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Restructuring Charges | 6 Months Ended
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Jun. 30, 2016
Restructuring And Related Activities [Abstract] |
Restructuring Charges | 7. RESTRUCTURING CHARGES During the past several years, we have carried out reductions in force related to the continued reorganization of our corporate and campus functions to better align with current total enrollments and made decisions to teach out a number of campuses, meaning gradually close the campuses through an orderly process. As part of the process to wind down these teach-out campuses, the Company also announced that it will align its corporate overhead to support a more streamlined and focused operating entity. Most notably, we have recorded charges within our Transitional Group and Culinary Arts segments and our corporate functions as we continue to align our overall management structure. Each of our teach-out campuses offer current students the reasonable opportunity to complete their course of study. The majority of these teach-out campuses are expected to cease operations by 2017 with the remainder expected to cease operations in 2018. The following table details the changes in our accrual for severance and related costs associated with all restructuring events for our continuing operations during the quarters and years to date ended June 30, 2016 and 2015 (dollars in thousands):
|  | Balance, Beginning of Period |  |  | Severance & Related Charges (1) (2) |  |  | Payments |  |  | Non-cash Adjustments (3) |  |  | Balance, End of Period |
For the quarter ended June 30, 2016 |  | $ | 14,353 |  |  | $ | 57 |  |  | $ | (2,305 | ) |  | $ | (815 | ) |  | $ | 11,290 |
For the quarter ended June 30, 2015 |  | $ | 2,596 |  |  | $ | 12,761 |  |  | $ | (2,293 | ) |  | $ | (201 | ) |  | $ | 12,863 |
For the year to date ended June 30, 2016 |  | $ | 18,985 |  |  | $ | 272 |  |  | $ | (7,630 | ) |  | $ | (337 | ) |  | $ | 11,290 |
For the year to date ended June 30, 2015 |  | $ | 2,712 |  |  | $ | 13,645 |  |  | $ | (3,064 | ) |  | $ | (430 | ) |  | $ | 12,863 |
(1) | Includes charges related to COBRA and outplacement services which are assumed to be completed by the third month following an employee’s departure.
(2) | Severance payments will result in future cash expenditures through 2018.
(3) | Includes cancellations due to employee departures prior to agreed upon end dates, employee transfers to open positions within the organization and subsequent adjustments to severance and related costs.
Severance and related expenses for the quarters and years to date ended June 30, 2016 and 2015 by reporting segment is as follows (dollars in thousands):
|  | For the Quarter Ended June 30, |  |  | For the Year to Date Ended June 30, |
|  | 2016 |  |  | 2015 |  |  | 2016 |  |  | 2015 |
CTU |  | $ | - |  |  | $ | 275 |  |  | $ | 18 |  |  | $ | 288 |
AIU |  |  | - |  |  |  | 339 |  |  |  | 66 |  |  |  | 339 |
Total University Group |  |  | - |  |  |  | 614 |  |  |  | 84 |  |  |  | 627 |
Corporate and Other |  |  | 57 |  |  |  | 4,318 |  |  |  | 153 |  |  |  | 4,318 |
Subtotal |  |  | 57 |  |  |  | 4,932 |  |  |  | 237 |  |  |  | 4,945 |
Culinary Arts |  |  | - |  |  |  | 125 |  |  |  | 5 |  |  |  | 265 |
Transitional Group |  |  | - |  |  |  | 7,704 |  |  |  | 30 |  |  |  | 8,435 |
Total |  | $ | 57 |  |  | $ | 12,761 |  |  | $ | 272 |  |  | $ | 13,645 |
The current portion of the accrual for severance and related charges was $6.9 million as of June 30, 2016, which is recorded within current accrued expenses – payroll and related benefits; the long-term portion of $4.4 million is recorded within other non-current liabilities on our condensed consolidated balance sheet. In addition, as of June 30, 2016, we have accrued approximately $1.5 million related to retention bonuses that have been offered to certain employees. These amounts will be recorded ratably over the period the employees are retained. In addition to the severance charges detailed above, a number of the teach-out campuses will have remaining lease obligations following the eventual campus closure, with the longest lease term being through 2023. The total remaining estimated charge as of June 30, 2016, for all restructuring events reported within continuing operations related to the remaining lease obligation for these leases, once the campus completes the close process, and adjusted for possible lease buyouts and sublease assumptions is approximately $50 million - $60 million. The amount related to each campus will be recorded at each campus closure date based on current estimates and assumptions related to the amount and timing of sublease income. This is in addition to approximately $26.5 million of charges related to remaining obligations that were recorded during 2015 through the second quarter of 2016. Remaining Lease Obligations of Continuing Operations We have recorded lease exit costs 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 unaudited condensed consolidated statements of income (loss) and comprehensive income (loss). 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 condensed consolidated balance sheets. Changes in our future minimum lease obligations for exited space related to our continuing operations for the quarters and years to date ended June 30, 2016 and 2015 were as follows (dollars in thousands):
|  | Balance, Beginning of Period |  |  | Charges Incurred (1) |  |  | Net Cash Payments |  |  | Other |  |  | Balance, End of Period |
For the quarter ended June 30, 2016 |  | $ | 11,618 |  |  | $ | 5,984 |  |  | $ | (2,723 | ) |  | $ | 2,261 |  |  | $ | 17,140 |
For the quarter ended June 30, 2015 |  | $ | 3,609 |  |  | $ | 2,171 |  |  | $ | (1,619 | ) |  | $ | 1,319 |  |  | $ | 5,480 |
For the year to date ended June 30, 2016 |  | $ | 12,892 |  |  | $ | 9,082 |  |  | $ | (8,000 | ) |  | $ | 3,166 |  |  | $ | 17,140 |
For the year to date ended June 30, 2015 |  | $ | 7,094 |  |  | $ | 6,420 |  |  | $ | (9,713 | ) |  | $ | 1,679 |  |  | $ | 5,480 |
_____________ (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.

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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 5.P.4) -URI http://asc.fasb.org/extlink&oid=27011515&loc=d3e140904-122747 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 5.P.3) -URI http://asc.fasb.org/extlink&oid=27011515&loc=d3e140864-122747 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6394359&loc=d3e17939-110869 + Details
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