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,			March 31,			December 31,
	2017			2016
(In Thousands, Except Share and Per Share Amounts)							2022			2021
ASSETS	(unaudited)						(unaudited)
CURRENT ASSETS:
Cash and cash equivalents, unrestricted	$	16,276		$	49,507		$	190,443		$	319,982
Restricted cash		789			1,375			1,210			5,196
Restricted short-term investments		7,070			8,597
Total cash, cash equivalents and restricted cash								191,653			325,178
Short-term investments		151,803			147,681			307,620			174,213
Total cash and cash equivalents, restricted cash and short-term investments		175,938			207,160			499,273			499,391
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								74,869			79,418
Allowance for credit losses								(40,765	)		(36,385	)
Student receivables, net								34,104			43,033
Receivables, other								8,845			1,692
Prepaid expenses		8,769			14,446			9,874			6,919
Inventories		991			1,868			1,405			904
Other current assets		1,112			817			2,702			2,514
Assets of discontinued operations		171			148
Total current assets		209,111			248,193			556,203			554,453

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 $116,927 and $113,711 as of March 31, 2022 and December 31, 2021, respectively								27,956			28,355
Right of use asset, net								34,535			36,664
Goodwill		87,356			87,356			162,579			162,579
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 $10,328 and $8,662 as of March 31, 2022 and December 31, 2021, respectively								30,542			32,208
Student receivables, gross								4,206			4,242
Allowance for credit losses								(2,892	)		(2,870	)
Student receivables, net								1,314			1,372
Deferred income tax assets, net		147,990			158,272			24,128			25,114
Other assets		7,018			7,608			6,570			6,688
Assets of discontinued operations		5,922			6,105
TOTAL ASSETS	$	501,197		$	559,601		$	843,827		$	847,433
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Lease liability-operating							$	8,355		$	9,400
Accounts payable	$	11,780		$	10,099			12,135			10,838
Accrued expenses:
Payroll and related benefits		31,646			41,203			17,648			25,312
Advertising and marketing costs		10,732			10,253			9,971			8,690
Income taxes		1,898			1,830			10,982			211
Other		35,127			69,244			12,148			15,180
Deferred tuition revenue		22,401			28,364
Liabilities of discontinued operations		6,434			8,219
Deferred revenue								39,108			70,613
Total current liabilities		120,018			169,212			110,347			140,244

NON-CURRENT LIABILITIES:
Deferred rent obligations		16,253			30,713
Lease liability-operating								33,757			35,549
Other liabilities		23,384			31,751			21,343			21,530
Liabilities of discontinued operations		2,156			6,422
Total non-current liabilities		41,793			68,886			55,100			57,079

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; 89,264,034 and 88,724,438 shares issued, 68,779,291 and 68,748,662 shares outstanding as of March 31, 2022 and December 31, 2021, respectively								893			887
Additional paid-in capital		619,483			613,325			677,311			674,242
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 loss								(1,541	)		(96	)
Retained earnings								284,050			251,972
Treasury stock, at cost; 20,484,743 and 19,975,776 shares as of March 31, 2022 and December 31, 2021, respectively								(282,333	)		(276,895	)
Total stockholders' equity		339,386			321,503			678,380			650,110
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	501,197		$	559,601		$	843,827		$	847,433

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

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

For the Quarter Ended September 30,

For the Year to Date Ended September 30,

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 March 31,
(In Thousands, Except Per Share Amounts)	2022			2021
REVENUE:
Tuition and fees, net	$	181,327		$	182,831
Other		1,632			807
Total revenue		182,959			183,638

OPERATING EXPENSES:
Educational services and facilities		28,088			28,974
General and administrative		106,296			110,045
Depreciation and amortization		4,882			4,002
Total operating expenses		139,266			143,021
Operating income		43,693			40,617

OTHER INCOME:
Interest income		333			359
Interest expense		(103	)		(109	)
Miscellaneous (expense) income		(89	)		131
Total other income		141			381

PRETAX INCOME		43,834			40,998
Provision for income taxes		11,756			10,245
NET INCOME		32,078			30,753

NET INCOME PER SHARE - BASIC:	$	0.47		$	0.44

NET INCOME PER SHARE - DILUTED:	$	0.46		$	0.43

WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		68,746			70,149
Diluted		69,567			71,482

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

~~UNAUDITED~~ CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~COMPREHENSIVE INCOME

For the Year to Date Ended September 30,

2017

2016

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$
12,485

$
14,164

Adjustments to reconcile net income to net

cash (used in) provided by operating activities:

Asset impairment

-

237

Depreciation and amortization expense

11,368

16,986

Bad debt expense

21,516

23,201

Compensation expense related to share-based awards

3,616

2,251

Gain on disposition of property and equipment

-

(438
)
Deferred income taxes

10,282

7,373

Changes in operating assets and liabilities

(88,374
)

(47,510
)
Net cash (used in) provided by operating activities

(29,107
)

16,264

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of available-for-sale investments

(202,050
)

(137,755
)
Sales of available-for-sale investments

199,340

99,718

Purchases of property and equipment

(3,426
)

(3,352
)
Proceeds on the sale of assets

-

3,600

Payments of cash upon sale of businesses

-

(62
)
Net cash used in investing activities

(6,136
)

(37,851
)

CASH FLOWS FROM FINANCING ACTIVITIES:

Issuance of common stock

2,548

581

Payment on borrowings

-

(38,000
)
Payments of employee tax associated with stock compensation

(1,170
)

(550
)
Net cash provided by (used in) financing activities

1,378

(37,969
)

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

	For the Quarter Ended March 31,
(In Thousands)	2022			2021
NET INCOME	$	32,078		$	30,753
OTHER COMPREHENSIVE LOSS, net of tax:
Foreign currency translation adjustments		(81	)		(129	)
Unrealized loss on investments		(1,364	)		(221	)
Total other comprehensive loss		(1,445	)		(350	)
COMPREHENSIVE INCOME	$	30,633		$	30,403

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

	Common Stock				Treasury Stock								Accumulated Other
(In Thousands)	Issued Shares		$0.01 Par Value		Purchased Shares			Cost			Additional Paid-in Capital		Comprehensive Loss			Retained Earnings		Total
BALANCE, January 1, 2022		88,724	$	887		(19,976	)	$	(276,895	)	$	674,242	$	(96	)	$	251,972	$	650,110
Net income		-		-		-			-			-		-			32,078		32,078
Foreign currency translation		-		-		-			-			-		(81	)		-		(81	)
Unrealized loss on investments, net of tax		-		-		-			-			-		(1,364	)		-		(1,364	)
Treasury stock purchased		-		-		(363	)		(3,828	)		-		-			-		(3,828	)
Share-based compensation expense		-		-		-			-			2,416		-			-		2,416
Common stock issued		540		6		(146	)		(1,610	)		653		-			-		(951	)
BALANCE, March 31, 2022		89,264	$	893		(20,485	)	$	(282,333	)	$	677,311	$	(1,541	)	$	284,050	$	678,380

	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, 2021		87,265	$	873		(17,203	)	$	(246,088	)	$	658,423	$	364		$	142,335	$	555,907
Net income		-		-		-			-			-		-			30,753		30,753
Foreign currency translation		-		-		-			-			-		(129	)		-		(129	)
Unrealized loss on investments, net of tax		-		-		-			-			-		(221	)		-		(221	)
Share-based compensation expense		-		-		-			-			3,753		-			-		3,753
Common stock issued		530		5		(160	)		(2,032	)		309		-			-		(1,718	)
BALANCE, March 31, 2021		87,795	$	878		(17,363	)	$	(248,120	)	$	662,485	$	14		$	173,088	$	588,345

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

	For the Quarter Ended March 31,
(In Thousands)	2022			2021

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	32,078		$	30,753
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization expense		4,882			4,002
Bad debt expense		13,715			13,719
Compensation expense related to share-based awards		2,416			3,753
Deferred income taxes		986			4,767
Changes in operating assets and liabilities		(31,923	)		(12,286	)
Net cash provided by operating activities		22,154			44,708

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale investments		(194,997	)		(126,009	)
Sales of available-for-sale investments		59,825			64,408
Purchases of property and equipment		(4,742	)		(1,042	)
Payments for potential business acquisition		(7,000	)		-
Net cash used in investing activities		(146,914	)		(62,643	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock		659			314
Purchase of treasury stock		(3,828	)		-
Payments of employee tax associated with stock compensation		(1,610	)		(2,032	)
Release of cash held in escrow		(3,986	)		-
Net cash used in financing activities		(8,765	)		(1,718	)

NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		(133,525	)		(19,653	)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of the period		325,178			109,684
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of the period	$	191,653		$	90,031

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~~blended learning programs. Our ~~two universities~~accredited institutions – Colorado Technical University (“CTU”) and the American InterContinental University ~~(“AIU”~~System (“AIUS” or “AIU System”) ~~and Colorado Technical University (“CTU”)~~ – provide degree programs from associate through ~~the master’s or~~ doctoral level as well as ~~associate~~non-degree professional development and ~~bachelor’s levels. Both~~continuing education offerings. Our universities ~~predominantly serve~~offer students ~~online with~~industry-relevant and career-focused ~~degree~~academic programs that are designed to meet the educational ~~demands~~needs of today’s busy adults. ~~AIU~~CTU and ~~CTU~~AIUS 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, institutions and universities can be found at~~ ~~www.careered.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.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included. Operating results for the quarter ~~and year to date~~ ended ~~September 30, 2017~~March 31, 2022 are not necessarily indicative of the results that may be expected for the full year ending December 31, ~~2017.~~2022.

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 ~~AIU (comprises University Group); Culinary Arts~~ and Transitional Group (comprises Career Schools Group). Campuses 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 course of study. Campuses included in our Culinary Arts segment successfully completed their teach-outs as of September 30, 2017. AIUS.

As of ~~the fourth quarter of 2017, Culinary Arts will no longer be its own operating segment.~~

~~During the third quarter of 2017,~~January 1, 2022, 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~~began recording income (loss) from discontinued operations ~~reporting.~~

~~Effective January 2017, the Company now accounts for cash flows related to cash payments for employee taxes made by the Company~~within other miscellaneous income (expense) on ~~the employees’ behalf for withheld shares related to stock settlements~~its unaudited condensed consolidated statements of income as ~~a financing activity within the statement of cash flows. This change was a result of updated guidance issued by the FASB under Accounting Standards Update (“ASU”) No 2016-09,~~ ~~Compensation – Stock Compensation (Topic 718). Prior period~~future amounts ~~were recast to cash flows from financing activities from cash flows from operating activities to~~will 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~~immaterial 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~~.infrequent. Prior period amounts are ~~now included in~~also immaterial and have been recast to maintain comparability.

