SEGMENTS

The for-profit education industry has been impacted by numerous regulatory changes, the changing economy and an onslaught of negative articles in the press. As a result of these actions, student populations have declined and operating costs have increased. Over the past few years, the Company has closed over 10 locations and exited its online business. The Company reviewed how it has been structured and in the first quarter of 2015 decided to change its organization to enable the Company to better allocate financial and human resources to respond to its markets and with the goal of improving its profitability and competitive advantage. In the past, the Company offered any combination of programs at any campus. The Company has changed its focus to program offerings that create greater differentiation and attain excellence to attract more students and gain market share. Also strategically, the Company began offering continuing education training to employers who hire its students and this is best achieved at campuses focused on their professions.

As a result of the regulatory environment, market forces and strategic decisions, the Company now operates in three reportable segments: a) Transportation and Skilled Trades, b) Healthcare and Other Professions, and c) Transitional which refers to businesses that have been or are currently being taught out.

The Company’s reportable segments have been determined based on a method by which we now evaluate performance and allocate resources. Each reportable segment represents a group of post-secondary education providers that offer a variety of degree and non-degree academic programs. These segments are organized by key market segments to enhance operational alignment within each segment to more effectively execute the Company’s strategic plan. Each of the Company’s schools is a reporting unit and an operating segment. The Company’s operating segments have been aggregated into three reportable segments because, in the Company’s judgment, the reporting units have similar services, types of customers, regulatory environment and economic characteristics.

On November 3, 2015 the Board of Directors approved a plan for the Company to divest 17 of the 18 schools included in the Healthcare and Other Professions business segment. Then, in December 2015, the Board of Directors approved a plan to cease operations of the remaining school in this segment located in Hartford, Connecticut, which is scheduled to close in the fourth quarter of 2016. The divestiture of the Company’s Healthcare and Other Professions business segment marks a strategic shift in business strategy. The results of operations of these 17 campuses are reflected as discontinued operations in the consolidated financial statements. The Hartford, Connecticut campus, which was previously included in the Healthcare and Other Professions segment is now included in the Transitional segment. Implementation of the plan would result in the Company’s operations focused solely on the Transportation and Skilled Trades segment. During the third quarter of 2016, the Board of Directors approved a plan to teach-out certain programs at the West Palm Beach, Florida campus which is expected to be completed in the first quarter of 2017. The operations related to these programs have been included in the Transitional segment as of September 30, 2016.

The Company’s two continuing operations reporting segments are described below.

Transportation and Skilled Trades – Transportation and Skilled Trades offers academic programs mainly in the career-oriented disciplines of transportation and skilled trades (e.g. automotive, diesel, HVAC, welding and manufacturing).

Transitional – Transitional refers to operations that were or are being taught out and consists of the Company’s Fern Park, Florida and Hartford, Connecticut campuses and certain programs at the West Palm Beach, Florida campus. Each school employs a gradual teach-out process that enables the school to continue to operate while current students complete their course of study. The Fern Park, Florida and Hartford, Connecticut schools are no longer enrolling new students. The West Palm Beach school is no longer enrolling new students for certain programs which was announced during the quarter ended September 30, 2016 and the teach-out of these programs is expected to be completed in the first quarter of 2017. The Fern Park, Florida campus was taught out as of March 31, 2016. On December 3, 2015, the Company announced it was teaching out the Hartford, Connecticut campus, where the teach-out is expected to be completed by December 2016.

The Company evaluates segment performance based on operating results. Adjustments to reconcile segment results to consolidated results are included under the caption “Corporate,” which primarily includes unallocated corporate activity.

Summary financial information by reporting segment is as follows:

	For the Three Months Ended September 30,
	Revenue										Operating Income (Loss)
	2016		% of Total			2015		% of Total			2016			2015
Transportation and Skilled Trades	$	47,939		96.3	%	$	49,697		92.0	%	$	6,122		$	10,588
Transitional		1,864		3.7	%		4,336		8.0	%		(1,359	)		(1,312	)
Corporate		-		0.0	%		-		0.0	%		(3,720	)		(3,404	)
Total	$	49,803		100.0	%	$	54,033		100.0	%	$	1,043		$	5,872

	For the Nine Months Ended September 30,
	Revenue										Operating (Loss) Income
	2016		% of Total			2015		% of Total			2016			2015
Transportation and Skilled Trades	$	131,242		94.8	%	$	136,988		91.0	%	$	11,920		$	18,333
Transitional		7,202		5.2	%		13,581		9.0	%		(5,579	)		(4,916	)
Corporate		-		0.0	%		-		0.0	%		(14,568	)		(16,610	)
Total	$	138,444		100.0	%	$	150,569		100.0	%	$	(8,227	)	$	(3,193	)

	Total Assets
	September 30, 2016		December 31, 2015
Transportation and Skilled Trades	$	87,056	$	90,045
Transitional		1,298		2,448
Corporate		53,743		69,999
Discontinued Operations		48,297		45,258
Total	$	190,394	$	207,750