Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company, as defined in Rule 12b-2 of the Exchange Act. Yes ☐ No ☒

Number of shares of registrant’s common stock, par value $0.01, outstanding as of October ~~27, 2017: 69,093,596~~26, 2018: 69,760,992

	September 30,			December 31,			September 30,			December 31,
	2017			2016			2018			2017
ASSETS	(unaudited)						(unaudited)
CURRENT ASSETS:
Cash and cash equivalents, unrestricted	$	16,276		$	49,507		$	32,029		$	18,110
Restricted cash		789			1,375			337			789
Restricted short-term investments		7,070			8,597			4,320			5,070
Short-term investments		151,803			147,681			156,336			156,178
Total cash and cash equivalents, restricted cash and short-term investments		175,938			207,160			193,022			180,147
Student receivables, net of allowance for doubtful accounts of $22,611 and $21,376 as of September 30, 2017 and December 31, 2016, respectively		21,134			22,825
Student receivables, net of allowance for doubtful accounts of $21,571 and $20,533 as of September 30, 2018 and December 31, 2017, respectively								34,043			18,875
Receivables, other, net		996			929			2,445			1,163
Prepaid expenses		8,769			14,446			8,515			7,722
Inventories		991			1,868			894			1,112
Other current assets		1,112			817			1,122			1,319
Assets of discontinued operations		171			148			66			382
Total current assets		209,111			248,193			240,107			210,720

NON-CURRENT ASSETS:
Property and equipment, net of accumulated depreciation of $346,718 and $381,415 as of September 30, 2017 and December 31, 2016, respectively		33,278			40,512
Property and equipment, net of accumulated depreciation of $195,650 and $213,825 as of September 30, 2018 and December 31, 2017, respectively								29,977			33,230
Goodwill		87,356			87,356			87,356			87,356
Intangible assets, net of amortization of $1,400 and $800 as of September 30, 2017 and December 31, 2016, respectively		7,900			8,500
Student receivables, net of allowance for doubtful accounts of $2,051 and $1,766 as of September 30, 2017 and December 31, 2016, respectively		2,622			3,055
Intangible assets, net of amortization of $1,400 as of both September 30, 2018 and December 31, 2017								7,900			7,900
Student receivables, net of allowance for doubtful accounts of $1,980 and $2,001 as of September 30, 2018 and December 31, 2017, respectively								2,230			2,548
Deferred income tax assets, net		147,990			158,272			86,910			98,084
Other assets		7,018			7,608			5,277			5,673
Assets of discontinued operations		5,922			6,105			1,596			1,585
TOTAL ASSETS	$	501,197		$	559,601		$	461,353		$	447,096
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	11,780		$	10,099		$	12,646		$	8,515
Accrued expenses:
Payroll and related benefits		31,646			41,203			23,953			32,910
Advertising and marketing costs		10,732			10,253			11,733			9,245
Income taxes		1,898			1,830			2,062			2,185
Other		35,127			69,244			16,222			31,233
Deferred tuition revenue		22,401			28,364
Deferred revenue								22,988			22,897
Liabilities of discontinued operations		6,434			8,219			2,013			5,701
Total current liabilities		120,018			169,212			91,617			112,686

NON-CURRENT LIABILITIES:
Deferred rent obligations		16,253			30,713			14,205			15,277
Other liabilities		23,384			31,751			15,884			22,143
Liabilities of discontinued operations		2,156			6,422			-			785
Total non-current liabilities		41,793			68,886			30,089			38,205

STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value; 1,000,000 shares authorized; none issued or outstanding		-			-			-			-
Common stock, $0.01 par value; 300,000,000 shares authorized; 84,254,021 and 83,538,033 shares issued, 69,093,603 and 68,519,005 shares outstanding as of September 30, 2017 and December 31, 2016, respectively		843			835
Common stock, $0.01 par value; 300,000,000 shares authorized; 85,159,221 and 84,279,533 shares issued, 69,760,992 and 69,117,803 shares outstanding as of September 30, 2018 and December 31, 2017, respectively								852			843
Additional paid-in capital		619,483			613,325			626,751			621,008
Accumulated other comprehensive income (loss)		144			(258	)
Accumulated other comprehensive loss								(271	)		(164	)
Accumulated deficit		(63,745	)		(76,230	)		(67,017	)		(108,127	)
Cost of 15,160,418 and 15,019,028 shares in treasury as of September 30, 2017 and December 31, 2016, respectively		(217,339	)		(216,169	)
Treasury stock, at cost; 15,398,229 and 15,161,730 shares as of September 30, 2018 and December 31, 2017, respectively								(220,668	)		(217,355	)
Total stockholders' equity		339,386			321,503			339,647			296,205
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	501,197		$	559,601		$	461,353		$	447,096

The accompanying notes are an integral part of these condensed consolidated financial statements.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME ~~(LOSS)~~ AND COMPREHENSIVE INCOME ~~(LOSS)~~

	For the Quarter Ended September 30,						For the Year to Date Ended September 30,						For the Quarter Ended September 30,						For the Year to Date Ended September 30,
	2017			2016			2017			2016			2018			2017			2018			2017
REVENUE:
Tuition and fees	$	144,408		$	166,819		$	451,292		$	546,036		$	144,882		$	144,408		$	433,736		$	451,292
Other		578			806			2,025			3,101			808			578			2,055			2,025
Total revenue		144,986			167,625			453,317			549,137			145,690			144,986			435,791			453,317

OPERATING EXPENSES:
Educational services and facilities		37,788			51,393			114,367			170,993			27,201			37,788			84,437			114,367
General and administrative		99,077			111,723			304,158			337,358			96,842			99,077			293,190			304,158
Depreciation and amortization		3,582			5,215			11,368			16,986			2,364			3,582			7,049			11,368
Asset impairment		-			-			-			237
Total operating expenses		140,447			168,331			429,893			525,574			126,407			140,447			384,676			429,893
Operating income (loss)		4,539			(706	)		23,424			23,563
Operating income														19,283			4,539			51,115			23,424

OTHER INCOME:
Interest income		474			334			1,328			900			950			474			2,326			1,328
Interest expense		(114	)		(117	)		(340	)		(469	)		(108	)		(114	)		(323	)		(340	)
Miscellaneous income (expense)		196			10			489			(4	)
Miscellaneous income														32			196			225			489
Total other income		556			227			1,477			427			874			556			2,228			1,477

PRETAX INCOME (LOSS)		5,095			(479	)		24,901			23,990
PRETAX INCOME														20,157			5,095			53,343			24,901
Provision for income taxes		1,597			21			11,143			8,776			5,089			1,597			11,527			11,143
INCOME (LOSS) FROM CONTINUING OPERATIONS		3,498			(500	)		13,758			15,214
INCOME FROM CONTINUING OPERATIONS														15,068			3,498			41,816			13,758

LOSS FROM DISCONTINUED OPERATIONS, net of tax		(476	)		(186	)		(1,273	)		(1,050	)		(211	)		(476	)		(706	)		(1,273	)

NET INCOME (LOSS)		3,022			(686	)		12,485			14,164
NET INCOME														14,857			3,022			41,110			12,485

OTHER COMPREHENSIVE INCOME, net of tax:
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
Foreign currency translation adjustments		105			47			368			143			(21	)		105			(103	)		368
Unrealized gains on investments		-			370			34			824
Total other comprehensive income		105			417			402			967
COMPREHENSIVE INCOME (LOSS)	$	3,127		$	(269	)	$	12,887		$	15,131
Unrealized gain (loss) on investments														106			-			(4	)		34
Total other comprehensive income (loss)														85			105			(107	)		402
COMPREHENSIVE INCOME													$	14,942		$	3,127		$	41,003		$	12,887

NET INCOME (LOSS) PER SHARE - BASIC and DILUTED:
Income (loss) from continuing operations	$	0.05		$	(0.01	)	$	0.20		$	0.22
NET INCOME (LOSS) PER SHARE - BASIC:
Income from continuing operations													$	0.21		$	0.05		$	0.60		$	0.20
Loss from discontinued operations		(0.01	)		-			(0.02	)		(0.01	)		-			(0.01	)		(0.01	)		(0.02	)
Net income (loss) per share	$	0.04		$	(0.01	)	$	0.18		$	0.21
Net income per share													$	0.21		$	0.04		$	0.59		$	0.18

NET INCOME (LOSS) PER SHARE - DILUTED:
Income from continuing operations													$	0.21		$	0.05		$	0.59		$	0.20
Loss from discontinued operations														-			(0.01	)		(0.01	)		(0.02	)
Net income per share													$	0.21		$	0.04		$	0.58		$	0.18

WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		69,082			68,460			68,897			68,328			69,737			69,082			69,542			68,897
Diluted		70,865			68,460			70,660			68,889			71,790			70,865			71,425			70,660

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Career Education’s academic institutions offer a quality education to a diverse student population in a variety of disciplines through online, campus-based and blended learning programs. Our two universities – American InterContinental University (“AIU”) and Colorado Technical University (“CTU”) – provide degree programs through the master’s or doctoral level as well as associate and bachelor’s levels. Both universities predominantly serve students online with career-focused degree programs that are designed to meet the educational demands of today’s busy adults. AIU and CTU continue to show innovation in higher education, advancing new personalized learning technologies like their intellipath~~™ adaptive~~^® learning platform. Career Education is committed to providing quality education that closes the gap between learners who seek to advance their careers and employers needing a qualified workforce.

Additionally, CEC is in the process of teaching out campuses within our ~~Transitional Group~~All Other Campuses segment. Students enrolled at these campuses have been afforded the reasonable opportunity to complete their program of study prior to the final teach-out date.

A listing of ~~individual campus~~our University Group locations and web links to ~~Career Education’s colleges,~~these institutions ~~and universities~~ can be found at www.careered.com.

As used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” “the Company” and “CEC” refer to Career Education Corporation and our wholly-owned subsidiaries. The terms “college,” “institution” and “university” refer to an individual, branded, for-profit educational institution, owned by us and includes its campus locations. The term “campus” refers to an individual main or branch campus operated by one of our colleges, institutions or universities.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included. Operating results for the quarter and year to date ended September 30, ~~2017~~2018 are not necessarily indicative of the results that may be expected for the full year ending December 31, ~~2017.~~2018.

The unaudited condensed consolidated financial statements presented herein include the accounts of Career Education Corporation and our wholly-owned subsidiaries (collectively “CEC”). All intercompany transactions and balances have been eliminated.

Our reporting segments are determined in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280 – Segment Reporting and are based upon how the Company analyzes performance and makes decisions. ~~For the third quarter~~Each segment represents a group of ~~2017, we organized~~postsecondary education providers that offer a variety of academic programs. We organize our business across ~~four~~three reporting segments: CTU, AIU (comprises University Group); and All Other Campuses (formerly separately reported as Culinary Arts and Transitional ~~Group (comprises Career Schools~~ Group). Campuses included in our ~~Transitional Group~~All Other Campuses segment are currently being taught out and no longer enroll new ~~students.~~students or have completed their teach-out. These campuses employ a gradual teach-out process, enabling them to continue to operate while current students have a reasonable opportunity to complete their ~~course~~program of study. Campuses included in our Culinary Arts segment successfully completed their teach-outs as of September 30, 2017. As of the fourth quarter of 2017, Culinary Arts will no longer be its own operating segment.

During the third quarter of ~~2017,~~2018, the Company completed the teach-out of ~~17 campuses: Sanford-Brown Las Vegas and the remaining 16 Le Cordon Bleu campuses,~~Harrington College of Design, which ~~continue~~continues to be reported within the ~~Transitional Group and Culinary Arts segments, respectively,~~All Other Campuses segment as of September 30, ~~2017~~2018 in accordance with ASC Topic 360 – Property, Plant and Equipment, which limits discontinued operations reporting.

Effective January 2017, the Company now accounts for cash flows related to cash payments for employee taxes made by the Company on the employees’ behalf for withheld shares related to stock settlements as a financing activity within the statement of cash flows.1, 2018, we have implemented FASB ASC Topic 606 – Revenue from Contracts with Customers. This ~~change was~~guidance supersedes all previously issued revenue recognition guidance. As a result of this change in accounting guidance, we have updated our revenue recognition policies and disclosures. The guidance ~~issued by~~under Topic 606 did not impact the ~~FASB~~amount of revenue we recognized in previous periods, and also does not impact the amount of revenue recognized prospectively as our revenue recognition methodology remained relatively the same under ~~Accounting Standards Update (“ASU”) No 2016-09,~~ ~~Compensation – Stock Compensation (Topic 718). Prior period amounts were recast~~the new guidance. The guidance under Topic 606 did impact our presentation of financial condition and disclosures. Previously, a student’s entire accounts receivable balance along with their deferred revenue balance was evaluated to ~~cash flows~~determine the net position of the two and the proper reporting of that balance within student receivables, net, or within deferred revenue, net, on our condensed consolidated balance sheets. Under Topic 606, we now separate the contract asset balance from ~~financing activities from cash flows from operating activities~~the student receivable balance to ~~be comparable to current year reporting.~~determine the amount reported as deferred revenue on the condensed consolidated balance sheets for each student. See Note ~~3 “Recent Accounting Pronouncements”~~5 “Revenue Recognition” for ~~further discussion.~~more information.

Effective January 2017, the Company now accounts for cash flows related to changes in restricted cash and restricted cash equivalents within cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This change was a result of updated guidance issued by the FASB under ASU No 2016-18, Statement of Cash Flows (Topic 230): ~~Restricted Cash~~. Prior period amounts are now included in cash and cash equivalents, beginning and end of the period, which were previously presented within cash flows from financing activities for changes in balances, to be comparable to current year reporting. See Note 3 “Recent Accounting Pronouncements” for further discussion.

In ~~May 2017,~~June 2018, the FASB issued ASU No. ~~2017-09,~~2018-07, Compensation – Stock Compensation (Topic 718): ~~Scope of Modification Accounting.~~ Improvements to Non-Employee Share-Based Payment Accounting. The amendments in this ASU ~~provide clarity and reduce both diversity in practice and cost and complexity when applying~~expanded the ~~guidance in Topic 718, Compensation – Stock Compensation,~~accounting scope to ~~a change~~include share-based payments issued to ~~the terms~~non-employees for goods or ~~conditions of a~~services to substantially align with share-based payment award. Stakeholders observed that the definition of the term modification is broad and that its interpretation results in diversity in practice. The amendments in this update provide further guidance about which changespayments issued to ~~the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718.~~employees. For ~~all~~ public entities, ASU ~~2017-09~~2018-07 is effective for annual reporting periods and interim periods beginning after December 15, ~~2017;~~2018; early adoption is permitted. We have evaluated and early adopted this ~~guidance. The adoption did not impact the presentation of our financial condition, results of operations and disclosures.~~

~~In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350):~~ ~~Simplifying the Test for Goodwill Impairment.~~ The amendments in this ASU modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning fair value of a reporting unit to all its assets and liabilities as if that reporting unit had been acquired in a business combination, eliminating Step 2 from the goodwill impairment tests. For all public entities, ASU 2017-04 isguidance effective for annual periods and interim periods beginning after December 15, 2019; early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates on or after January 1, 2017. We have evaluated and adopted this guidance beginning 2017.2018. The adoption did not significantly impact the presentation of our financial condition, results of operations and disclosures.

In ~~January 2017,~~March 2018, the FASB issued ASU No. ~~2017-03, Accounting Changes and Error Corrections~~2018-05, Income Taxes (Topic ~~250) and Investments – Equity Method and Joint Ventures (Topic 323)~~740): Amendments to SEC Paragraphs Pursuant to SEC Staff ~~Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings~~Accounting Bulletin No. 118. The amendments in this ASU ~~announced disclosure of the impact that recently issued accounting standards will have on the~~allow public companies to record provisional amounts in their annual and interim financial statements ~~of a registrant when such standards are adopted~~using an approach similar to the “measurement period” that US GAAP permits in a future period. The amendment provides SEC staff views that a registrant should evaluate ASUs that have not yet been adopted to determine the appropriate financial statement disclosures and the potential material effects of those ASUs on the financial statements when adopted. The changes and corrections within this guidance did not significantly impact the presentation of our financial condition, results of operations and disclosures.

~~In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718):~~ ~~Improvement to Employee Share-Based Payment Accounting. This ASU simplified several aspects of accounting for share-based payment award transactions including~~connection with the accounting for a recently acquired business. During the measurement period, management records provisional amounts for the effects of the tax law changes that can be reasonably estimated. If the finalization of the effect results in a different number, the adjustment to the provisional amount that was initially recorded does not represent the correction of an error. Instead, the adjustment is recorded to income ~~taxes, classification of excess~~ tax benefits on the statement of cash flows, classification of employee taxes paid on the statement of cash flows when the employer withholds shares, forfeiture policy election and payroll minimum statutory withholding. The changesexpense in the new standard eliminate the accounting for excess tax benefits to be recognized in additional paid-in capital and tax deficiencies recognized either in the income tax provision or in additional paid-in capital. We have evaluated each component of this guidance listed below and adopted the new standard beginning 2017.

~~In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230):~~ ~~Restricted Cash~~. The amendments in this ASU require that a statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows.identified. For all ~~public~~ entities, ASU ~~2016-18~~2018-05 is effective for annual periods and interim periods ~~beginning after December 15, 2017; early adoption is permitted for all organizations for annual periods and interim periods.~~upon discovery. We have evaluated and adopted this guidance beginning ~~2017 for all periods presented.~~2018. The adoption did not significantly impact the presentation of our financial condition, results of operations and disclosures.

~~In March 2016, the FASB issued ASU No. 2016-07, Investments – Equity Method and Joint Ventures (Topic 323):~~ ~~Simplifying the Transition to the Equity Method of Accounting~~. The amendments in this ASU eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investments, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method was in effect during all previous periods. The amendment requires an equity method investor to add the cost of acquisition and requires available-for-sale equity securities that qualify for the equity method of accounting to recognize earnings as unrealized holding gains or losses in accumulated other comprehensive income. For all entities, ASU 2016-07 is effective for annual periods and interim periods beginning after December 15, 2016. We have evaluated and adopted this guidance beginning 2017. The adoption did not materially impact the presentation of our financial condition, results of operations and disclosures.

~~In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330):~~ ~~Simplifying the Measurement of Inventory~~. The amendments in this ASU require an entity to measure inventory at the lower of cost and net realizable value, further clarifying consideration for net realizable value as estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation. This ASU more closely aligns the measurement of inventory in GAAP with the measurement of inventory in International Financial Reporting Standards (“IFRS”). For public business entities, ASU 2015-11 is effective for annual periods and interim periods beginning after December 15, 2016. The amendment in this ASU is prospectively applied. We have evaluated and adopted this guidance beginning 2017. The adoption did not significantly impact the presentation of our financial condition, results of operations and disclosures.

In February 2017, the FASB issued ASU No. 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial ~~Assets.~~Assets. The amendments in this ASU clarify and provide guidance for partial sales of nonfinancial assets and recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers. For all public entities, ASU 2017-05 is effective for annual reporting periods and interim periods beginning after December 15, ~~2017; early adoption is permitted for all organizations for annual periods~~2017. We have evaluated and ~~interim periods. We are currently evaluating~~adopted this guidance ~~and believe the~~beginning 2018. The adoption ~~will~~did not significantly impact the presentation of our financial condition, results of operations and disclosures.

