Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report: N/A

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, a 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~~

	September 30,			December 31,			June 30,			December 31,
	2017			2016
(In Thousands, Except Share and Per Share Amounts)							2020			2019
ASSETS	(unaudited)						(unaudited)
CURRENT ASSETS:
Cash and cash equivalents, unrestricted	$	16,276		$	49,507		$	91,536		$	108,687
Restricted cash		789			1,375			4,000			-
Restricted short-term investments		7,070			8,597
Total cash, cash equivalents and restricted cash								95,536			108,687
Short-term investments		151,803			147,681			250,265			185,488
Total cash and cash equivalents, restricted cash and short-term investments		175,938			207,160			345,801			294,175
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
Receivables, other, net		996			929
Student receivables, gross								72,666			84,874
Allowance for credit losses								(37,069	)		(29,856	)
Student receivables, net								35,597			55,018
Receivables, other								1,459			1,381
Prepaid expenses		8,769			14,446			9,843			7,299
Inventories		991			1,868			570			576
Other current assets		1,112			817			791			1,936
Assets of discontinued operations		171			148
Total current assets		209,111			248,193			394,061			360,385

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 $98,628 and $92,933 as of June 30, 2020 and December 31, 2019, respectively								28,335			26,006
Right of use asset, net								48,854			50,366
Goodwill		87,356			87,356			118,312			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 $2,511 and $1,400 as of June 30, 2020 and December 31, 2019, respectively								17,189			7,900
Student receivables, gross								3,133			3,352
Allowance for credit losses								(1,975	)		(2,108	)
Student receivables, net								1,158			1,244
Deferred income tax assets, net		147,990			158,272			41,361			60,169
Other assets		7,018			7,608			5,829			5,720
Assets of discontinued operations		5,922			6,105
TOTAL ASSETS	$	501,197		$	559,601		$	655,099		$	599,146
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Lease liability-operating							$	11,785		$	11,784
Accounts payable	$	11,780		$	10,099			11,909			11,533
Accrued expenses:
Payroll and related benefits		31,646			41,203			16,334			27,616
Advertising and marketing costs		10,732			10,253			11,289			10,479
Income taxes		1,898			1,830			1,919			1,376
Other		35,127			69,244			18,656			16,378
Deferred tuition revenue		22,401			28,364
Liabilities of discontinued operations		6,434			8,219
Deferred revenue								38,538			24,647
Total current liabilities		120,018			169,212			110,430			103,813

NON-CURRENT LIABILITIES:
Deferred rent obligations		16,253			30,713
Lease liability-operating								48,675			52,391
Other liabilities		23,384			31,751			17,310			11,647
Liabilities of discontinued operations		2,156			6,422
Total non-current liabilities		41,793			68,886			65,985			64,038

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
Preferred stock, $0.01 par value; 1,000,000 shares authorized; NaN issued or outstanding								-			-
Common stock, $0.01 par value; 300,000,000 shares authorized; 86,278,765 and 85,953,253 shares issued, 69,130,749 and 70,151,357 shares outstanding as of June 30, 2020 and December 31, 2019, respectively								863			860
Additional paid-in capital		619,483			613,325			646,849			639,335
Accumulated other comprehensive income (loss)		144			(258	)
Accumulated deficit		(63,745	)		(76,230	)
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	)
Accumulated other comprehensive income								941			344
Retained earnings								75,344			18,071
Treasury stock, at cost; 17,148,016 and 15,801,896 shares as of June 30, 2020 and December 31, 2019, respectively								(245,313	)		(227,315	)
Total stockholders' equity		339,386			321,503			478,684			431,295
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	501,197		$	559,601		$	655,099		$	599,146

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

	For the Quarter Ended June 30,						For the Year to Date Ended June 30,
(In Thousands, Except Per Share Amount)	2020			2019			2020			2019
REVENUE:
Tuition and fees	$	175,499		$	155,779		$	345,893		$	313,007
Other		536			662			1,136			1,287
Total revenue		176,035			156,441			347,029			314,294

OPERATING EXPENSES:
Educational services and facilities		28,676			25,350			55,587			51,677
General and administrative		105,840			128,672			209,369			227,994
Depreciation and amortization		4,151			2,235			6,790			4,468
Asset impairment		-			-			612			-
Total operating expenses		138,667			156,257			272,358			284,139
Operating income		37,368			184			74,671			30,155

OTHER INCOME:
Interest income		1,011			1,592			2,498			3,032
Interest expense		(43	)		(40	)		(84	)		(82	)
Miscellaneous income		125			45			112			271
Total other income		1,093			1,597			2,526			3,221

PRETAX INCOME		38,461			1,781			77,197			33,376
Provision for income taxes		10,272			2,302			19,876			8,709
INCOME (LOSS) FROM CONTINUING OPERATIONS		28,189			(521	)		57,321			24,667

LOSS FROM DISCONTINUED OPERATIONS, net of tax		(22	)		(38	)		(48	)		(435	)

NET INCOME (LOSS)		28,167			(559	)		57,273			24,232

NET INCOME (LOSS) PER SHARE - BASIC:
Income (loss) from continuing operations	$	0.41		$	(0.01	)	$	0.82		$	0.35
Loss from discontinued operations		-			-			-			-
Net income (loss) per share	$	0.41		$	(0.01	)	$	0.82		$	0.35

NET INCOME (LOSS) PER SHARE - DILUTED:
Income (loss) from continuing operations	$	0.40		$	(0.01	)	$	0.80		$	0.34
Loss from discontinued operations		-			-			-			-
Net income (loss) per share	$	0.40		$	(0.01	)	$	0.80		$	0.34

WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		69,094			70,105			69,467			69,972
Diluted		70,900			70,105			71,350			71,782

For the Quarter Ended September 30,

For the Year to Date Ended September 30,

2017

2016

2017

2016

REVENUE:

Tuition and fees

$
144,408

$
166,819

$
451,292

$
546,036

Other

578

806

2,025

3,101

Total revenue

144,986

167,625

453,317

549,137

OPERATING EXPENSES:

Educational services and facilities

37,788

51,393

114,367

170,993

General and administrative

99,077

111,723

304,158

337,358

Depreciation and amortization

3,582

5,215

11,368

16,986

Asset impairment

-

-

-

237

Total operating expenses

140,447

168,331

429,893

525,574

Operating income (loss)

4,539

(706
)

23,424

23,563

OTHER INCOME:

Interest income

474

334

1,328

900

Interest expense

(114
)

(117
)

(340
)

(469
)
Miscellaneous income (expense)

196

10

489

(4
)
Total other income

556

227

1,477

427

PRETAX INCOME (LOSS)

5,095

(479
)

24,901

23,990

Provision for income taxes

1,597

21

11,143

8,776

INCOME (LOSS) FROM CONTINUING OPERATIONS

3,498

(500
)

13,758

15,214

LOSS FROM DISCONTINUED OPERATIONS, net of tax

(476
)

(186
)

(1,273
)

(1,050
)

NET INCOME (LOSS)

3,022

(686
)

12,485

14,164

OTHER COMPREHENSIVE INCOME, net of tax:

Foreign currency translation adjustments

105

47

368

143

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

NET INCOME (LOSS) PER SHARE - BASIC and DILUTED:

Income (loss) from continuing operations

$
0.05

$
(0.01
)

$
0.20

$
0.22

Loss from discontinued operations

(0.01
)

-

(0.02
)

(0.01
)
Net income (loss) per share

$
0.04

$
(0.01
)

$
0.18

$
0.21

WEIGHTED AVERAGE SHARES OUTSTANDING:

Basic

69,082

68,460

68,897

68,328

Diluted

70,865

68,460

70,660

68,889

	For the Quarter Ended June 30,					For the Year to Date Ended June 30,
(In Thousands)	2020		2019			2020		2019
NET INCOME (LOSS)	$	28,167	$	(559	)	$	57,273	$	24,232
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
Foreign currency translation adjustments		53		35			5		(17	)
Unrealized gain on investments		1,431		371			592		770
Total other comprehensive income		1,484		406			597		753
COMPREHENSIVE INCOME (LOSS)	$	29,651	$	(153	)	$	57,870	$	24,985

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

~~UNAUDITED~~ CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

	Common Stock					Treasury Stock								Accumulated Other
(In Thousands)	Issued Shares			$0.01 Par Value		Purchased Shares			Cost			Additional Paid-in Capital		Comprehensive Income (Loss)			Retained Earnings			Total
BALANCE, April 1, 2020		86,209		$	862		(17,148	)	$	(245,311	)	$	642,958	$	(543	)	$	47,177		$	445,143
Net income		-			-		-			-			-		-			28,167			28,167
Foreign currency translation		-			-		-			-			-		53			-			53
Unrealized gain on investments		-			-		-			-			-		1,431			-			1,431
Share-based compensation expense		-	��		-		-			-			3,291		-			-			3,291
Common stock issued		70			1		-			(2	)		600		-			-			599
BALANCE, June 30, 2020		86,279		$	863		(17,148	)	$	(245,313	)	$	646,849	$	941		$	75,344		$	478,684

	Common Stock					Treasury Stock								Accumulated Other
(In Thousands)	Issued Shares			$0.01 Par Value		Purchased Shares			Cost			Additional Paid-in Capital		Comprehensive Income (Loss)			Accumulated Deficit			Total
BALANCE, April 1, 2019		85,659		$	857		(15,556	)	$	(223,232	)	$	629,768	$	49		$	(27,120	)	$	380,322
Net loss		-			-		-			-			-		-			(559	)		(559	)
Foreign currency translation		-			-		-			-			-		35			-			35
Unrealized gain on investments		-			-		-			-			-		371			-			371
Share-based compensation expense		-			-		-			-			1,037		-			-			1,037
Common stock issued		9			-		(2	)		(31	)		73		-			-			42
BALANCE, June 30, 2019		85,668		$	857		(15,558	)	$	(223,263	)	$	630,878	$	455		$	(27,679	)	$	381,248

	Common Stock					Treasury Stock								Accumulated Other
(In Thousands)	Issued Shares			$0.01 Par Value		Purchased Shares			Cost			Additional Paid-in Capital		Comprehensive Income (Loss)			Retained Earnings			Total
BALANCE, January 1, 2020		85,953		$	860		(15,802	)	$	(227,315	)	$	639,335	$	344		$	18,071		$	431,295
Net income		-			-		-			-			-		-			57,273			57,273
Foreign currency translation		-			-		-			-			-		5			-			5
Unrealized gain on investments		-			-		-			-			-		592			-			592
Treasury stock purchased		-			-		(1,284	)		(17,309	)		-		-			-			(17,309	)
Share-based compensation expense		-			-		-			-			6,503		-			-			6,503
Common stock issued		326			3		(62	)		(689	)		1,011		-			-			325
BALANCE, June 30, 2020		86,279		$	863		(17,148	)	$	(245,313	)	$	646,849	$	941		$	75,344		$	478,684

	Common Stock					Treasury Stock								Accumulated Other
(In Thousands)	Issued Shares			$0.01 Par Value		Purchased Shares			Cost			Additional Paid-in Capital		Comprehensive Income (Loss)			Accumulated Deficit			Total
BALANCE, January 1, 2019		85,174		$	852		(15,401	)	$	(220,700	)	$	628,295	$	(298	)	$	(52,946	)	$	355,203
Net income		-			-		-			-			-		-			24,232			24,232
Foreign currency translation		-			-		-			-			-		(17	)		-			(17	)
Unrealized gain on investments		-			-		-			-			-		770			-			770
Adjustment for change in accounting method		-			-		-			-			-		-			1,035			1,035
Share-based compensation expense		-			-		-			-			2,406		-			-			2,406
Common stock issued		494			5		(157	)		(2,563	)		177		-			-			(2,381	)
BALANCE, June 30, 2019		85,668		$	857		(15,558	)	$	(223,263	)	$	630,878	$	455		$	(27,679	)	$	381,248

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

~~Career Education’s~~Perdoceo’s academic institutions offer a quality postsecondary education primarily online to a diverse student population, ~~in a variety of disciplines through online,~~along with campus-based and blended learning programs. ~~Our two~~Our2 regionally accredited universities – Colorado Technical University (“CTU”) and 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~~offer students ~~online with~~industry-relevant and career-focused degree programs that are designed to meet the educational ~~demands~~needs of today’s busy adults. ~~AIU~~CTU and ~~CTU~~AIU continue to show innovation in higher education, advancing ~~new~~ personalized learning technologies like their intellipath~~™ adaptive~~^® learning ~~platform. Career Education~~platform and using data analytics and technology to support students and enhance learning. Perdoceo 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 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 locations and web links to ~~Career Education’s colleges,~~Perdoceo’s institutions ~~and universities~~ can be found at ~~www.careered.com.~~www.perdoceoed.com.

As used in this Quarterly Report on Form 10-Q, the terms ~~“we,~~“we,” “us,” “our,” “the ~~Company”~~Company,” “Perdoceo” and ~~“CEC”~~“PEC” refer to ~~Career~~Perdoceo 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.~~institutions.

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~~June 30, ~~2017~~2020 are not necessarily indicative of the results that may be expected for the full year ending December 31, ~~2017.~~2020.

The unaudited condensed consolidated financial statements presented herein include the accounts of ~~Career~~Perdoceo Education Corporation and our wholly-owned ~~subsidiaries (collectively “CEC”).~~subsidiaries. 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 postsecondary education provider that offers a variety of ~~2017, we organized~~academic programs. We organize our business across ~~four~~2 reporting segments: CTU and AIU ~~(comprises~~ (collectively referred to as the “University ~~Group); Culinary Arts~~Group”).

On March 2, 2020, the Company acquired substantially all of the assets of Trident University International (“Trident University”). Trident University’s operations were brought within the AIU segment, preserving the “Trident” name and ~~Transitional Group (comprises Career Schools Group). Campuses~~programs as part of AIU’s operations. Results of operations related to the acquisition of substantially all of the assets of Trident University (the “Trident acquisition”) are not material to our consolidated results of operations and are included in our Transitional Group segment are currently being taught out and no longer enroll new students. These campuses employ a gradual teach-out process, enabling them to continue to operate while current students have a reasonable opportunity to complete their coursethe unaudited condensed consolidated financial statements from the date 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, the Company completed the teach-out of 17 campuses: Sanford-Brown Las Vegas and the remaining 16 Le Cordon Bleu campuses, which continue to be reported within the Transitional Group and Culinary Arts segments, respectively, as of September 30, 2017 in accordance with ASC Topic 360 – ~~Property, Plant and Equipment, which limits discontinued operations reporting.~~acquisition. See Note 3 “Business Acquisition” for further information.

Effective January ~~2017,~~1, 2020, we implemented FASB ASC Topic 326 – Financial Instruments - Credit Losses. This guidance requires a financial asset measured at amortized cost basis to be presented at the ~~Company now accounts~~net amount expected to be collected and credit losses relating to available-for-sale debt securities to be recorded through an allowance for ~~cash flows~~credit losses. The guidance under Topic 326 impacts accounting for credit losses with the most significant relevance to our accounting for credit losses 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. This change was a result of updatedstudent receivables. The guidance ~~issued by the 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. See Note 3 “Recent Accounting Pronouncements” for further discussion.