During the first quarter of 2022, the Company paid an advance deposit related to a potential acquisition which is reflected within other current receivables on its unaudited condensed consolidated balance sheets and as a cash outflow from investing activities on its unaudited condensed consolidated statements of cash flows. The fair value of this note receivable approximates carrying value due to its short term nature and ~~cash equivalents, beginning and end of the period, which were previously presented within cash flows from financing activities for changes in balances,~~is expected to be ~~comparable to current year reporting. See Note 3 “Recent Accounting Pronouncements” for further discussion.~~offset against the final purchase price should the acquisition close.

In ~~May 2017,~~March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. ~~2017-09, Compensation~~2022-02, Financial Instruments – ~~Stock Compensation~~Credit Losses (Topic ~~718)~~326): ~~Scope of Modification Accounting.~~ Troubled Debt Restructurings and Vintage Disclosures. The amendments in this ASU ~~provide clarity~~eliminate the Troubled Debt Restructuring (“TDR”) recognition and ~~reduce both diversity in practice~~measurement guidance and, ~~cost and complexity when applying~~instead, require that an entity evaluate whether the ~~guidance in Topic 718, Compensation – Stock Compensation, to~~modification represents a ~~change to~~new loan or a continuation of an existing loan (consistent with 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.~~accounting for other loan modifications). The amendments ~~in this update provide further guidance about which changes~~also enhance existing disclosure requirements and introduce new requirements related to ~~the terms or conditions~~certain modifications of ~~a share-based payment award require an entity~~receivables made to ~~apply modification accounting in Topic 718.~~borrowers experiencing financial difficulty. For all public business entities, ASU ~~2017-09~~2022-02 is effective for annual periods and interim periods beginning after December 15, ~~2017;~~2022; early adoption is permitted. ~~We have evaluated and early adopted this guidance. The adoption did not impact the presentation of our financial condition, results of operations and disclosures.~~

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

~~In January 2017, the FASB issued ASU No. 2017-03, 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~~. The amendments in this ASU announced disclosure of the impact that recently issued accounting standards will have on the financial statements of a registrant when such standards are adopted in a future period. The amendment provides SEC staff views that a registrant should evaluate ASUs that have not yet been adopted to determine the appropriate financial statement disclosures and the potential material effects of those ASUs on the financial statements when adopted. The changes and corrections within this guidance did not significantly impact the presentation of our financial condition, results of operations and disclosures.

~~In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718):~~ ~~Improvement to Employee Share-Based Payment Accounting~~. This ASU simplified several aspects of accounting for share-based payment award transactions including 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. We have evaluated and adopted this guidance beginning 2017 for all periods presented. The adoption did not significantly impact the presentation of our financial condition, results of operations and disclosures.

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

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

~~In February 2017, the FASB issued ASU No. 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20):~~ ~~Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.~~ 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 for annual periods and interim periods beginning after December 15, 2019; early adoption is permitted for all organizations for annual periods and interim periods beginning after December 15, 2018. We are currently evaluating this guidance and believe the adoption will not significantly impact the presentation of our financial condition, results of operations and disclosures.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The objective of Topic 842 is to establish transparency and comparability that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. The core principle of Topic 842 is that lessees should recognize the assets and liabilities that arise from leases. All leases create an asset and liability for the lessee in accordance with FASB Concept Statements No. 6 Elements of Financial Statements, and, therefore, recognition of those lease assets and liabilities represents an improvement over previous GAAP. The accounting applied for lessors largely remained unchanged. The amendment in this ASU requires recognition of a lease liability and a right to use asset at the lease inception date. For all public business entities, ASU 2016-02 is effective for annual periods and interim periods beginning after December 15, 2018; early adoption is permitted. While we are continuing to assess all potential impacts of the standard, we currently believe the most significant impact primarily relates to our accounting for real estate leases and real estate subleases. The Company expects to 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. We are currently evaluating this guidance and believe the adoption will significantly impact the presentation of our financial condition, results of operations and disclosures.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), a new accounting standard intended to improve and converge the financial reporting requirements between U.S. GAAP and International 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 30, 2017~~March 31, 2022 and December 31, ~~2016~~2021 (dollars in thousands):

	September 30, 2017									March 31, 2022
			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	$	5,000	$	-	$	-		$	5,000
Non-governmental debt securities		118,111		11		(74	)		118,048		208,401		3		(1,192	)		207,212
Treasury and federal agencies		32,462		4		(61	)		32,405		95,737		-		(329	)		95,408
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)										$	309,138	$	3	$	(1,521	)	$	307,620

	December 31, 2016									December 31, 2021
			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	$	5,028	$	-	$	(1	)	$	5,027
Non-governmental debt securities		107,305		22		(113	)		107,214		168,623		27		(184	)		168,466
Treasury and federal agencies		36,480		10		(73	)		36,417		720		-		-			720
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)										$	174,371	$	27	$	(185	)	$	174,213

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, certificates of deposit and commercial paper. 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 infor which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of ~~September 30, 2017,~~March 31, 2022, 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 30, 2017~~March 31, 2022 and December 31, ~~2016~~2021. Additionally, money market funds of $51.8 million and $225.3 million included within cash and cash equivalents on our condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021, respectively, were measured under Level 1, and commercial paper and treasury bills of $63.9 million included within cash and cash equivalents on our unaudited condensed consolidated balance sheets as ~~follows (dollars in thousands):~~

Our investment in an equity affiliate, which is recorded within other noncurrent assets on our condensed consolidated balance sheets, isrepresents an international investment in a private company. As of ~~September 30, 2017,~~March 31, 2022, our investment in an equity affiliate equated to a 30.7%, or ~~$3.3~~$3.0 million, non-controlling interest in CCKF, a Dublin-based educational technology company providing intelligent ~~adaptive~~ systems to power the delivery of individualized and personalized learning.

During the quarters ended ~~September 30, 2017~~March 31, 2022 and ~~2016,~~2021, we recorded approximately $0.1 million of loss and approximately $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,~~gain, respectively, related to our proportionate investment in CCKF within miscellaneous (expense) income ~~(expense)~~ on our unaudited condensed consolidated statements of ~~income (loss) and comprehensive income (loss).~~income.

We make periodic operating maintenance payments to CCKF related to proprietary rights that we use in our intellipath^TM® ~~adaptive~~ personalized learning technology. The total fees ~~paid to CCKF for~~recorded during the quarters ended March 31, 2022 and ~~years to date ended September 30, 2017 and 2016~~2021 were as follows (dollars in thousands):

~~During~~On September 8, 2021, the ~~fourth quarter of 2015, the Company; its wholly-owned subsidiary, CEC Educational Services, LLC (“CEC-ES”);~~Company 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~~Wintrust Bank N.A. (“Wintrust”), in its capacities as the ~~initial lender~~sole lead arranger, sole bookrunner, administrative agent and letter of credit issuer ~~thereunder and the administrative agent~~ for the lenders ~~which~~ from time to time ~~may be~~ parties tothereto. The credit agreement provides the ~~Credit Agreement, to among other things, decrease~~Company with the benefit of a $125.0 million senior secured revolving credit ~~facility to $95.0~~facility. The $125.0 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~~ credit agreement is scheduled to mature on ~~December 31, 2018.~~September 8, 2024. So long as no default has occurred and other conditions have been met, the Company may request an increase in the aggregate commitment in an amount not to exceed $50.0 million. The loans and letter of credit obligations under the ~~Credit Agreement~~credit agreement are secured by substantially all assets of the Company and the subsidiary guarantors.

The credit agreement and the ancillary documents executed in connection therewith contain customary affirmative, negative and financial maintenance covenants. The Company is required to maintain unrestricted cash, cash equivalents and short-term investments in domestic accounts in an amount at least equal to the aggregate loan commitments then in effect. Acquisitions to be ~~secured~~undertaken by ~~100%~~the Company must meet certain criteria, and the Company’s ability to make restricted payments, including payments in connection with a repurchase of shares of our common stock, is subject to an aggregate maximum of $100.0 million per fiscal year. Upon the occurrence of certain regulatory events or if the Company’s unrestricted cash, ~~collateral.~~ cash equivalents and short term investments are less than 125% of the aggregate amount of the loan commitments then in effect, the Company is required to maintain cash in a segregated, restricted account in an amount not less than the aggregate loan commitments then in effect. The credit agreement also contains customary representations and warranties, events of default, and rights and remedies upon the occurrence of any event of default thereunder, including rights to accelerate the loans, terminate the commitments and realize upon the collateral securing the obligations under the credit agreement.

Under the credit agreement, outstanding principal amounts bear annual interest at a fluctuating rate equal to 1.0% less than the administrative agent’s prime commercial rate, subject to a 3.0% minimum rate. A higher rate may apply to late payments or if any event of default exists.

As of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, there were no0 outstanding borrowings under the revolving credit facility.

The following tables disaggregate our revenue by major source for the quarters ended March 31, 2022 and 2021 (dollars in thousands):

	For the Quarter Ended March 31, 2022								For the Quarter Ended March 31, 2021
	CTU ⁽⁴⁾		AIUS ⁽⁵⁾		Corporate and Other⁽⁶⁾		Total		CTU		AIUS		Corporate and Other⁽⁶⁾		Total
Tuition, net ⁽¹⁾	$	106,927	$	65,451	$	-	$	172,378	$	99,605	$	74,498	$	-	$	174,103
Technology fees		5,442		3,110		-		8,552		5,483		2,795		-		8,278
Other miscellaneous fees ⁽²⁾		182		215		-		397		292		158		-		450
Total tuition and fees, net		112,551		68,776		-		181,327		105,380		77,451		-		182,831
Other revenue ⁽³⁾		597		756		279		1,632		442		26		339		807
Total revenue	$	113,148	$	69,532	$	279	$	182,959	$	105,822	$	77,477	$	339	$	183,638

Our revenue, which is derived primarily from academic programs taught to students who attend our universities, 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 universities and are reflected net of scholarships and tuition discounts. Our universities charge tuition and fees at varying amounts, depending on the university, the type of program and specific curriculum. Our universities 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 for our degree programs and recognize the tuition as revenue on a straight-line basis over the academic term. 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. We bill student tuition upon enrollment for our non-degree professional development and continuing education offerings and recognize the tuition as revenue on a straight-line basis over the length of the offering.

Other revenue, which consists of contract trainingrevenue, bookstore sales and miscellaneous non-student related revenue, is billed and recognized as goods are delivered or services are performed.

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 university and program. Academic terms are determined by start dates, which vary by university and program and are generally 8-12 weeks in length. Our non-degree professional development and continuing education offerings are generally 16-52 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 AIUS’ Trident and DigitalCrafts programs and CTU’s Hippo programs, students are billed as they enroll in courses, including courses related to future periods. Any billings for future periods would meet the definition of a contract asset as we do not have the unconditional right to receive payment as the course has not yet started. Contract assets related to future periods are offset against the respective deferred revenue associated with the future period.

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 periods. 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 periods remain as contract assets until the course begins and the student reaches the point in that course that they are no longer entitled to a refund.