In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. The amendments in this ASU improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory by reducing complexity in accounting standards. The amendments eliminate the exception prohibiting the recognition of current and deferred income taxes for an intra-entity transfer of an asset other than inventory until the asset has been sold to an outside party. For all public entities, ASU 2016-16 is effective for annual periods and interim periods beginning after December 15, ~~2017; early adoption is permitted for all organizations for annual periods~~2017. We have evaluated and ~~interim periods. We are currently evaluating~~adopted this guidance ~~and believe the~~beginning 2018. The adoption ~~will~~did not significantly impact the presentation of our financial condition, results of operations and disclosures.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The amendments in this ASU address eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230. The eight topics include debt prepayment or extinguishments costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from settlement of insurance claims, proceeds from settlement of corporate-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions and separately identifiable cash flows and application of the predominance principle. For all public business

entities, ASU 2016-15 is effective for annual periods and interim periods beginning after December 15, ~~2017; early~~2017. We have evaluated and adopted this guidance beginning 2018. The adoption did not significantly impact the presentation of our financial condition, results of operations and disclosures.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), a new accounting standard intended to improve and converge the financial reporting requirements between U.S. GAAP and International Financial Reporting Standards, which supersedes virtually all existing revenue recognition guidance under GAAP. The fundamental principles of the new guidance are that companies should recognize revenue in a manner that reflects the timing of the transfer of services to customers and the amount of revenue recognized reflects the consideration that a company expects to receive for the goods and services provided. The new guidance establishes a five step approach for the recognition of revenue. For all public business entities, ASU No. 2014-09 is ~~permitted for all organizations~~effective for annual periods and interim ~~periods.~~periods beginning after December 15, 2017. We completed the assessment of our evaluation of the new standard on our accounting policies, processes and system requirements and adopted this guidance beginning 2018. We have adopted this guidance using the modified retrospective approach which applies to contracts that have remaining obligations as of January 1, 2018 and new contracts entered into subsequent to January 1, 2018. Under the modified retrospective approach, we do not restate comparative periods on our condensed consolidated financial statements. The adoption impacted the presentation of our financial condition and disclosures but did not impact our results of operations. See Note 5 “Revenue Recognition” for more information.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. The amendments in this ASU provide clarifications which align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software or software licenses. The accounting for the service element of a hosting arrangement that is a service contract is not affected by these amendments. For public entities, ASU 2018-15 is effective annual periods and interim periods beginning after December 15, 2019; early adoption is permitted. We are currently evaluating this guidance and the impact on the presentation of our financial condition, results of operations and disclosures.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this ASU carried removals, modifications and additions of the disclosure requirements on fair value measurements based on the concepts in the Concepts Statement, including the consideration of costs and benefits. The guidance removed the requirements of the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels and the valuation process for Level 3 fair value measurements. The modifications include requirements to disclose timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse if the investee has communicated the timing to the entity or announced the timing publicly for those investments in entities which calculate net asset value and provide clarity to communicate information about the uncertainty in measurement as of the reporting date. Furthermore, this ASU added additional requirements which include changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For all entities, ASU 2018-13 is effective for annual periods and interim periods beginning after December 15, 2019; early adoption is permitted. We are currently evaluating this guidance and believe the adoption will not significantly impact the presentation of our financial condition, results of operations and disclosures.

In February 2018, the FASB issued ASU No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this ASU provide financial statement preparers with an option to reclassify stranded tax effects within accumulated other comprehensive income (“AOCI”) to retained earnings in each period when the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recorded. For all entities, ASU 2018-02 is effective for annual periods and interim periods beginning after December 15, 2018; early adoption is permitted. We are currently evaluating this guidance and believe the adoption will not significantly impact the presentation of our financial condition, results of operations and disclosures.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this ASU require a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected and credit losses relating to available-for-sale debt securities to be recorded through an allowance for credit losses. For all public business entities, ASU 2016-13 is effective for annual periods and interim periods beginning after December 15, 2019; early adoption is permitted for all organizations for annual periods and interim periods beginning after December 15, 2018. We are currently evaluating this guidance and believe the adoption will not significantly impact the presentation of our financial condition, results of operations and disclosures.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The objective of Topic 842 is to establish transparency and comparability that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. The core principle of Topic 842 is that lessees should recognize the assets and liabilities that arise from leases. All leases create an asset and liability for the lessee in accordance with FASB Concept Statements No. 6 Elements of Financial Statements, and, therefore, recognition of those lease assets and liabilities represents an improvement over previous GAAP. The accounting applied for lessors largely remained unchanged. The amendment in this ASU requires recognition of a lease liability and a right toof use asset at the lease inception date. Subsequently, the FASB issued two additional Updates to the guidance as follows: In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases, and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, together providing additional clarity on certain narrow aspects of the guidance and providing an additional optional transition method to adopt the new leases standard. For all public business entities, ASU 2016-02 is effective for annual periods and interim periods beginning after December 15, 2018; early adoption is permitted. While we are continuing to assess all potential impacts of the standard, we currently believe the most significant impact primarily relates to our accounting for real estate leases and real estate subleases. ~~The Company expects~~We expect to have a material amount now reported as a right of use asset and lease liability related to these leases as well as ~~expects~~expect to separate lease components from the non-lease components for recognition. WeAdditionally, we expect an immaterial impact to the consolidated statement of income and comprehensive income prospectively. Based on ASU 2018-11, we will ~~be required to~~ recognize and measure leases at the beginning of the ~~earliest~~adoption date which will be January 1, 2019 for CEC. Any cumulative effect adjustments will be recorded as an adjustment to the opening balance of retained earnings in the period ~~presented using a modified retrospective approach starting fiscal year 2017.~~of adoption. We are currently evaluating this guidance and believe the adoption will significantly impact the presentation of our financial condition ~~results of operations and disclosures.~~

We have assigned internal resources and are in the assessment stage of our evaluation of the impact of the new standard on our accounting policies, processes and system requirements. While we continue to assess all potential impacts under the new standard, the Company has made progress as outlined in the below discussion and remains on schedule to implement the new revenue guidelines. This standard will be effective for us beginning in January 2018. We intend to adopt the new standard based on the modified retrospective transition method and accordingly the Company expects to complete the analysis of the cumulative effect adjustment to retained earnings (accumulated deficit), if applicable, as of the start of the first period for which it applies the new standard. While the Company continues to make progress to assess all potential impacts under the new revenue standard, including the areas described below, and have reached preliminary conclusions on key accounting assessments related to the standard, we do not know or cannot reasonably estimate quantitative information related to the impact of the new revenue standard on the Company’s financial statements and disclosures, ~~at this time.~~

The Company’s revenue is derived primarily from academic programs taught to its students. Tuition and other tuition-related fees are recognized as revenue on a straight-line basis over either the academic term or the program period based on number of days within such period. Non-tuition related revenue is recognized as services are performed or goods are delivered. See Note 2 “Summary of Significant Accounting Policies,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, which was filed with the Securities and Exchange Commission on February 23, 2017. The Company is in the process of evaluating each source of revenue stream that will remain as of the implementation date to evaluate the five step approach from the principles-based guidance (Topic 606) and develop a preliminary assessment to determine any impact to existing practices for revenue recognition. The key revenue component considerations the Company is evaluating are as follows:

The Company is currently evaluating the assessment of various contractual arrangements and performance obligations for each type of revenue stream and it reasonably expects the core contractual or performance obligations to remain similar in substance and not differ materially from considering each contract or performance obligation separate. We expect to elect and utilize the ‘portfolio’ approach when analyzing our student contracts, policies, processes and controls for revenue recognition. We reasonably expect that the impact of applying the portfolio approachbut will not ~~differ materially from considering each contract individually.~~

Our evaluation covered the collectability criteria under the new guidance. The Company believes it can apply the portfolio approach when assessing collectability due to the significant amount of historical data that the Company retains.

The Company is currently assessing the impacts related to the accounting for contract assets separate from accounts receivable and are evaluating the point at which a student’s contract asset becomes a receivable. Currently, a student’s entire accounts receivable balance is evaluated along with their entire deferred revenue balance to determine the net position of the two. Once the Company determines the point at which a contract asset becomes a receivable, this amount will no longer be offset with a student’s deferred revenue balance. This change in presentation is expected to have an immaterialsignificantly impact ~~to the statement of financial position.~~

~~Based on our ongoing assessment, we do not anticipate the adoption of ASU 2014-09 will have a significant material impact on the presentation of~~ our results of operations; however, we expect additional modifications on the presentation of our financial condition and disclosures around certain policies, practices and systems, but we are still finalizing our assessment.operations.

Investments consist of the following as of September 30, ~~2017~~2018 and December 31, ~~2016~~2017 (dollars in thousands):

In the table above, unrealized holding gains (losses) as of September 30, ~~2017~~2018 relate to short-term investments that have been in a continuous unrealized gain (loss) position for less than one year.

Our unrestricted non-governmental debt securities primarily consist of ~~corporate bonds~~commercial paper and ~~commercial paper.~~certificates of deposit. Our treasury and federal agencies primarily consist of U.S. Treasury bills and federal home loan debt securities. We do not intend to sell our investments in these securities prior to maturity and it is not likely that we will be required to sell these investments before recovery of the amortized cost basis. Our restricted short-term investments are comprised entirely of certificates of deposit, which secure our letters of credit.

FASB ASC Topic 820 – Fair Value Measurements establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of September 30, ~~2017,~~2018, we held investments that are required to be measured at fair value on a recurring basis. These investments (available-for-sale) consist of ~~municipal bonds,~~ non-governmental debt securities, and treasury and federal agencies securities. Available for sale securities included in Level 1 are valued at quoted prices in active markets for identical assets and liabilities. Available for sale securities included in Level 2 are estimated based on observable inputs other than quoted prices in active markets for identical assets and liabilities, such as quoted prices for identical or similar assets or liabilities in inactive markets or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Investments measured at fair value on a recurring basis subject to the disclosure requirements of FASB ASC Topic 820 – Fair Value Measurements at September 30, ~~2017~~2018 and December 31, ~~2016~~2017 were as follows (dollars in thousands):

Our investment in an equity affiliate, which is recorded within other noncurrent assets on our condensed consolidated balance sheets, isrepresents an international investment in a private company. As of September 30, ~~2017,~~2018, our investment in an equity affiliate equated to a 30.7%, or ~~$3.3~~$3.0 million, non-controlling interest in CCKF, a Dublin-based educational technology company providing intelligent ~~adaptive~~ systems to power the delivery of individualized and personalized learning.

During the quarters ended September 30, ~~2017~~2018 and ~~2016,~~2017, we recorded ~~approximately~~less than $0.1 million of gain and ~~$0.2~~$0.1 million of loss, respectively, and during the years to date ended September 30, ~~2017~~2018 and September 30, ~~2016,~~2017, we recorded ~~$0.2~~$0.1 million and ~~$1.0~~$0.2 million of loss, respectively, related to our proportionate investment in CCKF within miscellaneous income ~~(expense)~~ on our unaudited condensed consolidated statements of income ~~(loss)~~ and comprehensive ~~income (loss).~~income.

We make periodic operating maintenance payments related to proprietary rights that we use in our intellipath^®^TM ~~adaptive~~ personalized learning technology. The total fees paid to CCKF for the quarters and years to date ended September 30, ~~2017~~2018 and ~~2016~~2017 were as follows (dollars in thousands):

During the fourth quarter of 2015, the Company; its wholly-owned subsidiary, CEC Educational Services, LLC (“CEC-ES”); and the subsidiary guarantors thereunder entered into a Fourth Amendment to its Amended and Restated Credit Agreement dated as of December 30, 2013 (as amended, the “Credit Agreement”) with BMO Harris Bank N.A., in its capacities as the initial lender and letter of credit issuer thereunder and the administrative agent for the lenders which from time to time may be parties to the Credit Agreement, to among other things, decrease the revolving credit facility to $95.0 million and require pre-approval by the lenders for each credit extension (other than letter of credit extensions) occurring after December 31, 2015. The revolving credit facility under the

Credit Agreement is scheduled to mature on December 31, 2018. The loans and letter of credit obligations under the Credit Agreement are required to be secured by 100% cash collateral. As of September 30, ~~2017~~2018 and December 31, ~~2016,~~2017, there were no outstanding borrowings under the revolving credit facility.

The following tables disaggregate our revenue by major source (dollars in thousands):

Our revenue, which is derived primarily from academic programs taught to students who attend our institutions, is generally segregated into two categories: (1) tuition and fees and (2) other. Tuition and fees represent costs to our students for educational services provided by our institutions. Our institutions charge tuition and fees at varying amounts, depending on the institution, the type of program and specific curriculum. Our institutions bill students a single charge that covers tuition, fees and required program materials, such as textbooks and supplies, which we treat as a single performance obligation. Generally, we bill student tuition at the beginning of each academic term, and recognize the tuition as revenue on a straight-line basis over the academic term, which includes any applicable externship period. As part of a student’s course of instruction, certain fees, such as technology fees, graduation fees and laboratory fees, are billed to students. These fees are earned over the applicable term and are not considered separate performance obligations.

Other revenue, which consists primarily of contract training revenue and bookstore sales, is billed and recognized as goods are delivered or services are performed. Contract training revenue results from individual training courses that are stand-alone courses and not part of a degree or certificate program. Bookstore sales are primarily initiated by the student and are not included in the enrollment agreement at the onset of a student’s entrance to the institution. These types of sales constitute a separate performance obligation from classroom instruction.

Our institutions’ academic year is generally at least 30 weeks in length but varies both by institution and program of study and is divided by academic terms or payment periods. Academic terms or payment periods are determined by regulatory requirements mandated by the federal government and/or applicable accrediting body, which also vary by institution and program. Academic terms are determined by start dates, which vary by institution and program and are generally 10 – 11 weeks in length.

Prior to the adoption of ASC Topic 606, we offset our student receivable balances with deferred revenue on a student by student basis. Deferred revenue was previously stated net of outstanding student receivables on a student-by-student basis as of the end of each reporting period. Upon adoption of ASC Topic 606, we determined that a portion of the student receivable balance which was previously offset with deferred revenue now meets the definition of student receivables and is not considered a contract asset and therefore is no longer offset with deferred revenue. The previously reported balances along with the adjustment and beginning January 1, 2018 balances are provided below (dollars in thousands).

For each term, the portion of tuition and fee payments received from students but not yet earned is recorded as deferred revenue and reported as a current liability on our condensed consolidated balance sheets, as we expect to earn these revenues within the next year. A contract asset is recorded for each student for the current term for which they are enrolled for the amount charged for the current term that has not yet been received as payment and to which we do not have the unconditional right to receive payment because the student has not reached the point in the student’s current academic term at which the amount billed is no longer refundable to the student. On a student by student basis, the contract asset is offset against the deferred revenue balance for the current term and the net deferred revenue balance is reflected within current liabilities on our condensed consolidated balance sheets.

Due to the short-term nature of our academic terms, the contract asset balance which exists at the beginning of each quarter will no longer be a contract asset at the end of that quarter. The decrease in contract asset balances are a result of one of the following: it becomes a student receivable balance once a student reaches the point in a student’s academic term where the amount billed is no longer refundable to the student; a refund to withdrawn students for the portion entitled to be refunded under each institutions’ refund policy; or a student makes a change in the number of classes they are enrolled which may cause an adjustment to their previously billed amount. As of the end of each quarter, a new contract asset is determined on a student by student basis based on the most recently started term and a student’s progress within that term as compared to the date at which the student is no longer entitled to a refund under each institution’s refund policy.

The amount of contract assets which are being offset with deferred revenue balances as of January 1, 2018 and September 30, 2018 were as follows (dollars in thousands):

Changes in our deferred revenue balances for the quarter and year to date ended September 30, 2018 were as follows (dollars in thousands):

Our students finance costs through a variety of funding sources, including, among others, federal loan and grant programs, institutional payment plans, employer reimbursement, Veterans’ Administration and other military funding and grants, private and institutional scholarships and cash payments. Cash receipts from government related sources are typically received during the current academic term. We typically receive funds after the end of an academic term for students who receive employer reimbursements. Students who have not applied for any type of financial aid generally set up a payment plan with the institution and make payments on a monthly basis per the terms of the payment plan.

If a student withdraws from one of our institutions prior to the completion of the academic term or program period, we refund the portion of tuition and fees already paid that, pursuant to our refund policy and applicable federal and state law and accrediting agency standards, we are not entitled to retain. Generally, the amount to be refunded to a student is calculated based upon the percent of the term attended and the amount of tuition and fees paid by the student as of their withdrawal date. In certain circumstances, we have recognized revenue for students who have withdrawn that we are not entitled to retain. We have estimated a reserve for these limited circumstances based on historical evidence in the amount of $0.9 million as of September 30, 2018 and December 31, 2017. Students are typically entitled to a partial refund through approximately halfway of their term. Pursuant to each institution’s policy, once a student reaches the point in the term where no refund is given, the student would not have a refund due if withdrawing from the institution subsequent to that date.

Management reassesses collectability when a student withdraws from the institution and has unpaid tuition charges for the current term which the institution is entitled to retain per the applicable refund policy. Such unpaid charges do not meet the threshold of reasonably collectible and are recognized as revenue in accordance with ASC Topic 606 when cash is received and the contract is terminated and neither party has further performance obligations. We have no remaining performance obligations for students who have withdrawn from our institutions, and once the refund calculation is performed and funds are returned to the student, if applicable under our refund policy, no further consideration is due back to the student. We recognized $0.4 million of revenue for each of the quarters ended September 30, 2018 and 2017 and $1.1 million and $1.2 million for the years to date ended September 30, 2018 and September 30, 2017, respectively, for payments received from withdrawn students.

We analyze revenue recognition on a portfolio approach under ASC Topic 606. Significant judgment is utilized in determining the appropriate portfolios to assess for meeting the criteria to recognize revenue under ASC Topic 606. We have determined that all of our students can be grouped into one portfolio. Based on our past experience, students at different campuses, in different programs or with different funding all behave similarly. Enrollment agreements all contain similar terms, refund policies are similar across all institutions and all students work with the campus to obtain some type of funding, for example, Title IV Program funds, Veterans Administration funds, military funding, employer reimbursement or self-pay. We have significant historical data for our students which allows us to analyze collectability. We do not expect that revenue earned for the portfolio is significantly different as compared to revenue that would be earned if we were to assess each student contract separately.

Significant judgment is also required to assess collectability, particularly as it relates to students seeking funding under Title IV Programs. Because students are required to provide documentation, and in some cases extensive documentation, to the Department of Education to be eligible and approved for funding, the timeframe for this process can sometimes span between 90 to 120 days. We monitor the progress of students through the eligibility and approval process and assess collectability for the portfolio each reporting period to monitor that the collectability threshold is met.

For the quarters and years to date ended September 30, 2018 and 2017, we received a majority of our institutions’ cash receipts for tuition payments from various government agencies as well as our corporate partnerships which represents a substantial portion of our consolidated revenues and are all low risk of collectability.

Student receivables represent funds owed to us in exchange for the educational services provided to a student. Student receivables are reflected net of an allowance for doubtful accounts ~~and net of deferred tuition revenue as determined on a student-by-student basis~~ at the end of the reporting period. Student receivables, net, are reflected on our condensed consolidated balance sheets as components of both current and non-current assets. We do not accrue interest on past due student receivables; interest is recorded only upon collection.

Generally, a student receivable balance is written off once it reaches greater than 90 days past due. Although we analyze past due receivables, it is not practical to provide an aging of our non-current student receivable balances as a result of the methodology utilized in determining our earned student receivable balances. Student receivables are recognized on our condensed consolidated balance sheets as they are deemed earned over the course of a student’s program and/or term, and therefore cash collections are not applied against specifically dated transactions.

Our standard student receivable allowance estimation methodology considers a number of factors that, based on our collection experience, we believe have an impact on our repayment risk and ability to collect student receivables. Changes in the trends in any of these factors may impact our estimate of the allowance for doubtful accounts. These factors include, but are not limited to: internal repayment history, repayment practices of previous extended payment programs, changes in the current economic, legislative or regulatory environments and the ability to complete the federal financial aid process with ~~the student.~~students. These factors are monitored and assessed on a regular basis. Overall, our allowance estimation process for student receivables is validated by trending analysis and comparing estimated and actual performance.

To assist students in completing their educational programs, we ~~had~~ previously provided extended payment plans to certain students and also had loan agreements with Sallie Mae and Stillwater National Bank and Trust Company (“Stillwater”) which required us to repurchase loans originated by them to our students after a certain period of time. We discontinued providing extended payment plans to students during the first quarter of 2011 and the recourse loan agreements with Sallie Mae and Stillwater ended in March 2008 and April 2007, respectively.

As of September 30, ~~2017~~2018 and December 31, ~~2016,~~2017, the amount of non-current student receivables under these programs along with payment plans that are longer than 12 months in duration, net of allowance for doubtful accounts, was ~~$2.6~~$2.2 million and ~~$3.1~~$2.5 million, respectively.

Changes in our current and non-current receivables allowance for the quarters and years to date ended September 30, ~~2017~~2018 and ~~2016~~2017 were as follows (dollars in thousands):

The carrying amount reported in our condensed consolidated balance sheets for the current portion of student receivables approximates fair value because of the nature of these financial instruments as they generally have short maturity periods. It is not practicable to estimate the fair value of the non-current portion of student receivables, since observable market data is not readily available, and no reasonable estimation methodology exists.