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, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation (Topic 718):~~ ~~Scope of Modification Accounting.~~ ~~The amendments in this ASU provide clarity and reduce both diversity in practice and cost and complexity when applying the guidance in~~ Topic 718, Compensation – Stock Compensation, to a change to the terms or conditions of a 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 changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. For all public entities, ASU 2017-09 is effective for annual periods and interim periods beginning after December 15, 2017; early adoption is permitted. We have evaluated and early adopted this guidance. The adoption326 did not materially impact ~~the~~our presentation of our financial condition, results of operations and disclosures. See Note 7 “Student Receivables” for further information.

Effective January 1, 2020, the Company reclassified non-current assets of discontinued operations within other non-current assets and current liabilities of discontinued operations within current other accrued expenses. This reclassification was not material to our condensed consolidated balance sheets. Prior period amounts were recast to be comparable to current year reporting.

On March 2, 2020, the Company acquired substantially all of the assets of Trident University, a regionally accredited university offering online undergraduate, master’s and doctoral programs with a strong focus on graduate programs. Trident University’s operations were brought within the scope of the state licensure, accreditation and Department of Education approval of AIU, with Trident University relinquishing its accreditor and Department approvals. Trident University’s programs are now offered by AIU under the “Trident” name. The combined institution continues to serve existing and future students with a broader range of program offerings and resources.

On the date of acquisition, the Company made a cash payment of $38.1 million for the Trident University assets. Pursuant to the purchase agreement, $4.0 million of this payment was set aside in an escrow account to secure indemnification obligations of the seller after closing and is reflected as restricted cash on our condensed consolidated balance sheets. A subsequent cash payment of $5.7 million was made to the seller during July 2020 after finalization of Trident University’s results measured in terms of its revenue and EBITDA (as determined pursuant to the purchase agreement for the transaction) during the 12-month period ended December 31, 2019 and a final working capital adjustment calculated pursuant to the purchase agreement. The initial payment and the post-closing payment were fully funded with the Company’s available cash balances generated from operating activities.

The purchase price of $43.8 million was allocated to preliminary estimated fair values of acquired tangible and identifiable intangible assets of $53.1 million and assumed liabilities of $9.3 million as of March 2, 2020. Intangible assets acquired include a trade name with a fair value of $1.0 million and student relationships and course curriculum with an aggregate fair value of $9.4 million. Based on our preliminary purchase price allocation, we have recorded goodwill of $31.0 million. We expect substantially all of this goodwill balance to be deductible for income tax reporting purposes. Subsequent adjustments may be made to the purchase price allocation once finalized.

The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of March 2, 2020 (dollars in thousands):

In ~~January 2017,~~March 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of Effects of Reference Rate Reform on Financial Reporting. This ASU ~~No. 2017-04, Intangibles – Goodwill~~provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and ~~Other (Topic 350):~~ ~~Simplifying the Test~~exceptions for ~~Goodwill Impairment.~~ ~~The amendments in this ASU modify the concept of impairment from the condition~~applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that ~~exists when the carrying amount of goodwill exceeds its implied fair value~~reference LIBOR or another reference rate expected 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.be discontinued. For all ~~public~~ entities, ASU ~~2017-04~~2020-04 is effective ~~for annual periods and interim periods beginning after~~as of March 22, 2020 through December ~~15, 2019; early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates on or after January 1, 2017.~~22, 2022. We have evaluated and adopted this guidance ~~beginning 2017.~~effective March 22, 2020. The adoption did not significantly impact the presentation of our financial condition, results of operations and disclosures.

In ~~January 2017,~~August 2018, the FASB issued ASU No. ~~2017-03,~~2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting ~~Changes and Error Corrections (Topic 250) and Investments – Equity Method and Joint Ventures (Topic 323):~~ ~~Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings~~.for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. The amendments in this ASU ~~announced disclosure of~~provide clarifications which align the ~~impact~~requirements for capitalizing implementation costs incurred in a hosting arrangement that ~~recently issued~~is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software or software licenses. The accounting ~~standards will have on~~for the ~~financial statements~~service element of a ~~registrant when such standards are adopted in~~hosting arrangement that is a ~~future period. The amendment provides SEC staff views that a registrant should evaluate ASUs that have~~service contract is 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 the accounting for 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 changes 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. For all public entities, ASU 2016-18 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.these amendments. We have evaluated and adopted this guidance ~~beginning 2017 for all periods presented.~~effective January 1, 2020. The adoption did not significantly impact the presentation of our financial condition, results of operations and disclosures.

In ~~March 2016,~~August 2018, the FASB issued ASU No. ~~2016-07, Investments~~2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – ~~Equity Method and Joint Ventures (Topic 323):~~ ~~Simplifying the Transition~~Changes to the ~~Equity Method of Accounting~~Disclosure Requirements for Fair Value Measurement. The amendments in this ASU ~~eliminate~~include removals from, modifications of and additions to the ~~requirement that when an investment qualifies for use~~disclosure requirements on fair value measurements, including the consideration of costs and benefits. The guidance removed the requirements of the ~~equity method as a result~~amount of ~~an increase~~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. This ASU also added additional requirements regarding changes in ~~the level of ownership interest or degree of influence, an investor must adjust the investments, results of operations,~~unrealized gains 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 qualifylosses for the ~~equity method of accounting to recognize earnings as unrealized holding gains or losses~~period included in ~~accumulated~~ other comprehensive ~~income. For all entities, ASU 2016-07 is effective~~(loss) income for ~~annual periods~~recurring Level 3 fair value measurements held at the end of the reporting period and ~~interim periods beginning after December 15, 2016.~~the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. 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.~~January 1, 2020. 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.~~ 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 and interim periods. 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 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 and interim periods. 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 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 adoption is permitted for all organizations for annual periods and interim periods. 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~~The standard replaces today’s “incurred loss” approach with an “expected loss” model for ~~annual periods~~instruments measured at amortized cost. We completed the assessment of our evaluation of the new standard on our accounting policies 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 evaluatingadopted this guidance ~~and believe the~~effective January 1, 2020 using a modified retrospective approach without restating prior comparative periods. The adoption ~~will~~of this guidance did not significantly impact the presentation of our financial condition, results of operations and disclosures.

In ~~February 2016,~~December 2019, the FASB issued ASU No. ~~2016-02, Leases~~2019-12, Income Taxes (Topic ~~842)~~740): Simplifying the Accounting for Income Taxes. 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 amendmentamendments in this ASU ~~requires recognition~~simplify the accounting for income taxes by removing the following exceptions: the exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items, the exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment, the exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary and the exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The amendments in this ASU also simplify the accounting for income taxes by requiring that an entity recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the goodwill recorded for US GAAP purposes was originally recognized and when it should be considered a ~~lease liability~~separate transaction, specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a ~~right~~legal entity that is not subject to ~~use asset at~~tax in its separate financial statements with some exceptions, requiring that an entity reflect the ~~lease inception date.~~effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date and making minor codification improvements for income taxes related to employee stock ownership plans. For all public business entities, ASU ~~2016-02~~2019-12 is effective for annual periods and interim periods beginning after December 15, ~~2018;~~2020; 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~~permitted for ~~real estate leases and real estate subleases. The Company expects to~~public organizations for which financial statements have a material amount now reported as a right of use asset and lease liability related to these leases as well as expects to separate lease components from the non-lease components for recognition. We will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach starting fiscal year 2017.not yet been issued. We are currently evaluating this guidance and ~~believe~~ the ~~adoption will significantly~~ impact on the presentation of our financial condition, results of operations and ~~disclosures.~~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 Accounting Standards, which will supersede virtually all existing revenue recognition guidance under generally accepted accounting principles in the United States. 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.

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 approach 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 immaterial 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.

Investments consist of the following as of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016~~2019 (dollars in thousands):

In the table above, unrealized holding gains (losses) ~~as of September 30, 2017~~ 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~~June 30, ~~2017,~~2020, we held investments that are required to be measured at fair value on a recurring basis. These investments ~~(available-for-sale)~~(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~~All of our available for sale investments were measured ~~at fair value on a recurring basis subject to the disclosure requirements~~under Level 2 as of ~~FASB ASC Topic 820 –~~ ~~Fair Value Measurements~~ ~~at September~~June 30, ~~2017~~2020 and December 31, ~~2016 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~~June 30, ~~2017,~~2020, our investment in an equity affiliate equated to a 30.7%, or ~~$3.3~~$2.8 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 each of the quarters and years to date ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, we recorded approximately $0.1 million ~~and $0.2 million~~ of ~~loss, respectively, and during the years to date ended September 30, 2017 and September 30, 2016, we recorded $0.2 million and $1.0 million of loss, respectively,~~gain for each respective period, related to our proportionate investment in CCKF within miscellaneous income ~~(expense)~~ on our unaudited condensed consolidated statements of ~~income (loss) and comprehensive~~ income (loss).

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~~during the quarters and years to date ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019 were as follows (dollars in thousands):

(1)During the first quarter of 2020, the Company prepaid approximately $1.4 million of maintenance payments, of which approximately $0.4 million and $0.8 million was recognized as expense for the quarter and year to date ended June 30, 2020, respectively.

~~During the fourth quarter of 2015,~~On December 27, 2018, the Company; its wholly-owned subsidiary, CEC Educational Services, ~~LLC (“CEC-ES”);~~LLC; 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”)~~credit agreement with BMO Harris Bank N.A., in its capacities as the ~~initial~~sole lender, ~~and~~the 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~~credit agreement. The credit agreement provides the Company with the benefit of a $50.0 million 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.~~January 20, 2022. The loans and letter of credit obligations under the ~~Credit Agreement~~credit agreement are required to be 100% secured ~~by 100%~~with cash ~~collateral.~~and marketable securities deposited with the bank. As of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, there were no0 outstanding borrowings under the revolving credit facility.

The following tables disaggregate our revenue by major source for the quarters and years to date ended June 30, 2020 and 2019 (dollars in thousands):

(3) AIU includes revenue related to the Trident acquisition commencing on the March 2, 2020 date of acquisition.

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 and graduation 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. Academic terms 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 8 - 12 weeks in length.

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. For AIU’s Trident programs, students are billed as they register for courses, including courses related to future terms. Any billings for future terms would meet the definition of a contract asset as we do not have the unconditional right to receive payment as the academic term has not yet started. Contract assets related to future terms are offset against the deferred revenue associated with the respective future term.

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, with the exception of the contract assets associated with future terms. 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 is made to withdrawn students for the portion entitled to be refunded under each institutions’ refund policy; we receive funds to apply against the contract asset balance; or a student makes a change to the number of classes they are enrolled in 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. Contract assets associated with future terms remain as contract assets until the academic term begins and the student reaches the point in that academic term that they are no longer entitled to a refund.

The amount of contract assets which are being offset with deferred revenue balances as of June 30, 2020 and December 31, 2019 were as follows (dollars in thousands):

Changes in our deferred revenue balances for the quarters and years to date ended June 30, 2020 and 2019 were as follows (dollars in thousands):

Our students pay for their costs through a variety of funding sources, including 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, 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 $1.2 million and $1.1 million as of June 30, 2020 and December 31, 2019, respectively. 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 $0.3 million of revenue for each of the quarters ended June 30, 2020 and 2019, and $0.6 million and $0.5 million for the years to date ended June 30, 2020 and 2019, respectively, for payments received from withdrawn students.

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~~credit losses 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~~charge interest or fees on ~~past~~any of our payment plans.

approximately 30 weeks in length. Generally, a student receivable balance is written off once a student is out of school and it reaches greater than 90 days past due. ~~Although we analyze past due receivables, it is not practical~~

Effective January 1, 2020, the Company adopted ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, commonly known as “CECL.” This guidance impacted our accounting for the allowance for credit losses (formerly referred to ~~provide an aging of our non-current~~as “doubtful accounts”) for 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.receivables.

Our standard student receivable allowance is based on an estimate of lifetime expected credit losses for student receivables. Our estimation methodology considers a number of quantitative and qualitative 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.~~credit losses. 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, internal cash collection forecasts and the ability to complete the federal financial aid process with the student. 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.

Student Receivables Under Extended Payment Plans ~~and Recourse Loan Agreements~~

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 toWe have an immaterial amount of student receivables that are due greater than 12 months from the date of 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.

condensed consolidated balance sheets. As of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, the amount of non-current student receivables under ~~these programs,~~payment plans that are longer than 12 months in duration, net of allowance for ~~doubtful accounts,~~credit losses, was ~~$2.6~~$1.2 million ~~and $3.1 million, respectively.~~each.

We define student receivables as a portfolio segment under ASC Topic 326 – Financial Instruments – Credit Losses.Changes in our current and non-current receivables allowance related to our student receivable portfolio in accordance with the guidance effective January 1, 2020 under ASU 2016-13 for the quarters and years to date ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019 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~~We lease most of our administrative and educational facilities under non-cancelable operating leases expiring at various dates through 2028. Lease terms generally range from five to ten years with one to four renewal options for extended terms. In most cases, we are required to make additional payments under facility operating leases for taxes, insurance and other operating expenses incurred during the ~~past several years,~~operating lease period, which are typically variable in nature.

We determine if a contract contains a lease when the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. Upon identification and commencement of a lease, we ~~have carried out reductions in force~~establish a right of use (“ROU”) asset and a lease liability.

Quantitative information related to leases is presented in 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. The majority of these teach-out campuses have ceased operations as of September 30, 2017, with the remainder expected to cease operations through 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 and 2016 (dollars in thousands):

~~The current portion~~For certain of our leased locations, primarily those related to our closed campuses, we have vacated the ~~accrual for severance~~facility and ~~related charges was $3.0~~have fully or partially subleased the space. For each sublease that has been entered into, we remain the guarantor under the lease and therefore become the intermediate lessor. We have 6 subleases within 5 leased facilities with terms ranging from one to three years. We have recognized sublease income of $0.6 million and ~~$7.3~~$1.1 million ~~respectively, as of September~~for the quarters ended June 30, ~~2017~~2020 and ~~December 31, 2016, which is recorded within current accrued expenses – payroll and related benefits; the long-term portion of $0.3 million~~2019, respectively, and $1.4 million ~~is recorded within other non-current liabilities on our condensed consolidated balance sheets~~and $2.3 million for the years to date ended June 30, 2020 and 2019, respectively, as ~~of September 30, 2017 and December 31, 2016, respectively.~~

~~In addition, as of September 30, 2017, we have~~ an ~~accrual of approximately $1.4 million related~~offset 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. These costs are recorded within educational services and facilities~~ expense on our unaudited condensed consolidated statements of income (loss) ~~and comprehensive income (loss)~~. ~~The current portion of~~

During the liability for these charges is reflected within other accrued expenses under current liabilities and the long-term portion of these charges are included in other liabilities under the non-current liabilities section of our condensed consolidated balance sheets. Changes in our future minimum lease obligations for exited space related to our continuing operations for the quarters and yearsyear to date ended ~~September~~June 30, ~~2017 and 2016 were~~2020, we recorded $0.6 million of asset impairment related to one of our previously vacated facilities 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~~a result of ~~any reversals for terminated lease obligations.~~

~~(2)Includes existing prepaid rent and deferred rent liability balances for newly vacated spaces~~non-payment from the sub-lessee. We determined that ~~offset~~ the ~~losses incurred in~~right of use asset carrying value was not recoverable through the ~~period recorded.~~

~~In addition to the charges detailed above, a number~~end of the ~~teach-out campuses will have remaining~~ lease ~~obligations following the eventual campus closure, with the longest lease term being through 2023. The total remaining estimated charge as of 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 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 million of charges related to remaining obligations for continuing operations that were recorded during 2015 through the third quarter of 2017.this facility.

