Segment Reporting

6 Months Ended

Dec. 31, 2013

Segments [Abstract]

Segment Reporting Disclosure

SEGMENT REPORTING

The Company's principal business is providing post-secondary education. The Company manages its operations through four operating segments, which are The Art Institutes, Argosy University, Brown Mackie Colleges and South University.

During fiscal 2013, the Company created "The Center", which provides support services to its four education systems through the centralization and automation of certain non-student facing activities, including financial aid packaging, the qualification and transfer of prospective students to school admissions teams, student billing services, certain registrar services, support call center services for students and employees, and remote student advising services. Effective July 1, 2013, The Center allocates costs to each reportable segment based primarily on the level of transaction volume. In the prior fiscal year, similar costs were allocated to each reportable segment based primarily on net revenues. To ensure comparability among periods, EBITDA excluding certain expenses for each segment has been recast to report results for the three and six months ended December 31, 2012 as if The Center existed in prior periods and allocating its costs in a manner consistent with the current methodology. The creation of The Center and changes in the allocation methodology had no impact on previously reported consolidated EBITDA excluding certain expenses.

Earnings before interest, income taxes, depreciation and amortization ("EBITDA") excluding certain expenses is the measure used by the chief operating decision maker to evaluate segment performance and allocate resources. It is defined as net income before interest, income taxes, depreciation and amortization and certain expenses presented in the table below. EBITDA excluding certain expenses is not a recognized term under generally accepted accounting principles ("GAAP") and does not purport to be an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally, EBITDA excluding certain expenses is not intended to be a measure of free cash flow available for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Management believes EBITDA excluding certain expenses is helpful in highlighting trends because EBITDA excluding certain expenses excludes the results of decisions that are outside the control of operating management and can differ significantly from company to company depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. Management compensates for the limitations of using non-GAAP financial measures by using them to supplement GAAP results to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone. Because not all companies use identical calculations, this presentation of EBITDA excluding certain expenses may not be comparable to similarly titled measures of other companies. Adjustments to reconcile segment results to consolidated results are included under the caption “Corporate and other,” which primarily includes unallocated corporate activity. A reconciliation of EBITDA excluding certain expenses by reportable segment to consolidated income (loss) before income taxes along with other summary financial information by reportable segment is presented below (in thousands):

	For the Three Months Ended December 31,						For the Six Months Ended December 31,
	2013			2012			2013			2012
Net revenues:
The Art Institutes	$	371,474		$	411,533		$	727,989		$	791,672
Argosy University	76,640			92,312			159,788			174,232
Brown Mackie Colleges	69,463			78,274			139,649			152,246
South University	76,096			72,776			146,627			146,309
Total EDMC	$	593,673		$	654,895		$	1,174,053		$	1,264,459
EBITDA excluding certain expenses:
The Art Institutes	$	87,992		$	113,429		$	147,089		$	182,848
Argosy University	2,547			15,231			5,931			15,401
Brown Mackie Colleges	7,123			8,980			13,407			18,186
South University	12,158			9,132			17,550			16,364
Corporate and other	(22,737		)	(23,444		)	(44,727		)	(46,550		)
Total EDMC	87,083			123,328			139,250			186,249
Reconciliation to consolidated (loss) income before income taxes:
Restructuring (A)	9,452			—			11,097			9,145
Settlement-related costs	5,959			—			5,959			—
Long-lived asset impairments (B)	3,847			—			3,847			—
Depreciation and amortization	38,593			39,255			77,198			83,400
Net interest expense	31,615			31,009			63,481			62,461
(Loss) income before income taxes	$	(2,383	)	$	53,064		$	(22,332	)	$	31,243

(A) Refer to Note 7, "Accrued Liabilities," for more information on these charges.

(B) Refer to Note 4, "Property and Equipment," for more information on these charges.

Total assets of each reportable segment were as follows (in thousands):

Assets: (+)	December 31, 2013		June 30, 2013		December 31, 2012
The Art Institutes	$	1,371,173	$	1,438,028	$	1,748,715
Argosy University	204,924		257,608		242,546
Brown Mackie Colleges	190,294		231,225		190,915
South University	203,945		226,041		202,341
Corporate and other	209,752		162,391		309,301
Total EDMC	$	2,180,088	$	2,315,293	$	2,693,818

(+) Excludes inter-company activity.