The amount of deferred revenue balances which are being offset with contract assets balances as of March 31, 2022 and December 31, 2021 were as follows (dollars in thousands):

Changes in our deferred revenue balances for the quarters ended March 31, 2022 and 2021 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, as well as private loans for our non-degree programs. 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 university and make payments on a monthly basis per the terms of the payment plan.

If a student withdraws from one of our universities 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 of $2.3million and $2.1 million as of March 31, 2022 and December 31, 2021, respectively. Students are typically entitled to a partial refund until approximately halfway through their term. Pursuant to each university’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 university subsequent to that date.

Management reassesses collectability when a student withdraws from the university and has unpaid tuition charges for the current term which the university is entitled to retain per the applicable refund policy. Certain 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 universities, and once the refund calculation is performed and funds are returned to the student, if applicable under our refund policy, no further consideration is due back to the student. We recognized $0.4 million of revenue for each of the quarters ended March 31, 2022 and 2021, 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 on ~~past~~any of our payment plans.

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, as well as private loans for our non-degree programs. 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. For those balances that are not received during the academic term, the balance is typically due ~~student receivables; interest~~within the current academic year which is ~~recorded only upon collection.~~

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 to provide an aging of our non-current student receivable balances as a result of the methodology utilized in determining our earned student receivable balances. Student receivables are recognized on our condensed consolidated balance sheets as they are deemed earned over the course of a student’s program and/or term, and therefore cash collections are not applied against specifically dated transactions.

Our standard student receivable allowance 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~~trend 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 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, 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~~$1.3 million and ~~$3.1~~$1.4 million, respectively.

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 for credit losses related to our student receivable portfolio in accordance with the guidance under ASU 2016-13 for the quarters ended March 31, 2022 and ~~years to date ended September 30, 2017 and 2016~~2021 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 2032. 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~~Historically, for certain of our leased locations we have vacated the ~~accrual~~facility and have fully or partially subleased the space. As of March 31, 2022, we have 1 sublease with a remaining term of 13 months, for ~~severance~~which we remain the guarantor under the lease and ~~related charges was $3.0 million and $7.3 million, respectively, as of September 30, 2017 and December 31, 2016, which is recorded within current accrued expenses – payroll and related benefits;~~therefore become the ~~long-term portion~~intermediate lessor. We have recognized sublease income of $0.3 million and ~~$1.4~~$0.5 million ~~is recorded within other non-current liabilities on our condensed consolidated balance sheets~~for the quarters ended March 31, 2022 and 2021, 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 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 years to date ended September 30, 2017 and 2016 were as follows (dollars in thousands):income.

~~(1)Includes charges for newly vacated spaces and subsequent adjustments for accretion, revised estimates and variances~~ ~~between estimated and actual charges, net of any reversals for terminated lease obligations.~~

~~(2)Includes existing prepaid rent and deferred rent liability balances for newly vacated spaces that offset the losses incurred in the period recorded.~~

In addition to the charges detailed above, a number 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.

An accrual for estimated legal fees and settlements of ~~$2.2~~$1.8 million and ~~$34.5~~$1.1 million at ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, 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.~~further information develops, circumstances change or contingencies are resolved. 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~~April 8, 2022, the Company ~~as defendants. Plaintiffs filed~~received a Civil Investigative Demand (“CID”) from the ~~complaint individually~~Department of Justice (“DOJ”). The CID requests information 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 graduationdocumentation 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 governmentCTU regarding compliance with ~~certain provisions~~federal financial aid credit hour requirements for five of its entry-level courses as well as information regarding CTU’s learning management system. The information sought covers 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,~~time period from January 1, 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~~present. The Company is cooperating with the DOJ with a view towards resolving this inquiry as promptly as possible.

We receive from time-to-time requests from state attorneys general, federal and state government agencies and accreditors relating to our institutions, to specific complaints they have received from students or former students or to student loan forgiveness claims which seek information about students, our programs, and other matters ~~described above, we~~relating to our activities. 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 action or claims of non-compliance. 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,~~former students, alleged violations of the Telephone Consumer Protection Act, both individually and on behalf of a putative class, and ~~routine~~ employment matters. Periodically matters arise that we consider outside the scope of ordinary routine litigation incidental to our business. While we currently believe that ~~such claims,~~these matters, individually or in aggregate, will not have a material adverse impact on our financial position,

Contingent Consideration for ~~the period in which the effect becomes probable and reasonably estimable.~~Business Acquisitions

~~The Attorney General of Connecticut is serving as the point of contact~~We have an accrual 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 relatecontingent consideration amounts related to the ~~investigation by~~DigitalCrafts and Hippo acquisitions in the ~~attorneys general~~aggregate fair value amount of ~~whether the Company and its schools have complied with certain state consumer protection laws, and generally focus on the Company's practices relating~~$3.2 million as of March 31, 2022. Pursuant to the ~~recruitment~~acquisition agreements, post-closing contingent consideration payments are expected to be paid in early 2024 based upon the achievement 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 connectioncertain financial metrics, 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 to a Civil Investigative Demand from the U.S. Federal Trade Commission (“FTC”). The request was made pursuant to a November 2013 resolution by the FTC directing an investigation to determine whether unnamed persons, partnerships, corporations, or others have engaged or are engaging in deceptive or unfair acts or practices in or affecting commerce in the advertising, marketing or sale of secondary or postsecondary educational products or services, or educational accreditation products or services. The information request requires the Company to provide documents and information regarding a broad spectrum of the business and practices of its subsidiaries and institutions for the time period of January 1, 2010 to the present. The Company has responded 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 oraggregate maximum 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, 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 finds violations of the Higher Education Act or related regulations, ED may impose monetary or program level sanctions, impose some period 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 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 policies 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 review of these materials, 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 reviews 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.$6.5 million.

The determination of the annual effective tax rate 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):~~rate:

	For the Quarter Ended September 30,						For the Year to Date Ended September 30,						For the Quarter Ended March 31,
	2017			2016			2017			2016
Pretax income (loss)	$	5,095		$	(479	)	$	24,901		$	23,990
(Dollars in Thousands)													2022			2021
Pretax income													$	43,834		$	40,998
Provision for income taxes	$	1,597		$	21		$	11,143		$	8,776		$	11,756		$	10,245
Effective rate		31.3	%		4.4	%		44.7	%		36.6	%		26.8	%		25.0	%

As of December 31, ~~2016,~~2021, a valuation allowance of ~~$49.7~~$32.2 million was maintained with respect to our foreign tax credits ~~separate~~not supported by an Overall Domestic Loss (“ODL”) account balance, state net operating losses, and ~~Illinois edge credits.~~capital loss carryforward. 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 $32.2 million valuation allowance against ~~these~~our non-ODL supported foreign tax credits, ~~and separate~~ state net operating losses, and capital loss carryforward as of ~~September 30, 2017.~~March 31, 2022.

The effective tax rate for the quarter ~~and year to date~~ ended ~~September 30, 2017,~~March 31, 2022 was ~~primarily~~ impacted by ~~tax reserves and~~ the tax effect of ~~expenses that are not deductible for~~stock-based compensation and the release of previously recorded tax ~~purposes. For the current quarter we recognized less than $0.1 million~~reserves. The net effect 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 million unfavorable adjustment associated with the adoption of ASU 2016-09, whichthese discrete items increased the effective tax rate by ~~4.6%~~0.5%. ~~For~~The effective tax rate for the ~~year to date~~quarter ended ~~September 30, 2016,~~March 31, 2021 was benefitted by the release of previously recorded tax reserves, which reduced 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 and 2014. The effect of this discrete item was to decrease the year to date effective tax rate by ~~8.8%~~1.3%.

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~~$1.6 million in the next twelve months as a result of the completion of various tax audits currently in process and the expiration of the statute of limitations in several jurisdictions. The income tax rate for the quarter ~~and year to date~~ ended ~~September 30, 2017~~March 31, 2022 does not take into account the possible reduction of the liability for unrecognized tax benefits. The impact of a reduction to the liability will be treated as a discrete item in the period the reduction occurs. We recognize interest and penalties related to unrecognized tax benefits in tax expense. As of ~~September 30, 2017,~~March 31, 2022, we had accrued ~~$1.9~~$2.0 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 Perdoceo Education Corporation Amended and Restated 2016 Incentive Compensation ~~Plans~~

~~The~~Plan (the “2016 Plan”) became effective (as the Career Education Corporation 2016 Incentive Compensation Plan) on May 24, 2016, and the amendment and restatement of the 2016 Plan ~~(the “2016 Plan”) was approved~~became effective on June 3, 2021, upon its approval by the Company’s ~~stockholders on May 24, 2016. The~~stockholders.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 quarters ended March 31, 2022 and 2021, the Company granted approximately 0.3 million restricted stock units in each period which are not “performance-based” and which have a grant-date fair value of approximately $2.9 million and $3.6 million, respectively.

Additionally, for the quarters ended March 31, 2022 and 2021, the Company granted approximately 0.4 million restricted stock units in each period which are “performance-based” and which have a grant-date fair value of approximately $4.0 million and $4.2 million, respectively. 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.

All restricted stock units granted in 2022 and 2021 are to be settled in shares of our common stock.

There were 0 stock options granted during each of the quarters ended March 31, 2022 and 2021.

Total share-based compensation expense for the quarters ended March 31, 2022 and 2021 for all types of awards was as follows (dollars in thousands):

As of ~~September 30, 2017,~~March 31, 2022, we estimate that total compensation expense of approximately ~~$6.0~~$17.0 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 January 27, 2022, the Board of Directors of the Company approved a new stock repurchase program for up to $50.0 million which commenced March 1, 2022 and expires September 30, 2023. The other terms of the new stock repurchase program are consistent with the Company’s previous stock repurchase program which expired February 28, 2022.

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 of stock but excluding restricted stock units to be settled in cash.~~its discretion, begin, suspend or terminate repurchases at any time, without any prior notice.

~~Stock Options.~~ ~~The exercise price of stock options and stock appreciation rights granted under each of~~During the ~~plans is equal to the fair market value~~quarter ended March 31, 2022, we repurchased 0.4million shares of our common stock ~~on the date~~for approximately $3.8 million at an average price of ~~grant. Employee~~$10.56per share. There were 0 stock options generally become exercisable 25% per year over a four-year service period beginning on the date of grant and expire ten years from the date of grant. Non-employee directors’ stock options expire ten years from the date of grant and generally become 100% exercisable after the first anniversary of grant date. Grants of stock options are generally only subject to the service conditions discussed previously.

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

~~Restricted Stock Units to be Settled in Stock.~~ Restricted stock units to be settled in shares of stock generally become fully vested as follows: 25% per year over a four-year service period or one-third for each of the first through third anniversary of the grant date. Certain awards granted in 2016 vest 20% after the first year, 50% after the second year and 30% after the third year 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~~repurchases during the quarter ended ~~September 30, 2017.~~March 31, 2021.

