of $3.4 million during the current quarter related to the sale of property in a prior period.

          Deferred income tax assets, net: The decrease is primarily driven by the tax impact of the current net operating losses reducing the deferred tax asset balance.

          Short-term borrowings: The decrease is driven by the repayment during the first quarter of 2016 of the amount borrowed under the revolving credit facility under the Credit Agreement.

          Current and non-current liabilities of discontinued operations: The decrease is driven by the termination and sublease assignments completed for real estate obligations of vacated properties.

Contractual Obligations

As of June 30, 2016, future minimum cash payments under contractual obligations for our non-cancelable operating lease arrangements were as follows (dollars in thousands):

	2016 (4)		2017		2018		2019		2020			2021 & Thereafter		Total
Gross operating lease obligations (1)
CTU	$	1,538	$	1,578	$	1,627	$	1,678	$	1,738		$	679	$	8,838
AIU		6,235		5,708		5,789		5,928		3,074			1,692		28,426
Total University Group		7,773		7,286		7,416		7,606		4,812			2,371		37,264
Corporate and Other		4,799		4,832		4,949		5,037		5,110			9,373		34,100
Subtotal		12,572		12,118		12,365		12,643		9,922			11,744		71,364
Culinary Arts		22,166		20,220		17,085		13,181		8,871			4,937		86,460
Transitional Group		20,466		14,994		12,794		7,384		4,468			4,021		64,127
Discontinued Operations		14,972		12,691		6,734		1,438		620			-		36,455
Total gross operating lease obligations (2)	$	70,176	$	60,023	$	48,978	$	34,646	$	23,881		$	20,702	$	258,406
Sublease income (3)
CTU	$	5	$	13	$	14	$	6	$	-		$	-	$	38
AIU		117		-		-		-		-			-		117
Total University Group		122		13		14		6		-			-		155
Corporate and Other		187		232		237		242		105			-		1,003
Subtotal		309		245		251		248		105			-		1,158
Culinary Arts		2,463		2,544		2,354		1,611		322			54		9,348
Transitional Group		1,185		960		800		516		283			94		3,838
Discontinued Operations		5,564		5,507		1,481		675		691			-		13,918
Total sublease income	$	9,521	$	9,256	$	4,886	$	3,050	$	1,401		$	148	$	28,262
Net operating lease obligations
CTU	$	1,533	$	1,565	$	1,613	$	1,672	$	1,738		$	679	$	8,800
AIU		6,118		5,708		5,789		5,928		3,074			1,692		28,309
Total University Group		7,651		7,273		7,402		7,600		4,812			2,371		37,109
Corporate and Other		4,612		4,600		4,712		4,795		5,005			9,373		33,097
Subtotal		12,263		11,873		12,114		12,395		9,817			11,744		70,206
Culinary Arts		19,703		17,676		14,731		11,570		8,549			4,883		77,112
Transitional Group		19,281		14,034		11,994		6,868		4,185			3,927		60,289
Discontinued Operations		9,408		7,184		5,253		763		(71	)		-		22,537
Total net contractual lease obligations (2)	$	60,655	$	50,767	$	44,092	$	31,596	$	22,480		$	20,554	$	230,144

36

(1) Amounts exclude certain costs associated with real estate leases, such as expense for common area maintenance (i.e., “CAM”) and taxes, as these amounts are undeterminable at this time and may vary based on future circumstances.

(2) Certain real estate properties are shared by campuses within multiple segments. The lease obligations for shared locations are reported under the segment which holds the legal title to the lease.

(3) Amounts provided are for executed sublease arrangements.

(4) Amounts provided are for the full year 2016.

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, and as such, we classify our investment in ARS as non-current on our condensed 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 June 30, 2016, we have determined this investment is at risk for impairment due to the nature of the liquidity of the market over the past several years. Cumulative unrealized losses as of June 30, 2016 amount to $0.5 million and are reflected within accumulated other comprehensive 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.

Interest Rate and Foreign Currency Exposure

Any outstanding borrowings under our revolving credit facility bear annual interest at fluctuating rates under either the Base Rate Loan or as determined by the London Interbank Offered Rate (LIBOR) for the relevant currency, plus the applicable rate based on the type of loan. As of June 30, 2016, we had no outstanding borrowings under this facility.

During 2016 we were subject to foreign currency exchange exposures arising from 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, primarily related to an equity investment. We are subject to risks associated with fluctuations in the value of the Euro or British pound versus the U.S. dollar.

Our financial instruments are recorded at their fair values as of June 30, 2016 and December 31, 2015. We believe that the exposure of our consolidated financial position and results of operations and cash flows to adverse changes in interest rates or foreign currency is not significant.

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 June 30, 2016 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 June 30, 2016, 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,

37

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.

38

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Note 8 “Contingencies” to our unaudited condensed 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, 2015, which was filed with the Securities and Exchange Commission on February 29, 2016.

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 June 30, 2016:

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, 2015							$	183,296,772
January 1, 2016—January 31, 2016		-	$	-		-		183,296,772
February 1, 2016—February 29, 2016		-		-		-		183,296,772
March 1, 2016—March 31, 2016		97,266		4.29		-		183,296,772
April 1, 2016—April 30, 2016		-		-		-		183,296,772
May 1, 2016—May 31, 2016		-		-		-		183,296,772
June 1, 2016—June 30, 2016		17,932		5.70		-		183,296,772
Total		115,198				-

(1) Includes 115,198 shares delivered back to the Company for payment of withholding taxes from employees for vesting restricted stock units pursuant to the terms of the Career Education Corporation 2008 Incentive Compensation Plan.

(2) As of June 30, 2016, 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 5. Other Information

On August 1, 2016, the Board of Directors of the Company approved a new form of Indemnification Agreement (the “New Indemnification Agreement”) to be entered into with our directors, Section 16 executive officers and other designated officers of the Company as of August 1, 2016. The Company may from time to time enter into additional indemnification agreements with future directors, officers and other employees.

For the current directors and executive officers of the Company who had entered into the Company’s previous form of indemnification agreement, which form of agreement was previously filed with the Securities and Exchange Commission, the entry into the New Indemnification Agreement will supersede the previous agreement.

The New Indemnification Agreement generally provides for the indemnification of and the advancing of expenses to the fullest extent permitted by Delaware law. The foregoing summary of the New Indemnification Agreement is qualified in its entirety by reference to Exhibit 10.9 to this Quarterly Report on Form 10-Q and is incorporated herein by reference.

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.

39

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: August 3, 2016	By:	/s/ TODD S. NELSON
		Todd S. Nelson President and Chief Executive Officer (Principal Executive Officer)
Date: August 3, 2016	By:	/s/ ANDREW J. CEDEROTH
		Andrew J. Cederoth Senior Vice President and Chief Financial Officer (Principal Financial Officer)

40

	INDEX TO EXHIBITS
Exhibit Number	Exhibit	Incorporated by Reference to:
*10.1	Career Education Corporation 2016 Incentive Compensation Plan (the "2016 Plan")	Appendix A to our Definitive Proxy Statement on Schedule 14A filed April 8, 2016
*10.2	Form of Employee Non-Qualified Stock Option Agreement under the 2016 Plan	Exhibit 10.1 to our Form 8-K filed May 27, 2016
*10.3	Form of Non-Employee Director Non-Qualified Stock Option Agreement under the 2016 Plan	Exhibit 10.2 to our Form 8-K filed May 27, 2016
*10.4	Form of Restricted Stock Unit Agreement under the 2016 Plan (Time-Based)	Exhibit 10.3 to our Form 8-K filed May 27, 2016
*10.5	Form of Restricted Stock Unit Agreement under the 2016 Plan (Performance-Based)	Exhibit 10.4 to our Form 8-K filed May 27, 2016
*10.6	Form of Cash-Settled Restricted Stock Unit Agreement under the 2016 Plan (Time-Based)	Exhibit 10.5 to our Form 8-K filed May 27, 2016
*10.7	Form of Cash-Settled Restricted Stock Unit Agreement under the 2016 Plan (Performance-Based)	Exhibit 10.6 to our Form 8-K filed May 27, 2016
*10.8	Form of Performance Unit Agreement under the 2016 Plan	Exhibit 10.7 to our Form 8-K filed May 27, 2016
+*10.9	Form of Indemnification Agreement
+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 six months ended June 30, 2016, filed with the SEC on August 3, 2016, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015, (ii) the Unaudited Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the three and six months ended June 30, 2016 and June 30, 2015, (iii) the Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and June 30, 2015, and (iv) Notes to Unaudited Condensed Consolidated Financial Statements
	___
	* Management contract or compensatory plan or arrangement required to be filed as an Exhibit on this Form 10-Q.
	+Filed herewith.

41

EX-10.9

Exhibit 10.9

INDEMNIFICATION AGREEMENT

This INDEMNIFICATION AGREEMENT (this “Agreement”) is made as of ___, 20__, by and between CAREER EDUCATION CORPORATION, a Delaware corporation and the individual designated as Indemnitee on the signature page hereto (“Indemnitee”). Certain terms and phrases used herein have the meanings set forth in subsection 17.8.

RECITALS

A.The Board has determined that, in order to attract and retain qualified individuals such as Indemnitee as officers and/or as members of the Board, it is reasonable, prudent and necessary for the Company to contractually obligate itself to indemnify and to advance expenses on behalf of directors and certain officers to the fullest extent permitted (and not merely to the extent affirmatively permitted) by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified.

B.The DGCL and Career Education Corporation’s Restated Certificate of Incorporation (Article XII, Section A.6) expressly provide that the indemnification provisions set forth therein are not exclusive and contemplate that agreements with respect to indemnification may be entered into between the Company and directors, officers or other persons. This Agreement is a supplement to and in furtherance of Career Education Corporation’s Restated Certificate of Incorporation, its Bylaws and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

C.The Company has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve or continue to serve as a director or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director or officer of the Company. Indemnitee is willing to serve or continue to serve and to take on additional service for or on behalf of the Company on the condition that he or she be so indemnified.

Now, therefore, in consideration of the promises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

Section 1.Services to the Company. Indemnitee will serve or continue to serve as a director, officer, or both, of the Company at the will of the Company and its stockholders for so long as Indemnitee is duly elected or appointed or until Indemnitee tenders his or her resignation. As provided in section 16, the obligations of the Company under this Agreement will continue in full force and effect notwithstanding any resignation or termination that may occur.

Section 2.Indemnity in Third-Party Proceedings. The Company shall indemnify Indemnitee in accordance with the provisions of this section 2 if Indemnitee is, or is threatened to be made, a party to or a witness in or otherwise participates in any Third-Party Proceeding. Pursuant to this section 2, Indemnitee shall be indemnified against all Expenses and Liabilities actually and reasonably incurred by Indemnitee or on his or her behalf in connection with such Third-Party Proceeding or any claim, issue or matter therein, if Indemnitee acted in

1

good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal proceeding, had no reasonable cause to believe that such conduct was unlawful. A “Third-Party Proceeding” is a Proceeding other than a Proceeding by or in the right of the Company to procure a judgment in its favor. 

Section 3.Indemnity in Proceedings by or in the Right of the Company. The Company shall indemnify Indemnitee in accordance with the provisions of this section 3 if Indemnitee is, or is threatened to be made, a party to or a witness in or otherwise participates in any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this section 3, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by him or her, or on his or her behalf, in connection with such Proceeding or any claim, issue or matter therein and to the extent permitted by law, amounts paid in settlement, if Indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company. No indemnification for Expenses shall be made under this section 3 in respect of any claim, issue or matter as to which Indemnitee has been finally adjudged by a court or determined by an arbitrator to be liable to the Company, unless and only to the extent that the arbitrator or the Delaware Court of Chancery or any court in which the Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification.

Section 4.Indemnification for Expenses of a Party Who Is Wholly or Partly Successful.

4.1In any Proceeding referred to in section 3, if Indemnitee is not wholly successful in such Proceeding, but has been adjudged to be liable to the Company as to one or more but less than all claims, issues or matters in such Proceeding, no indemnification shall be made in respect of any claim, issue or matter as to which Indemnitee has been adjudged to be liable to the Company unless and only to the extent that the arbitrator or the Delaware Court of Chancery or any court in which the Proceeding was brought shall determine upon application that, despite the adjudication of liability to the Company, in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to such indemnification. However, in any Proceeding referred to in section 3, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or her, or on his or her behalf, and, to the extent permitted by law, amounts paid in settlement, in connection with each claim, issue or matter as to which Indemnitee is successful on the merits or reaches a settlement.

4.2To the extent that Indemnitee is successful on the merits or otherwise in defense of any Proceeding (including any Proceeding referred to in section 3), or in defense of any claim, issue or matter therein, Indemnitee shall be indemnified and held harmless by the Company to the fullest extent authorized by applicable law, as the same exists or may hereafter be amended, against all Expenses actually and reasonably incurred or suffered by Indemnitee or on Indemnitee’s behalf in connection therewith. Indemnification pursuant to this subsection 4.2 shall not require a determination pursuant to section 10.

4.3For purposes of this section 4 and without limitation, the termination of any claim, issue or matter in a Proceeding in which Indemnitee is a defendant by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

2

Section 5.Additional Indemnification. 

5.1Notwithstanding any limitation in section 2, 3 or 4, if Indemnitee is, or is threatened to be made, a party to or a witness in or otherwise participates in any Proceeding, the Company shall indemnify Indemnitee to the extent permitted by law  against all Expenses and Liabilities actually and reasonably incurred by Indemnitee in connection with the Proceeding,

(a)unless Indemnitee’s conduct constitutes a breach of Indemnitee’s duty of loyalty to the Company or its stockholders;

(b)except for liability for acts or omissions that are not in good faith or that involve intentional misconduct or a knowing violation of law;

(c)except for liability under section 174 of the DGCL; or

(d)except for liability relating to any transaction from which Indemnitee derived an improper benefit.

5.2For purposes of subsection 5.1, the meaning of the phrase “to the extent permitted by law” means:

(a)the fullest extent permitted by DGCL § 145(f), which authorizes or contemplates additional indemnification by agreement, or a corresponding provision of any amendment to or replacement of the DGCL; and

(b)the fullest extent authorized or permitted by any DGCL amendments or replacements that are adopted after the date of this Agreement and that increase the extent to which a corporation may indemnify its officers and directors.

Section 6.Exclusions. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any payment for indemnity including Expenses and Liabilities:

(a)to the extent that payment of the amount for which Indemnitee seeks indemnification, or a portion thereof, has actually been made to or on behalf of Indemnitee under any insurance policy, contract, agreement or otherwise; or

(b)to the extent that the amount for which Indemnitee seeks indemnification, or a portion thereof, is based upon an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of section 16(b) of the Exchange Act or similar provisions of state statutory law or common law; or

(c)for the payment of amounts required to be reimbursed to the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002, as amended, or any similar successor statute; or

(d)in connection with any Proceeding (or any part of any Proceeding) initiated or brought voluntarily by Indemnitee and including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers or  

3

employees, unless (i) such indemnification is expressly required to be made by Delaware law,(ii) such claim is brought to enforce Indemnitee’s rights under this Agreement,  (iii) the Proceeding (or any part thereof) was authorized by a majority of the Disinterested Directors (as defined in section 9.1), (iv) there has been a Change of Control (as defined in section 9.3) or (v) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law; or 

(e)where the making of such payment would violate applicable law.

The exclusion set forth in paragraph 6(d) does not apply to counterclaims or affirmative defenses asserted by Indemnitee in a Proceeding brought against Indemnitee.

Section 7.Advancement of Expenses.

7.1Right to Advancement of Expenses. Without regard to Indemnitee’s ultimate entitlement to indemnification under other provisions of this Agreement, the Company shall pay the Expenses as incurred by Indemnitee or reimburse Indemnitee for his or her payment of such Expenses in connection with any Proceeding within thirty days after the Company receives a written request for advancement of expenses. If the DGCL so requires, advancement of Expenses by the Company under this section 7 shall be made only upon delivery to the Company of an undertaking. Such undertaking shall constitute Indemnitee’s agreement that (a) he or she shall repay the Expenses advanced by the Company to the extent that a final judicial decision from which there is no further right to appeal ultimately determines that Indemnitee is not entitled to be indemnified by the Company and (b) that, in consideration for the advancement of such expenses, the Company may, at its sole discretion, select counsel for Indemnitee as provided in subsection 7.2, assume the defense or otherwise participate in the defense of such Proceeding. Advancement of Expenses pursuant to this section 7 shall be unsecured and interest free. The Company shall advance Expenses without regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement. The Company’s obligation to advance expenses shall include any and all reasonable Expenses incurred pursuing an action to enforce Indemnitee’s right to advancement of Expenses, including Expenses incurred preparing and forwarding statements to the Company to support the advancement claimed. This section 7 shall not apply to Indemnitee's claim for any Expenses for which indemnity is excluded pursuant to section 6. Nothing herein shall be construed to limit the Company’s right to seek damages, including the full amount of the Expenses paid by the Company hereunder, from Indemnitee.

