GOODWILL AND LONG-LIVED ASSETS

9 Months Ended

Sep. 30, 2013

GOODWILL AND LONG-LIVED ASSETS [Abstract]

5.	GOODWILL AND LONG-LIVED ASSETS

There was no long-lived asset impairment during the three months ended September 30, 2013. The Company reviews long-lived assets for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The Company concluded that as of June 30, 2013, March 31, 2013, and June 30, 2012, there was sufficient evidence to conclude that there were impairments of certain long-lived assets at four, two, and ten of our campuses respectively. Long lived assets had been tested at these campuses as a result of certain financial indicators such as our history of losses, our current respective period losses, as well as future projected losses at these campuses. The long-lived assets impairment resulted in a pre-tax charge of $1.4 million and $1.7 million for leasehold improvements as of June 30, 2013 and March 31, 2013, respectively, and a pre-tax charge of $8.3 million as of June 30, 2012 (which included leasehold improvements of $8.1 million and definite-lived intangible assets of $0.2 million, of which $4.0 million is included in discontinued operations).

There was no goodwill impairment during the three months ended September 30, 2013. As of June 30, 2013, the Company concluded that current period losses at two reporting units, which resulted in a deterioration of current and projected cash flows, was an indicator of potential impairment and, accordingly, tested goodwill and long-lived assets for impairment. The tests indicated that these two reporting units were impaired, which resulted in a pre-tax non-cash charge of $3.1 million for the three months ended June 30, 2013.

The Company concluded that the decrease in the Company’s market capitalization as of June 30, 2012 was an indicator of potential impairment and, accordingly, the Company tested goodwill for impairment. The tests indicated that five of the Company’s reporting units were impaired as a result of lower than expected student population, which resulted in a pre-tax non-cash charge of $15.4 million ($5.5 million included in discontinued operations) in the second quarter of 2012. The fair values of these reporting units were estimated using the expected present value of future cash flows.

The carrying amount of goodwill at September 30, 2013 is as follows:

	Gross Goodwill Balance		Accumulated Impairment Losses			Net Goodwill Balance
Balance as of January 1, 2013	$	117,176	$	(51,649	)	$	65,527
Goodwill impairment		-		(3,062	)		(3,062	)
Balance as of September 30, 2013	$	117,176	$	(54,711	)	$	62,465

Intangible assets, which are included in other assets in the accompanying condensed consolidated balance sheets, consist of the following:

	Student Contracts			Indefinite Trade Name		Trade Name			Accreditation		Curriculum		Non-compete		Total
Gross carrying amount at December 31, 2012	$	25		$	180	$	366		$	1,268	$	1,124	$	200	$	3,163
Write-off (1)		(25	)		-		(31	)		-		-		-		(56	)
Gross carrying amount at September 30, 2013		-			180		335			1,268		1,124		200		3,107

Accumulated amortization at December 31, 2012		25			-		209			-		670		28		932
Write-off (1)		(25	)		-		(31	)		-		-		-		(56	)
Amortization		-			-		37			-		101		30		168
Accumulated amortization at September 30, 2013		-			-		215			-		771		58		1,044

Net carrying amount at September 30, 2013	$	-		$	180	$	120		$	1,268	$	353	$	142	$	2,063

Weighted average amortization period (years)				Indefinite			7		Indefinite			9		3

(1)

The Company wrote-off the value of fully amortized assets not in service.

Amortization of intangible assets was approximately $0.1 million for each of the three months ended September 30, 2013 and 2012, and approximately $0.2 million for each of the nine months ended September 30, 2013 and 2012.

The following table summarizes the estimated future amortization expense:

Year Ending December 31,
Remainder of 2013	$	56
2014		224
2015		156
2016		112
2017		46
Thereafter		21

	$	615

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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