~~Stock-Based Compensation Expense.~~ ~~Total stock-based compensation expense for the quarters and years~~As of March 31, 2022, approximately $46.2 million was available under our authorized stock repurchase program to ~~date ended September 30, 2017 and 2016 for all types of awards was as follows (dollars in thousands):~~

~~Performance Unit Awards.~~ Performance unit awards granted during 2015, 2016 and 2017 are long-term incentive, cash-based awards. Payment of these awards is based upon a calculation of Total Shareholder Return (“TSR”) of CEC as compared to TSR across a specified peer grouprepurchase outstanding shares of our ~~competitors over a three-year performance period ending primarily on December 31, 2017, 2018~~common stock. Shares of stock repurchased under the program are held as treasury shares. These repurchased shares have reduced the weighted average number of shares of common stock outstanding for basic and ~~2019, respectively. These awards are recorded as liabilities as the expense is recognized and the fair value for these awards is~~diluted earnings per share calculations.

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 ended March 31, 2022 and ~~years to date ended September 30, 2017 and 2016~~2021 were as ~~follows:~~follows (shares in thousands):

	For the Quarter Ended September 30,				For the Year to Date Ended September 30,				For the Quarter Ended March 31,
	2017		2016⁽¹⁾		2017		2016		2022		2021
Basic common shares outstanding		69,082		68,460		68,897		68,328		68,746		70,149
Common stock equivalents		1,783		-		1,763		561		821		1,333
Diluted common shares outstanding		70,865		68,460		70,660		68,889		69,567		71,482

For the ~~quarter~~quarters ended ~~September 30, 2017~~March 31, 2022 and ~~the years to date ended September 30, 2017 and 2016,~~2021, 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~~0.3 million and 0.5 million shares for the ~~quarter~~quarters ended ~~September 30, 2017~~March 31, 2022 and ~~1.1 million and 2.6 million shares for the years to date ended September 30, 2017 and 2016,~~2021, 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 a group~~is comprised of an accredited 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~~business plan. As of ~~September 30, 2017,~~March 31, 2022, 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):

For the Quarter Ended September 30,

Revenue

Operating Income (Loss)

2017

% of Total

2016

% of Total

2017

2016

CTU

$
91,319

63.0
%

$
90,921

54.2
%

$
27,565

$
21,486

AIU

50,150

34.6
%

48,542

29.0
%

2,256

291

Total University Group

141,469

97.6
%

139,463

83.2
%

29,821

21,777

Corporate and Other

-

NM

-

NM

(6,199
)

(5,587
)
Subtotal

141,469

97.6
%

139,463

83.2
%

23,622

16,190

Culinary Arts

2,367

1.6
%

21,369

12.7
%

(14,027
)

(1,801
)
Transitional Group

1,150

0.8
%

6,793

4.1
%

(5,056
)

(15,095
)
Total

$
144,986

100.0
%

$
167,625

100.0
%

$
4,539

$
(706
)

For the Year to Date Ended September 30,

Revenue

Operating Income (Loss)

2017

% of Total

2016

% of Total

2017

2016

CTU

$
276,558

61.0
%

$
274,623

50.0
%

$
78,649

$
70,693

AIU

150,618

33.2
%

152,123

27.7
%

7,987

9,036

Total University Group

427,176

94.2
%

426,746

77.7
%

86,636

79,729

Corporate and Other

-

NM

-

NM

(16,595
)

(17,160
)
Subtotal

427,176

94.2
%

426,746

77.7
%

70,041

62,569

Culinary Arts

19,302

4.3
%

89,990

16.4
%

(25,039
)

1,666

Transitional Group

6,839

1.5
%

32,401

5.9
%

(21,578
)

(40,672
)
Total

$
453,317

100.0
%

$
549,137

100.0
%

$
23,424

$
23,563

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

	For the Quarter Ended March 31,

	Revenue										Operating Income (Loss)
	2022		% of Total			2021		% of Total			2022			2021
CTU ⁽¹⁾	$	113,148		61.8	%	$	105,822		57.6	%	$	43,026		$	36,143
AIUS ⁽²⁾		69,532		38.0	%		77,477		42.2	%		9,523			11,323
Corporate and Other ⁽³⁾		279		0.2	%		339		0.2	%		(8,856	)		(6,849	)
Total	$	182,959		100.0	%	$	183,638		100.0	%	$	43,693		$	40,617

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,” “may,” “should,” ~~“will,” “focused on,~~”will,” “continue to,” “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~~2021 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 universities~~accredited institutions – ~~American InterContinental University (“AIU”) and~~ Colorado Technical University (“CTU”) and the American InterContinental University System (“AIUS” or “AIU System”) – provide degree programs from associate through ~~the master’s or~~ doctoral level as well as ~~associate~~non-degree professional development and ~~bachelor’s levels. Both~~continuing education offerings. Our universities ~~predominantly serve~~offer students ~~online with~~industry-relevant and career-focused ~~degree~~academic programs that are designed to meet the educational ~~demands~~needs of today’s busy adults. ~~AIU~~CTU and ~~CTU~~AIUS 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~~16

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, which limits discontinued operations reporting.~~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 AIUS. These segments are organized by key market segments and to enhance brand focus within each segment to more effectively execute our business plan.

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, the ~~U.S. Congress and federal~~Department, states, accrediting agencies, ~~including ED,~~ the ~~Consumer Financial Protection Bureau~~CFPB, the 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~~targeted loan relief to student borrowers is a stated priority for the Department, and consumer advocacy groups and others are focusing their lobbying and other efforts relating to student debt forgiveness on for-profit colleges and universities, encouraging loan discharge applications and complaints by former students.

The current Presidential and Department administrations, as well as Congress, are pursuing significant legislative, regulatory and administrative actions affecting our business. A loss or material reduction in Title IV Programs or the ~~for-profit sector involving multiple federal agencies~~amount of student financial aid for which our students are eligible would materially impact our student enrollments and ~~departments including~~profitability and could impact the ~~Federal Trade Commission, the U.S. Departments~~continued viability of Justice, Treasury and Veterans Affairs, the Consumer Financial Protection Bureau, the Securities and Exchange Commission, and numerous state Attorneys General, to coordinate activities and share information to protect students from unfair, deceptive and abusive policies and practices. We believe that the recent actions by the Federal Trade Commission and the multiple Attorney Generals’ offices may be related to or coordinated with this task force. ~~At this time, the future direction of many of these initiatives is uncertain~~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 in our ~~2017~~2022 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.~~performance. 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.

During the quarter ended March 31, 2022 (“current quarter”), we continued to focus on enhancing student experiences, retention and academic outcomes as students adjust to the evolving COVID-19 pandemic and as pandemic-era restrictions ease. We believe the prolonged pandemic and its resulting safety measures, as well as the macro-economic and governmental response, has impacted overall student engagement and will continue to have a lingering impact on total student enrollments for the remainder of 2022. As a result, during the first quarter we continued to experience ~~better than expected enrollment trends and operating performance~~some students pause their academic programs or decide not to begin classes which negatively impacted total student enrollments as of the end of the current quarter. While we did see some improvement in student engagement during the ~~third~~current quarter ~~of 2017. Our third quarter operating income~~we expect total student enrollments for the University Group and Corporate was $23.6 million and adjusted for certain items not considered reflective of underlying operating performance and certain non-cash items was $26.2 million, which was better than the high end of our operating income outlook of $21 million and adjusted operating income outlook of $24 million, respectively. We believe this performance was primarily driven by better than expected retention and new enrollment trends that positively impacted revenue as well as timing of certain operating expenses.

~~Within our CTU segment, total enrollments increased 0.9% and new enrollments increased 10.9% for the third quarter of 2017~~full year to decrease as compared to the prior ~~year quarter. We believe the increase~~year.

Additionally, leveraging data analytics, we made adjustments to our marketing strategies beginning in total enrollments was primarily driven by new enrollment growth and continued improvement in our retention trends. New enrollment growth benefitted from improved execution within our admissions operations, enhanced training and coaching as well as increasing tenure of our admissions personnel driving higher efficiency in our enrollment and onboarding processes. Improvements in technology has also helped drive better student engagement early in their decision process. The new admissions and advising center in Arizona which was fully operational during the quarter for CTU also contributed to the increase in new 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 increased $6.1 million and $8.0 million 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 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 for the quarter were impacted by the calendar redesign discussed in prior quarters which shifts new enrollments between quarters as compared to the prior year periods. The new admissions and advising center became fully operational at the end of the third quarter of ~~2017 for AIU.~~2021. We ~~expect~~believe these changes should further improve our ability, in the long term, to ~~see positive impacts in future quarters as increased resources to serve~~identify prospective students ~~is expected~~who are more likely to ~~support~~

succeed at one of our ~~objective~~universities. However, in the short-term, we believe these changes negatively impacted total student enrollments as of ~~sustainable~~March 31, 2022 and ~~responsible growth. Revenue increased by $1.6 million for~~will continue to negatively impact total student enrollments during the second quarter ~~and~~of 2022.

Total student enrollments decreased ~~by $1.5 million for the year to date~~14.7% at March 31, 2022 as compared to March 31, 2021, with CTU decreasing by 13.9% and AIUS decreasing by 16.1%. These decreases were a result of the ~~prior year periods while operating income increased $2.0 million and decreased by $1.0 million for the current quarter and year to date, respectively,~~factors mentioned above along with a negative timing impact 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 student support operations. During the third quarter, AIU announced~~ a new specialization for its Bachelor of Business Administration degree program. The new program, Le Cordon Bleu Hospitality Management, provides a specialization which allows students to engage in an in-depth study in their areas of interest. Within both Universities we rolled out the faculty mobile application which allows faculty to engage more with students as well as track their progress more efficiently. We have also established advisor accountability for students based on their degree and program of study and promoted increased interaction and dialogue between advisors and faculty.

~~We expect to see quarterly variability driven by the timing of operating expenses and the varying impacts from our initiatives, including the ongoing impacts~~result of the academic calendar redesign for the CTU segment. In early 2021, we redesigned CTU’s academic calendar to strategically place breaks between sessions and provide more opportunities for students to continue with their academic programs. We believe this redesign may improve student experiences and engagement. CTU’s academic calendar redesign, along with the previous academic calendar redesign at AIU, ~~yet~~may impact the comparability of revenue-earning days and enrollment results in any given quarter, with the impact on revenue and total student enrollments not necessarily having the same magnitude or directional impact.

We believe investments in technology positively impact student experiences and academic outcomes. During the current quarter, we continued to invest in our technology infrastructure, including data analytics, so that our teams can be more effective in their student support efforts. Our technology infrastructure advancement project is progressing well and we continue to update our mobile platform and virtual campus. Additionally, we are experiencing longer than expected position vacancies and increased employee compensation expectations as a result of the competitive job market. As a result, we invested more in our recruiting resources and thus far have been maintaining appropriate staffing levels to effectively serve and educate our students.