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 continued to align our overall management structure. Each of our teach-out campuses offer current students the reasonable opportunity to complete their course of study. TheA majority of these teach-out campuses have ceased operations as of September 30, ~~2017,~~2018, with the ~~remainder~~two remaining campuses expected to cease operations ~~through~~by December 31, 2018. Additionally, during the quarter ended September 30, 2018, we continued to evaluate our corporate and campus functions to reorganize these functions to best align with our current enrollments to ensure efficient and effective support and recorded additional severance and related costs of approximately $1.9 million. A majority of these costs are expected to be paid during the fourth quarter of 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 September 30, ~~2017~~2018 and ~~2016~~2017 (dollars in thousands):

The current portion of the accrual for severance and related charges was ~~$3.0~~$2.3 million and ~~$7.3~~$2.1 million, respectively, as of September 30, ~~2017~~2018 and December 31, ~~2016,~~2017, which is recorded within current accrued expenses – payroll and related benefits; the long-term portion of $0.3 million and $1.4 million is recorded within other non-current liabilities on our condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016, respectively.benefits.

In addition, as of September 30, 2018 and December 31, 2017, we have an accrual of approximately ~~$1.4~~$0.3 million and $0.5 million, respectively, related to retention bonuses that have been offered to certain employees. These amounts are recorded ratably over the period the employees are retained.

We have recorded lease exit costs associated with the exit of real estate space for certain campuses related to our continuing ~~operations.~~operations, primarily associated with our teach-out campuses. These costs are recorded within educational services and facilities expense on our unaudited condensed consolidated statements of income ~~(loss)~~ and comprehensive ~~income (loss).~~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 condensed consolidated balance sheets. Changes in our future minimum lease obligations for ~~exited~~vacated space related to our continuing operations for the quarters and years to date ended September 30, ~~2017~~2018 and ~~2016~~2017 were as follows (dollars in thousands):

(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.

~~In addition~~We do not expect to ~~the~~have any significant new charges ~~detailed above, a number of the teach-out campuses will have~~for remaining lease obligations following the eventual campus closure, with the longest lease term being through 2023. The total remaining estimated charge as of September 30, 2017, 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~~our campuses in teach-out. We have recorded approximately $4 million - $6 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 $67.5$75.6 million of charges related to remaining obligations for continuing operations ~~that were recorded during 2015 through the third quarter of 2017.~~since 2015.

An accrual for estimated legal fees and settlements of ~~$2.2~~$0.9 million and ~~$34.5~~$8.7 million at September 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively, is presented within ~~other~~ current liabilities – other accrued expenses on our condensed consolidated balance sheets.

We record a liability when we believe that it is both probable that a loss will be incurred and the amount of loss can be reasonably estimated. We evaluate, at least quarterly, developments in our legal matters that could affect the amount of liability that was previously accrued, and make adjustments as appropriate. Significant judgment is required to determine both probability and the estimated amount. We may be unable to estimate a possible loss or range of possible loss due to various reasons, including, among others: (1) if the damages sought are indeterminate; (2) if the proceedings are in early stages; (3) if there is uncertainty as to the outcome of pending appeals, motions, or settlements; (4) if there are significant factual issues to be determined or resolved; and (5) if there are novel or unsettled legal theories presented. In such instances, there is considerable uncertainty regarding the ultimate resolution of such matters, including a possible eventual loss, if any.

We are, or were, a party to the following legal proceedings that we consider to be outside the scope of ordinary routine litigation incidental to our business. Due to the inherent uncertainties of litigation, we cannot predict the ultimate outcome of these matters. An unfavorable outcome of any one or more of these matters could have a material adverse impact on our business, reputation, results of operations, cash flows and financial position.

~~Surrett, et al. v. Western Culinary Institute, Ltd. and Career Education Corporation~~Oregon Arbitrations. ~~. On March 5, 2008, a complaint was~~There are 325 active individual arbitration claims which were filed ~~in Portland, Oregon in the Circuit Court of the State of Oregon in and for Multnomah County naming~~against Western Culinary Institute, Ltd. (“WCI”) from March through July 2018, all of which are being administered by the American Arbitration Association. These individual arbitrations involve students who attended WCI from approximately 2008 to 2010. Each arbitration seeks monetary damages and the Company as defendants. Plaintiffs filed the complaint individually and as a putative class action and alleged two claims for equitable relief: violation of Oregon’s Unlawful Trade Practices Act (“UTPA”) and unjust enrichment. Plaintiffs allegedalleges that WCI made a variety of misrepresentations to ~~them,~~the individual student filing the arbitration, relating generally to WCI’s placement statistics, students’ employment prospects upon graduation from WCI, the value and quality of an education at WCI, and the amount of tuition students could expect to pay as compared to salaries they could expect to earn after graduation. ~~On January 21, 2016, the Oregon appellate court reversed an earlier circuit court denying a motion to compel arbitration~~The institution is no longer in operation and held that the claims by 1,062 individual class members should be compelled to arbitration, which these individuals would have to pursue separately on their own behalf. On May 16, 2017, plaintiffs filed a seventh amended putative class complaint which seeks recovery based on a theory of diminished value and contains a claim for punitive damages. Defendants’ motion to dismiss the seventh amended complaint was denied and plaintiffs have moved for class certification, which defendants oppose. If class certification is granted, the size of the class would depend on the scope certified by the court but could consist of up to 1,275 members.closed in 2017.

Because of the early stages of these individual arbitrations, the unique circumstances with respect to each individual student and the many questions of fact and law that have already arisen and that may arise in the future, the outcome of ~~this legal proceeding~~each of these individual arbitrations is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of potential loss, if any, for ~~this action~~these actions because of the inherent difficulty in assessing ~~the appropriate measure of~~ damages, if any, in each individual arbitration and the number of ~~class members~~individual students, if any, who might be entitled to recover ~~damages, if we were to be found liable.~~damages. Accordingly, we have not recognized any liability associated with ~~this action.~~

~~United States of America, ex rel. Ann Marie Rega v. Career Education Corporation~~, ~~et al~~. On May 16, 2014, relator Ann Marie Rega, a former employee of Sanford-Brown Iselin, filed an action in the U.S. District Court for the District of New Jersey against the Company and almost all of the Company’s individual schools on behalf of herself and the federal government. She alleges claims under the False Claims Act, including that the defendants allegedly provided false certifications to the federal government regarding compliance with certain provisions of the Higher Education Act and accreditation standards. Relator claims that defendants’ conduct caused the government to pay federal funds to defendants, and to make payments to third-party lenders, which the government would not have made if not for defendants’ alleged violation of the law. Relator seeks treble damages plus civil penalties and attorneys’ fees.

On October 6, 2017, the United States filed its Notice of Election to Decline Intervention in the matter. On October 10, 2017, the Court ordered that the complaint be unsealed. After the federal government declines to intervene in a case, the relator may elect to pursue the litigation on behalf of the federal government. If she is successful she will receive a portion of the federal government’s recovery. It is not clear whether this relator will elect to pursue the litigation.

Because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on information available to us at present, we cannot reasonably estimate a range of potential loss, if any ~~for this action because~~

the complaint does not seek a specified amount of damages and it is unclear how damages would be calculated, if we were to be found liable. Moreover, the case presents novel legal issues. Accordingly, we have not recognized any liability associated with this action.

~~Other Litigation~~. In addition to the legal proceedings and other matters described above, we are also subject to a variety of other claims, lawsuits, arbitrations and investigations that arise from time to time out of the conduct of our business, including, but not limited to, matters involving prospective students, students or graduates, alleged violations of the Telephone Consumer Protection Act, both individually and on behalf of a putative class, and routine employment matters. While we currently believe that such claims, individually or in aggregate, will not have a material adverse impact on our financial position, cash flows or results of operations, these other matters are subject to inherent uncertainties, and management’s view of these matters may change in the future. Were an unfavorable final outcome to occur in any one or more of these matters, there exists the possibility of a material adverse impact on our business, reputation, financial position, cash flows and the results of operations for the period in which the effect becomes probable and reasonably estimable.actions.

Multi-State AGs. The Attorney General of Connecticut is serving as the point of contact for inquiries received from the attorneys general of the following: Arkansas, Arizona, Connecticut, Idaho, Iowa, Kentucky, Missouri, Nebraska, North Carolina, Oregon, Pennsylvania, Washington (January 24, 2014); Illinois (December 9, 2011); Tennessee (February 7, 2014); Hawaii (May 28, 2014 ); New Mexico (May 2014); Maryland (March 16, 2015); and the District of Columbia (June 3, 2015) (these 18 attorneys general are collectively referred to as the “Multi-State AGs”). In addition, the Company has received inquiries from the attorneys general of Florida (November 5, 2010), Massachusetts (September 27, 2012), Colorado (August 27, 2013) and Minnesota (September 18, 2014, October 25, 2016). The inquiries are civil investigative demands or subpoenas which relate to the investigation by the attorneys general of whether the Company and its schools have complied with certain state consumer protection laws, and generally focus on the Company's practices relating to the recruitment of students, graduate placement statistics, graduate certification and licensing results and student lending activities, among other matters. Depending on the state, the documents and information sought by the attorneys general in connection with their investigations cover time periods as early as 2006 to the present. In addition, the Company has received in the past similar inquiries from the attorneys general of several other states. The Company continues to cooperate with the ~~states involved~~Multi-State AGs with a view towards resolving ~~these~~their inquiries as promptly as possible. In this regard, the Company ~~has participated~~continues to participate in ~~several~~ meetings with representatives of the Multi-State AGs about the Company’s business and to engage in a dialogue towards a resolution of ~~these inquiries.~~the inquiries by the Multi-State AGs. If the Company and the Multi-State AGs enter into an agreement resolving their inquiries, the Company believes that attorneys general of additional states may also be a party to any such agreement.

~~We cannot predict the scope, duration or~~The ultimate outcome of ~~these attorneys general investigations.~~the Multi-State AGs’ inquiries is uncertain. At the conclusion ~~of any~~ of these matters, the Company or certain of its ~~schools~~institutions may be subject to claims of failure to comply with state laws or regulations, ~~and may be~~ required to pay significant financial penalties and/or required to curtail or modify their operations. ~~Other state attorneys general may also initiate inquiries into the Company or its schools.~~ Based on information available to us at present and the uncertain outcome of these inquiries, we cannot reasonably estimate a range of potential ~~monetary or non-monetary impact~~loss these ~~investigations~~inquiries might have on the ~~Company because it is uncertain what remedies, if any, these regulators might ultimately seek in connection with these investigations.~~Company.

In addition to the aforementioned inquiries, from time to time, we receive informal requests from state attorneys general and other government agencies relating to specific complaints they have received from students or former students which seek information about the student, our programs, and other matters relating to our activities in the relevant state. These requests can be broad and time consuming to respond to, and there is a risk that they could expand and/or lead to a formal inquiry or investigation into our practices in a particular state.

FTC. On August 20, 2015, the Company received a request for information pursuant to a Civil Investigative Demand (“CID”) from the U.S. Federal Trade Commission (“FTC”). The request was made pursuant to a November 2013 resolution by the FTC directing an investigation to determine whether unnamed persons, partnerships, corporations, or others have engaged or are engaging in deceptive or unfair acts or practices in or affecting commerce in the advertising, marketing or sale of secondary or postsecondary educational products or services, or educational accreditation products or services. The information request requires the Company to provide documents and information regarding a broad spectrum of the business and practices of its subsidiaries and institutions for the time period of January 1, 2010 to the present. The Company ~~has responded~~continues to ~~several~~respond to supplemental requests for information, ~~but has received no further inquiries~~including a CID dated July 5, 2018 requesting specific information about telephone calls placed to prospective students from 2013 to the present. The Company is cooperating with the FTC ~~since March 2017. Given~~with a view towards resolving this inquiry as promptly as possible, including agreeing with the ~~passage~~FTC to toll the statute of limitations from October 18, 2018 until such time ~~it is not clear what additional requests or action, if any,~~as the tolling may be ~~undertaken by the FTC. Should~~terminated with respect to any claims the FTC may have ~~further inquiries in~~under the Federal Trade Commission Act or the Telemarketing and Consumer Fraud and Abuse Prevention Act.

The ultimate outcome of the FTC’s inquiry is uncertain. At the conclusion of this ~~regard,~~matter, the Company or certain of its institutions may be subject to claims of failure to comply with federal laws or regulations, required to pay significant financial penalties and/or required to curtail or modify their operations. Based on information available to us at present and the uncertain outcome of this inquiry, we cannot ~~predict~~reasonably estimate a range of potential loss this inquiry might have on the ~~outcome or estimate the nature or amount of possible remedies, if any, that the FTC might ultimately seek in connection with this matter.~~

ED.In December 2011, ~~the U.S. Department of Education (“ED”)~~ED advised the Company that it iswas conducting an inquiry concerning possible violations of ED misrepresentation regulations ~~related to placement rates reported by certain of the Company’s institutions to accrediting bodies, students and potential students. This inquiry stems~~that stemmed from the ~~Company’s~~Company self-reporting to ED of its ~~internal~~

~~investigation into student placement determination practices at the Company’s previous Health Education segment campuses and~~ review of placement determination practices ~~at all of the Company’s other domestic campuses~~ in 2011. ~~The Company has been cooperating with ED in~~In connection with ~~this inquiry. If~~the inquiry, ED determines that the Company or any of its institutions violated ED misrepresentation regulations with regard to the publication or reporting of placement rates or other disclosures to students or prospective students or finds any other basis in the materials we are providing, ED may revoke, limit, suspend, delay or deny the institution’s or all of the Company’s institutions’ Title IV eligibility, or impose fines. In addition, all of the Company’s institutions were issued provisional program participation agreements in May 2016 and this inquiry as well as other matters were cited as bases for that decision.

~~In December 2011, ED also~~ moved all of the Company’s institutions from the “advance” method of payment of Title IV Program funds to cash monitoring status (referred to as Heightened Cash Monitoring 1, or HCM1, status). IfThe Company has

cooperated with ED ~~finds~~in connection with its inquiry; however, almost all of the schools that were the principal subjects of the inquiry are now closed. On September 27, 2018, ED notified the Company that it was removing the HCM1 designation from the Company’s remaining institutions, including AIU and CTU, and returning them to the “advance” method of payment. We will continue to provide ED with monthly updates on regulatory matters, student complaints and financial performance, to the extent requested by ED.

Other. In addition to the legal proceedings and other matters described above, we receive informal requests from state attorneys general and other government agencies relating to specific complaints they have received from students or former students which seek information about the student, our programs, and other matters relating to our activities in the relevant state. These requests can be broad and time consuming to respond to, and there is a risk that they could expand and/or lead to a formal inquiry or investigation into our practices in a particular state. We are also subject to a variety of other claims, lawsuits, arbitrations and investigations that arise from time to time out of the conduct of our business, including, but not limited to, matters involving prospective students, students or graduates, alleged violations of the ~~Higher Education~~Telephone Consumer Protection Act, both individually and on behalf of a putative class, and employment matters. While we currently believe that these additional matters, individually or ~~related regulations, ED may impose monetary~~in aggregate, will not have a material adverse impact on our financial position, cash flows or ~~program level sanctions, impose some period~~results of delay in the Company’s receipt of Title IV funds or transfer the Company’s schools to the “reimbursement” or Heightened Cash Monitoring 2 (“HCM2”) methods of payment of Title IV Program funds. While on HCM2 status, an institution must disburse its own funds to students, document the students’ eligibility for Title IV Program funds and comply with certain waiting period requirements before receiving such funds from ED, which may result in a delay in receiving those funds. The process of re-establishing a regular schedule of cash receipts for the Title IV Program funds if ED places our schools on “reimbursement” or HCM2 payment status could take several months, and would require us to fund ongoing operations, substantially out of existing cash balances. If our existing cash balances are insufficient to sustain us through this transition period, we would need to pursue other sources of liquidity, which may not be available or may be costly.

~~Our schools and universities~~these additional matters are subject to periodic audits by various regulatory bodies, including the U.S. Department of Education's Office of Inspector General ("OIG"). The OIG audit services division commenced a compliance audit of CTU in June 2010, covering the period July 5, 2009 to May 16, 2010 (the “Audit Period”), to determine whether CTU had policiesinherent uncertainties, and procedures to ensure that CTU administered Title IV Program and other federal program funds in accordance with applicable federal law and regulation. On January 13, 2012, the OIG issued a draft report identifying three findings, including one regarding the documentation of attendance of students enrolled in online programs and one regarding the calculation of returns of Title IV Program funds arising from student withdrawals without official notice to the institution. CTU submitted a written response to the OIG, contesting these findings, on March 2, 2012. On October 24, 2012, CTU provided a further response challenging the findings of the report directly to ED's Office of Federal Student Aid. As a result of ED’s reviewmanagement’s view of these ~~materials,~~matters may change in the future. Were an unfavorable final outcome to occur in any one or more of these matters, there exists the possibility of a material adverse impact on January 31, 2013, CTU received a request from ED that it perform two file reviews covering the Audit Period to determine potential liability on two discrete issues associated with one of the above findings. The Company completed these file reviewsour business, reputation, financial position and provided supporting documentation to ED on April 10, 2013. On April 29, 2016, ED directed CTU to perform these same two file reviews for an additional time period that extended from the end of the Audit Period through June 30, 2011, which CTU has completed and submitted to ED. On April 29, 2016, ED also requested an additional file review related to whether CTU appropriately performed calculations regarding any required return of Title IV Program funds for students that failed to earn passing grades within a term. This additional file review covers the period from July 5, 2009 to June 30, 2011 and is a review of whether students should be deemed to have unofficially withdrawn from the institution based on each student’s last known academically-related activity. CTU is seeking reconsideration of the request for this additional file review. In the May 2017 semi-annual OIG update to Congress, the OIG reported that ED’s Office of Federal Student Aid expected to resolve the audit in about 30 days; however, we have not yet received any notification in this regard. As of September 30, 2017, the Company has a $1.0 million reserve recorded related to this matter. This reserve does not include any amount relating to the additional file review requested by ED on April 29, 2016 because it is uncertain.cash flows.

The determination of the annual effective tax is based upon a number of significant estimates and judgments, including the estimated annual pretax income in each tax jurisdiction in which we operate and the ongoing development of tax planning strategies during the year. In addition, our provision for income taxes can be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, as well as other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions.

The following is a summary of our provision for income taxes and effective tax rate from continuing operations (dollars in thousands):

As of December 31, ~~2016,~~2017, a valuation allowance of ~~$49.7~~$50.5 million was maintained with respect to our foreign tax credits, ~~separate~~ state net operating losses and Illinois edge credits. After considering both positive and negative evidence related to the realization of these deferred tax assets, we have determined that it is necessary to continue to record the valuation allowance against these credits and ~~separate~~ state net operating losses as of September 30, ~~2017.~~2018.

The effective tax rate for the quarter and year to date ended September 30, 2018 reflects the tax effect of expenses that are not deductible for tax purposes and other adjustments which on a relative basis are a higher percentage of projected full-year earnings. The current quarter and year to date effective tax rate includes the impact of tax reserves, the tax effect of stock-based compensation and adjustments to increase the state deferred tax asset. The effect of these discrete items decreased the current effective tax rate for the quarter and year to date by 2.7% and 5.2%, respectively. The effective tax rate for the quarter and year to date ended September 30, 2018 also reflects the reduction in the U.S. corporate tax rate from 35% to 21% resulting from the enactment of the Tax Cuts and Jobs Act that became effective in January 2018. For the quarter and year to date ended September 30, 2017, the effective tax rate was primarily impacted by tax reserves and the tax effect of expenses that are not deductible for tax purposes. ~~For~~The effective tax rate for the ~~current~~prior year quarter ~~we recognized~~includes less than $0.1 million of benefit ~~associated with~~and the ~~adoption of ASU 2016-09,~~ ~~Compensation – Stock Compensation (Topic 718), improvements to Employee Share-Based Payment Accounting, which decreased our quarterly effective tax rate by 0.6%. For the~~prior year to date ended September 30, 2017, we recognized a $1.1 million unfavorable adjustment associated with the adoption of ASU 2016-09, which increased the effective tax rate by 4.6%. For the year to date ended September 30, 2016, the effective tax rate includes ~~a $2.1~~$1.1 million ~~favorable tax adjustment related to the closure~~ of ~~a federal tax audit for the tax years 2013 and 2014.~~expense, associated with stock-based compensation. The effect of this discrete item was to decrease the prior year quarterly effective rate by 0.6% and increase the prior year to date effective tax rate by ~~8.8%~~4.6%.

We estimate that it is reasonably possible that the gross liability for unrecognized tax benefits for a variety of uncertain tax positions will decrease by up to $1.8 million in the next twelve months as a result of the completion of various tax audits currently in process and the expiration of the statute of limitations in several jurisdictions. The income tax rate for the quarter and year to date ended September 30, ~~2017~~2018 does not take into account the possible reduction of the liability for unrecognized tax benefits. The impact of a reduction to the liability will be treated as a discrete item in the period the reduction occurs. We recognize interest and penalties related to unrecognized tax benefits in tax expense. As of September 30, 2018 and December 31, 2017, we had accrued $1.8 million and $1.9 million, respectively, as an estimate for reasonably possible interest and accrued penalties.

