Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Feb. 01, 2016 | Jun. 30, 2015 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | STRAYER EDUCATION INC | ||
Entity Central Index Key | 1,013,934 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 452.6 | ||
Entity Common Stock, Shares Outstanding | 11,027,177 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 106,889 | $ 162,283 |
Tuition receivable, net | 18,519 | 16,942 |
Other current assets | 13,390 | 17,426 |
Total current assets | 138,798 | 196,651 |
Property and equipment, net | 77,139 | 82,266 |
Deferred income taxes | 20,003 | 16,241 |
Goodwill | 6,800 | 6,800 |
Other assets | 5,694 | 5,857 |
Total assets | 248,434 | 307,815 |
Current liabilities: | ||
Accounts payable and accrued expenses | 42,253 | 43,836 |
Income taxes payable | 2,684 | 1,286 |
Deferred revenue | 12,373 | 4,682 |
Other current liabilities | $ 281 | 281 |
Current portion of debt | 6,250 | |
Total current liabilities | $ 57,591 | 56,335 |
Long term debt | 112,500 | |
Other long-term liabilities | $ 47,987 | 46,248 |
Total liabilities | $ 105,578 | $ 215,083 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, par value $0.01; 20,000,000 shares authorized; 10,903,341 and 11,027,177 shares issued and outstanding at December 31, 2014 and 2015, respectively | $ 110 | $ 109 |
Additional paid-in capital | 24,738 | 14,550 |
Retained earnings | $ 118,008 | 77,985 |
Accumulated other comprehensive income | 88 | |
Total stockholders' equity | $ 142,856 | 92,732 |
Total liabilities and stockholders' equity | $ 248,434 | $ 307,815 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Balance Sheets [Abstract] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 11,027,177 | 10,903,341 |
Common stock, shares outstanding | 11,027,177 | 10,903,341 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Statements of Income [Abstract] | |||
Revenues | $ 434,437 | $ 446,041 | $ 503,600 |
Costs and expenses: | |||
Instruction and educational support | 234,097 | 236,303 | 310,446 |
Marketing | 70,084 | 66,495 | 75,426 |
Admissions advisory | 16,304 | 16,661 | 20,390 |
General and administration | 44,254 | 44,835 | 64,637 |
Total costs and expenses | 364,739 | 364,294 | 470,899 |
Income from operations | 69,698 | 81,747 | 32,701 |
Investment income | 283 | 117 | 2 |
Interest expense | 3,850 | 5,248 | 5,419 |
Income before income taxes | 66,131 | 76,616 | 27,284 |
Provision for income taxes | 26,108 | 30,260 | 10,859 |
Net income | $ 40,023 | $ 46,356 | $ 16,425 |
Earnings per share: | |||
Basic | $ 3.78 | $ 4.39 | $ 1.55 |
Diluted | $ 3.73 | $ 4.35 | $ 1.55 |
Weighted average shares outstanding: | |||
Basic | 10,588 | 10,561 | 10,584 |
Diluted | 10,740 | 10,650 | 10,624 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Statements of Comprehensive Income [Abstract] | |||
Net income | $ 40,023 | $ 46,356 | $ 16,425 |
Other comprehensive income: | |||
Change in fair value of derivative instrument, net of income tax | (88) | 60 | 764 |
Comprehensive income | $ 39,935 | $ 46,416 | $ 17,189 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) |
Beginning balance at Dec. 31, 2012 | $ 40,988 | $ 114 | $ 299 | $ 41,311 | $ (736) |
Beginning balance, shares at Dec. 31, 2012 | 11,387,299 | ||||
Tax shortfall associated with stock-based compensation arrangements | (3,567) | (702) | (2,865) | ||
Repurchase of common stock | $ (24,999) | $ (5) | (1,752) | $ (23,242) | |
Repurchase of common stock, shares | (495,085) | ||||
Restricted stock forfeitures and cancellations, net of grants | $ (1) | 1 | |||
Restricted stock forfeitures and cancellations, net of grants, shares | (94,750) | ||||
Stock-based compensation | $ 9,291 | $ 9,291 | |||
Change in fair value of derivative instrument, net of income tax | 764 | $ 764 | |||
Net income | 16,425 | $ 16,425 | |||
Ending balance at Dec. 31, 2013 | 38,902 | $ 108 | $ 7,137 | $ 31,629 | $ 28 |
Ending balance, shares at Dec. 31, 2013 | 10,797,464 | ||||
Tax shortfall associated with stock-based compensation arrangements | $ (2,039) | (2,039) | |||
Restricted stock grants, net of forfeitures | $ 1 | (1) | |||
Restricted stock grants, net of forfeitures, shares | 105,877 | ||||
Stock-based compensation | $ 9,453 | $ 9,453 | |||
Change in fair value of derivative instrument, net of income tax | 60 | $ 60 | |||
Net income | 46,356 | $ 46,356 | |||
Ending balance at Dec. 31, 2014 | 92,732 | $ 109 | $ 14,550 | $ 77,985 | $ 88 |
Ending balance, shares at Dec. 31, 2014 | 10,903,341 | ||||
Tax shortfall associated with stock-based compensation arrangements | $ (24) | (24) | |||
Restricted stock grants, net of forfeitures | $ 1 | (1) | |||
Restricted stock grants, net of forfeitures, shares | 123,836 | ||||
Stock-based compensation | $ 10,213 | $ 10,213 | |||
Change in fair value of derivative instrument, net of income tax | (88) | $ (88) | |||
Net income | 40,023 | $ 40,023 | |||
Ending balance at Dec. 31, 2015 | $ 142,856 | $ 110 | $ 24,738 | $ 118,008 | |
Ending balance, shares at Dec. 31, 2015 | 11,027,177 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities: | |||
Net income | $ 40,023 | $ 46,356 | $ 16,425 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Amortization of gain on sale of assets | (280) | (280) | (281) |
Amortization of deferred rent | (345) | (1,092) | (462) |
Amortization of deferred financing costs | 1,229 | 780 | 780 |
Depreciation and amortization | 18,104 | 20,630 | 35,563 |
Deferred income taxes | (4,006) | (1,036) | (23,435) |
Stock-based compensation | 10,213 | 9,453 | 9,291 |
Changes in assets and liabilities: | |||
Tuition receivable, net | (1,991) | 685 | 4,024 |
Other current assets | 4,005 | (2,862) | 2,434 |
Other assets | 22 | 219 | 494 |
Accounts payable and accrued expenses | (752) | 6,550 | (116) |
Income taxes payable and income taxes receivable | 1,835 | 737 | 7,799 |
Deferred revenue | 12,465 | 11,783 | 2,059 |
Other long-term liabilities | (3,624) | (14,373) | 29,518 |
Net cash provided by operating activities | 76,898 | 77,550 | 84,093 |
Cash flows from investing activities: | |||
Purchases of property and equipment | (12,692) | (6,902) | (8,726) |
Net cash used in investing activities | (12,692) | (6,902) | (8,726) |
Cash flows from financing activities: | |||
Payments on term loan | (118,750) | $ (3,125) | $ (3,125) |
Payment of deferred financing costs | $ (850) | ||
Repurchase of common stock | $ (24,999) | ||
Net cash used in financing activities | $ (119,600) | $ (3,125) | (28,124) |
Net increase (decrease) in cash and cash equivalents | (55,394) | 67,523 | 47,243 |
Cash and cash equivalents - beginning of year | 162,283 | 94,760 | 47,517 |
Cash and cash equivalents - end of year | 106,889 | 162,283 | 94,760 |
Non-cash transactions: | |||
Purchases of property and equipment included in accounts payable | $ 365 | $ 412 | $ 47 |
Nature of Operations
Nature of Operations | 12 Months Ended |
Dec. 31, 2015 | |
Nature of Operations [Abstract] | |
Nature of Operations | 1. Strayer Education, Inc. (the “Company”), a Maryland corporation, conducts its operations through its wholly owned subsidiaries, Strayer University (the “University”) and New York Code and Design Academy (“NYCDA”). The University is an accredited institution of higher education that provides undergraduate and graduate degrees in various fields of study through physical campuses, predominantly located in the eastern United States, and online. With the Company’s focus on the student, regardless of whether he or she chooses to take classes at a physical campus or online, it has only one reporting segment. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Significant Accounting Policies [Abstract] | |
Significant Accounting Policies | 2. Financial Statement Presentation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, the University. On January 13, 2016, the Company acquired all of the outstanding stock of NYCDA, and the results of NYCDA will be included with the Company from the acquisition date. All intercompany accounts and transactions have been eliminated in the consolidated financial statements. Revenue Recognition The Company’s educational programs are offered on a quarterly basis and such periods coincide with the Company’s quarterly financial reporting periods. Approximately 96% of the Company’s revenues during the year ended December 31, 2015 consisted of tuition revenue, which is recognized in the quarter of instruction. Tuition revenue is assessed for collectibility on a student-by-student basis throughout the quarter of instruction, and is shown net of any refunds, withdrawals, corporate discounts, scholarships and employee tuition discounts. This collectibility assessment considers available sources of funds for the student including Federal Financial Student Aid programs. The Company reassesses the collectibility of tuition revenue that it may earn based on new information and changes in the facts and circumstances relevant to a student’s ability to pay, including the timing of a student’s withdrawal from a program of study. At the start of each academic term, a liability (deferred revenue) is recorded for academic services to be provided and a tuition receivable is recorded for the portion of the tuition not paid in advance. Any cash received prior to the start of an academic term is recorded as deferred revenue. Some students may be eligible for scholarship awards, the estimated value of which will be realized in the future and is deducted from revenue when earned, based on historical student attendance and completion behavior. Deferred revenue is recorded as a current or long-term liability in the consolidated balance sheets based on when the benefit is expected to be realized. Revenues also include textbook-related income, certificate revenue, certain academic fees, licensing revenue, and other income, which are recognized when earned. The Company’s refund policy typically permits students who complete less than half of a course to receive a partial refund of tuition for that course. Refunds reduce the tuition revenue that would have otherwise been recognized for that student. Since the Company’s academic terms coincide with its financial reporting periods, nearly all refunds are processed and recorded within the same quarter as the corresponding revenue. The amount of tuition revenue refundable to students may vary based on the student’s state of residence. Unused books and related academic materials may be returned for a full refund within 21 days of the start of class; however, purchases of electronic content are not refundable if downloaded. Revenues derived from fees are not eligible for a refund. Graduation Fund In the third quarter of 2013, the Company introduced the Graduation Fund, which allows new undergraduate students to earn tuition credits that are redeemable in the final year of a student’s course of study if he or she successfully remains in the program. New students registering in credit-bearing courses in any undergraduate program for the summer 2013 term (fiscal third quarter) and subsequent terms qualify for the Graduation Fund. Students must meet all of the University’s admission requirements, and must be enrolled in an undergraduate degree program. The Company’s employees and their dependents are not eligible for the program. Students who have more than one consecutive term of non-attendance lose any Graduation Fund credits earned to date, but may earn and accumulate new credits if the student is reinstated or readmitted by the University in the future. In their final academic year, qualifying students will receive one free course for every three courses that were successfully completed. Revenue from students participating in the Graduation Fund is recorded in accordance with the Revenue Recognition Topic, ASC 605-50. The Company defers the value of benefits estimated to be redeemed in the future based on the underlying revenue transactions that result in progress by the student toward earning the benefit. The Company’s estimate of the benefits that will be redeemed in the future is based on its historical experience of student persistence toward completion of a course of study within this program and similar programs. Each quarter, the Company assesses its methodologies and assumptions underlying these estimates and, to date, any adjustments to the estimates have not been material. The amount estimated to be redeemed in the next twelve months is $10.0 million and is included in deferred revenue as a current liability in the consolidated balance sheets. The table below presents activity in the Graduation Fund for the years ended December 31, 2014 and 2015 (in thousands): 2014 2015 Balance at beginning of year $ 1,898 $ 9,706 Revenue deferred 8,507 17,882 Benefit redeemed (699 ) (6,651 ) Balance at end of year $ 9,706 $ 20,937 Cash and Cash Equivalents Cash and cash equivalents consist of cash maintained in mostly FDIC-insured bank accounts and cash invested in bank overnight deposits and money market mutual funds. The Company places its cash and temporary cash investments with various financial institutions. The Company considers all highly liquid instruments purchased with a maturity of three months or less at the date of purchase to be cash equivalents. Concentration of Credit Risk The Company places its cash and temporary cash investments in bank overnight deposits and money market mutual funds with various financial institutions. Cash and cash equivalent balances are in excess of the FDIC insurance limit. The Company has not experienced any losses on its cash and cash equivalents. Restricted Cash A significant portion of the Company’s revenues are funded by various federal and state government programs. The Company generally does not receive funds from these programs prior to the start of the corresponding academic term. The Company may be required to return certain funds for students who withdraw from the University during the academic term. There were no amounts payable for these obligations at December 31, 2015. At December 31, 2014, the Company had approximately $0.2 million of these unpaid obligations, which are recorded as restricted cash and included in other current assets in the consolidated balance sheet. As part of commencing operations in Pennsylvania in 2003, the Company was required to maintain a “minimum protective endowment” of at least $0.5 million in an interest-bearing account. These funds are required as long as the Company operates its campuses in the state. The Company holds these funds in an interest-bearing account which is included in other assets. Tuition Receivable and Allowance for Doubtful Accounts The Company records tuition receivable and deferred revenue for its students upon the start of the academic term. Therefore, at the end of the quarter (and academic term), tuition receivable represents amounts due from students for educational services already provided and deferred revenue represents advance payments from students for academic services to be provided in the future. Tuition receivables are not collateralized; however, credit risk is minimized as a result of the diverse nature of the University’s student base. An allowance for doubtful accounts is established primarily based upon historical collection rates by age of receivable, net of estimated recoveries. These collection rates incorporate historical performance based on a student’s current enrollment status and likelihood of future enrollment. The Company periodically assesses its methodologies for estimating bad debts in consideration of actual experience. The Company’s tuition receivable and allowance for doubtful accounts were as follows as of