While we believe that the ~~University Group is positioned well for long-term sustainable and responsible growth. In line with these expectations,~~factors impacting student engagement discussed above will negatively impact total student enrollments in 2022, we ~~expect positive new and~~believe that the rate of decline in total ~~enrollment growth at both AIU and CTU during~~student enrollments should gradually improve throughout the ~~fourth quarter~~remainder of ~~2017. This expectation is primarily driven by our ongoing initiatives and investments in student support operations, including our admissions and advising centers in Arizona as well~~2022 as the ~~academic calendar redesign at AIU.~~

~~We completed the teach-out of all remaining Culinary Arts campuses during~~changes to our marketing processes begin to annualize in the third quarter of ~~2017, which significantly lowered~~2022 and as students further adjust to an environment post COVID-19. Typically, changes in total student enrollments have a lag in the ~~remaining number of students involved in our teach-out campuses. At the end of 2017,~~impact on revenue, and, as a result, we expect revenue and operating income for 2022 to ~~have approximately 80 students remaining across seven teach-out campuses. Results for~~be lower as compared to 2021, excluding any positive impacts from acquisitions or the academic calendar redesign. We will continue our ~~teach-out campuses~~efforts to adjust our operating processes and expenses to align with overall revenue and enrollment trends, although we do not expect these adjustments to fully offset the expected revenue decline. Our strong balance sheet and technology infrastructure provide us with the ability to adapt our operations in response to fluctuations in enrollment trends. We continue to ~~track ahead~~monitor for future impacts of a potential worsening of global economic conditions on our ~~expectations due to stronger than expected retention~~university operations and for changes in prospective student interest or student engagement levels 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~~a result of changes in CDC and ~~further reduce our remaining contractual lease obligations, which will result in future cash savings.~~state mandated COVID-19 protocols and the U.S. economy.

Revenue ~~from continuing operations declined $22.6 million or 13.5% due to an overall 9.9% decrease in total student enrollments~~ for the ~~third~~ quarter ~~of 2017~~ended March 31, 2022 decreased by 0.4% or $0.7 million as compared to the prior year quarter, ~~driven by our decision to teach-out our Career Schools. For the current quarter, we reported operating income~~resulting from an increase in revenue for CTU of ~~$4.5~~6.9% or $7.3 million ~~as compared to an operating loss~~which was more than offset with a decrease for AIUS of $0.7 million in the prior year quarter. This improvement was driven by increased revenue and operating efficiencies within our University Group as well as a result of growth investments made earlier in 2017. Lastly, we reported cash used in operations for the current year to date of $29.1 million, as compared to the prior year to date’s cash provided of $16.310.3% or $7.9 million. The revenue increase ~~in cash usage~~ for ~~the current year to date~~CTU was primarily driven by ~~payments~~a positive timing impact 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~~academic calendar redesign along with the ~~prior year.~~

~~For our University Group,~~Hippo acquisition. Excluding these positive impacts, CTU would have experienced a decline in revenue ~~increased $2.0 million or 1.4%~~ as compared to the prior year quarter ~~primarily~~which, along with the decline at AIUS, was driven by ~~new and~~the factors impacting 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~~student enrollments ~~for the University Group increased by 2.5% as of the current year~~

~~quarter end as compared to the prior year quarter end.~~previously discussed. Operating income for the ~~University Group increased by $8.0 million, or 36.9%, for the~~ current year ~~quarter~~increased to $43.7 million as compared to operating income of $40.6 million for the prior year ~~quarter driven by the reasons discussed above.~~

~~Within our teach-out segments,~~quarter. The increase in operating ~~loss for the Transitional Group improved by $10.0 million or 66.5%~~income was primarily due to increased revenue at CTU along with decreased operating expense associated with advertising and marketing, admissions and occupancy for the current quarter as compared to the prior year quarter, driven by reductions in expenses, particularly within administrative, occupancy and academic expenses. Operating loss for Culinary Arts increased by $12.2 million as a result of the reduction in revenue more than offsetting the reduction in expenses as the business completed its teach-out as well as lease charges recorded as campuses vacated facilities during the third quarter of 2017 upon teach-out completion. We have eight campuses remaining within the Transitional Group at the end of the third quarter of 2017, which will complete their teach-out at varying dates through 2018.quarter.

~~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~~ was ~~$23.6 million and $26.2~~$50.9 million for the current quarter as compared to ~~$16.2~~$44.9 million ~~and $18.8 million in~~for the prior year ~~quarter, respectively. Adjusted operating loss~~quarter. The improvement was driven by the same factors discussed above for the ~~Transitional Group and Culinary Arts increased to $10.8 million for the current year quarter as compared to an adjusted~~improvement in operating ~~loss of $9.3 million in the prior year quarter as a result of the fixed costs not decreasing in line with revenue as we near the end of teach-out completion.~~

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

Forward looking adjusted operating income (loss) expectations are presented in the reconciliation of GAAP to non-GAAP items below. Operating income (loss), which is the most directly comparable GAAP measure to adjusted operating income (loss), may not follow the same trends as discussed in our outlook above because of adjustments made for unused space charges that represent the present value of future remaining lease obligations for vacated space less an estimated amount for sublease income as well as depreciation, amortization, asset impairment charges and significant legal settlements. The expectations provided in the paragraph above and table below for 2017 and 2018 are based on the following key assumptions and factors, among others: (i) prospective student interest in our programs continues to trend in line with recent experiences, (ii) modest total enrollment growth within the University Group, (iii) availability and retention of qualified personnel for ongoing investments in our student support 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) no material changes in the current legal or regulatory environment and excludes legal and regulatory liabilities which are not probable and estimable at this time, and any impact of new or proposed regulations, including the new “borrower defense to repayment” regulations and the gainful employment regulation, and 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. Although these estimates and assumptions are based upon management’s good faith beliefs regarding current events and actions that may be undertaken in the future, actual results could differ materially from these estimates.income.

Adjusted operating income ~~(loss)~~and adjusted earnings per diluted share for the quarters ended March 31, 2022 and ~~years to date ended September 30, 2017 and 2016 as well as an outlook for the second half of 2017 and the years ending December 31, 2017 and 2018~~2021 is presented below (dollars in thousands, unless otherwise noted):

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)

~~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 reviewInstitutional and ~~a new negotiated rulemaking process to amend the rules. On October 24, 2017 ED published two related notices in the Federal Register.~~ Programmatic Eligibility Negotiated Rulemaking. 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 itsDepartment’s previously announced negotiated rulemaking committee regarding institutional and programmatic eligibility requirements met in January, February and March 2022. As part of each negotiating session, the Department provided issue papers that revealed its intent to ~~amend~~adjust current requirements as well as impose a number of additional obligations for schools and programs to remain eligible for Title IV Program funds.

Negotiators reached consensus on two of seven topics that were open for discussion:

Negotiators failed to come to agreement on the ~~rules and to provide adequate time for institutions to prepare~~remaining topics:

With negotiations completed, the next step in the rulemaking process is for the ~~implementation~~Department to draft and publish proposed regulations on these topics, or a subset of ~~its modified requirements. Comments~~the topics, for public comment. On the two areas where negotiators reached consensus, the

See Item 1, “Business – ~~Student Financial Aid~~Legislative Action and ~~Related Federal Regulation – Compliance~~Recent Department Regulatory Initiatives” and “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”Violations” in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2021 for an overview of the previously adopted and rescinded gainful employment regulation and the current rules relating to the 90-10 Rule, change of ownership or control, financial responsibility and administrative capability.

See Item 1A, “Risk Factors – Risks Related to the Highly Regulated Field in Which We Operate – The extensive regulatory requirements applicable to our business may change, in particular as a result of the scrutiny of the for-profit postsecondary education sector and the results of the 2020 Presidential and Congressional elections, which could require us to make substantial changes to our business, reduce our profitability and make compliance more difficult,” in our Annual Report on Form 10-K for the year ended December 31, 2021 for information about the potential impact of new regulations on our business.

Pending Borrower Defense to Repayment Applications. In May 2021, the Department notified the Company that the Department has several thousand borrower defense applications that make claims regarding the Company’s institutions, including institutions that have ceased operations. As part of the initial fact-finding process, the Department will send individual student claims to the Company and allow the institutions the opportunity to submit responses to the borrower defense applications. A large majority of the claims received involve institutions or campuses that have ceased operations and, in some cases, involve students who attended over 25 years ago. We have submitted initial responses to the majority of claims received, and these responses indicate that we believe the applications fail to establish a valid borrower defense and the Department should therefore deny them. We continue to receive additional claims and respond to requests for information going back as far as 25 years with respect to these claims. The outcome of the Department’s evaluation of each of these applications is uncertain. See 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 the Department 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 our Annual Report on Form 10-K for the year ended December 31, 2021 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,~~risks associated with 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 adhereborrower defense 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.

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 ended March 31, 2022 and ~~years to date ended September 30, 2017 and 2016~~2021 (dollars in thousands):

	For the Quarter Ended September 30,												For the Year to Date Ended September 30,												For the Quarter Ended March 31,
		2017		% of Total Revenue				2016		% of Total Revenue				2017		% of Total Revenue				2016		% of Total Revenue				2022		% of Total Revenue				2021		% of Total Revenue			2022 vs 2021 % Change
TOTAL REVENUE	$	144,986					$	167,625					$	453,317					$	549,137					$	182,959					$	183,638						-0.4	%
OPERATING EXPENSES
Educational services and facilities ⁽¹⁾		37,788			26.1	%		51,393			30.7	%		114,367			25.2	%		170,993			31.1	%		28,088			15.4	%		28,974			15.8	%		-3.1	%
General and administrative: ⁽²⁾
Advertising		33,927			23.4	%		45,272			27.0	%		105,759			23.3	%		122,088			22.2	%
Advertising and marketing																										32,798			17.9	%		36,794			20.0	%		-10.9	%
Admissions		21,237			14.6	%		19,842			11.8	%		62,406			13.8	%		63,352			11.5	%		22,744			12.4	%		25,840			14.1	%		-12.0	%
Administrative		37,493			25.9	%		38,152			22.8	%		114,363			25.2	%		128,586			23.4	%		37,039			20.2	%		33,687			18.3	%		10.0	%
Bad debt		6,420			4.4	%		8,457			5.0	%		21,630			4.8	%		23,332			4.2	%		13,715			7.5	%		13,724			7.5	%		-0.1	%
Total general and administrative expense		99,077			68.3	%		111,723			66.7	%		304,158			67.1	%		337,358			61.4	%		106,296			58.1	%		110,045			59.9	%		-3.4	%
Depreciation and amortization		3,582			2.5	%		5,215			3.1	%		11,368			2.5	%		16,986			3.1	%		4,882			2.7	%		4,002			2.2	%		22.0	%
Asset impairment		-			0.0	%		-			0.0	%		-			0.0	%		237			0.0	%
OPERATING INCOME (LOSS)		4,539			3.1	%		(706	)		-0.4	%		23,424			5.2	%		23,563			4.3	%
OPERATING INCOME																										43,693			23.9	%		40,617			22.1	%		7.6	%