Our tax returns are routinely examined by federal, state ~~local~~ and ~~foreign~~local tax authorities and these audits are at various stages of completion at any given time. The Internal Revenue Service has completed its examination of our U.S. income tax returns through our tax year ended December 31, 2014.

The Career Education Corporation 2016 Incentive Compensation Plan (the “2016 Plan”) ~~was approved by the Company’s stockholders on May 24, 2016. The 2016 Plan~~ authorizes awards of stock options, stock appreciation rights, restricted stock, restricted stock units, deferred stock, performance units, annual incentive awards, and substitute awards, which generally may be settled in cash or shares of our common stock. Any shares of our common stock that are subject to awards of stock options or stock appreciation rights payable in shares will be counted as 1.0 share for each share issued for purposes of the aggregate share limit and any shares of our common stock that are subject to any other form of award payable in shares will be counted as 1.35 shares for each share issued for purposes of the aggregate share limit. As of September 30, ~~2017,~~2018, there were approximately ~~4.0~~3.3 million shares of common stock available for future share-based awards under the 2016 Plan, which is net of (i) ~~0.5~~0.8 million shares issuable upon exercise of outstanding options and (ii) ~~0.3~~0.9 million shares underlying restricted stock units, which will be settled in shares of our common stock if the vesting conditions are met and thus reduce the common stock available for future share-based awards under the 2016 Plan by the amount vested. These shares have been multiplied by the applicable factor under the 2016 Plan to determine the remaining shares available as of September 30, ~~2017.~~2018. Additionally, as of September 30, ~~2017,~~2018 under the previous Career Education Corporation 2008 Incentive Compensation Plan, there were approximately ~~2.4~~2.0 million shares issuable upon exercise of outstanding options and ~~1.3~~0.6 million shares underlying outstanding restricted and deferred stock units, ~~outstanding,~~ which will be settled in shares of our common stock if the vesting conditions are ~~met, under the previous Career Education Corporation 2008 Incentive Compensation Plan.~~met. This plan was replaced by the 2016 Plan and effective May 24, 2016 all future awards will be made under the 2016 Plan. The vesting of all types of equity awards (stock options, stock appreciation rights, restricted stock awards, restricted stock units and deferred stock units) is subject to possible acceleration in certain circumstances. Generally, if a plan participant terminates employment for any reason other than by death or disability during the vesting period, the right to unvested equity awards is forfeited.

As of September 30, ~~2017,~~2018, we estimate that compensation expense of approximately ~~$6.0~~$8.0 million will be recognized over the next four years for all unvested share-based awards that have been granted to participants, including stock options, restricted stock units and deferred stock units to be settled in shares of stock but excluding restricted stock units to be settled in cash.

Stock Options. The exercise price of stock options ~~and stock appreciation rights~~ granted under each of the plans is equal to the fair market value of our common stock on the date of grant. Employee stock options generally become exercisable 25% per year over a four-year service period beginning on the date of grant and expire ten years from the date of grant. Non-employee directors’ stock options expire ten years from the date of grant and generally become 100% exercisable after the first anniversary of the grant date. Grants of stock options are generally only subject to the service conditions discussed previously.

Stock option activity during the year to date ended September 30, ~~2017~~2018 under all of our plans was as follows (options in thousands):

Restricted Stock Units to be Settled in Stock. Restricted stock units to be settled in shares of stock generally ~~become fully vested as follows:~~vest 25% per year over a four-year service period or one-third for each of the first through third anniversary of the grant date. Certain awards granted in 2016 vest 20% after the first year, 50% after the second year and 30% after the third year andperiod. Restricted stock units which are “performance-based” ~~awards which~~ are subject to performance conditions that, even if the requisite service period is met, may reduce the number of units of restricted stock that vest at the end of the requisite service period or result in all units being forfeited. ~~Also, certain awards granted in~~The performance-based restricted stock units generally vest three years after the grant date or vest 20% after the first year, 50% after the second ~~quarter of 2015 for retention purposes are subject to accelerated vesting~~year and ~~cash settlement in~~30% after the ~~event of an involuntary not-for-cause termination of employment by the Company.~~third year.

The following table summarizes information with respect to all outstanding restricted stock units to be settled in shares of stock under our plans during the year to date ended September 30, ~~2017~~2018 (units in thousands):

Deferred Stock Units to be Settled in Stock. We granted deferred stock units to our non-employee directors. The deferred stock units are to be settled in shares of stock and generally vest one-third per year over a three-year service period beginning on the date of grant. Settlement of the deferred stock units and delivery of the underlying shares of stock to the plan participants does not occur until he or she ceases to provide services to the Company in the capacity of a director, employee or consultant.

The following table summarizes information with respect to all deferred stock units during the year to date ended September 30, ~~2017~~2018 (units in thousands):

Restricted Stock Units to be Settled in Cash. Restricted stock units to be settled in cash generally ~~become fully vested~~vest 25% per year over a four-year service period beginning on the date of grant. ~~Certain awards granted to our Chief Executive Officer in 2015 outside of the 2008 Plan vest 50% per year over a two-year service period.~~ Cash-settled restricted stock units are recorded as liabilities as the expense is recognized and the fair value for these awards is determined at each period end date with changes in fair value recorded in our unaudited condensed consolidated statements of income ~~(loss)~~ and comprehensive income ~~(loss)~~ in the current period. Cash-settled restricted stock units are settled with a cash payment for each unit vested equal to the closing price on the vesting date. Cash-settled restricted stock units are not included in common shares reserved for issuance or available for issuance under the 2016 Plan.

The following table summarizes information with respect to all cash-settled restricted stock units during the year to date ended September 30, ~~2017~~2018 (units in thousands):

Upon vesting, based on the conditions set forth in the award agreements, these units will be settled in cash. We valued these units in accordance with the guidance set forth by FASB ASC Topic 718 – Compensation-Stock Compensation and recognized ~~$3.3~~$2.0 million of expense for the year to date ~~2017~~September 30, 2018 for all cash-settled restricted stock units, of which ~~$1.4~~$0.4 million was recorded during the quarter ended September 30, ~~2017.~~2018.

Stock-Based Compensation Expense. Total stock-based compensation expense for the quarters and years to date ended September 30, ~~2017~~2018 and ~~2016~~2017 for all types of awards was as follows (dollars in thousands):

Performance Unit Awards. Performance unit awards granted during ~~2015,~~ 2016 and 2017 are long-term incentive, cash-based awards. Payment of these awards is based upon a calculation of Total Shareholder Return (“TSR”) of CEC as compared to TSR across a specified peer group of our competitors over a three-year performance period ending primarily on December 31, ~~2017,~~ 2018 and 2019, respectively. These awards are recorded as liabilities as the expense is recognized and the fair value for these awards is

determined at each period end date with changes in fair value recorded in our unaudited condensed consolidated statements of income ~~(loss)~~ and comprehensive income ~~(loss)~~ in the current period. We recorded ~~$3.7~~$2.5 million and ~~$2.6~~$3.7 million of expense related to these awards for the years to date ended September 30, ~~2017~~2018 and September 30, ~~2016,~~2017, respectively, with ~~$1.4~~$0.9 million and ~~$1.7~~$1.4 million of expense for the quarters ended September 30, ~~2017~~2018 and September 30, ~~2016,~~2017, respectively.

Basic net income ~~(loss)~~ per share is calculated by dividing net income ~~(loss)~~ by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income ~~(loss)~~ by the weighted average number of shares assuming dilution. Dilutive common shares outstanding is computed using the Treasury Stock Method and reflects the additional shares that would be outstanding if dilutive stock options were exercised and restricted stock units were settled for common shares during the period.

The weighted average number of common shares used to compute basic and diluted net income ~~(loss)~~ per share for the quarters and years to date ended September 30, ~~2017~~2018 and ~~2016~~2017 were as follows:

For the ~~quarter ended September 30, 2017~~quarters and ~~the~~ years to date ended September 30, ~~2017~~2018 and ~~2016,~~2017, certain unexercised stock option awards are excluded from our computations of diluted earnings per share, as these shares were out-of-the-money and their effect would have been anti-dilutive. The anti-dilutive options that were excluded from our computations of diluted earnings per share were ~~1.1~~0.8 million shares for each of the quarter ~~ended September 30, 2017~~ and ~~1.1 million and 2.6 million shares for the years~~year to date ended September 30, ~~2017~~2018 and ~~2016, respectively.~~1.1 million shares for each of the quarter and year to date ended September 30, 2017.

Our segments are determined in accordance with FASB ASC Topic 280—Segment Reporting and are based upon how the Company analyzes performance and makes decisions. Each segment represents a group of postsecondary education providers that offer a variety of degree and non-degree academic programs. These segments are organized by key market segments to enhance operational alignment and, for our two universities, to enhance brand focus within each segment to more effectively execute our strategic plan. As of September 30, ~~2017,~~2018, our ~~four~~three segments are:

Campuses included in our Career School segments include those which are currently being taught out or those which have completed their teach-out activities or have been sold subsequent to January 1, 2015. As a result of a change in accounting guidance, campuses which have closed or have been sold subsequent to January 1, 2015 no longer meet the criteria for discontinued operations and remain reported within continuing operations on our consolidated financial statements. Campuses in teach-out employ a gradual teach-out process, enabling them to continue to operate while current students have a reasonable opportunity to complete their course of study; they no longer enroll new students.

Summary financial information by reporting segment is as follows (dollars in thousands):

As of September 30, ~~2017,~~2018, the results of operations for campuses that have ceased operations prior to 2015 are presented within discontinued operations. Prior to January 1, 2015, our ~~Transitional Group~~teach-out campuses met the criteria for discontinued operations upon completion of their ~~teach-out.~~teach-out as defined under FASB ASC Topic 205 – Presentation of Financial Statements. Commencing January 1, 2015, in accordance with the new guidance under ASC Topic 360, only campuses that meet the criteria of a strategic shift upon disposal will be classified within discontinued operations, among other criteria. Since the January 2015 effective date of the updated guidance within ASC Topic 360, we have not had any campuses that met the criteria to be considered a discontinued operation.

The summary of unaudited results of operations for our discontinued operations for the quarters and years to date ended September 30, ~~2017~~2018 and ~~2016~~2017 were as follows (dollars in thousands):

Assets and liabilities of discontinued operations on our condensed consolidated balance sheets as of September 30, ~~2017~~2018 and December 31, ~~2016~~2017 include the following (dollars in thousands):

A number of the campuses that ceased operations prior to January 1, 2015 have remaining lease obligations that expire over time with the latest expiration in 2019. A liability is recorded representing the fair value of the remaining lease obligation at the time the space is no longer being utilized. Changes in our future remaining lease obligations, which are reflected within current and non-current liabilities of discontinued operations on our condensed consolidated balance sheets, for the quarters and years to date ended September 30, ~~2017~~2018 and ~~2016,~~2017, were as follows (dollars in thousands):

The discussion below and other items in this Quarterly Report on Form 10-Q contain “forward-looking statements,” as defined in Section 21E of the Securities Exchange Act of 1934, as amended, that reflect our current expectations regarding our future growth, results of operations, cash flows, performance and business prospects, and opportunities, as well as assumptions made by, and information currently available to, our management. We have tried to identify forward-looking statements by using words such as “anticipate,” “believe,” “expect,” ~~“outlook,~~“plan,” “should,” “will,” ~~“focused on,”~~ “continue to,” “outlook,” “focused on” and similar expressions, but these words are not the exclusive means of identifying forward-looking statements. These statements are based on information currently available to us and are subject to various risks, uncertainties, and other factors, including, but not limited to, those matters discussed in Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 that could cause our actual growth, results of operations, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements. Except as expressly required by the federal securities laws, we undertake no obligation to update such factors or to publicly announce the results of any of the forward-looking statements contained herein to reflect future events, developments, or changed circumstances, or for any other reason. Among the factors that could cause actual results to differ materially from those expressed in, or implied by, our forward-looking statements are the following:

Readers are also directed to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016~~2017 and its subsequent filings with the Securities and Exchange Commission for information about other risks and uncertainties, including, but not limited to, those matters discussed in Item 1A, “Risk Factors,” in our Form 10-K.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the Company’s unaudited condensed consolidated financial statements and the notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. The MD&A is intended to help investors understand the results of operations, financial condition and present business environment. The MD&A is organized as follows:

Our academic institutions offer a quality education to a diverse student population in a variety of disciplines through online, campus-based and blended learning programs. Our two universities – American InterContinental University (“AIU”) and Colorado Technical University (“CTU”) – provide degree programs through the master’s or doctoral level as well as associate and bachelor’s levels. Both universities predominantly serve students online with career-focused degree programs that are designed to meet the educational demands of today’s busy adults. AIU and CTU continue to show innovation in higher education, advancing new

personalized learning technologies like their intellipath~~™ adaptive~~^® learning platform. Career Education is committed to providing quality education that closes the gap between learners who seek to advance their careers and employers needing a qualified workforce.

~~In accordance with our strategic decision to focus our resources and attention on our two universities, we are~~Additionally, CEC is in the process of teaching out campuses within our ~~Transitional Group and have fully~~All Other Campuses segment. Campuses within this segment include those which are being taught out ~~our Culinary Arts campuses.~~or those which have completed their teach-out activities. Students enrolled at these campuses have been afforded the reasonable opportunity to complete their program of study prior to the final teach-out date. During the third quarter of ~~2017,~~2018, the Company completed the teach-out of ~~17 campuses: Sanford-Brown Las Vegas and the remaining 16 Le Cordon Bleu campuses,~~one campus, Harrington College of Design, which ~~continue~~continues to be reported within the ~~Transitional Group and Culinary Arts segments, respectively,~~All Other Campuses segment as part of ~~September 30, 2017~~continuing operations in accordance with ASC Topic 360 – Property, Plant and Equipment, which limits discontinued operations reporting.

We operate in a highly regulated industry, which has significant impacts on our business and creates risks and uncertainties. In recent years, ~~there has been substantial and increasing focus by various members of~~Congress, ED, states, accrediting agencies, the ~~U.S. Congress and federal agencies, including ED,~~CFPB, the ~~Consumer Financial Protection Bureau~~FTC, state attorneys general and the ~~Federal Trade Commission, on~~media have scrutinized the ~~role that~~ for-profit, ~~educational institutions play in higher education.~~postsecondary education sector. Congressional hearings and roundtable discussions ~~have been~~were held regarding various aspects of the education industry and reports ~~have been~~were issued that are highly critical of for-profit ~~institutions~~colleges and ~~include a number of recommendations to be considered by Congress in connection with the upcoming reauthorization of the Higher Education Act.~~universities. A group of influential U.S. senators, ~~has~~consumer advocacy groups and some media outlets have strongly and repeatedly encouraged the Departments of Education, Defense and Veterans Affairs to take action to limit or terminate the participation of for-profit educational institutions, including Career Education Corporation, in existing tuition assistance programs.

In addition, ED has formed an inter-agency task force focused on the for-profit sector involving multiple federal agencies and departments including the Federal Trade Commission, the U.S. Departments of Justice, Treasury and Veterans Affairs, the Consumer Financial Protection Bureau, the Securities and Exchange Commission, and numerous state Attorneys General, to coordinate activities and share information to protect students from unfair, deceptive and abusive policies and practices. We believe that the recent actions by the Federal Trade Commission and the multiple Attorney Generals’ offices may be related to or coordinated with this task force. At this time, the future direction of many of these initiatives is uncertain as they may be impacted by federal budget cuts and/or shifts in policy goals and administration priorities in connection with the new administration.

We encourage you to review Item 1, “Business,” and Item 1A, “Risk Factors,” in our Annual Report on Form 10-K to learn more about our highly regulated industry and related risks and uncertainties, in addition to the MD&A in our ~~2017~~2018 Quarterly Reports on Form 10-Q.

We believe it is useful to present non-GAAP financial measures which exclude certain significant and non-cash items as a means to understand the performance of our core business. As a general matter, we use non-GAAP financial measures in conjunction with results presented in accordance with GAAP to help analyze the performance of our core business, assist with preparing the annual operating plan, and measure performance for some forms of compensation. In addition, we believe that non-GAAP financial information is used by analysts and others in the investment community to analyze our historical results and to provide estimates of future performance.

We believe certain non-GAAP measures allow us to compare our current operating results with respective historical periods and with the operational performance of other companies in our industry because it does not give effect to potential differences caused by items we do not consider reflective of underlying operating performance, such as our teach-out campuses. In evaluating the use of non-GAAP measures, investors should be aware that in the future we may incur expenses similar to the adjustments presented below. Our presentation of non-GAAP measures should not be construed as an inference that our future results will be unaffected by expenses that are unusual, non-routine or non-recurring. A non-GAAP measure has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for net income (loss), operating income (loss), diluted earnings per share, or any other performance measure derived in accordance with and reported under GAAP or as an alternative to cash flow from operating activities or as a measure of our liquidity.

Non-GAAP financial measures, when viewed in a reconciliation to respective GAAP financial measures, provide an additional way of viewing the Company's results of operations and the factors and trends affecting the Company's business. Non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the respective financial results presented in accordance with GAAP.

The third quarter of 2018 ended with continued improvement in student enrollment trends as well as revenue growth and improvements in operating income as compared to the prior year. We continued to execute well against our strategy to drive sustainable, responsible growth while also making appropriate long term investments in both of our Universities.

Student enrollments at both AIU and CTU continued to experience growth which we believe were positively impacted by the organic investments made and operating efficiencies achieved in our student-serving processes and supported by consistent levels of prospective student interest for our programs. On an aggregate basis, University Group total student enrollments increased 5.8% as of September 30, 2018 as compared to the prior year, and new student enrollments were up 39.0%. The increase in new student enrollments for the quarter was a result of the academic calendar redesign at AIU as well as the organic growth at both AIU and CTU.

As new student enrollment has grown and our admissions and advising personnel work with these students to improve their learning experiences and academic outcomes, we believe this should lead to further improvement in retention trends for the future. Our new student enrollment growth in AIU and CTU has not fully manifested into total student enrollment growth as this process usually takes a few quarters as we continue to further enhance student retention and academic outcomes.

~~We continued to experience better than expected enrollment trends and operating performance during the third quarter of 2017. Our third quarter operating income~~New student enrollments within CTU increased 9.0% for the University Group and Corporate was $23.6 million and adjusted for certain items not considered reflective of underlying operating performance and certain non-cash items was $26.2 million, which was better than the high end of our operating income outlook of $21 million and adjusted operating income outlook of $24 million, respectively. We believe this performance was primarily driven by better than expected retention and new enrollment trends that positively impacted revenue as well as timing of certain operating expenses.

~~Within our CTU segment, total enrollments increased 0.9% and new enrollments increased 10.9% for the third~~current quarter ~~of 2017~~ as compared to the prior year quarter. ~~We believe the~~CTU has continued to increase in total enrollments was primarily driven by new enrollment growth and continued improvement in our retention trends. New enrollment growth benefitted from improved execution within our admissions operations, enhancedits focus on employee training and ~~coaching~~development while streamlining its admissions and organizational structure to better serve our students. Employee tenure within the admissions and advising centers continues to further improve and these employees continue to gain training and experience, and as ~~well as increasing tenure~~a result, we believe CTU will gain incremental operating efficiencies from the team. Based on the overall success of the Arizona center and supported by consistent levels of prospective student interest for our ~~admissions personnel driving higher efficiency in our enrollment and onboarding processes. Improvements in technology has~~programs, CTU had also ~~helped drive better student engagement early in their decision process. The new~~increased staffing at its admissions and advising center in Illinois.

The third quarter of 2018 was the last quarter of benefit from increased staffing at CTU’s Arizona ~~which was fully operational during~~and Illinois centers that positively impacted year over year enrollment trend comparability. But, as a result of improved execution across our operating processes, we expect CTU to experience another quarter of new student enrollment growth in the fourth quarter ~~for CTU~~of 2018 versus the prior year.

Corporate partnerships have also meaningfully contributed to the ~~increase~~new enrollment growth at CTU and the University continues to make progress in expanding their corporate partnership network. CTU now has corporate partnerships with companies in a variety of industries, including telecommunications, healthcare and food. These corporate partnerships have provided us with an opportunity to educate students that are not easily accessible through our standard marketing. While students who enroll through these corporate partnerships are awarded higher tuition grants from the University to offset their tuition costs, these students typically have lower application and support costs and are more likely to start class and continue in their programs. Students associated with these corporate partners tend to be more persistent in their pursuit of long-term learning, which, we believe, will result in higher life-time value per student. As we make progress and continue to add corporate partners, these students will become a bigger part of our population.

