Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 21, 2016 | |
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-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,016 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 11,093,958 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 120,502 | $ 106,889 |
Tuition receivable, net | 18,925 | 18,519 |
Income taxes receivable | 2,437 | |
Other current assets | 10,838 | 6,944 |
Total current assets | 152,702 | 132,352 |
Property and equipment, net | 71,725 | 77,139 |
Deferred income taxes | 27,894 | 26,449 |
Goodwill | 20,793 | 6,800 |
Other assets | 13,390 | 5,694 |
Total assets | 286,504 | 248,434 |
Current liabilities: | ||
Accounts payable and accrued expenses | 44,818 | 42,253 |
Income taxes payable | 2,684 | |
Deferred revenue | 16,633 | 12,373 |
Other current liabilities | 203 | 281 |
Total current liabilities | 61,654 | 57,591 |
Other long-term liabilities | 51,631 | 47,987 |
Total liabilities | 113,285 | 105,578 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, par value $0.01; 20,000,000 shares authorized; 11,027,177 and 11,093,958 shares issued and outstanding at December 31, 2015 and September 30, 2016, respectively | 111 | 110 |
Additional paid-in capital | 32,016 | 24,738 |
Retained earnings | 141,092 | 118,008 |
Total stockholders' equity | 173,219 | 142,856 |
Total liabilities and stockholders' equity | $ 286,504 | $ 248,434 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
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 | 11,093,958 | 11,027,177 |
Common stock, shares outstanding | 11,093,958 | 11,027,177 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Statements of Income [Abstract] | ||||
Revenues | $ 102,156 | $ 99,142 | $ 321,809 | $ 320,777 |
Costs and expenses: | ||||
Instruction and educational support | 56,295 | 55,281 | 176,175 | 174,223 |
Marketing | 25,388 | 21,593 | 61,434 | 52,944 |
Admissions advisory | 4,691 | 4,089 | 13,171 | 12,144 |
General and administration | 10,952 | 10,925 | 33,211 | 33,424 |
Total costs and expenses | 97,326 | 91,888 | 283,991 | 272,735 |
Income from operations | 4,830 | 7,254 | 37,818 | 48,042 |
Investment income | 115 | 44 | 327 | 222 |
Interest expense | 161 | 1,144 | 481 | 3,689 |
Income before income taxes | 4,784 | 6,154 | 37,664 | 44,575 |
Provision for income taxes | 1,906 | 2,431 | 14,580 | 17,593 |
Net income | $ 2,878 | $ 3,723 | $ 23,084 | $ 26,982 |
Earnings per share: | ||||
Basic | $ 0.27 | $ 0.35 | $ 2.18 | $ 2.55 |
Diluted | $ 0.27 | $ 0.35 | $ 2.14 | $ 2.52 |
Weighted average shares outstanding: | ||||
Basic | 10,616 | 10,593 | 10,608 | 10,586 |
Diluted | 10,828 | 10,736 | 10,803 | 10,726 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Statements of Comprehensive Income [Abstract] | ||||
Net income | $ 2,878 | $ 3,723 | $ 23,084 | $ 26,982 |
Other comprehensive income: | ||||
Change in fair value of derivative instrument, net of income tax | 145 | (88) | ||
Comprehensive income | $ 2,878 | $ 3,868 | $ 23,084 | $ 26,894 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
Beginning balance at Dec. 31, 2014 | $ 109 | $ 14,550 | $ 77,985 | $ 88 | $ 92,732 |
Beginning balance, shares at Dec. 31, 2014 | 10,903,341 | ||||
Tax shortfall associated with stock-based compensation arrangements | (25) | (25) | |||
Restricted stock grants, net of forfeitures and conversions | $ 1 | (1) | |||
Restricted stock grants, net of forfeitures and conversions, shares | 124,924 | ||||
Stock-based compensation | 7,576 | 7,576 | |||
Change in fair value of derivative instrument, net of income tax | (88) | (88) | |||
Net income | 26,982 | 26,982 | |||
Ending balance at Sep. 30, 2015 | $ 110 | 22,100 | 104,967 | 127,177 | |
Ending balance, shares at Sep. 30, 2015 | 11,028,265 | ||||
Beginning balance at Dec. 31, 2015 | $ 110 | 24,738 | 118,008 | 142,856 | |
Beginning balance, shares at Dec. 31, 2015 | 11,027,177 | ||||
Tax shortfall associated with stock-based compensation arrangements | (51) | (51) | |||
Restricted stock grants, net of forfeitures and conversions | $ 1 | (1) | |||
Restricted stock grants, net of forfeitures and conversions, shares | 66,781 | ||||
Stock-based compensation | 7,330 | 7,330 | |||
Net income | 23,084 | 23,084 | |||
Ending balance at Sep. 30, 2016 | $ 111 | $ 32,016 | $ 141,092 | $ 173,219 | |
Ending balance, shares at Sep. 30, 2016 | 11,093,958 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities: | ||
Net income | $ 23,084 | $ 26,982 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization of gain on sale of assets | (211) | (210) |
Amortization of deferred rent | (919) | (417) |
Amortization of deferred financing costs | 197 | 1,163 |
Depreciation and amortization | 13,276 | 13,711 |
Deferred income taxes | (5,543) | (3,358) |
Stock-based compensation | 7,330 | 7,576 |
Changes in assets and liabilities: | ||
Tuition receivable, net | 425 | (435) |
Other current assets | (3,895) | 1,402 |
Other assets | (2,264) | 2 |
Accounts payable and accrued expenses | 2,825 | 1,023 |
Income taxes payable and income taxes receivable | (4,854) | 205 |
Deferred revenue | 5,940 | 8,126 |