December 31, 2014 and 2015 (in thousands): 2014 2015 Tuition receivable $ 25,777 $ 28,543 Allowance for doubtful accounts (8,835 ) (10,024 ) Tuition receivable, net $ 16,942 $ 18,519 Approximately $1.6 million and $2.0 million of tuition receivable is included in other assets as of December 31, 2014 and 2015, respectively, because these amounts are expected to be collected after 12 months. The following table illustrates changes in the Company’s allowance for doubtful accounts for each of the three years ended December 31, 2015 (in thousands): 2013 2014 2015 Beginning allowance for doubtful accounts $ 6,596 $ 10,303 $ 8,835 Additions charged to expense 22,225 16,947 13,067 Write-offs, net of recoveries (18,518 ) (18,415 ) (11,878 ) Ending allowance for doubtful accounts $ 10,303 $ 8,835 $ 10,024 Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. In accordance with the Property, Plant and Equipment Topic, ASC 360, the carrying values of the Company’s assets are re-evaluated when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined that an impairment loss has occurred based on expected undiscounted future cash flows, then a loss is recognized using a fair value-based model. Through 2015, no such impairment loss had occurred. Depreciation and amortization of property and equipment is calculated using the straight-line method over the estimated useful lives ranging from 3 to 40 years. Depreciation and amortization amounted to $35.6 million, $20.6 million and $18.1 million for the years ended December 31, 2013, 2014, and 2015, respectively. Construction in progress includes costs of computer software developed for internal use, which is accounted for in accordance with the Internal-Use Software Topic, ASC 350-40. Computer software development costs that are incurred in the preliminary project stage are expensed as incurred. During the development stage, direct consulting costs, payroll, and payroll-related costs for employees that are directly associated with the project are capitalized and will be amortized over the estimated useful life of the software once placed into operation. Purchases of property and equipment and changes in accounts payable for each of the three years in the period ended December 31, 2015 in the Consolidated Statements of Cash Flows have been adjusted to exclude non-cash purchases of property and equipment transactions during that period. Fair Value The Fair Value Measurement Topic, ASC 820-10 (“ASC 820-10”), establishes a framework for measuring fair value, establishes a fair value hierarchy based upon the observability of inputs used to measure fair value, and expands disclosures about fair value measurements. Assets and liabilities are classified in their entirety within the fair value hierarchy based on the lowest level input that is significant to the fair value measurement. Under ASC 820-10, fair value of an investment is the price that would be received to sell an asset or to transfer a liability to an entity in an orderly transaction between market participants at the measurement date. The hierarchy gives the highest priority to assets and liabilities with readily available quoted prices in an active market and lowest priority to unobservable inputs which require a higher degree of judgment when measuring fair value, as follows: • • • The Company’s assets and liabilities that are subject to fair value measurement are categorized in one of the three levels above. Fair values are based on the inputs available at the measurement dates, and may rely on certain assumptions that may affect the valuation of fair value for certain assets or liabilities. Goodwill and Indefinite-Lived Intangible Assets Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the assets acquired and liabilities assumed. Indefinite-lived intangible assets, which include a trade name, are recorded at fair market value on their acquisition date. An indefinite life was assigned to the trade name because it has the continued ability to generate cash flows indefinitely. Goodwill and the indefinite-lived intangible asset are assessed at least annually for impairment during the three-month period ending September 30, or more frequently if events occur or circumstances change between annual tests that would more likely than not reduce the fair value of the respective reporting unit below its carrying amount. Under Accounting Standards Update No. 2011-08, Intangibles-Goodwill and Other (Topic 350): Testing Goodwill for Impairment Long-Term Liabilities Included in the Company’s long-term liabilities are amounts related to the Company’s operating leases, deferred payments related to an acquisition completed in 2011, the fair value of the Company’s interest rate swap, and the non-current portion of deferred revenue. In conjunction with the opening of some campuses and other facilities, the Company was reimbursed by the lessors for improvements made to those leased properties. In accordance with the Operating Leases Subtopic, ASC 840-20 (“ASC 840-20”), these underlying assets were capitalized as leasehold improvements and a liability was established for the reimbursements. The leasehold improvements and the liability are amortized on a straight-line basis over the corresponding lease terms, which generally range from five to ten years. In accordance with ASC 840-20, the Company records rent expense on a straight-line basis over the initial term of a lease. The cumulative difference between the rent payment and the straight-line rent expense is recorded as a liability. The Company also records the non-current portion of the gain related to the sale and lease back of a campus facility as a long-term liability. Accounting for Derivative Instruments and Hedging Activities On the date that the Company enters into a derivative contract, it designates the derivative as a hedge of (a) a forecasted transaction or (b) the variability of cash flows that are to be received or paid in connection with a recognized asset or liability (a cash flow hedge). All derivatives are recognized in the balance sheet at their fair value. Changes in the fair value of a derivative that is highly effective and that is designated and qualifies as a cash flow hedge, to the extent that the hedge is effective, are recorded, net of income tax, in other comprehensive income, until earnings are affected by the variability of cash flows of the hedged transaction (e.g., until periodic settlements of a variable-rate asset or liability are recorded in earnings). Any hedge ineffectiveness (which represents the amount by which the changes in the fair value of the derivative exceed the variability in the cash flows of the forecasted transaction) is recorded in current-period earnings. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. The Company also formally assesses (both at the hedge’s inception and on an ongoing basis) whether the derivatives that are used in hedging transactions have been highly effective in offsetting changes in the fair value or cash flows of hedged items and whether those derivatives may be expected to remain highly effective in future periods. When it is determined that a derivative is not (or has ceased to be) highly effective as a hedge, the Company discontinues hedge accounting prospectively. Authorized Stock The Company has authorized 20,000,000 shares of common stock, par value $.01, of which 10,903,341 and 11,027,177 shares were issued and outstanding as of December 31, 2014 and 2015, respectively. The Company also has authorized 8,000,000 shares of preferred stock, none of which has been issued or outstanding since 2004. Before any preferred stock may be issued in the future, the Board of Directors would need to establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, and the terms or conditions of the redemption of the preferred stock. Advertising Costs The Company expenses advertising costs in the quarter incurred, except for costs associated with the production of media commercials which are expensed when the commercial is first aired. Stock-Based Compensation As required by the Stock Compensation Topic, ASC 718, the Company measures and recognizes compensation expense for all share-based payment awards made to employees and directors, including employee stock options, restricted stock, restricted stock units, and employee stock purchases related to the Company’s Employee Stock Purchase Plan, based on estimated fair values. Stock-based compensation expense recognized in the Consolidated Statements of Income for each of the three years in the period ended December 31, 2015 is based on awards ultimately expected to vest and, therefore, has been adjusted for estimated forfeitures. The Company is required to estimate forfeitures at the time of grant and revise the estimate, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The forfeiture rate used is based on historical experience. The Company also assesses the likelihood that performance criteria associated with performance-based awards will be met. If it is determined that it is more likely than not that performance criteria will not be achieved, the Company revises its estimate of the number of shares it believes will ultimately vest. Net Income Per Share Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the periods. Diluted earnings per share reflects the potential dilution that could occur assuming conversion or exercise of all dilutive unexercised stock options, restricted stock and restricted stock units. The dilutive effect of stock awards was determined using the treasury stock method. Under the treasury stock method, all of the following are assumed to be used to repurchase shares of the Company’s common stock: (1) the proceeds received from the exercise of stock options, (2) the amount of compensation cost associated with the stock awards for future service not yet recognized by the Company, and (3) the amount of tax benefits that would be recorded in additional paid-in capital when the stock awards become deductible for income tax purposes. Stock options are not included in the computation of diluted earnings per share when the stock option exercise price of an individual grant exceeds the average market price for the period. During the year ended December 31, 2015, the Company had no issued and outstanding stock options that were excluded from the calculation. Set forth below is a reconciliation of shares used to calculate basic and diluted earnings per share for each of the three years ended December 31, 2015 (in thousands): 2013 2014 2015 Weighted average shares outstanding used to compute basic earnings per share 10,584 10,561 10,588 Incremental shares issuable upon the assumed exercise of stock — 6 6 Unvested restricted stock and restricted stock units 40 83 146 Shares used to compute diluted earnings per share 10,624 10,650 10,740 Income Taxes The Company provides for deferred income taxes based on temporary differences between financial statement and income tax bases of assets and liabilities using enacted tax rates in effect in the year in which the differences are expected to reverse. The Income Taxes Topic, ASC 740, requires the company to determine whether uncertain tax positions should be recognized within the Company’s financial statements. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. Uncertain tax positions are recognized when a tax position, based solely on its technical merits, is determined to be more likely than not to be sustained upon examination. Upon determination, uncertain tax positions are measured to determine the amount of benefit that is greater than 50% likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. A tax position is derecognized if it no longer meets the more likely than not threshold of being sustained. The tax years 2012-2015 remain open for Federal tax examination and the tax years 2011-2015 remain open to examination by state and local taxing jurisdictions in which the Company is subject. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the period reported. The most significant management estimates included allowances for doubtful accounts, the useful lives of property and equipment, fair value of future contractual operating lease obligations, potential sublease income and vacancy periods, accrued expenses, forfeiture rates and the likelihood of achieving performance criteria for stock-based awards, value of free courses earned by students that will be redeemed in the future, valuation of goodwill, intangible assets and the interest rate swap arrangement, and the provision for income taxes. Actual results could differ from those estimates. Comprehensive Income Comprehensive income consists of net income and the change in the fair value of the Company’s interest rate swap, net of income taxes. Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). The standard establishes a new recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. ASU 2014-09 is effective for fiscal years beginning after December 15, 2017. The Company currently is evaluating the impact that the standard will have on its financial condition, results of operations, and disclosures. In April 2015, the FASB issued ASU No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30)” (“ASU 2015-03”). The new guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 is effective for financial statements issued for fiscal years beginning after December 15, 2015. The new guidance will be applied on a retrospective basis, and early adoption is permitted. The Company currently is evaluating the impact that the standard will have on its financial condition, results of operations, and disclosures. In November 2015, the FASB issued ASU No. 2015-17, “Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”). The new guidance requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in ASU 2015-17 are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company intends to adopt the standard during the first quarter of 2016. |
Restructuring and Related Charg
Restructuring and Related Charges | 12 Months Ended |
Dec. 31, 2015 | |
Restructuring and Related Charges [Abstract] | |
Restructuring and Related Charges | 3. In October 2013, the Company implemented a restructuring to better align the Company’s resources with its current student enrollments. This restructuring included the closing of 20 physical locations and reductions in the number of campus-based and corporate employees. T he following details the changes in the Company’s restructuring liability by type of cost during the three years ended December 31, 2015 (in thousands): Lease Severance Total Balance at December 31, 2012 $ — $ — $ — Restructuring and other charges (1) 47,792 6,898 54,690 Payments (103 ) (6,120 ) (6,223 ) Adjustments (2) (5,139 ) 1,438 (3,701 ) Balance at December 31, 2013 (1) 42,550 2,216 44,766 Payments (12,418 ) (2,138 ) (14,556 ) Adjustments (2) (2,849 ) (78 ) (2,927 ) Balance at December 31, 2014 (1) 27,283 — 27,283 Payments (7,754 ) — (7,754 ) Adjustments (2) 526 — 526 Balance at December 31, 2015 (1) $ 20,055 $ — $ 20,055 ____________ (1) (2) Lease and Related Costs, Net — Severance and Other Employee Separation Costs |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2015 | |
Property and Equipment [Abstract] | |