Total student enrollments at CTU increased 2.8% as of the current quarter end as compared to the prior year quarter, with growth primarily driven by the momentum in new student enrollments. CTU has continued its focus to improve learning experiences and engagement, which, we believe, will further enhance student retention and academic outcomes. Students are assigned to their advising teams based on their academic characteristics and program of study. Additionally, our predictive analytics tool is going live in the fourth quarter. The tool is intended to better help reach students at the right time with the right solution, which should increase overall course completion for each student.

Total student enrollments for AIU increased by 11.7% as of the end of the current quarter as compared to the prior year quarter. New student enrollments increased by 96.8% for the current ~~quarter. Revenue~~quarter as compared to the prior year quarter and increased ~~by $0.4 million~~6.6% for the ~~quarter and $1.9 million for the~~current year to date as compared to the prior year ~~periods while operating income increased $6.1 million and $8.0 million~~to date. The significant increase in new enrollments for the ~~current~~quarter was expected, given that there were approximately 60% more enrollment days for the quarter, a result of the academic calendar redesign. Enrollment days attributable to any given quarter are generally the available days during which a prospective student can apply to start school in that quarter. Another driver of the increase in student enrollments was the admissions and advising center in Arizona which continues to improve its execution around the student inquiry and application process. Primarily driven by the academic calendar redesign, we expect new student enrollments to significantly decline in the fourth quarter followed by significant growth in the first quarter of 2019, which will more than offset the decline in the fourth quarter of 2018.

The calendar driven variability in quarterly enrollment trends at AIU does not materially impact quarterly revenue trends which are still primarily driven by our underlying long-term operating performance and the number of revenue-earning days during the quarter. Despite quarterly variability in new student enrollments, we expect AIU to experience revenue growth both in the fourth quarter and for the full year 2018.

AIU continues to ~~date, respectively,~~make incremental investments across its admissions and advising centers, primarily in Arizona, with staffing at these centers up approximately 15% as compared to the prior ~~year periods.~~

~~Within our~~year. AIU ~~segment, total enrollments increased 5.7% while new enrollments decreased 2.8%. The increase in total enrollments was primarily driven by~~has also benefitted from the ~~improvements made in our~~rollout of the personalized graduate team model with cross functional student support ~~operations throughout~~between admissions, advising and financial aid groups. The focus of this model is aimed at improving student engagement prior to the ~~year. New enrollments~~start of their education and continuing through their academic programs, with particular emphasis on the important onboarding phase and first academic term as students adjust to their academic program. Lastly, a new Learner-Centric model has also recently been introduced that has resulted in an increased number of courses that utilize our intellipath^® technology which we believe promotes stronger learning.

Technology continues to be a key focus and important competitive advantage for the ~~quarter were impacted by the calendar redesign discussed in prior quarters which shifts new enrollments between quarters as compared to the prior year periods. The new admissions~~Universities and advising center became fully operational at the end of the third quarter of 2017 for AIU. We expect to see positive impacts in future quarters as increased resources to serve prospective students is expected to support our objective of sustainable and responsible growth. Revenue increased by $1.6 million for the quarter and decreased by $1.5 million for the year to date as compared to the prior year periods while operating income increased $2.0 million and decreased by $1.0 million for the current quarter and year to date, respectively, as compared to the prior year periods.

~~We continue to focus on additional innovative ways~~we continued to implement strategies, invest in new technology and appropriately staff our student support operations. During the third quarter, AIU announced a new specialization for its Bachelor of Business Administration degree program. The new program, Le Cordon Bleu Hospitality Management, provides a specialization which allows students to engage in an in-depth study in their areas of interest. Within both Universities we rolled out the faculty mobile application which allows faculty to engage more with students as well as track their progress more efficiently. We have also established advisor accountability for students based on their degree and program of study and promoted increased interaction and dialogue between advisors and faculty.

~~We expect to see quarterly variability driven by the timing of operating expenses and the varying impacts from our~~ initiatives including the ongoing impacts of the academic calendar redesign at AIU, yet we believe that the University Group is positioned well for long-term sustainable and responsible growth. In line with these expectations, we expect positive new and total enrollment growth at both AIU and CTU during the fourth quarter of 2017. This expectation is primarily driven by our ongoing initiatives and investments in student support operations, including our admissions and advising centers in Arizona as well as the academic calendar redesign at AIU.

~~We completed the teach-out of all remaining Culinary Arts campuses~~ during the third ~~quarter of 2017, which significantly lowered~~quarter. Both Universities have fully implemented a 2-way messaging platform within the ~~remaining number of~~mobile application to support effective and efficient student outreach and communication with advising, admissions and financial aid personnel. Our students ~~involved in~~and staff are increasingly using the messenger due to its ease and simplicity. As a result, our ~~teach-out campuses. At the end of 2017, we expect~~staff is now able to reach and advise students that they would not have ~~approximately 80 students remaining across seven teach-out campuses. Results for our teach-out campuses~~otherwise been able to reach easily. We believe this will ultimately have a positive impact on overall student retention and academic outcomes. We will continue to ~~track ahead of~~advance technology initiatives to better assist our ~~expectations due to stronger than expected retention as well as better than expected occupancy costs as we work to exit leases prior to~~students in their end dates or secure sublease arrangements. We are continuing to terminate or sublease vacated space and further reduce our remaining contractual lease obligations, which will result in future cash savings.education life cycle.

Revenue from continuing operations ~~declined $22.6 million or 13.5% due to an overall 9.9% decrease~~ in ~~total student enrollments for~~ the third quarter of ~~2017~~2018 increased $0.7 million or 0.5% as compared to the prior year ~~quarter, driven by~~quarter. The increase of $4.2 million or 2.9% within our ~~decision to~~University Group was offset with operating losses within our teach-out ~~our Career Schools.~~

campuses as they near the end of their teach-out strategy. For the ~~current~~third quarter of 2018, we reported operating income of ~~$4.5~~$19.3 million as compared to an operating ~~loss~~income of ~~$0.7~~$4.5 million infor the prior year quarter. This improvement was driven by ~~increased revenue~~reduced operating costs at our teach-out campuses. We continue to expect some variability in our quarterly results driven by the timing of our operating expenses and ~~operating efficiencies within~~the varying impacts from our ~~University Group as well as a result~~initiatives, including the ongoing impacts of ~~growth investments made earlier in 2017.~~the academic calendar redesign at AIU. Lastly, we reported cash ~~used in~~provided by operations for the current year to date of $18.3 million as compared to cash used by operations of $29.1 million for the prior year period. The prior year cash usage included a payment of $32.0 million for legal settlements as compared to $17.1 million in the current year period.

For our University Group, revenue in the third quarter of 2018 increased $4.2 million or 2.9% as compared to the prior year ~~to date’s cash provided of $16.3 million. The~~quarter. Revenue within our CTU segment increased $1.8 million or 2.0% driven by an increase in ~~cash usage~~new and total student enrollments. AIU’s revenue increased by $2.4 million or 4.7% also driven by an increase in new and total enrollments. Operating income for the ~~current year~~University Group decreased $2.5 million or 8.3%, with both AIU and CTU contributing to ~~date was~~this decrease, primarily ~~driven by payments~~as a result of ~~legal settlements of $32.0 million~~severance charges recorded during the ~~first~~current quarter as a result of ~~2017~~restructuring actions as well as ~~increased payments for exit~~investments within student-serving operations at both Universities during the third quarter. The severance charges during the quarter were recorded as a result of ~~leased facilities and incentive-based compensation expenses as compared to the prior year.~~

~~For~~process reengineering within our University Group, ~~revenue increased $2.0~~primarily within non-student serving operations. As an educational institution, we regularly evaluate and analyze ways to improve operations and redistribute resources to serve our students in the most efficient manner. A substantial portion of these operating efficiencies have been committed for reinvestments in our student-serving operations.

Within our All Other Campuses segment, operating loss of $3.7 million ~~or 1.4% as~~improved 80.7% compared to the prior year quarter ~~primarily driven by new and total enrollment growth~~ as ~~well~~we continued to eliminate costs as ~~the timing impact of the calendar redesign for AIU which shifted revenue from the second quarter of 2017 to the third quarter of 2017. Total enrollments for the University Group increased by 2.5%~~campuses completed their teach-outs. We had approximately 10 students remaining within two teach-out campuses as of ~~the current year~~

quarter end as compared to the prior year quarter end. Operating income for the University Group increased by $8.0 million, or 36.9%, for the current year quarter as compared to the prior year quarter driven by the reasons discussed above.

Within our teach-out segments, operating loss for the Transitional Group improved by $10.0 million or 66.5% for the current quarter as compared to the prior year quarter, driven by reductions in expenses, particularly within administrative, occupancy and academic expenses. Operating loss for Culinary Arts increased by $12.2 million as a result of the reduction in revenue more than offsetting the reduction in expenses as the business completed its teach-out as well as lease charges recorded as campuses vacated facilities during the third quarter of 2017 upon teach-out completion. We have eight campuses remaining within the Transitional Group at the end of the third quarter of ~~2017, which will~~2018; these students are scheduled to complete their programs during the fourth quarter of 2018. As the teach-out ~~at varying dates through 2018.~~campuses complete their closure in 2018, we expect to see expenses further decrease.

~~As discussed above, the~~The Company believes it is useful to present non-GAAP financial measures, which exclude certain significant and non-cash items, as a means to understand the performance of its operations. (See tables below for a GAAP to non-GAAP reconciliation.) ~~Operating income and adjusted~~Adjusted operating income for the ~~University Group and Corporate~~total company was ~~$23.6 million and $26.2~~$25.8 million for the current quarter as compared to ~~$16.2 million and $18.8~~$15.5 million in the prior year quarter ~~respectively.~~ with the improvement primarily driven by reductions in operating losses at our teach-out campuses.

Adjusted operating ~~loss~~income (loss) for the ~~Transitional~~quarters and years to date ended September 30, 2018 and 2017 is presented below (dollars in thousands, unless otherwise noted):

(2) Amounts relate to the University Group and Culinary Arts increased to $10.8 million for the current year quarter as compared to an adjusted operating loss of $9.3 million in the prior year quarter as a result of the fixed costs not decreasing in line with revenue as we near the end of teach-out completion.Corporate.

The substantial completion of the teach-outs and continued execution against our strategy has provided us with further visibility into our anticipated operating results. As a result, we are providing an update to our previous outlook for adjusted operating losses related to our teach-out operations and for ending cash balances for 2017. We currently expect the following results, subject to the key assumptions identified below (see the GAAP to non-GAAP reconciliation ~~below):~~

~~University Group and Corporate~~for adjusted operating income ~~in the range of $100 to $105 million for the full~~(loss) below):

Financial Outlook:

Full year ~~2017, compared to $89.3 million in 2016.~~2018 – total company:

Operating income in the range of $71.0 million to $76.0 million.

Adjusted operating income in the range of $101 million to $106 million.

~~New and~~Fourth quarter 2018 – total student enrollment growth at both Universities in the fourth quarter of 2017, primarily driven by our ongoing initiatives and investments in student support operations, including our Phoenix admissions and advising centers as well as the academic calendar redesign at AIU.company:

Operating income in the range of $19.9 million to $24.9 million.

Adjusted operating income in the range of $25.6 million to $30.6 million.

~~Adjusted operating loss for our teach-out segments, comprised of the Transitional Group~~Year end 2018 cash, cash equivalents, restricted cash and ~~Culinary Arts,~~short-term investments to be in the range of ~~$40~~$215 million to ~~$45 million~~$220 million.

Operating income and adjusted operating income and ending cash balances for the total company to grow in ~~2017,~~2019 as compared to adjusted operating loss of $29.8 million in 2016, and to be in the range of $10 million to $15 million in 2018 as we wind-down the remainder of our teach-out campuses, which reflects an improvement of $5 million in 2017 compared to our previously provided outlook.2018.

ACTUAL

OUTLOOK

ACTUAL

OUTLOOK

For the Quarter Ending December 31,

For the Year Ending December 31,

2017

2018

2017

2018

Total Company:

Operating income

$10.7M

$19.9M -$24.9M

$34.1M

$71.0M - $76.0M

Depreciation and amortization

2.6

~2.5

14.0

~9.5

Unused space charges ⁽¹⁾

1.1

~3.2

12.2

~9.0

Severance and related costs ⁽²⁾

1.9

Significant legal settlements

6.5

9.6

Adjusted Operating Income - Total Company

$20.9M

$25.6M - $30.6M

$66.8M

$101M - $106M

_______________________

(1)	Unused space charges represent the net present value of remaining lease obligations for vacated space less an estimated amount for sublease income. These charges relate to exited leased space and therefore are not considered representative of ongoing

operations. As early lease terminations or subleases occur, or as assumptions are otherwise adjusted, these unused space charges are increased or decreased. These adjustments are also included in the amounts presented.

(2)	Severance and related costs includes charges related to significant restructuring actions. These restructuring actions are non-recurring charges and are not considered part of ongoing operating results.

University Group Outlook:

CTU

New student enrollments for the fourth quarter of 2018 are expected to grow as compared to the prior year quarter.

End of year cash, cash equivalents, restricted cash and available-for-sale short-term investments, net of any borrowings, as reported on the consolidated balance sheets of approximately $160 million to $165 million for the year ending December 31, 2017, which reflect an improvement of $5 million compared to our previously provided outlook, and expected to increase in 2018.AIU:

Primarily driven by the academic calendar redesign, new student enrollments at AIU are expected to significantly decline in the fourth quarter of 2018 followed by significant growth in the first quarter of 2019, which will more than offset the decline in the fourth quarter of 2018.

Fourth quarter and full year revenue growth for 2018.

Forward looking adjusted operating income ~~(loss)~~ expectations are presented in the reconciliation of GAAP to non-GAAP items ~~below.~~above. Operating income, ~~(loss),~~ which is the most directly comparable GAAP measure to adjusted operating income, ~~(loss),~~ may not follow the same trends ~~as discussed~~stated in ~~our~~the outlook above because of adjustments made for unused space charges that represent the present value of future remaining lease obligations for vacated space less an estimated amount for sublease income and subsequent adjustments as well as depreciation, amortization, asset impairment charges, severance and related costs as a result of significant restructuring actions and significant legal settlements. The ~~expectations~~operating income and adjusted operating income, enrollment, revenue and cash outlook provided ~~in the paragraph~~ above for 2018 and ~~table below for 2017 and 2018~~2019 are based on the following key assumptions and factors, among others: (i) prospective student interest in our programs continues to trend in line with recent experiences, (ii) ~~modest total~~initiatives and investments in student-serving operations continue to positively impact enrollment ~~growth~~trends within the University Group, (iii) ~~availability and retention~~achievement of ~~qualified personnel for ongoing investments in our student support operations, (iv) achievement of~~anticipated recovery rates for ~~the Company’s~~our real estate obligations ~~and timing of any associated lease termination payments consistent~~in line with ~~the Company’s historical experiences, (v)~~our current expectations, (iv) no material changes in the ~~current~~ legal or regulatory environment, and excludes legal and regulatory liabilities and other related impacts which are not probable and estimable at this time, and any impact of new or proposed regulations, including the ~~new~~ “borrower defense to repayment” ~~regulations~~ and ~~the~~ gainful employment ~~regulation,~~regulations and any modifications thereto, and ~~(vi) consistent working capital movements~~(v) no material changes in ~~line with historical operating trends and potential impacts~~the estimated amount of ~~teach-out campuses on working capital~~compensation expense that could be impacted by changes in ~~line with expectations.~~our stock price. Although these estimates and assumptions are based upon management’s good faith beliefs regarding current events and actions that may be undertaken in the future, actual results could differ materially from these estimates.

~~Adjusted operating income (loss) for the quarters and years to date ended September 30, 2017 and 2016~~The strong student interest we experienced as well as ~~an outlook for~~our operating performance has provided us with momentum into the second half of ~~2017~~2018. We expect to close 2018 on a good note, and we should have positive momentum entering into 2019 that will enable us to be strategic with respect to future capital allocation decisions and continue to focus on building a strong balance sheet, while prudently investing in organic growth projects. We feel good about the ~~years ending December 31, 2017~~strength of our organization and ~~2018 is presented below (dollars~~are continually striving to build a leadership position in ~~thousands, unless otherwise noted):~~postsecondary education.

ACTUAL

ACTUAL

For the Quarter Ended
September 30,

For the Year to Date Ended
September 30,

Adjusted Operating Income (Loss)

2017

2016

2017

2016

University Group and Corporate:

Operating income ^{(1) (2)}

$
23,622

$
16,190

$
70,041

$
62,569

Depreciation and amortization⁽²⁾

2,605

2,594

7,695

8,474

Asset impairments ⁽²⁾

-

-

-

237

Unused space charges ^{(2) (3)}

-

-

-

1,118

Adjusted Operating Income -- University Group and Corporate

$
26,227

$
18,784

$
77,736

$
72,398

Transitional Group and Culinary Arts:

Operating loss ^{(1) (4)}

$
(19,083
)

$
(16,896
)

$
(46,617
)

$
(39,006
)
Depreciation and amortization ⁽⁴⁾

977

2,621

3,673

8,512

Unused space charges^{(3) (4)}

7,347

4,983

11,158

14,123

Adjusted Operating Loss -- Transitional and Culinary Arts

$
(10,759
)

$
(9,292
)

$
(31,786
)

$
(16,371
)

ACTUAL

OUTLOOK

ACTUAL

OUTLOOK

For the Second Half July-December 31,

For the Year Ended December 31,

Adjusted Operating Income (Loss)
2016

2017

2016

2017

2018

University Group and Corporate:

Operating income ⁽²⁾
$
(1,662
)

$43 - $48M

$
44,717

$90-95M

Growth vs 2017

Depreciation and amortization⁽²⁾

5,284

5M

11,164

10M

2017 Levels

Asset impairments ⁽²⁾

-

None Assumed

237

None Assumed

Unused space charges ^{(2) (3)}

16

None Assumed

1,134

None Assumed

Significant legal settlements ⁽²⁾

32,000

None Assumed

32,000

None Assumed

Adjusted Operating Income -- University Group and Corporate
$
35,638

$48 - $53M

$
89,252

$100 - $105M

Growth vs 2017

Transitional Group and Culinary Arts:

Operating loss ⁽⁴⁾
$
(54,951
)

($31 - $36M)

$
(77,061
)

($59 - $64M)

($15 - $20M)

Depreciation and amortization ⁽⁴⁾

5,692

1M

11,583

4M

-

Asset impairments ⁽⁴⁾

927

None Assumed

927

None Assumed

Unused space charges^{(3) (4)}

25,579

11M

34,719

15M

5M

Adjusted Operating Loss -- Transitional and Culinary Arts
$
(22,753
)

($19 - $24M)

$
(29,832
)

($40 - $45M)

($10 - $15M)

~~_____________~~

~~(1)~~

Operating income for the University Group and Corporate and operating loss for the Transitional Group and Culinary Arts make up the components of operating income (loss). A reconciliation of these components for the quarters and years to date ended September 30, 2017 and 2016 is presented below:

ACTUAL

ACTUAL

For the Quarter Ended
September 30,

For the Year to Date Ended
September 30,

2017

2016

2017

2016

Operating income for University Group and Corporate

$
23,622

$
16,190

$
70,041

$
62,569

Operating loss for Culinary Arts and Transitional

(19,083
)

(16,896
)

(46,617
)

(39,006
)
Operating income (loss)

$
4,539

$
(706
)

$
23,424

$
23,563

~~(2)~~

~~Amounts relate to the University Group and Corporate.~~

~~(3)~~

Unused space charges represent the net present value of remaining lease obligations for vacated space less an estimated amount for sublease income. These charges relate to exiting leased space as the Company continues to right-size the organization and therefore are not considered representative of ongoing operations.

~~(4)~~

~~Amounts relate to the Transitional Group and Culinary Arts.~~

Regulatory Updates

Borrower Defense to ~~Repayment~~Repayment. ~~. In~~On October 28, 2016, ED adopted new regulations that cover multiple issues including the processes and standards for the discharge of student loans, which are commonly referred to as “borrower defense to repayment” regulations. However, prior to the effective date of July 1, 2017, the previously adopted 2016 regulations were, in response to pending litigation, ~~challenging the borrower defense to repayment regulations, on June 14, 2017~~delayed while ED ~~announced an indefinite delay in the effective date of the regulations while it conducts~~conducted a further review and a new negotiated rulemaking process.Following a process ~~to amend the rules. On October 24, 2017~~of negotiated rulemaking in which negotiators did not reach consensus on what these new regulations should include, ED published ~~two related notices in~~proposed regulations on July 31, 2018, and the ~~Federal Register.~~ public comment period has ended.