An accrual for estimated legal fees and settlements of ~~$2.2~~$2.0 million and ~~$34.5~~$7.3 million at ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, respectively, is presented within other current liabilities 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, results of operations, cash flows and financial position.

~~Surrett, et al. v. Western Culinary Institute, Ltd. and Career Education Corporation~~. On March 5, 2008, a complaint was filed in Portland, Oregon in the Circuit Court of the State of Oregon in and for Multnomah County naming Western Culinary Institute, Ltd. (“WCI”) 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 alleged WCI made a variety of misrepresentations to them, 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 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.

Because of the many questions of fact and law that have already arisen and that may arise in the future, 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 of the inherent difficulty in assessing the appropriate measure of damages and the number of class members who might be entitled to recover damages, if we were to be found liable. 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.

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. The Company continues to cooperate with the states involved with a view towards resolving these inquiries as promptly as possible. In this regard, the Company has participated 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.

We cannot predict the scope, duration or outcome of these attorneys general investigations. At the conclusion of any of these matters, the Company or certain of its schools 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 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, we cannot reasonably estimate a range of potential monetary or non-monetary impact these investigations might have on the Company because it is uncertain what remedies, if any, these regulators might ultimately seek in connection with these investigations.

~~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.

~~On August 20, 2015, the Company received a request for information pursuant~~ We are subject to a ~~Civil Investigative Demand~~variety of other claims, lawsuits, arbitrations and investigations that arise from ~~the U.S. Federal Trade Commission (“FTC”). The request was made pursuant~~time 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 spectrumtime out of the conduct of our business, ~~and practices of its subsidiaries and institutions for the time period of January 1, 2010~~including, but not limited to, the present. The Company has responded to several requests for information but has received no further inquiries from the FTC since March 2017. Given the passage of time, it is not clear what additional requests or action, if any, may be undertaken by the FTC. Should the FTC have further inquiries in this regard, we cannot predict the outcome or estimate the nature or amount of possible remedies, if any, that the FTC might ultimately seek in connection with this matter.

In December 2011, the U.S. Department of Education (“ED”) advised the Company that it is 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,matters involving prospective students, ~~and potential students. This inquiry stems from the Company’s 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 connection with this inquiry. If 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). If ED findsgraduates, alleged violations of the ~~Higher Education~~Telephone Consumer Protection Act, both individually and on behalf of a putative class, and employment matters. Periodically matters arise that we consider outside the scope of ordinary routine litigation incidental to our business. While we currently believe that these 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 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,~~2019, a valuation allowance of ~~$49.7~~$45.0 million was maintained with respect to our foreign tax credits ~~separate~~and state net operating ~~losses and Illinois edge credits.~~losses. After considering both positive and negative evidence related to the realization of ~~these~~the deferred tax assets, we have determined that it is necessary to continue to ~~record the~~maintain a $45.0 million valuation allowance against ~~these~~our foreign tax credits and ~~separate~~ state net operating losses as of ~~September~~June 30, ~~2017.~~2020.

The effective tax rate for the quarter and year to date ended ~~September~~June 30, ~~2017,~~2020 was impacted by the tax effect of stock-based compensation and the release of previously recorded tax reserves. The effect of these discrete items increased the effective tax rate for the quarter by 0.3% and decreased the year to date rate by 0.8%. The effective tax rate for the quarter and year to date ended June 30, 2019 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), improvements to Employee Share-Based Payment Accounting, which decreased our quarterly effective tax rate by 0.6%. For the year to date ended September 30, 2017, we recognized~~ a ~~$1.1~~$2.4 million unfavorable adjustment ~~associated~~related to the partial non-deductibility of a settlement with the ~~adoption of ASU 2016-09,~~U.S. Federal Trade Commission, which increased the effective tax rate for the quarter and year to date by ~~4.6%. For~~132.5% and 7.1%, respectively. The effective tax rate for the quarter and year to date ended ~~September~~June 30, 2019 also includes a $0.5 million net benefit associated with the results of a Florida income tax audit covering the years ended December 31, 2014 through December 31, 2016, which decreased the effective tax rate ~~includes a $2.1 million favorable tax adjustment related to the closure of a federal tax audit for the tax years 2013~~by 28.2% and ~~2014. The effect of this discrete item was to decrease the year to date effective tax rate by 8.8%.~~1.5%, respectively.

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~~$1.4 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~~June 30, ~~2017~~2020 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~~June 30, ~~2017,~~2020, we had accrued ~~$1.9~~$1.7 million 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~~Company’s 2016 Incentive Compensation Plan (the ~~“2016 Plan”~~“2016 Plan”) was approved by ~~the Company’s~~ stockholders onin May ~~24,~~ 2016. ~~The~~Under the 2016 Plan, ~~authorizes~~Perdoceo may grant to eligible participants 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, there were approximately 4.0 million shares of common stock available for future share-based awards under the 2016 Plan, which is net of (i) 0.5 million shares issuable upon exercise of outstanding options and (ii) 0.3 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. Additionally, as of September 30, 2017, there were approximately 2.4 million shares issuable upon exercise of outstanding options and 1.3 million shares underlying 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. 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~~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 generally forfeited.

For the quarter and year to date ended June 30, 2020, the Company granted less than 0.1 million and 0.3 million of restricted stock units to be settled in shares of stock which are not “performance-based” with a grant-date fair value of approximately $0.9 million and $4.4 million, respectively, compared to 0 restricted stock units granted during the quarter and year to date ended June 30, 2019. Additionally, during the year to date ended June 30, 2020, the Company granted less than 0.3 million of restricted stock units to be settled in shares of stock which are “performance-based” with a grant-date fair value of approximately $3.9 million, compared to 0 performance-based restricted stock units during the prior year period. The performance-based restricted stock units are subject to performance conditions which are determined at the time of grant and typically cover a three-year performance period. These performance conditions may result in all units being forfeited even if the requisite service period is met. Awards pursuant to the 2016 Plan are typically granted annually to eligible employees during the first quarter of each year; however, in 2019, these awards were deferred until August 2019.

There were 0 stock options granted in the quarters and years to date ended June 30, 2020 and 2019.

Total share-based compensation expense for the quarters and years to date ended June 30, 2020 and 2019 for all types of awards was as follows (dollars in thousands):

As of ~~September~~June 30, ~~2017,~~2020, we estimate that compensation expense of approximately ~~$6.0~~$28.0 million will be recognized over the next four years for all unvested share-based awards that have been granted to ~~participants,~~participants. This amount excludes any estimates of forfeitures.

On November 4, 2019, the Board of Directors of the Company approved a stock repurchase program which authorizes the Company to repurchase up to $50.0 million of the Company’s outstanding common stock. The timing of purchases and the number of shares repurchased under the program will be determined by the Company’s management and will depend on a variety of factors including stock ~~options, restricted stock units~~price, trading volume and ~~deferred stock units~~other general market and economic conditions, its assessment of alternative uses of capital, regulatory requirements and other factors. Repurchases will be made in open market transactions, including block purchases, conducted in accordance with Rule 10b-18 under the Exchange Act as well as may be made pursuant to trading plans established under Rule 10b5-1 under the Exchange Act, which would permit shares to be ~~settled~~repurchased when the Company might otherwise be precluded from doing so under insider trading laws. The stock repurchase program does not obligate the Company to purchase shares and the Company may, in ~~shares~~its discretion, begin, suspend or terminate repurchases at any time, without any prior notice. The program expires on December 31, 2021 and replaced all prior stock repurchase programs authorized by the Board of ~~stock but excluding restricted stock units to be settled in cash.~~Directors.

~~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~~During 2020, we repurchased 1.3 million shares of our common stock ~~on the date~~for approximately $17.3 million at an average price of ~~grant. Employee~~$13.48 per share. As of June 30, 2020, approximately $28.8 million was available under our authorized stock ~~options generally become exercisable 25% per year over a four-year service period beginning on the date~~repurchase program to repurchase outstanding shares 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 grant date. Grantsour common stock. Shares of stock ~~options~~repurchased under the program are ~~generally only subject to~~held as treasury shares. These repurchased shares have reduced the ~~service conditions discussed previously.~~

~~Stock option activity during the year to date ended September 30, 2017 under all~~weighted average number 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 common stock ~~generally become fully vested as follows: 25%~~outstanding for basic and diluted earnings 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 and 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 second quarter of 2015 for retention purposes are subject to accelerated vesting and cash settlement in the event of an involuntary not-for-cause termination of employment by the Company.

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 (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 (units in thousands):~~

~~Restricted Stock Units to be Settled in Cash.~~ Restricted stock units to be settled in cash generally become fully vested 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 (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 million of expense for the year to date 2017 for all cash-settled restricted stock units, of which $1.4 million was recorded during~~share calculations. During the quarter ended ~~September~~June 30, ~~2017.~~

~~Stock-Based Compensation Expense.~~ ~~Total stock-based compensation expense for~~2020, the ~~quarters and years to date ended September 30, 2017 and 2016 for all types~~Company did 0t repurchase any shares of ~~awards was as follows (dollars in thousands):~~common stock.

~~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 million and $2.6 million of expense related to these awards for the years to date ended September 30, 2017 and September 30, 2016, respectively, with $1.4 million and $1.7 million of expense for the quarters ended September 30, 2017 and September 30, 2016, 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~~June 30, ~~2017~~2020 and ~~2016~~2019 were as ~~follows:~~follows (shares in thousands):

For the quarter ended ~~September~~June 30, ~~2017~~2020 and the years to date ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, 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~~0.6 million ~~shares~~ for the quarter ended ~~September~~June 30, ~~2017~~2020 and ~~1.1~~0.6 million and ~~2.6~~0.7 million shares for the years to date ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, respectively.

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~~is comprised of a ~~group of~~ postsecondary education ~~providers~~institution that ~~offer~~offers 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~~June 30, ~~2017,~~2020, our ~~four~~2 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, 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 campuses met the criteria for discontinued operations upon completion of their teach-out. Commencing January 1, 2015, in accordance with 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 and 2016 were as follows (dollars in thousands):~~

~~Assets and liabilities of discontinued operations on our condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016 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 and 2016, 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,” “seek,” “should,” ~~“will,” “focused on,~~”will,” “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~~ 2019 and Part II, Item 1A, “Risk Factors,” in this Quarterly Report on Form 10-Q that could cause our actual growth, results of operations, financial condition, 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 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”~~&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 postsecondary education primarily online to a diverse student population, ~~in a variety of disciplines through online,~~along with campus-based and blended learning programs. Our two regionally accredited universities – Colorado Technical University (“CTU”) and 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~~offer students ~~online with~~industry-relevant and career-focused degree programs that are designed to meet the educational ~~demands~~needs of today’s busy adults. ~~AIU~~CTU and ~~CTU~~AIU continue to show innovation in higher education, advancing ~~new~~ personalized learning technologies like their intellipath~~™ adaptive~~® learning ~~platform. Career Education~~platform and using data analytics and technology to support students and enhance learning. Perdoceo 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~~Our reporting segments are in the process of teaching out campuses within our Transitional Group and have fully taught out our Culinary Arts campuses. 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, the Company completed the teach-out of 17 campuses: Sanford-Brown Las Vegas and the remaining 16 Le Cordon Bleu campuses, which continue to be reported within the Transitional Group and Culinary Arts segments, respectively, as of September 30, 2017determined in accordance with ~~ASC~~Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic ~~360~~280 – ~~Property, Plant~~Segment Reporting and ~~Equipment~~are based upon how the Company analyzes performance and makes decisions. Each segment represents a postsecondary education provider that offers a variety of academic programs. We organize our business across two reporting segments: CTU and AIU (collectively referred to as the “University Group”). These segments are organized by key market segments and to enhance brand focus within each segment to more effectively execute our strategic plan.

In 2020, the Company acquired substantially all of the assets of Trident University International (“Trident University”), ~~which limits discontinued~~a regionally accredited university offering online undergraduate, master’s and doctoral programs with a strong focus on graduate programs. Trident University’s operations ~~reporting.~~were brought within the scope of the state licensure, accreditation and Department of Education approval of AIU, with Trident University relinquishing its accreditor and Department approvals. Trident University’s programs are now offered by AIU under the “Trident” name. The combined institution continues to serve existing and future students with a broader range of program offerings and resources.

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,~~Perdoceo, in existing tuition assistance programs.

~~In addition, ED has formed an inter-agency task force focused~~ Most recently, in March 2020, we received a letter from the Committee on ~~the for-profit sector involving multiple federal agencies~~Education and ~~departments including the Federal Trade Commission,~~Labor of the U.S. ~~Departments~~House of ~~Justice, Treasury and Veterans Affairs,~~Representatives requesting information in order to better understand Perdoceo’s compliance with the ~~Consumer Financial Protection Bureau,~~90-10 Rule, which we have responded to.

Both major political parties have conveyed significantly different views on how they would propose to reauthorize 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 CommissionTitle IV Programs and the ~~multiple Attorney Generals’ offices may be related~~various conditions on program or institutional eligibility they would require. As a result, the outcome of the 2020 Presidential and Congressional elections is likely to significantly impact the outcome of future legislative and regulatory actions affecting our business. A loss or ~~coordinated with this task force.~~ ~~At this time,~~material reduction in Title IV Programs or the ~~future direction~~amount of ~~many~~student financial aid for which our students are eligible would materially impact our student enrollments and profitability and could impact the continued viability of ~~these initiatives is uncertain~~our business as ~~they may be impacted by federal budget cuts and/or shifts in policy goals and administration priorities in connection with the new administration.~~currently conducted.

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 and Risk Factors in our ~~2017~~2020 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.~~restructuring charges and significant legal reserves. 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), earnings per diluted 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.

WeThe second quarter of 2020 (“current quarter”) reflected continued ~~to experience better than expected enrollment trends~~positive financial results with revenue and operating ~~performance during~~income increasing as compared to the ~~third~~prior year quarter. The financial results for the second quarter of ~~2017. Our third quarter operating income for~~2020 were benefitted by 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 thanTrident acquisition in 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 revenuecurrent year as well as ~~timing of certain operating expenses.~~

~~Within our CTU segment, total~~growth in student 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~~continued to execute against our objective of sustainable and responsible growth while remaining focused on delivering quality academic outcomes for our students.