Property and Equipment | 4. Property and Equipment The composition of property and equipment as of December 31, 2014 and 2015 is as follows (in thousands): 2014 2015 Estimated useful Land $ 7,138 $ 7,138 — Buildings and improvements 18,998 19,109 5–40 Furniture, equipment, and computer hardware and software 153,417 150,597 5–10 Leasehold improvements 38,732 38,639 3–10 Construction in progress 1,942 4,251 — 220,227 219,734 Accumulated depreciation and amortization (137,961 ) (142,595 ) $ 82,266 $ 77,139 Construction in progress includes costs associated with the construction and renovation of campuses and the development of information technology applications. In 2014 and 2015, the Company recorded leasehold improvements of $0.1 million and $2.9 million, respectively, which were reimbursed by lessors as lease incentives. In 2014 and 2015, the Company wrote off $13.6 million and $13.3 million, respectively, in fixed assets that were fully depreciated and no longer in service. |
Fair Value Measurement
Fair Value Measurement | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Measurement [Abstract] | |
Fair Value Measurement | 5. Fair Value Measurement Assets and liabilities measured at fair value on a recurring basis consist of the following as of December 31, 2015 (in thousands): Fair Value Measurements at Reporting Date Using December 31, 2015 Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) Significant Significant Unobservable Inputs Assets: Cash equivalents: Money market funds $ 100 $ 100 $ — $ — Total assets at fair value on a recurring basis $ 100 $ 100 $ — $ — Liabilities: Other long-term liabilities: Deferred payments $ 3,278 $ — $ — $ 3,278 Total liabilities at fair value on a recurring basis $ 3,278 $ — $ — $ 3,278 Assets and liabilities measured at fair value on a recurring basis consist of the following as of December 31, 2014 (in thousands): Fair Value Measurements at Reporting Date Using December 31, Quoted Prices in Significant Significant Assets: Cash equivalents: Money market funds $ 8,275 $ 8,275 $ — $ — Interest rate swaps 143 — 143 — Total assets at fair value on a recurring basis $ 8,418 $ 8,275 $ 143 $ — Liabilities: Other long-term liabilities: Deferred payments $ 2,398 $ — $ — $ 2,398 Total liabilities at fair value on a recurring basis $ 2,398 $ — $ — $ 2,398 The Company measures the above items on a recurring basis at fair value as follows: • • • The Company’s lease loss liability incorporates an assessment of current sublease market conditions and uses Level 3 inputs, but is not deemed a fair value liability as the future lease payments are required to be discounted using the Company’s incremental borrowing rate at the date of lease abandonment without subsequent adjustment. See Note 3 for further discussion of the Company’s lease loss liability. At December 31, 2014, the carrying value of the Company’s debt was $118.8 million, which approximated fair value. All of the Company’s debt was variable interest rate debt and classified within Level 2 because it was valued using readily available pricing sources which utilize market observable inputs. The Company has no outstanding debt as of December 31, 2015. The Company did not change its valuation techniques associated with recurring fair value measurements from prior periods, and no assets or liabilities were transferred between levels of the fair value hierarchy during the years ended December 31, 2014 or 2015. Changes in the fair value of the Company’s Level 3 deferred payment liability that was outstanding throughout the years ended December 31, 2014 and 2015 are as follows (in thousands): 2014 2015 Balance at beginning of year $ 2,115 $ 2,398 Amounts earned (545 ) (756 ) Adjustments to fair value 828 1,636 Balance at end of year $ 2,398 $ 3,278 |
Long Term Debt
Long Term Debt | 12 Months Ended |
Dec. 31, 2015 | |
Long Term Debt [Abstract] | |
Long Term Debt | 6. On July 2, 2015, the Company entered into an amended credit facility (the “Amended Credit Facility”) which provides for a revolving line of credit (the “Revolver”) up to $150.0 million and provides the Company with an option, under certain conditions, to increase the commitments under the Revolver or establish one or more incremental term loans in an amount up to $50 million in the aggregate in the future. The maturity date of the Amended Credit Facility is July 2, 2020. The Amended Credit Facility replaced the Company’s prior credit agreement (the “Prior Credit Agreement”), dated November 8, 2012, which had provided for both a term loan and revolving line of credit and an original maturity date of December 31, 2016. All amounts outstanding under the Prior Credit Agreement were repaid upon execution of the Amended Credit Facility. The Company paid approximately $0.9 million in debt financing costs associated with the Amended Credit Facility. Borrowings under the Revolver will bear interest at a per annum rate equal to, at the Company’s election, LIBOR or a base rate, plus a margin ranging from 1.75% to 2.25% (as compared to 2.00% to 2.50% under the Prior Credit Agreement), depending on the Company’s leverage ratio. The Company also is subject to a quarterly unused commitment fee ranging from 0.25% to 0.35% per annum (as compared to 0.30% to 0.40% per annum under the Prior Credit Agreement), depending on the Company’s leverage ratio, times the daily unused amount under the Revolver. All other remaining terms of the Prior Credit Agreement remain in full force and effect. The Amended Credit Facility is guaranteed by the University and is secured by substantially all of the personal property and assets of the Company and the guarantor. The Amended Credit Facility contains customary affirmative and negative covenants, representations, warranties, events of default and remedies upon default, including acceleration and rights to foreclose on the collateral securing the Amended Credit Facility. In addition, as with the Prior Credit Agreement, the Amended Credit Facility requires that the Company satisfy certain financial maintenance covenants, including: • • • The Company was in compliance with all the terms of the Amended Credit Facility at December 31, 2015. During the years ended December 31, 2014 and 2015, the Company paid cash interest of $4.4 million and $2.4 million, respectively. The Company’s average annual interest rate, including non-cash charges for the amortization of debt financing costs, was 4.3% in 2014, and 4.3% in 2015 during the period in which the Company had debt outstanding. The Company had no outstanding balance under Revolver as of December 31, 2015. Interest Rate Swap Under the Prior Credit Agreement, the Company was party to an interest rate swap on the outstanding term loan balance in order to minimize the interest rate exposure on the balance of the term loan facility (the “Swap”). The Swap effectively fixed the variable interest rate on the associated term loan at a rate ranging from 2.85% to 3.35%, depending on the Company’s leverage ratio, rather than being subject to fluctuations in the LIBOR rate. The term of the Swap effectively matched the term of the underlying term loan facility. The Swap was designated as a cash flow hedge and was deemed effective in accordance with the Derivatives and Hedging Topic, ASC 815. The fair value of the Swap was included in other assets in the Company’s consolidated balance sheets, and was settled in full at the time of the payoff of the term loan under the Prior Credit Agreement. |
Stock Options, Restricted Stock
Stock Options, Restricted Stock and Restricted Stock Units | 12 Months Ended |
Dec. 31, 2015 | |
Stock Options, Restricted Stock and Restricted Stock Units [Abstract] | |
Stock Options, Restricted Stock and Restricted Stock Units | 7. On May 5, 2015, the Company’s shareholders approved the Strayer Education, Inc. 2015 Equity Compensation Plan (the “2015 Plan”), which replaced the Strayer Education, Inc. 2011 Equity Compensation Plan (the “2011 Plan”). The 2015 Plan provides for the granting of restricted stock, restricted stock units, stock options intended to qualify as incentive stock options, options that do not qualify as incentive stock options, and other forms of equity compensation and performance-based awards to employees, officers and directors of the Company, or to a consultant or advisor to the Company, at the discretion of the Board of Directors. Vesting provisions are at the discretion of the Board of Directors. Options may be granted at option prices based at or above the fair market value of the shares at the date of grant. The maximum term of the awards granted under the 2015 Plan is ten years. The number of shares of common stock reserved for issuance under the 2015 Plan is 500,000 authorized but unissued shares, plus the number of shares available for grant under the 2011 Plan at the time of stockholder approval of the 2015 Plan, and plus the number of shares which may in the future become available under the 2011 Plan due to forfeitures of outstanding awards. In February 2015, the Company’s Board of Directors approved grants of 71,991 shares of restricted stock to certain employees. These shares, which vest 100% in February 2019, were granted pursuant to the 2011 Plan. The Company’s stock price closed at $70.15 on the date of these restricted stock grants. In May 2015, the Company’s Board of Directors approved grants of 40,867 shares of restricted stock, which vest in their entirety four years from the date of grant, and were granted pursuant to the 2015 Plan. The Company’s Board of Directors also approved grants of 13,797 shares of restricted stock. These shares, which vest annually over a three-year period, were awarded to non-employee members of the Company’s Board of Directors, as part of the Company’s annual director compensation program and the 2015 Plan. The Company’s stock price closed at $48.94 on the date of these restricted stock grants. Dividends paid on unvested restricted stock are reimbursed to the Company if the recipient forfeits his or her shares as a result Restricted Stock and Restricted Stock Units The table below sets forth the restricted stock and restricted stock units activity for each of the three years in the period ended December 31, 2015: Number of Weighted-average Balance, December 31, 2012 434,439 $ 178.88 Grants 225,741 57.90 Vested shares (51,916 ) 164.22 Forfeitures (120,491 ) 140.30 Balance, December 31, 2013 487,773 $ 131.51 Grants 108,606 38.95 Vested shares (69,434 ) 158.97 Forfeitures (2,729 ) 93.44 Balance, December 31, 2014 524,216 $ 115.67 Grants 126,655 61.00 Vested shares (13,725 ) 52.94 Forfeitures (2,819 ) 115.55 Balance, December 31, 2015 634,327 $ 104.66 Stock Options The table below sets forth the stock option activity for each of the three years in the period ended December 31, 2015 and other stock option information at December 31, 2015: Number of Weighted-average exercise price Weighted- Aggregate (1) Balance, December 31, 2012 100,000 $ 107.28 0.1 $ — Grants 100,000 51.95 Exercises — — Forfeitures (100,000 ) 107.28 Balance, December 31, 2013 100,000 $ 51.95 7.0 $ — Grants — — Exercises — — Forfeitures — — Balance, December 31, 2014 100,000 $ 51.95 6.0 $ 2,233 Grants — — Exercises — — Forfeitures/Expirations — — Balance, December 31, 2015 100,000 $ 51.95 5.1 $ 817 Exercisable, December 31, 2015 100,000 $ 51.95 5.1 $ 817 ____________ (1) The number of shares exercisable as of December 31, 2013, 2014 and 2015 are as follows: Number of Weighted-average Exercisable, December 31, 2013 — $ 51.95 Exercisable, December 31, 2014 — $ 51.95 Exercisable, December 31, 2015 100,000 $ 51.95 Valuation and Expense Information under Stock Compensation Topic ASC 718 At December 31, 2015, total stock-based compensation cost which has not yet been recognized was $25.7 million for unvested restricted stock, restricted stock units, and stock option awards. This cost is expected to be recognized over the next 33 months on a weighted-average basis. Awards of approximately 467,000 shares of restricted stock and restricted stock units are subject to performance conditions. The accrual for stock-based compensation for performance awards is based on the Company’s estimates that such performance criteria are probable of being achieved over the respective vesting periods. Such a determination involves significant judgment surrounding the Company’s ability to maintain regulatory compliance. If the performance targets are not reached during the respective vesting period, or it is determined it is more likely than not that the performance criteria will not be achieved, related compensation expense is adjusted. The following table sets forth the amount of stock-based compensation expense recorded in each of the expense line items for the years ended December 31, 2013, 2014 and 2015 (in thousands): 2013 2014 2015 Instruction and educational support $ 1,976 $ 1,736 $ 2,134 Marketing — — — Admissions advisory — — — General and administration 7,315 7,717 8,079 Stock-based compensation expense included in operating expense 9,291 9,453 10,213 Tax benefit 3,698 3,734 4,032 Stock-based compensation expense, net of tax $ 5,593 $ 5,719 $ 6,181 The following table summarizes information regarding share-based payment arrangements for the years ended December 31, 2013, 2014 and 2015 (in thousands): 2013 2014 2015 Proceeds from stock options exercised $ — $ — $ — Tax shortfall related to share-based payment $ (3,567 ) $ (2,039 ) $ (24 ) Intrinsic value of stock options exercised $ — $ — $ — |
Other Long-Term Liabilities
Other Long-Term Liabilities | 12 Months Ended |
Dec. 31, 2015 | |
Other Long-Term Liabilities [Abstract] | |
Other Long-Term Liabilities | 8. Other long-term liabilities consist of the following as of December 31, 2014 and 2015 (in thousands): 2014 2015 Loss on facilities not in use $ 21,280 $ 15,229 Deferred revenue, net of current portion 9,654 14,429 Deferred rent and other facility costs 8,646 8,993 Deferred payments related to acquisition 5,198 6,078 Lease incentives 1,056 3,125 Deferred gain on sale of campus building 414 133 $ 46,248 $ 47,987 Loss on Facilities Not in Use and Deferred Rent and Other Facility Costs The Company records a liability for lease costs of campuses and non-campus facilities that are not currently in use (see Note 3). For facilities still in use, the Company records rent expense on a straight-line basis over the initial term of a lease. The difference between the rent payment and the straight-line rent expense is recorded as a liability. Deferred Revenue The Company provides for certain scholarship and awards programs, such as the Graduation Fund (see Note 2 for additional information), that are earned by students when they successfully complete course requirements. The Company also has licensed certain of its non-credit bearing course content to a third party. Included in long-term deferred revenue is the amount of revenue under these arrangements that the Company expects will be realized after one year. Deferred Payments Related to Acquisition The Company acquired certain assets and entered into deferred payment arrangements with one of the sellers in connection with an acquisition completed in 2011. The deferred payment arrangements are valued at approximately $2.4 million and $3.3 million as of December 31, 2014 and 2015, respectively. In addition, one of the sellers contributed $2.8 million to the Company representing the seller’s continuing interest in the assets acquired. Lease Incentives In conjunction with the opening of new campuses or renovating existing ones, the Company, in some instances, was reimbursed by the lessors for improvements made to the leased properties. In accordance with ASC 840-20, the underlying assets were capitalized as leasehold improvements and a liability was established for the reimbursements. The leasehold improvements and the liability are amortized on a straight-line basis over the corresponding lease terms, which generally range from five to 10 years. Deferred Gain on Sale of Campus Building In June 2007, the Company sold one of its campus buildings for $5.8 million. The Company is leasing back most of the campus building over a 10-year period. In conjunction with this sale and lease back transaction, the Company realized a gain of $2.8 million before tax, which is deferred and recognized over the 10-year lease term. |
