COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES AND DISCONTINUED OPERATIONS

9 Months Ended

Sep. 30, 2013

COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES AND DISCONTINUED OPERATIONS [Abstract]

COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES AND DISCONTINUED OPERATIONS

4. COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES AND DISCONTINUED OPERATIONS

a) Costs Associated with Exit or Disposal Activities

On June 18, 2013, the Company’s Board of Directors approved a plan to cease operations at four campuses in Ohio and one campus in Kentucky consisting of the Company’s Dayton institution and its branch campuses.  Federal legislation implemented on July 1, 2012 that prohibits “ability to benefit” students from participating in federal student financial aid programs led to a dramatic decrease in the number of students attending these five campuses.  As a result, the Company adopted a plan to cease operations at these campuses and, in accordance with the plan, the Company stopped admitting new students at these five campuses, but provided currently enrolled students who were scheduled to graduate before December 31, 2013 with the ability to complete their course of study at these five campuses. The Company expects all operations at these campuses to cease by December 31, 2013 at which time the results of operations for these campuses will be reflected as discontinued operations in the Company’s financial statements.

The results of operations at these five campuses for the three and nine months ended September 30, 2013 and for the fiscal years ended December 31, 2012, 2011 and 2010 were as follows (in thousands):

	Three Months Ended September 30,			Nine Months Ended September 30,			Year Ended December 31,
	2013			2013			2012			2011			2010
Revenue	$	(18	)	$	7,261		$	19,924		$	35,099		$	61,028
Operating expenses		(3,898	)		(19,322	)		(33,564	)		(29,885	)		(31,947	)
Operating (loss) income	$	(3,916	)	$	(12,061	)	$	(13,640	)	$	5,214		$	29,081

Amounts include impairments of goodwill and long-lived assets for these campuses of $2.3 million and $8.7 million for the nine months ended September 30, 2013 and for the year ended December 31, 2012, respectively.  For the three months ended September 30, 2013, the accompanying financial statements reflect $1.5 million of refunds to students as a reduction of revenue and $0.2 million of accrued compensation related to severance and stay bonuses at these campuses.  For the nine months ended September 30, 2013, amounts include $1.5 million of student refunds as a reduction of revenue and $1.2 million of accrued compensation related to severance and stay bonuses at these campuses.

b) Discontinued Operations

On July 31, 2012, the Company’s Board of Directors approved a plan to cease operations at seven campuses.  The adjustments made to the Company’s business model to better align with the U.S. Department of Education’s (“DOE”) increased emphasis on student outcomes and the Company’s efforts to comply with the 90/10 rule and cohort default rates greatly impacted the population at these campuses.  In addition, the current economic environment and regulatory changes under the Consolidated Appropriations Act, 2012, which eliminated the ability to enroll “ability to benefit” students, have made these campuses no longer viable.  Accordingly, the Company ceased operations at these campuses as of December 31, 2012.  The results of operations are reflected as discontinued operations in the condensed consolidated financial statements.

The results of operations at these seven campuses for the three and nine months ended September 30, 2012 were as follows (in thousands):

	Three Months Ended September 30,			Nine Months Ended September 30,
	2012			2012
Revenue	$	2,087		$	9,134
Loss before income taxes		(4,277	)		(17,173	)
Income tax benefit		(1,707	)		(6,854	)
Net loss from discontinued operations	$	(2,570	)	$	(10,319	)