During the quarter, we continued to operate in a remote environment as a result of the COVID-19 pandemic with all of our students taking classes online and our employees working remote, supported by our scalable and innovative technology infrastructure. The health and well-being of our students, employees and communities remain our top priority. For the current quarter we did not have a material impact on our operating results as a result of the COVID-19 pandemic but we continue to monitor the impact of the pandemic on our business processes and operating results. We discuss matters relating to the COVID-19 pandemic below under the heading “COVID-19 Pandemic.”

During the first quarter of 2020, we completed the acquisition of substantially all of the assets of Trident University (the “Trident acquisition”). During the second quarter of 2020 we have continued our efforts to integrate Trident’s unique academic programs along with its students, faculty and staff into AIU’s operations. Trident’s unique academic model and its masters and doctoral programs will continue within AIU providing a diversification of educational learning models and programs to better serve students’ needs. Trident students and faculty, now a part of AIU, will also benefit over time from AIU’s technology investments and operations support.

For the second quarter of 2020, we experienced an increase in total student enrollments ~~was primarily driven by~~of 20.1% as of June 30, 2020 as compared to June 30, 2019 and an increase in new student enrollments of 45.3% for the current quarter as compared to the prior year quarter. This enrollment growth was supported by consistent levels of prospective student interest that were well served by our student enrollment processes. We believe our continued focus on student experiences, retention and ~~continued improvement in our retention trends. New~~academic outcomes, including the technology investments we have made, have contributed to this positive total student enrollment growth, ~~benefitted from improved execution~~in addition to the Trident acquisition.

New student enrollments within CTU increased 4.5% for the current quarter as compared to the prior year quarter, contributing to total student enrollment growth of 4.0% as of June 30, 2020 as compared to June 30, 2019. This enrollment growth was supported by our investments in technology and student-serving functions which continue to enable our admissions, ~~operations, enhanced training~~financial aid and ~~coaching as well as increasing tenure~~advising staff to support our students effectively throughout the enrollment, orientation and learning processes. Additionally, our faculty and advising teams further increased their student outreach efforts by optimizing faculty scheduling and focusing on the needs of students participating in beginning general education courses. CTU’s mobile app continues to be widely used and we are making investments in technology that use predictive analytics allowing further customization of our ~~admissions personnel driving higher efficiency in our enrollment and onboarding processes. Improvements in technology has also helped drive better~~ student engagement ~~early~~process that we believe will improve student experiences and ultimately academic outcomes. Lastly, CTU continues to focus on its corporate partnership program, and an increase in ~~their decision process. The new admissions and advising center in Arizona which was fully operational during the quarter for CTU also~~student enrollments from corporate partnerships contributed to the increase in total student enrollments as of June 30, 2020.

Total student enrollments for AIU increased by 52.7% as of June 30, 2020 as compared to June 30, 2019 as a result of the Trident acquisition and underlying organic growth in new student enrollments for the current ~~quarter. Revenue increased by $0.4 million for the quarter and $1.9 million for the~~ year to date as compared to the prior year ~~periods while operating income~~to date. New student enrollments increased ~~$6.1 million and $8.0 million~~118.8% for the current quarter ~~and year to date, respectively,~~ as compared to the prior year ~~periods.~~

~~Within our AIU segment, total enrollments increased 5.7% while~~quarter. The new ~~enrollments decreased 2.8%. The increase in total enrollments was primarily driven by the improvements made in our~~ student ~~support operations throughout the year. New enrollments~~enrollment growth for the current quarter ~~were~~was positively impacted by several factors, including, the ~~calendar redesign discussed in prior quarters which shifts new enrollments between quarters~~Trident acquisition, approximately 50% more enrollment days for the current quarter as compared to the prior year ~~periods. The new admissions~~quarter and ~~advising center became fully operational at~~underlying organic growth. Enrollment days attributable to any given quarter are the ~~end of the third quarter of 2017 for AIU. We expect to see positive impacts~~available days 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~~during which a prospective student may apply 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~~start school during that quarter, and ~~year to date, respectively, as compared to the prior year periods.~~

~~We continue to focus on additional innovative ways to implement strategies, invest in new technology and appropriately staff our~~AIU’s quarterly enrollment results can be significantly impacted by AIU’s academic calendar. AIU’s non-acquisition related enrollment growth was well served by AIU’s student support ~~operations. During~~teams which are centered on student engagement across 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 studentsentire student life cycle, from enrolling and orientation 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 degreeongoing learning 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~~graduation. Additionally, 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 technology are enabling AIU’s student support ~~operations, including~~teams to provide enhanced support to our ~~admissions~~students through customized student enrollment and ~~advising centers in Arizona as well as the academic calendar redesign at AIU.~~outreach.

We completed the teach-out of all remaining Culinary Arts campuses during the third quarter of 2017, which significantly lowered the remaining number of students involved in our teach-out campuses. At the end of 2017, we expect to have approximately 80 students remaining across seven teach-out campuses. Results for our teach-out campuses continue to track ahead of our expectations due to stronger than expected retention as well as better than expected occupancy costs as we work to exit leases prior to 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.

Revenue ~~from continuing operations declined $22.6~~for the current quarter increased $19.6 million or ~~13.5% due to an overall 9.9% decrease in total student enrollments for the third quarter of 2017~~12.5% as compared to the prior year quarter, ~~driven by our decision to teach-out our Career Schools. For~~reflecting revenue growth at both universities as a result of the positive enrollment results discussed above and, for AIU, the Trident acquisition. Operating income for the current quarter ~~we reported operating income of $4.5~~increased to $37.4 million as compared to an operating ~~loss~~income of ~~$0.7~~$0.2 million infor the prior year quarter. This improvement was primarily driven by ~~increased~~reduced legal settlements within the current quarter as compared to the prior year quarter. The prior year quarter results included $30.0 million of expense related to the FTC settlement as compared to no significant legal settlements during the current quarter. Excluding the impact of the legal settlement, the operating income improvement reflects the revenue growth at CTU and AIU and reduced operating ~~efficiencies~~losses within ~~our University Group~~Corporate and Other as well as ~~a result of growth investments made earlier in 2017.~~pandemic-related savings associated with reduced employee health insurance expenses, occupancy-related expenses, travel and events, partially offset with increased expenses relating to marketing as well as student-serving functions, costs associated with compliance and monitoring efforts and legal expenses related to the recently resolved VA matter. Lastly, we reported cash ~~used in~~provided by operations for the current year to date of ~~$29.1~~$109.4 million as compared to cash provided by operations of $53.4 million in the prior year to ~~date’s cash provided of $16.3 million.~~date. The ~~increase in cash usage for the~~ current year to date ~~was primarily driven~~cash provided by payments of legal settlements of $32.0 million during the first quarter of 2017 as well as increased payments for exit of leased facilities and incentive-based compensation expenses as compared to the prior year.

For our University Group, revenue increased $2.0 million or 1.4% as compared to the prior year quarter, primarily driven by new and total enrollment growth as well 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% 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~~operations was driven by the ~~reasons discussed above.~~positive operating results at both universities and timing of Title IV Program funds received in January 2020, partially offset with a settlement payment related to the Oregon arbitrations matter and annual and long-term incentive compensation payments.

~~Within~~Revenue within our ~~teach-out segments, operating loss for the Transitional Group improved by $10.0~~CTU segment increased $3.6 million or ~~66.5%~~3.8% for the current quarter as compared to the prior year quarter reflecting the increase in new and total student enrollments. Operating income for CTU increased to $33.1 million for the current quarter as compared to operating income of $12.1 million in the prior year quarter driven by ~~reductions~~decreased legal settlements in the current quarter as compared to the prior year quarter which contained $18.6 million of legal settlement expenses ~~particularly within~~for the FTC matter. Increased expenses relating to marketing and student-serving functions were partially offset with operating efficiencies across various 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-outfunctions as well as ~~lease charges recorded~~reduced expenses associated with pandemic-related savings.

Revenue within our AIU segment increased $16.0 million or 26.7% for the current quarter as ~~campuses vacated facilities~~compared to the prior year quarter reflecting the Trident acquisition as well as underlying organic growth in new and total student enrollments. Operating income for AIU increased to $10.5 million for the current quarter as compared to an operating loss of $4.2 million in the prior year quarter driven by decreased legal settlements in the current quarter as compared to the prior year quarter which contained $11.4 million of legal settlement expenses for the FTC matter. AIU continues to focus on achieving operating efficiencies across various administrative processes and experienced reduced expenses associated with pandemic-related savings while marketing expenses increased during the ~~third~~current quarter as compared to the prior year quarter.

Within our Corporate and Other category, operating loss of ~~2017 upon teach-out completion. We have eight campuses remaining within~~$6.2 million improved by $1.5 million or 19.8% compared to the ~~Transitional Group at the end of the third~~prior year quarter ~~of 2017, which will complete their teach-out at varying dates through 2018.~~driven by reduced operating losses associated with our closed campuses.

~~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~~$41.7 million for the current quarter as compared to ~~$16.2 million and $18.8~~$32.8 million in the prior year quarter ~~respectively.~~ with the improvement primarily driven by revenue gowth at both universities along with pandemic related cost savings partially offset with increased expenses related to student-serving functions and marketing, costs associated with compliance and monitoring efforts and legal expenses related to the recently resolved VA matter.

Adjusted operating ~~loss~~income and adjusted earnings per diluted share for the ~~Transitional Group~~quarters and ~~Culinary Arts increased~~years to ~~$10.8 million~~date ended June 30, 2020 and 2019 is presented below (dollars in thousands, unless otherwise noted):

The COVID-19 pandemic has impacted economies and various industries worldwide in 2020. The analysis of the overall impact of COVID-19 on various businesses, markets and economies continues to be assessed as this pandemic is unprecedented during our recent history. We are closely monitoring the impact of COVID-19 on our educational institutions’ operations, including the impact on our students, employees and third-party service vendors. While we have not experienced any material disruptions to date, it is impossible to predict all of the effects and the ultimate impact that COVID-19 may have on our business and results of operations due to uncertainties, including the severity and duration of the outbreak, governmental, regulatory, business or other actions, the effect on our students, impacts on our third-party service vendors and current ~~year quarter as compared~~and potential corporate partners, and other changes to ~~an adjusted operating loss of $9.3 million in the prior year quarter~~our operations as a result of ~~the fixed costs not decreasing in line with revenue as we near the end of teach-out completion.~~

The ~~substantial completion~~health and well-being of our workforce and our ability to continue to serve students is vital to our operations. In response to the stay at home order issued during the first quarter across multiple states and counties, we were able to respond quickly by providing our employees the necessary tools to work remotely. Our employees have continued to efficiently and effectively serve our students remotely throughout the second quarter. Additionally, we continue to provide our employees with support and resources during this critical time so that they have the tools and information they need to continue supporting our students. Our benefit programs provide support for employees during the COVID-19 pandemic and leaves are also available to eligible employees through the Family Medical Leave Act (FMLA), the Americans with Disabilities Act (ADA), other applicable state leave laws and/or the Company’s short-term disability, long-term disability or personal leave benefits.

Students who are enrolled at our campus-based locations continue to take classes virtually utilizing our online platform and are proceeding with their academic studies with no major disruption to the level of service they are used to experiencing from our institutions and support staff. In certain cases, related to degree programs which require students to complete laboratory or similar tasks, we have arranged for access to the campus for students in these programs. Costs related to maintaining our workforce in a remote environment and continuing to educate our campus-based students via our online platform have thus far not been material to our operating results.

Our strong balance sheet continues to provide us with the financial stability and flexibility to operate during these unprecedented times. While we have not experienced any significant impacts to our operating results to date, the future impacts of a potential worsening of global economic conditions and the disruptions to, and volatility in, the credit and financial markets as well as other unanticipated consequences remain unknown. In addition, the future impacts that COVID-19 may have on our students, employees, third-party service vendors and corporate partners are unknown; however, any material effect on these parties could adversely impact us. See Part II, Item 1A, “Risk Factors - The ongoing COVID-19 pandemic and measures intended to prevent its spread could have a material adverse effect on our business and results of operations,” in this Quarterly Report on Form 10-Q.

VA Letter. As previously disclosed, on March 9, 2020, the Company received a letter from the U.S. Department of Veterans Affairs (the “VA”) notifying the Company that if it fails to remedy its deficiency through corrective action, the VA will disapprove, for purposes of VA educational assistance programs, the enrollment of individuals not already enrolled in programs at the Company’s institutions. The Company provided detailed responses to the VA, including information about its current compliance processes which incorporate enhanced operational and compliance commitments made in agreements with the FTC and multiple state attorneys general. The enrollment of individuals in programs at the Company’s institutions was not suspended by the VA during the period of its review. On July 2, 2020, the VA notified the Company that this matter has been satisfactorily resolved and that the VA will continue the approval of enrollments for new students.

Borrower Defense to Repayment Regulations. On October 28, 2016, ED adopted new regulations that cover multiple issues including the processes and standards for the discharge of federal student loans, which are commonly referred to as “borrower defense to repayment” regulations. ED initially delayed the effective date of these regulations; however, after a successful legal challenge against the delay, ED published guidance to institutions on March 15, 2019 regarding how to implement the 2016 regulations while noting that a new set of regulations was forthcoming. On September 23, 2019, ED published new final “borrower defense to repayment” regulations that became effective on July 1, 2020. The new 2019 final borrower defense to repayment regulations include a distinct loan discharge process and standards applicable to federal student loans first disbursed after July 1, 2020. Although the U.S. House of Representatives and Senate voted to approve a resolution under the Congressional Review Act to disapprove of the ~~teach-outs and continued execution against our strategy has provided us with further visibility into our anticipated operating results.~~2019 final borrower defense to repayment regulations, President Trump subsequently vetoed this resolution. An attempt to override the President’s veto in the U.S. House of Representatives was unsuccessful. As a result, wethe 2019 borrower defense to repayment regulations are now effective. 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,” and Item 1A, “Risk Factors – Risks Related to the Highly Regulated Field in Which We Operate - ‘Borrower defense to repayment’ regulations, including closed school discharges, may subject us to significant repayment liability to ED for discharged federal student loans and posting of substantial letters of credit that may limit our ability to make investments in our business which could negatively impact our future growth,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 for more information about the borrower defense to repayment regulations and the risks associated therewith.

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,~~outlook, subject to the key assumptions identified ~~below (see~~below. Please see the GAAP to non-GAAP reconciliation ~~below):~~

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 millionAIU’s enrollment days for the third and fourth quarters of 2020 relatively comparable to the respective prior year ~~ending December 31, 2017, which reflect an improvement of $5 million compared~~periods.

