2.	Revision of 2011 and 2012 Financial Statements

We identified corrections to our 2011 and 2012 financial statements related to the recognition of revenue with respect to students who withdrew from a program of study. We also corrected the calculation of the contingent loss for the 2009 RSA in our 2012 financial statements.

We evaluated the cumulative impact of those items on prior periods under the guidance in ASC 250, “Accounting Changes and Error Corrections” (“ASC 250”), relating to SEC Staff Accounting Bulletin (“SAB”) No. 99, “Materiality.” We also evaluated the impact of correcting those items through an adjustment to our financial statements for the fiscal year ended December 31, 2013. We concluded, based on the guidance in ASC 250 relating to SAB No. 108, “Considering the Effects of Prior Year Misstatement when Quantifying Misstatements in Current Year Financial Statements,” that the correction of those items in our 2011 and 2012 fiscal year would not be material, but would be material if corrected out-of-period in our 2013 fiscal year. As a result, we have revised our audited consolidated financial statements as of and for the fiscal years ended December 31, 2012 and December 31, 2011 to reflect the correction of those items that should have been recognized in those periods. The amounts of the corrections as of December 31, 2012 and December 31, 2011 are shown in the Revisions column in the tables below.

Our revised Consolidated Balance Sheet as of December 31, 2012 and Consolidated Statements of Shareholders’ Equity as of December 31, 2012, 2011 and 2010 also reflect the correction of the classification of funds held for students from Title IV Programs that result in a credit balance on a student’s account as restricted and amounts related to the vesting of RSUs from retained earnings to capital surplus. The amounts of these corrections related to our Consolidated Balance Sheets were not material and are shown in the Revisions column in the tables below. The December 31, 2012 Consolidated Balance Sheet reflects an adjustment to increase retained earnings by $5,366 and decrease capital surplus by $5,366 for the cumulative effect of the classification of the vesting of RSUs as of December 31, 2011. We also increased retained earnings as of December 31, 2011 by $306 for the cumulative effect of the adjustment for the recognition of revenue with respect to students who withdrew from a program of study in prior years.

The December 31, 2010 amounts presented on our Consolidated Statement of Shareholders’ Equity reflect an adjustment to increase retained earnings by $2,969 and decrease capital surplus by $2,969 for the cumulative effect of the classification of the vesting of RSUs. We also decreased retained earnings as of December 31, 2010 in our Consolidated Statement of Shareholders’ Equity by $1,028 for the cumulative effect of the adjustments for the recognition of revenue with respect to students who withdrew from a program of study in prior periods.

We reclassified the following items in our Consolidated Statement of Income for the year ended December 31, 2012 to conform with the current year presentation:

•

settlement cost was reclassified to loss related to loan program guarantees;

•

loss related to private student loan programs was reclassified to loss related to loan program guarantees; and

•

an asset impairment was reclassified from loss related to private student loan programs to a separate line item.

We also corrected the classification of losses related to loan program guarantees, which were previously recorded as reductions to revenue in our Consolidated Statements of Income for the years ended December 31, 2012 and December 31, 2011, to report those amounts on a separate line. The amount of those corrections is shown in the Revisions column in the tables below.

The following table sets forth the effect of the revisions on the affected line items on our Consolidated Balance Sheet as of the date indicated.


	As of December 31, 2012
	As Previously Reported		Revisions			As Revised
Balance Sheet Data:
Cash and cash equivalents	$	246,342	$	(2,877	)	$	243,465
Restricted cash		601		2,877			3,478
Accounts receivable, net		77,313		1,615			78,928
Deferred income taxes (current)		44,547		0			44,547
Total current assets		384,965		1,615			386,580
Deferred income taxes		56,112		1,359			57,471
Total assets		672,230		2,974			675,204
Other current liabilities		86,722		20,074			106,796
Total current liabilities		306,949		20,074			327,023
Other liabilities		98,327		(15,911	)		82,416
Total liabilities		545,276		4,163			549,439
Capital surplus		206,703		(9,590	)		197,113
Retained earnings		959,072		8,401			967,473
Total shareholders’ equity		126,954		(1,189	)		125,765
Total liabilities and shareholders’ equity		672,230		2,974			675,204

The following table sets forth the effect of the revisions and reclassifications on the affected line items in our Consolidated Statement of Income for the year ended December 31, 2012.