PRETAX INCOME (LOSS)		5,095			3.5	%		(479	)		-0.3	%		24,901			5.5	%		23,990			4.4	%
PRETAX INCOME																										43,834			24.0	%		40,998			22.3	%		6.9	%
PROVISION FOR INCOME TAXES		1,597			1.1	%		21			0.0	%		11,143			2.5	%		8,776			1.6	%		11,756			6.4	%		10,245			5.6	%		-14.7	%
Effective tax rate		31.3	%					4.4	%					44.7	%					36.6	%					26.8	%					25.0	%

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

NET INCOME (LOSS)	$	3,022			2.1	%	$	(686	)		-0.4	%	$	12,485			2.8	%	$	14,164			2.6	%
NET INCOME																									$	32,078			17.5	%	$	30,753			16.7	%		4.3	%

~~Current~~Revenue for the first quarter ~~and~~ of 2022 (“current ~~year to date revenue~~quarter”) decreased ~~13.5%~~by 0.4% or ~~$22.6~~$0.7 million ~~and 17.4% or $95.8 million, respectively,~~ as compared to the prior ~~periods~~year quarter. The current quarter decrease is driven by ~~the overall~~a $7.9 million decline in ~~total student enrollments. Excluding the Transitional Group and Culinary Arts,~~revenue within AIUS which ~~no longer enroll new students as they teach out each campus, revenue increased approximately 1.4% or $2.0~~was partially offset with an increase of $7.3 million within CTU. Revenue for the current quarter ~~and 0.1% or $0.4 million for~~was positively impacted by the current year to date as compared to the prior periods. The current quarter increase when excluding the Transitional Group and Culinary Arts was primarily driven by new and total enrollment growth as well as theacademic 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 in new and total student enrollments.CTU.

	For the Quarter Ended September 30,								For the Year to Date Ended September 30,									For the Quarter Ended March 31,
		2017	% of Total Revenue			2016	% of Total Revenue			2017	% of Total Revenue			2016	% of Total Revenue				2022		2021	2022 vs 2021 % Change
Educational services and facilities:
Academics & student related	$	21,319		14.7%	$	29,941		17.9%	$	72,700		16.0%	$	103,652		18.9%	��	$	23,694	$	23,833	-0.6%
Occupancy		16,469		11.4%		21,452		12.8%		41,667		9.2%		67,341		12.3%			4,394		5,141	-14.5%
Total educational services and facilities	$	37,788		26.1%	$	51,393		30.7%	$	114,367		25.2%	$	170,993		31.1%		$	28,088	$	28,974	-3.1%

~~The decrease in~~Current quarter educational services and facilities expense decreased by 3.1% or $0.9 million as compared to the prior year quarter, with 0.6% or $0.1 million lower academics and student related expense and 14.5% or $0.7 million lower occupancy expense as compared to the prior year quarter. Academics and student related expense remained relatively flat as compared to the prior year quarter while the decrease in occupancy expense for the current quarter ~~and current year to date as compared to the respective prior year periods is~~was primarily driven by a decrease within academics and student related expenses for teach-out campuses as these campuses continue to wind-down their operations, 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 for the current quarter and current year to date as compared to the respective prior year periods primarily due to decreases within our teach-out segments as a result of ~~exiting facilities as campuses complete their teach-out.~~the relocation of our CTU Colorado Springs campus to a smaller facility.

	For the Quarter Ended September 30,								For the Year to Date Ended September 30,								For the Quarter Ended March 31,
		2017	% of Total Revenue			2016	% of Total Revenue			2017	% of Total Revenue			2016	% of Total Revenue			2022		2021	2022 vs 2021 % Change
General and administrative:
Advertising	$	33,927		23.4%	$	45,272		27.0%	$	105,759		23.3%	$	122,088		22.2%
Advertising and marketing																	$	32,798	$	36,794	-10.9%
Admissions		21,237		14.6%		19,842		11.8%		62,406		13.8%		63,352		11.5%		22,744		25,840	-12.0%
Administrative		37,493		25.9%		38,152		22.8%		114,363		25.2%		128,586		23.4%		37,039		33,687	10.0%
Bad Debt		6,420		4.4%		8,457		5.0%		21,630		4.8%		23,332		4.2%
Bad debt																		13,715		13,724	-0.1%
Total general and administrative expense	$	99,077		68.3%	$	111,723		66.7%	$	304,158		67.1%	$	337,358		61.4%	$	106,296	$	110,045	-3.4%

~~General~~The general and administrative ~~expenses decreased by 11.3% or $12.6 million~~expense for the current quarter decreased by 3.4% or $3.7 million as compared to the prior year quarter, driven by decreases in advertising and marketing and admissions expenses. Partially offsetting the current quarter decreases in admissions and advertising and marketing expense were increased administrative costs as compared to the prior year quarter.

Advertising and marketing expense for the current quarter decreased by 10.9% or $4.0 million as compared to the prior year quarter, as a result of adjustments to our marketing processes related to identifying prospective student interest within both CTU and AIUS. Admissions expense decreased by 12.0% or $3.1 million as compared to the prior year quarter as a result of the changes to marketing processes mentioned above which also benefit admissions expense at both institutions.

Administrative expense for the current quarter increased by 10.0% or $3.4 million as compared to the prior year quarter primarily driven by ~~advertising~~increased legal fees within Corporate 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% or $33.2 million for the current year to date as compared to the prior year to date 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 compared to the prior year to date as the costsOther 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 campuses as well as decreased costs within University in the early part of the current year. As a percentage of revenue, administrative expenses have increased for the current year periods as comparedborrower defense to ~~the prior year periods due to certain fixed administrative costs for the consolidated organization that do not decline upon teach-out of campuses.~~repayment applications from former students.

Bad debt expense incurred by each of our segments during the quarters ended March 31, 2022 and ~~years to date ended September 30, 2017 and 2016~~2021 was as follows (dollars in thousands):

For the Quarter Ended September 30,

For the Year to Date Ended September 30,

2017

% of
Segment
Revenue

2016

% of
Segment
Revenue

2017

% of
Segment
Revenue

2016

% of
Segment
Revenue

Bad debt expense:

CTU

$
4,262

4.7
%

$
5,758

6.3
%

$
15,087

5.5
%

$
15,599

5.7
%
AIU

2,129

4.2
%

1,497

3.1
%

6,654

4.4
%

5,259

3.5
%
Total University Group

6,391

4.5
%

7,255

5.2
%

21,741

5.1
%

20,858

4.9
%
Corporate and Other

(140
)

NM

(57
)

NM

(270
)

NM

(3
)

NM

Sub Total

6,251

4.4
%

7,198

5.2
%

21,471

5.0
%

20,855

4.9
%
Culinary Arts

57

2.4
%

862

4.0
%

80

0.4
%

1,861

2.1
%
Transitional Group

112

9.7
%

397

5.8
%

79

1.2
%

616

1.9
%
Total bad debt expense

$
6,420

4.4
%

$
8,457

5.0
%

$
21,630

4.8
%

$
23,332

4.2
%

	For the Quarter Ended March 31,
		2022		% of Segment Revenue				2021		% of Segment Revenue			2022 vs 2021 % Change
Bad debt expense:
CTU	$	7,185			6.4	%	$	6,323			6.0	%		13.6	%
AIUS		6,551			9.4	%		7,415			9.6	%		-11.7	%
Corporate and Other		(21	)	NM				(14	)	NM			NM
Total bad debt expense	$	13,715			7.5	%	$	13,724			7.5	%		-0.1	%

Bad debt ~~expenses decreased by 24.1% or $2.0 million and 7.3% or $1.7 million~~expense for the current quarter ~~and current year to date, respectively,~~remained relatively flat 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, CTUquarter. AIUS’ bad debt expense decreased by ~~$1.5~~11.7% or $0.9 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~~quarter which was ~~slightly~~ offset with increased bad debt expense ~~within AIU for the current quarter and current year to date~~at CTU of 13.6% or $0.9 million, as compared to the prior year ~~periods. AIU continues~~quarter.

We continue to expect periodic fluctuations in bad debt expense. We regularly monitor our reserve rates, which includes a quarterly update of our analysis of historical student receivable collectability based on the most recent data available and a review of current known factors which we believe could affect future collectability of our student receivables, such as the number of students that do not complete the financial aid process. Our student support teams have maintained their focus on ~~implementation of improvement~~financial aid documentation collection and are counseling students through the Title IV financial aid process so that they are better prepared to ~~processes related to collection efforts~~start school. We have also focused on emphasizing employer-paid and ~~completion of funding packages for students.~~other direct-pay education programs such as corporate partnerships as students within these programs typically have lower bad debt expense associated with them.

~~The operating~~Operating income ~~reported~~increased by 7.6% or $3.1 million for the current quarter ~~improved to $4.5 million and remained relatively flat at $23.4 million for the current year to date,~~ as compared to the ~~respective~~ prior ~~periods. Operating losses within our Culinary Arts campuses,~~year quarter. The current quarter improvement was primarily due to ~~teach-outs~~decreased advertising and ~~fixed costs associated with each campus, contributed to the decline in consolidated operating income. The operating losses from teach-out campuses were~~marketing and admissions expenses which more than offset ~~with operating income generated within our University Group, which was primarily driven by continued improvements~~the increase in ~~operating efficiencies~~administrative expense and ~~increased revenues.~~lower revenue for the current quarter as compared to the prior year quarter.

For the quarter ended ~~September 30, 2017,~~March 31, 2022, we recorded a provision for income taxes of ~~$1.6~~$11.8 million or ~~31.3%~~26.8% as compared to a provision for income taxes of ~~less than $0.1~~$10.2 million or ~~4.4%~~25.0% for the prior year quarter. We recorded $11.1 million or 44.7% of provision for income taxes for the year to date ended September 30, 2017 as compared to a provision of $8.8 million or 36.6% for the year to date ended September 30, 2016. The effective tax rate for the quarter ~~and year to date~~ ended ~~September 30, 2017~~March 31, 2022 was impacted by ~~tax reserves and~~ the tax effect of ~~expenses that are not deductible for~~stock-based compensation and the release of previously recorded tax ~~purposes. For~~reserves, the ~~current quarter we recognized less than $0.1 million~~net effect of benefit associated with the adoption of ASU 2016-09, Compensation – Stock Compensation (Topic 718), which decreased our quarterly effective tax rate by 0.6%. For the year to date ended September 30, 2017, we recognized a $1.1 million unfavorable adjustment associated with the adoption of ASU 2016-09, which increased the effective tax rate by ~~4.6%~~0.5%. The effective tax rate for the quarter ended March 31, 2021 was benefitted by the

release of previously recorded tax reserves, which reduced the effective tax rate by 1.3%. For the full year 2022, we expect our effective tax rate to ~~date ended September 30, 2016 was reduced by 8.8%, due to a $2.1 million favorable tax adjustment upon completion of a federal tax audit.~~be between 25.5% and 26.5%.