•

Full year 2020 – total company:

Operating income in the range of $135.0 million to $139.0 million

Adjusted operating income in the range of $151.0 million to $155.0 million

Earnings per diluted share in the range of $1.44 to $1.48

Adjusted earnings per diluted share in the range of $1.48 to $1.52

•

Third quarter 2020 – total company:

Operating income in the range of $31.0 to $32.0 million

Adjusted operating income in the range of $35.0 million to $36.0 million

Earnings per diluted share in the range of $0.33 to $0.34

Adjusted earnings per diluted share in the range of $0.34 to $0.35

	OUTLOOK		ACTUAL		OUTLOOK		ACTUAL
	For the Quarter Ending September 30,				For the Year Ending December 31,
(Dollars In Thousands, unless otherwise noted)	2020 ⁽⁷⁾		2019		2020 ⁽⁷⁾		2019
Total Company:
Operating income	$31.0M- $32.0M		$	24,294	$135.0M- $139.0M		$	86,462
Depreciation and amortization⁽¹⁾	3.8M			2,284	14.5M			9,145
Asset impairment ⁽²⁾		-		-	0.6M			-
Lease expenses for vacated space ⁽³⁾	0.2M			295	0.9M			1,630
Significant legal settlements ⁽⁴⁾		-		7,100		-		37,100
Adjusted Operating Income	$35.0M - $36.0M		$	33,973	$151.0M - $155.0M		$	134,337

	OUTLOOK		ACTUAL			OUTLOOK			ACTUAL
	For the Quarter Ending September 30,					For the Year Ending December 31,
	2020 ⁽⁷⁾		2019			2020 ⁽⁷⁾			2019
Total Company:
Reported Earnings Per Diluted Share	$0.33 - $0.34		$	0.25		$1.44 - $1.48			$	0.97

Pre-tax adjustments included in operating expenses:
Amortization ⁽¹⁾		0.01		-			0.04			-
Asset impairment ⁽²⁾		-		-			0.01			-
Lease expenses for vacated space ⁽³⁾		-		-			0.01			0.02
Significant legal settlements ⁽⁴⁾		-		0.10			-			0.51
Total pre-tax adjustments	$	0.01	$	0.10		$	0.06		$	0.53
Tax effect of adjustments ⁽⁵⁾		-		(0.02	)		(0.02	)		(0.13	)
Tax effect of change in settlement deductibility ⁽⁶⁾		-		0.02			-			-
Total adjustments after tax		0.01		0.10			0.04			0.40
Adjusted Earnings Per Diluted Share	$0.34 - $0.35		$	0.35		$1.48 - $1.52			$	1.37

_______________________

Amortization amounts relate to ~~our previously provided outlook, and expected~~definite-lived intangible assets associated with the Trident acquisition.

(1)Amortization amounts relate to ~~increase in 2018.~~definite-lived intangible assets associated with the Trident acquisition.

(2)	Asset impairment relates to a right of use asset for one of our vacated facilities for which the sublease income was deemed no longer recoverable.

(3)	Lease expenses for vacated space include both fixed and variable lease costs offset with sublease income for closed campuses.

(4)	Significant legal settlements relate to the FTC and Oregon arbitration matters recorded during 2019.

(5)	The tax effect of adjustments was calculated by multiplying the pre-tax adjustments with a tax rate of 25%. This tax rate is intended to reflect federal and state taxable jurisdictions as well as the nature of the adjustments.

(6)

A legal settlement of $30.0 million related to the FTC matter was an adjustment from operating income during the second quarter of 2019 to calculate adjusted operating income. However, only $6.7 million of this adjustment met the criteria for tax deductibility during the second quarter of 2019. During the fourth quarter of 2019, an additional $23.0 million related to the FTC settlement met the criteria to be deductible for tax purposes. This amount was previously considered a non-deductible permanent item for tax purposes through September 30, 2019. As a result, the tax benefit of the change in deductibility for the $23.0 million, reflected during the fourth quarter of 2019 has been adjusted to fully reflect the proportional impact of the tax non-deductibility on the second and third quarters of 2019. The impact of the non-deductibility was not proportionally reflected in the originally reported adjusted earnings per diluted share for the second and third quarters of 2019 which would have decreased by $0.05 and increased by $0.02, respectively. The third quarter of 2019 now reflects this adjustment. For the full year 2019, approximately $29.7 million was considered deductible for tax purposes. The quarterly reversals and adjustments of the proportional impacts of the non-deductibility had no effect for the full year 2019.

(7)	2020 results include the Trident acquisition commencing on the March 2, 2020 date of acquisition.

Forward looking adjusted operating income ~~(loss) expectations~~and adjusted earnings per diluted share are presented in the reconciliation of GAAP to non-GAAP ~~items below.~~tables above. Operating income, ~~(loss),~~ which is the most directly comparable GAAP measure to adjusted operating income, ~~(loss),~~and earnings per diluted share 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~~certain significant and non-cash items such as lease ~~obligations~~expenses for vacated space ~~less an estimated amount for~~offset with any sublease income as well as depreciation, amortization, asset impairment charges, significant restructuring charges and significant legal settlements. The ~~expectations~~operating income, adjusted operating income, earnings per share, adjusted earnings per share and enrollment outlook provided ~~in the paragraph~~ above ~~and table below~~ for ~~2017 and 2018~~2020 are based on the following key assumptions and factors, among others: (i) prospective student interest in ~~our~~the Company’s programs ~~continues to trend in line~~remains consistent with recent ~~experiences,~~experience, (ii) ~~modest total enrollment growth within the University Group, (iii) availability~~initiatives and ~~retention of qualified personnel for ongoing~~ investments in ~~our student support~~student-serving operations ~~(iv) achievement of recovery rates for the Company’s real estate obligations and timing of any associated lease termination payments consistent with the Company’s historical experiences, (v)~~continue to positively impact enrollment trends, (iii) 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, (iv) no significant operating impacts from the settlements with the FTC and state attorneys general or other legal or regulatory matters, (v) no significant operating or financial impacts from the COVID-19 pandemic beyond known costs which have been incorporated in the outlook, (vi) earnings per diluted share outlook assumes an effective income tax rate of approximately 26% for the third quarter and the ~~gainful employment regulation,~~full year, and (vii) any ~~modifications thereto, and (vi) consistent working capital movements in line with historical operating trends and potential impacts of teach-out campuses on working capital in line with expectations.~~future impact from the Company’s stock repurchase program is excluded. Although these estimates and assumptions are based upon management’s good faith beliefs regarding current ~~events~~and future circumstances and actions that may be undertaken, ~~in the future,~~ actual results could differ materially from these estimates.

~~Adjusted operating income (loss) for~~ In addition, decisions we make in the ~~quarters and years~~future as we continue to ~~date ended September 30, 2017 and 2016 as well as an~~evaluate diverse strategies to enhance shareholder value may impact the outlook ~~for the second half of 2017 and the years ending December 31, 2017 and 2018 is presented below (dollars in thousands, unless otherwise noted):~~provided above.

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~~. In response to pending litigation challenging the borrower defense to repayment regulations, on June 14, 2017 ED announced an indefinite delay in the effective date of the regulations while it conducts further review and a new negotiated rulemaking process to amend the rules. On October 24, 2017 ED published two related notices in the Federal Register. 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. These borrower defense to repayment regulations were previously set to take effect on July 1, 2017. Separately, a group of attorneys general filed a lawsuit on July 6, 2017 in federal court in the District of Columbia to challenge the legal authority for ED’s delay of the effectiveness of the regulations. The outcome of this legal challenge and the impact any ruling may have on the future effectiveness of the existing or modified regulations is uncertain at this time. 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,” in our Annual Report on Form 10-K for more information about the borrower defense to repayment regulations.

~~Program Participation Agreements.~~ All of 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 are in compliance with the terms of their respective provisional program participation agreements, ED may withdraw an institution’s provisional certification without advance notice if ED determines that the institution is not fulfilling all requirements.

~~Cohort Default Rates~~. In late September 2017, ED released the official three-year cohort default rates for the 2014 cohort. Each of our institutions had cohort default rates under the 30% threshold for the 2014 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 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~~June 30, ~~2017~~2020 and ~~2016~~2019 (dollars in thousands):

	For the Quarter Ended September 30,												For the Year to Date Ended September 30,												For the Quarter Ended June 30,												For the Year to Date Ended June 30,
		2017		% of Total Revenue				2016		% of Total Revenue				2017		% of Total Revenue				2016		% of Total Revenue				2020		% of Total Revenue				2019		% of Total Revenue				2020		% of Total Revenue				2019		% of Total Revenue
TOTAL REVENUE	$	144,986					$	167,625					$	453,317					$	549,137					$	176,035					$	156,441					$	347,029					$	314,294
OPERATING EXPENSES
Educational services and facilities ⁽¹⁾		37,788			26.1	%		51,393			30.7	%		114,367			25.2	%		170,993			31.1	%		28,676			16.3	%		25,350			16.2	%		55,587			16.0	%		51,677			16.4	%
General and administrative: ⁽²⁾
Advertising		33,927			23.4	%		45,272			27.0	%		105,759			23.3	%		122,088			22.2	%		34,962			19.9	%		31,153			19.9	%		70,019			20.2	%		63,858			20.3	%
Admissions		21,237			14.6	%		19,842			11.8	%		62,406			13.8	%		63,352			11.5	%		24,668			14.0	%		23,065			14.7	%		49,361			14.2	%		46,278			14.7	%
Administrative		37,493			25.9	%		38,152			22.8	%		114,363			25.2	%		128,586			23.4	%		33,885			19.2	%		63,022			40.3	%		64,802			18.7	%		94,704			30.1	%
Bad debt		6,420			4.4	%		8,457			5.0	%		21,630			4.8	%		23,332			4.2	%		12,325			7.0	%		11,432			7.3	%		25,187			7.3	%		23,154			7.4	%
Total general and administrative expense		99,077			68.3	%		111,723			66.7	%		304,158			67.1	%		337,358			61.4	%		105,840			60.1	%		128,672			82.2	%		209,369			60.3	%		227,994			72.5	%
Depreciation and amortization		3,582			2.5	%		5,215			3.1	%		11,368			2.5	%		16,986			3.1	%		4,151			2.4	%		2,235			1.4	%		6,790			2.0	%		4,468			1.4	%
Asset impairment		-			0.0	%		-			0.0	%		-			0.0	%		237			0.0	%		-			0.0	%		-			0.0	%		612			0.2	%		-			0.0	%
OPERATING INCOME (LOSS)		4,539			3.1	%		(706	)		-0.4	%		23,424			5.2	%		23,563			4.3	%
OPERATING INCOME																										37,368			21.2	%		184			0.1	%		74,671			21.5	%		30,155			9.6	%

PRETAX INCOME (LOSS)		5,095			3.5	%		(479	)		-0.3	%		24,901			5.5	%		23,990			4.4	%
PRETAX INCOME																										38,461			21.8	%		1,781			1.1	%		77,197			22.2	%		33,376			10.6	%
PROVISION FOR INCOME TAXES		1,597			1.1	%		21			0.0	%		11,143			2.5	%		8,776			1.6	%		10,272			5.8	%		2,302			1.5	%		19,876			5.7	%		8,709			2.8	%
Effective tax rate		31.3	%					4.4	%					44.7	%					36.6	%					26.7	%					129.3	%					25.7	%					26.1	%

INCOME (LOSS) FROM CONTINUING OPERATIONS		3,498			2.4	%		(500	)		-0.3	%		13,758			3.0	%		15,214			2.8	%		28,189			16.0	%		(521	)		-0.3	%		57,321			16.5	%		24,667			7.8	%
LOSS FROM DISCONTINUED OPERATIONS, net of tax		(476	)		-0.3	%		(186	)		-0.1	%		(1,273	)		-0.3	%		(1,050	)		-0.2	%		(22	)		0.0	%		(38	)		0.0	%		(48	)		0.0	%		(435	)		-0.1	%

NET INCOME (LOSS)	$	3,022			2.1	%	$	(686	)		-0.4	%	$	12,485			2.8	%	$	14,164			2.6	%	$	28,167			16.0	%	$	(559	)		-0.4	%	$	57,273			16.5	%	$	24,232			7.7	%

(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,~~leased facilities and certain costs of establishing and maintaining computer ~~laboratories and owned and leased facility costs.~~laboratories. Also included in educational services and facilities expense are rents on leased administrative facilities, such as our corporate headquarters, and 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, information technology, 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 ~~current~~ year to date revenue ~~decreased 13.5%~~increased by 12.5% or ~~$22.6~~$19.6 million and ~~17.4%~~10.4% or ~~$95.8~~$32.7 million, respectively, as compared to the prior year periods ~~driven~~supported by ~~the overall decline~~a 20.1% increase as of June 30, 2020 in total student enrollments. Excluding the Transitional Group and Culinary Arts, which no longer enroll new students as they teach out each campus, revenue increased approximately 1.4% or $2.0 million for the current quarter and 0.1% or $0.4 million for the current year to dateenrollments as compared to the prior ~~periods. The current quarter increase when excluding the Transitional Group~~year period. CTU’s and Culinary Arts was primarily driven by new and total enrollment growth as well as the calendar redesign at AIU which shifted more earnings days into the third quarter of 2017 as compared to 2016. The current year to date increase when excluding the Transitional Group and Culinary Arts was primarily driven by an overall increase inAIU’s new and total student ~~enrollments.~~enrollments are discussed in the segment results of operations section below. The current quarter and year to date revenue increase was also benefitted by the Trident acquisition.

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 June 30,						For the Year to Date Ended June 30,
		2017	% of Total Revenue			2016	% of Total Revenue			2017	% of Total Revenue			2016	% of Total Revenue				2020	% of Total Revenue		2019	% of Total Revenue		2020	% of Total Revenue		2019	% 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%	��	$	23,201	13.2%	$	19,552	12.5%	$	44,713	12.9%	$	39,414	12.5%
Occupancy		16,469		11.4%		21,452		12.8%		41,667		9.2%		67,341		12.3%			5,475	3.1%		5,798	3.7%		10,874	3.1%		12,263	3.9%
Total educational services and facilities	$	37,788		26.1%	$	51,393		30.7%	$	114,367		25.2%	$	170,993		31.1%		$	28,676	16.3%	$	25,350	16.2%	$	55,587	16.0%	$	51,677	16.4%

The ~~decrease in~~ educational services and facilities expense for the current quarter and ~~current~~ year to date increased by 13.1% or $3.3 million and 7.6% or $3.9 million, respectively, as compared to the ~~respective~~ prior year ~~periods is primarily~~periods. The increase was driven by ~~a decrease within~~ academics and student related ~~expenses for teach-out campuses as these campuses continue to wind-down their operations,~~expense which ~~was slightly offset with an increase in academics and student related expenses for the University Group to support the increases in total student enrollment. Occupancy expenses also decreased~~increased for the current quarter and ~~current~~ year to date by 18.7% or $3.6 million and 13.4% or $5.3 million, respectively, as compared to the ~~respective~~ prior year periods, primarily ~~due to decreases within our teach-out segments~~ as a result of ~~exiting~~the Trident acquisition. Occupancy expense for the current quarter and year to date improved by 5.6% or $0.3 million and 11.3% or $1.4 million, respectively, as compared to the prior year periods, primarily driven by decreases associated with our closed campuses as those leased facilities ~~as campuses complete~~reach the end of their ~~teach-out.~~lease terms.