Other Employee Benefit Plans
Other Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2015 | |
Other Employee Benefit Plans [Abstract] | |
Other Employee Benefit Plans | 9. The Company has a 401(k) plan covering all eligible employees of the Company. Effective January 1, 2016, participants may contribute up to $18,000 of their base compensation annually. Employee contributions are voluntary. Discretionary contributions were made by the Company matching 50% of employee deferrals up to a maximum of 3% of the employee’s annual salary. The Company’s contributions, which vest immediately, totaled $1.1 million, $0.9 million and $1.1 million for the years ended December 31, 2013, 2014, and 2015, respectively. In May 1998, the Company adopted the Strayer Education, Inc. Employee Stock Purchase Plan (“ESPP”). Under the ESPP, eligible employees may purchase shares of the Company’s common stock, subject to certain limitations, at 90% of its market value at the date of purchase. Purchases are limited to 10% of an employee’s eligible compensation. The aggregate number of shares of common stock that may be made available for purchase by participating employees under the ESPP is 2,500,000 shares. Shares purchased in the open market for employees for the years ended December 31, 2013, 2014, and 2015 were as follows: Shares Average price 2013 8,911 $ 42.27 2014 5,872 $ 44.55 2015 5,136 $ 49.10 |
Stock Repurchase Plan
Stock Repurchase Plan | 12 Months Ended |
Dec. 31, 2015 | |
Stock Repurchase Plan [Abstract] | |
Stock Repurchase Plan | 10. In November 2003, the Company’s Board of Directors authorized the Company to repurchase up to an aggregate of $15 million in value of common stock in open market purchases from time to time at the discretion of the Company’s management depending on market conditions and other corporate considerations. The Company’s Board of Directors amended the program on various dates, increasing the repurchase amount authorized and extending the expiration date. At December 31, 2015, approximately $70 million of the Company’s share repurchase authorization was remaining for repurchases through December 31, 2016. All of the Company’s share repurchases were effected in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended. This stock repurchase plan may be modified, suspended or terminated at any time by the Company without notice. A summary of the Company’s stock repurchase activity for the years ended December 31, 2013, 2014, and 2015, all of which was part of a publicly announced plan, is set forth in the table below: Number of Average price paid Amount available for future repurchases (in millions) 2013 495,085 $ 50.49 $ 70.0 2014 — $ — $ 70.0 2015 — $ — $ 70.0 Repurchases of common stock are recorded as a reduction to additional paid-in capital. To the extent additional paid-in capital had been reduced to zero through stock repurchases, retained earnings was then reduced. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies and Litigation [Abstract] | |
Commitments and Contingencies | 11. The University participates in various federal student financial assistance programs which are subject to audit by agencies including the Department of Education, the Veterans Administration, and the Department of Defense. Management believes that the potential effects of audit adjustments, if any, for the periods currently under audit will not have a material adverse effect, individually or in the aggregate, on the Company’s consolidated financial position, results of operations or cash flows. As of December 31, 2015, the Company had 88 long-term, non-cancelable operating leases for campuses and other administrative facilities. Rent expense was $82.2 million, $35.7 million, and $37.5 million for the years ended December 31, 2013, 2014, and 2015, respectively. Rent expense for 2013 includes approximately $36.0 million in charges related to the closure of 20 campus locations. Rent expense for 2014 and 2015 includes benefits of approximately $4.1 million and $0.4 million, respectively, to reduce the Company’s liability for losses on facilities no longer in use. The rents on the Company’s leases are subject to annual increases. The minimum rental commitments for the Company as of December 31, 2015 are as follows (in thousands): Minimum 2016 $ 37,240 2017 33,264 2018 28,819 2019 23,444 2020 18,157 Thereafter 26,140 Total $ 167,064 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes [Abstract] | |
Income Taxes | 12. The income tax provision for the years ended December 31, 2013, 2014 and 2015 is summarized below (in thousands): 2013 2014 2015 Current: Federal $ 26,390 $ 25,285 $ 25,515 State 4,582 4,490 4,538 Total current 30,972 29,775 30,053 Deferred: Federal (18,387 ) 141 (3,634 ) State (1,726 ) 344 (311 ) Total deferred (20,113 ) 485 (3,945 ) Total provision for income taxes $ 10,859 $ 30,260 $ 26,108 The tax effects of the principal temporary differences that give rise to the Company’s deferred tax assets are as follows as of December 31, 2014 and 2015 (in thousands): 2014 2015 Tuition receivable $ 3,439 $ 3,908 Other facility-related costs 2,824 2,538 Employee-related liabilities (96 ) — Current net deferred tax asset 6,167 6,446 Stock-based compensation 12,994 16,742 Property and equipment (11,622 ) (9,417 ) Other facility-related costs 8,903 6,534 Deferred revenue 3,758 4,267 Deferred leasing costs 2,797 2,825 Interest rate swap (56 ) — Other (533 ) (948 ) Long-term net deferred tax asset 16,241 20,003 Net deferred tax asset $ 22,408 $ 26,449 As of December 31, 2014 and 2015, the Company’s liabilities for unrecognized tax benefits are included in income taxes payable in the Consolidated Balance Sheets. Interest and penalties, including those related to uncertain tax positions, are included in the provision for income taxes in the Consolidated Statements of Income. The Company recognized $0.1 million of benefits in 2014 and $0.1 million of expense in 2015, related to interest and penalties. The total amount of interest and penalties included in the Consolidated Balance Sheets was $0.3 million and $0.2 million as of December 31, 2014 and 2015, respectively. The following table summarizes changes in unrecognized tax benefits, excluding interest and penalties, for the respective periods (in thousands): Year Ended December 31, 2014 2015 Beginning unrecognized tax benefits $ 1,745 $ 2,936 Additions based on tax positions taken in the current year 2,085 — Reductions for tax positions taken in prior years (565 ) (2,431 ) Settlements with taxing authorities (329 ) — Ending unrecognized tax benefits $ 2,936 $ 505 It is reasonably possible that approximately $0.3 million of unrecognized tax benefits will be reduced in the next twelve months due to expiration of the applicable statutes of limitations. The Company does not anticipate significant changes to other unrecognized tax benefits. As of December 31, 2015, $0.5 million of the Company’s total unrecognized tax benefits would favorably affect the Company’s effective tax rate if recognized. If amounts accrued are less than amounts ultimately assessed by taxing authorities, the Company would record additional income tax expense. A reconciliation between the Company’s statutory tax rate and the effective tax rate for the years ended December 31, 2013, 2014, and 2015 is as follows: 2013 2014 2015 Statutory federal rate 35.0 % 35.0 % 35.0 % State income taxes, net of federal benefits 4.6 4.2 4.2 Other 0.2 0.3 0.3 Effective tax rate 39.8 % 39.5 % 39.5 % Cash payments for income taxes were $26.5 million, $30.8 million, and $28.5 million in 2013, 2014, and 2015, respectively. |
Summarized Quarterly Financial
Summarized Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2015 | |
Summarized Quarterly Financial Data (Unaudited) [Abstract] | |
Summarized Quarterly Financial Data (Unaudited) | 13. Quarterly financial information for 2014 and 2015 is as follows (in thousands except per share data): Quarter 2014 First Second Third Fourth Revenues $ 116,468 $ 112,747 $ 100,756 $ 116,070 Income from operations 25,909 23,998 9,216 22,624 Net income 14,783 13,677 4,953 12,943 Net income per share: Basic $ 1.40 $ 1.29 $ 0.47 $ 1.22 Diluted $ 1.40 $ 1.29 $ 0.46 $ 1.21 Quarter 2015 First Second Third Fourth Revenues $ 111,885 $ 109,750 $ 99,142 $ 113,660 Income from operations 19,859 20,929 7,254 21,656 Net income 11,385 11,874 3,723 13,041 Net income per share: Basic $ 1.08 $ 1.12 $ 0.35 $ 1.23 Diluted $ 1.06 $ 1.11 $ 0.35 $ 1.21 |
Litigation
Litigation | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies and Litigation [Abstract] | |
Litigation | 14. Litigation From time to time, the Company is involved in litigation and other legal proceedings arising out of the ordinary course of its business. There are no pending material legal proceedings to which the Company is subject or to which the Company’s property is subject. |
Regulation
Regulation | 12 Months Ended |
Dec. 31, 2015 | |
Regulation [Abstract] | |
Regulation | 15. The Department of Education (the “Department”) previously attempted to define “an eligible program of training to prepare students for gainful employment in a recognized occupation.” After a federal court invalidated the Department’s regulation, the Department established a negotiated rulemaking committee to consider the issue of gainful employment. The negotiations did not result in the required consensus. On March 25, 2014, the Department issued a Notice of Proposed Rulemaking for public comment, and on October 31, 2014, the Department published the final regulation which became effective on July 1, 2015. The new requirements include two debt-to-earnings measures, consisting of an annual income rate and a discretionary income rate. The annual income rate measures student debt in relation to earnings, and the discretionary income rate measures student debt in relation to discretionary income. Under the new gainful employment regulation, a program would pass if the program’s graduates: • or • In addition, a program that does not pass either of the debt-to-earnings metrics, and that has an annual income rate between 8% and 12%, or a discretionary income rate between 20% and 30%, would be considered to be in a warning zone. A program would fail if the program’s graduates have an annual income rate of 12% or greater and a discretionary income rate of 30% or greater. A program would become Title IV-ineligible for three years if it fails both metrics for two out of three consecutive years, or fails to pass at least one metric for four consecutive award years. If an institution is notified by the Secretary that a program could become ineligible, based on its final rates, for the next award year: • • The new regulation also requires institutions to report student and program level data to the Department, and comply with additional disclosure requirements beginning in January 2017. In addition, the gainful employment regulation required institutions to certify by December 31, 2015, among other things, that each eligible gainful employment program is programmatically accredited if required by a federal governmental entity or a state governmental entity in the state in which it is located or is otherwise required to obtain state approval, and that the each eligible program satisfies the applicable educational prerequisites for professional licensure or certification requirements in each state in which it is located or is otherwise required to obtain state approval, so that a student who completes the program and seeks employment in that state qualifies to take any licensure or certification exam that is needed for the student to practice or find employment in an occupation that the program prepares students to enter. The Company timely made the required certification. The requirements associated with the gainful employment regulations may substantially increase the Company’s administrative burdens and could affect student enrollment, persistence and retention. Further, although the regulations provide opportunities for an institution to correct any potential deficiencies in a program prior to the loss of Title IV eligibility, the continuing eligibility of the Company’s academic programs will be affected by factors beyond management’s control such as changes in the Company’s graduates’ income levels, changes in student borrowing levels, increases in interest rates, changes in the percentage of former students who are current in the repayment of their student loans, and various other factors. Even if the Company were able to correct any deficiency in the gainful employment metrics in a timely manner, the disclosure requirements associated with a program’s failure to meet at least one metric may adversely affect student enrollments in that program and may adversely affect the reputation of the University. Strayer University must comply with the campus safety and security reporting requirements as well as other requirements in the Jeanne Clery Disclosure of Campus Security Policy and Campus Crime Statistics Act, or Clery Act, including recent changes made to the Clery Act by the Violence Against Women Reauthorization Act of 2013, which was signed into law on March 7, 2013. On April 1, 2014, a negotiated rulemaking committee reached consensus on proposed regulations, and on October 20, 2014, the Department promulgated regulations implementing the recent amendments to the Clery Act. In addition, the Department has interpreted Title IX to categorize sexual violence as a form of prohibited sex discrimination and to require institutions to follow certain disciplinary procedures with respect to such offenses. Failure to comply with the Clery Act or Title IX requirements or regulations thereunder could result in action by the Department to require correction action, fine the Company or limit or suspend its participation in Title IV programs, could lead to litigation, and could harm the Company’s reputation. The Company is in compliance with these requirements. Strayer University is subject to announced and unannounced compliance reviews and audits by various external agencies, including the Department, its Office of Inspector General, state licensing agencies, and accrediting agencies. The Department conducted four campus-based program reviews of Strayer University campuses in three states and the District of Columbia, with one on-site review conducted August 18-20, 2014; one on-site review conducted September 8-11, 2014; and two on-site reviews conducted September 22-26, 2014. The reviews covered federal financial aid years 2012-2013 and 2013-2014, and two of the reviews also covered compliance with the Jeanne Clery Disclosure of Campus Security Policy and Campus Crime Statistics Act, the Drug-Free Schools and Communities Act, and regulations related thereto. On October 21, 2014, the Department issued an Expedited Final Program Review Determination Letter for one of the program reviews conducted the week of September 22, 2014, closing the program review with no further action required by the Company. On November 17, 2014, the Company received a Program Review Report for the program review conducted in August 2014, and provided a response to the Department on December 15, 2014. On January 7, 2015, the Company received a Final Program Review Determination letter from that review, closing the review with no further action required by the Company. On March 24, 2015, the Company received a Program Review Report for another program review, and provided a response to the Department on April 21, 2015. On April 29, 2015, the Company received a Final Program Review Determination Letter closing the review and identifying a payment of less than $500 due to the Department of Education based on an underpayment on a return to Title IV calculation. The Company remitted payment, and received a letter from the Department on May 26, 2015, indicating that no further action was required and that the matter was closed. On September 15, 2015, the Company received a Program Review report for the final program review, and provided a response to the Department on October 5, 2015. On January 5, 2016 the Company received a Final Program Review Determination letter for the final program review, indicating that the program review was closed and no further action was required. Each institution participating in Title IV programs must enter into a Program Participation Agreement with the Department. Under the agreement, the institution agrees to follow the Department’s rules and regulations governing Title IV programs. On October 1, 2014, Strayer University received an executed provisional Program Participation Agreement from the Department allowing it to participate in Title IV programs until June 30, 2017. The Program Participation Agreement was issued on a provisional basis because of the Department’s program reviews open at the time of issuance. Under the provisional agreement, the only material additional condition that the University must comply with is obtaining Department approval for substantial changes, including the addition of any new location, level of academic offering, non-degree program, or degree program. |
