2.	Restatement of Previously Issued Financial Statements

Subsequent to the Original Filing, we determined there was an error in the application of the interest method used to calculate the interest rate used in accounting for the accretion of the debt discount associated with our PEAKS Senior Debt. In our Original Filing, we accreted the debt discount associated with the PEAKS Senior Debt using the interest method based on the amounts and timing of the repayments that we estimated at the time that the PEAKS Senior Debt was initially included in our consolidated financial statements. We subsequently determined that the interest method should take into consideration actual repayments and updated projections for future repayments on the PEAKS Senior Debt to determine the interest rate used to calculate the amount of the debt discount recognized as interest expense in each period.

As a result, we have restated the previously-issued unaudited condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for each of the fiscal quarters ended March 31, 2014, June 30, 2014, September 30, 2014, March 31, 2015, June 30, 2015 and September 30, 2015, and our audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2014, and that those previously-issued financial statements should no longer be relied upon.

Our restated condensed consolidated financial statements as of and for the three months ended March 31, 2014 included in this Amended Filing reflect the correction of this error. A reconciliation of previously reported amounts to the restated amounts is set forth in the tables below.

The following table sets forth the effect of the restatement on the affected line items in our Condensed Consolidated Balance Sheet as of March 31, 2014:


	As of March 31, 2014
	As Previously Reported		Interest Method Adjustment			As Restated
Condensed Consolidated Balance Sheet Data:
Deferred income taxes	$	75,607	$	1,901		$	77,508
Total assets		778,431		1,901			780,332
Other current liabilities		52,415		(147	)		52,268
Total current liabilities		458,067		(147	)		457,920
PEAKS Trust senior debt, excluding current portion		58,782		4,911			63,693
Total liabilities		659,325		4,764			664,089
Retained earnings		944,039		(2,863	)		941,176
Total shareholders’ equity		119,106		(2,863	)		116,243
Total liabilities and shareholders’ equity		778,431		1,901			780,332

The following table sets forth the effect of the restatement on the affected line items in our Condensed Consolidated Statement of Income for the three months ended March 31, 2014:


	Three Months Ended March 31, 2014
	As Previously Reported			Interest Method Adjustment			As Restated
Condensed Consolidated Statement of Income Data:
Revenue	$	237,923		$	0		$	237,923
Costs and expenses:
Cost of educational services		120,115			0			120,115
Student services and administrative expenses		99,238			0			99,238
Legal and professional fees related to certain lawsuits, investigations and accounting matters		5,547			0			5,547
Loss related to loan program guarantees		0			0			0

Total costs and expenses		224,900			0			224,900

Operating income		13,023			0			13,023
Interest income		19			0			19
Interest (expense)		(6,901	)		(4,911	)		(11,812	)

Income before provision for income taxes		6,141			(4,911	)		1,230
Provision for income taxes		2,519			(2,048	)		471

Net income	$	3,622		$	(2,863	)	$	759

Earnings per share:
Basic	$	0.15		$	(0.12	)	$	0.03
Diluted	$	0.15		$	(0.12	)	$	0.03
Weighted average shares outstanding:
Basic		23,447			0			23,447
Diluted		23,844			0			23,844

The following table sets forth the effect of the restatement on the affected line items in our Condensed Consolidated Statement of Comprehensive Income for the three months ended March 31, 2014:


	Three Months Ended March 31, 2014
	As Previously Reported		Interest Method Adjustment			As Restated
Condensed Consolidated Statement of Comprehensive Income Data:
Net income	$	3,622	$	(2,863	)	$	759
Comprehensive income		3,384		(2,863	)		521

The following table sets forth the effect of the restatement on the affected line items in our Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2014:


	Three Months Ended March 31, 2014
	As Previously Reported			Interest Method Adjustment			As Restated
Condensed Consolidated Statement of Cash Flows Data:
Net income	$	3,622		$	(2,863	)	$	759
Deferred income taxes		(416	)		(1,901	)		(2,317	)
Accretion of discount on PEAKS Trust senior debt		1,541			4,911			6,452
Other operating assets and liabilities		(3,885	)		(147	)		(4,032	)
Net cash flows from operating activities		36,918			0			36,918

The following table sets forth the effect of the restatement on the affected line items in our Condensed Consolidated Statement of Shareholders’ Equity for the three months ended March 31, 2014:


	Three Months Ended March 31, 2014
	As Previously Reported		Interest Method Adjustment			As Restated
Condensed Consolidated Statement of Shareholders’ Equity Data – Retained Earnings:
Net income	$	3,622	$	(2,863	)	$	759
Balance as of March 31, 2014		944,039		(2,863	)		941,176