9. LEASES

We lease most of our administrative and educational facilities and certain equipment under non-cancelable operating leases expiring at various dates through 2028. Lease terms generally range from five to ten years with one to two renewal options for extended terms. In most cases, we are required to make additional payments under facility operating leases for taxes, insurance and other operating expenses incurred during the operating lease period.

Certain of our leases contain rent escalation clauses or lease incentives, including rent abatements and tenant improvement allowances. Rent escalation clauses and lease incentives are taken into account in determining total rent expense to be recognized during the term of the lease, which begins on the date we take control of the leased space. Renewal options are considered when determining the overall lease term. In accordance with FASB ASC Topic 840—Leases, differences between periodic rent expense and periodic cash rental payments, caused primarily by the recognition of rent expense on a straight-line basis and tenant improvement allowances due or received from lessors, are recorded as deferred rent obligations on our consolidated balance sheets.

In addition, we have financed the acquisition of certain property and equipment through capital lease arrangements and have assumed capital lease obligations in connection with certain acquisitions. The current portion of our capital lease obligations for continuing operations is included within short-term borrowings and current maturities of capital lease obligations on our consolidated balance sheets, and the non-current portion of our capital lease obligations is included within capital lease obligations, net of current maturities on our consolidated balance sheets. The cost basis and accumulated depreciation of assets recorded under capital leases from continuing operating activities, which are included in property and equipment, are as follows as of December 31, 2012 and 2011:


	December 31,
	2012			2011
	(Dollars in thousands)
Cost	$	9,224		$	9,143
Accumulated depreciation		(6,993	)		(6,691	)

Net book value	$	2,231		$	2,452

Depreciation expense for continuing operations recorded in connection with assets recorded under capital leases was $0.3 million, $0.9 million, and $0.6 million for the years ended December 31, 2012, 2011 and 2010, respectively.

Rent expense, exclusive of related taxes, insurance, and maintenance costs, for continuing operations totaled approximately $103.2 million, $106.3 million and $110.0 million for the years ended December 31, 2012, 2011 and 2010, respectively, and is reflected in educational services and facilities expense in our consolidated statements of income and comprehensive income. Rent expense for discontinued operations, which is included in (loss) income from discontinued operations, was approximately $7.1 million, $13.6 million and $14.5 million for the years ended December 31, 2012, 2011 and 2010, respectively.

Remaining Lease Obligations

We have recorded lease exit costs over the past three years associated with the exit of real estate space for certain campuses related to our continuing operations. These costs are recorded within educational services and facilities expense on our consolidated statements of income and comprehensive income. The current portion of the liability for these charges is reflected within other accrued expenses under current liabilities and the long-term portion of these charges are included in other liabilities under the non-current liabilities section of our consolidated balance sheets. Changes in our future minimum lease obligations for the years ended December 31, 2012, 2011 and 2010 were as follows:


	Balance, Beginning of Period		Charges Incurred ⁽¹⁾		Net Cash Payments			Other ⁽²⁾			Balance, End of Period
	(Dollars in thousands)
For the year ended December 31, 2012	$	12,831	$	4,249	$	(3,818	)	$	—		$	13,262

For the year ended December 31, 2011	$	17,770	$	1,313	$	(6,544	)	$	292		$	12,831

For the year ended December 31, 2010	$	19,609	$	4,364	$	(6,115	)	$	(88	)	$	17,770

(1)	Includes charges for newly vacated spaces and subsequent adjustments for accretion, revised estimates and variances between estimated and actual charges, net of any reversals for terminated lease obligations.

(2)	Includes existing prepaid rent and deferred rent liability balances for newly vacated spaces that offset the losses incurred in the period recorded.

As of December 31, 2012, future minimum lease payments under capital leases and operating leases for continuing and discontinued operations are as follows:


				Operating Leases
	Capital Leases			Continuing Operations		Discontinued Operations		Total
	(Dollars in thousands)
2013	$	214		$	103,010	$	13,253	$	116,477
2014		—			97,597		13,613	$	111,210
2015		—			86,132		12,728	$	98,860
2016		—			71,801		10,213	$	82,014
2017		—			59,038		10,012	$	69,050
2018 and thereafter		—			157,349		4,669	$	162,018

Total	$	214		$	574,927	$	64,488	$	639,629

Less—Portion representing interest at annual rates of 6.25%		(3	)

Principal	$	211

As of December 31, 2012, future minimum sublease rental income under operating leases for continuing and discontinued operations is as follows:


	Continuing Operations		Discontinued Operations
	(Dollars in thousands)
2013	$	52	$	2,478
2014		—		2,509
2015		—		2,555
2016		—		2,569
2017		—		2,590
2018 and thereafter		—		—

Total	$	52	$	12,701