Subsequent Event
Subsequent Event | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Event [Abstract] | |
Subsequent Event | 16. On January 13, 2016, the Company acquired all of the outstanding shares of the New York Code and Design Academy, a provider of non-degree web and mobile app development courses. NYCDA will operate as a wholly owned subsidiary of the Company, and will maintain its current headquarters and management team based in New York City. The purchase price includes $7.0 million paid up front in cash, plus an additional contingent cash payment of up to $18.0 million based on the achievement of certain performance objectives including NYCDA’s future revenue and results of operations for the five-year period ending December 31, 2020. NYCDA’s operating results will be included in the Company’s consolidated financial statements from the date of the acquisition. |
Significant Accounting Polici24
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Significant Accounting Policies [Abstract] | |
Financial statement presentation | Financial Statement Presentation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, the University. On January 13, 2016, the Company acquired all of the outstanding stock of NYCDA, and the results of NYCDA will be included with the Company from the acquisition date. All intercompany accounts and transactions have been eliminated in the consolidated financial statements. |
Revenue Recognition | Revenue Recognition The Company’s educational programs are offered on a quarterly basis and such periods coincide with the Company’s quarterly financial reporting periods. Approximately 96% of the Company’s revenues during the year ended December 31, 2015 consisted of tuition revenue, which is recognized in the quarter of instruction. Tuition revenue is assessed for collectibility on a student-by-student basis throughout the quarter of instruction, and is shown net of any refunds, withdrawals, corporate discounts, scholarships and employee tuition discounts. This collectibility assessment considers available sources of funds for the student including Federal Financial Student Aid programs. The Company reassesses the collectibility of tuition revenue that it may earn based on new information and changes in the facts and circumstances relevant to a student’s ability to pay, including the timing of a student’s withdrawal from a program of study. At the start of each academic term, a liability (deferred revenue) is recorded for academic services to be provided and a tuition receivable is recorded for the portion of the tuition not paid in advance. Any cash received prior to the start of an academic term is recorded as deferred revenue. Some students may be eligible for scholarship awards, the estimated value of which will be realized in the future and is deducted from revenue when earned, based on historical student attendance and completion behavior. Deferred revenue is recorded as a current or long-term liability in the consolidated balance sheets based on when the benefit is expected to be realized. Revenues also include textbook-related income, certificate revenue, certain academic fees, licensing revenue, and other income, which are recognized when earned. The Company’s refund policy typically permits students who complete less than half of a course to receive a partial refund of tuition for that course. Refunds reduce the tuition revenue that would have otherwise been recognized for that student. Since the Company’s academic terms coincide with its financial reporting periods, nearly all refunds are processed and recorded within the same quarter as the corresponding revenue. The amount of tuition revenue refundable to students may vary based on the student’s state of residence. Unused books and related academic materials may be returned for a full refund within 21 days of the start of class; however, purchases of electronic content are not refundable if downloaded. Revenues derived from fees are not eligible for a refund. |
Graduation Fund | Graduation Fund In the third quarter of 2013, the Company introduced the Graduation Fund, which allows new undergraduate students to earn tuition credits that are redeemable in the final year of a student’s course of study if he or she successfully remains in the program. New students registering in credit-bearing courses in any undergraduate program for the summer 2013 term (fiscal third quarter) and subsequent terms qualify for the Graduation Fund. Students must meet all of the University’s admission requirements, and must be enrolled in an undergraduate degree program. The Company’s employees and their dependents are not eligible for the program. Students who have more than one consecutive term of non-attendance lose any Graduation Fund credits earned to date, but may earn and accumulate new credits if the student is reinstated or readmitted by the University in the future. In their final academic year, qualifying students will receive one free course for every three courses that were successfully completed. Revenue from students participating in the Graduation Fund is recorded in accordance with the Revenue Recognition Topic, ASC 605-50. The Company defers the value of benefits estimated to be redeemed in the future based on the underlying revenue transactions that result in progress by the student toward earning the benefit. The Company’s estimate of the benefits that will be redeemed in the future is based on its historical experience of student persistence toward completion of a course of study within this program and similar programs. Each quarter, the Company assesses its methodologies and assumptions underlying these estimates and, to date, any adjustments to the estimates have not been material. The amount estimated to be redeemed in the next twelve months is $10.0 million and is included in deferred revenue as a current liability in the consolidated balance sheets. The table below presents activity in the Graduation Fund for the years ended December 31, 2014 and 2015 (in thousands): 2014 2015 Balance at beginning of year $ 1,898 $ 9,706 Revenue deferred 8,507 17,882 Benefit redeemed (699 ) (6,651 ) Balance at end of year $ 9,706 $ 20,937 |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of cash maintained in mostly FDIC-insured bank accounts and cash invested in bank overnight deposits and money market mutual funds. The Company places its cash and temporary cash investments with various financial institutions. The Company considers all highly liquid instruments purchased with a maturity of three months or less at the date of purchase to be cash equivalents. |
Concentration of Credit Risk | Concentration of Credit Risk The Company places its cash and temporary cash investments in bank overnight deposits and money market mutual funds with various financial institutions. Cash and cash equivalent balances are in excess of the FDIC insurance limit. The Company has not experienced any losses on its cash and cash equivalents. |
Restricted Cash | Restricted Cash A significant portion of the Company’s revenues are funded by various federal and state government programs. The Company generally does not receive funds from these programs prior to the start of the corresponding academic term. The Company may be required to return certain funds for students who withdraw from the University during the academic term. There were no amounts payable for these obligations at December 31, 2015. At December 31, 2014, the Company had approximately $0.2 million of these unpaid obligations, which are recorded as restricted cash and included in other current assets in the consolidated balance sheet. As part of commencing operations in Pennsylvania in 2003, the Company was required to maintain a “minimum protective endowment” of at least $0.5 million in an interest-bearing account. These funds are required as long as the Company operates its campuses in the state. The Company holds these funds in an interest-bearing account which is included in other assets. |
Tuition Receivable and Allowance for Doubtful Accounts | Tuition Receivable and Allowance for Doubtful Accounts The Company records tuition receivable and deferred revenue for its students upon the start of the academic term. Therefore, at the end of the quarter (and academic term), tuition receivable represents amounts due from students for educational services already provided and deferred revenue represents advance payments from students for academic services to be provided in the future. Tuition receivables are not collateralized; however, credit risk is minimized as a result of the diverse nature of the University’s student base. An allowance for doubtful accounts is established primarily based upon historical collection rates by age of receivable, net of estimated recoveries. These collection rates incorporate historical performance based on a student’s current enrollment status and likelihood of future enrollment. The Company periodically assesses its methodologies for estimating bad debts in consideration of actual experience. The Company’s tuition receivable and allowance for doubtful accounts were as follows as of December 31, 2014 and 2015 (in thousands): 2014 2015 Tuition receivable $ 25,777 $ 28,543 Allowance for doubtful accounts (8,835 ) (10,024 ) Tuition receivable, net $ 16,942 $ 18,519 Approximately $1.6 million and $2.0 million of tuition receivable is included in other assets as of December 31, 2014 and 2015, respectively, because these amounts are expected to be collected after 12 months. The following table illustrates changes in the Company’s allowance for doubtful accounts for each of the three years ended December 31, 2015 (in thousands): 2013 2014 2015 Beginning allowance for doubtful accounts $ 6,596 $ 10,303 $ 8,835 Additions charged to expense 22,225 16,947 13,067 Write-offs, net of recoveries (18,518 ) (18,415 ) (11,878 ) Ending allowance for doubtful accounts $ 10,303 $ 8,835 $ 10,024 |
Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. In accordance with the Property, Plant and Equipment Topic, ASC 360, the carrying values of the Company’s assets are re-evaluated when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined that an impairment loss has occurred based on expected undiscounted future cash flows, then a loss is recognized using a fair value-based model. Through 2015, no such impairment loss had occurred. Depreciation and amortization of property and equipment is calculated using the straight-line method over the estimated useful lives ranging from 3 to 40 years. Depreciation and amortization amounted to $35.6 million, $20.6 million and $18.1 million for the years ended December 31, 2013, 2014, and 2015, respectively. Construction in progress includes costs of computer software developed for internal use, which is accounted for in accordance with the Internal-Use Software Topic, ASC 350-40. Computer software development costs that are incurred in the preliminary project stage are expensed as incurred. During the development stage, direct consulting costs, payroll, and payroll-related costs for employees that are directly associated with the project are capitalized and will be amortized over the estimated useful life of the software once placed into operation. Purchases of property and equipment and changes in accounts payable for each of the three years in the period ended December 31, 2015 in the Consolidated Statements of Cash Flows have been adjusted to exclude non-cash purchases of property and equipment transactions during that period. |
Fair Value | Fair Value The Fair Value Measurement Topic, ASC 820-10 (“ASC 820-10”), establishes a framework for measuring fair value, establishes a fair value hierarchy based upon the observability of inputs used to measure fair value, and expands disclosures about fair value measurements. Assets and liabilities are classified in their entirety within the fair value hierarchy based on the lowest level input that is significant to the fair value measurement. Under ASC 820-10, fair value of an investment is the price that would be received to sell an asset or to transfer a liability to an entity in an orderly transaction between market participants at the measurement date. The hierarchy gives the highest priority to assets and liabilities with readily available quoted prices in an active market and lowest priority to unobservable inputs which require a higher degree of judgment when measuring fair value, as follows: • • • The Company’s assets and liabilities that are subject to fair value measurement are categorized in one of the three levels above. Fair values are based on the inputs available at the measurement dates, and may rely on certain assumptions that may affect the valuation of fair value for certain assets or liabilities. |
Goodwill and Indefinite-Lived Intangible Assets | Goodwill and Indefinite-Lived Intangible Assets Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the assets acquired and liabilities assumed. Indefinite-lived intangible assets, which include a trade name, are recorded at fair market value on their acquisition date. An indefinite life was assigned to the trade name because it has the continued ability to generate cash flows indefinitely. Goodwill and the indefinite-lived intangible asset are assessed at least annually for impairment during the three-month period ending September 30, or more frequently if events occur or circumstances change between annual tests that would more likely than not reduce the fair value of the respective reporting unit below its carrying amount. Under Accounting Standards Update No. 2011-08, Intangibles-Goodwill and Other (Topic 350): Testing Goodwill for Impairment |