~~General~~The general and administrative ~~expenses~~expense for the current quarter and year to date improved by 17.7% or $22.8 million and 8.2% or $18.6 million, respectively, as compared to the prior year periods. The current quarter and year to date decreases were primarily related to lower administrative expense, which was partially offset with increases in advertising, admissions and bad debt expense. The decreased administrative expense for the current quarter and year to date was due to the prior year legal settlement of $30.0 million recorded in the second quarter of 2019 for the FTC matter. The advertising expense for the current quarter and year to date increased by ~~11.3%~~12.2% or ~~$12.6~~$3.8 million and 9.6% or $6.2 million, respectively, as compared to the prior year periods, partially due to the Trident acquisition as well as supporting student enrollment growth within our universities. As a percentage of revenue, advertising expense remained relatively flat for the current quarter and year to date as compared to the prior year periods. Admissions expense increased by 6.9% or $1.6 million for the current quarter as compared to the prior year ~~quarter~~period primarily ~~driven by advertising~~as a result of the Trident acquisition and bad debt expenses. The lower advertising expense is related to decreased expenses for both AIU and CTU due to efficiencies developed within certain marketing channels that optimized our processes related to receiving prospective student inquiries. Admissions expenses increased slightly for the current quarter as compared to the prior year quarter due to the investments in our new admissions and advising centers in Arizona. 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%~~6.7% or ~~$33.2~~$3.1 million for the current year to date as compared to the prior year ~~to date~~period primarily driven by advertising and administrative expenses. The lower advertising expenses and administrative expenses decreased for the reasons mentioned above. Admissions expenses decreased by approximately 1.5% or $0.9 million for the current year to date as compareddue to the prior year to date as the costs related to the investments in the admission and advising centers in Arizona during the past two quarters were more than offset with decreases in admissions expenses for our teach-out campusesTrident acquisition as well as ~~decreased costs within University in~~increased staffing to support 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.prospective student interest we are experiencing.

Bad debt expense incurred by each of our segments during the quarters and years to date ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019 was as follows (dollars in thousands):

Bad debt ~~expenses decreased~~expense increased by ~~24.1%~~7.8% or ~~$2.0~~$0.9 million and ~~7.3%~~8.8% or ~~$1.7~~$2.0 million for the current quarter and ~~current~~ year to date, respectively, 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. Additionally, CTU decreased by $1.5 million and $0.5 million for the current quarter and current year to date, respectively, as compared to the prior year periods 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 withperiods. The increased bad debt expense within both CTU and AIU for the current quarter and ~~current~~ year to date was in line with the revenue increases at both universities with total bad debt expense as a percentage of revenue decreasing slightly for the current quarter and year to date periods as compared to the prior year periods. ~~AIU continues to~~We regularly monitor our reserve rates, which includes a review of our analysis of historical student receivable collectability which we update quarterly based on the most recent data available, along with current known factors which we believe could affect collectability of our student receivables, including the number of students that do not complete the financial aid process. Our student support teams have maintained their focus on ~~implementation~~financial aid documentation collection and are counseling students through the Title IV process so that they are better prepared to start school. Lastly, we have focused on emphasizing employer-paid and other direct-pay education programs such as corporate partnerships as students within these programs typically have lower bad debt expense associated with them.

For the current year to date, we recorded $0.6 million of ~~improvement to processes~~asset impairment related to ~~collection efforts and completion~~one of ~~funding packages~~our previously vacated leased facilities as a result of non-payment from the sub-lessee. We determined that the right of use asset carrying value was not recoverable through the end of the lease for ~~students.~~this facility.

~~The operating~~Operating income ~~reported~~increased by $37.2 million and $44.5 million for the current quarter ~~improved to $4.5 million~~ and ~~remained relatively flat at $23.4 million for the current~~ year to date, respectively, as compared to the ~~respective~~ prior year periods. ~~Operating losses within our Culinary Arts campuses, due~~The current quarter and year 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, whichdate increase was primarily driven by ~~continued improvements~~reduced legal settlements as compared to the prior year periods. The prior year quarter and year to date operating results included a $30.0 million legal settlement for the FTC matter as compared to no significant legal settlements recorded during the current quarter and year to date. Additionally, operating income for the current quarter and year to date benefitted from increased revenue of $19.6 million and $32.7 million, respectively, as compared to the prior year periods, reduced operating losses within Corporate and Other for the current quarter and year to date and pandemic-related cost savings, which more than offset the increases in ~~operating efficiencies~~advertising, admissions and ~~increased revenues.~~bad debt expenses. Operating margins improved by 21.1% and 11.9% for the current quarter and year to date, respectively, as compared to the prior year periods, as we continue to optimize non-student-serving expenses while supporting student enrollments.

For the quarter and year to date ended ~~September~~June 30, ~~2017,~~2020, we recorded a provision for income taxes of ~~$1.6~~$10.3 million ~~or 31.3%~~reflecting an effective tax rate of 26.7% and $19.9 million reflecting an effective tax rate of 25.7%, respectively, as compared to a provision for income taxes of ~~less than $0.1~~$2.3 million ~~or 4.4%~~reflecting an effective tax rate of 129.3% and $8.7 million reflecting an effective tax rate of 26.1% for the respective 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~~June 30, ~~2017~~2020 was impacted by ~~tax reserves~~the tax-effect of stock-based compensation and the release of previously recorded tax reserves. The 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, whichthese discrete items increased the effective tax rate for the quarter by ~~4.6%~~0.3% and decreased the year to date rate by 0.8%. The effective tax rate for the quarter and year to date ended ~~September~~June 30, ~~2016~~2019 was ~~reduced~~primarily impacted by ~~8.8%~~a $2.4 million unfavorable adjustment related to the expected partial non-deductibility of the FTC settlement, which increased the effective tax rate for the quarter and year to date by 132.5% and 7.1%, ~~due to~~respectively, and a ~~$2.1~~$0.5 million ~~favorable tax adjustment upon completion~~net benefit associated with results of a Florida income tax audit which decreased the effective tax rate by 28.2% and 1.5%, respectively. For the full year 2020, we expect our effective tax rate to be between 25.5% and 26.5%. As of December 31, 2019, we had $108.5 million of federal ~~tax audit.~~net operating loss carry forwards which will offset federal taxable income during 2020.

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

For the Year to Date Ended September 30,

REVENUE

OPERATING INCOME (LOSS)

OPERATING
MARGIN (LOSS)

2017

2016

% Change

2017

2016

% Change

2017

2016

REVENUE:

CTU

$
276,558

$
274,623

0.7
%

$
78,649

$
70,693

11.3
%

28.4
%

25.7
%
AIU

150,618

152,123

-1.0
%

7,987

9,036

-11.6
%

5.3
%

5.9
%
Total University Group

427,176

426,746

0.1
%

86,636

79,729

8.7
%

20.3
%

18.7
%
Corporate and Other

-

-

NM

(16,595
)

(17,160
)

3.3
%

NM

NM

Subtotal

427,176

426,746

0.1
%

70,041

62,569

11.9
%

16.4
%

14.7
%
Culinary Arts

19,302

89,990

-78.6
%

(25,039
)

1,666

NM

-129.7
%

1.9
%
Transitional Group

6,839

32,401

-78.9
%

(21,578
)

(40,672
)

46.9
%

-315.5
%

-125.5
%
Total

$
453,317

$
549,137

-17.4
%

$
23,424

$
23,563

-0.6
%

5.2
%

4.3
%

	For the Year to Date Ended June 30,
	REVENUE							OPERATING INCOME (LOSS)									OPERATING MARGIN
		2020		2019	% Change				2020			2019		% Change				2020			2019
REVENUE:
CTU ⁽¹⁾	$	203,781	$	193,612		5.3	%	$	67,695		$	41,804			61.9	%		33.2	%		21.6	%
AIU ^{(2) (3)}		143,231		120,652		18.7	%		19,852			4,095			384.8	%		13.9	%		3.4	%
Total University Group		347,012		314,264		10.4	%		87,547			45,899			90.7	%		25.2	%		14.6	%
Corporate and other ⁽⁴⁾		-		-		0.0	%		(11,488	)		(11,158	)		-3.0	%	NM			NM
Closed campuses		17		30		-43.3	%		(1,388	)		(4,586	)		69.7	%	NM			NM
Total Corporate and Other		17		30		-43.3	%		(12,876	)		(15,744	)		18.2	%	NM			NM
Total	$	347,029	$	314,294		10.4	%	$	74,671		$	30,155			147.6	%		21.5	%		9.6	%

Total student enrollments represent all students who are active as of the last day of the reporting period. Active students are defined as those students who are considered in good attendance by participating in class related activities. New student enrollments represent students who have started class at one of our academic institutions during the period, excluding students who were previously active at any point in time within the 365 days prior to the start of their course.

CTU. Current quarter and year to date revenue increased by ~~$2.0~~3.8% or $3.6 million and 5.3% or ~~1.4% and $0.4~~$10.2 million, ~~or 0.1%,~~ respectively, as compared to the ~~respective~~ prior year periods. ~~The overall increase in revenue was primarily driven by the improvement in total student enrollments. AIU~~CTU experienced positive ~~total enrollments of 5.7% as compared to the prior period, while revenue decreased by $1.5 million or 1.0% in the current year to date as compared to prior period, partially due to changes in course~~

sequencing made to assist students in progressing through their course of study. AIU experienced improvement in quarterly revenue by $1.6 million or 3.3% as compared to prior year quarter, primarily attributed to the shift in earnings days during the current quarter due to the calendar redesign as well as improved totalnew student enrollments. We expect to experience continued variability in comparisons for AIU as a result of the academic calendar redesign. CTU contributed $0.4 million or 0.4% and $1.9 million or 0.7% to the increaseenrollment growth for the current quarter and year to date of 4.5% and 10.7%, respectively, ~~while~~as compared to the prior year periods, and increased total student enrollments ~~increased 0.9%.~~by 4.0% as of the end of the quarter as compared to the prior year quarter. We believe this growth was supported by consistent levels of prospective student interest which were well served by CTU’s student enrollment processes and technology enhancements. Also contributing to the increase in total student enrollments was growth within the corporate partnership program.

Current quarter and year to date operating income for ~~the University Group~~CTU increased ~~$8.0~~by 173.1% or $21.0 million and 61.9% or ~~36.9%, and $6.9~~$25.9 million, ~~or 8.7%,~~ respectively, as compared to the respective prior year periods. Operating income increased within both segments for the current quarter with AIU contributing $2.0 million of the increase and CTU contributing $6.0 million of the increase as compared to the prior year ~~quarter. CTU’s~~periods, primarily due to lower legal settlement expense in the current quarter and year to date as well as the increase in revenue discussed above. Excluding the legal settlement, operating ~~income~~margin improved ~~by $8.0 million or 11.3%~~ for the current quarter and current year to date as compared to the prior ~~period. AIU’s~~year periods, primarily as a result of improved operating ~~income decreased $1.0 million or 11.6%~~efficiencies which more than offset the increased bad debt and advertising expenses as well as increased admissions expense for the current year to date as compared to the prior year ~~primarily driven~~periods.

AIU. Current quarter and year to date revenue increased by 26.7% or $16.0 million and 18.7% or $22.6 million, respectively, as compared to the prior year periods. AIU experienced positive new student enrollment growth for the current quarter and year to date of 118.8% and 36.0%, respectively, as compared to the prior year periods, and positive total student enrollment growth of 52.7% as of the end of the quarter as compared to the prior year quarter end. These enrollment results were positively impacted by the ~~decrease~~Trident acquisition and organic enrollment growth as well as a positive impact for the current quarter new student enrollment growth related to 50% more enrollment days 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% for~~ the current quarter as compared to the prior year quarter. Enrollment days attributable to any given

quarter are the available days in the quarter during which a prospective student may apply to start school during that quarter, and AIU’s quarterly enrollment results can be significantly impacted by AIU’s academic calendar.

Current quarter and year to date operating income for AIU increased by 348.4% or $14.7 million and 384.8% or $15.8 million, respectively, as compared to the prior year periods, primarily due to ~~increased revenues and improved efficiencies~~lower legal settlement expense in ~~advertising costs.~~

~~Culinary Arts.~~ ~~This segment includes our LCB campuses which were announced for teach-out during December 2015. The~~the current quarter and year to date ~~decline~~as well as the increase in revenue discussed above, which more than offset the increase in advertising, admissions and bad debt expenses. Excluding the legal settlement, operating margin improved for the current quarter and current year to date as compared to the ~~corresponding~~ prior year periods, is primarily as a result of the decision to teach-out 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 ownimproved operating ~~segment.~~

~~Transitional Group.~~ This segment includes our non-LCB campuses that are currently being taught-out. The current quarter and year to date decline in revenue as compared to the corresponding prior periods resulted from a decrease in total student enrollments. We expect revenue and operating expenses to continue to decline compared to prior periods as campuses wind down their operations through 2018.efficiencies.

Corporate and Other.This category includes unallocated costs that are incurred on behalf of the entire company and remaining expenses associated with closed campuses.Total Corporate and Other operating loss for the current quarter ~~increased by $0.6 million or 11.0%~~ and year to date improved by ~~$0.6~~ 19.8% or $1.5 million and 18.2% or ~~3.3%~~$2.9 million, respectively, as compared to the prior year periods, primarily as a result of decreased expenses associated with our closed campuses partially offset with increased professional fees within Corporate for the current year to date as compared to the ~~respective prior periods. The increase in costs for the current quarter as compared to the~~ prior year ~~quarter was primarily driven by timing of incentive-based compensation expenses as compared~~ to ~~the prior year. The 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.~~2019. Note 2 ~~“Summary~~“Summary of Significant Accounting ~~Policies”~~Policies” of the notes to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2019 also includes a discussion of these and other significant accounting ~~policies.~~policies, along with Note 4 "Recent Accounting Pronouncements" in this Form 10-Q for accounting policies adopted in 2020.

As of ~~September~~June 30, ~~2017,~~2020, cash, cash equivalents, restricted cash and available-for-sale short-term investments (“cash balances”)totaled ~~$175.9~~$345.8 million. Restricted cash ~~and investment balances~~ as of ~~September~~June 30, ~~2017 approximate $7.9~~2020 was $4.0 million and ~~include restricted short-term investments for certificates~~relates to amounts held in an escrow account to secure post-closing indemnification obligations of ~~deposit in addition~~the seller pursuant to ~~restricted cash to provide securitization for letters of credit.~~the Trident acquisition. 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. The recent losses from our Transitional Group and Culinary Arts campuses 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. However, as we execute on 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 generating cash in 2018.balances. We expect to ~~end 2017 with~~continue to generate cash ~~cash equivalents, restricted cash and available-for-sale short-term investments, net of borrowings, in the range of $160 million to $165 million. These expectations are~~during 2020. The expectation is based upon, and subject to, the ~~updated~~ key assumptions and factors discussed above in ~~the Management’s Discussion and Analysis~~this MD&A under the heading ~~“2017 Third Quarter Overview.~~“2020 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~~agreement allows us to borrow up to a maximum amount of ~~$95~~$50.0 million and is scheduled to mature on ~~December 31, 2018.~~January 20, 2022. The credit agreement contains customary affirmative, negative and financial maintenance covenants, including a requirement to maintain a balance of cash, cash equivalents and marketable securities in our domestic accounts with the bank of at least $50.0 million at all times. Amounts borrowed under the ~~Credit Agreement~~credit agreement are required to be 100% secured with ~~100%~~deposits of cash ~~collateral.~~ and marketable securities with the bank. Under the credit agreement, the Company’s ability to make restricted payments, including payments in connection with an acquisition or a repurchase of shares of our common stock, is subject to aggregate limitations which vary during the term of the credit agreement. Taking into consideration restricted payments made by the Company during the term of the credit agreement, the Company may make up to an additional $38.8 million of restricted payments through December 27, 2020. In addition, during this same period, the Company may also make up to an additional $61.2 million of restricted payments in connection with permitted acquisitions, subject to an aggregate cap of $125.0 million for acquisitions during the term of the credit agreement. Any restricted payments in excess of these permitted amounts would require consent of the applicable parties pursuant to the credit agreement.

