Segment Reporting

12 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

Segment Reporting

17. SEGMENT REPORTING

The Company's principal business is providing post-secondary education. The Company manages its operations through four reportable segments, which are The Art Institutes, Argosy University, Brown Mackie Colleges and South University. A summary of each reportable segment is below.

• The Art Institutes.  The Art Institutes focus on applied arts in creative professions such as graphic design, media arts and animation, culinary arts, photography, digital filmmaking and video production, interior design, audio production, fashion design, game art and design, baking and pastry, and fashion marketing. The Art Institutes offer Associate’s, Bachelor’s and Master’s degree programs, as well as selective non-degree diploma programs. Students pursue their degrees through local campuses, fully-online programs through The Art Institute of Pittsburgh, Online Division and blended formats, which combine campus-based and online education. As of June 30, 2014, there were 51 Art Institutes campuses in 25 U.S. states and in Canada. As of October 2013, students enrolled at The Art Institutes represented approximately 53% of the Company's total enrollments.

• Argosy University.  Argosy University offers academic programs in psychology and behavioral sciences, business, legal, education and health sciences disciplines. Argosy University offers Doctoral, Master’s and undergraduate degrees through local campuses, fully-online programs and blended formats. Argosy University’s academic programs largely focus on graduate students seeking advanced credentials as a prerequisite to initial licensing, career advancement and/or structured pay increases. As of June 30, 2014, there were 20 Argosy University schools in 13 U.S. states. As of October 2013, students enrolled at Argosy University represented approximately 19% of the Company's total enrollments. This segment includes Western State College of Law, which offers Juris Doctor degrees, and the Ventura Group, which provides courses and materials for post-graduate licensure examinations in the behavioral sciences fields and continuing education courses for K-12 educators.

• Brown Mackie Colleges.  Brown Mackie Colleges offer flexible Associate’s and non-degree diploma programs that enable students to develop skills for entry-level positions in high demand vocational specialties and Bachelor’s degree programs that assist students to advance within the workplace. Brown Mackie Colleges offer programs in fields such as medical assisting, business, criminal justice, occupational therapy assistant, healthcare administration, and veterinary technology. As of June 30, 2014, there were 28 Brown Mackie College campuses in 15 U.S. states. As of October 2013, students enrolled at Brown Mackie Colleges represented approximately 13% of the Company's total enrollments.

• South University.  South University offers academic programs in health profession and business disciplines, including business administration, health sciences, nursing, criminal justice, psychology, information technology, and healthcare management. South University offers Doctoral, Master’s, Bachelor’s and Associate’s degrees through local campuses, fully-online programs and blended formats. As of June 30, 2014, there were 11 South University campuses in nine U.S. states. As of October 2013, students enrolled at South University represented approximately 15% of the Company's total enrollments.

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 fiscal years ended June 30, 2013 and 2012 as if The Center existed in those periods and allocated its costs in a manner consistent with the fiscal 2014 methodology. The creation of The Center and changes in the allocation methodology had no impact on previously reported EBITDA excluding certain expenses for total EDMC.

EBITDA excluding certain expenses, the measure used by the chief operating decision maker to evaluate segment performance and allocate resources, is defined as net income (loss) before interest expense, income tax expense (benefit), depreciation and amortization and certain other expenses presented below. EBITDA excluding certain expenses is not a recognized term under 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, the Company's 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. As well as other summary financial information by reportable segment, a reconciliation of EBITDA excluding certain expenses by reportable segment to consolidated income (loss) before income taxes is presented below (in thousands):

	For the Fiscal Year Ended June 30,
	2014			2013			2012
Net revenues:
The Art Institutes	$	1,386,729		$	1,543,385		$	1,738,542
Argosy University	321,118			356,544			397,458
Brown Mackie Colleges	265,606			298,175			314,801
South University	299,283			300,495			310,166
Total EDMC	$	2,272,736		$	2,498,599		$	2,760,967
EBITDA excluding certain expenses:
The Art Institutes	$	268,530		$	352,036		$	480,518
Argosy University	29,880			39,068			57,346
Brown Mackie Colleges	22,007			32,154			55,755
South University	41,260			46,613			10,560
Corporate and other	(85,538		)	(89,654		)	(94,298		)
Total EDMC	276,139			380,217			509,881
Reconciliation to loss before income taxes:
Long-lived asset impairments	568,216			300,104			1,662,288
Restructuring and other	26,952			13,920			14,133
Lease abandonment charge	6,367			—			—
Settlement-related costs	7,859			—			—
Loss on sale-leaseback transactions	3,491			3,938			—
Loss on debt refinancing	—			5,232			9,474
Depreciation and amortization	152,501			164,712			158,663
Net interest expense	128,033			124,663			110,330
Loss before income taxes	$	(617,280	)	$	(232,352	)	$	(1,445,007	)

Expenditures for long-lived assets:
The Art Institutes	$	30,829	$	39,778	$	42,970
Argosy University	5,712		6,719		6,573
Brown Mackie Colleges	2,847		9,049		11,906
South University	4,960		7,648		9,056
Corporate and other	29,412		20,047		23,041
Total EDMC	$	73,760	$	83,241	$	93,546
	As of June 30,
Assets: *	2014		2013
The Art Institutes	$	953,003	$	1,521,597
Argosy University	297,320		274,151
Brown Mackie Colleges	210,154		231,225
South University	229,336		233,993
Corporate and other	187,223		162,390
Total EDMC	$	1,877,036	$	2,423,356

* Excludes inter-company activity.