7.2Selection of Defense Counsel and Liability for Fees of Counsel. The selection by the Company of defense counsel for Indemnitee in connection with any Proceeding shall be made only with Indemnitee's approval, which shall not be unreasonably withheld, upon the delivery to Indemnitee of written notice of the Company’s election to do so. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees and expenses of counsel subsequently incurred by Indemnitee with respect to the same Proceeding, provided that (i) Indemnitee shall have the right to employ his or her counsel in any such Proceeding at Indemnitee’s expense, and (ii) if (1) the employment of counsel by Indemnitee was authorized by the Company, (2) Indemnitee reasonably concludes that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense, or (3) the Company shall not, in fact, have employed counsel to assume the defense of such

4

Proceeding, then the fees and expenses of Indemnitee’s counsel shall be at the expense of the Company. 

Section 8.Notification of Indemnification Claim. Indemnitee shall, as a condition precedent to his or her right to be indemnified under this Agreement, give the Company notice in writing as soon as practicable of any claim that is made against Indemnitee and for which indemnification will or could be sought under this Agreement. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter that will or could be subject to indemnification or advancement of Expenses covered hereunder. The Secretary of the Company shall, promptly upon receiving such notice, advise the Board in writing of such notice. The failure of Indemnitee to timely notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise, unless and only to the extent that such failure to give timely notice materially prejudices the Company. The omission to notify the Company will not relieve the Company from any liability for indemnification which it may have to Indemnitee otherwise than under this Agreement.

Section 9.Procedure upon Application for Indemnification.

9.1Determination of Indemnification. Upon final disposition of a Proceeding for which indemnification is sought pursuant to section 2 or section 3, Indemnitee shall submit promptly (and, in any event, no later than the applicable statute of limitations) to the Board a written request for indemnification averring that he or she met the applicable standard of conduct set forth herein. Any indemnification made under this Agreement pursuant to section 2 or section 3 shall be made by the Company only as authorized in the specific case upon a determination that indemnification of Indemnitee is proper in the circumstances because Indemnitee met the applicable standard of conduct. Such determination shall be made in the following manner and, in any event, no later than sixty (60) calendar days after receipt of such indemnification request: (a) if a Change in Control has occurred and Indemnitee is not a director or executive officer at the time of such determination, by independent counsel in a written opinion to the Board, a copy of which opinion shall be delivered to Indemnitee; and (b) in any other circumstance: (i) by a majority vote of the Disinterested Directors, even though less than a quorum of the Board; (ii) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Board; (iii) if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by independent counsel in a written opinion to the Board, a copy of which opinion shall be delivered to Indemnitee; or (iv) if so directed by the Board, by the stockholders of the Company, and if Indemnitee is determined to be entitled to indemnification, payment to Indemnitee shall be made within thirty days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination (the “Reviewing Party”) with respect to Indemnitee’s entitlement to indemnification, including providing to the Reviewing Party upon reasonable advance request any documentation or information that is not privileged or otherwise protected from disclosure and that is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the Reviewing Party, as well as the fees and expenses of any independent counsel acting as the Reviewing Party, shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification), and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom. As used in this subsection 9.1, a

5

“Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee. 

9.2Selection of Independent Counsel. If a determination of entitlement to indemnification is to be made by independent counsel pursuant to subsection 9.1, the independent counsel shall be a law firm, or a member of a law firm, (a) that is experienced in matters of corporation law; (b) that as of the date of selection neither is, nor in the past five years was, retained to represent (i) the Company or Indemnitee in any matter material or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder; (c) that would not, under the applicable standards of professional conduct then prevailing, have a conflict of interest representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement; and (d) that is selected as provided in this subsection 9.2. If a Change in Control does not occur, the independent counsel shall be selected by the Board within ten days of submission of a written request by Indemnitee for indemnification pursuant to subsection 9.1, and the Company shall give written notice to Indemnitee advising him or her of the identity of the independent counsel so selected. If a Change in Control has occurred, the independent counsel shall be selected by Indemnitee within ten days of submission of a written request by Indemnitee for indemnification pursuant to subsection 9.1 (unless Indemnitee shall request that such selection be made by the Board, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the independent counsel so selected. In either event, Indemnitee or the Company, as the case may be, may, within ten days after such written notice of selection is given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the independent counsel so selected does not meet the requirements set forth in the first sentence of this subsection 9.2, and the objection shall set forth with particularity the factual basis of such assertion. The objection must also include a proposed substitute independent counsel. If objection including a proposed substituted independent counsel is timely made, such substituted independent counsel shall serve as independent counsel unless objected to within ten days. An objection to the substituted independent counsel may be asserted only on the ground that the independent counsel so selected does not meet the requirements set forth in the first sentence of this subsection 9.2, and the objection shall set forth with particularity the factual basis of such assertion. If written objection is made, the independent counsel or substituted independent counsel proposed may not serve as independent counsel unless and until such objection is withdrawn or a court determines that such objection is without merit. If, within thirty days after submission by Indemnitee of a written request for indemnification pursuant to subsection 9.1, the parties do not agree upon the selection of the independent counsel, either the Company or Indemnitee may petition a court of competent jurisdiction for resolution of any objection that the Company or Indemnitee makes to the other’s selection of independent counsel and/or for the appointment as independent counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as independent counsel under subsection 9.1.

9.3“Change in Control” Defined. For purposes of this section 9, a “Change in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:

(a)Acquisition of Stock by Third Party. Any Person (as defined in paragraph 9.3(f)) is or becomes the Beneficial Owner (as defined in Rule 13d-3 under the

6

Exchange Act), directly or indirectly, of securities of the Company representing 35% (thirty-five percent)or more of the combined voting power of the Company’s then outstanding securities. 

(b)Change in Board of Directors. During any period of two consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board (together with any new directors (other than directors designated by a Person who has entered into an agreement with the Company to effect a transaction described in paragraph 9.3(a), (c) or (d)) whose election to the Board or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least a majority of the members of the Board.

(c)Corporate Transactions. A reorganization, merger or consolidation of the Company with any other entity becomes effective, unless such reorganization, merger or consolidation would result in the voting securities of the Company outstanding immediately prior to such reorganization, merger or consolidation continuing to represent (by remaining outstanding or by being converted into voting securities of the surviving entity, including the parent corporation of such surviving entity) more than half of the combined voting power of the voting securities of the surviving entity outstanding immediately after such reorganization, merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity.

(d)Liquidation. The stockholders of the Company approve a complete liquidation or dissolution of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets.

(e)Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act, whether or not the Company is then subject to such reporting requirement.

(f)“Person” Defined. For purposes of subsection 9.3, “Person” has the meaning as set forth in sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the Company or a person or entity that directly or indirectly controls, is controlled by, or is under common control with, the Company; (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company; and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

Section 10.Certain Presumptions and Effect of Certain Proceedings.

10.1The submission of an application for indemnification to the Board shall create a rebuttable presumption that Indemnitee is entitled to indemnification under this Agreement, and the Board, independent counsel or stockholders, as the case may be, may, at any time, specifically determine that Indemnitee is so entitled, unless it or they possess sufficient evidence to rebut the presumption that Indemnitee met the applicable standard of conduct. If a determination is made pursuant to this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced

7

pursuant to section 11, absent (a) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (b) a prohibition of such indemnification under applicable law. Neither the failure of the Company (including by its directors or independent counsel) to make a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or independent counsel) that Indemnitee did not meet such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee did not meet the applicable standard of conduct. Moreover, the fact that the Company paid Indemnitee’s Expenses pursuant to section 7 herein shall not create a presumption that Indemnitee met the applicable standard of conduct for indemnification.  

10.2The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner that he or she reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his or her conduct was unlawful.

10.3For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the bests interests of the Company, and, with respect to any criminal proceeding, be deemed to have acted in without reasonable cause to believe his conduct was unlawful if Indemnitee’s action is based on (a) the advice of legal counsel for the Company, (b) information or records given or reports made to the Company by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Company,(c) records or books of account of the Company, including financial reports, or information supplied to Indemnitee by officers of the Company in the course of their duties, or (d) if Indemnitee is a director, reports made by a committee of the Board on which committee Indemnitee does not serve as to a matter within such committee’s designated authority. The provisions of this subsection 10.3 shall not be deemed exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

10.4To the extent legally permissible, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Company (and any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise) was shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

Section 11.Remedies of Indemnitee.

11.1If (a) a determination is made pursuant to section 9 that Indemnitee is not entitled to indemnification under this Agreement, (b) advancement of Expenses is not timely made pursuant to section 9, or (c) payment of indemnification pursuant to section 2, 3, 4 or 5 is not made within thirty days after a determination is made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication by such court specified in section

8

17.7 of his or her entitlement to such indemnification or advancement of Expenses. Alternatively,Indemniteeathisorheroptionmayseekanawardinarbitration.Ifthepartiesareunabletoagreeonanarbitratorwithintwenty(20)days,thepartiesshallprovideJAMS (“JAMS”)withastatementofthenatureofthedisputeandthedesiredqualificationsofthearbitrator.JAMS willthenprovidealistofthreeavailablearbitrators.Eachpartymaystrikeoneofthenamesonthelist,andtheremainingpersonwillserveasthearbitrator.Ifbothpartiesstrikethesameperson,JAMSwillselectthearbitratorfromtheothertwonames.Thearbitrationawardshallbemadewithinninety(90)daysfollowingthedemandforarbitration.Exceptassetforthherein,theprovisionsofDelawarelawshallapplytoanysucharbitration.InanysuchproceedingorarbitrationIndemniteeshallbepresumedtobeentitledtoindemnificationunderthisAgreementandtheCompanyshallhavetheburdenofproofbyclearandconvincingevidencetoovercomethatpresumption. 

11.2If Indemnitee successfully sues the Company for indemnification or advancement of Expenses, and is successful in whole or in part, Indemnitee shall be entitled to be paid by the Company for the Expenses of prosecuting such suit. If the Company sues Indemnitee to recover Expenses paid and Indemnitee is successful in defending such suit, in whole or in part, Indemnitee shall be entitled to be paid the Expenses of defending such suit.

11.3If a determination is made under this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this section 11 shall be conducted in all respects as a de novo trial on the merits, and Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial or arbitral proceeding pursuant to this section 11, the Company shall have the burden of proving by clear and convincing evidence that Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.

11.4The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this section 11 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement. The Company shall indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within thirtydays after the Company receives a written request therefor) advance all such Expenses that Indemnitee incurs in connection with any action brought by Indemnitee for indemnification or advancement of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.

11.5The CompanyandIndemniteeagreehereinthatamonetaryremedyforbreachofthis Agreement,atsomelaterdate,willbeinadequate,impracticableanddifficulttoprove,andfurtheragreethat suchbreachwouldcauseIndemniteeirreparableharm.Accordingly,theCompanyandIndemniteeagree thatIndemniteeshallbeentitledtotemporaryandpermanentinjunctiverelieftoenforcethisAgreement withoutthenecessityofprovingactualdamagesorirreparableharm.TheCompanyandIndemniteefurther agreethatIndemniteeshallbeentitledtosuchinjunctiverelief,includingtemporaryrestrainingorders, preliminaryinjunctionsandpermanentinjunctions,withoutthenecessityofpostingbondorotherundertaking inconnectiontherewith.Anysuchrequirementofbondorundertakingisherebywaivedbythe

9

Company, andtheCompanyacknowledgesthatintheabsenceofsuchawaiver,abondorundertakingmayberequiredbythecourt 

Section 12.Nonexclusivity; Survival of Rights; Limitation on Certain Actions. The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Company’s Certificate of Incorporation, the Company’s Bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee prior to such amendment, alteration or repeal. To the extent that a change in applicable law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Company’s Certificate of Incorporation, Bylaws and this Agreement, the parties hereto intend that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy. The Company shall not adopt any amendment to its Restated Certificate of Incorporation or Bylaws the effect of which would be to deny, diminish or encumber Indemnitee’s rights to indemnification, contribution and advancement hereunder.

Section 13.Contribution.

13.1Whetherornottheindemnificationprovidedinsections 2 through 5 hereofisavailable,inrespect ofanyProceedinginwhichtheCompanyisjointlyliablewithIndemnitee(orwouldbeifjoinedinsuch Proceeding),theCompany, in lieu of indemnifying Indemnitee,shallcontribute,tothefullestextentpermittedbyapplicable law,the amount of any ExpensesandLiabilities actually and reasonably incurredand paid or payable by Indemnitee as a result of such Liabilities or Expenses in such proportion as is appropriate to reflect (a) the relative benefits received by the Company, on the one hand, and Indemnitee, on the other hand, in connection with the action or inaction that resulted in such Liabilities or Expenses and (b) the relative fault of the Company (and its directors, officers, employees and agents), on the one hand, and the Indemnitee, on the other hand, in connection therewith, as well as any other relevant equitable considerations.  The relative fault of the Company and Indemnitee shall be determined by reference to, among other things, (i) whether an untrue or alleged untrue statement of a material fact or an omission or alleged omission to state a material fact relates to information supplied by the Company or Indemnitee, (ii) the parties' relative intent, knowledge, access to information and opportunity to correct or prevent the circumstances resulting in such Liabilities or Expenses, (iii) the degree to which the parties' actions were motivated by intent to gain personal profit or advantage, (iv) the degree to which the parties' liability is primary or secondary, and (v) the degree to which the parties' conduct is active or passive.  The Company and Indemnitee agree that it would not be just and equitable if contribution pursuant to this section 13.1 were determined by pro rata or per capita allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this section 13.1.  The CompanyshallnotenterintoanysettlementofanyProceedinginwhichthe

10

CompanyisjointlyliablewithIndemnitee(orwouldbeifjoinedinsuchProceeding)unlesssuchsettlementprovidesforafullandfinalreleaseofallclaimsassertedagainstIndemnitee. Neither the Company nor the Indemnitee shall unreasonably withhold its or his consent to any proposed settlement; provided that the Indemnitee may withhold consent to any settlement that does not provide a complete and unconditional release of the Indemnitee.  To the fullest extent permitted by Delaware law, the Company’s assumption of the defense of a Claim pursuant to this section 13.1 will constitute an irrevocable acknowledgement by the Company that any Indemnifiable Expenses incurred by or for the account of Indemnitee incurred in connection therewith are indemnifiable by the Company under section 2 of this Agreement. 

Section 14.Insurance. The Company shall, from time to time, make the good-faith determination whether or not the Company’s obtaining and maintaining a policy or policies of insurance with reputable insurance companies providing the directors, officers, employees or agents of the Company with coverage for losses from wrongful acts, or ensuring the Company’s performance of its indemnification obligations under this Agreement, is practicable. Among other considerations, the Company shall weigh the costs of obtaining such insurance coverage against the protection afforded by such coverage. To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors of the Company or of any other corporation, partnership, joint venture, trust, employee benefits plan or other enterprise that Indemnitee serves at the request of the Company, Indemnitee shall be covered by such policy or policies in such manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company’s directors. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

Section 15.Subrogation. In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers reasonably required and take all reasonable action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

Section 16.Effectiveness and Duration of Agreement.

16.1Effectiveness. This Agreement shall be effective as of the date of this Agreement and may apply to Indemnitee’s acts or omissions that occurred prior to such date if Indemnitee was an officer, director, employee or other agent of the Company, or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, limited liability company, trust or other enterprise, at the time such act or omission occurred, and shall continue to exist after the rescission or restrictive modification of this Agreement with respect to events occurring prior to such rescission or restrictive modification.

16.2Duration. This Agreement shall continue so long as Indemnitee shall be subject to any possible Proceeding.

11

Section 17.General Provisions. 

17.1Successors and Assigns. This Agreement shall be binding upon the Company and its successors and assigns and shall inure to the benefit of Indemnitee and his or her spouse, heirs, assigns, devisees, executors, administrators, and other legal representatives.

17.2Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

17.3Partial Indemnity.  If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of any Expenses or Liabilities of any kind whatsoever incurred by him or her in the investigation, defense, settlement or appeal of a Proceeding but not entitled to all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for such total amount except as to the portion thereof for which it has been determined pursuant to sections 9 and 10 hereof that Indemnitee is not entitled.

17.4Entire Agreement. Except as otherwise specified herein, this Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof. Any Proceedings or other matters as to which a request for indemnification has been made by Indemnitee as of the date hereof will continue to be handled pursuant to any prior agreement. Any Proceedings or other matters as to which a request for indemnification has not been made by Indemnitee as of the date hereof will be handled pursuant to this Agreement.

17.5Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties thereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement, nor shall any waiver constitute a continuing waiver.