	Year Ended December 31, 2012
	As Previously Reported		Revisions			Reclassifications			As Revised
Statement of Income Data:
Revenue	$	1,287,209	$	(576	)	$	0		$	1,286,633
Cost of educational services		539,223		0			(873	)		538,350
Student services and administrative expenses		422,345		(21,489	)		0			400,856
Settlement cost		21,750		0			(21,750	)		0
Asset impairment		0		0			15,166			15,166
Legal and other investigation costs		0		0			873			873
Loss related to private student loan programs		71,102		0			(71,102	)		0
Loss related to loan program guarantees		0		23,339			77,686			101,025
Total costs and expenses		1,054,420		1,850			0			1,056,270
Operating income		232,789		(2,426	)		0			230,363
Income before provision for income taxes		230,414		(2,426	)		0			227,988
Provision for income taxes		89,949		(931	)		0			89,018
Net income		140,465		(1,495	)		0			138,970
Earnings per share:
Basic	$	5.88							$	5.82
Diluted	$	5.85							$	5.79

The following table sets forth the effect of the revisions on the affected line items in our Consolidated Statement of Income for the year ended December 31, 2011.


	Year Ended December 31, 2011
	As Previously Reported		Revisions			As Revised
Statement of Income Data:
Revenue	$	1,499,949	$	(28	)	$	1,499,977
Cost of educational services		553,065		0			553,065
Student services and administrative expenses		439,808		(25,652	)		414,156
Loss related to loan program guarantees		0		23,500			23,500
Total costs and expenses		992,873		(2,152	)		990,721
Operating income		507,076		2,180			509,256
Income before provision for income taxes		508,153		2,180			510,333
Provision for income taxes		200,401		846			201,247
Net income		307,752		1,334			309,086
Earnings per share:
Basic	$	11.22				$	11.27
Diluted	$	11.13				$	11.18

The following table sets forth the effect of the revisions on the affected line items in our Consolidated Statement of Comprehensive Income for the year ended December 31, 2012.


	Year Ended December 31, 2012
	As Previously Reported		Revisions			As Revised
Statement of Comprehensive Income Data:
Net income	$	140,465	$	(1,495	)	$	138,970
Comprehensive income		142,014		(1,495	)		140,519

The following table sets forth the effect of the revisions on the affected line items in our Consolidated Statement of Comprehensive Income for the year ended December 31, 2011.


	Year Ended December 31, 2011
	As Previously Reported		Revisions		As Revised
Statement of Comprehensive Income Data:
Net income	$	307,752	$	1,334	$	309,086
Comprehensive income		302,782		1,334		304,116

The following table sets forth the effect of the revisions on the affected line items in our Consolidated Statement of Cash Flows for the year ended December 31, 2012.


	Year Ended December 31, 2012
	As Previously Reported			Revisions			As Revised
Statement of Cash Flows Data:
Net income	$	140,465		$	(1,495	)	$	138,970
Provision for doubtful accounts		78,307			(21,489	)		56,818
Deferred income taxes		(58,640	)		(1,359	)		(59,999	)
Restricted cash		1,527			2,267			3,794
Accounts receivable		(107,514	)		20,376			(87,138	)
Other operating assets and liabilities		68,890			3,967			72,857
Net cash flows from operating activities		105,354			2,267			107,621

The following table sets forth the effect of the revisions on the affected line items in our Consolidated Statement of Cash Flows for the year ended December 31, 2011.


	Year Ended December 31, 2011
	As Previously Reported			Revisions			As Revised
Statement of Cash Flows Data:
Net income	$	307,752		$	1,334		$	309,086
Provision for doubtful accounts		61,308			(25,653	)		35,655
Deferred income taxes		(8,991	)		0			(8,991	)
Restricted cash		(1,873	)		931			(942	)
Accounts receivable		(40,477	)		23,473			(17,004	)
Other operating assets and liabilities		35,118			846			35,964
Net cash flows from operating activities		387,832			931			388,763

The revisions had an effect on capital surplus, retained earnings and total shareholders’ equity as of December 31, 2012, December 31, 2011 and December 31, 2010, as reported in our Consolidated Statements of Shareholders’ Equity. The effect on capital surplus, retained earnings and total shareholders’ equity as of December 31, 2012 is shown in the Balance Sheet Data table above. The revisions resulted in the following changes to capital surplus, retained earnings and total shareholders’ equity as of December 31, 2011:

•

a decrease in capital surplus of $5,366;

•

an increase in retained earnings of $5,672; and

•

an increase in total shareholders’ equity of $306.

The revisions resulted in the following changes to capital surplus, retained earnings and total shareholders’ equity as of December 31, 2010:

•

a decrease in capital surplus of $2,969;

•

an increase in retained earnings of $1,941; and

•

a decrease in total shareholders’ equity of $1,028.

The revisions had an effect on net income for the years ended December 31, 2012 and December 31, 2011, as reported in our Consolidated Statements of Shareholders’ Equity. The effect of the revisions on net income for the years ended December 31, 2012 and December 31, 2011, as reported in our Consolidated Statements of Shareholders’ Equity, is shown in the Statement of Income Data tables above.