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

For the Quarter Ended September 30,

REVENUE

OPERATING INCOME (LOSS)

OPERATING
MARGIN (LOSS)

2017

2016

% Change

2017

2016

% Change

2017

2016

REVENUE:

CTU

$
91,319

$
90,921

0.4
%

$
27,565

$
21,486

28.3
%

30.2
%

23.6
%
AIU

50,150

48,542

3.3
%

2,256

291

675.3
%

4.5
%

0.6
%
Total University Group

141,469

139,463

1.4
%

29,821

21,777

36.9
%

21.1
%

15.6
%
Corporate and Other

-

-

NM

(6,199
)

(5,587
)

-11.0
%

NM

NM

Subtotal

141,469

139,463

1.4
%

23,622

16,190

45.9
%

16.7
%

11.6
%
Culinary Arts

2,367

21,369

-88.9
%

(14,027
)

(1,801
)

NM

-592.6
%

-8.4
%
Transitional Group

1,150

6,793

-83.1
%

(5,056
)

(15,095
)

66.5
%

-439.7
%

-222.2
%
Total

$
144,986

$
167,625

-13.5
%

$
4,539

$
(706
)

742.9
%

3.1
%

-0.4
%

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
%

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
%

~~University Group~~. 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 attendance by participating in class related activities. Total student enrollments do not include learners participating in non-degree professional development and continuing education offerings.

CTU. Current quarter ~~and year to date~~ revenue increased by ~~$2.0~~6.9% or $7.3 million or 1.4% and $0.4 million or 0.1%, respectively, as compared to the respective prior periods. The overall increase in revenue was primarily driven by the improvement in total student enrollments. AIU experienced positive total enrollments 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 total 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 increase for the current quarter and year to date, respectively, while total enrollments increased 0.9%.

Current quarter and year to date operating income for the University Group increased $8.0 million or 36.9%, and $6.9 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 operating income improved~~The current quarter revenue was positively impacted by ~~$8.0 million or 11.3%~~the timing impact of the academic calendar redesign as well as the Hippo acquisition. CTU experienced a decrease in total student enrollment of 13.9% at March 31, 2022 as compared to March 31, 2021. We believe the decrease in total student enrollments was primarily due to the following two factors: students pausing their academic programs and deciding not to begin class as a result of the COVID-19 pandemic, and changes in our marketing and student recruitment processes as we continue to use technology and data analytics to help us identify prospective students who are more likely to succeed at one of our universities. Additionally, total student enrollments were negatively impacted by the academic calendar redesign for the current ~~year to date as compared to the prior period. AIU’s~~quarter.

Current quarter operating income decreased $1.0 million or 11.6% for the current year to date as compared to the prior year primarily driven by the decrease in revenue and the investments in our admissions and advising center in Phoenix. Operating margins for CTU ~~and AIU have increased~~improved by ~~6.6% and 3.9% for the current quarter~~19.0% or $6.9 million as compared to the prior year quarter, primarily due to increased ~~revenues and improved efficiencies in advertising costs.~~revenue as a result of the timing impact of the academic calendar redesign.

~~Culinary Arts.~~ ~~This segment includes our LCB campuses which were announced for teach-out during December 2015. The current~~AIUS. Current quarter ~~and year to date decline in~~ revenue decreased by 10.3% or $7.9 million as compared to the ~~corresponding~~ prior periods is primarily 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 own 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~~quarter. AIUS experienced a decrease in total student ~~enrollments. We expect revenue and operating expenses to continue to decline~~enrollment of 16.1% at March 31, 2022 as compared to March 31, 2021. We believe the decrease in total student enrollments was caused by the same two factors as mentioned above for CTU.

Current quarter operating income for AIUS decreased by 15.9% or $1.8 million as compared to the prior ~~periods~~year quarter, driven by the lower revenue discussed above which more than offset decreased operating expense, primarily within advertising and marketing and admissions expenses, as ~~campuses wind down their operations through 2018.~~compared to the prior year quarter.

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~~29.3% or $2.0 million ~~or 11.0% and improved by $0.6 million or 3.3% for the 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~~as a result of ~~incentive-based compensation expenses as compared~~increased legal fee expense associated with the borrower defense 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.~~repayment applications from former students.

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.~~2021. 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~~2021 also includes a discussion of these and other significant accounting policies.

As of ~~September 30, 2017,~~March 31, 2022, cash, cash equivalents, restricted cash and available-for-sale short-term investments (“cash balances”)totaled ~~$175.9~~$499.3 million. Restricted cash ~~and investment balances~~ as of ~~September 30, 2017 approximate $7.9~~March 31, 2022 was $1.2 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 Hippo 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~~balances. We expect to continue to generate 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. We expect to end 2017 with 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 based upon, and subject to, the updated key assumptions and factors discussed above in the Management’s Discussion and Analysis under the heading “2017 Third Quarter Overview.”2022. 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 and acquisitions through at least the next 12 months primarily with cash generated by operations and existing cash balances.

~~We continue~~On September 8, 2021, the Company and the subsidiary guarantors thereunder entered into a credit agreement with Wintrust Bank N.A. (“Wintrust”), in its capacities as the sole lead arranger, sole bookrunner, administrative agent and letter of credit issuer for the lenders from time to ~~focus on our transformation strategy which we believe will transition CEC to~~time parties thereto. The credit agreement provides the Company with the benefit of a ~~period of sustainable and responsible growth. Our~~$125.0 million senior secured revolving credit facility. The $125.0 million revolving credit facility ~~allows us to borrow up to a maximum amount of $95 million and~~under the credit agreement is scheduled to mature on September 8, 2024. So long as no default has occurred and other conditions have been met, the Company may request an increase in the aggregate commitment in an amount not to exceed $50.0 million. The loans and letter of credit obligations under the credit agreement are secured by substantially all assets of the Company and the subsidiary guarantors.

The credit agreement and the ancillary documents executed in connection therewith contain customary affirmative, negative and financial maintenance covenants. The Company is required to maintain unrestricted cash, cash equivalents and short-term investments in domestic accounts in an amount at least equal to the aggregate loan commitments then in effect. Acquisitions to be undertaken by the Company must meet certain criteria, and the Company’s ability to make restricted payments, including payments in connection with a repurchase of shares of our common stock, is subject to an aggregate maximum of $100.0 million per fiscal year. Upon the occurrence of certain regulatory events or if the Company’s unrestricted cash, cash equivalents and short term investments are less than 125% of the aggregate amount of the loan commitments then in effect, the Company is required to maintain cash in a segregated, restricted account in an amount not less than the aggregate loan commitments then in effect. The credit agreement also contains customary representations and warranties, events of default, and rights and remedies upon the occurrence of any event of default thereunder, including rights to accelerate the loans, terminate the commitments and realize upon the collateral securing the obligations under the credit agreement. As of March 31, 2022, there were no amounts outstanding under the revolving credit facility.

We maintain a balanced capital allocation strategy that focuses on maintaining a strong balance sheet and adequate liquidity, while (i) investing in organic projects at our universities, in particular technology-related initiatives which are designed to benefit our students, and (ii) evaluating diverse strategies to enhance stockholder value, including acquisitions of quality educational institutions or programs and share repurchases. We completed two acquisitions with a combined initial cash consideration of approximately $57.1 million during the year ended December 31, ~~2018. Amounts borrowed~~2021 and we currently anticipate that we will complete another acquisition by the end of 2022 with a purchase price relatively similar to the 2021 acquisitions. Ultimately, our goal is to deploy resources in a way that drives long term stockholder value while supporting and enhancing the academic value of our institutions.

On January 27, 2022, the Board of Directors of the Company approved a new stock repurchase program for up to $50.0 million which commences March 1, 2022 and expires September 30, 2023. The timing of purchases and the number of shares repurchased under the ~~Credit Agreement are required to~~program will be ~~secured with 100% cash collateral.~~ determined by the Company’s management and will depend on a variety of factors including stock price, trading volume and other general market and economic conditions, its assessment of alternative uses of capital, regulatory requirements and other factors. Share repurchases will remain a part of our capital allocation strategy. The Company repurchased approximately 0.4 million shares for $3.8 million during the quarter ended March 31, 2022.

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 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,~~the Department, 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.~~2021.

During the ~~year to date~~quarters ended ~~September 30, 2017,~~March 31, 2022 and 2021, net cash flows ~~used in operating activities totaled $29.1 million compared to net cash~~ provided by operating activities ~~of $16.3~~totaled $22.2 million ~~for the year to date ended September 30, 2016.~~ and $44.7 million, respectively. The ~~increase~~current quarter decrease in net cash ~~usage from operations as compared to the prior year is primarily~~flows provided by operating activities was driven by ~~$32.0 million~~the timing impact of ~~payments for legal settlements during~~Title IV cash receipts which negatively impacted 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.~~current quarter.

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~~quarters ended ~~September 30, 2017~~March 31, 2022 and ~~2016,~~2021, approximately 77% and 81%, respectively, of our institutions’ aggregate cash receipts from tuition payments came from Title IV Program funding. 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~~other 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.~~2021.

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~~quarters ended ~~September 30, 2017~~March 31, 2022 and ~~2016,~~2021, net cash flows used in investing activities totaled ~~$6.1~~$146.9 million and ~~$37.9~~$62.6 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~~$135.2 million and ~~$38.0~~$61.6 million ~~respectively, during~~for the ~~years to date~~quarters ended ~~September 30, 2017~~March 31, 2022 and ~~2016.~~2021, respectively.

Payments for potential business acquisition. During the quarter ended March 31, 2022, the Company made advance deposit payments of $7.0 million in connection with a potential business acquisition.

Capital Expenditures. Capital expenditures ~~remained relatively flat~~increased to ~~$3.4~~$4.7 million for the ~~years~~quarter ended March 31, 2022 as compared to ~~date~~$1.0 million for the quarter ended ~~September 30, 2017 and 2016.~~March 31, 2021. Capital expenditures represented ~~less than 1.0%~~approximately 2.6% and 0.6% of total revenue for ~~each~~the quarters ended March 31, 2022 and 2021, respectively. For the full year 2022, we expect capital expenditures to be approximately 2.0% of ~~the years to date ended September 30, 2017 and 2016.~~revenue.

During the ~~year to date~~quarters ended ~~September 30, 2017, net cash flows provided by financing activities totaled $1.4 million compared to~~March 31, 2022 and 2021, net cash flows used in financing activities totaled $8.8 million and $1.7 million, respectively. The current quarter included $3.8 million of ~~$38.0~~payments to repurchase shares of our common stock and a $4.0 million ~~for~~payment to release the ~~prior year to date.~~ escrow associated with the Trident acquisition.

