Long-term Obligations

6 Months Ended

Dec. 31, 2012

5. Long-term Obligations

Capital Leases

The Company incurs capital lease obligations for student computers under a lease line of credit with PNC Equipment Finance, LLC with annual lease availability limits. The current annual availability of $35 million expires in August 2013. As of December 31, 2012, the aggregate outstanding balance under the lease line of credit was $40.4 million. Borrowings bore interest at rates ranging from 2.62% to 4.96% and included a 36-month payment term with a $1 purchase option at the end of the term. The Company has pledged the assets financed to secure the outstanding leases. The lease line of credit is subject to cross default compliance provisions in the Company’s line of credit agreement. The Company may extend its lease line of credit for additional periods, or consider alternative arrangements for financing student computers.

As of December 31, 2012 and June 30, 2012, computer equipment under capital lease was recorded at a cost of $101.1 million and $81.9 million, respectively, with accumulated depreciation of $64.6 million and $54.4 million, respectively. The net carrying value of leased student computers as of December 31, 2012 and June 30, 2012 was $36.5 million and $27.5 million, respectively.

Note Payable

The Company has purchased computer software licenses and maintenance services through an unsecured note payable arrangement with a vendor at 2.8% interest rate and a payment term of three years. There are no covenants associated with this note payable arrangement. The balance of the note payable at December 31 and June 30, 2012 was $1.1 million and $1.9 million, respectively.

The following is a summary as of December 31, 2012 of the present value of the net minimum payments due on outstanding capital leases and the note payable under the Company’s commitments:

	Capital			Note
December 31,	Leases			Payable			Total
	($ in thousands)

2013	$	20,580		$	1,162		$	21,742
2014	15,075			—			15,075
2015	6,121			—			6,121
Thereafter	—			—			—

Total minimum payments	41,776			1,162			42,938

Less amount representing interest (imputed weighted average capital lease interest rate of 2.9%)	(1,358		)	(24		)	(1,382		)

Net minimum payments	40,418			1,138			41,556
Less current portion	(19,799		)	(1,138		)	(20,937		)

Present value of minimum payments, less current portion	$	20,619		$	—		$	20,619