Other long-term liabilities | (5,284) | (1,299) |
Net cash provided by operating activities | 30,107 | 54,471 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (7,501) | (9,587) |
Cash used in acquisition, net of cash acquired | (7,635) | |
Net cash used in investing activities | (15,136) | (9,587) |
Cash flows from financing activities: | ||
Payments on term loan | (118,750) | |
Payments of contingent consideration | (1,358) | (650) |
Payment of deferred financing costs | (850) | |
Net cash used in financing activities | (1,358) | (120,250) |
Net increase in cash and cash equivalents | 13,613 | (75,366) |
Cash and cash equivalents - beginning of year | 106,889 | 162,283 |
Cash and cash equivalents - end of year | 120,502 | 86,917 |
Non-cash transactions: | ||
Purchases of property and equipment included in accounts payable | 112 | $ 633 |
Contingent consideration recorded in connection with an acquisition | $ 8,000 |
Nature of Operations
Nature of Operations | 9 Months Ended |
Sep. 30, 2016 | |
Nature of Operations [Abstract] | |
Nature of Operations | 1. Nature of Operations 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. NYCDA is a New York City-based provider of non-degree web and mobile app development courses. NYCDA courses are delivered primarily on-ground to students seeking to further their career in software application development. The Company has only one reporting segment |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
Significant Accounting Policies [Abstract] | |
Significant Accounting Policies | 2. Significant Accounting Policies Financial Statement Presentation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. On January 13, 2016, the Company acquired all of the outstanding stock of NYCDA, and the results of NYCDA are included with the Company from the acquisition date. All intercompany accounts and transactions have been eliminated in the consolidated financial statements. All information as of December 31, 2015 and September 30, 2015 and 2016, and for the three and nine months ended September 30, 2015 and 2016 is unaudited but, in the opinion of management, contains all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the condensed consolidated financial position, results of operations, and cash flows of the Company. Certain amounts in the prior period financial statements have been reclassified to conform to the current period’s presentation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015. The results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the results to be expected for the full fiscal year. Revenue Recognition The Company’s educational programs typically are offered on a quarterly basis and such periods coincide with the Company’s quarterly financial reporting periods. Approximately 95% of the Company’s revenues during the nine months ended September 30, 2016 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 or program, 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 or program 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 University’s academic terms coincide with the Company’s 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 receive one free course for every three courses that are successfully completed. Students must meet all of the University’s admission requirements, and must be enrolled in a bachelor’s 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. 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 $12.7 million and is included in deferred revenue as a current liability in the unaudited condensed consolidated balance sheets. The table below presents activity in the Graduation Fund for the nine months ended September 30, 2015 and 2016 (in thousands): September 30, September 30, 2015 2016 Balance at beginning of period $ $ Revenue deferred Benefit redeemed Balance at end of period $ $ 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 September 30, 2016 or December 31, 2015. 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 or program. 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 generally 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, 2015 and September 30, 2016 (in thousands): December 31, 2015 September 30, 2016 Tuition receivable $ $ Allowance for doubtful accounts Tuition receivable, net $ $ Approximately $2.0 million of tuition receivable is included in other assets as of both December 31, 2015 and September 30, 2016, 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 the three and nine months ended September 30, 2015 and 2016 (in thousands): For the three months ended For the nine months ended September 30, September 30, 2015 2016 2015 2016 Allowance for doubtful accounts, beginning of period $ $ $ $ Additions charged to expense Write-offs, net of recoveries Allowance for doubtful accounts, end of 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: · Level 1 assets or liabilities use quoted prices in active markets for identical assets or liabilities as of the measurement date; · Level 2 assets or liabilities use observable inputs, other than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities; and · Level 3 assets or liabilities use unobservable inputs that are supported by little or no market activity. 