Payments of employee tax associated with stock compensation. Payments of employee tax associated with stock compensation were ~~$1.2~~$1.6 million and $2.0 million for the ~~year to date~~quarters ended ~~September 30, 2017~~March 31, 2022 and ~~$0.6 million for the year to date ended September 30, 2016. The~~ Company now accounts for cash flows related to cash payments for employee taxes made by the Company on the employees’ behalf for withheld shares related to stock settlements as a financing activity. This change was a result of updated guidance issued by the Financial Accounting Standards Board (“FASB”) under Accounting Standards Update (“ASU”) No. 2016-09, ~~Compensation – Stock Compensation (Topic 718). Prior period amounts were recast to cash flows from financing activities from cash flows from operating activities to be comparable to current year reporting.~~2021, respectively.

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

Selected condensed consolidated balance sheet account changes from December 31, ~~2016~~2021 to ~~September 30, 2017~~March 31, 2022 were as follows (dollars in thousands):

	September 30,		December 31,					March 31,		December 31,
	2017		2016		% Change			2022		2021		% Change
ASSETS
CURRENT ASSETS:
Total cash and cash equivalents, restricted cash and short-term investments	$	175,938	$	207,160		-15	%
Student receivables, net								$	34,104	$	43,033		-21	%
Receivables, other									8,845		1,692		423	%
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued expenses - payroll and related benefits		31,646		41,203		-23	%		17,648		25,312		-30	%
Accrued expenses - other		35,127		69,244		-49	%
NON-CURRENT LIABILITIES:
Deferred Rent		16,253		30,713		-47	%
Income taxes									10,982		211		5105	%
Deferred revenue									39,108		70,613		-45	%

~~Total cash and cash equivalents, restricted cash and short-term investments~~: Student receivables, net: The decrease is ~~driven by the $32.0 million of payments~~primarily related to ~~legal settlements~~the timing of academic terms within AIUS and CTU.

Receivables, other: The increase is primarily related to the $7.0 million advance deposit in connection with a potential acquisition.

Accrued expenses – payroll and related benefits: The decrease is primarily related to payments made during the current ~~year.~~quarter of annual incentive compensation.

~~Accrued expenses - payroll~~Income taxes: The increase primarily relates to amounts owed with respect to estimated payments of federal and ~~related benefits~~: state income tax for 2022.

Deferred revenue: The decrease is ~~driven by~~primarily related to the ~~payments during~~timing impact of the ~~first quarter of 2017 of annual incentive compensation items as well as decreases in severance accruals during the current year.~~

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

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

~~As of September 30, 2017, future minimum cash payments under contractual obligations for our non-cancelable operating lease arrangements were as follows (dollars in thousands):~~academic terms within CTU and AIUS.

2017 ⁽⁵⁾

2018

2019

2020

2021 & Thereafter

Total

Gross operating lease obligations ⁽¹⁾

Ongoing operations⁽²⁾

$
12,399

$
12,835

$
13,089

$
10,446

$
15,555

$
64,324

Teach-out campuses and discontinued operations ⁽³⁾

58,845

29,168

14,171

7,455

5,677

115,316

Total gross operating lease obligations

$
71,244

$
42,003

$
27,260

$
17,901

$
21,232

$
179,640

Sublease income ⁽⁴⁾

Ongoing operations ⁽²⁾

$
612

$
934

$
426

$
107

$
-

$
2,079

Teach-out campuses and discontinued operations ⁽³⁾

8,432

4,887

3,107

1,498

229

18,153

Total sublease income

$
9,044

$
5,821

$
3,533

$
1,605

$
229

$
20,232

Net operating lease obligations

Ongoing operations ⁽²⁾

$
11,787

$
11,901

$
12,663

$
10,339

$
15,555

$
62,245

Teach-out campuses and discontinued operations ⁽³⁾

50,413

24,281

11,064

5,957

5,448

97,163

Total net contractual lease obligations

$
62,200

$
36,182

$
23,727

$
16,296

$
21,003

$
159,408

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

We are exposed to financial market risks, ~~including~~primarily 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.~~interest rate 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.

~~Any~~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 March 31, 2022, 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.

Under the credit agreement, outstanding ~~borrowings under our revolving credit facility~~principal amounts bear annual interest at a fluctuating ~~rates under either~~rate equal to 1.0% less than the ~~Base Rate Loan~~administrative agent’s prime commercial rate, subject to a 3.0% minimum rate. A higher rate may apply to late payments or ~~as determined by the London Interbank Offered Rate (LIBOR) for the relevant currency, plus the applicable rate based on the type~~if any event of ~~loan.~~default exists. As of ~~September 30, 2017,~~March 31, 2022, we had no outstanding borrowings under this facility.

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

Our financial instruments are recorded at their fair values as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016.~~2021. 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 ~~foreign currency~~borrowings 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 30, 2017~~March 31, 2022, 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 30, 2017,~~March 31, 2022 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”~~8 “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,~~2021, which was filed with the Securities and Exchange Commission on February ~~23, 2017.~~24, 2022.

On January 27, 2022, the Board of Directors of the Company approved a new stock repurchase program which authorizes the Company to repurchase up to $50.0 million of the Company’s outstanding common stock. See Note 11 “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~~quarter ended ~~September 30, 2017:~~March 31, 2022:

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

-

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		Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs⁽²⁾
December 31, 2021							$	2,889,583
January 1, 2022—January 31, 2022		-	$	-		-		2,889,583
February 1, 2022—February 28, 2022		-		-		-		2,889,583
March 1, 2022—March 31, 2022		508,967		10.69		362,571		46,164,617
Total		508,967				362,571

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.

	INDEX TO EXHIBITS
Exhibit Number	Exhibit	Incorporated by Reference to:

+10.1	First Amendment to Credit Agreement entered into as of April 1, 2022, among Perdoceo Education Corporation, the guarantors and the lenders under the Credit Agreement and Wintrust Bank, N.A., as administrative agent and letter of credit issuer

*10.2	2022 Annual Incentive Plan	Exhibit 10.1 to our Form 8-K filed on March 11, 2022

*10.3	Form of Retention Bonus Award Agreement	Exhibit 10.2 to our Form 8-K filed on March 11, 2022


*10.4	Amended and Restated Letter Agreement between Perdoceo Education Corporation and Todd Nelson dated January 19, 2022	Exhibit 10.1 to our Form 8-K filed on January 20, 2022

*10.5	Letter Agreement between Perdoceo Education Corporation and Jeffrey Ayers dated February 21, 2022	Exhibit 10.21 to our Form 10-K for the year ended December 31, 2021

+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 March 31, 2022, 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.

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)~~(Unaudited)	2

	~~Unaudited~~ Condensed Consolidated Statements of Comprehensive Income (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	2216

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3526

Item 4.	Controls and Procedures	3526

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	3628

Item 1A.	Risk Factors	3628

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3628
Item 6.	Exhibits	3628

SIGNATURES		3830

	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

	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

	As of
	March 31, 2022			December 31, 2021
Gross deferred revenue	$	67,850		$	113,719
Gross contract assets		(28,742	)		(43,106	)
Deferred revenue, net	$	39,108		$	70,613

	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 March 31, 2022			For the Quarter Ended March 31, 2021
Lease expenses ⁽¹⁾
Fixed lease expenses - operating	$	2,767		$	3,015
Variable lease expenses - operating		815			1,513
Sublease income		(276	)		(499	)
Total lease expenses	$	3,306		$	4,029

Other information
Gross operating cash flows for operating leases ⁽²⁾	$	(4,555	)	$	(5,221	)
Operating cash flows from subleases⁽²⁾	$	274		$	530

	As of March 31, 2022			As of March 31, 2021
Weighted average remaining lease term (in months) – operating leases		68			73
Weighted average discount rate – operating leases		4.9	%		5.0	%

	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 March 31,
Award Type	2022		2021
Stock options	$	89	$	160
Restricted stock units settled in stock		2,323		3,588
Total share-based compensation expense	$	2,412	$	3,748

	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⁽⁴⁾
	March 31, 2022		December 31, 2021
CTU	$	152,252	$	153,072
AIUS		138,730		151,407
Corporate and Other ⁽³⁾		552,845		542,954
Total	$	843,827	$	847,433

	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)

	For the Quarter Ended March 31,
Adjusted Operating Income	2022			2021

Operating income	$	43,693		$	40,617
Depreciation and amortization ⁽¹⁾		4,882			4,002
Legal fee expense related to certain matters ⁽²⁾		2,347			242
Adjusted Operating Income ⁽³⁾	$	50,922		$	44,861

	For the Quarter Ended March 31,
Adjusted Earnings Per Diluted Share	2022			2021

Reported Earnings Per Diluted Share	$	0.46		$	0.43
Pre-tax adjustments included in operating expenses:
Amortization for acquired intangible assets ⁽¹⁾		0.02			0.01
Legal fee expense related to certain matters ⁽²⁾		0.03			-
Total pre-tax adjustments	$	0.05		$	0.01
Tax effect of adjustments ⁽⁴⁾		(0.01	)		-
Total adjustments after tax		0.04			0.01
Adjusted Earnings Per Diluted Share ⁽³⁾	$	0.50		$	0.44

	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	%

	TOTAL STUDENT ENROLLMENTS
	As of March 31,
		2022	2021	% Change
CTU		23,500	27,300		-13.9	%
AIUS		14,100	16,800		-16.1	%
Total		37,600	44,100		-14.7	%

	2017 ⁽⁵⁾		2018		2019		2020		2021 & Thereafter		Total
Gross operating lease obligations ⁽¹⁾
Ongoing operations⁽²⁾	$	12,399	$	12,835	$	13,089	$	10,446	$	15,555	$	64,324
Teach-out campuses and discontinued operations ⁽³⁾		58,845		29,168		14,171		7,455		5,677		115,316
Total gross operating lease obligations	$	71,244	$	42,003	$	27,260	$	17,901	$	21,232	$	179,640

Sublease income ⁽⁴⁾
Ongoing operations ⁽²⁾	$	612	$	934	$	426	$	107	$	-	$	2,079
Teach-out campuses and discontinued operations ⁽³⁾		8,432		4,887		3,107		1,498		229		18,153
Total sublease income	$	9,044	$	5,821	$	3,533	$	1,605	$	229	$	20,232

Net operating lease obligations
Ongoing operations ⁽²⁾	$	11,787	$	11,901	$	12,663	$	10,339	$	15,555	$	62,245
Teach-out campuses and discontinued operations ⁽³⁾		50,413		24,281		11,064		5,957		5,448		97,163
Total net contractual lease obligations	$	62,200	$	36,182	$	23,727	$	16,296	$	21,003	$	159,408

	~~CAREER~~PERDOCEO EDUCATION CORPORATION

Date: ~~November 2, 2017~~May 5, 2022	By:	/s/ ~~TODD S. NELSON~~ ANDREW H. HURST
		~~Todd S. Nelson~~Andrew H. Hurst President and Chief Executive Officer (Principal Executive Officer)

Date: ~~November 2, 2017~~May 5, 2022	By:	/s/ ASHISH R. GHIA
		Ashish R. Ghia Senior Vice President and ~~Interim~~ Chief Financial Officer (Principal Financial Officer)