17.6Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been given (a) when delivered personally, or (b) if sent by a reputable overnight courier service, on the date delivery is shown as made in such service’s tracking system, and shall be addressed as follows:

If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee shall provide to the Company.

If to the Company, to

12

Career Education Corporation 

231 North Martingale Road

Schaumburg, Illinois 60173

Attention: General Counsel

Or to any other address as may be furnished to Indemnitee by the Company.

17.7Applicable Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict-of-laws rules or any other law or rule that would cause the laws of any other jurisdiction to apply. The Company and Indemnitee hereby irrevocably and unconditionally (a) agree that, unless Indemniteehas sought anawardinarbitration, any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Delaware Court of Chancery, and not in any other state or federal court in the United States of America or any court in any other country; (b) consent to submit to the exclusive jurisdiction of the Delaware Court of Chancery for purposes of any action or proceeding arising out of or in connection with this Agreement; (c) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court of Chancery; and (d) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court of Chancery has been brought in an improper or inconvenient forum.

17.8Certain Definitions. As used in this Agreement:

(a)The “Board” means the board of directors of the Company.

(b) The “Company” means Career Education Corporation, a Delaware corporation, and, in addition to Career Education Corporation, any corporation, partnership, joint venture, limited liability company, trust or other enterprise of which such Indemnitee is or was serving as a director, officer, employee or agent of or at the request of the Company, or any corporation that results from or survives a consolidation or merger with Career Education Corporation as well as any corporation resulting from a consolidation or merger that, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that if Indemnitee is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, limited liability company, trust or other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued.

(c)The “DGCL” means the Delaware General Corporation Law.

(d)The “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(e)“Expenses” mean all reasonable attorneys’ and accountants’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating

13

costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, settling or negotiating for the settlement of, or otherwise being involved with, a Proceeding. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding, including the premium, security for and other costs relating to any cost bond, supersedeas bond or other appeal bond or its equivalent. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee. 

(f)“Liabilities” means all damages, liabilities and losses of any type whatsoever, including, but not limited to, judgments, penalties, arbitral awards, fines, ERISA or other excise taxes and penalties, and amounts paid in settlement (including all interest, assessments or other charges paid or payable in connection with any of the foregoing).

(g)“Proceeding” means any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation (including any internal corporate investigation), inquiry, administrative hearing or any other actual, threatened or completed proceeding, including any and all appeals, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative, investigative or other nature, whether formal or informal, in which Indemnitee was, is or will be a party to or a witness in or otherwise participates in by reason of the fact that Indemnitee is or was a director or officer of the Company, by reason of any action taken or omission by him or her or of any action or omission on his or her part while acting as director or officer of the Company, or by reason of the fact that he or she is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of another corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement or advancement of expenses can be provided under this Agreement or the DGCL, except one initiated by Indemnitee to enforce his or her rights under this Agreement. Any Indemnitee serving, in any capacity, (i) another corporation of which a majority of the shares entitled to vote in the election of its directors are held by the Company, or (ii) any employee benefit plan of the Company or of any corporation referred to in clause (i), shall be deemed to be doing so at the request of the Company.

(h)References to “fines” include any excise tax assessed with respect to any employee benefit plan; references to “serving at the request of the Company” include any service as a director, officer, employee or agent of the Company imposing duties on, or involving services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he or she reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.

(i)The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

14

(j)Unless otherwise specified, references to sections, subsections and paragraphs are references to sections, subsections and paragraphs of this Agreement. 

(k)The words “include” or “including” as used in this Agreement are deemed to be followed by the words “without limitation.”

(l)The masculine pronoun shall be deemed to include usage of the feminine pronoun and the feminine pronoun shall be deemed to include usage of the masculine pronoun where appropriate.

17.9Interpretation of Agreement.  It is understood that the parties hereto intend this Agreement to be interpreted and enforced so as to provide indemnification to Indemnitee to the fullest extent not now or hereafter prohibited by law. To the extent that a change in applicable law (whether by statute or judicial decision) shall permit broader indemnification or advancement of expenses than is provided under the terms of the Certificate of Incorporation and/or Bylaws and this Agreement, Indemnitee shall be entitled to such broader indemnification and advancements, and this Agreement shall be deemed to be automatically amended to such extent.

17.10Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same instrument. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

IN WITNESS WHEREOF, the parties have caused this Indemnification Agreement to be signed as of the day and year first above written.

CAREER EDUCATION CORPORATION

By:

Its:

INDEMNITEE

Address of Indemnitee:

15

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Todd S. Nelson, 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: August 3, 2016

/s/ TODD S. NELSON

Todd S. Nelson

President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Andrew J. Cederoth, 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: August 3, 2016

/s/ ANDREW J. CEDEROTH

Andrew J. Cederoth

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 June 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Todd S. Nelson, 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/ TODD S. NELSON

Todd S. Nelson

President and Chief Executive Officer

August 3, 2016

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 June 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Andrew J. Cederoth, 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/ ANDREW J. CEDEROTH

Andrew J. Cederoth

Senior Vice President and Chief Financial Officer

August 3, 2016

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

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Jul. 29, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
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		68,458,130

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands		Jun. 30, 2016	Dec. 31, 2015
CURRENT ASSETS:
Cash and cash equivalents, unrestricted		$ 49,663	$ 66,919
Restricted cash		1,375	49,821
Restricted short-term investments		9,610
Short-term investments		140,812	114,901
Total cash and cash equivalents, restricted cash and short-term investments		201,460	231,641
Student receivables, net of allowance for doubtful accounts of $19,233 and $18,013 as of June 30, 2016 and December 31, 2015, respectively		27,502	31,618
Receivables, other, net		781	5,194
Prepaid expenses		16,160	14,380
Inventories		2,107	3,353
Other current assets		1,537	2,523
Assets of discontinued operations		159	254
Total current assets		249,706	288,963
NON-CURRENT ASSETS:
Property and equipment, net		48,574	58,249
Goodwill		87,356	87,356
Intangible assets, net		8,900	9,300
Student receivables, net of allowance for doubtful accounts of $1,775 and $2,216 as of June 30, 2016 and December 31, 2015, respectively		3,333	3,958
Deferred income tax assets, net		130,188	137,716
Other assets		16,043	16,562
Assets of discontinued operations		8,694	8,811
TOTAL ASSETS	[1]	552,794	610,915
CURRENT LIABILITIES:
Short-term borrowings			38,000
Accounts payable		13,831	25,906
Accrued expenses:
Payroll and related benefits		32,120	38,789
Advertising and marketing costs		10,325	11,788
Income taxes		1,600	1,061
Other		24,701	24,082
Deferred tuition revenue		37,398	40,112
Liabilities of discontinued operations		9,376	13,067
Total current liabilities		129,351	192,805
NON-CURRENT LIABILITIES:
Deferred rent obligations		39,152	45,927
Other liabilities		23,192	25,197
Liabilities of discontinued operations		6,940	9,376
Total non-current liabilities		69,284	80,500
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; 83,431,251 and 82,996,585 shares issued, 68,418,122 and 68,098,654 shares outstanding as of June 30, 2016 and December 31, 2015, respectively		834	830
Additional paid-in capital		612,449	610,784
Accumulated other comprehensive loss		(330)	(880)
Accumulated deficit		(42,668)	(57,518)
Cost of 15,013,129 and 14,897,931 shares in treasury as of June 30, 2016 and December 31, 2015, respectively		(216,126)	(215,606)
Total stockholders' equity		354,159	337,610
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$ 552,794	$ 610,915

[1] Total assets do not include intercompany receivable or payable activity between schools and corporate and investments in subsidiaries.

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Statement Of Financial Position [Abstract]
Student receivables, allowance for doubtful accounts, current	$ 19,233	$ 18,013
Student receivables, allowance for doubtful accounts, non-current	$ 1,775	$ 2,216
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	83,431,251	82,996,585
Common stock, shares outstanding	68,418,122	68,098,654
Treasury, Shares in treasury	15,013,129	14,897,931

XML

Unaudited Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended			6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015		Jun. 30, 2016	Jun. 30, 2015
REVENUE:
Tuition and registration fees	$ 181,432	$ 215,747		$ 379,217	$ 441,438
Other	1,194	1,081		2,295	2,404
Total revenue	182,626	216,828		381,512	443,842
OPERATING EXPENSES:
Educational services and facilities	58,062	73,064		119,600	147,958
General and administrative	102,072	145,171		225,635	308,844
Depreciation and amortization	5,202	7,113		11,771	13,899
Asset impairment		11,372		237	17,391
Total operating expenses	165,336	236,720		357,243	488,092
Operating income (loss)	17,290	(19,892)		24,269	(44,250)
OTHER INCOME (EXPENSE):
Interest income	301	224		566	384
Interest expense	(116)	(170)		(352)	(332)
Loss on sale of business		(917)			(917)
Miscellaneous (expense) income	(231)	5		(14)	(375)
Total other (expense) income	(46)	(858)		200	(1,240)
PRETAX INCOME (LOSS)	17,244	(20,750)		24,469	(45,490)
Provision for (benefit from) income taxes	4,620	(747)		8,755	(958)
INCOME (LOSS) FROM CONTINUING OPERATIONS	12,624	(20,003)		15,714	(44,532)
LOSS FROM DISCONTINUED OPERATIONS, net of tax	(785)	(720)		(864)	(1,072)
NET INCOME (LOSS)	11,839	(20,723)		14,850	(45,604)
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
Foreign currency translation adjustments	(97)			96
Unrealized gains (losses) on investments	131	(43)		454	152
Total other comprehensive income (loss)	34	(43)		550	152
COMPREHENSIVE INCOME (LOSS)	$ 11,873	$ (20,766)		$ 15,400	$ (45,452)
NET INCOME (LOSS) PER SHARE - BASIC and DILUTED:
Income (loss) from continuing operations	$ 0.18	$ (0.29)		$ 0.23	$ (0.66)
Loss from discontinued operations	(0.01)	(0.02)		(0.01)	(0.01)
Net income (loss) per share	$ 0.17	$ (0.31)		$ 0.22	$ (0.67)
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic	68,368	67,893	[1]	68,261	67,714	[1]
Diluted	69,015	67,893	[1]	68,627	67,714	[1]

[1] Due to the fact that we reported a loss from continuing operations for the quarter and year to date ended June 30, 2015, 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 quarter and year to date ended June 30, 2015.

XML

Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ 14,850	$ (45,604)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Asset impairment	237	17,391
Depreciation and amortization expense	11,771	13,899
Bad debt expense	14,769	9,138
Compensation expense related to share-based awards	1,391	1,470
Loss on sale of businesses, net		917
(Gain) loss on disposition of property and equipment	(238)	3
Changes in operating assets and liabilities	(36,733)	(23,809)
Net cash provided by (used in) operating activities	6,047	(26,595)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale investments	(93,689)	(33,707)
Sales of available-for-sale investments	58,330	36,051
Purchases of property and equipment	(1,970)	(4,994)
Proceeds on the sale of assets	3,400
Payments of cash upon sale of businesses	(62)	(2,018)
Net cash used in investing activities	(33,991)	(4,668)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock	278	939
Payment on borrowings	(38,000)	(10,000)
Change in restricted cash	48,446	9,500
Net cash provided by financing activities	10,724	439
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS:	(36)	258
NET DECREASE IN CASH AND CASH EQUIVALENTS	(17,256)	(30,566)
CASH AND CASH EQUIVALENTS, beginning of the period	66,919	93,832
CASH AND CASH EQUIVALENTS, end of the period	$ 49,663	$ 63,266

XML

Description of the Company

6 Months Ended

Jun. 30, 2016

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Description of the Company

1. DESCRIPTION OF THE COMPANY

Career Education’s academic institutions offer a quality education to a diverse student population in a variety of disciplines through online, campus-based and hybrid learning programs. Our two universities – American InterContinental University (“AIU”) and Colorado Technical University (“CTU”) – provide degree programs through the master’s or doctoral level as well as associate and bachelor’s levels. Both universities predominantly serve students online with career-focused degree programs that are designed to meet the educational demands of today’s busy adults. AIU and CTU continue to show innovation in higher education, advancing new personalized learning technologies like their intellipath™ adaptive learning platform that allow students to more efficiently pursue earning a degree by receiving course credit for knowledge they can already demonstrate. Career Education is committed to providing quality education that closes the gap between learners who seek to advance their careers and employers needing a qualified workforce.

Additionally, CEC is in the process of teaching out campuses within our Transitional Group and Culinary Arts segments. Students enrolled at these campuses are afforded the reasonable opportunity to complete their program of study prior to the final teach-out date.

A listing of individual campus locations and web links to Career Education’s colleges, institutions and universities can be found at www.careered.com.

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 “college,” “institution” and “university” refer to an individual, branded, for-profit 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 colleges, institutions or universities.

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2016

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation

2. BASIS OF PRESENTATION

The accompanying unaudited condensed 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 June 30, 2016 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2016.

The unaudited condensed consolidated financial statements presented herein include the accounts of Career Education Corporation and our wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated.

Our reporting segments are determined in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280 – Segment Reporting and are based upon how the Company analyzes performance and make decisions. We organize our business across four reporting segments: CTU, AIU (comprises University Group); Culinary Arts and Transitional Group (comprises Career Schools Group). Campuses included in our Transitional Group and Culinary Arts segments are currently being taught out and no longer enroll new students. These campuses employ a gradual teach-out process, enabling them to continue to operate while current students have a reasonable opportunity to complete their course of study. All prior periods have been recast to reflect our segments on a comparable basis.

During the second quarter of 2016, the Company completed the teach-out of three Transitional Group campuses: Collins College, International Academy of Design & Technology Sacramento and Sanford-Brown Institute New York, which continue to be reported within the Transitional Group as of June 30, 2016 in accordance with ASC Topic 360 – Property, Plant and Equipment, which limits discontinued operations reporting.

XML

Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2016

New Accounting Pronouncements And Changes In Accounting Principles [Abstract]

Recent Accounting Pronouncements

3. RECENT ACCOUNTING PRONOUNCEMENTS

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this ASU require a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected and credit losses relating to available-for-sale debt securities to be recorded through an allowance for credit losses. For all public business entities, ASU 2016-13 is effective for annual periods and interim periods beginning after December 15, 2019; early adoption is permitted for all organizations for annual periods and interim periods beginning after December 15, 2018. We are currently evaluating this guidance and believe the adoption will not significantly impact the presentation of our financial condition, results of operations and disclosures.

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This ASU simplified several aspects of accounting for share-based payment award transactions including income tax consequences, classification of excess tax benefits on the statement of cash flows, classification of employee taxes paid on the statement of cash flows when the employer withholds shares, forfeiture policy election and payroll minimum statutory tax withholding. For all public business entities, ASU 2016-09 is effective for annual periods and interim periods beginning after December 15, 2016. We are currently evaluating this guidance and believe the adoption will significantly impact the presentation of our financial condition, results of operations and disclosures.

In March 2016, the FASB issued ASU No. 2016-07, Investments – Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting. The amendments in this ASU eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investments, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method was in effect during all previous periods. The amendments require an equity method investor to add the cost of acquisition and requires available-for-sale equity securities that qualify for the equity method of accounting to recognize earnings as unrealized holding gain or loss in accumulated other comprehensive income. For all entities, ASU 2016-07 is effective for annual periods and interim periods beginning after December 15, 2016. We are currently evaluating this guidance and do not believe the adoption will significantly impact the presentation of our financial condition, results of operations and disclosures.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. The core principle of Topic 842 is that lessees should recognize the assets and liabilities that arise from leases. All leases create an asset and liability for the lessee in accordance with FASB Concept Statements No. 6 Elements of Financial Statements, and, therefore, recognition of those lease assets and liabilities represents an improvement over previous GAAP. The accounting applied for lessors largely remained unchanged. The amendment in this ASU requires recognition of a lease liability and a right to use asset at the commencement date. For all public business entities, ASU 2016-02 is effective for annual periods and interim periods beginning after December 15, 2018; early adoption is permitted. We are currently evaluating this guidance and believe the adoption will significantly impact the presentation of our financial condition, results of operations and disclosures.  

