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Restructuring and Related Charges
 6 Months Ended
Jun. 30, 2015
Restructuring and Related Charges [Abstract]  
Restructuring and Related Charges
3. Restructuring and Related Charges

 

In October 2013, the Company implemented a restructuring to better align the Company’s resources with its current student enrollments.  This restructuring, which occurred primarily in the fourth quarter of 2013, included the closing of approximately 20 physical locations and reductions in the number of campus-based and corporate employees. The Company recorded approximately $36.0 million of aggregate charges representing the estimated fair value of future contractual operating lease obligations, which were recorded in the periods the Company ceased using the respective facilities. Lease obligations, some of which continue through 2022, are measured at fair value using a discounted cash flow approach encompassing significant unobservable inputs (Level 3). The estimation of future cash flows includes non-cancelable contractual lease costs over the remaining terms of the leases discounted at the Company’s marginal borrowing rate of 4.5%, partially offset by estimated future sublease rental income, which involves significant judgment. The Company’s estimate of the amount and timing of sublease rental income considers subleases that have been executed and subleases expected to be executed based on current commercial real estate market data and conditions, and other qualitative factors specific to the facilities. The estimates are subject to adjustment as market conditions change or as new information becomes available, including the execution of additional sublease agreements.

 

The following details the changes in the Company’s restructuring liability for lease and related costs during the six months ended June 30, 2015 (in thousands):

 

Balance at December 31, 2014(1) $27,283 
Non-cash adjustments(2)  435 
Payments  (3,451)
     Balance at June 30, 2015(1) $24,267 

 

 

(1)The current portion of restructuring liabilities was $6.0 million and $5.5 million as of December 31, 2014 and June 30, 2015, respectively, which are included in accounts payable and accrued expenses. The long-term portion is included in other long-term liabilities in the unaudited condensed consolidated balance sheets.
  
(2)Non-cash adjustments for lease and related costs include accretion of interest on lease costs, partially offset by changes in the timing and expected income from sublease agreements signed during the period.