We will continue to maintain a balanced capital allocation strategy that focuses on maintaining a strong balance sheet and adequate liquidity, while prudently investing in organic growth projects at our universities, such as student-serving initiatives, and evaluating diverse strategies to enhance shareholder value, including share repurchases and acquisitions of quality educational institutions and programs. As we evaluate factors when making determinations regarding capital allocation, we will also consider the COVID-19 pandemic and its related impacts. Ultimately, our goal is to deploy resources in a way that drives long term shareholder value while supporting and enhancing the academic value of our institutions.

On November 4, 2019, the Board of Directors of the Company approved a stock repurchase program which authorizes the Company to repurchase up to $50.0 million of our common stock from time to time depending on market conditions and other considerations. The program expires on December 31, 2021. Since the November 4, 2019 inception date, the Company repurchased approximately 1.5 million shares for $21.2 million. The Company did not repurchase any shares of our common stock during the

quarter ended June 30, 2020. See Note 12 “Stock Repurchase Program” to our unaudited condensed consolidated financial statements for more information about this stock repurchase program.

On March 2, 2020, the Company acquired substantially all of the assets of Trident University. The final purchase price for the acquisition, including post-closing purchase price and working capital adjustments, was $43.8 million, based in part on Trident University’s financial results measured in terms of its revenue and EBITDA (as determined pursuant to the purchase agreement for the transaction) during the 12-month period ended December 31, 2019. The initial cash payment of $38.1 million was made on the date of acquisition. As mentioned above, approximately $4.0 million of this amount is held in an escrow account to secure post-closing indemnification obligations of the seller pursuant to the purchase agreement, and is reflected as restricted cash on our condensed consolidated balance sheet as of June 30, 2020. We paid an additional amount of $5.7 million, related to the final post-closing purchase price and working capital adjustments, during July 2020; this amount was funded with the Company’s available cash balances.

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 7 “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 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.~~2019 and Part II, Item 1A, “Risk Factors,” in this Quarterly Report on Form 10-Q.

During the ~~year~~years to date ended ~~September~~June 30, ~~2017,~~2020 and 2019, net cash flows ~~used in~~ provided by operating activities totaled ~~$29.1~~$109.4 million ~~compared to net cash provided by operating activities of $16.3~~and $53.4 million, ~~for the year to date ended September 30, 2016.~~respectively. The ~~increase~~improvement in cash ~~usage~~flow from operations as compared to the prior year quarter is primarily driven by ~~$32.0 million of payments for legal settlements during~~ the ~~first quarter of 2017~~positive operating results at both universities as well as ~~increased payments for exit~~timing of ~~leased facilities and incentive-based compensation expenses as compared to~~receipt of $39.3 million of Title IV Program funds during the current period that historically was received in the fourth quarter of the prior year.

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 ~~to date~~ ended ~~September 30, 2017 and 2016,~~December 31, 2019, approximately ~~77%~~79% of our institutions’ aggregate cash receipts from tuition payments came from Title IV Program funding. For the year to date ended June 30, 2020, this percentage increased as a result of the timing of Title IV Program funds received in January 2020. This percentage differs from the Title IV Program percentage calculated under the 90-10 Rule due to the treatment of certain funding types and certain student level limitations on what and how much to count as prescribed under the rule.

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.~~2019.

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~~June 30, ~~2017~~2020 and ~~2016,~~2019, net cash flows used in investing activities totaled ~~$6.1~~$105.5 million and ~~$37.9~~$32.3 million, respectively.

Purchases and Sales of Available-for-Sale Investments. Purchases and sales of available-for-sale investments resulted in a net cash outflow of ~~$2.7~~$64.0 million and ~~$38.0 million, respectively, during the years to date ended September 30, 2017 and 2016.~~

~~Capital Expenditures.~~ ~~Capital expenditures remained relatively flat to $3.4~~$30.9 million for the years to date ended ~~September~~June 30, ~~2017~~2020 and ~~2016.~~2019, respectively.

Business acquisition. During the year to date ended June 30, 2020, the Company completed the Trident acquisition and made an initial payment of $38.1 million. See Note 3 “Business Acquisition” for further information.

Capital Expenditures. Capital expenditures increased to $3.4 million for the year to date ended June 30, 2020 as compared to $1.4 million for the year to date ended June 30, 2019. Capital expenditures represented ~~less than~~approximately 1.0% of total revenue for each of the years to date ended ~~September~~June 30, ~~2017~~2020 and ~~2016.~~2019. For the full year 2020, we expect capital expenditures to be approximately 1.5% of revenue.

During the ~~year~~years to date ended ~~September~~June 30, ~~2017, net cash flows provided by financing activities totaled $1.4 million compared to~~2020 and 2019, net cash flows used in financing activities ~~of $38.0~~totaled $17.0 million ~~for the prior year to date.~~ and $2.4 million, respectively.

Payments of employee tax associated with stock compensation. Payments of employee tax associated with stock compensation were ~~$1.2~~$0.7 million for the year to date ended ~~September~~June 30, ~~2017~~2020 and ~~$0.6~~$2.6 million for the year to date ended ~~September~~June 30, ~~2016. The~~ ~~Company now accounts~~2019.

Repurchase of Stock. During the year to date ended June 30, 2020, we repurchased 1.3 million shares of our common stock for approximately $17.3 million at an average price of $13.48 per share. Repurchases of stock during the current year were funded by 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~~generated from operating activities ~~to be comparable to current year reporting.~~and existing cash balances.

Credit ~~Agreement~~. Agreement.On December ~~11, 2015,~~27, 2018, we entered into ~~an amendment to our Amended and Restated Credit Agreement~~a $50.0 million credit agreement with BMO Harris Bank N.A.(“BMO Harris”), in its capacities as the ~~initial~~sole 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~~credit agreement is scheduled to mature on ~~December 31, 2018.~~January 20, 2022. Amounts borrowed under the ~~Credit Agreement~~credit agreement are required to be 100% secured with ~~100%~~ cash ~~collateral.~~and marketable securities with the bank. The ~~Credit Agreement,~~credit agreement, which includes certain financial covenants, requires that interest is payable at the end of each respective interest period or monthly in arrears, 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~~June 30, ~~2017,~~2020 we ~~have~~had no outstanding borrowings under the revolving credit facility and we remain in compliance with the covenants of the ~~Credit Agreement.~~credit agreement.

Selected condensed consolidated balance sheet account changes from December 31, ~~2016~~2019 to ~~September~~June 30, ~~2017~~2020 were as follows (dollars in thousands):

Total cash and cash equivalents, restricted cash and short-term investments: The increase is primarily driven by cash provided by operating activities as a result of the increase in total revenue within CTU and AIU during the current year to date and cash received from Title IV Program funding, partially offset with cash outflows related to the Trident acquisition, share repurchases, a legal settlement payment of $7.1 million related to the Oregon arbitrations, and the payment of annual and long-term incentive compensation.

Student receivables, net: The decrease is primarily due to receipt of $39.3 million for Title IV Program funding during the current year that in the past would have been received in the prior year.

Intangible assets, net: The increase in intangible assets is attributable to the Trident acquisition.

Deferred income tax assets, net: The decrease is driven by the ~~$32.0 million~~usage of ~~payments related to legal settlements during~~deferred tax assets associated with the ~~current year.~~offset of income taxes payable.

Accrued expenses - payroll and related ~~benefits~~: benefits: The decrease is driven primarily by the payments during the ~~first quarter of 2017~~current year of annual incentive ~~compensation items~~compensation.

Treasury stock: The increase is driven primarily by the repurchase of the Company’s common stock during the current ~~year.~~year for approximately $17.3 million.

~~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~~June 30, ~~2017,~~2020, 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		2020 ⁽⁵⁾		2021		2022		2023 Through 2025		2026 & Thereafter		Total
Gross operating lease obligations ⁽¹⁾
Ongoing operations⁽²⁾	$	12,399	$	12,835	$	13,089	$	10,446	$	15,555	$	64,324	$	5,442	$	13,500	$	12,769	$	22,225	$	15,068	$	69,004
Teach-out campuses and discontinued operations ⁽³⁾		58,845		29,168		14,171		7,455		5,677		115,316
Closed campuses ⁽³⁾														1,488		1,065		-		-		-		2,553
Total gross operating lease obligations	$	71,244	$	42,003	$	27,260	$	17,901	$	21,232	$	179,640	$	6,930	$	14,565	$	12,769	$	22,225	$	15,068	$	71,557

Sublease income ⁽⁴⁾
Ongoing operations ⁽²⁾	$	612	$	934	$	426	$	107	$	-	$	2,079	$	288	$	764	$	777	$	330	$	-	$	2,159
Teach-out campuses and discontinued operations ⁽³⁾		8,432		4,887		3,107		1,498		229		18,153
Closed campuses ⁽³⁾														388		327		-		-		-		715
Total sublease income	$	9,044	$	5,821	$	3,533	$	1,605	$	229	$	20,232	$	676	$	1,091	$	777	$	330	$	-	$	2,874

Net operating lease obligations
Ongoing operations ⁽²⁾	$	11,787	$	11,901	$	12,663	$	10,339	$	15,555	$	62,245	$	5,154	$	12,736	$	11,992	$	21,895	$	15,068	$	66,845
Teach-out campuses and discontinued operations ⁽³⁾		50,413		24,281		11,064		5,957		5,448		97,163
Closed campuses ⁽³⁾														1,100		738		-		-		-		1,838
Total net contractual lease obligations	$	62,200	$	36,182	$	23,727	$	16,296	$	21,003	$	159,408	$	6,254	$	13,474	$	11,992	$	21,895	$	15,068	$	68,683

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 use asset managers who conduct initial and ongoing credit analysis on our investment portfolio and monitor that 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.

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 June 30, 2020, a 10% increase or decrease in interest rates applicable to our investments or borrowings 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)~~(“LIBOR”) for the relevant currency, plus the applicable rate based

on the type of loan. Under the credit agreement, if LIBOR cannot be determined or an announcement is made about a specific date after which LIBOR will no longer be used for determining interest rates for loans, an alternative to LIBOR or a mechanism to establish an alternate rate is specified. As of ~~September~~June 30, ~~2017,~~2020, we had no outstanding borrowings under this facility.

During ~~2017~~2020 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~~June 30, ~~2017~~2020 and December 31, ~~2016.~~2019. We believe that the exposure of our consolidated financial position and results of operations and cash flows to adverse changes in interest rates applicable to our investments or borrowings or to foreign currency fluctuations is not significant.

We completed an evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q (“~~Report”~~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”~~“Exchange Act”). Based upon that evaluation, our Chief Executive Officer and ~~Interim~~ Chief Financial Officer concluded that, as of ~~September~~June 30, ~~2017~~2020, 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”~~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~~June 30, ~~2017,~~2020 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 ~~7 “Contingencies”~~9 “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,~~2019, which was filed with the Securities and Exchange Commission on February ~~23, 2017.~~19, 2020. Except for the risk factor below, there have been no material changes to the risk factors previously disclosed in the Form 10-K.

The ongoing COVID-19 pandemic and measures intended to prevent its spread could have a material adverse effect on our business and results of operations.

In March 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious outbreak, which has continued to spread, and the related adverse public health developments, including orders to shelter-in-place, travel restrictions and mandated business closures, have adversely affected workforces, organizations, their customers, economies and financial markets globally, leading to an economic downturn and increased market volatility. It has also disrupted the normal operations of many businesses, including ours.

We are closely monitoring the impact of COVID-19 on our educational institutions’ operations, including the impact on our students, employees and third-party service vendors. It is impossible to predict all of the effects and the ultimate impact of the COVID-19 pandemic, as the situation is rapidly evolving. We may in the future experience reduced student interest in our programs, whether due to funding constraints related to loss of employment, lack of interest in pursuing an education during a period of uncertainty or other reasons directly or indirectly related to the pandemic. Adverse economic circumstances may impact our current and prospective corporate partners, which could negatively impact current student enrollments and future growth at our institutions. The pandemic may also negatively impact collections of accounts receivable, whether due to an inability or unwillingness to make such payments.

We have transitioned almost all of our employees to remote work, as have a number of our third-party service vendors. This rapid transition to a remote work environment may exacerbate certain risks to our business, including increasing the stress on, and our vulnerability to disruptions of, our technology infrastructure and systems, and increased risk of phishing and other cybersecurity attacks, unauthorized dissemination of confidential information and social engineering attempts that seek to exploit the COVID-19 pandemic. If a natural disaster, power outage, connectivity issue or other event occurs that impacts the ability of employees to work remotely, it may be difficult or, in certain cases, impossible, for us to continue our business for a period of time, which could be substantial. While most of our operations can be performed remotely, there is no guarantee that we will be as effective while working remotely because our team is dispersed, many employees may have additional personal needs to attend to (such as looking after children as a result of school closures or family who become sick), and employees may become sick themselves and be unable to work.

Because of the size and breadth of the pandemic, all of the direct and indirect consequences of COVID-19 are not yet known and may not emerge for some time. As a result, there may be impacts on our business and results of operations that may be material and affect us in ways we do not foresee at this time. We therefore may have difficulty accurately forecasting our operating results. In addition, if we do not respond appropriately to the pandemic, or if students, regulators and the public do not perceive our response to be adequate, we could suffer damage to our reputation, which could adversely affect our business.

Moreover, the COVID-19 pandemic may also exacerbate many of the risks discussed in Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2019, such as those related to failure to comply with the extensive regulatory requirements applicable to our business, revised laws and regulations relating to Title IV Programs, student loan cohort default rates (with respect to those students who first enter into student loan repayment during the federal fiscal year ending September 30, 2020 and the following years), the level of enrollments in our institutions, competition, technology, our ability to hire, train and retain personnel, our ability to successfully identify and integrate acquisitions, privacy and information security, and the trading price of our common stock.

As a result of any one or more of these risks, COVID-19 could materially and adversely impact our business and results of operations in the future.

