Restructuring and Related Charges

6 Months Ended

Jun. 30, 2016

Restructuring and Related Charges [Abstract]

4. Restructuring and Related Charges

In October 2013, the Company implemented a restructuring to better align the Company’s resources with student enrollments at the time. This restructuring included the closing of 20 physical locations and reductions in the number of campus-based and corporate employees. A liability for lease obligations, some of which continue through 2022, was recorded and is measured at fair value using a discounted cash flow approach encompassing significant unobservable inputs (Level 3). The estimation of future cash flows includes non-cancelable contractual lease costs over the remaining terms of the leases discounted at the Company’s marginal borrowing rate of 4.5%, partially offset by estimated future sublease rental income discounted at credit-adjusted rates. The Company’s estimates, which involve significant judgment, also consider the amount and timing of sublease rental income based on subleases that have been executed and subleases expected to be executed based on current commercial real estate market data and conditions, and other qualitative factors specific to the facilities. The estimates are subject to adjustment as market conditions change or as new information becomes available, including the execution of additional sublease agreements.

The following details the changes in the Company’s restructuring liability for lease and related costs during the six months ended June 30, 2015 and 2016 (in thousands):


	June 30,		June 30,
	2015		2016
Balance at beginning of period(1)	$	27,283	$	20,055
Adjustments(2)		435		(1,558)
Payments		(3,451)		(3,212)
Balance at end of period(1)	$	24,267	$	15,285

⁽¹⁾

The current portion of restructuring liabilities was $4.8 million and $5.3 million as of December 31, 2015 and June 30, 2016, respectively, which are included in accounts payable and accrued expenses. The long-term portion is included in other long-term liabilities.

⁽²⁾

Adjustments include accretion of interest on lease costs, partially offset by changes in the timing and expected income from sublease agreements.