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. The amendments in this ASU require an entity to measure in-scope inventory at the lower of cost and net realizable value, further clarifying consideration for net realizable value as estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation. This ASU more closely aligns the measurement of inventory in GAAP with the measurement of inventory in International Financial Reporting Standards (“IFRS”). For public business entities, ASU 2015-11 is effective for annual periods and interim periods beginning after December 15, 2016. The amendment in this ASU is prospectively applied with earlier adoption permitted. We are currently evaluating this guidance and do not believe the adoption will significantly impact the presentation of our financial condition, results of operations and disclosures.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This ASU provides guidance to an organization’s management, intended to define management’s responsibility to evaluate whether there is a substantial doubt about an organization’s ability to continue as a going concern and to provide guidance regarding related footnote disclosure. In connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. For all entities, ASU 2014-15 is effective for annual periods and interim periods within those annual periods beginning after December 15, 2016; early adoption is permitted. We are currently evaluating the impact that the adoption of ASU 2014-15 will have on the presentation of our financial condition, results of operations and disclosures.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 is principles based guidance that can be applied to all contracts with customers, enhancing comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. The core principle of the guidance is that entities should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The guidance details the steps entities should apply to achieve the core principle. Subsequently, FASB issued four additional Updates to the guidance as follows: In August 2015, the FASB issued ASU 2015-14 approving a one-year deferral of the effective date for its new revenue standard for public and nonpublic entities reporting under US GAAP. In March 2016, the FASB issued ASU 2016-08, providing clarity to improve operability and understandability of the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, to add further guidance on identifying performance obligations and the licensing implementation while retaining the related core principles for those areas. In May 2016, the FASB issued ASU 2016-12, amendments to provide clarity on the objective of the collectability criterion, permit an entity to exclude amounts collected from customers for all sales taxes from the transaction price, specify a measurement date for non-cash consideration, provide a practical expedient permitting an entity to reflect the aggregate effect of all modifications, clarify a completed contract during transition and clarify disclosure requirements for retrospectively applied guidance in Topic 606. The standard will be effective for public business entities for annual reporting periods beginning after December 15, 2017 and interim periods therein. Nonpublic entities would be required to adopt the new standard for annual reporting periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019. Additionally, the FASB approved the option to early adopt prior to the original effective date (fiscal years beginning after December 15, 2016). We are currently evaluating the impact that the adoption of ASU 2014-09 will have on the presentation of our financial condition, results of operations and disclosures.

XML

Discontinued Operations

6 Months Ended

Jun. 30, 2016

Discontinued Operations And Disposal Groups [Abstract]

Discontinued Operations

4. DISCONTINUED OPERATIONS

As of June 30, 2016, the results of operations for campuses that have ceased operations prior to 2015 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. Since the January 2015 effective date of the updated guidance within ASC Topic 360, we have not had any campuses that met the criteria to be considered a discontinued operation.  

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, 2016 and 2015 were as follows (dollars in thousands):

	For the Quarter Ended June 30,						For the Year to Date Ended June 30,
	2016			2015			2016			2015
Revenue	$	-		$	(29	)	$	-		$	3
Total operating expenses	$	1,255		$	698		$	1,381		$	1,089
Loss before income tax	$	(1,255	)	$	(720	)	$	(1,381	)	$	(1,072	)
Benefit from income tax		(470	)		-			(517	)		-
Loss from discontinued operations, net of tax	$	(785	)	$	(720	)	$	(864	)	$	(1,072	)
Net loss per share - Basic and Diluted	$	(0.01	)	$	(0.02	)	$	(0.01	)	$	(0.01	)

Assets and Liabilities of Discontinued Operations

Assets and liabilities of discontinued operations on our condensed consolidated balance sheets as of June 30, 2016 and December 31, 2015 include the following (dollars in thousands):

	June 30,		December 31,
	2016		2015
Assets:
Current assets:
Receivables, net	$	159	$	254
Total current assets		159		254
Non-current assets:
Other assets, net		603		720
Deferred income tax assets, net		8,091		8,091
Total assets of discontinued operations	$	8,853	$	9,065
Liabilities:
Current liabilities:
Accounts payable and accrued expenses	$	2	$	528
Remaining lease obligations		9,374		12,539
Total current liabilities		9,376		13,067
Non-current liabilities:
Remaining lease obligations		6,775		9,212
Other		165		164
Total liabilities of discontinued operations	$	16,316	$	22,443

Remaining Lease Obligations of Discontinued Operations

A number of the campuses that ceased operations prior to January 1, 2015 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 on our condensed consolidated balance sheets, for the quarters and years to date ended June 30, 2016 and 2015 were as follows (dollars in thousands):

	Balance, Beginning of Period		Charges Incurred (1)			Net Cash Payments			Other		Balance, End of Period
For the quarter ended June 30, 2016	$	17,669	$	743		$	(2,263	)	$	-	$	16,149
For the quarter ended June 30, 2015	$	31,605	$	157		$	(3,769	)	$	-	$	27,993
For the year to date ended June 30, 2016	$	21,751	$	401		$	(6,003	)	$	-	$	16,149
For the year to date ended June 30, 2015	$	37,616	$	(413	)	$	(9,210	)	$	-	$	27,993

(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. 

XML

Financial Instruments

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Financial Instruments

5. FINANCIAL INSTRUMENTS

Investments consist of the following as of June 30, 2016 and December 31, 2015 (dollars in thousands):

	June 30, 2016
			Gross Unrealized
	Cost		Gain		(Loss)			Fair Value
Short-term investments (available for sale):
Non-governmental debt securities	$	105,475	$	69	$	(33	)	$	105,511
Treasury and federal agencies		35,260		47		(6	)		35,301
Total short-term investments		140,735		116		(39	)		140,812
Restricted short-term investments (available for sale):
Non-governmental debt securities		9,610		-		-			9,610
Long-term investments (available for sale):
Municipal bond		7,850		-		(476	)		7,374
Total investments (available for sale)	$	158,195	$	116	$	(515	)	$	157,796

	December 31, 2015
			Gross Unrealized
	Cost		Gain		(Loss)			Fair Value
Short-term investments (available for sale):
Municipal bonds	$	1,500	$	-	$	(11	)	$	1,489
Non-governmental debt securities		76,999		-		(242	)		76,757
Treasury and federal agencies		36,779		3		(127	)		36,655
Total short-term investments		115,278		3		(380	)		114,901
Long-term investments (available for sale):
Municipal bond		7,850		-		(476	)		7,374
Total investments (available for sale)	$	123,128	$	3	$	(856	)	$	122,275

In the table above, unrealized holding gains (losses) as of June 30, 2016 relate to short-term investments that have been in a continuous unrealized gain (loss) position for less than one year. The table also includes an unrealized holding loss, greater than one year, which relates to our long-term investment in a municipal bond, which is an auction rate security (“ARS”).

Our unrestricted non-governmental debt securities primarily consist of corporate bonds and commercial paper. Our treasury and federal agencies primarily consist of U.S. Treasury bills and federal home loan debt securities. We do not intend to sell our investments in these securities and it is not likely that we will be required to sell these investments before recovery of the amortized cost basis.

Our restricted short-term investments are comprised entirely of certificates of deposit, which secure our letters of credit. Prior to the second quarter of 2016, these funds were held as cash by the letter of credit issuer and reported by the Company as restricted cash on our condensed consolidated balance sheets.

Our ARS is comprised of debt obligations issued by states, cities, counties and other governmental entities, which earn federally tax-exempt interest. Our 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 condensed 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 June 30, 2016, we have determined this investment is at risk for impairment due to the nature of the liquidity of the market over the past several years. Cumulative unrealized losses as of June 30, 2016 amount to $ 0.5 million and are reflected within accumulated other comprehensive 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 June 30, 2016, we held investments that are required to be measured at fair value on a recurring basis. These investments (available-for-sale) consist of non-governmental debt securities, treasury and federal agencies and municipal bonds that are publicly traded and our investment in an ARS. Available for sale securities included in Level 1 are valued at quoted prices in active markets for identical assets and liabilities. Available for sale securities included in Level 2 are estimated based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Our investment in an ARS is categorized as Level 3 and fair value is estimated utilizing a discounted cash flow analysis as of June 30, 2016 which considers, among other items, the collateralization underlying the security investment, the credit worthiness of the counterparty, the time of expected future cash flows, and the expectation of the next time the security is expected to have a successful auction. The auction event for our ARS investment has failed for multiple years. The 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 – Fair Value Measurements at June 30, 2016 and December 31, 2015 were as follows (dollars in thousands):

	As of  June 30, 2016
	Level 1		Level 2		Level 3		Total
Municipal bonds	$	-	$	-	$	7,374	$	7,374
Non-governmental debt securities		35,368		79,753		-		115,121
Treasury and federal agencies		-		35,301		-		35,301
Totals	$	35,368	$	115,054	$	7,374	$	157,796
	As of  December 31, 2015
	Level 1		Level 2		Level 3		Total
Municipal bonds	$	-	$	1,489	$	7,374	$	8,863
Non-governmental debt securities		-		76,757		-		76,757
Treasury and federal agencies		-		36,655		-		36,655
Totals	$	-	$	114,901	$	7,374	$	122,275

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 June 30, 2016 (dollars in thousands):

Balance at December 31, 2015	$	7,374
Unrealized gain (loss)		-
Balance at June 30, 2016	$	7,374

Equity Method Investment

Our investment in an equity affiliate, which is recorded within other noncurrent assets on our condensed consolidated balance sheets, represents an international investment in a private company. As of June 30, 2016, our investment in an equity affiliate equated to a 30.7%, or $3.5 million, non-controlling interest in CCKF, a Dublin-based educational technology company providing intelligent adaptive systems to power the delivery of individualized and personalized learning.

During the quarters ended June 30, 2016 and 2015, we recorded approximately $0.7 million and less than $0.1 million of loss, respectively, and during the years to date ended June 30, 2016 and June 30, 2015, we recorded approximately $0.8 million and $0.2 million of loss, respectively, related to our proportionate investment in CCKF within miscellaneous income (expense) on our unaudited condensed consolidated statements of income (loss) and comprehensive income (loss).

We make periodic operating maintenance payments for our use of intellipath^TM. The total fees paid to CCKF for the quarters and years to date ended June 30, 2016 and 2015 were as follows (dollars in thousands):

	Maintenance Fee Payments
For the quarter ended June 30, 2016	$	345
For the quarter ended June 30, 2015	$	343
For the year to date ended June 30, 2016	$	687
For the year to date ended June 30, 2015	$	699

Credit Agreement

During the fourth quarter of 2015, the Company; its wholly-owned subsidiary, CEC Educational Services, LLC (“CEC-ES”); and the subsidiary guarantors thereunder entered into a Fourth Amendment to its Amended and Restated Credit Agreement dated as of December 30, 2013 (as amended, the “Credit Agreement”) with BMO Harris Bank N.A., in its capacities as the initial lender and letter of credit issuer thereunder and the administrative agent for the lenders which from time to time may be parties to the Credit Agreement, to among other things, decrease the revolving credit facility to $95.0 million and require pre-approval by the lenders for each credit extension (other than letter of credit extensions) occurring after December 31, 2015. The revolving credit facility under the Credit Agreement is scheduled to mature on December 31, 2018. The loans and letter of credit obligations under the Credit Agreement are required to be secured by 100% cash collateral. As of June 30, 2016, there were no outstanding borrowings under the revolving credit facility.

XML

Student Receivables

6 Months Ended

Jun. 30, 2016

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 as determined on a student-by-student basis at the end of the reporting period. Student receivables, net are reflected on our condensed consolidated balance sheets as components of both current and non-current assets. We do not accrue interest on past due student receivables; interest is recorded only upon collection.

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 condensed 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.

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, changes in the current economic, legislative or regulatory environments and the ability to complete the federal financial aid process with the student. 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. 

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 discontinued providing extended payment plans to students during the first quarter of 2011 and the recourse loan agreements with Sallie Mae and Stillwater ended in March 2008 and April 2007, respectively.

As of June 30, 2016 and December 31, 2015, the amount of non-current student receivables under these programs, net of allowance for doubtful accounts and net of deferred tuition revenue, was $3.3 million and $4.0 million, respectively.

Student Receivables Valuation Allowance

Changes in our current and non-current receivables allowance for the quarters and years to date ended June 30, 2016 and 2015 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 June 30, 2016	$	22,768	$	5,268	$	(7,028	)	$	21,008
For the quarter ended June 30, 2015	$	18,249	$	4,956	$	(4,702	)	$	18,503
For the year to date ended June 30, 2016	$	20,229	$	14,875	$	(14,096	)	$	21,008
For the year to date ended June 30, 2015	$	19,097	$	9,225	$	(9,819	)	$	18,503

(1) Charges to expense include an offset for recoveries of amounts previously written off of $1.6 million and $1.7 million for the quarters ended June 30, 2016 and 2015, respectively, and $3.6 million and $3.7 million for the years to date ended June 30, 2016 and 2015, respectively.

Fair Value Measurements

The carrying amount reported in our condensed 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.

XML

Restructuring Charges

6 Months Ended

Jun. 30, 2016

Restructuring And Related Activities [Abstract]

Restructuring Charges

7. RESTRUCTURING CHARGES

During the past several years, 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 and made decisions to teach out a number of campuses, meaning gradually close the campuses through an orderly process. As part of the process to wind down these teach-out campuses, the Company also announced that it will align its corporate overhead to support a more streamlined and focused operating entity. Most notably, we have recorded charges within our Transitional Group and Culinary Arts segments and our corporate functions as we continue to align our overall management structure. Each of our teach-out campuses offer current students the reasonable opportunity to complete their course of study. The majority of these teach-out campuses are expected to cease operations by 2017 with the remainder expected to cease operations in 2018.

The following table details the changes in our accrual for severance and related costs associated with all restructuring events for our continuing operations during the quarters and years to date ended June 30, 2016 and 2015 (dollars in thousands):

	Balance, Beginning of Period		Severance & Related Charges (1) (2)		Payments			Non-cash Adjustments(3)			Balance, End of Period
For the quarter ended June 30, 2016	$	14,353	$	57	$	(2,305	)	$	(815	)	$	11,290
For the quarter ended June 30, 2015	$	2,596	$	12,761	$	(2,293	)	$	(201	)	$	12,863
For the year to date ended June 30, 2016	$	18,985	$	272	$	(7,630	)	$	(337	)	$	11,290
For the year to date ended June 30, 2015	$	2,712	$	13,645	$	(3,064	)	$	(430	)	$	12,863

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

(2) Severance payments will result in future cash expenditures through 2018.

(3) 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.

Severance and related expenses for the quarters and years to date ended June 30, 2016 and 2015 by reporting segment is as follows (dollars in thousands):

	For the Quarter Ended June 30,				For the Year to Date Ended June 30,
	2016		2015		2016		2015
CTU	$	-	$	275	$	18	$	288
AIU		-		339		66		339
Total University Group		-		614		84		627
Corporate and Other		57		4,318		153		4,318
Subtotal		57		4,932		237		4,945
Culinary Arts		-		125		5		265
Transitional Group		-		7,704		30		8,435
Total	$	57	$	12,761	$	272	$	13,645

The current portion of the accrual for severance and related charges was $6.9 million as of June 30, 2016, which is recorded within current accrued expenses – payroll and related benefits; the long-term portion of $4.4 million is recorded within other non-current liabilities on our condensed consolidated balance sheet. In addition, as of June 30, 2016, we have accrued approximately $1.5 million related to retention bonuses that have been offered to certain employees. These amounts will be recorded ratably over the period the employees are retained.

In addition to the severance charges detailed above, a number of the teach-out campuses will have remaining lease obligations following the eventual campus closure, with the longest lease term being through 2023. The total remaining estimated charge as of June 30, 2016, for all restructuring events reported within continuing operations related to the remaining lease obligation for these leases, once the campus completes the close process, and adjusted for possible lease buyouts and sublease assumptions is approximately $50 million - $60 million. The amount related to each campus will be recorded at each campus closure date based on current estimates and assumptions related to the amount and timing of sublease income. This is in addition to approximately $26.5 million of charges related to remaining obligations that were recorded during 2015 through the second quarter of 2016.

Remaining Lease Obligations of Continuing Operations

         We have recorded lease exit costs associated with the exit of real estate space for certain campuses related to our continuing operations. These costs are recorded within educational services and facilities expense on our unaudited condensed consolidated statements of income (loss) and comprehensive income (loss). The current portion of the liability for these charges is reflected within other accrued expenses under current liabilities and the long-term portion of these charges are included in other liabilities under the non-current liabilities section of our condensed consolidated balance sheets. Changes in our future minimum lease obligations for exited space related to our continuing operations for the quarters and years to date ended June 30, 2016 and 2015 were as follows (dollars in thousands):

	Balance, Beginning of Period		Charges Incurred (1)		Net Cash Payments			Other		Balance, End of Period
For the quarter ended June 30, 2016	$	11,618	$	5,984	$	(2,723	)	$	2,261	$	17,140
For the quarter ended June 30, 2015	$	3,609	$	2,171	$	(1,619	)	$	1,319	$	5,480
For the year to date ended June 30, 2016	$	12,892	$	9,082	$	(8,000	)	$	3,166	$	17,140
For the year to date ended June 30, 2015	$	7,094	$	6,420	$	(9,713	)	$	1,679	$	5,480

_____________

(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.