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 trade names, are recorded at fair market value on their acquisition date. An indefinite life was assigned to the trade names because they have the continued ability to generate cash flows indefinitely. Goodwill and the indefinite-lived intangible assets 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 , the Company is permitted, but not required, to first assess qualitative factors to determine whether it is necessary to perform the more thorough quantitative goodwill impairment test. Following its qualitative assessment, the Company determined it was not more likely than not that the fair value of its goodwill was less than the carrying amount and, accordingly, no impairment existed at September 30, 2016. 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 11,027,177 and 11,093,958 shares were issued and outstanding as of December 31, 2015 and September 30, 2016, 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. 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 unaudited consolidated statements of income for each of the three and nine months ended September 30, 2015 and 2016 is based on awards ultimately expected to vest and, therefore, has been adjusted for estimated forfeitures. The Company estimates forfeitures at the time of grant and revises 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. Set forth below is a reconciliation of shares used to calculate basic and diluted earnings per share for the three and nine months ended September 30, 2015 and 2016 (in thousands): For the three months ended For the nine months ended September 30, September 30, 2015 2016 2015 2016 Weighted average shares outstanding used to compute basic earnings per share Incremental shares issuable upon the assumed exercise of stock options — — — — Unvested restricted stock Shares used to compute diluted earnings per share 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 2013-2015 remain open for Federal tax examination and the tax years 2012-2015 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, fair value of contingent consideration, and the provision for income taxes. Actual results could differ from those estimates. Recent Accounting Pronouncements 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 Company adopted ASU 2015-17 effective January 1, 2016 and reclassified approximately $6.4 million of its deferred tax asset from current to non-current assets in the condensed consolidated balance sheet as of December 31, 2015, to conform to the current period presentation. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). The new guidance requires the recognition of right-of-use assets and lease liabilities on the balance sheet for most leases. Under current guidance, operating leases are off-balance sheet. ASU 2016-02 also requires more extensive quantitative and qualitative disclosures about leasing arrangements. ASU 2016-02 applies to fiscal periods beginning after December 15, 2018, using the modified retrospective method, with early adoption permitted. The Company anticipates that the impact of ASU 2016-02 on its consolidated balance sheet will be material as the Company will record significant asset and liability balances in connection with its leased properties. In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). ASU 2016-09 impacts several aspects of the accounting for share-based payment transactions, including classification of certain items on the consolidated statement of cash flows and accounting for income taxes. Specifically, ASU 2016-09 requires excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in earnings, which could introduce significant volatility to the Company’s provision for income taxes. In addition, ASU 2016-09 allows companies to recognize the impact of stock award forfeitures at the time of forfeiture, rather than as an estimate ratably over the life of awards. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The transition method varies for each of the areas in ASU 2016-09. The Company does not plan to early adopt and is currently evaluating the impact of ASU 2016-09 on its Consolidated Financial Statements. 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. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date , which defers the effective date of ASU 2014-09 by one year to fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted for fiscal years, and interim periods within those years, beginning after December 15, 2016. Accordingly, the new revenue recognition standard is effective for the Company on January 1, 2018 using either a full retrospective or a modified retrospective approach. The Company is currently evaluating which transition approach to use and the impact that the new revenue recognition standard will have on our Consolidated Financial Statements. There have been three new ASUs issued amending certain aspects of ASU 2014-09. ASU No. 2016-08 Principal versus Agent Considerations (Reporting Revenue Gross Versus Net) , was