The first, again citing the pending litigation and uncertain outcome, was an interim final rule setting the effective date of the delayed regulations as July 1, 2018. The second, was a proposed extension of the delay for an extra year, through July 1, 2019, to permit ED to conclude its previously announced negotiated rulemaking to amend the rules and to provide adequate time for institutions to prepare for the implementation of its modified requirements. Comments on the proposed extension through July 1, 2019 are due by November 24, 2017. These2016 borrower defense to repayment regulations ~~were previously~~ set forth categories of borrower defenses that could be asserted by students with respect to ~~take effect~~student loans disbursed on or after its proposed effective date of July 1, ~~2017. Separately,~~2017 and established an automatic discharge process associated with closed schools. In most cases, the 2016 regulations entitle ED to seek reimbursement from the institution for any loans discharged under new standards which were designed to accommodate student claims. The 2018 proposed regulations effectively replace the 2016 regulations and are designed to generally take a measured approach to adjudicating student loan discharge claims for loans made after the new regulations become effective. The 2018 proposed rules provide for ED to adjudicate claims using a single federal standard and would require claims to be made and adjudicated individually, rather than on a group basis. Additionally, institutions would have an opportunity to respond to claims submitted.

The proposed rules also make modifications to the rules governing financial responsibility and administrative capability requirements. Both the 2016 regulations and 2018 proposed regulations include discussion of ~~attorneys general filed~~triggering events that would provide ED discretion regarding periodic determinations of our financial responsibility and associated enhanced financial protection in the form of a ~~lawsuit on July 6, 2017~~letter of credit or other security it determines it needs.

The delay of the 2016 regulations was challenged in federal court in the District of Columbia ~~to challenge~~and on September 12, 2018 the ~~legal authority for ED’s~~court issued a decision concluding that the delay was improper. As a result, the 2016 regulations became effective on October 16, 2018. There are several aspects of the ~~effectiveness~~2016 regulations that require further action, rulemaking and/or direction from ED. We are awaiting further guidance from ED regarding how it will proceed with the 2016 regulations while it is working to develop and publish a finalized version of its 2018 proposed regulations. With respect to the ~~regulations.~~ 2018 proposed regulations, ED recently indicated that it does not intend to publish final regulations by November 1, 2018, which is the typical publication deadline for regulations that would take effect on July 1, 2019.

The outcome of ~~this~~the borrower defense to repayment rulemaking initiatives and related legal ~~challenge~~proceedings and the impact ~~any ruling may have on the future effectiveness~~ of the existing or any new or modified regulations isare uncertain at this time. We have in the past had claims made against us that if made in the future could result in ED determining a discharge of student loans is merited. We cannot predict the extent to which any borrower defense to repayment regulations which allow ED to seek recoupment from institutions for student loans that ED discharges may impact us, nor can we predict how ED may exercise its discretion under revised financial responsibility rules. See Item 1A, “Risk Factors – Risks Related to the Highly Regulated Field in Which We Operate – Recently adopted or modified ‘borrower defense to repayment’ regulations may subject us to significant repayment liability to ED for discharged federal student loans, posting of substantial letters of credit and other requirements that could have a material adverse effect on us,” in our Annual Report on Form 10-K for more information about risks associated with the borrower defense to repayment regulations.

Gainful Employment. In June 2017, ED announced its intention to convene new negotiated rulemaking committees to consider modifications to the gainful employment regulation. Committee negotiations failed to reach consensus on what an alternative set of regulations should be. ED subsequently published proposed regulations in August 2018 rescinding the gainful employment regulation, and the public comment period has ended. ED recently indicated that it does not intend to publish final regulations by November 1, 2018, which is the typical publication deadline for regulations that would take effect on July 1, 2019.

The current gainful employment regulation remains in effect until the effective date of any new final regulations adopted pursuant to ED’s rulemaking initiative commenced in June 2017. Please see Item 1, “Business – Student Financial Aid and Related Federal Regulation – Compliance with Federal Regulatory Standards and Effect of Federal Regulatory Violations – ~~Borrower Defense to Repayment,~~Gainful Employment” in our Annual Report on Form 10-K for ~~more information about~~a summary of the ~~borrower defense to repayment regulations.~~current gainful employment regulation. However, in June 2018, ED announced that it was further delaying aspects of the regulation requiring that program disclosures be distributed in person or via email until July 1, 2019.

Although the current gainful employment regulation remains in effect, ED has not distributed any additional gainful employment rates since publishing the initial year rates in January 2017.

The outcome of ED’s gainful employment rulemaking initiatives and the impact of any new or modified regulations are uncertain at this time. ~~Program Participation Agreements.~~ ~~All of~~There can be no assurance that our institutions, including AIU and CTU, are currently operating on a provisional program participation agreement. AIU and CTU each have a program participation agreement that expires on September 30, 2018. During the period of provisional certification, our institutions must obtain prior ED approval to add an educational program, open a new location or make any other significant change. Our ACICS-accredited institutions all have provisional program participation agreements that extend through the duration of their respective closure dates. Although we believe our institutions arefuture actions will result in compliance with the ~~terms~~existing regulation or any new or modified regulation and the eligibility of ~~their respective provisional program participation agreements, ED~~the programs we offer could be adversely affected. See Item 1A, “Risk Factors – Risks Related to the Highly Regulated Field in Which We Operate - ED’s gainful employment regulation may ~~withdraw an institution’s provisional certification without advance notice if ED determines~~limit the programs we can offer students and increase our cost of operations, ” in our Annual Report on Form 10-K for more information about risks associated with the gainful employment regulation.

AIU Institutional Accreditation. AIU has completed a comprehensive evaluation by The Higher Learning Commission (“HLC”) (www.hlcommission.org). HLC found that AIU continued to meet HLC’s criteria of accreditation. AIU’s next re-affirmation of accreditation is scheduled for 2023-24. See Item 1, “Business – Accreditation and Jurisdictional Authorizations – Institutional Accreditation” in our Annual Report on Form 10-K for the ~~institution is not fulfilling all requirements.~~year ended December 31, 2017 for more information about institutional accreditation.

Cohort Default ~~Rates~~.Rates. In late September ~~2017,~~2018, ED released the official three-year cohort default rates for the ~~2014~~2015 cohort. Each of our institutions had cohort default rates under the 30% threshold for the ~~2014~~2015 cohort. See Item 1, “Business – Student Financial Aid and Related Federal Regulation – Compliance with Federal Regulatory Standards and Effect of Federal Regulatory Violations – Student Loan Default Rates” in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 for more information about cohort default rates, our prior year rates and ED’s related standards.

~~HLC Policy Making Initiatives.~~ At its June 2017 board meeting, the Higher Learning Commission (“HLC”) proposed the addition of student consumer protection policies focused on recruiting, admissions and related institutional practices. Comments on the proposed policies were solicited through September 23, 2017 and the HLC Board of Trustees will consider adoption of the new policies at its November 2017 meeting. We believe our universities already substantially adhere to many of the proposed policies. However, some aspects of the policies and their application are unclear and our institutions have sought clarifications through the comment process. The proposed policies may preclude arbitration agreements in student enrollment agreements. As a result, the impact of these proposed policies, if any, is uncertain at this time, but they may require us to modify our practices and limit our ability to resolve student concerns efficiently and cost effectively. If adopted in November 2017, the new policies would be effective in December 2018.

CONSOLIDATED RESULTS OF OPERATIONS

The summary of selected financial data table below should be referenced in connection with a review of the following discussion of our results of operations for the quarters and years to date ended September 30, ~~2017~~2018 and ~~2016~~2017 (dollars in thousands):

	For the Quarter Ended September 30,												For the Year to Date Ended September 30,												For the Quarter Ended September 30,												For the Year to Date Ended September 30,
		2017		% of Total Revenue				2016		% of Total Revenue				2017		% of Total Revenue				2016		% of Total Revenue				2018		% of Total Revenue				2017		% of Total Revenue				2018		% of Total Revenue				2017		% of Total Revenue
TOTAL REVENUE	$	144,986					$	167,625					$	453,317					$	549,137					$	145,690					$	144,986					$	435,791					$	453,317
OPERATING EXPENSES
Educational services and facilities ⁽¹⁾		37,788			26.1	%		51,393			30.7	%		114,367			25.2	%		170,993			31.1	%		27,201			18.7	%		37,788			26.1	%		84,437			19.4	%		114,367			25.2	%
General and administrative: ⁽²⁾
Advertising		33,927			23.4	%		45,272			27.0	%		105,759			23.3	%		122,088			22.2	%		34,155			23.4	%		33,927			23.4	%		97,013			22.3	%		105,759			23.3	%
Admissions		21,237			14.6	%		19,842			11.8	%		62,406			13.8	%		63,352			11.5	%		23,764			16.3	%		21,237			14.6	%		70,918			16.3	%		62,406			13.8	%
Administrative		37,493			25.9	%		38,152			22.8	%		114,363			25.2	%		128,586			23.4	%		30,991			21.3	%		37,493			25.9	%		103,584			23.8	%		114,363			25.2	%
Bad debt		6,420			4.4	%		8,457			5.0	%		21,630			4.8	%		23,332			4.2	%		7,932			5.4	%		6,420			4.4	%		21,675			5.0	%		21,630			4.8	%
Total general and administrative expense		99,077			68.3	%		111,723			66.7	%		304,158			67.1	%		337,358			61.4	%		96,842			66.5	%		99,077			68.3	%		293,190			67.3	%		304,158			67.1	%
Depreciation and amortization		3,582			2.5	%		5,215			3.1	%		11,368			2.5	%		16,986			3.1	%		2,364			1.6	%		3,582			2.5	%		7,049			1.6	%		11,368			2.5	%
Asset impairment		-			0.0	%		-			0.0	%		-			0.0	%		237			0.0	%
OPERATING INCOME (LOSS)		4,539			3.1	%		(706	)		-0.4	%		23,424			5.2	%		23,563			4.3	%
OPERATING INCOME																										19,283			13.2	%		4,539			3.1	%		51,115			11.7	%		23,424			5.2	%

PRETAX INCOME (LOSS)		5,095			3.5	%		(479	)		-0.3	%		24,901			5.5	%		23,990			4.4	%
PRETAX INCOME																										20,157			13.8	%		5,095			3.5	%		53,343			12.2	%		24,901			5.5	%
PROVISION FOR INCOME TAXES		1,597			1.1	%		21			0.0	%		11,143			2.5	%		8,776			1.6	%		5,089			3.5	%		1,597			1.1	%		11,527			2.6	%		11,143			2.5	%
Effective tax rate		31.3	%					4.4	%					44.7	%					36.6	%					25.2	%					31.3	%					21.6	%					44.7	%

INCOME (LOSS) FROM CONTINUING OPERATIONS		3,498			2.4	%		(500	)		-0.3	%		13,758			3.0	%		15,214			2.8	%
INCOME FROM CONTINUING OPERATIONS																										15,068			10.3	%		3,498			2.4	%		41,816			9.6	%		13,758			3.0	%
LOSS FROM DISCONTINUED OPERATIONS, net of tax		(476	)		-0.3	%		(186	)		-0.1	%		(1,273	)		-0.3	%		(1,050	)		-0.2	%		(211	)		-0.1	%		(476	)		-0.3	%		(706	)		-0.2	%		(1,273	)		-0.3	%

NET INCOME (LOSS)	$	3,022			2.1	%	$	(686	)		-0.4	%	$	12,485			2.8	%	$	14,164			2.6	%
NET INCOME																									$	14,857			10.2	%	$	3,022			2.1	%	$	41,110			9.4	%	$	12,485			2.8	%

(1)

Educational services and facilities expense includes costs directly attributable to the educational activities of our institutions, including: salaries and benefits of faculty, academic administrators and student support personnel, and costs of educational supplies and facilities, such as rents on campus leases, certain costs of establishing and maintaining computer laboratories and owned and leased facility costs. Also included in educational services and facilities expense are costs of other goods and services provided by our campuses, including costs of textbooks and laptop computers.

(2)

General and administrative expense includes salaries and benefits of personnel in corporate and campus administration, marketing, admissions, financial aid, accounting, human resources, legal and compliance. Other expenses within this expense category include costs of advertising and production of marketing materials, occupancy of the corporate offices and bad debt expense.

Revenue

Current quarter ~~and~~revenue increased slightly by 0.5% or $0.7 million compared to the prior year quarter, while current year to date revenue decreased ~~13.5%~~3.9% or ~~$22.6~~$17.5 million ~~and 17.4% or $95.8 million, respectively, as~~ compared to the prior ~~periods~~year period. The year to date decrease is driven by the ~~overall~~$25.5 million decline in ~~total student enrollments. Excluding the Transitional Group and Culinary Arts,~~revenue within our All Other Campuses segment, which no longer ~~enroll~~enrolls new students as they teach out each ~~campus,~~campus. Excluding All Other Campuses, revenue for ongoing operations increased ~~approximately 1.4%~~2.9% or ~~$2.0~~$4.2 million for the current quarter and ~~0.1%~~1.9% or ~~$0.4~~$8.0 million for the current year to date as compared to the prior periods.

The current quarter and year to date increase when excluding the ~~Transitional Group and Culinary Arts~~All Other Campuses segment was primarily driven by new and total enrollment growth ~~as well as the calendar redesign~~ at both CTU and AIU ~~which shifted more earnings days into the third quarter of 2017~~(University Group) as compared to ~~2016. The current~~the prior year periods. Total enrollment for the University Group improved by 5.8% as compared to the prior year quarter end and new enrollments improved by 39.0% and 6.6% for the quarter and year to date, ~~increase when excluding~~respectively, as compared to the ~~Transitional Group and Culinary Arts was primarily driven by an overall increase in new and total student enrollments.~~prior periods.

2829

Educational Services and Facilities Expense (dollars in thousands)

	For the Quarter Ended September 30,								For the Year to Date Ended September 30,									For the Quarter Ended September 30,						For the Year to Date Ended September 30,
		2017	% of Total Revenue			2016	% of Total Revenue			2017	% of Total Revenue			2016	% of Total Revenue				2018	% of Total Revenue		2017	% of Total Revenue		2018	% of Total Revenue		2017	% of Total Revenue
Educational services and facilities:
Academics & student related	$	21,319		14.7%	$	29,941		17.9%	$	72,700		16.0%	$	103,652		18.9%	��	$	20,974	14.4%	$	21,319	14.7%	$	64,913	14.9%	$	72,700	16.0%
Occupancy		16,469		11.4%		21,452		12.8%		41,667		9.2%		67,341		12.3%			6,227	4.3%		16,469	11.4%		19,524	4.5%		41,667	9.2%
Total educational services and facilities	$	37,788		26.1%	$	51,393		30.7%	$	114,367		25.2%	$	170,993		31.1%		$	27,201	18.7%	$	37,788	26.1%	$	84,437	19.4%	$	114,367	25.2%

The decrease in educational services and facilities expense for the current quarter and current year to date as compared to the respective prior year periods is primarily driven by a decrease within ~~academics~~occupancy expenses within our teach-out campuses as a result of the exit or subleases of facilities as campuses complete their teach-out. As campuses cease operations, a charge is recorded at the cease use date which represents the net present value of all future remaining lease obligations offset with any estimated sublease income. Occupancy expenses within the All Other Campuses segment decreased by 78.8% or $9.6 million and 76.1% or $22.8 million, respectively, for the quarter and year to date as compared to the prior year periods. Academics and student related ~~expenses~~expense decreased for the current quarter and year to date primarily related to teach-out campuses as these campuses continue to wind-down their operations, which was ~~slightly~~partially offset with an increase in academics and student related expenses for the University Group to support the ~~increases~~Company’s investments in ~~total student enrollment. Occupancy expenses also~~student-serving operations.

General and administrative expense decreased by 2.3% or $2.2 million and 3.6% or $11.0 million, respectively, for the current quarter and ~~current~~ year to date as compared to the respective prior year ~~periods~~periods. The current quarter and year to date improvement was primarily ~~due to decreases~~driven by decreased expenses within our teach-out ~~segments as a result~~segment of ~~exiting facilities as campuses complete their teach-out.~~

~~General~~85.3% or $6.6 million and ~~Administrative Expense (dollars in thousands)~~

~~General and administrative~~45.9% or $12.4 million, respectively, which was partially offset by increased expenses ~~decreased by 11.3% or $12.6 million~~within our University Group. The increased expenses within our University Group for the current quarter ~~as compared~~and current year to ~~the prior year quarter~~date were primarily ~~driven by advertising and bad debt expenses. The lower advertising expense is~~ related to ~~decreased~~higher admissions expenses for both AIU and CTU due to increased salary and related expenses to enhance student onboarding and investments in new admissions and advising centers in Arizona and Illinois as well as increased bad debt expense.

Advertising expense for the quarter remained relatively flat with an increase in advertising expense of $0.4 million at CTU, partially offset by a decrease in advertising expense of $0.2 million at AIU. Advertising expense for the year to date decreased by 8.3% or $8.7 million, primarily as a result of efficiencies developed within certain marketing channels that optimized our processes related to receiving prospective student inquiries. ~~Admissions~~

Administrative expenses ~~increased slightly~~ for the current quarter and year to date decreased by 17.3% or $6.5 million and 9.4% or $10.8 million, respectively, as compared to the prior year ~~quarter due to the investments~~periods. The decreases in ~~our new admissions and advising centers in Arizona. Administrative~~administrative expenses for the current quarter ~~as compared to the prior year quarter decreased slightly primarily driven by reductions within Culinary Arts which completed their teach-outs during the current quarter.~~

~~General~~ and ~~administrative expenses decreased by 9.8% or $33.2 million for the current~~ year to date as compared to the prior year periods was primarily related to ~~date primarily driven by advertising and administrative expenses. The lower advertising~~overall decreases in corporate expenses ~~and administrative expenses decreased for the reasons mentioned above. Admissions expenses decreased by approximately 1.5% or $0.9~~partially offset with an increase of $1.9 million for severance and related costs due to restructuring actions taken during the current quarter. The year to date ~~as compared to the prior year to date as the costs related to the investments in the admission and advising centers in Arizona during the~~decrease also includes a recovery of $2.5 million for past ~~two quarters were~~claims which was more than offset with ~~decreases in admissions expenses for our teach-out campuses as well as decreased costs~~increased legal settlements within ~~University in~~ the early part of the current year. As a percentage of revenue, administrative expenses have increased for the current year periods as compared to the prior year periods due to certain fixed administrative costs for the consolidated organization that do not decline upon teach-out of campuses.All Other Campuses segment.

Bad debt expense incurred by each of our segments during the quarters and years to date ended September 30, ~~2017~~2018 and ~~2016~~2017 was as follows (dollars in thousands):

Bad debt expenses ~~decreased~~for the current quarter increased by ~~24.1%~~23.6% or ~~$2.0~~$1.5 million and ~~7.3% or $1.7 million~~remained relatively flat for the current year to date, as compared to the respective prior year periods. The increased bad debt expenses within the University Group for the current quarter and ~~current~~ year to date ~~respectively,~~was primarily driven by an increase in reserve rates due to historical performance within the University Group segments and an increase in accounts receivable write-offs as compared to the prior year ~~periods primarily driven by decreases related to our teach-out campuses as our total student enrollment continues to decrease within those campuses as they wind-down their teach-out operations.~~periods. Additionally, CTU decreased by ~~$1.5 million and $0.5~~8.3% or $1.3 million for the current ~~quarter and current~~ year to date ~~respectively,~~ as compared to the prior year ~~periods~~period due to improvements in collections as well as increased efforts to assist students with completing their funding packages at the beginning of their academic ~~year. CTU’s improvement was slightly offset with increased bad debt expense within AIU~~year while the increase for the current quarter ~~and current year to date~~was a result of an increase in write-offs as compared to the prior year ~~periods. AIU~~quarter. The Company continues to focus on implementation of improvement to processes related to collection efforts and completion of ~~funding~~financial aid packages for students.

~~The operating~~Operating income ~~reported~~improved by 324.8% or $14.7 million and 118.2% or $27.7 million for the current quarter ~~improved~~and current year to ~~$4.5 million~~date, respectively, as compared to the prior year periods driven by reduced operating losses within our teach-out campuses partially offset with increased investments in student-serving operations and ~~remained relatively flat~~ongoing technology investments at ~~$23.4 million for~~our University segments. Improvements within operating losses from teach-out campuses were a result of fewer teach-out campuses remaining in the current quarter and current year to date as compared to the ~~respective~~ prior year periods. Operating losses within our Culinary Arts campuses, due to teach-outs and fixed costs associated with each campus, contributed to the decline in consolidated operating income. The operating losses from teach-out campuses were more than offset with operating income generated within our University Group, which was primarily driven by continued improvements in operating efficiencies and increased revenues.