XML

Contingencies

6 Months Ended

Jun. 30, 2016

Contingencies Disclosure [Abstract]

Contingencies

8. CONTINGENCIES

An accrual for estimated legal fees and settlements of $2.2 million and $2.7 million at June 30, 2016 and December 31, 2015, respectively, is presented within other current liabilities on our condensed 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 we consider to be 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.

Student Litigation

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. (“WCI”) 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 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. On August 6, 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. The oral argument on the appeal was heard on May 9, 2014 and on January 21, 2016, the appellate court reversed the trial court and held that the claims by the 1,062 individual class members referenced above should be compelled to arbitration. The case has been remanded back to the trial court for further proceedings.

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.

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. 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 remained pending against defendants was based on relators’ contention that defendants misled the school’s accreditor, Southern Association of Colleges and Schools, during the accreditation process. On December 16, 2013, we filed a motion for summary judgment on a variety of substantive grounds. On September 29, 2014, the Court granted our motion for summary judgment and entered judgment in our favor. On October 2, 2014, relators filed a notice of appeal. The appeal was stayed pending the United States Supreme Court’s decision in Kellogg Brown & Root Servs., Inc. v. U.S. ex rel. Carter, No. 12-1497. The Supreme Court issued its decision and the case was remanded to the district court. After considering additional arguments regarding whether it has jurisdiction over relators’ remaining claims, on June 8, 2016, the district court issued an order finding that it does not have jurisdiction over the relators’ proof of graduation claim. The Court additionally found that it does not have jurisdiction over the incentive compensation claim as to three of the four relators, but that it does have jurisdiction over that claim with respect to the fourth relator. The Court ordered, and the parties submitted further briefing as to whether and to what extent the Court’s June 8, 2016 order affected its September 29, 2014 order granting summary judgment to defendants on the accreditation claim.

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 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. 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, defendants were served with an amended complaint filed in the U.S. District Court for the Eastern District of Wisconsin. The original complaint was 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 would receive a portion of the federal government’s recovery. An amended complaint was filed by the relator on April 12, 2013 and 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, defendants filed a motion to dismiss the case on a variety of grounds. The Court ruled on that motion, dismissing CEC from the case and dismissing several of the relator’s factual claims. On November 27, 2013, Sanford Brown, LTD., and Ultrasound Technical Services, Inc., the remaining Company defendants, filed a motion to dismiss the case for lack of subject matter jurisdiction due to prior public disclosures of the relator’s alleged claims. On March 17, 2014, the Court granted this motion in part, limiting the timeframe and geographical scope of the relator’s claims. On June 13, 2014, the Court granted the remaining Company defendants’ motion for summary judgment and entered judgment in their favor. On July 9, 2014, relator filed a notice of appeal. On June 8, 2015, the appellate court affirmed the district court. On July 2, 2015, relator filed a petition for rehearing, which was denied on August 4, 2015. On December 2, 2015, relator filed his petition for certiorari to the United States Supreme Court. Defendants filed their opposition to the petition on February 3, 2016. On June 27, 2016, the Supreme Court entered an order granting the petition, vacating the appellate court’s judgment and remanding the case back to the appellate court for further consideration.

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 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. Accordingly, we have not recognized any liability associated with this action.

United States of America, ex rel. Ann Marie Rega v. Career Education Corporation, et al. On May 16, 2014, Relator Ann Marie Rega, a former employee of Sanford-Brown Iselin, filed an action in the U.S. District Court for the District of New Jersey against the Company and almost all of the Company’s individual schools on behalf of herself and the federal government. She alleges claims under the False Claims Act, including that the defendants allegedly provided 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. Relator failed to comply with the statutory requirement that all False Claims Act cases be filed under seal. On June 16, 2014, defendants filed a motion to dismiss the complaint with prejudice as to relator for failure to file her complaint under seal in accordance with the requirements of the False Claims Act.

The Company has been contacted by the Civil Division of the U.S. Department of Justice (“DOJ”) with a request for certain documents and information relating to relator’s claims. The Company is cooperating with the DOJ.  

Because it is in the early stages 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 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. 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 (“ARSC”) 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, but the petition was denied.

The case was remanded to the district court for further proceedings on the sole question of whether CEC’s termination of the ARSC Plan violated the implied covenant of good faith and fair dealing. The parties completed fact discovery as to the issue of liability. On March 24, 2015, we filed a motion for summary judgment which the Court granted on December 18, 2015. Plaintiff filed his notice of appeal on January 16, 2016.  

Because of the many questions of fact and law that may arise on appeal, 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.

Other Litigation

In addition to the legal proceedings and other matters described above, we are also subject to a variety of other claims, lawsuits and investigations that arise from time to time out of the conduct of our business, including, but not limited to, claims involving prospective students, students or graduates, alleged violations of the Telephone Consumer Protection Act, both individually and on behalf of a putative class, 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 Attorney General of Connecticut is serving as the point of contact for inquiries received from the attorneys general of the following: Arkansas, Arizona, Connecticut, Idaho, Iowa, Kentucky, Missouri, Nebraska, North Carolina, Oregon, Pennsylvania, Washington (January 24, 2014); Illinois (December 9, 2011); Tennessee (February 7, 2014); Hawaii (May 28, 2014 ); New Mexico (May 2014); Maryland (March 16, 2015); and the District of Columbia (June 3, 2015) (these 18 attorneys general are collectively referred to as the “Multi-State AGs”). In addition, the Company has received inquiries from the attorneys general of Florida (November 5, 2010), Massachusetts (September 27, 2012), Colorado (August 27, 2013) and Minnesota (September 18, 2014). The inquiries are civil investigative demands or subpoenas which relate to the investigation by the attorneys general of whether the Company and its schools have complied with certain state consumer protection laws, and generally focus on the Company's practices relating to the recruitment of students, graduate placement statistics, graduate certification and licensing results and student lending activities, among other matters. Depending on the state, the documents and information sought by the attorneys general in connection with their investigations cover time periods as early as 2006 to the present. The Company intends to cooperate with the states involved with a view towards resolving these inquiries as promptly as possible. In this regard, over the past several months the Company has participated in several meetings with representatives of the Multi-State AGs about the Company’s business and to engage in a dialogue towards a resolution of these inquiries.

We cannot predict the scope, duration or outcome of these attorney general investigations. At the conclusion of any 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. In addition, all of the Company’s institutions have been issued provisional program participation agreements that extend through December 31, 2016. Each of our institutions will need to apply for recertification by September 30, 2016 in order to continue its eligibility to participate in Title IV Programs. We cannot predict whether, or to what extent, any of these inquiries or future resolutions of these inquiries might impact our Title IV eligibility. Depending on the circumstances of any resolution of these inquiries, ED may revoke, limit, suspend, delay or deny the institution’s or all of the Company’s institutions’ Title IV eligibility, or impose fines. 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.

In addition to the aforementioned inquiries, from time to time, we receive informal requests from state Attorneys General and other government agencies relating to specific complaints they have received from students or former students which seek information about the student, our programs, and other matters relating to our activities in the relevant state. These requests can be broad and time consuming to respond to, and there is a risk that they could expand and/or lead to a formal inquiry or investigation into our practices in a particular state.

Federal Trade Commission Inquiry

On August 20, 2015, the Company received a request for information pursuant to a Civil Investigative Demand from the U.S. Federal Trade Commission (“FTC”). The request was made pursuant to a November 2013 resolution by the FTC directing an investigation to determine whether unnamed persons, partnerships, corporations, or others have engaged or are engaging in deceptive or unfair acts or practices in or affecting commerce in the advertising, marketing or sale of secondary or postsecondary educational products or services, or educational accreditation products or services. The information request requires the Company to provide documents and information regarding a broad spectrum of the business and practices of its subsidiaries and institutions for the time period of January 1, 2010 to the present. The Company is cooperating with the FTC with a view towards resolving these inquiries as promptly as possible.

Because the FTC inquiry is in the early stages and because of the many questions of fact and law that may arise, we cannot predict the outcome of the inquiry. Based on information available to us at present, we cannot reasonably estimate a range of potential monetary or non-monetary impact this inquiry might have on the Company because it is uncertain what remedies, if any, the FTC might ultimately seek in connection with this inquiry.

SEC Inquiry

          As previously disclosed, on June 21, 2016, the Company received a request for documents and information from the Denver Regional Office of the Securities and Exchange Commission (“SEC”) regarding the Company’s fourth quarter 2014 classification of the Company’s Le Cordon Bleu Culinary Arts campuses as held for sale within discontinued operations, subsequent sales process and CEC’s related public disclosures. The Company is cooperatingwith the SEC’s inquiry. Because the inquiry is in the early stages, we cannot predict its outcomeor estimate the nature or amount of possible remedies, if any, the SEC might ultimately seek in connection with this inquiry.

Regulatory Matters

ED Inquiry and HCM1 Status

In December 2011, the U.S. Department of Education (“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 previous 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 or reporting of placement rates or other disclosures to students or prospective students or finds any other basis in the materials we are providing, ED may revoke, limit, suspend, delay or deny the institution’s or all of the Company’s institutions Title IV eligibility, or impose fines. In addition, all of the Company’s institutions have been issued provisional program participation agreements that extend through December 31, 2016. Each of our institutions will need to apply for recertification by September 30, 2016 in order to continue its eligibility to participate in Title IV Programs. We cannot predict whether, or to what extent, ED’s inquiry might impact this recertification process.

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). If ED finds violations of the Higher Education Act or related regulations, ED may impose monetary or program level sanctions, impose some period of delay in the Company’s receipt of Title IV funds 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 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 (the “Audit Period”), 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 covering the Audit Period 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 completed these file reviews and provided supporting documentation to ED on April 10, 2013. On April 29, 2016, ED directed CTU to perform these same two file reviews for an additional time period that extended from the end of the Audit Period through June 30, 2011, which CTU has completed and submitted to ED. On April 29, 2016, ED also requested an additional file review related to whether CTU appropriately performed calculations regarding any required return of Title IV Program funds for students that failed to earn passing grades within a term. This additional file review covers the period from July 5, 2009 to June 30, 2011 and is a review of whether students should be deemed to have unofficially withdrawn from the institution based on each student’s last known academically-related activity. CTU is seeking reconsideration of the request for this additional file review. As of June 30, 2016, the Company has a $1.0 million reserve recorded related to this matter. This reserve does not include any amount relating to the additional file review requested by ED on April 29, 2016 because it is uncertain.

XML

Income Taxes

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

9. INCOME TAXES

The determination of the annual effective tax is based upon a number of significant estimates and judgments, including the estimated annual pretax income in each tax jurisdiction in which we operate and the ongoing development of tax planning strategies during the year. In addition, our provision for 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 provision for (benefit from) income taxes and effective tax rate from continuing operations:

	For the Quarter Ended June 30,						For the Year to Date Ended June 30,
	2016			2015			2016			2015
Pretax income (loss)	$	17,244		$	(20,750	)	$	24,469		$	(45,490	)
Provision for (benefit from) income taxes	$	4,620		$	(747	)	$	8,755		$	(958	)
Effective rate		26.8	%		-3.6	%		35.8	%		-2.1	%

As of December 31, 2015, we determined that it was more likely than not that we will realize most of our deferred tax assets and, as a result, reversed a significant portion of our valuation allowance during the fourth quarter of 2015. As of December 31, 2015, a valuation allowance of $47.5 million was maintained with respect to our foreign tax credits, separate state net operating losses and Illinois edge credits. After considering both positive and negative evidence related to the realization of these deferred tax assets we have determined that it is necessary to continue to record the valuation allowance against these credits and separate state net operating losses as of June 30, 2016.

The effective tax rate for the quarter and year to date ended June 30, 2016 includes a $2.1 million favorable tax adjustment related to the recent closure of a federal tax audit for the tax years 2013 and 2014. The effect of this discrete item was to decrease the quarter and year to date effective rate by 12.2% and 8.6%, respectively. The effective rate for the quarter and year to date ended June 30, 2015, was primarily driven by maintaining a full valuation allowance against our deferred tax assets. For the quarter and year to date ended June 30, 2015, the effect of federal and state valuation losses reduced the effective tax rate benefit by 28.0% and 37.1%, respectively.

We estimate that it is reasonably possible that the gross liability for unrecognized tax benefits for a variety of uncertain tax positions will decrease by up to $1.3 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 June 30, 2016 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 June 30, 2016, we had accrued $1.8 million as an estimate for reasonably possible interest and accrued penalties.

Our tax returns are routinely examined by federal, state, local and foreign tax authorities and these audits are at various stages of completion at any given time. The Internal Revenue Service recently completed its examination of our U.S. income tax returns for the 2013 and 2014 tax years.

XML

Share-Based Compensation

6 Months Ended

Jun. 30, 2016

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Share-Based Compensation

10. SHARE-BASED COMPENSATION

Overview of Share-Based Compensation Plans

The Career Education Corporation 2016 Incentive Compensation Plan (the “2016 Plan”) was approved by the Company’s stockholders on May 24, 2016. The 2016 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 1.35 shares for each share issued for purposes of the aggregate share limit. As of June 30, 2016, there were approximately 4.1 million shares of common stock available for future share-based awards under the 2016 Plan, which is net of (i) 0.2 million shares issuable upon exercise of outstanding options and (ii) less than 0.1 million shares underlying restricted stock units, which will be settled in shares of our common stock if the vesting conditions are met and thus reduce the common stock available for future share-based awards under the 2016 Plan by the amount vested. These shares have been multiplied by the applicable factor under the 2016 Plan to determine the remaining shares available as of June 30, 2016. Additionally, as of June 30, 2016, there were approximately 3.0 million shares issuable upon exercise of outstanding options and 1.8 million shares underlying restricted and deferred stock units outstanding, which will be settled in shares of our common stock if the vesting conditions are met under the previous Career Education Corporation 2008 Incentive Compensation Plan. This plan was replaced by the 2016 Plan and effective May 24, 2016, all future awards will be made under the 2016 Plan. The vesting of all types of equity awards (stock options, stock appreciation rights, restricted stock awards, restricted stock units and deferred stock units) is subject to possible acceleration in certain circumstances. Generally, if a plan participant terminates employment for any reason other than by death or disability during the vesting period, the right to unvested equity awards is forfeited.

As of June 30, 2016, we estimate that compensation expense of approximately $6.0 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 and deferred 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 and stock appreciation rights 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: 100% after first anniversary of grant date or one-fourth on the grant date and one-fourth for each of the first through third anniversary of the grant date. Grants of stock options are generally only subject to the service conditions discussed previously.

Stock option activity during the year to date ended June 30, 2016 under all of our plans was as follows (options in thousands):

	Options			Weighted Average Exercise Price
Outstanding as of December 31, 2015		2,658		$	14.27
Granted		906			4.79
Exercised		(26	)		2.65
Forfeited		(41	)		4.30
Cancelled		(263	)		25.36
Outstanding as of June 30, 2016		3,234		$	10.93
Exercisable as of June 30, 2016		1,810		$	15.78

Restricted Stock Units to be Settled in Stock. Restricted stock units to be settled in shares of stock generally become fully vested as follows: 25% per year over a four-year service period or one-third for each of the first through third anniversary of the grant date. Certain awards granted in 2016 vest 20% after the first year, 50% after the second year and 30% after the third year and are “performance-based” awards which are subject to performance conditions that, even if the requisite service period is met, may reduce the number of units of restricted stock that vest at the end of the requisite service period or result in all units being forfeited. Also, certain awards granted in the second quarter of 2015 for retention purposes are subject to accelerated vesting and cash settlement in the event of an involuntary not-for-cause termination of employment by the Company.

The following table summarizes information with respect to all outstanding restricted stock units to be settled in shares of stock under our plans during the year to date ended June 30, 2016 (units in thousands):

	Restricted Stock to be Settled in Shares of Stock
	Units			Weighted Average Grant-Date Fair Value Per Unit
Outstanding as of  December 31, 2015		758		$	5.55
Granted		1,556			4.58
Vested (1)		(363	)		6.07
Forfeited		(124	)		5.25
Outstanding as of  June 30, 2016		1,827		$	4.64

_____________

(1) The total vested awards include 9.2 thousand of vested stock settled in cash. As a result of the termination provision for certain awards, certain termination scenarios allow for cash-settlement.

Deferred Stock Units to be Settled in Stock. During 2014, we granted deferred stock units to our non-employee directors. The deferred stock units are to be settled in shares of stock and generally vest one-third per year over a three-year service period beginning on the date of grant. Settlement of the deferred stock units and delivery of the underlying shares of stock to the plan participants does not occur until he or she ceases to provide services to the Company in the capacity of a director, employee or consultant.

The following table summarizes information with respect to all deferred stock units during the year to date ended June 30, 2016 (units in thousands):

	Deferred Stock Units to be Settled in Shares			Weighted Average Grant-Date Fair Value Per Unit
Outstanding as of  December 31, 2015 (1)		91		$	4.43
Granted		-			-
Vested		(15	)		4.39
Forfeited		-			-
Outstanding as of  June 30, 2016 (1)		76		$	4.44

(1) Includes vested but unreleased awards. These awards are included in total outstanding awards until they are released under the terms of the agreement.