Long-Term Liabilities | Long-Term Liabilities Included in the Company’s long-term liabilities are amounts related to the Company’s operating leases, deferred payments related to an acquisition completed in 2011, the fair value of the Company’s interest rate swap, and the non-current portion of deferred revenue. In conjunction with the opening of some campuses and other facilities, the Company was reimbursed by the lessors for improvements made to those leased properties. In accordance with the Operating Leases Subtopic, ASC 840-20 (“ASC 840-20”), these underlying assets were capitalized as leasehold improvements and a liability was established for the reimbursements. The leasehold improvements and the liability are amortized on a straight-line basis over the corresponding lease terms, which generally range from five to ten years. In accordance with ASC 840-20, the Company records rent expense on a straight-line basis over the initial term of a lease. The cumulative difference between the rent payment and the straight-line rent expense is recorded as a liability. The Company also records the non-current portion of the gain related to the sale and lease back of a campus facility as a long-term liability. |
Accounting for Derivative Instruments and Hedging Activities | Accounting for Derivative Instruments and Hedging Activities On the date that the Company enters into a derivative contract, it designates the derivative as a hedge of (a) a forecasted transaction or (b) the variability of cash flows that are to be received or paid in connection with a recognized asset or liability (a cash flow hedge). All derivatives are recognized in the balance sheet at their fair value. Changes in the fair value of a derivative that is highly effective and that is designated and qualifies as a cash flow hedge, to the extent that the hedge is effective, are recorded, net of income tax, in other comprehensive income, until earnings are affected by the variability of cash flows of the hedged transaction (e.g., until periodic settlements of a variable-rate asset or liability are recorded in earnings). Any hedge ineffectiveness (which represents the amount by which the changes in the fair value of the derivative exceed the variability in the cash flows of the forecasted transaction) is recorded in current-period earnings. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. The Company also formally assesses (both at the hedge’s inception and on an ongoing basis) whether the derivatives that are used in hedging transactions have been highly effective in offsetting changes in the fair value or cash flows of hedged items and whether those derivatives may be expected to remain highly effective in future periods. When it is determined that a derivative is not (or has ceased to be) highly effective as a hedge, the Company discontinues hedge accounting prospectively. |
Authorized Stock | Authorized Stock The Company has authorized 20,000,000 shares of common stock, par value $.01, of which 10,903,341 and 11,027,177 shares were issued and outstanding as of December 31, 2014 and 2015, respectively. The Company also has authorized 8,000,000 shares of preferred stock, none of which has been issued or outstanding since 2004. Before any preferred stock may be issued in the future, the Board of Directors would need to establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, and the terms or conditions of the redemption of the preferred stock. |
Advertising Costs | Advertising Costs The Company expenses advertising costs in the quarter incurred, except for costs associated with the production of media commercials which are expensed when the commercial is first aired. |
Stock-Based Compensation | Stock-Based Compensation As required by the Stock Compensation Topic, ASC 718, the Company measures and recognizes compensation expense for all share-based payment awards made to employees and directors, including employee stock options, restricted stock, restricted stock units, and employee stock purchases related to the Company’s Employee Stock Purchase Plan, based on estimated fair values. Stock-based compensation expense recognized in the Consolidated Statements of Income for each of the three years in the period ended December 31, 2015 is based on awards ultimately expected to vest and, therefore, has been adjusted for estimated forfeitures. The Company is required to estimate forfeitures at the time of grant and revise the estimate, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The forfeiture rate used is based on historical experience. The Company also assesses the likelihood that performance criteria associated with performance-based awards will be met. If it is determined that it is more likely than not that performance criteria will not be achieved, the Company revises its estimate of the number of shares it believes will ultimately vest. |
Net Income Per Share | Net Income Per Share Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the periods. Diluted earnings per share reflects the potential dilution that could occur assuming conversion or exercise of all dilutive unexercised stock options, restricted stock and restricted stock units. The dilutive effect of stock awards was determined using the treasury stock method. Under the treasury stock method, all of the following are assumed to be used to repurchase shares of the Company’s common stock: (1) the proceeds received from the exercise of stock options, (2) the amount of compensation cost associated with the stock awards for future service not yet recognized by the Company, and (3) the amount of tax benefits that would be recorded in additional paid-in capital when the stock awards become deductible for income tax purposes. Stock options are not included in the computation of diluted earnings per share when the stock option exercise price of an individual grant exceeds the average market price for the period. During the year ended December 31, 2015, the Company had no issued and outstanding stock options that were excluded from the calculation. Set forth below is a reconciliation of shares used to calculate basic and diluted earnings per share for each of the three years ended December 31, 2015 (in thousands): 2013 2014 2015 Weighted average shares outstanding used to compute basic earnings per share 10,584 10,561 10,588 Incremental shares issuable upon the assumed exercise of stock — 6 6 Unvested restricted stock and restricted stock units 40 83 146 Shares used to compute diluted earnings per share 10,624 10,650 10,740 |
Income Taxes | Income Taxes The Company provides for deferred income taxes based on temporary differences between financial statement and income tax bases of assets and liabilities using enacted tax rates in effect in the year in which the differences are expected to reverse. The Income Taxes Topic, ASC 740, requires the company to determine whether uncertain tax positions should be recognized within the Company’s financial statements. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. Uncertain tax positions are recognized when a tax position, based solely on its technical merits, is determined to be more likely than not to be sustained upon examination. Upon determination, uncertain tax positions are measured to determine the amount of benefit that is greater than 50% likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. A tax position is derecognized if it no longer meets the more likely than not threshold of being sustained. The tax years 2012-2015 remain open for Federal tax examination and the tax years 2011-2015 remain open to examination by state and local taxing jurisdictions in which the Company is subject. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the period reported. The most significant management estimates included allowances for doubtful accounts, the useful lives of property and equipment, fair value of future contractual operating lease obligations, potential sublease income and vacancy periods, accrued expenses, forfeiture rates and the likelihood of achieving performance criteria for stock-based awards, value of free courses earned by students that will be redeemed in the future, valuation of goodwill, intangible assets and the interest rate swap arrangement, and the provision for income taxes. Actual results could differ from those estimates. |
Comprehensive Income | Comprehensive Income Comprehensive income consists of net income and the change in the fair value of the Company’s interest rate swap, net of income taxes. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). The standard establishes a new recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. ASU 2014-09 is effective for fiscal years beginning after December 15, 2017. The Company currently is evaluating the impact that the standard will have on its financial condition, results of operations, and disclosures. In April 2015, the FASB issued ASU No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30)” (“ASU 2015-03”). The new guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 is effective for financial statements issued for fiscal years beginning after December 15, 2015. The new guidance will be applied on a retrospective basis, and early adoption is permitted. The Company currently is evaluating the impact that the standard will have on its financial condition, results of operations, and disclosures. In November 2015, the FASB issued ASU No. 2015-17, “Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”). The new guidance requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in ASU 2015-17 are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company intends to adopt the standard during the first quarter of 2016. |
Significant Accounting Polici25
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Significant Accounting Policies [Abstract] | |
Schedule of graduation fund liability | Year Ended December 31, 2014 2015 Balance at beginning of year $ 1,898 $ 9,706 Revenue deferred 8,507 17,882 Benefit redeemed (699 ) (6,651 ) Balance at end of year $ 9,706 $ 20,937 |
Schedule of tuition receivable and allowance for doubtful accounts | 2014 2015 Tuition receivable $ 25,777 $ 28,543 Allowance for doubtful accounts (8,835 ) (10,024 ) Tuition receivable, net $ 16,942 $ 18,519 |
Schedule of allowance for doubtful accounts | 2013 2014 2015 Beginning allowance for doubtful accounts $ 6,596 $ 10,303 $ 8,835 Additions charged to expense 22,225 16,947 13,067 Write-offs, net of recoveries (18,518 ) (18,415 ) (11,878 ) Ending allowance for doubtful accounts $ 10,303 $ 8,835 $ 10,024 |
Schedule of reconciliation of shares used to calculate basic and diluted earnings per share | 2013 2014 2015 Weighted average shares outstanding used to compute basic earnings per share 10,584 10,561 10,588 Incremental shares issuable upon the assumed exercise of stock — 6 6 Unvested restricted stock and restricted stock units 40 83 146 Shares used to compute diluted earnings per share 10,624 10,650 10,740 |
Restructuring and Related Cha26
Restructuring and Related Charges (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Restructuring and Related Charges [Abstract] | |
Schedule of restructuring liability by type of cost | Lease Severance Total Balance at December 31, 2012 $ — $ — $ — Restructuring and other charges (1) 47,792 6,898 54,690 Payments (103 ) (6,120 ) (6,223 ) Adjustments (2) (5,139 ) 1,438 (3,701 ) Balance at December 31, 2013 (1) 42,550 2,216 44,766 Payments (12,418 ) (2,138 ) (14,556 ) Adjustments (2) (2,849 ) (78 ) (2,927 ) Balance at December 31, 2014 (1) 27,283 — 27,283 Payments (7,754 ) — (7,754 ) Adjustments (2) 526 — 526 Balance at December 31, 2015 (1) $ 20,055 $ — $ 20,055 ____________ (1) (2) |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property and Equipment [Abstract] | |
Composition of property and equipment | 2014 2015 Estimated useful Land $ 7,138 $ 7,138 — Buildings and improvements 18,998 19,109 5–40 Furniture, equipment, and computer hardware and software 153,417 150,597 5–10 Leasehold improvements 38,732 38,639 3–10 Construction in progress 1,942 4,251 — 220,227 219,734 Accumulated depreciation and amortization (137,961 ) (142,595 ) $ 82,266 $ 77,139 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Measurement [Abstract] | |
Schedule of assets and liabilities measured at fair value on a recurring basis | Fair Value Measurements at Reporting Date Using December 31, 2015 Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) Significant Significant Unobservable Inputs Assets: Cash equivalents: Money market funds $ 100 $ 100 $ — $ — Total assets at fair value on a recurring basis $ 100 $ 100 $ — $ — Liabilities: Other long-term liabilities: Deferred payments $ 3,278 $ — $ — $ 3,278 Total liabilities at fair value on a recurring basis $ 3,278 $ — $ — $ 3,278 Fair Value Measurements at Reporting Date Using December 31, Quoted Prices in Significant Significant Assets: Cash equivalents: Money market funds $ 8,275 $ 8,275 $ — $ — Interest rate swaps 143 — 143 — Total assets at fair value on a recurring basis $ 8,418 $ 8,275 $ 143 $ — Liabilities: Other long-term liabilities: Deferred payments $ 2,398 $ — $ — $ 2,398 Total liabilities at fair value on a recurring basis $ 2,398 $ — $ — $ 2,398 |
Schedule of changes in fair value of level 3 liability | 2014 2015 Balance at beginning of year $ 2,115 $ 2,398 Amounts earned (545 ) (756 ) Adjustments to fair value 828 1,636 Balance at end of year $ 2,398 $ 3,278 |
Stock Options, Restricted Sto29
Stock Options, Restricted Stock and Restricted Stock Units (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Stock Options, Restricted Stock and Restricted Stock Units [Abstract] | |
Schedule of restricted stock and restricted stock units activity | Number of Weighted-average Balance, December 31, 2012 434,439 $ 178.88 Grants 225,741 57.90 Vested shares (51,916 ) 164.22 Forfeitures (120,491 ) 140.30 Balance, December 31, 2013 487,773 $ 131.51 Grants 108,606 38.95 Vested shares (69,434 ) 158.97 Forfeitures (2,729 ) 93.44 Balance, December 31, 2014 524,216 $ 115.67 Grants 126,655 61.00 Vested shares (13,725 ) 52.94 Forfeitures (2,819 ) 115.55 Balance, December 31, 2015 634,327 $ 104.66 |
Schedule of stock option activity and other stock option information | Number of Weighted-average exercise price Weighted- Aggregate (1) Balance, December 31, 2012 100,000 $ 107.28 0.1 $ — Grants 100,000 51.95 Exercises — — Forfeitures (100,000 ) 107.28 Balance, December 31, 2013 100,000 $ 51.95 7.0 $ — Grants — — Exercises — — Forfeitures — — Balance, December 31, 2014 100,000 $ 51.95 6.0 $ 2,233 Grants — — Exercises — — Forfeitures/Expirations — — Balance, December 31, 2015 100,000 $ 51.95 5.1 $ 817 Exercisable, December 31, 2015 100,000 $ 51.95 5.1 $ 817 ____________ (1) |
Summary of number of shares exercisable | Number of shares Weighted- average exercise price Exercisable, December 31, 2013 - $ 51.95 Exercisable, December 31, 2014 - $ 51.95 Exercisable, December 31, 2015 100,000 $ 51.95 |
Schedule of stock-based compensation expense | 2013 2014 2015 Instruction and educational support $ 1,976 $ 1,736 $ 2,134 Marketing – – – Admissions advisory – – – General and administration 7,315 7,717 8,079 Stock-based compensation expense included in operating expense 9,291 9,453 10,213 Tax benefit 3,698 3,734 4,032 Stock-based compensation expense, net of tax $ 5,593 $ 5,719 $ 6,181 |
Schedule of information regarding share-based payment arrangements | 2013 2014 2015 Proceeds from stock options exercised $ — $ — $ — Tax shortfall related to share-based payment $ (3,567 ) $ (2,039 ) $ (24 ) Intrinsic value of stock options exercised $ — $ — $ — |
Other Long-Term Liabilities (Ta
Other Long-Term Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Other Long-Term Liabilities [Abstract] | |