For the quarter and year to date ended September 30, ~~2017,~~2018, we recorded a provision for income taxes of $5.1 million or 25.2% and $11.5 million or 21.6%, respectively, as compared to a provision for income taxes of $1.6 million or 31.3% ~~as compared to a provision for income taxes of less than $0.1~~and $11.1 million or ~~4.4%~~44.7% for the prior year quarter. We recorded $11.1 million or 44.7% of provision for income taxes for the year to date ended September 30, 2017 as compared to a provision of $8.8 million or 36.6% for the year to date ended September 30, 2016.periods. The effective tax rate for the quarter and year to date ended September 30, 2018 reflects the tax effect of expenses that are not deductible for tax purposes and other adjustments which on a relative basis are a higher percentage of projected full year earnings. The current quarter and year to date effective tax rate includes the impact of tax reserves, the tax effect of stock-based compensation and adjustments to increase the state deferred tax assets. The effect of these discrete items decreased the effective tax rate for the quarter and year to date by 2.7% and 5.2%, respectively. The effective tax rate for the quarter and year to date ended September 30, 2018 also reflects the reduction in the U.S. corporate tax rate from 35% to 21% resulting from the enactment of the Tax Cuts and Jobs Act that became effective in January 2018. For the full year 2018, we expect our effective tax rate to be between 22% and 24%. As of December 31, 2017, we had $215.5 million of federal net operating loss carry forwards which will be partially used in 2018 to offset federal taxable income. For the quarter and year to date ended September 30, 2017, the effective tax rate was primarily impacted by tax reserves and the tax effect of expenses that are not deductible for tax purposes. For the current quarter we recognized less than $0.1 million of benefit associated with the adoption of ASU 2016-09, Compensation – Stock Compensation (Topic 718), which decreased our quarterly effective tax rate by 0.6%. For the year to date ended September 30, 2017, we recognized a $1.1 million unfavorable adjustment associated with the adoption of ASU 2016-09, which increased the effective tax rate by 4.6%. The effective tax rate for the year to date ended September 30, 2016 was reduced by 8.8%, due to a $2.1 million favorable tax adjustment upon completion of a federal tax audit.

The following tables present unaudited segment results for the reported periods (dollars in thousands):

University Group. Current quarter and year to date revenue increased by ~~$2.0~~2.9% or $4.2 million and 1.9% or ~~1.4%~~$8.0 million, respectively, as compared to the prior year periods. Both AIU and ~~$0.4 million or 0.1%~~CTU experienced positive total enrollment growth of 11.7% and 2.8%, respectively, as compared to the ~~respective~~ prior ~~periods. The overall increase in revenue was primarily driven by the improvement in total student enrollments. AIU experienced positive total enrollments~~year quarter, and new enrollment growth of ~~5.7% as compared to the prior period, while revenue decreased by $1.5 million or 1.0% in~~6.6% each for the current year to date as compared to the prior ~~period, partially due~~year to ~~changes in course~~

~~sequencing made~~date. This growth drove increases to ~~assist students in progressing through their course~~revenue at AIU of ~~study. AIU experienced improvement in quarterly~~4.7% or $2.4 million and 2.4% or $3.6 million, for the current quarter and current year to date, respectively, and increases to revenue at CTU by ~~$1.6~~2.0% or $1.8 million and 1.6% or ~~3.3%~~$4.4 million, for the current quarter and current year to date, respectively, as compared to the prior year periods. New enrollments for the current quarter ~~primarily attributed~~significantly increased at AIU by 96.8% as compared to the ~~shift in earnings days during the current~~prior year quarter due to the ~~calendar redesign as well as improved total student enrollments. We expect to experience continued variability in comparisons for AIU as a result~~timing impact of the academic calendar redesign. ~~CTU contributed $0.4 million or 0.4%~~Additionally, AIU and ~~$1.9 million or 0.7% to the increase~~CTU’s enrollment growth for both the current quarter and year to date ~~respectively, while total enrollments increased 0.9%.~~were positively impacted by encouraging student interest in our programs and initiatives and investments and operating efficiencies in student-serving functions, including the admissions and advising centers in Arizona and Illinois, enhanced onboarding and orientation processes that we believe positively benefit student retention and investments in technology initiatives. Lastly, CTU’s new enrollment growth was positively impacted by growth in corporate partnerships which meaningfully contributed to new student enrollments.

Current quarter and year to date operating income for the University Group ~~increased $8.0~~decreased by 8.3% or $2.5 million and 2.8% or ~~36.9%, and $6.9~~$2.5 million, ~~or 8.7%,~~ respectively, as compared to the ~~respective~~ prior year periods. Operating income ~~increased~~decreased within both segments for the current quarter, with AIU contributing ~~$2.0~~$1.2 million ~~of the increase~~ and CTU contributing ~~$6.0~~$1.3 million, ~~of the increase~~ as compared to the prior year quarter. The current quarter was impacted by additional severance and related costs for restructuring actions taken to continue to drive efficiency and effectiveness within administrative support functions. Additionally, AIU and CTU both continue to invest in student-serving processes and operations and technology initiatives which drove an increase in operating expenses for the current quarter along with increased bad debt expenses which more than offset the increases in revenue. CTU’s operating income improved by ~~$8.0~~2.4% or $1.9 million ~~or 11.3%~~ for the ~~current year to date as compared to the prior period. AIU’s operating income decreased $1.0 million or 11.6% for the~~ current year to date as compared to the prior year ~~primarily driven by the~~period, which was more than offset with a decrease in ~~revenue and the investments in our admissions and advising center in Phoenix. Operating margins for CTU and AIU have increased by 6.6% and 3.9%~~operating income of $4.4 million or 54.7% for the current ~~quarter~~year to date at AIU as compared to the prior year ~~quarter, primarily due~~period. AIU’s decrease in operating income for the current year to ~~increased revenues~~date was driven by the investments and ~~improved efficiencies~~restructuring actions discussed above as well as increases in ~~advertising costs.~~bad debt and occupancy charges related to optimization of leased facilities.

All Other Campuses.~~Culinary Arts.~~ This segment includes our ~~LCB~~ campuses ~~which were announced for teach-out during December~~that are currently being taught out or have completed their teach-outs since January 1, 2015.

The current quarter and current year to date decline in revenue as compared to the ~~corresponding~~respective prior year periods is primarily a result of the ~~decision to teach-out~~decrease in total student enrollments as campuses complete their closures. The operating loss improved by $15.4 million or 80.7% and $24.5 million or 52.5% for the campuses. During the third quarter of 2017, the Company completed the teach-out of all remaining campuses and as of the fourth quarter of 2017, Culinary Arts will no longer be its own operating segment.

~~Transitional Group.~~ ~~This segment includes our non-LCB campuses that are currently being taught-out. The~~ current quarter and current year to date, ~~decline in revenue~~respectively, as compared to the ~~corresponding~~ prior year periods ~~resulted from a decrease~~primarily due to overall decreases in ~~total student enrollments.~~operating expenses as campuses cease operations.

A majority of these teach-out campuses have ceased operations as of September 30, 2018, with the two remaining campuses expected to cease operations by December 31, 2018. We expect revenue and operating expenses to continue to decline compared to prior periods as campuses wind down their operations through 2018.

Corporate and Other. This category includes unallocated costs that are incurred on behalf of the entire company. Corporate and Other operating loss for the current quarter ~~increased by $0.6 million or 11.0%~~ and ~~improved by $0.6 million or 3.3% for the~~current year to date ~~as compared to the respective prior periods. The increase in costs for the current quarter~~improved by $1.8 million or 29.6% and $5.7 million or 34.3%, respectively, as compared to the prior year ~~quarter~~periods. A recovery for past claims of $2.5 million was ~~primarily driven by timing of incentive-based compensation expenses as compared to~~recorded during the ~~prior year. The~~current year to ~~date overall decrease in cost compared to the prior year is primarily driven by reduced staff and other expenses.~~date.

A detailed discussion of the accounting policies and estimates that we believe are most critical to our financial condition and results of operations that require management’s most subjective and complex judgments in estimating the effect of inherent uncertainties is included under the caption “Summary of Critical Accounting Policies and Estimates” included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017. Note 2 “Summary of Significant Accounting Policies” of the notes to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 also includes a discussion of these and other significant accounting policies.

As of September 30, ~~2017,~~2018, cash, cash equivalents, restricted cash and available-for-sale short-term investments (“cash balances”) totaled ~~$175.9~~$193.0 million. Restricted cash and investment balances as of September 30, ~~2017~~2018 approximate ~~$7.9~~$4.7 million and include restricted short-term investments for certificates of deposit in addition to restricted cash to provide securitization for letters of credit. Our cash flows from operating activities have historically been adequate to fulfill our liquidity requirements. We have historically financed our operating activities, organic growth and acquisitions primarily through cash generated from operations and existing cash ~~balances and credit facility borrowings.~~balances. The recent losses from our ~~Transitional Group and Culinary Arts campuses~~All Other Campuses segment and associated lease payments for vacated spaces have driven a net cash usage in recent ~~years as well as payment of a legal settlement during the current year.~~years. However, as we ~~execute on~~near the end of our transformation strategy and complete the wind-down of our teach-out campuses, we expect our cash usage to moderate ~~through the remainder of 2017~~ and ~~to begin~~we have begun generating cash in 2018. We expect to end ~~2017~~2018 with cash, cash equivalents, restricted cash and available-for-sale short-term investments ~~net of borrowings,~~ in the range of ~~$160~~$215 million to ~~$165~~$220 million. These expectations are based upon, and subject to, the ~~updated~~ key assumptions and factors discussed above in the Management’s Discussion and Analysis under the heading ~~“2017 Third Quarter Overview.~~“Outlook.” We anticipate that we will be able to satisfy the cash requirements associated with, among other things, our working capital needs, capital expenditures and lease commitments through at least the next 12 months primarily with cash generated by operations and existing cash balances.

~~We continue to focus on our transformation strategy which we believe will transition CEC to a period of sustainable and responsible growth.~~ Our credit facility allows us to borrow up to a maximum amount of $95 million and is scheduled to mature on December 31, 2018. Amounts borrowed under the ~~Credit Agreement~~credit facility are required to be secured with 100% cash collateral.

Our strategy has been focused on building a strong balance sheet while prudently investing in organic growth projects. As we further build our cash balances, we will continue to evaluate diverse strategies to enhance shareholder value, including acquisitions of high-quality educational institutions and programs, while emphasizing organic student-serving investments at our Universities and maintaining adequate liquidity.

The discussion above reflects management’s expectations regarding liquidity; however, we are not able to assess the effect of loss contingencies on future cash requirements and liquidity. See Note 78 “Contingencies” to our unaudited condensed consolidated

financial statements. Further, as a result of the significance of the Title IV Program funds received by our students, we are highly dependent on these funds to operate our business. Any reduction in the level of Title IV Program funds that our students are eligible to receive or any impact on timing or our ability to receive ~~or retain~~ Title IV Program funds, or any requirement to post a significant letter of credit to ED, may have a significant impact on our operations and our financial condition. In addition, our financial performance is dependent on the level of student ~~enrollments~~enrollment which could be impacted by external factors. See Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

During the year to date ended September 30, ~~2017,~~2018, net cash flows provided by operating activities totaled $18.3 million compared to net cash flows used in operating activities ~~totaled~~of $29.1 ~~million compared to net cash provided by operating activities of $16.3~~ million for the year to date ended September 30, ~~2016.~~2017. The ~~increase~~improvement in cash ~~usage~~flow from operations as compared to the prior year is primarily driven by payments of $32.0 million of ~~payments for~~ legal settlements ~~during~~in the ~~first quarter of 2017 as well as increased payments for exit of leased facilities and incentive-based compensation expenses~~prior year to date as compared to $17.1 million in the ~~prior year.~~current year to date, lower operating losses at our teach-out campuses and stabilized operating performance within our ongoing operations.

Our primary source of cash flows from operating activities is tuition collected from our students. Our students derive the ability to pay tuition costs through the use of a variety of funding sources, including, among others, federal loan and grant programs, state grant programs, private loans and grants, ~~institution~~institutional payment plans, private and institutional scholarships and cash payments. For the ~~year~~years to date ended September 30, 2018 and 2017, approximately 78% and ~~2016, approximately~~ 77%, respectively, of our institutions’ cash receipts from tuition payments came from Title IV Program funding.

For further discussion of Title IV Program funding and alternative ~~private loan~~ funding sources for our students, see Item 1, “Business - Student Financial Aid and Related Federal Regulation,” in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

Our primary uses of cash to support our operating activities include, among other things, cash paid and benefits provided to our employees for services, to vendors for products and services, to lessors for rents and operating costs related to leased facilities, to suppliers for textbooks and other institution supplies, and to federal, state and local governments for income and other taxes.

During the years to date ended September 30, ~~2017~~2018 and ~~2016,~~2017, net cash flows used in investing activities totaled $3.1 million and $6.1 million, ~~and $37.9 million,~~ respectively.

Purchases and Sales of Available-for-Sale Investments. Purchases and sales of available-for-sale investments resulted in a $0.8 million net cash inflow and a $2.7 million net cash outflow ~~of $2.7 million and $38.0 million, respectively,~~ during the years to date ended September 30, 2018 and 2017, ~~and 2016.~~respectively.

Capital Expenditures. Capital expenditures ~~remained relatively flat~~increased to $4.0 million for the year to date ended September 30, 2018 as compared to $3.4 million for the ~~years~~year to date ended September 30, ~~2017 and 2016.~~2017. Capital expenditures represented less than 1.0% of total revenue for each of the years to date ended September 30, ~~2017~~2018 and ~~2016.~~2017. For the full year 2018, we expect capital expenditures to be approximately 1% to 2% of revenue.

During the year to date ended September 30, ~~2017,~~2018, net cash flows used in financing activities totaled $1.7 million compared to net cash flows provided by financing activities ~~totaled~~of $1.4 ~~million compared to net cash flows used in financing activities of $38.0~~ million for the prior year to date.

Payments of employee tax associated with stock compensation. Payments of employee tax associated with stock compensation were $3.3 million for the year to date ended September 30, 2018 and $1.2 million for the year to date ended September 30, ~~2017 and $0.6 million for the year to date ended September 30, 2016. The~~ Company now accounts for cash flows related to cash payments for employee taxes made by the Company on the employees’ behalf for withheld shares related to stock settlements as a financing activity. This change was a result of updated guidance issued by the Financial Accounting Standards Board (“FASB”) under Accounting Standards Update (“ASU”) No. 2016-09, ~~Compensation – Stock Compensation (Topic 718). Prior period amounts were recast to cash flows from financing activities from cash flows from operating activities to be comparable to current year reporting.~~2017.

Credit ~~Agreement~~Agreement.. On December 11, 2015, we entered into ~~an amendment to our~~a $95.0 million Amended and Restated Credit Agreement with BMO Harris Bank N.A., in its capacities as the initial lender and letter of credit issuer thereunder and the administrative agent for the lenders which from time to time may be parties to the Credit ~~Agreement which, among other things, decreased the revolving credit facility to $95.0 million.~~Agreement. The revolving credit facility under the Credit Agreement is scheduled to mature on December 31, ~~2018.~~2018 and amended our previous credit agreement entered into on October 31, 2014. Amounts borrowed under the Credit Agreement are required to be secured with 100% cash collateral. The Credit Agreement, which includes certain financial covenants, requires that fees and interest are payable monthly and quarterly in arrears, respectively, and principal is payable at maturity. ~~During the first quarter of 2016, we repaid the $38.0 million borrowed as of December 31, 2015.~~ As of September 30, ~~2017,~~2018, we have no outstanding borrowings under the revolving credit facility and we remain in compliance with the covenants of the Credit Agreement.

Selected condensed consolidated balance sheet account changes from December 31, ~~2016~~2017 to September 30, ~~2017~~2018 were as follows (dollars in thousands):

~~Total cash and cash equivalents, restricted cash and short-term investments~~ Student receivables, net: The increase is driven by a change in how we account for student receivables under ASC Topic 606 as well as timing impacts related to deposits of Title IV funds.

Accrued expenses -other: The decrease is driven by the ~~$32.0 million~~payment of ~~payments related to~~ legal settlements ~~during~~in the current ~~year.~~year which were included within accrued expenses as of December 31, 2017 as well as continued reductions in liabilities associated with remaining lease obligations for our vacated facilities.

~~Accrued expenses - payroll and related benefits~~ Other non-current liabilities: The decrease is driven by ~~the payments during the first quarter of 2017 of annual incentive compensation items as well as decreases~~continued reductions in ~~severance accruals during the current year.~~liabilities associated with remaining lease obligations for our vacated facilities.

~~Accrued expenses – other: The decrease is driven by the payments of legal settlements during the current year.~~

~~Deferred Rent: The decrease is driven by the continued exit of leased space as campuses complete their teach-out.~~

As of September 30, ~~2017,~~2018, future minimum cash payments under contractual obligations for our non-cancelable operating lease arrangements were as follows (dollars in thousands):

	2017 ⁽⁵⁾		2018		2019		2020		2021 & Thereafter		Total		2018 ⁽⁵⁾		2019		2020		2021		2022 & Thereafter		Total
Gross operating lease obligations ⁽¹⁾
Ongoing operations⁽²⁾	$	12,399	$	12,835	$	13,089	$	10,446	$	15,555	$	64,324	$	12,766	$	13,247	$	12,375	$	10,326	$	30,936	$	79,650
Teach-out campuses and discontinued operations ⁽³⁾		58,845		29,168		14,171		7,455		5,677		115,316		27,186		9,784		5,349		1,744		-		44,063
Total gross operating lease obligations	$	71,244	$	42,003	$	27,260	$	17,901	$	21,232	$	179,640	$	39,952	$	23,031	$	17,724	$	12,070	$	30,936	$	123,713

Sublease income ⁽⁴⁾
Ongoing operations ⁽²⁾	$	612	$	934	$	426	$	107	$	-	$	2,079	$	259	$	814	$	845	$	758	$	1,105	$	3,781
Teach-out campuses and discontinued operations ⁽³⁾		8,432		4,887		3,107		1,498		229		18,153		4,984		2,590		1,560		229		-		9,363
Total sublease income	$	9,044	$	5,821	$	3,533	$	1,605	$	229	$	20,232	$	5,243	$	3,404	$	2,405	$	987	$	1,105	$	13,144

Net operating lease obligations
Ongoing operations ⁽²⁾	$	11,787	$	11,901	$	12,663	$	10,339	$	15,555	$	62,245	$	12,507	$	12,433	$	11,530	$	9,568	$	29,831	$	75,869
Teach-out campuses and discontinued operations ⁽³⁾		50,413		24,281		11,064		5,957		5,448		97,163		22,202		7,194		3,789		1,515		-		34,700
Total net contractual lease obligations	$	62,200	$	36,182	$	23,727	$	16,296	$	21,003	$	159,408	$	34,709	$	19,627	$	15,319	$	11,083	$	29,831	$	110,569

ITEM 3. QUANTITATIVE AND ~~QUALITATI~~VEQUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to financial market risks, including changes in interest rates and foreign currency exchange rates. We use various techniques to manage our market ~~risk, including, from time to time, the use of derivative financial instruments.~~risk. We ~~do not use~~have no derivative financial instruments or derivative commodity instruments, and believe the risk related to cash equivalents and available for ~~speculative purposes.~~sale investments is limited due to the adherence to our investment policy, which focuses on capital preservation and liquidity. In addition, we utilize asset managers who conduct initial and ongoing credit

analysis on our investment portfolio and ensure that all investments are in compliance with our investment policy. Despite the investment risk mitigation strategies we employ, we may incur investment losses as a result of unusual and unpredictable market developments and may experience reduced investment earnings if the yields on investments deemed to be low risk remain low or decline further in this time of economic uncertainty.

We manage interest rate risk by investing excess funds in cash equivalents and available for sale investments bearing a combination of fixed and variable interest rates, which are tied to various market indices. Our future investment income may fall short of expectations due to changes in interest rates or we may suffer losses in principal if we are forced to sell investments that have declined in market value due to changes in interest rates. At September 30, 2018, a 10% increase or decrease in interest rates would not have a material impact on our future earnings, fair values or cash flows.