Restricted Stock Units to be Settled in Cash. Restricted stock units to be settled in cash generally become fully vested 25% per year over a four-year service period beginning on the date of grant. Certain awards granted to our Chief Executive Officer in 2015 outside of the 2008 Plan vest 50% per year over a two-year service period. Cash-settled restricted stock units are recorded as liabilities as the expense is recognized and the fair value for these awards is determined at each period end date with changes in fair value recorded in our unaudited condensed consolidated statements of income (loss) and comprehensive income (loss) in the current period. 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 2016 Plan.

The following table summarizes information with respect to all cash-settled restricted stock units during the year to date ended June 30, 2016 (units in thousands):

	Restricted Stock Units to be Settled in Cash
Outstanding as of  December 31, 2015		1,575
Granted		461
Vested		(331	)
Forfeited		(181	)
Outstanding as of  June 30, 2016		1,524

          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 Compensation and recognized $2.0 million of expense for the year to date 2016 for all cash-settled restricted stock units, of which $1.1 million was recorded during the quarter ended June 30, 2016.

Stock-Based Compensation Expense. Total stock-based compensation expense for the quarters and years to date ended June 30, 2016 and 2015 for all types of awards was as follows (dollars in thousands):

	For the Quarter Ended June 30,				For the Year to Date Ended June 30,
Award Type	2016		2015  (1)		2016		2015  (1)
Stock options	$	348	$	124	$	589	$	394
Restricted stock or units settled in stock		494		239		791		1,527
Restricted stock units settled in cash		1,088		256		2,021		544
Total stock-based compensation expense	$	1,930	$	619	$	3,401	$	2,465

(1) Stock-based compensation expense for the year to date 2015 does not reflect $1.5 million of forfeitures related to our former Chief Executive Officer’s departure which was applied against the separation agreement payment of $2.5 million.

Performance Unit Awards. Performance unit awards granted during 2014, 2015 and 2016 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, 2016, 2017 and 2018, respectively. These awards are recorded as liabilities as the expense is recognized and fair value for these awards is revalued at each period end date with changes in fair value recorded in our unaudited condensed consolidated statements of income (loss) and comprehensive income (loss) in the current period. We recorded $0.9 million of expense and $0.3 million of credit related to these awards for the years to date ended June 30, 2016 and June 30, 2015, respectively, with $0.6 million and $0.1 million of expense for the quarters ended June 30, 2016 and June 30, 2015, respectively.  

XML

Weighted Average Common Shares

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Weighted Average Common Shares

11. WEIGHTED AVERAGE COMMON SHARES

Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income (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.

The weighted average number of common shares used to compute basic and diluted net income (loss) per share for the quarters and years to date ended June 30, 2016 and 2015 were as follows:

	For the Quarter Ended June 30,				For the Year to Date Ended June 30,
	2016		2015 (1)		2016		2015 (1)
Basic common shares outstanding		68,368		67,893		68,261		67,714
Common stock equivalents		647		-		366		-
Diluted common shares outstanding		69,015		67,893		68,627		67,714

___________________

(1)    Due to the fact that we reported a loss from continuing operations for the quarter and year to date ended June 30, 2015, 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 quarter and year to date ended June 30, 2015.

For the quarter and year to date ended June 30, 2016, certain unexercised stock option awards are excluded from our computations of diluted earnings per share, as these shares were out-of-the-money and their effect would have been anti-dilutive. The anti-dilutive options that were excluded from our computations of diluted earnings per share were 2.8 million and 2.6 million shares for the quarter and year to date ended June 30, 2016, respectively.

XML

Segment Reporting

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Segment Reporting

12. 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 operational alignment and, for our two universities, to enhance brand focus within each segment to more effectively execute our strategic plan. As of June 30, 2016, our four segments are:

University Group:

¨      Colorado Technical University (CTU) places a strong focus on providing industry-relevant degree programs to meet the needs of our students for employment and of employers for a well-educated workforce and offers academic programs in the career-oriented disciplines of business studies, information systems and technologies, criminal justice, computer science and engineering, and health sciences. Students pursue their degrees through fully-online programs through CTU Online, local campuses and blended formats, which combine campus-based and online education. As of June 30, 2016, students enrolled at CTU represented approximately 56% of our total enrollments. Approximately 92% of CTU’s enrollments are fully online.

¨      American InterContinental University (AIU) focuses on helping busy professionals get the degree they need to move forward in their career as efficiently as possible and collectively offers academic programs in the career-oriented disciplines of business studies, information technologies, criminal justice and design technologies. Students pursue their degrees through fully-online programs through AIU Online, local campuses and blended formats, which combine campus-based and online education. As of June 30, 2016, students enrolled at AIU represented approximately 27% of our total enrollments. Approximately 99% of AIU’s enrollments are fully online.

Career Schools Group:

          Campuses included in our Career Schools segments include those which are currently being taught out or those which have completed their teach-out activities or have been sold subsequent to January 1, 2015. As a result of a change in accounting guidance, campuses which have closed or have been sold subsequent to January 1, 2015 no longer meet the criteria for discontinued operations and remain reported within continuing operations on our unaudited condensed consolidated financial statements. Campuses in teach-out employ a gradual teach-out process, enabling them to continue to operate while current students have a reasonable opportunity to complete their course of study; they no longer enroll new students.

¨      Culinary Arts includes our Le Cordon Bleu institutions in North America (“LCB”) which offer hands on educational programs in the career-oriented disciplines of culinary arts and patisserie and baking in the commercial-grade kitchens of Le Cordon Bleu. LCB also provides online programs in culinary arts and hotel and restaurant management. These campuses are all expected to complete their teach-out activities during 2017. As of June 30, 2016, students enrolled at LCB represented approximately 13% of our total enrollments.

¨      Transitional Group includes our non-LCB campuses which are in teach-out or those which have been closed or sold subsequent to January 1, 2015. Our Transitional Group offers academic programs primarily in the career-oriented discipline of health education complemented by certain programs in business studies and information technology, as well as fashion design, film and video production, graphic design, interior design and visual communications. The campuses within the Transitional Group that have not yet ceased operations as of June 30, 2016 will complete their teach-outs on varying dates through 2018. As of June 30, 2016, students enrolled at the Transitional Group campuses represented approximately 4% of our total enrollments. During the second quarter of 2016, the Company completed the teach-out of three Transitional Group campuses: Collins College, International Academy of Design & Technology Sacramento and Sanford-Brown Institute New York, which continue to be reported as part of the Transitional Group as of June 30, 2016.

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

	For the Quarter Ended June 30,
	Revenue										Operating (Loss) Income
	2016		% of Total			2015		% of Total			2016			2015
CTU (1)	$	91,736		50.2	%	$	86,174		39.7	%	$	29,970		$	24,263
AIU (2)		50,608		27.7	%		52,024		24.0	%		6,838			5,174
Total University Group		142,344		77.9	%		138,198		63.7	%		36,808			29,437
Corporate and Other		-		0.0	%		39		0.0	%		(5,761	)		(7,036	)
Subtotal		142,344		77.9	%		138,237		63.8	%		31,047			22,401
Culinary Arts		29,998		16.4	%		42,048		19.4	%		361			(10,560	)
Transitional Group		10,284		5.6	%		36,543		16.9	%		(14,118	)		(31,733	)
Total	$	182,626		100.0	%	$	216,828		100.0	%	$	17,290		$	(19,892	)

	For the Year to Date Ended June 30,
	Revenue										Operating (Loss) Income
	2016		% of Total			2015		% of Total			2016			2015
CTU (1)	$	183,702		48.2	%	$	171,301		38.6	%	$	49,207		$	38,879
AIU (2)		103,581		27.2	%		105,090		23.7	%		8,745			2,287
Total University Group		287,283		75.3	%		276,391		62.3	%		57,952			41,166
Corporate and Other		-	NM				78		0.0	%		(11,573	)		(12,896	)
Subtotal		287,283		75.3	%		276,469		62.3	%		46,379			28,270
Culinary Arts		68,621		18.0	%		86,760		19.5	%		3,467			(10,317	)
Transitional Group		25,608		6.7	%		80,613		18.2	%		(25,577	)		(62,203	)
Total	$	381,512		100.0	%	$	443,842		100.0	%	$	24,269		$	(44,250	)

	Total Assets as of  (3)
	June 30, 2016		December 31, 2015
CTU	$	75,469	$	76,577
AIU		53,404		53,087
Total University Group		128,873		129,664
Corporate and Other		327,345		372,405
Subtotal		456,218		502,069
Culinary Arts		64,554		71,197
Transitional Group		23,169		28,584
Discontinued Operations		8,853		9,065
Total	$	552,794	$	610,915

(1) Bad debt increased approximately 0.3% and 2.4% as a percentage of revenue for the quarter and year to date ended June 30, 2016 as compared to the respective prior periods, primarily driven by students who are experiencing a greater time lag while completing the financial aid application process due to increased verification procedures implemented by ED.

(2) Bad debt increased approximately 1.4% and 1.7% as a percentage of revenue for the quarter and year to date ended June 30, 2016 as compared to the respective prior periods, primarily driven by students who are experiencing a greater time lag while completing the financial aid application process due to increased verification procedures implemented by ED.

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

XML

Discontinued Operations (Tables)

6 Months Ended

Jun. 30, 2016

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 June 30, 2016 and 2015 were as follows (dollars in thousands):

	For the Quarter Ended June 30,						For the Year to Date Ended June 30,
	2016			2015			2016			2015
Revenue	$	-		$	(29	)	$	-		$	3
Total operating expenses	$	1,255		$	698		$	1,381		$	1,089
Loss before income tax	$	(1,255	)	$	(720	)	$	(1,381	)	$	(1,072	)
Benefit from income tax		(470	)		-			(517	)		-
Loss from discontinued operations, net of tax	$	(785	)	$	(720	)	$	(864	)	$	(1,072	)
Net loss per share - Basic and Diluted	$	(0.01	)	$	(0.02	)	$	(0.01	)	$	(0.01	)

Assets and Liabilities of Discontinued Operations on Consolidated Balance Sheets

Assets and liabilities of discontinued operations on our condensed consolidated balance sheets as of June 30, 2016 and December 31, 2015 include the following (dollars in thousands):

	June 30,		December 31,
	2016		2015
Assets:
Current assets:
Receivables, net	$	159	$	254
Total current assets		159		254
Non-current assets:
Other assets, net		603		720
Deferred income tax assets, net		8,091		8,091
Total assets of discontinued operations	$	8,853	$	9,065
Liabilities:
Current liabilities:
Accounts payable and accrued expenses	$	2	$	528
Remaining lease obligations		9,374		12,539
Total current liabilities		9,376		13,067
Non-current liabilities:
Remaining lease obligations		6,775		9,212
Other		165		164
Total liabilities of discontinued operations	$	16,316	$	22,443

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 condensed consolidated balance sheets, for the quarters and years to date ended June 30, 2016 and 2015 were as follows (dollars in thousands):

	Balance, Beginning of Period		Charges Incurred (1)			Net Cash Payments			Other		Balance, End of Period
For the quarter ended June 30, 2016	$	17,669	$	743		$	(2,263	)	$	-	$	16,149
For the quarter ended June 30, 2015	$	31,605	$	157		$	(3,769	)	$	-	$	27,993
For the year to date ended June 30, 2016	$	21,751	$	401		$	(6,003	)	$	-	$	16,149
For the year to date ended June 30, 2015	$	37,616	$	(413	)	$	(9,210	)	$	-	$	27,993

(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. 

XML

Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Summary of Investments

Investments consist of the following as of June 30, 2016 and December 31, 2015 (dollars in thousands):

	June 30, 2016
			Gross Unrealized
	Cost		Gain		(Loss)			Fair Value
Short-term investments (available for sale):
Non-governmental debt securities	$	105,475	$	69	$	(33	)	$	105,511
Treasury and federal agencies		35,260		47		(6	)		35,301
Total short-term investments		140,735		116		(39	)		140,812
Restricted short-term investments (available for sale):
Non-governmental debt securities		9,610		-		-			9,610
Long-term investments (available for sale):
Municipal bond		7,850		-		(476	)		7,374
Total investments (available for sale)	$	158,195	$	116	$	(515	)	$	157,796

	December 31, 2015
			Gross Unrealized
	Cost		Gain		(Loss)			Fair Value
Short-term investments (available for sale):
Municipal bonds	$	1,500	$	-	$	(11	)	$	1,489
Non-governmental debt securities		76,999		-		(242	)		76,757
Treasury and federal agencies		36,779		3		(127	)		36,655
Total short-term investments		115,278		3		(380	)		114,901
Long-term investments (available for sale):
Municipal bond		7,850		-		(476	)		7,374
Total investments (available for sale)	$	123,128	$	3	$	(856	)	$	122,275

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 – Fair Value Measurements at June 30, 2016 and December 31, 2015 were as follows (dollars in thousands):

	As of  June 30, 2016
	Level 1		Level 2		Level 3		Total
Municipal bonds	$	-	$	-	$	7,374	$	7,374
Non-governmental debt securities		35,368		79,753		-		115,121
Treasury and federal agencies		-		35,301		-		35,301
Totals	$	35,368	$	115,054	$	7,374	$	157,796
	As of  December 31, 2015
	Level 1		Level 2		Level 3		Total
Municipal bonds	$	-	$	1,489	$	7,374	$	8,863
Non-governmental debt securities		-		76,757		-		76,757
Treasury and federal agencies		-		36,655		-		36,655
Totals	$	-	$	114,901	$	7,374	$	122,275

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 June 30, 2016 (dollars in thousands):

Balance at December 31, 2015	$	7,374
Unrealized gain (loss)		-
Balance at June 30, 2016	$	7,374

Schedule of Maintenance Fee Payment to CCKF

We make periodic operating maintenance payments for our use of intellipath^TM. The total fees paid to CCKF for the quarters and years to date ended June 30, 2016 and 2015 were as follows (dollars in thousands):

	Maintenance Fee Payments
For the quarter ended June 30, 2016	$	345
For the quarter ended June 30, 2015	$	343
For the year to date ended June 30, 2016	$	687
For the year to date ended June 30, 2015	$	699

XML

Student Receivables (Tables)

6 Months Ended

Jun. 30, 2016

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 June 30, 2016 and 2015 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 June 30, 2016	$	22,768	$	5,268	$	(7,028	)	$	21,008
For the quarter ended June 30, 2015	$	18,249	$	4,956	$	(4,702	)	$	18,503
For the year to date ended June 30, 2016	$	20,229	$	14,875	$	(14,096	)	$	21,008
For the year to date ended June 30, 2015	$	19,097	$	9,225	$	(9,819	)	$	18,503

(1) Charges to expense include an offset for recoveries of amounts previously written off of $1.6 million and $1.7 million for the quarters ended June 30, 2016 and 2015, respectively, and $3.6 million and $3.7 million for the years to date ended June 30, 2016 and 2015, respectively.

XML

Restructuring Charges (Tables)

6 Months Ended

Jun. 30, 2016

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 restructuring events for our continuing operations during the quarters and years to date ended June 30, 2016 and 2015 (dollars in thousands):

	Balance, Beginning of Period		Severance & Related Charges (1) (2)		Payments			Non-cash Adjustments(3)			Balance, End of Period
For the quarter ended June 30, 2016	$	14,353	$	57	$	(2,305	)	$	(815	)	$	11,290
For the quarter ended June 30, 2015	$	2,596	$	12,761	$	(2,293	)	$	(201	)	$	12,863
For the year to date ended June 30, 2016	$	18,985	$	272	$	(7,630	)	$	(337	)	$	11,290
For the year to date ended June 30, 2015	$	2,712	$	13,645	$	(3,064	)	$	(430	)	$	12,863

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

(2) Severance payments will result in future cash expenditures through 2018.

(3) 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.

Restructuring Charges by Segment

Severance and related expenses for the quarters and years to date ended June 30, 2016 and 2015 by reporting segment is as follows (dollars in thousands):

	For the Quarter Ended June 30,				For the Year to Date Ended June 30,
	2016		2015		2016		2015
CTU	$	-	$	275	$	18	$	288
AIU		-		339		66		339
Total University Group		-		614		84		627
Corporate and Other		57		4,318		153		4,318
Subtotal		57		4,932		237		4,945
Culinary Arts		-		125		5		265
Transitional Group		-		7,704		30		8,435
Total	$	57	$	12,761	$	272	$	13,645

Schedule of Changes in Future Minimum Lease Obligations

Changes in our future minimum lease obligations for exited space related to our continuing operations for the quarters and years to date ended June 30, 2016 and 2015 were as follows (dollars in thousands):

	Balance, Beginning of Period		Charges Incurred (1)		Net Cash Payments			Other		Balance, End of Period
For the quarter ended June 30, 2016	$	11,618	$	5,984	$	(2,723	)	$	2,261	$	17,140
For the quarter ended June 30, 2015	$	3,609	$	2,171	$	(1,619	)	$	1,319	$	5,480
For the year to date ended June 30, 2016	$	12,892	$	9,082	$	(8,000	)	$	3,166	$	17,140
For the year to date ended June 30, 2015	$	7,094	$	6,420	$	(9,713	)	$	1,679	$	5,480

_____________

(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.