Schedule of other long-term liabilities | 2014 2015 Loss on facilities not in use $ 21,280 $ 15,229 Deferred revenue, net of current portion 9,654 14,429 Deferred rent and other facility costs 8,646 8,993 Deferred payments related to acquisition 5,198 6,078 Lease incentives 1,056 3,125 Deferred gain on sale of campus building 414 133 $ 46,248 $ 47,987 |
Other Employee Benefit Plans (T
Other Employee Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Other Employee Benefit Plans [Abstract] | |
Schedule of shares purchased in the open market for employees | Shares Average price 2013 8,911 $ 42.27 2014 5,872 $ 44.55 2015 5,136 $ 49.10 |
Stock Repurchase Plan (Tables)
Stock Repurchase Plan (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Stock Repurchase Plan [Abstract] | |
Schedule of stock repurchase activity | Number of shares repurchased Average price paid per share Amount available for future repurchases (in millions) 2013 495,085 $ 50.49 $ 70.0 2014 – $ – $ 70.0 2015 – $ – $ 70.0 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies and Litigation [Abstract] | |
Schedule of minimum rental commitments | Minimum 2016 $ 37,240 2017 33,264 2018 28,819 2019 23,444 2020 18,157 Thereafter 26,140 Total $ 167,064 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes [Abstract] | |
Schedule of income tax provision | 2013 2014 2015 Current: Federal $ 26,390 $ 25,285 $ 25,515 State 4,582 4,490 4,538 Total current 30,972 29,775 30,053 Deferred: Federal (18,387 ) 141 (3,634 ) State (1,726 ) 344 (311 ) Total deferred (20,113 ) 485 (3,945 ) Total provision for income taxes $ 10,859 $ 30,260 $ 26,108 |
Schedule of tax effects of principal temporary differences that give rise to deferred tax assets | 2014 2015 Tuition receivable $ 3,439 $ 3,908 Other facility-related costs 2,824 2,538 Employee-related liabilities (96 ) — Current net deferred tax asset 6,167 6,446 Stock-based compensation 12,994 16,742 Property and equipment (11,622 ) (9,417 ) Other facility-related costs 8,903 6,534 Deferred revenue 3,758 4,267 Deferred leasing costs 2,797 2,825 Interest rate swap (56 ) — Other (533 ) (948 ) Long-term net deferred tax asset 16,241 20,003 Net deferred tax asset $ 22,408 $ 26,449 |
Summary of changes in unrecognized tax benefits | Year Ended December 31, 2014 2015 Beginning unrecognized tax benefits $ 1,745 $ 2,936 Additions based on tax positions taken in the current year 2,085 — Reductions for tax positions taken in prior years (565 ) (2,431 ) Settlements with taxing authorities (329 ) — Ending unrecognized tax benefits $ 2,936 $ 505 |
Schedule of reconciliation between statutory tax rate and effective tax rate | 2013 2014 2015 Statutory federal rate 35.0 % 35.0 % 35.0 % State income taxes, net of federal benefits 4.6 4.2 4.2 Other 0.2 0.3 0.3 Effective tax rate 39.8 % 39.5 % 39.5 % |
Summarized Quarterly Financia35
Summarized Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summarized Quarterly Financial Data (Unaudited) [Abstract] | |
Schedule of quarterly financial information | Quarter 2014 First Second Third Fourth Revenues $ 116,468 $ 112,747 $ 100,756 $ 116,070 Income from operations 25,909 23,998 9,216 22,624 Net income 14,783 13,677 4,953 12,943 Net income per share: Basic $ 1.40 $ 1.29 $ 0.47 $ 1.22 Diluted $ 1.40 $ 1.29 $ 0.46 $ 1.21 Quarter 2015 First Second Third Fourth Revenues $ 111,885 $ 109,750 $ 99,142 $ 113,660 Income from operations 19,859 20,929 7,254 21,656 Net income 11,385 11,874 3,723 13,041 Net income per share: Basic $ 1.08 $ 1.12 $ 0.35 $ 1.23 Diluted $ 1.06 $ 1.11 $ 0.35 $ 1.21 |
Nature of Operations (Details)
Nature of Operations (Details) | 12 Months Ended |
Dec. 31, 2015Segments | |
Nature of Operations [Abstract] | |
Number of reporting segments | 1 |
Significant Accounting Polici37
Significant Accounting Policies (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Schedule of activity in the Graduation Fund | ||
Balance at beginning of year | $ 9,706 | $ 1,898 |
Revenue deferred | 17,882 | 8,507 |
Benefit redeemed | (6,651) | (699) |
Balance at end of year | $ 20,937 | $ 9,706 |
Significant Accounting Polici38
Significant Accounting Policies (Details 1) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Schedule of tuition receivable and allowance for doubtful accounts | ||||
Tuition receivable | $ 28,543 | $ 25,777 | ||
Allowance for doubtful accounts | (10,024) | (8,835) | $ (10,303) | $ (6,596) |
Tuition receivable, net | $ 18,519 | $ 16,942 |
Significant Accounting Polici39
Significant Accounting Policies (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Schedule of allowance for doubtful accounts | |||
Beginning allowance for doubtful accounts | $ 8,835 | $ 10,303 | $ 6,596 |
Additions charged to expense | 13,067 | 16,947 | 22,225 |
Write-offs, net of recoveries | (11,878) | (18,415) | (18,518) |
Ending allowance for doubtful accounts | $ 10,024 | $ 8,835 | $ 10,303 |
Significant Accounting Polici40
Significant Accounting Policies (Details 3) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Schedule of reconciliation of shares used to calculate basic and diluted earnings per share | |||
Weighted average shares outstanding used to compute basic earnings per share | 10,588 | 10,561 | 10,584 |
Incremental shares issuable upon the assumed exercise of stock options | 6 | 6 | |
Unvested restricted stock and restricted stock units | 146 | 83 | 40 |
Shares used to compute diluted earnings per share | 10,740 | 10,650 | 10,624 |
Significant Accounting Polici41
Significant Accounting Policies (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Significant Accounting Policies (Textual) | |||
Percentage of tuition revenue in total revenue | 96.00% | ||
Unused books and academic material refundable period | 21 days | ||
Restricted cash | $ 200 | ||
Tuition receivable included in other assets | $ 2,000 | 1,600 | |
Expected collection period of tuition receivable | After 12 months | ||
Minimum protective endowment | $ 500 | ||
Common stock, shares authorized | 20,000,000 | 20,000,000 | |
Common stock, par value | $ 0.01 | $ 0.01 | |
Common stock, shares issued | 11,027,177 | 10,903,341 | |
Common stock, shares outstanding | 11,027,177 | 10,903,341 | |
Preferred stock, shares authorized | 8,000,000 | ||
Preferred stock, shares issued | |||
Preferred stock, shares outstanding | |||
Income tax description | Upon determination, uncertain tax positions are measured to determine the amount of benefit that is greater than 50% likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. A tax position is derecognized if it no longer meets the more likely than not threshold of being sustained. | ||
Graduation fund estimated to be redeemed | $ 10,000 | ||
Goodwill and intangible assets impairment | |||
Depreciation and amortization | $ 18,104 | $ 20,630 | $ 35,563 |
Impairment loss | |||
Maximum [Member] | |||
Significant Accounting Policies (Textual) | |||
Estimated useful life of property and equipment | 40 years | ||
Minimum [Member] | |||
Significant Accounting Policies (Textual) | |||
Estimated useful life of property and equipment | 3 years |
Restructuring and Related Cha42
Restructuring and Related Charges (Details) - USD ($) $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||||
Schedule of restructuring liability | ||||||
Beginning balance | $ 27,283 | [1] | $ 44,766 | [1] | ||
Restructuring and other charges | [1] | $ 54,690 | ||||
Payments | (7,754) | (14,556) | (6,223) | |||
Adjustments | [2] | 526 | (2,927) | (3,701) | ||
Ending balance | [1] | 20,055 | 27,283 | $ 44,766 | ||
Lease and Related Costs, Net [Member] | ||||||
Schedule of restructuring liability | ||||||
Beginning balance | 27,283 | [1] | 42,550 | [1] | ||
Restructuring and other charges | [1] | $ 47,792 | ||||
Payments | (7,754) | (12,418) | (103) | |||
Adjustments | [2] | 526 | (2,849) | (5,139) | ||
Ending balance | [1] | $ 20,055 | 27,283 | $ 42,550 | ||
Severance and Other Employee Separation Costs [Member] | ||||||
Schedule of restructuring liability | ||||||
Beginning balance | [1] | 2,216 | [1] | |||
Restructuring and other charges | [1] | $ 6,898 | ||||
Payments | (2,138) | (6,120) | ||||
Adjustments | [2] | $ (78) | 1,438 | |||
Ending balance | [1] | $ 2,216 | ||||
[1] | The current portion of restructuring liabilities was $6.0 million and $4.8 million as of December 31, 2014 and December 31, 2015, respectively, which are included in accounts payable and accrued expenses. The long-term portion is included in other long-term liabilities. | |||||
[2] | Adjustments for lease and related costs include accretion of interest on lease costs, partially offset by changes in the timing and expected income from sublease agreements signed during the period. Adjustments for severance and other employee separation costs include amounts related to employees who were re-hired to other roles within the Company and were not paid severance. |
Restructuring and Related Cha43
Restructuring and Related Charges (Details Textual) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015USD ($)Campus | Dec. 31, 2013USD ($) | Dec. 31, 2014USD ($) | |
Restructuring Cost and Reserve [Line Items] | |||
Restructuring liabilities | $ 4.8 | $ 6 | |
Campus location closed | Campus | 20 | ||
Lease term expire | 2,022 | ||
Lease marginal borrowing rate | 4.50% | ||
Severance and other employee separation costs | $ 6.9 | ||
Lease and Related Costs, Net [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Contractual obligation | $ 36 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 219,734 | $ 220,227 |
Accumulated depreciation and amortization | (142,595) | (137,961) |
Property and equipment, net | 77,139 | 82,266 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 7,138 | 7,138 |
Buildings and improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 19,109 | 18,998 |
Furniture, equipment, and computer hardware and software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 150,597 | 153,417 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 38,639 | 38,732 |
Construction in progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 4,251 | $ 1,942 |
Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life of property and equipment | 40 years | |
Maximum [Member] | Buildings and improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life of property and equipment | 40 years | |
Maximum [Member] | Furniture, equipment, and computer hardware and software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life of property and equipment | 10 years | |
Maximum [Member] | Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life of property and equipment | 10 years | |
Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life of property and equipment | 3 years | |
Minimum [Member] | Buildings and improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life of property and equipment | 5 years | |
Minimum [Member] | Furniture, equipment, and computer hardware and software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life of property and equipment | 5 years | |
Minimum [Member] | Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life of property and equipment | 3 years |
Property and Equipment (Detai45
Property and Equipment (Details Textual) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Property and Equipment [Abstract] | ||
Leasehold improvements reimbursed by lessors as lease incentives | $ 2.9 | $ 0.1 |
Fixed assets written off | $ 13.3 | $ 13.6 |
Fair Value Measurement (Details
Fair Value Measurement (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Cash equivalents: | ||
Total assets at fair value on a recurring basis | $ 100 | $ 8,418 |
Other long-term liabilities: | ||
Total liabilities at fair value on a recurring basis | 3,278 | 2,398 |
Money market funds [Member] | ||
Cash equivalents: | ||
Total assets at fair value on a recurring basis | 100 | 8,275 |
Deferred payments [Member] | ||
Other long-term liabilities: | ||
Total liabilities at fair value on a recurring basis | 3,278 | 2,398 |
Interest rate swaps [Member] | ||
Cash equivalents: | ||
Total assets at fair value on a recurring basis | 143 | |
Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) [Member] | ||
Cash equivalents: | ||
Total assets at fair value on a recurring basis | $ 100 | $ 8,275 |
Other long-term liabilities: | ||
Total liabilities at fair value on a recurring basis | ||
Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) [Member] | Money market funds [Member] | ||
Cash equivalents: | ||
Total assets at fair value on a recurring basis | $ 100 | $ 8,275 |
Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) [Member] | Deferred payments [Member] | ||
Other long-term liabilities: | ||
Total liabilities at fair value on a recurring basis | ||
Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) [Member] | Interest rate swaps [Member] | ||
Cash equivalents: | ||
Total assets at fair value on a recurring basis | ||
Significant Other Observable Inputs (Level 2) [Member] | ||
Cash equivalents: | ||
Total assets at fair value on a recurring basis | $ 143 | |
Other long-term liabilities: | ||
Total liabilities at fair value on a recurring basis | ||
Significant Other Observable Inputs (Level 2) [Member] | Money market funds [Member] | ||
Cash equivalents: | ||
Total assets at fair value on a recurring basis | ||
Significant Other Observable Inputs (Level 2) [Member] | Deferred payments [Member] | ||
Other long-term liabilities: | ||
Total liabilities at fair value on a recurring basis | ||
Significant Other Observable Inputs (Level 2) [Member] | Interest rate swaps [Member] | ||
Cash equivalents: | ||
Total assets at fair value on a recurring basis | $ 143 | |
Significant Unobservable Inputs (Level 3) [Member] | ||
Cash equivalents: | ||
Total assets at fair value on a recurring basis | ||
Other long-term liabilities: | ||
Total liabilities at fair value on a recurring basis | $ 3,278 | $ 2,398 |
Significant Unobservable Inputs (Level 3) [Member] | Money market funds [Member] | ||
Cash equivalents: | ||
Total assets at fair value on a recurring basis | ||
Significant Unobservable Inputs (Level 3) [Member] | Deferred payments [Member] | ||
Other long-term liabilities: | ||
Total liabilities at fair value on a recurring basis | $ 3,278 | $ 2,398 |
Significant Unobservable Inputs (Level 3) [Member] | Interest rate swaps [Member] | ||
Cash equivalents: | ||
Total assets at fair value on a recurring basis |
Fair Value Measurement (Detai47
Fair Value Measurement (Details 1) - Deferred Payments [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Schedule of changes in fair value of level 3 liability | ||
Balance at beginning of year | $ 2,398 | $ 2,115 |
Amounts earned | (756) | (545) |
Adjustments to fair value | 1,636 | 828 |
Balance at end of year | $ 3,278 | $ 2,398 |
Fair Value Measurement (Detai48
Fair Value Measurement (Details Textual) $ in Millions | 12 Months Ended | |
Dec. 31, 2015Sellers | Dec. 31, 2014USD ($) | |
Fair Value Measurement (Textual) | ||
Deferred payment arrangement number of sellers | Sellers | 1 | |
Carrying value of the debt | $ 118.8 | |
Interest Rate Swap [Member] | ||
Fair Value Measurement (Textual) | ||
Interest rate swap, notional amount | $ 118.8 |
Long Term Debt (Details)
Long Term Debt (Details) | Jul. 02, 2015USD ($) | Nov. 08, 2012 | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) |
Long Term Debt (Textual) | ||||
Revolving credit facility, value | $ 150,000,000 | |||
Maximum aggregate incremental term loans | $ 50,000,000 | |||
Maturity date | Jul. 2, 2020 | |||
Cash interest paid | $ 2,400,000 | $ 4,400,000 | ||
Covenant terms required by credit facility | • • • | |||
Maximum total leverage ratio | 2 | |||
Minimum coverage ratio | 1.75 | |||