Any outstanding borrowings under our revolving credit facility bear annual interest at fluctuating rates under either the Base Rate Loan or as determined by the London Interbank Offered Rate (LIBOR) for the relevant currency, plus the applicable rate based on the type of loan. As of September 30, ~~2017,~~2018, we had no outstanding borrowings under this facility.

During ~~2017~~2018 we were subject to foreign currency exchange exposures arising from transactions denominated in currencies other than the U.S. dollar, and from the translation of foreign currency balance sheet accounts into U.S. dollar balance sheet accounts, primarily related to an equity investment. We are subject to risks associated with fluctuations in the value of the Euro ~~or British pound~~ versus the U.S. dollar.

Our financial instruments are recorded at their fair values as of September 30, ~~2017~~2018 and December 31, ~~2016.~~2017. We believe that the exposure of our consolidated financial position and results of operations and cash flows to adverse changes in interest rates or foreign currency exposure is not significant.

We completed an evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q (“Report”) under the supervision and with the participation of management, including our Chief Executive Officer and ~~Interim~~ Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation, our Chief Executive Officer and ~~Interim~~ Chief Financial Officer concluded that, as of September 30, ~~2017~~2018 our disclosure controls and procedures were effective to provide reasonable assurance that (i) the information required to be disclosed by us in this Report was recorded, processed, summarized, and reported within the time periods specified in the rules and forms provided by the U.S. Securities and Exchange Commission (“SEC”) and (ii) information required to be disclosed by us in our reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, ~~2017,~~2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our management does not expect that our disclosure controls and procedures or our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in a cost-effective control system, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our Company have been detected.

These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Note 78 “Contingencies” to our unaudited condensed consolidated financial statements is incorporated herein by reference.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, the reader should carefully consider the factors discussed in Part I, Item 1A “Risk Factors,” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2017, which was filed with the Securities and Exchange Commission on February ~~23, 2017.~~21, 2018.

The following table sets forth information regarding purchases made by us of shares of our common stock on a monthly basis during the year to date ended September 30, ~~2017:~~2018:

The exhibits required to be filed by Item 601 of Regulation S-K are listed in the “Exhibit Index,” which is attached hereto and incorporated by reference herein.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Delaware	36-3932190
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

231 N. Martingale Road Schaumburg, Illinois	60173
(Address of principal executive offices)	(Zip Code)

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐ ~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐
Emerging growth company	☐



		Page
PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets	1

	Unaudited Condensed Consolidated Statements of Income ~~(Loss)~~ and Comprehensive Income ~~(Loss)~~	2

	Unaudited Condensed Consolidated Statements of Cash Flows	3

	Notes to Unaudited Condensed Consolidated Financial Statements	4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	35

Item 4.	Controls and Procedures	3536

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	3637

Item 1A.	Risk Factors	3637

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3637
Item 6.	Exhibits	3637

SIGNATURES		3839

	For the Year to Date Ended September 30,						For the Year to Date Ended September 30,
	2017			2016			2018			2017

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	12,485		$	14,164		$	41,110		$	12,485
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Asset impairment		-			237
cash provided by (used in) operating activities:
Depreciation and amortization expense		11,368			16,986			7,049			11,368
Bad debt expense		21,516			23,201			21,579			21,516
Compensation expense related to share-based awards		3,616			2,251			4,143			3,616
Gain on disposition of property and equipment		-			(438	)
Deferred income taxes		10,282			7,373			11,174			10,282
Changes in operating assets and liabilities		(88,374	)		(47,510	)		(66,760	)		(88,374	)
Net cash (used in) provided by operating activities		(29,107	)		16,264
Net cash provided by (used in) operating activities								18,295			(29,107	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale investments		(202,050	)		(137,755	)		(190,726	)		(202,050	)
Sales of available-for-sale investments		199,340			99,718			191,555			199,340
Purchases of property and equipment		(3,426	)		(3,352	)		(3,952	)		(3,426	)
Proceeds on the sale of assets		-			3,600
Payments of cash upon sale of businesses		-			(62	)
Net cash used in investing activities		(6,136	)		(37,851	)		(3,123	)		(6,136	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock		2,548			581			1,608			2,548
Payment on borrowings		-			(38,000	)
Payments of employee tax associated with stock compensation		(1,170	)		(550	)		(3,313	)		(1,170	)
Net cash provided by (used in) financing activities		1,378			(37,969	)
Net cash (used in) provided by financing activities								(1,705	)		1,378

EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS:		48			(150	)		-			48

NET DECREASE IN CASH AND CASH EQUIVALENTS		(33,817	)		(59,706	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS								13,467			(33,817	)
CASH AND CASH EQUIVALENTS, beginning of the period		50,882			116,740			18,899			50,882
CASH AND CASH EQUIVALENTS, end of the period	$	17,065		$	57,034		$	32,366		$	17,065

	September 30, 2017									September 30, 2018
			Gross Unrealized									Gross Unrealized
	Cost		Gain		(Loss)			Fair Value		Cost		Gain		(Loss)			Fair Value
Short-term investments (available for sale):
Municipal bonds	$	1,350	$	-	$	-		$	1,350
Non-governmental debt securities		118,111		11		(74	)		118,048	$	139,700	$	17	$	(241	)	$	139,476
Treasury and federal agencies		32,462		4		(61	)		32,405		16,987		-		(127	)		16,860
Total short-term investments		151,923		15		(135	)		151,803		156,687		17		(368	)		156,336
Restricted short-term investments (available for sale):
Non-governmental debt securities		7,070		-		-			7,070		4,320		-		-			4,320
Total investments (available for sale)	$	158,993	$	15	$	(135	)	$	158,873	$	161,007	$	17	$	(368	)	$	160,656

	December 31, 2016									December 31, 2017
			Gross Unrealized									Gross Unrealized
	Cost		Gain		(Loss)			Fair Value		Cost		Gain		(Loss)			Fair Value
Short-term investments (available for sale):
Municipal bonds	$	4,050	$	-	$	-		$	4,050	$	830	$	-	$	-		$	830
Non-governmental debt securities		107,305		22		(113	)		107,214		125,485		7		(222	)		125,270
Treasury and federal agencies		36,480		10		(73	)		36,417		30,211		-		(133	)		30,078
Total short-term investments		147,835		32		(186	)		147,681		156,526		7		(355	)		156,178
Restricted short-term investments (available for sale):
Non-governmental debt securities		8,597		-		-			8,597		5,070		-		-			5,070
Total investments (available for sale)	$	156,432	$	32	$	(186	)	$	156,278	$	161,596	$	7	$	(355	)	$	161,248

	As of September 30, 2017								As of September 30, 2018
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Municipal bonds	$	-	$	1,350	$	-	$	1,350
Non-governmental debt securities		42,097		83,021		-		125,118	$	15,000	$	128,796	$	-	$	143,796
Treasury and federal agencies		-		32,405		-		32,405		-		16,860		-		16,860
Totals	$	42,097	$	116,776	$	-	$	158,873	$	15,000	$	145,656	$	-	$	160,656

	As of December 31, 2016								As of December 31, 2017
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Municipal bonds	$	-	$	4,050	$	-	$	4,050	$	-	$	830	$	-	$	830
Non-governmental debt securities		33,597		82,214		-		115,811		31,500		98,840		-		130,340
Treasury and federal agencies		-		36,417		-		36,417		-		30,078		-		30,078
Totals	$	33,597	$	122,681	$	-	$	156,278	$	31,500	$	129,748	$	-	$	161,248

	Maintenance Fee Payments		Maintenance Fee Payments
For the quarter ended September 30, 2018			$	355
For the quarter ended September 30, 2017	$	356	$	356
For the quarter ended September 30, 2016	$	340
For the year to date ended September 30, 2018			$	1,108
For the year to date ended September 30, 2017	$	1,013	$	1,013
For the year to date ended September 30, 2016	$	1,027

	For the Quarter Ended September 30, 2018								For the Year to Date Ended September 30, 2018
	CTU		AIU		All Other Campuses		Total		CTU		AIU		All Other Campuses		Total
Tuition	$	89,121	$	50,349	$	64	$	139,534	$	269,146	$	148,134	$	555	$	417,835
Technology fees		2,823		1,953		-		4,776		8,554		5,577		-		14,131
Other miscellaneous fees⁽¹⁾		426		145		1		572		1,415		335		20		1,770
Total tuition and fees		92,370		52,447		65		144,882		279,115		154,046		575		433,736
Other revenue⁽²⁾		745		57		6		808		1,873		158		24		2,055
Total revenue	$	93,115	$	52,504	$	71	$	145,690	$	280,988	$	154,204	$	599	$	435,791


	For the Quarter Ended September 30, 2017								For the Year to Date Ended September 30, 2017
	CTU		AIU		All Other Campuses		Total		CTU		AIU		All Other Campuses		Total
Tuition	$	87,603	$	48,287	$	3,501	$	139,391	$	265,163	$	144,942	$	25,907	$	436,012
Technology fees		2,751		1,696		-		4,447		8,313		5,151		-		13,464
Other miscellaneous fees⁽¹⁾		466		101		3		570		1,488		306		22		1,816
Total tuition and fees		90,820		50,084		3,504		144,408		274,964		150,399		25,929		451,292
Other revenue⁽²⁾		499		66		13		578		1,594		219		212		2,025
Total revenue	$	91,319	$	50,150	$	3,517	$	144,986	$	276,558	$	150,618	$	26,141	$	453,317


	December 31, 2017		Impact of Modified Retrospective Adoption of ASC 606		January 1, 2018 Post ASC 606 Adoption
Student receivables, net of allowance for doubtful accounts, current	$	18,875	$	6,663	$	25,538
Deferred revenue	$	22,897	$	6,663	$	29,560

	As of
	January 1, 2018			September 30, 2018
Gross deferred revenue	$	39,544		$	58,779
Gross contract assets		(9,984	)		(35,791	)
Deferred revenue, net	$	29,560		$	22,988

	Balance, Beginning of Period		Charges to Expense ⁽¹⁾		Amounts Written-off			Balance, End of Period		Balance, Beginning of Period		Charges to Expense ⁽¹⁾		Amounts Written-off			Balance, End of Period
For the quarter ended September 30, 2018										$	24,268	$	7,932	$	(8,649	)	$	23,551
For the quarter ended September 30, 2017	$	24,574	$	6,420	$	(6,332	)	$	24,662	$	24,574	$	6,420	$	(6,332	)	$	24,662
For the quarter ended September 30, 2016	$	21,008	$	8,457	$	(8,407	)	$	21,058
For the year to date ended September 30, 2018										$	22,534	$	21,675	$	(20,658	)	$	23,551
For the year to date ended September 30, 2017	$	23,142	$	21,630	$	(20,110	)	$	24,662	$	23,142	$	21,630	$	(20,110	)	$	24,662
For the year to date ended September 30, 2016	$	20,229	$	23,332	$	(22,503	)	$	21,058

	Balance, Beginning of Period		Severance & Related Charges ^{(1) (2)}		Payments			Non-cash Adjustments ⁽³⁾			Balance, End of Period		Balance, Beginning of Period		Severance & Related Charges		Payments			Non-cash Adjustments ⁽¹⁾			Balance, End of Period		��
For the quarter ended September 30, 2018													$	721	$	1,898	$	(273	)	$	(46	)	$	2,300
For the quarter ended September 30, 2017	$	4,969	$	-	$	(1,715	)	$	23		$	3,277	$	4,969	$	-	$	(1,715	)	$	23		$	3,277
For the quarter ended September 30, 2016	$	11,290	$	117	$	(1,546	)	$	240		$	10,101
For the year to date ended September 30, 2018													$	2,170	$	1,898	$	(1,607	)	$	(161	)	$	2,300
For the year to date ended September 30, 2017	$	8,686	$	-	$	(5,166	)	$	(243	)	$	3,277	$	8,686	$	-	$	(5,166	)	$	(243	)	$	3,277
For the year to date ended September 30, 2016	$	18,985	$	389	$	(9,176	)	$	(97	)	$	10,101

	Balance, Beginning of Period		Charges Incurred ⁽¹⁾		Net Cash Payments			Other ⁽²⁾		Balance, End of Period		Balance, Beginning of Period		Charges Incurred ⁽¹⁾		Net Cash Payments			Other ⁽²⁾		Balance, End of Period
For the quarter ended September 30, 2018												$	14,327	$	2,304	$	(5,388	)	$	-	$	11,243
For the quarter ended September 30, 2017	$	27,109	$	9,422	$	(9,094	)	$	2,932	$	30,369	$	27,109	$	9,422	$	(9,094	)	$	2,932	$	30,369
For the quarter ended September 30, 2016	$	17,140	$	4,912	$	(3,476	)	$	1,303	$	19,879
For the year to date ended September 30, 2018												$	20,763	$	7,901	$	(17,462	)	$	41	$	11,243
For the year to date ended September 30, 2017	$	36,814	$	14,628	$	(23,496	)	$	2,423	$	30,369	$	36,814	$	14,628	$	(23,496	)	$	2,423	$	30,369
For the year to date ended September 30, 2016	$	12,892	$	13,994	$	(11,476	)	$	4,469	$	19,879

	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Outstanding as of December 31, 2016		3,086		$	11.18
Outstanding as of December 31, 2017							2,868		$	9.86
Granted		360			8.60		337			14.10
Exercised		(274	)		8.29		(161	)		8.46
Cancelled		(295	)		23.87		(226	)		20.58
Outstanding as of September 30, 2017		2,877		$	9.84
Exercisable as of September 30, 2017		1,779		$	12.32
Outstanding as of September 30, 2018							2,818		$	9.59
Exercisable as of September 30, 2018							1,828		$	10.17

	Restricted Stock Units to be Settled in Shares of Stock					Restricted Stock Units to be Settled in Shares of Stock
	Units			Weighted Average Grant-Date Fair Value Per Unit		Units			Weighted Average Grant-Date Fair Value Per Unit
Outstanding as of December 31, 2016		1,712		$	4.63
Outstanding as of December 31, 2017							1,454		$	5.32
Granted		275			8.30		530			13.81
Vested ⁽¹⁾		(417	)		4.65		(702	)		4.94
Forfeited		(125	)		5.56		(125	)		7.14
Outstanding as of September 30, 2017		1,445		$	5.25
Outstanding as of September 30, 2018							1,157		$	9.24

	Deferred Stock Units to be Settled in Shares		Weighted Average Grant-Date Fair Value Per Unit		Deferred Stock Units to be Settled in Shares		Weighted Average Grant-Date Fair Value Per Unit
Outstanding as of December 31, 2016 ⁽¹⁾		76	$	4.44
Outstanding as of December 31, 2017 ⁽¹⁾						76	$	4.44
Granted		-		-		-		-
Vested		-		-		-		-
Forfeited		-		-		-		-
Outstanding as of September 30, 2017 ⁽¹⁾		76	$	4.44
Outstanding as of September 30, 2018 ⁽¹⁾						76	$	4.44

	Restricted Stock Units to be Settled in Cash
Outstanding as of December 31, ~~2016~~2017		~~1,192~~472
Granted		-
Vested		(~~647~~210	)
Forfeited		(6645	)
Outstanding as of September 30, ~~2017~~2018		~~479~~217

	Total Assets as of⁽¹⁾				Total Assets as of⁽¹⁾
	September 30, 2017		December 31, 2016		September 30, 2018		December 31, 2017
CTU	$	72,589	$	76,143	$	76,782	$	72,988
AIU		65,275		66,081		63,761		51,832
Total University Group		137,864		142,224		140,543		124,820
Corporate and Other		292,929		334,945		291,894		291,211
Subtotal		430,793		477,169		432,437		416,031
Culinary Arts ⁽²⁾		48,995		57,443
Transitional Group ⁽²⁾		15,316		18,736
All Other Campuses						27,254		29,098
Discontinued Operations		6,093		6,253		1,662		1,967
Total	$	501,197	$	559,601	$	461,353	$	447,096

	ACTUAL						ACTUAL
	For the Quarter Ended September 30,						For the Year to Date Ended September 30,
Adjusted Operating Income (Loss)	2018			2017			2018			2017
University Group and Corporate:
Operating income ^{(1) (2)}	$	22,969		$	23,622		$	73,279		$	70,041
Depreciation and amortization⁽²⁾		2,364			2,605			6,916			7,695
Unused space charges^{(2) (3)}		16			-			1,229			-
Severance and related costs ^{(2) (4)}		1,898			-			1,898			-
Adjusted Operating Income -- University Group and Corporate	$	27,247		$	26,227		$	83,322		$	77,736

All Other Campuses:
Operating loss ^{(1) (5)}	$	(3,686	)	$	(19,083	)	$	(22,164	)	$	(46,617	)
Depreciation and amortization ⁽⁵⁾		-			977			133			3,673
Unused space charges^{(3) (5)}		2,098			7,347			4,545			11,158
Significant legal settlements ⁽⁵⁾		134			-			9,595			-
Adjusted Operating Loss -- All Other Campuses	$	(1,454	)	$	(10,759	)	$	(7,891	)	$	(31,786	)

Total Company
Operating income	$	19,283		$	4,539		$	51,115		$	23,424
Depreciation and amortization		2,364			3,582			7,049			11,368
Unused space charges⁽³⁾		2,114			7,347			5,774			11,158
Severance and related costs ⁽⁴⁾		1,898			-			1,898			-
Significant legal settlements		134			-			9,595			-
Adjusted Operating Income -- Total Company	$	25,793		$	15,468		$	75,431		$	45,950

	NEW STUDENT ENROLLMENTS												TOTAL STUDENT ENROLLMENTS
	For the Quarter Ended September 30,						For the Year to Date Ended September 30,						As of September 30,
		2017	2016	% Change				2017	2016	% Change				2017	2016	% Change
CTU ⁽¹⁾		5,980	5,390		10.9	%		16,170	15,240		6.1	%		21,600	21,400		0.9	%
AIU⁽¹⁾		3,100	3,190		-2.8	%		11,020	10,600		4.0	%		11,100	10,500		5.7	%
Total University Group ⁽¹⁾		9,080	8,580		5.8	%		27,190	25,840		5.2	%		32,700	31,900		2.5	%
Culinary Arts ⁽²⁾		-	-	NM				-	990	NM				-	3,500	NM
Transitional Group ⁽³⁾		-	10	NM				-	90	NM				200	1,100	NM
Total		9,080	8,590		5.7	%		27,190	26,920		1.0	%		32,900	36,500		-9.9	%

Period	Total Number of Shares Purchased ⁽¹⁾		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽²⁾		Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ⁽²⁾
December 31, 2016							$	183,296,772
January 1, 2017—January 31, 2017		-	$	-		-		183,296,772
February 1, 2017—February 28, 2017		-		-		-		183,296,772
March 1, 2017—March 31, 2017		116,771		7.95		-		183,296,772
April 1, 2017—April 30, 2017		-		-		-		183,296,772
May 1, 2017—May 31, 2017		-		-		-		183,296,772
June 1, 2017—June 30, 2017		17,639		9.80		-		183,296,772
July 1, 2017—July 31, 2017		-		-		-		183,296,772
August 1, 2017—August 31, 2017		-		-		-		183,296,772
September 1, 2017—September 30, 2017		6,980		9.82		-		183,296,772
Total		141,390				-

	INDEX TO EXHIBITS
Exhibit Number	Exhibit	Incorporated by Reference to:

+31.1	Certification of CEO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

+31.2	Certification of CFO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

+32.1	Certification of CEO Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

+32.2	Certification of CFO Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

+101	The following financial information from our Quarterly Report on Form 10-Q for the nine months ended September 30, ~~2017,~~2018, filed with the SEC on November ~~2, 2017,~~1, 2018, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets as of September 30, ~~2017~~2018 and December 31, ~~2016,~~2017, (ii) the Unaudited Condensed Consolidated Statements of Income ~~(Loss)~~ and Comprehensive Income ~~(Loss)~~ for the three and nine months ended September 30, ~~2017~~2018 and September 30, ~~2016,~~2017, (iii) the Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2017~~2018 and September 30, ~~2016,~~2017, and (iv) Notes to Unaudited Condensed Consolidated Financial Statements
	___
	* Management contract or compensatory plan or arrangement required to be filed as an Exhibit on this Form 10-Q.
	+Filed herewith.

	CAREER EDUCATION CORPORATION

Date: November ~~2, 2017~~1, 2018	By:	/s/ TODD S. NELSON
		Todd S. Nelson President and Chief Executive Officer (Principal Executive Officer)

Date: November ~~2, 2017~~1, 2018	By:	/s/ ASHISH R. GHIA
		Ashish R. Ghia Senior Vice President and ~~Interim~~ Chief Financial Officer (Principal Financial Officer)