XML

Income Taxes (Tables)

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Summary of (Benefit from) Provision for Income Taxes and Effective Tax Rate from Continuing Operations

The following is a summary of our provision for (benefit from) income taxes and effective tax rate from continuing operations:

	For the Quarter Ended June 30,						For the Year to Date Ended June 30,
	2016			2015			2016			2015
Pretax income (loss)	$	17,244		$	(20,750	)	$	24,469		$	(45,490	)
Provision for (benefit from) income taxes	$	4,620		$	(747	)	$	8,755		$	(958	)
Effective rate		26.8	%		-3.6	%		35.8	%		-2.1	%

XML

Share-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2016

Schedule of Deferred Stock Units to be Settled in Shares

The following table summarizes information with respect to all deferred stock units during the year to date ended June 30, 2016 (units in thousands):

	Deferred Stock Units to be Settled in Shares			Weighted Average Grant-Date Fair Value Per Unit
Outstanding as of  December 31, 2015 (1)		91		$	4.43
Granted		-			-
Vested		(15	)		4.39
Forfeited		-			-
Outstanding as of  June 30, 2016 (1)		76		$	4.44

(1) Includes vested but unreleased awards. These awards are included in total outstanding awards until they are released under the terms of the agreement.

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 June 30, 2016 (units in thousands):

	Restricted Stock Units to be Settled in Cash
Outstanding as of  December 31, 2015		1,575
Granted		461
Vested		(331	)
Forfeited		(181	)
Outstanding as of  June 30, 2016		1,524

Summary of Total Stock Based Compensation Expense

Stock-Based Compensation Expense. Total stock-based compensation expense for the quarters and years to date ended June 30, 2016 and 2015 for all types of awards was as follows (dollars in thousands):

	For the Quarter Ended June 30,				For the Year to Date Ended June 30,
Award Type	2016		2015  (1)		2016		2015  (1)
Stock options	$	348	$	124	$	589	$	394
Restricted stock or units settled in stock		494		239		791		1,527
Restricted stock units settled in cash		1,088		256		2,021		544
Total stock-based compensation expense	$	1,930	$	619	$	3,401	$	2,465

(1) Stock-based compensation expense for the year to date 2015 does not reflect $1.5 million of forfeitures related to our former Chief Executive Officer’s departure which was applied against the separation agreement payment of $2.5 million.

Restricted Stock Units [Member]

Schedule of Information with Respect to all Outstanding Restricted Stock

The following table summarizes information with respect to all outstanding restricted stock units to be settled in shares of stock under our plans during the year to date ended June 30, 2016 (units in thousands):

	Restricted Stock to be Settled in Shares of Stock
	Units			Weighted Average Grant-Date Fair Value Per Unit
Outstanding as of  December 31, 2015		758		$	5.55
Granted		1,556			4.58
Vested (1)		(363	)		6.07
Forfeited		(124	)		5.25
Outstanding as of  June 30, 2016		1,827		$	4.64

_____________

(1) The total vested awards include 9.2 thousand of vested stock settled in cash. As a result of the termination provision for certain awards, certain termination scenarios allow for cash-settlement.

Employee Stock Option [Member]

Summary of Stock Option Activity

Stock option activity during the year to date ended June 30, 2016 under all of our plans was as follows (options in thousands):

	Options			Weighted Average Exercise Price
Outstanding as of December 31, 2015		2,658		$	14.27
Granted		906			4.79
Exercised		(26	)		2.65
Forfeited		(41	)		4.30
Cancelled		(263	)		25.36
Outstanding as of June 30, 2016		3,234		$	10.93
Exercisable as of June 30, 2016		1,810		$	15.78

XML

Weighted Average Common Shares (Tables)

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Summary of Weighted Average Numbers of Common Shares Used to Compute Basic and Diluted Net Income (Loss) Per Share

The weighted average number of common shares used to compute basic and diluted net income (loss) per share for the quarters and years to date ended June 30, 2016 and 2015 were as follows:

	For the Quarter Ended June 30,				For the Year to Date Ended June 30,
	2016		2015 (1)		2016		2015 (1)
Basic common shares outstanding		68,368		67,893		68,261		67,714
Common stock equivalents		647		-		366		-
Diluted common shares outstanding		69,015		67,893		68,627		67,714

(1)    Due to the fact that we reported a loss from continuing operations for the quarter and year to date ended June 30, 2015, 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 quarter and year to date ended June 30, 2015.

XML

Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Summary Financial Information by Reporting Segment

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

	For the Quarter Ended June 30,
	Revenue										Operating (Loss) Income
	2016		% of Total			2015		% of Total			2016			2015
CTU (1)	$	91,736		50.2	%	$	86,174		39.7	%	$	29,970		$	24,263
AIU (2)		50,608		27.7	%		52,024		24.0	%		6,838			5,174
Total University Group		142,344		77.9	%		138,198		63.7	%		36,808			29,437
Corporate and Other		-		0.0	%		39		0.0	%		(5,761	)		(7,036	)
Subtotal		142,344		77.9	%		138,237		63.8	%		31,047			22,401
Culinary Arts		29,998		16.4	%		42,048		19.4	%		361			(10,560	)
Transitional Group		10,284		5.6	%		36,543		16.9	%		(14,118	)		(31,733	)
Total	$	182,626		100.0	%	$	216,828		100.0	%	$	17,290		$	(19,892	)

	For the Year to Date Ended June 30,
	Revenue										Operating (Loss) Income
	2016		% of Total			2015		% of Total			2016			2015
CTU (1)	$	183,702		48.2	%	$	171,301		38.6	%	$	49,207		$	38,879
AIU (2)		103,581		27.2	%		105,090		23.7	%		8,745			2,287
Total University Group		287,283		75.3	%		276,391		62.3	%		57,952			41,166
Corporate and Other		-	NM				78		0.0	%		(11,573	)		(12,896	)
Subtotal		287,283		75.3	%		276,469		62.3	%		46,379			28,270
Culinary Arts		68,621		18.0	%		86,760		19.5	%		3,467			(10,317	)
Transitional Group		25,608		6.7	%		80,613		18.2	%		(25,577	)		(62,203	)
Total	$	381,512		100.0	%	$	443,842		100.0	%	$	24,269		$	(44,250	)

	Total Assets as of  (3)
	June 30, 2016		December 31, 2015
CTU	$	75,469	$	76,577
AIU		53,404		53,087
Total University Group		128,873		129,664
Corporate and Other		327,345		372,405
Subtotal		456,218		502,069
Culinary Arts		64,554		71,197
Transitional Group		23,169		28,584
Discontinued Operations		8,853		9,065
Total	$	552,794	$	610,915

(1) Bad debt increased approximately 0.3% and 2.4% as a percentage of revenue for the quarter and year to date ended June 30, 2016 as compared to the respective prior periods, primarily driven by students who are experiencing a greater time lag while completing the financial aid application process due to increased verification procedures implemented by ED.

(2) Bad debt increased approximately 1.4% and 1.7% as a percentage of revenue for the quarter and year to date ended June 30, 2016 as compared to the respective prior periods, primarily driven by students who are experiencing a greater time lag while completing the financial aid application process due to increased verification procedures implemented by ED.

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

XML

Description of the Company - Additional Information (Detail)	Jun. 30, 2016 University
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Number of universities	2

XML

Basis of Presentation - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2016 Segment Cmp
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Number of reporting segments | Segment	4
Transitional Group [Member]
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Number of campuses completed teach out activities | Cmp	3

XML

Discontinued Operations - Summary Results of Operations for Discontinued Operations (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Discontinued Operations And Disposal Groups [Abstract]
Revenue		$ (29)		$ 3
Total operating expenses	$ 1,255	698	$ 1,381	1,089
Loss before income tax	(1,255)	(720)	(1,381)	(1,072)
Benefit from income tax	(470)		(517)
Loss from discontinued operations, net of tax	$ (785)	$ (720)	$ (864)	$ (1,072)
Net loss per share - Basic and Diluted	$ (0.01)	$ (0.02)	$ (0.01)	$ (0.01)

XML

Discontinued Operations - Assets and Liabilities of Discontinued Operations on Consolidated Balance Sheets (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Disposal Group Including Discontinued Operation Balance Sheet Disclosures [Abstract]
Receivables, net	$ 159	$ 254
Total current assets	159	254
Other assets, net	603	720
Deferred income tax assets, net	8,091	8,091
Total assets of discontinued operations	8,853	9,065
Accounts payable and accrued expenses	2	528
Remaining lease obligations	9,374	12,539
Total current liabilities	9,376	13,067
Remaining lease obligations	6,775	9,212
Other	165	164
Total liabilities of discontinued operations	$ 16,316	$ 22,443

XML

Discontinued Operations - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2016
Discontinued Operations And Disposal Groups [Abstract]
Lease expiration year	2020

XML

Discontinued Operations - Changes in Future Remaining Lease Obligations Discontinued Operations (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Discontinued Operations And Disposal Groups [Abstract]
Balance, Beginning of Period		$ 17,669	$ 31,605	$ 21,751	$ 37,616
Charges Incurred	[1]	743	157	401	(413)
Net Cash Payments		(2,263)	(3,769)	(6,003)	(9,210)
Other		0	0	0	0
Balance, End of Period		$ 16,149	$ 27,993	$ 16,149	$ 27,993

[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.

XML

Financial Instruments - Summary of Investments (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Total investments (available for sale), Cost	$ 158,195	$ 123,128
Total investments (available for sale), Gross Unrealized Gain	116	3
Total investments (available for sale), Gross Unrealized (Loss)	(515)	(856)
Total investments (available for sale), Fair value	157,796	122,275
Short-term Investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Total investments (available for sale), Cost	140,735	115,278
Total investments (available for sale), Gross Unrealized Gain	116	3
Total investments (available for sale), Gross Unrealized (Loss)	(39)	(380)
Total investments (available for sale), Fair value	140,812	114,901
Short-term Investments [Member] | Municipal Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Total investments (available for sale), Cost		1,500
Total investments (available for sale), Gross Unrealized (Loss)		(11)
Total investments (available for sale), Fair value		1,489
Short-term Investments [Member] | Non-governmental Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Total investments (available for sale), Cost	105,475	76,999
Total investments (available for sale), Gross Unrealized Gain	69
Total investments (available for sale), Gross Unrealized (Loss)	(33)	(242)
Total investments (available for sale), Fair value	105,511	76,757
Short-term Investments [Member] | Treasury and Federal Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Total investments (available for sale), Cost	35,260	36,779
Total investments (available for sale), Gross Unrealized Gain	47	3
Total investments (available for sale), Gross Unrealized (Loss)	(6)	(127)
Total investments (available for sale), Fair value	35,301	36,655
Restricted short-term investments [Member] | Non-governmental Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Total investments (available for sale), Cost	9,610
Total investments (available for sale), Fair value	9,610
Long Term Investments [Member] | Municipal Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Total investments (available for sale), Cost	7,850	7,850
Total investments (available for sale), Gross Unrealized (Loss)	(476)	(476)
Total investments (available for sale), Fair value	$ 7,374	$ 7,374

XML

Financial Instruments - Additional Information (Detail) - USD ($)	3 Months Ended			6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
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
Unrealized gains (losses) on investments	$ (131,000)		$ 43,000	$ (454,000)	$ (152,000)
Credit Agreement [Member] | Revolving Credit Facility [Member] | BMO Harris Bank N.A. (“BMO Harris”) [Member]
Financial Instruments [Line Items]
Revolving credit facility		$ 95,000,000
Cash collateral percentage		100.00%
Credit facility borrowings	$ 0			$ 0
Revolving credit facility maturity date				Dec. 31, 2018
CCKF [Member]
Financial Instruments [Line Items]
Percentage of investment in equity affiliate	30.70%			30.70%
Non controlling interest	$ 3,500,000			$ 3,500,000
Income (loss) from investment in affiliate	$ (700,000)			$ (800,000)	$ (200,000)
Maximum [Member] | CCKF [Member]
Financial Instruments [Line Items]
Income (loss) from investment in affiliate			$ (100,000)
Municipal Bonds [Member]
Financial Instruments [Line Items]
Period debt obligations mature, years, maximum				1 year
Unrealized gains (losses) on investments				$ 500,000

XML

Financial Instruments - Investments Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Total investments at fair value	$ 157,796	$ 122,275
Fair Value Measurements on Recurring Basis [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Total investments at fair value	157,796	122,275
Fair Value Measurements on Recurring Basis [Member] | Level 1 [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Total investments at fair value	35,368
Fair Value Measurements on Recurring Basis [Member] | Level 2 [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Total investments at fair value	115,054	114,901
Fair Value Measurements on Recurring Basis [Member] | Level 3 [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Total investments at fair value	7,374	7,374
Fair Value Measurements on Recurring Basis [Member] | Municipal Bonds [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Total investments at fair value	7,374	8,863
Fair Value Measurements on Recurring Basis [Member] | Municipal Bonds [Member] | Level 2 [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Total investments at fair value		1,489
Fair Value Measurements on Recurring Basis [Member] | Municipal Bonds [Member] | Level 3 [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Total investments at fair value	7,374	7,374
Fair Value Measurements on Recurring Basis [Member] | Non-governmental Debt Securities [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Total investments at fair value	115,121	76,757
Fair Value Measurements on Recurring Basis [Member] | Non-governmental Debt Securities [Member] | Level 1 [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Total investments at fair value	35,368
Fair Value Measurements on Recurring Basis [Member] | Non-governmental Debt Securities [Member] | Level 2 [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Total investments at fair value	79,753	76,757
Fair Value Measurements on Recurring Basis [Member] | Treasury and Federal Agencies [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Total investments at fair value	35,301	36,655
Fair Value Measurements on Recurring Basis [Member] | Treasury and Federal Agencies [Member] | Level 2 [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Total investments at fair value	$ 35,301	$ 36,655

XML

Financial Instruments - Assets Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs (Level3) (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($)
Investments Debt And Equity Securities [Abstract]
Beginning balance	$ 7,374
Unrealized gain (loss)	0
Ending balance	$ 7,374

XML

Financial Instruments - Schedule of Periodic Operating Maintenance Payments (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Related Party Transactions [Abstract]
Maintenance Fee Payments	$ 345	$ 343	$ 687	$ 699

XML

Student Receivables - Additional Information (Detail) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Student receivables, net of allowance for doubtful accounts and net of deferred tuition revenue	$ 3.3	$ 4.0
Minimum [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Student receivables write-off period, days past due	90 days

XML

Student Receivables - Changes in Current and Non-Current Receivables Allowance (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Receivables [Abstract]
Balance, Beginning of Period		$ 22,768	$ 18,249	$ 20,229	$ 19,097
Charges to Expense	[1]	5,268	4,956	14,875	9,225
Amounts Written-off		(7,028)	(4,702)	(14,096)	(9,819)
Balance, End of Period		$ 21,008	$ 18,503	$ 21,008	$ 18,503

[1] Charges to expense include an offset for recoveries of amounts previously written off of $1.6 million and $1.7 million for the quarters ended June 30, 2016 and 2015, respectively, and $3.6 million and $3.7 million for the years to date ended June 30, 2016 and 2015, respectively.

XML

Student Receivables - Changes in Current and Non-Current Receivables Allowance (Parenthetical) (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Receivables [Abstract]
Recoveries of amounts previously written off	$ 1.6	$ 1.7	$ 3.6	$ 3.7

XML

Restructuring Charges - Accrual for Severance and Related Costs (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Restructuring And Related Activities [Abstract]
Beginning of Period		$ 14,353	$ 2,596	$ 18,985	$ 2,712
Severance & Related Charges	[1],[2]	57	12,761	272	13,645
Payments		(2,305)	(2,293)	(7,630)	(3,064)
Non-cash Adjustments	[3]	(815)	(201)	(337)	(430)
End of Period		$ 11,290	$ 12,863	$ 11,290	$ 12,863

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

[2] Severance payments will result in future cash expenditures through 2018.

[3] 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.