Minimum department of education financial composite score | 1.5 | |||
Revolving credit facility, outstanding | $ 0 | |||
Payments of debt financing costs | $ 900,000 | |||
Average annual interest rate | 4.30% | 4.30% | ||
Prior Credit Agreement [Member] | ||||
Long Term Debt (Textual) | ||||
Maturity date | Dec. 31, 2016 | |||
Revolving Credit Facility [Member] | ||||
Long Term Debt (Textual) | ||||
Interest rate description | Borrowings under the Revolver will bear interest at a per annum rate equal to, at the Company's election, LIBOR or a base rate, plus a margin ranging from 1.75% to 2.25% (as compared to 2.00% to 2.50% under the Prior Credit Agreement), depending on the Company's leverage ratio. | |||
Revolving Credit Facility [Member] | Minimum [Member] | ||||
Long Term Debt (Textual) | ||||
Margin rate for interest if using base rate | 1.75% | |||
Unused commitment fee | 0.25% | |||
Revolving Credit Facility [Member] | Maximum [Member] | ||||
Long Term Debt (Textual) | ||||
Margin rate for interest if using base rate | 2.25% | |||
Unused commitment fee | 0.35% | |||
Revolving Credit Facility [Member] | Prior Credit Agreement [Member] | Minimum [Member] | ||||
Long Term Debt (Textual) | ||||
Margin rate for interest if using base rate | 2.00% | |||
Unused commitment fee | 0.30% | |||
Revolving Credit Facility [Member] | Prior Credit Agreement [Member] | Maximum [Member] | ||||
Long Term Debt (Textual) | ||||
Margin rate for interest if using base rate | 2.50% | |||
Unused commitment fee | 0.40% | |||
Term Loan Facility [Member] | Interest Rate Swap [Member] | ||||
Long Term Debt (Textual) | ||||
Interest rate swap, fixed rate minimum | 2.85% | |||
Interest rate swap, fixed rate maximum | 3.35% |
Stock Options, Restricted Sto50
Stock Options, Restricted Stock and Restricted Stock Units (Details) - Restricted stock and restricted stock units [Member] - $ / shares | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Schedule of restricted stock and restricted stock units activity | |||
Beginning Balance, Number of shares or units | 524,216 | 487,773 | 434,439 |
Grants, Number of shares or units | 126,655 | 108,606 | 225,741 |
Vested shares, Number of shares or units | (13,725) | (69,434) | (51,916) |
Forfeitures, Number of shares or units | (2,819) | (2,729) | (120,491) |
Ending Balance, Number of shares or units | 634,327 | 524,216 | 487,773 |
Beginning Balance, Weighted-average grant price | $ 115.67 | $ 131.51 | $ 178.88 |
Grants, Weighted-average grant price | 61 | 38.95 | 57.90 |
Vested shares, Weighted-average grant price | 52.94 | 158.97 | 164.22 |
Forfeitures, Weighted-average grant price | 115.55 | 93.44 | 140.30 |
Ending Balance, Weighted-average grant price | $ 104.66 | $ 115.67 | $ 131.51 |
Stock Options, Restricted Sto51
Stock Options, Restricted Stock and Restricted Stock Units (Details 1) - Stock options [Member] - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||
Schedule of stock option activity and other stock option information | |||||
Beginning Balance, Number of shares | 100,000 | 100,000 | 100,000 | ||
Grants, Number of shares | 100,000 | ||||
Exercises, Number of shares | |||||
Forfeitures/Expirations, Number of shares | (100,000) | ||||
Ending Balance, Number of shares | 100,000 | 100,000 | 100,000 | 100,000 | |
Exercisable, Number of shares | 100,000 | ||||
Beginning Balance, Weighted-average exercise price | $ 51.95 | $ 51.95 | $ 107.28 | ||
Grants, Weighted-average exercise price | $ 51.95 | ||||
Exercises, Weighted-average exercise price | |||||
Forfeitures/Expirations, Weighted-average exercise price | $ 107.28 | ||||
Ending Balance, Weighted-average exercise price | $ 51.95 | $ 51.95 | $ 51.95 | $ 107.28 | |
Exercisable, Weighted-average exercise price | $ 51.95 | ||||
Weighted-average remaining contractual life (years) | 5 years 1 month 6 days | 6 years | 7 years | 1 month 6 days | |
Exercisable, Weighted-average remaining contractual life (years) | 5 years 1 month 6 days | ||||
Beginning Balance, Aggregate intrinsic value | [1] | $ 2,233 | |||
Ending Balance, Aggregate intrinsic value | [1] | 817 | $ 2,233 | ||
Exercisable, Aggregate intrinsic value | [1] | $ 817 | |||
[1] | The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company's closing stock price on the respective trading day and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holder had all options been exercised on the respective trading day. The amount of intrinsic value will change based on the fair market value of the Company's common stock. |
Stock Options, Restricted Sto52
Stock Options, Restricted Stock and Restricted Stock Units (Details 2) - Employee Stock [Member] - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Exercisable, Number of shares | 100,000 | ||
Exercisable, Weighted-average exercise price | $ 51.95 | $ 51.95 | $ 51.95 |
Stock Options, Restricted Sto53
Stock Options, Restricted Stock and Restricted Stock Units (Details 3) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Schedule of stock-based compensation expense | |||
Stock-based compensation expense included in operating expense | $ 10,213 | $ 9,453 | $ 9,291 |
Tax benefit | 4,032 | 3,734 | 3,698 |
Stock-based compensation expense, net of income tax | 6,181 | 5,719 | 5,593 |
Instruction and educational support [Member] | |||
Schedule of stock-based compensation expense | |||
Stock-based compensation expense included in operating expense | $ 2,134 | $ 1,736 | $ 1,976 |
Marketing [Member] | |||
Schedule of stock-based compensation expense | |||
Stock-based compensation expense included in operating expense | |||
Admissions advisory [Member] | |||
Schedule of stock-based compensation expense | |||
Stock-based compensation expense included in operating expense | |||
General and administration [Member] | |||
Schedule of stock-based compensation expense | |||
Stock-based compensation expense included in operating expense | $ 8,079 | $ 7,717 | $ 7,315 |
Stock Options, Restricted Sto54
Stock Options, Restricted Stock and Restricted Stock Units (Details 4) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Schedule of information regarding share-based payment arrangements | |||
Proceeds from stock options exercised | |||
Tax shortfall related to share-based payment arrangements | $ (24) | $ (2,039) | $ (3,567) |
Intrinsic value of stock options exercised |
Stock Options, Restricted Sto55
Stock Options, Restricted Stock and Restricted Stock Units (Details Textual) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 12 Months Ended | |
Feb. 28, 2015 | Dec. 31, 2015 | May. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Additional shares authorized for grants | 500,000 | ||
Maximum term of the awards granted under the Plan | 10 years | ||
Stock-based compensation cost which has not yet been recognized | $ 25.7 | ||
Stock-based compensation cost recognized period, in months | 33 months | ||
Restricted stock awarded subject to performance condition | 467,000 | ||
Board of Directors [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares authorized for grants | 71,991 | 40,867 | |
Vesting percentage | 100.00% | ||
Vesting date | Feb. 28, 2019 | ||
Closing price of stock on date of stock grant | $ 70.15 | $ 48.94 | |
Board of Directors [Member] | Vesting over three years [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares authorized for grants | 13,797 |
Other Long-Term Liabilities (De
Other Long-Term Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Other Long-Term Liabilities [Abstract] | ||
Loss on facilities not in use | $ 15,229 | $ 21,280 |
Deferred revenue, net of current portion | 14,429 | 9,654 |
Deferred rent and other facility costs | 8,993 | 8,646 |
Deferred payments related to acquisition | 6,078 | 5,198 |
Lease incentives | 3,125 | 1,056 |
Deferred gain on sale of campus building | 133 | 414 |
Total other long-term liabilities | $ 47,987 | $ 46,248 |
Other Long-Term Liabilities (57
Other Long-Term Liabilities (Details Textual) $ in Millions | 1 Months Ended | 12 Months Ended | |
Jun. 30, 2007USD ($)Asset | Dec. 31, 2015USD ($)Sellers | Dec. 31, 2014USD ($) | |
Other Long -Term Liabilities (Textual) | |||
Sale price of one of campus buildings | $ 5.8 | ||
Sale and lease back term for most of the campus building | 10 years | ||
Gain on sale and lease back of one of campus buildings before tax | $ 2.8 | ||
Funds received from investor | $ 2.8 | ||
Sale and lease back term | 10 years | ||
Number of assets sold | Asset | 1 | ||
Deferred payment arrangements value | $ 3.3 | $ 2.4 | |
Deferred payment arrangement number of sellers | Sellers | 1 | ||
Minimum [Member] | |||
Other Long -Term Liabilities (Textual) | |||
Leasehold improvements and long-term liability amortization period | 5 years | ||
Maximum [Member] | |||
Other Long -Term Liabilities (Textual) | |||
Leasehold improvements and long-term liability amortization period | 10 years |
Other Employee Benefit Plans (D
Other Employee Benefit Plans (Details) - Employee Stock [Member] - $ / shares | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares purchased | 5,136 | 5,872 | 8,911 |
Average price per share | $ 49.10 | $ 44.55 | $ 42.27 |
Other Employee Benefit Plans 59
Other Employee Benefit Plans (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Other Employee Benefit Plans [Abstract] | |||
Maximum annual contribution to 401(k) plan by employees, effective January 1, 2016 | $ 18,000 | ||
Percentage of company matching contribution to 401(K) plan | 50.00% | ||
Defined contribution plan employer matching contribution percent | 3.00% | ||
Company's contributions to 401(K) plan | $ 1,100,000 | $ 900,000 | $ 1,100,000 |
Common stock shares purchase price limit for employees as percentage of market value under Employee Stock Purchase Plan | 90.00% | ||
Employee stock purchase plan maximum percentage of purchase employee can make on eligible compensation | 10.00% | ||
Maximum number of shares available for purchase by participating employees | 2,500,000 |
Stock Repurchase Plan (Details)
Stock Repurchase Plan (Details) - Stock repurchase plan [Member] - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Summary Of Stock Repurchase Activity [Abstract] | |||
Number of shares repurchased | 495,085 | ||
Average price paid per share | $ 50.49 | ||
Amount available for future repurchases | $ 70 | $ 70 | $ 70 |
Stock Repurchase Plan (Details
Stock Repurchase Plan (Details Textual) - Stock repurchase plan [Member] - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2003 |
Stock repurchase plan (Details Textual) | ||||
Authorized common stock for repurchases, amount | $ 15 | |||
Remaining authorized share for repurchases, amount | $ 70 | $ 70 | $ 70 |
Commitments and Contingencies62
Commitments and Contingencies (Details) $ in Thousands | Dec. 31, 2015USD ($) |
Schedule of minimum rental commitments | |
2,016 | $ 37,240 |
2,017 | 33,264 |
2,018 | 28,819 |
2,019 | 23,444 |
2,020 | 18,157 |
Thereafter | 26,140 |
Total | $ 167,064 |
Commitments and Contingencies63
Commitments and Contingencies (Details Textual) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015USD ($)Lease | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($)Campus | |
Commitments and Contingencies and Litigation [Abstract] | |||
Number of long-term, non-cancelable operating leases | Lease | 88 | ||
Rent expense | $ 37.5 | $ 35.7 | $ 82.2 |
Charges related to the closure of campuses and other administrative facilities | $ 36 | ||
Campus location closed | Campus | 20 | ||
Reduction of liability | $ 0.4 | $ 4.1 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Current: | |||
Federal | $ 25,515 | $ 25,285 | $ 26,390 |
State | 4,538 | 4,490 | 4,582 |
Total current | 30,053 | 29,775 | 30,972 |
Deferred: | |||
Federal | (3,634) | 141 | (18,387) |
State | (311) | 344 | (1,726) |
Total deferred | (3,945) | 485 | (20,113) |
Total provision for income taxes | $ 26,108 | $ 30,260 | $ 10,859 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Schedule of tax effects of principal temporary differences that give rise to deferred tax assets | ||
Tuition receivable | $ 3,908 | $ 3,439 |
Other facility-related costs | $ 2,538 | 2,824 |
Employee-related liabilities | (96) | |
Current net deferred tax asset | $ 6,446 | 6,167 |
Stock-based compensation | 16,742 | 12,994 |
Property and equipment | (9,417) | (11,622) |
Other facility-related costs | 6,534 | 8,903 |
Deferred revenue | 4,267 | 3,758 |
Deferred leasing costs | $ 2,825 | 2,797 |
Interest rate swap | (56) | |
Other | $ (948) | (533) |
Long-term net deferred tax asset | 20,003 | 16,241 |
Net deferred tax asset | $ 26,449 | $ 22,408 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of the beginning and ending amount of unrecognized tax benefits | ||
Beginning unrecognized tax benefits | $ 2,936 | $ 1,745 |
Additions based on tax positions taken in the current year | 2,085 | |
Reductions for tax positions taken in prior years | $ (2,431) | (565) |
Settlements with taxing authorities | (329) | |
Ending unrecognized tax benefits | $ 505 | $ 2,936 |
Income Taxes (Details 3)
Income Taxes (Details 3) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Schedule of reconciliation between statutory tax rate and effective tax rate | |||
Statutory federal rate | 35.00% | 35.00% | 35.00% |
State income taxes, net of federal benefits | 4.20% | 4.20% | 4.60% |
Other | 0.30% | 0.30% | 0.20% |
Effective tax rate | 39.50% | 39.50% | 39.80% |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Taxes (Textual) | |||
Cash payments for income taxes | $ 28.5 | $ 30.8 | $ 26.5 |
Tax expense (benefits) related to interest and penalties | 0.1 | (0.1) | |
Reduction of unrecognized tax benefits in the next twelve months, due to expiration of applicable statues of limitation | 0.3 | ||
Unrecognized tax benefits that affects company's effective tax rate | 0.5 | ||
Amount of interest and penalties | $ 0.2 | $ 0.3 |
Summarized Quarterly Financia69
Summarized Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Selected Quarterly Financial Information [Abstract] | |||||||||||
Revenues | $ 113,660 | $ 99,142 | $ 109,750 | $ 111,885 | $ 116,070 | $ 100,756 | $ 112,747 | $ 116,468 | $ 434,437 | $ 446,041 | $ 503,600 |
Income from operations | 21,656 | 7,254 | 20,929 | 19,859 | 22,624 | 9,216 | 23,998 | 25,909 | 69,698 | 81,747 | 32,701 |
Net income | $ 13,041 | $ 3,723 | $ 11,874 | $ 11,385 | $ 12,943 | $ 4,953 | $ 13,677 | $ 14,783 | $ 40,023 | $ 46,356 | $ 16,425 |
Net income per share: | |||||||||||
Basic | $ 1.23 | $ 0.35 | $ 1.12 | $ 1.08 | $ 1.22 | $ 0.47 | $ 1.29 | $ 1.40 | $ 3.78 | $ 4.39 | $ 1.55 |
Diluted | $ 1.21 | $ 0.35 | $ 1.11 | $ 1.06 | $ 1.21 | $ 0.46 | $ 1.29 | $ 1.40 | $ 3.73 | $ 4.35 | $ 1.55 |
Regulation (Details)
Regulation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Apr. 29, 2015 | |
Regulation (Textual) | ||
Average of median annual income percentage | 8.00% | |
Average of median discretionary percentage | 20.00% | |
Debt to income rates description | A program would fail if the program's graduates have an annual income rate of 12% or greater and a discretionary income rate of 30% or greater. | |
Amount due to department of education | $ 500 | |
Minimum [Member] | ||
Regulation (Textual) | ||
Average of median annual income percentage | 8.00% | |
Average of median discretionary percentage | 20.00% | |
Maximum [Member] | ||
Regulation (Textual) | ||
Average of median annual income percentage | 12.00% | |
Average of median discretionary percentage | 30.00% |
Subsequent Event (Details)
Subsequent Event (Details) - Subsequent Event [Member] $ in Millions | Jan. 13, 2016USD ($) |
Subsequent Event [Line Items] | |
Purchase price paid in cash | $ 7 |
Additional contingent cash payment | $ 18 |