5. Restructuring and Related Charges

In October 2013, the Company implemented a restructuring to better align the Company’s resources with student enrollments at the time. This restructuring included the closing of 20 physical locations and reductions in the number of campus-based and corporate employees. A liability for lease obligations, some of which continue through 2022, was recorded and is 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 discounted at credit-adjusted rates. The Company’s estimates, which involve significant judgment, also consider the amount and timing of sublease rental income based on 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.

In 2017 and 2018, the Company incurred personnel related restructuring charges due to cost reduction efforts and management changes. These changes are primarily intended to integrate CEC successfully and establish an efficient ongoing cost structure for the Company.

The following details the changes in the Company’s restructuring liability for lease and related costs during the years ended December 31, 2016, 2017, and 2018 (in thousands):


	Lease and Related Costs, Net		Severance and Other Employee Separation Costs		Total
Balance at December 31, 2015	$	20,055	$	—	$	20,055
Restructuring and other charges(2)		—		—		—
Payments		(6,438)		—		(6,438)
Adjustments(3)		(1,632)		—		(1,632)
Balance at December 31, 2016		11,985		—		11,985
Restructuring and other charges(2)		—		3,414		3,414
Payments		(3,623)		(3,414)		(7,037)
Adjustments(3)		419		—		419
Balance at December 31, 2017(1)		8,781		—		8,781
Restructuring and other charges(2)		—		16,319		16,319
Payments		(2,684)		(1,972)		(4,656)
Adjustments(3)		443		—		443
Balance at December 31, 2018(1)	$	6,540	$	14,347	$	20,887

⁽¹⁾

The current portion of restructuring liabilities was $3.1 million and $9.8 million as of December 31, 2017 and December 31, 2018, respectively, which are included in accounts payable and accrued expenses. The long-term portion is included in other long-term liabilities.

⁽²⁾

Restructuring and other charges of $3.4 million and $16.3 million for the years ended December 31, 2017 and 2018, respectively, are included in Merger costs on the consolidated statements of income. There were no restructuring and other charges in the year ended December 31, 2016.

⁽³⁾

Adjustments include accretion of interest on lease costs, partially offset by changes in the timing and expected income from sublease agreements.