10.

Other Long-Term Liabilities

Long-term liabilities consist of the following as of December 31, 2010 and 2011 (in thousands):


	2010		2011
Deferred rent	$	7,902	$	10,302
Lease incentives		3,205		4,088
Deferred gain on sale of campus building		1,537		1,256
Fair value of interest rate swap (see Note 7)		–		1,010
Deferred payments (see Note 6)		–		5,000

	$	12,644	$	21,656

Deferred Rent

In accordance with ASC 840-20, the Company records rent expense on a straight-line basis over the initial term of a lease. The difference between the rent payment and the straight-line rent expense is recorded as a long-term liability. As of December 31, 2010 and 2011, the Company had deferred rent associated with its lease obligations of $7.9 million and $10.3 million, respectively.

Lease Incentives

In conjunction with the opening of new campuses during 2010 and 2011, the Company recorded reimbursements by the lessors for improvements made to the leased properties in the amount of $0.7 million and $2.0 million, respectively. In accordance with the Operating Leases Topic, ASC 840-20, these reimbursements were capitalized as leasehold improvements and a long-term liability established. The leasehold improvements and the long-term liability will be amortized on a straight-line basis over the corresponding lease terms, which range from five to 10 years. As of December 31, 2010 and 2011, the Company had deferred lease incentives of $3.2 million and $4.1 million, respectively.

Deferred Gain on Sale of Campus Building

In June 2007, the Company sold its Loudoun, Virginia campus building for $5.8 million. The Company is leasing back most of the campus building over a 10-year period. In conjunction with this sale and lease back transaction, the Company realized a gain of $2.8 million before tax, which is deferred and recognized over the 10-year lease term. The non-current portion of this gain, which is recorded as a long-term liability, was $1.5 million and $1.3 million, at December 31, 2010 and 2011, respectively.