On November 4, 2019, the Board of Directors of the Company approved a stock repurchase program which authorizes the Company to repurchase up to $50.0 million of the Company’s outstanding common stock. See Note 12 “Stock Repurchase Program” to our unaudited condensed consolidated financial statements for further information.

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~~June 30, ~~2017:~~2020:

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)

Title of each class		Trading symbol(s)		Name of each exchange on which registered
Common Stock, $0.01 par value		PRDO		Nasdaq Global Select Market

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)~~(Loss) (Unaudited)	2

	~~Unaudited~~ Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	2
	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)	3

	Condensed Consolidated Statements of Cash Flows (Unaudited)	34

	Notes to Unaudited Condensed Consolidated Financial Statements	45

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2218

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3533

Item 4.	Controls and Procedures	3534

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	3635

Item 1A.	Risk Factors	3635

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 6.	Exhibits	36

SIGNATURES		38

	For the Year to Date Ended September 30,						For the Year to Date Ended June 30,
	2017			2016
(In Thousands)							2020			2019

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	12,485		$	14,164		$	57,273		$	24,232
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
cash provided by operating activities:
Asset impairment		-			237			612			-
Depreciation and amortization expense		11,368			16,986			6,790			4,468
Bad debt expense		21,516			23,201			25,187			23,141
Compensation expense related to share-based awards		3,616			2,251			6,503			2,406
Gain on disposition of property and equipment		-			(438	)
Deferred income taxes		10,282			7,373			19,262			9,213
Changes in operating assets and liabilities		(88,374	)		(47,510	)		(6,263	)		(10,046	)
Net cash (used in) provided by operating activities		(29,107	)		16,264
Net cash provided by operating activities								109,364			53,414

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale investments		(202,050	)		(137,755	)		(209,846	)		(296,666	)
Sales of available-for-sale investments		199,340			99,718			145,819			265,743
Purchases of property and equipment		(3,426	)		(3,352	)		(3,439	)		(1,408	)
Proceeds on the sale of assets		-			3,600
Payments of cash upon sale of businesses		-			(62	)
Business acquisition								(38,065	)		-
Other								-			9
Net cash used in investing activities		(6,136	)		(37,851	)		(105,531	)		(32,322	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock		2,548			581			1,014			180
Payment on borrowings		-			(38,000	)
Purchase of treasury stock								(17,309	)		-
Payments of employee tax associated with stock compensation		(1,170	)		(550	)		(689	)		(2,562	)
Net cash provided by (used in) financing activities		1,378			(37,969	)
Net cash used in financing activities								(16,984	)		(2,382	)

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

NET DECREASE IN CASH AND CASH EQUIVALENTS		(33,817	)		(59,706	)
CASH AND CASH EQUIVALENTS, beginning of the period		50,882			116,740
CASH AND CASH EQUIVALENTS, end of the period	$	17,065		$	57,034
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH								(13,151	)		18,710
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of the period								108,687			32,731
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of the period							$	95,536		$	51,441

	March 2, 2020
Assets:
Student receivables, net	$	6,212
Other current assets		912
Property and equipment		3,932
Intangible assets subject to amortization
Trade name (useful life of 5 years)		1,000
Student relationships (useful life of 3 years)		8,000
Course curriculum (useful life of 3 years)		1,400
Goodwill		30,956
Deferred tax asset		454
Other non-current assets		270
Total assets acquired	$	53,136
Liabilities:
Accounts payable and other accrued liabilities	$	2,622
Deferred revenue		4,749
Loan discharge reserve		1,900
Other long-term liabilities		46
Total liabilities assumed	$	9,317

Net assets acquired	$	43,819

	September 30, 2017									June 30, 2020
			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	$	1,538	$	2	$	-		$	1,540
Non-governmental debt securities		118,111		11		(74	)		118,048		219,215		975		(37	)		220,153
Treasury and federal agencies		32,462		4		(61	)		32,405		28,525		49		(2	)		28,572
Total short-term investments		151,923		15		(135	)		151,803
Restricted short-term investments (available for sale):
Non-governmental debt securities		7,070		-		-			7,070
Total investments (available for sale)	$	158,993	$	15	$	(135	)	$	158,873
Total short-term investments (available for sale)										$	249,278	$	1,026	$	(39	)	$	250,265

	December 31, 2016									December 31, 2019
			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	$	1,361	$	3	$	-		$	1,364
Non-governmental debt securities		107,305		22		(113	)		107,214		165,423		433		(37	)		165,819
Treasury and federal agencies		36,480		10		(73	)		36,417		18,307		7		(9	)		18,305
Total short-term investments		147,835		32		(186	)		147,681
Restricted short-term investments (available for sale):
Non-governmental debt securities		8,597		-		-			8,597
Total investments (available for sale)	$	156,432	$	32	$	(186	)	$	156,278
Total short-term investments (available for sale)										$	185,091	$	443	$	(46	)	$	185,488

	As of September 30, 2017
	Level 1		Level 2		Level 3		Total
Municipal bonds	$	-	$	1,350	$	-	$	1,350
Non-governmental debt securities		42,097		83,021		-		125,118
Treasury and federal agencies		-		32,405		-		32,405
Totals	$	42,097	$	116,776	$	-	$	158,873

	As of December 31, 2016
	Level 1		Level 2		Level 3		Total
Municipal bonds	$	-	$	4,050	$	-	$	4,050
Non-governmental debt securities		33,597		82,214		-		115,811
Treasury and federal agencies		-		36,417		-		36,417
Totals	$	33,597	$	122,681	$	-	$	156,278

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

	Maintenance Fee Payments
For the quarter ended June 30, 2020 ⁽¹⁾	$	-
For the quarter ended June 30, 2019	$	359
For the year to date ended June 30, 2020 ⁽¹⁾	$	1,443
For the year to date ended June 30, 2019	$	707

	For the Quarter Ended June 30, 2020								For the Quarter Ended June 30, 2019
	CTU		AIU ⁽³⁾		Corporate and Other⁽⁴⁾		Total		CTU		AIU		Corporate and Other⁽⁴⁾		Total
Tuition	$	94,204	$	73,004	$	-	$	167,208	$	90,903	$	57,341	$	-	$	148,244
Technology fees		5,162		2,633		-		7,795		4,590		2,391		-		6,981
Other miscellaneous fees⁽¹⁾		323		173		-		496		463		91		-		554
Total tuition and fees		99,689		75,810		-		175,499		95,956		59,823		-		155,779
Other revenue⁽²⁾		504		25		7		536		599		50		13		662
Total revenue	$	100,193	$	75,835	$	7	$	176,035	$	96,555	$	59,873	$	13	$	156,441


	For the Year to Date Ended June 30, 2020								For the Year to Date Ended June 30, 2019
	CTU		AIU ⁽³⁾		Corporate and Other⁽⁴⁾		Total		CTU		AIU		Corporate and Other⁽⁴⁾		Total
Tuition	$	191,755	$	137,549	$	-	$	329,304	$	183,521	$	115,571	$	-	$	299,092
Technology fees		10,282		5,290		-		15,572		8,039		4,769		-		12,808
Other miscellaneous fees⁽¹⁾		695		322		-		1,017		887		220		-		1,107
Total tuition and fees		202,732		143,161		-		345,893		192,447		120,560		-		313,007
Other revenue⁽²⁾		1,049		70		17		1,136		1,165		92		30		1,287
Total revenue	$	203,781	$	143,231	$	17	$	347,029	$	193,612	$	120,652	$	30	$	314,294

	As of
	June 30, 2020			December 31, 2019
Gross deferred revenue	$	67,817		$	63,204
Gross contract assets		(29,279	)		(38,557	)
Deferred revenue, net	$	38,538		$	24,647

	Balance, Beginning of Period		Charges to Expense ⁽¹⁾		Amounts Written-off			Balance, End of Period
For the quarter ended September 30, 2017	$	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, 2017	$	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
For the quarter ended September 30, 2017	$	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, 2017	$	8,686	$	-	$	(5,166	)	$	(243	)	$	3,277
For the year to date ended September 30, 2016	$	18,985	$	389	$	(9,176	)	$	(97	)	$	10,101

	For the Quarter Ended June 30, 2020			For the Year to Date Ended June 30, 2020
Lease expenses ⁽¹⁾
Fixed lease expenses - operating	$	3,116		$	6,264
Variable lease expenses - operating		650			2,565
Sublease income		(563	)		(1,351	)
Total lease expenses	$	3,203		$	7,478

Other information
Gross operating cash flows for operating leases ⁽²⁾	$	(5,930	)	$	(12,120	)
Operating cash flows from subleases⁽²⁾	$	558		$	1,234

	For the Quarter Ended June 30, 2019			For the Year to Date Ended June 30, 2019
Lease expenses ⁽¹⁾
Fixed lease expenses - operating	$	3,335		$	6,705
Variable lease expenses - operating		2,248			4,634
Sublease income		(1,149	)		(2,257	)
Total lease expenses	$	4,434		$	9,082

Other information
Gross operating cash flows for operating leases ⁽²⁾	$	(8,003	)	$	(18,103	)
Operating cash flows from subleases⁽²⁾	$	1,055		$	2,305

	As of June 30, 2020			As of June 30, 2019
Weighted average remaining lease term (in months) – operating leases		73			70
Weighted average discount rate – operating leases		5.0	%		5.4	%

	Balance, Beginning of Period		Charges Incurred ⁽¹⁾		Net Cash Payments			Other ⁽²⁾		Balance, End of Period
For the quarter ended September 30, 2017	$	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, 2017	$	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

	For the Quarter Ended June 30,				For the Year to Date Ended June 30,
Award Type	2020		2019		2020			2019
Stock options	$	293	$	409	$	698		$	860
Restricted stock units settled in stock		2,994		623		5,797			1,538
Restricted stock units settled in cash		-		446		(240	)		1,437
Total share-based compensation expense	$	3,287	$	1,478	$	6,255		$	3,835

	Options			Weighted Average Exercise Price
Outstanding as of December 31, 2016		3,086		$	11.18
Granted		360			8.60
Exercised		(274	)		8.29
Cancelled		(295	)		23.87
Outstanding as of September 30, 2017		2,877		$	9.84
Exercisable as of September 30, 2017		1,779		$	12.32

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

	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
Granted		-		-
Vested		-		-
Forfeited		-		-
Outstanding as of September 30, 2017 ⁽¹⁾		76	$	4.44

	~~Restricted Stock~~ ~~Units to be Settled~~ ~~in Cash~~
~~Outstanding as of December 31, 2016~~		~~1,192~~
~~Granted~~		-
~~Vested~~		~~(647~~	)
~~Forfeited~~		~~(66~~	)
~~Outstanding as of September 30, 2017~~		~~479~~

	Total Assets as of⁽¹⁾
	September 30, 2017		December 31, 2016
CTU	$	72,589	$	76,143
AIU		65,275		66,081
Total University Group		137,864		142,224
Corporate and Other		292,929		334,945
Subtotal		430,793		477,169
Culinary Arts ⁽²⁾		48,995		57,443
Transitional Group ⁽²⁾		15,316		18,736
Discontinued Operations		6,093		6,253
Total	$	501,197	$	559,601

	Total Assets as of⁽³⁾
	June 30, 2020		December 31, 2019
CTU	$	97,489	$	100,414
AIU ⁽¹⁾		142,282		104,747
Total University Group		239,771		205,161
Corporate and Other ⁽²⁾		415,247		393,904
Discontinued Operations		81		81
Total	$	655,099	$	599,146

	ACTUAL						ACTUAL
	For the Quarter Ended June 30,						For the Year to Date Ended June 30,
Adjusted Operating Income	2020 ⁽⁷⁾			2019			2020 ⁽⁷⁾			2019
Total Company
Operating income	$	37,368		$	184		$	74,671		$	30,155
Depreciation and amortization		4,151			2,235			6,790			4,468
Asset impairment ⁽¹⁾		-			-			612			-
Lease expenses for vacated space⁽²⁾		202			392			419			1,158
Significant legal settlements ⁽³⁾		-			30,000			-			30,000
Adjusted Operating Income -- Total Company	$	41,721		$	32,811		$	82,492		$	65,781

	ACTUAL						ACTUAL
	For the Quarter Ended June 30,						For the Year to Date Ended June 30,
Adjusted Earnings Per Diluted Share	2020 ⁽⁷⁾			2019			2020 ⁽⁷⁾			2019
Total Company
Reported Earnings Per Diluted Share	$	0.40		$	(0.01	)	$	0.80		$	0.34
Pre-tax adjustments included in operating expenses:
Amortization ⁽⁴⁾	0.02				-		0.02				-
Asset impairment ⁽¹⁾		-			-		0.01				-
Lease expenses for vacated space ⁽²⁾		-			0.01		0.01				0.02
Significant legal settlements ⁽³⁾		-			0.41			-			0.41
Total pre-tax adjustments	$	0.02		$	0.42		$	0.04		$	0.43
Tax effect of adjustments ⁽⁵⁾		(0.01	)		(0.02	)		(0.02	)		(0.03	)
Tax effect of change in settlement deductibility ⁽⁶⁾		-			(0.05	)		-			(0.05	)
Total adjustments after tax		0.01			0.35			0.02			0.35
Adjusted Earnings Per Diluted Share -- Total Company	$	0.41		$	0.34		$	0.82		$	0.69

	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	)

	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:

*10.1	Form of Non-Employee Director Restricted Stock Unit Award Agreement pursuant to the Career Education Corporation 2016 Incentive Compensation Plan (used for awards commencing May 2020)	Exhibit 10.1 to our Form 8-K filed on June 1, 2020

+*10.2	First Amendment and Summary of Material Modifications to the Career Education Corporation Executive Severance Plan & Summary Plan Description

+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~~101.INS	~~The following financial information from our Quarterly Report on Form 10-Q for~~Inline XBRL Instance Document- the ~~nine months ended September 30, 2017, filed with~~instance document does not appear in the ~~SEC on November 2, 2017, formatted in Extensible Business Reporting Language (XBRL): (i)~~Interactive Data File because its XBRL tags are embedded within the Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016, (ii) the Unaudited Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the three and nine months ended September 30, 2017 and September 30, 2016, (iii) the Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and September 30, 2016, and (iv) Notes to Unaudited Condensed Consolidated Financial StatementsInline XBRL document
	~~___~~
+101.SCH	Inline XBRL Taxonomy Extension Schema Document

+101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document

+101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document

+101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document

+101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document

+104	The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, formatted in Inline XBRL (included in Exhibit 101)
	____
	* Management contract or compensatory plan or arrangement required to be filed as an Exhibit on this Form 10-Q.
	+Filed herewith.

	~~CAREER~~PERDOCEO EDUCATION CORPORATION

Date: ~~November 2, 2017~~August 6, 2020	By:	/s/ TODD S. NELSON
		Todd S. Nelson President and Chief Executive Officer (Principal Executive Officer)

Date: ~~November 2, 2017~~August 6, 2020	By:	/s/ ASHISH R. GHIA
		Ashish R. Ghia Senior Vice President and ~~Interim~~ Chief Financial Officer (Principal Financial Officer)