XML

Restructuring Charges - Restructuring Charges by Segment (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Restructuring And Related Cost [Line Items]
Severance and related expenses	[1],[2]	$ 57	$ 12,761	$ 272	$ 13,645
University Group [Member]
Restructuring And Related Cost [Line Items]
Severance and related expenses			614	84	627
Corporate and Other [Member]
Restructuring And Related Cost [Line Items]
Severance and related expenses		57	4,318	153	4,318
Subtotal [Member]
Restructuring And Related Cost [Line Items]
Severance and related expenses		$ 57	4,932	237	4,945
Culinary Arts [Member]
Restructuring And Related Cost [Line Items]
Severance and related expenses			125	5	265
Transitional Group [Member]
Restructuring And Related Cost [Line Items]
Severance and related expenses			7,704	30	8,435
CTU [Member]
Restructuring And Related Cost [Line Items]
Severance and related expenses			275	18	288
AIU [Member]
Restructuring And Related Cost [Line Items]
Severance and related expenses			$ 339	$ 66	$ 339

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

[2] Severance payments will result in future cash expenditures through 2018.

XML

Restructuring Charges - Additional Information (Detail) $ in Millions	6 Months Ended
	Jun. 30, 2016 USD ($)
Restructuring Cost And Reserve [Line Items]
Accrual for severance and related charges	$ 6.9
Long term amount	4.4
Accrued retention bonuses	$ 1.5
Lease expiration teach out campuses	2023
Charges related to remaining obligations	$ 26.5
Minimum [Member]
Restructuring Cost And Reserve [Line Items]
Gross remaining lease obligations	50.0
Maximum [Member]
Restructuring Cost And Reserve [Line Items]
Gross remaining lease obligations	$ 60.0

XML

Restructuring Charges - Schedule of Changes in Future Minimum Lease Obligations (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Restructuring And Related Activities [Abstract]
Balance, Beginning of Period	$ 11,618	$ 3,609	$ 12,892	$ 7,094
Charges Incurred	5,984	2,171	9,082	6,420
Net Cash Payments	(2,723)	(1,619)	(8,000)	(9,713)
Other	2,261	1,319	3,166	1,679
Balance, End of Period	$ 17,140	$ 5,480	$ 17,140	$ 5,480

XML

Contingencies - Additional Information (Detail)		6 Months Ended
	Apr. 22, 2011 Student	Jun. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)	May 23, 2012 Member	Jan. 13, 2012 Finding	Jul. 14, 2008 Employee	Apr. 10, 2008 Claim	Mar. 05, 2008 Claim
Loss Contingencies [Line Items]
Accrual for legal fees and settlements | $		$ 2,200,000	$ 2,700,000
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
Surrett [Member]
Loss Contingencies [Line Items]
Number of alleged claims for equitable relief | Claim								2
Number of claims added for money damages | Claim							2
Number of students in class | Student	2,600
Opt-out period expiration date		Jun. 20, 2011
Number of individuals WCI file motion to compel arbitration | Member				1,062
False Claims Act [Member]
Loss Contingencies [Line Items]
Number of former employees who filed complaint | Employee						4
OIG Audit [Member] | Maximum [Member]
Loss Contingencies [Line Items]
Potential liability related to audit | $		$ 1,000,000

XML

Income Taxes - Summary of (Benefit from) Provision for Income Taxes and Effective Tax Rate from Continuing Operations (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Pretax income (loss)	$ 17,244	$ (20,750)	$ 24,469	$ (45,490)
Provision for (benefit from) income taxes	$ 4,620	$ (747)	$ 8,755	$ (958)
Effective rate	26.80%	(3.60%)	35.80%	(2.10%)

XML

Income Taxes - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Net deferred income tax assets					$ 47.5
Effective rate tax adjustment related to federal tax, amount	$ 2.1		$ 2.1
Decrease in effective tax rate	12.20%		8.60%
Decrease in effective tax rate due to valuation allowance, percentage		28.00%		37.10%
Decrease in unrecognized tax positions	$ 1.3		$ 1.3
Interest and penalties			$ 1.8

XML

Share-Based Compensation - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares issuable upon exercise of outstanding options	3,234,000		3,234,000		2,658,000
Estimated pretax compensation expense	$ 6.0		$ 6.0
Expiration period in years			4 years
Service period in years			4 years
Long-term incentive, cash-based awards			3 years
Restricted stock awards settled in cash exercisable in percentage			25.00%
Stock compensation and recognized liability	1.1		$ 2.0
Performance unit award credit (expense)	$ (0.6)	$ (0.1)	$ (0.9)	$ 0.3
Share-based Compensation Award, Tranche One [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock awards settled in stock exercisable in percentage			25.00%
Share-based Compensation Award, Tranche Two [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock awards settled in stock exercisable in percentage			33.33%
Share-based Compensation Award, Tranche Three [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock awards settled in stock exercisable in percentage			33.33%
Non-Employee Directors' Stock Options [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expiration period in years			10 years
Employee stock options exercisable in percentage			100.00%
Long-term incentive, cash-based awards			4 years
Employee Stock Option [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expiration period in years			10 years
Service period in years			4 years
Employee Stock Option [Member] | Share-based Compensation Award, Tranche One [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock awards settled in stock exercisable in percentage			25.00%
Restricted Stock Units [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Service period in years			4 years
Restricted Stock Units [Member] | Share-based Compensation Award, Tranche One [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock awards settled in stock exercisable in percentage			20.00%
Service period in years			3 years
Restricted Stock Units [Member] | Share-based Compensation Award, Tranche Two [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock awards settled in stock exercisable in percentage			50.00%
Service period in years			3 years
Restricted Stock Units [Member] | Share-based Compensation Award, Tranche Three [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock awards settled in stock exercisable in percentage			30.00%
Service period in years			3 years
Deferred Stock Units to be Settled in Shares [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Service period in years			3 years
2016 Incentive Compensation Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock subject to awards of stock options or stock appreciation rights payable in shares			1.0
Common stock available for future share-based awards	4,100,000		4,100,000
Shares issuable upon exercise of outstanding options	200,000		200,000
2008 Incentive Compensation Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares issuable upon exercise of outstanding options	3,000,000		3,000,000
Number of shares to reduce shares available to grant by upon vesting of restricted stock units	1,800,000		1,800,000
2008 Incentive Compensation Plan [Member] | Chief Executive Officer [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Service period in years			2 years
Restricted stock awards settled in cash exercisable in percentage			50.00%
Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares to reduce shares available to grant by upon vesting of restricted stock units	100,000		100,000

XML

Share-Based Compensation - Summary of Stock Option Activity (Detail) shares in Thousands	6 Months Ended
	Jun. 30, 2016 $ / shares shares
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Beginning balance of Outstanding, Options | shares	2,658
Granted, Options | shares	906
Exercised, Options | shares	(26)
Forfeited, Options | shares	(41)
Cancelled, Options | shares	(263)
Ending balance of Outstanding, Options | shares	3,234
Exercisable, Options | shares	1,810
Beginning balance of Outstanding, Weighted Average Exercise Price | $ / shares	$ 14.27
Granted, Weighted Average Exercise Price | $ / shares	4.79
Exercised, Weighted Average Exercise Price | $ / shares	2.65
Forfeited, Weighted Average Exercise Price | $ / shares	4.30
Cancelled, Weighted Average Exercise Price | $ / shares	25.36
Ending balance of Outstanding, Weighted Average Exercise Price | $ / shares	10.93
Exercisable, Weighted Average Exercise Price | $ / shares	$ 15.78

XML

Share-Based Compensation - Schedule of Information with Respect to all Outstanding Restricted Stock (Detail) - Restricted Stock Shares [Member]	6 Months Ended
	Jun. 30, 2016 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Beginning balance of Outstanding Shares | shares	758,000
Granted, Shares | shares	1,556,000
Vested, Shares | shares	(363,000)	[1]
Forfeited, Shares | shares	(124,000)
Ending balance of Outstanding Shares | shares	1,827,000
Beginning balance of Outstanding, Weighted Average Grant-Date Fair Value Per Share | $ / shares	$ 5.55
Granted, Weighted Average Grant-Date Fair Value Per Share | $ / shares	4.58
Vested, Weighted Average Grant-Date Fair Value Per Share | $ / shares	6.07	[1]
Forfeited, Weighted Average Grant-Date Fair Value Per Share | $ / shares	5.25
Ending balance of Outstanding, Weighted Average Grant-Date Fair Value Per Share | $ / shares	$ 4.64

[1] The total vested awards include 9.2 thousand of vested stock settled in cash. As a result of the termination provision for certain awards, certain termination scenarios allow for cash-settlement.

XML

Share-Based Compensation - Schedule of Information with Respect to all Outstanding Restricted Stock (Parenthetical) (Detail)	6 Months Ended
	Jun. 30, 2016 shares
Restricted Stock Shares [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vested stock settled in cash	9,200

XML

Share-Based Compensation - Schedule of Deferred Stock Units to be Settled in Shares (Detail)	6 Months Ended
	Jun. 30, 2016 $ / shares shares
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Beginning balance of Outstanding Shares	91,000	[1]
Granted, Shares	0
Vested, Shares	(15,000)
Forfeited, Shares	0
Ending balance of Outstanding Shares	76,000	[1]
Beginning balance of Weighted Average Grant-Date Fair Value Per Unit | $ / shares	$ 4.43	[1]
Vested, Weighted Average Grant-Date Fair Value Per Unit | $ / shares	4.39
Ending balance of Weighted Average Grant-Date Fair Value Per Unit | $ / shares	$ 4.44	[1]

[1] Includes vested but unreleased awards. These awards are included in total outstanding awards until they are released under the terms of the agreement

XML

Share-Based Compensation - Schedule of Restricted Stock Units to be Settled in Cash (Detail)	6 Months Ended
	Jun. 30, 2016 shares
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Beginning balance of Outstanding, Stock Units to be Settled in Cash	1,575,000
Stock Units to be Settled in Cash, Granted	461,000
Stock Units to be Settled in Cash, Vested	(331,000)
Stock Units to be Settled in Cash, Forfeited	(181,000)
Ending balance of Outstanding, Stock Units to be Settled in Cash	1,524,000

XML

Share-Based Compensation - Summary of Total Stock Based Compensation Expense (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock based compensation expense	$ 1,930	$ 619	$ 3,401	$ 2,465
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock based compensation expense	348	124	589	394
Restricted Stock or Units Settled in Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock based compensation expense	494	239	791	1,527
Restricted Stock Units to be Settled in Cash [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock based compensation expense	$ 1,088	$ 256	$ 2,021	$ 544

XML

Share-Based Compensation - Summary of Total Stock Based Compensation Expense (Parenthetical) (Detail) - Former Chief Executive Officer [Member] $ in Millions	6 Months Ended
	Jun. 30, 2015 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Forfeitures related stock-based compensation expense	$ 1.5
Separation agreement payment	$ 2.5

XML

Weighted Average Common Shares - Summary of Weighted Average Numbers of Common Shares Used to Compute Basic and Diluted Net Income (Loss) Per Share (Detail) - shares shares in Thousands	3 Months Ended			6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	[1]	Jun. 30, 2016	Jun. 30, 2015	[1]
Earnings Per Share [Abstract]
Basic common shares outstanding	68,368	67,893		68,261	67,714
Common stock equivalents	647			366
Diluted common shares outstanding	69,015	67,893		68,627	67,714

[1] Due to the fact that we reported a loss from continuing operations for the quarter and year to date ended June 30, 2015, 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 quarter and year to date ended June 30, 2015.

XML

Weighted Average Common Shares - Summary of Weighted Average Numbers of Common Shares Used to Compute Basic and Diluted Net Income (Loss) Per Share (Parenthetical) (Detail) - shares shares in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2015
Earnings Per Share [Abstract]
Anti-dilutive awards excluded from computations of diluted earnings per share	0	0

XML

Weighted Average Common Shares - Additional Information (Detail) - shares shares in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Anti-dilutive awards excluded from computations of diluted earnings per share		0.0		0.0
Employee Stock Option [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Anti-dilutive awards excluded from computations of diluted earnings per share	2.8		2.6

XML

Segment Reporting - Additional Information (Detail)	Jun. 30, 2016 Cmp
CTU [Member]
Segment Reporting Information [Line Items]
Students enrolled expressed as percentage of enrollment	56.00%
AIU [Member]
Segment Reporting Information [Line Items]
Students enrolled expressed as percentage of enrollment	27.00%
Culinary Arts [Member]
Segment Reporting Information [Line Items]
Students enrolled expressed as percentage of enrollment	13.00%
Transitional Group [Member]
Segment Reporting Information [Line Items]
Students enrolled expressed as percentage of enrollment	4.00%
Number of campuses completed teach out activities	3
Fully Online [Member] | CTU [Member]
Segment Reporting Information [Line Items]
Percentage of enrollment	92.00%
Fully Online [Member] | AIU [Member]
Segment Reporting Information [Line Items]
Percentage of enrollment	99.00%

XML

Segment Reporting - Summary Financial Information by Reporting Segment (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Segment Reporting Information [Line Items]
Revenue		$ 182,626	$ 216,828	$ 381,512	$ 443,842
Percentage of total revenue		100.00%	100.00%	100.00%	100.00%
Operating (Loss) Income		$ 17,290	$ (19,892)	$ 24,269	$ (44,250)
Total Assets	[1]	552,794		552,794		$ 610,915
Discontinued Operations [Member]
Segment Reporting Information [Line Items]
Total Assets	[1]	8,853		8,853		9,065
University Group [Member]
Segment Reporting Information [Line Items]
Revenue		$ 142,344	$ 138,198	$ 287,283	$ 276,391
Percentage of total revenue		77.90%	63.70%	75.30%	62.30%
Operating (Loss) Income		$ 36,808	$ 29,437	$ 57,952	$ 41,166
Total Assets	[1]	$ 128,873		128,873		129,664
Corporate and Other [Member]
Segment Reporting Information [Line Items]
Revenue			$ 39		$ 78
Percentage of total revenue		0.00%	0.00%		0.00%
Operating (Loss) Income		$ (5,761)	$ (7,036)	(11,573)	$ (12,896)
Total Assets	[1]	327,345		327,345		372,405
Subtotal [Member]
Segment Reporting Information [Line Items]
Revenue		$ 142,344	$ 138,237	$ 287,283	$ 276,469
Percentage of total revenue		77.90%	63.80%	75.30%	62.30%
Operating (Loss) Income		$ 31,047	$ 22,401	$ 46,379	$ 28,270
Total Assets	[1]	456,218		456,218		502,069
Culinary Arts [Member]
Segment Reporting Information [Line Items]
Revenue		$ 29,998	$ 42,048	$ 68,621	$ 86,760
Percentage of total revenue		16.40%	19.40%	18.00%	19.50%
Operating (Loss) Income		$ 361	$ (10,560)	$ 3,467	$ (10,317)
Total Assets	[1]	64,554		64,554		71,197
Transitional Group [Member]
Segment Reporting Information [Line Items]
Revenue		$ 10,284	$ 36,543	$ 25,608	$ 80,613
Percentage of total revenue		5.60%	16.90%	6.70%	18.20%
Operating (Loss) Income		$ (14,118)	$ (31,733)	$ (25,577)	$ (62,203)
Total Assets	[1]	23,169		23,169		28,584
CTU [Member] | University Group [Member]
Segment Reporting Information [Line Items]
Revenue	[2]	$ 91,736	$ 86,174	$ 183,702	$ 171,301
Percentage of total revenue	[2]	50.20%	39.70%	48.20%	38.60%
Operating (Loss) Income	[2]	$ 29,970	$ 24,263	$ 49,207	$ 38,879
Total Assets	[1]	75,469		75,469		76,577
AIU [Member] | University Group [Member]
Segment Reporting Information [Line Items]
Revenue	[3]	$ 50,608	$ 52,024	$ 103,581	$ 105,090
Percentage of total revenue	[3]	27.70%	24.00%	27.20%	23.70%
Operating (Loss) Income	[3]	$ 6,838	$ 5,174	$ 8,745	$ 2,287
Total Assets	[1]	$ 53,404		$ 53,404		$ 53,087

[1] Total assets do not include intercompany receivable or payable activity between schools and corporate and investments in subsidiaries.

[2] Bad debt increased approximately 0.3% and 2.4% as a percentage of revenue for the quarter and year to date ended June 30, 2016 as compared to the respective prior periods, primarily driven by students who are experiencing a greater time lag while completing the financial aid application process due to increased verification procedures implemented by ED.

[3] Bad debt increased approximately 1.4% and 1.7% as a percentage of revenue for the quarter and year to date ended June 30, 2016 as compared to the respective prior periods, primarily driven by students who are experiencing a greater time lag while completing the financial aid application process due to increased verification procedures implemented by ED.

XML

Segment Reporting - Summary Financial Information by Reporting Segment (Parenthetical) (Detail)	3 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2016
CTU [Member]
Segment Reporting Information [Line Items]
Bad debt increase in percentage of revenue	0.30%	2.40%
AIU [Member]
Segment Reporting Information [Line Items]
Bad debt increase in percentage of revenue	1.40%	1.70%