issued in March, 2016 to clarify certain aspects of the principal versus agent guidance in ASU 2014-09. In addition, ASU No. 2016-10, Identifying Performance Obligations and Licensing , issued in April 2016, amends other sections of ASU 2014-09 including clarifying guidance related to identifying performance obligations and licensing implementation. ASU No. 2016-12, Revenue from Contracts with Customers – Narrow Scope Improvements and Practical Expedients, was issued in May 2016 and provides amendments and practical expedients to the guidance in ASU 2014-09 in the areas of assessing collectibility, presentation of sales taxes received from customers, noncash consideration, contract modification and clarification of using the full retrospective approach to adopt ASU 2014-09. With its evaluation of the impact of ASU 2014-09, the Company will also consider the impact related to the updated guidance provided by these three new ASUs. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses, which is included in ASC Topic 326, Measurement of Credit Losses on Financial Instruments. The new guidance revises the accounting requirements related to the measurement of credit losses and will require organizations to measure all expected credit losses for financial assets based on historical experience, current conditions and reasonable and supportable forecasts about collectibility. Assets must be presented in the financial statements at the net amount expected to be collected. The guidance will be effective for the Company's annual and interim reporting periods beginning January 1, 2020, with early adoption permitted. The Company is evaluating the impact this standard will have on its financial condition, results of operations, and disclosures. In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-15, Classification of Certain Cash Receipts and Cash Payments, which is included in FASB Accounting Standards Codification (ASC) Topic 230, Statement of Cash Flows. The new guidance clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows, including contingent consideration payments made after a business acquisition. Specifically, cash payments to settle a contingent consideration liability which are not made soon after the acquisition date should be classified as cash used in financing activities up to the initial amount of contingent consideration recognized with the remaining amount classified as cash flows from operating activities. The guidance will be effective for the Company's annual and interim reporting periods beginning January 1, 2018, and early adoption is permitted. The Company does not expect adoption of this guidance to have a material impact on its financial condition, results of operations, or disclosures. Other ASUs issued by the FASB but not yet effective are not expected to have a material effect on the Company’s Consolidated Financial Statements. |
Acquisition of New York Code an
Acquisition of New York Code and Design Academy | 9 Months Ended |
Sep. 30, 2016 | |
Acquisition of New York Code and Design Academy [Abstract] | |
Acquisition of New York Code and Design Academy | 3. Acquisition of New York Code and Design Academy On January 13, 2016, the Company acquired all of the outstanding stock of New York Code and Design Academy, Inc. (“NYCDA”), a provider of non-degree information technology curriculum primarily based in the New York City area (the “Acquisition”). The Acquisition supports the Company’s strategy to complement its traditional degree offerings with a broader platform of educational services. The Company incurred transaction costs of approximately $0.2 million, and these costs are included in general and administrative costs in the unaudited consolidated statements of income. The acquisition is accounted for as a business combination. The purchase price includes $2.4 million paid up front in cash, plus contingent cash payments of (a) up to $12.5 million payable based on NYCDA’s results of operations over a five-year period (the “Earnout”), and (b) $5.5 million payable based on NYCDA’s receipt of state regulatory permits. Pursuant to the Acquisition, $1.0 million of the Earnout may be accelerated upon receipt of one of the state regulatory permits. In April 2016 and August 2016, NYCDA received the state regulatory permits and the Company paid $6.0 and $0.5 million of contingent consideration to the sellers, respectively. In addition, the Company paid a total of $4.6 million to two of NYCDA’s founders who are required to remain employed for at least three years from the acquisition date. If either of them terminates employment voluntarily, or is terminated for cause (as defined), he is required to reimburse the Company his respective portion of the retention amount. This amount is classified as prepaid compensation and is amortized to compensation expense over three years. Total potential cash payments for the acquisition and the Earnout could total $25.0 million. The Company determined the preliminary fair values of the assets acquired and liabilities assumed at the date of the Acquisition. The allocation of the purchase price is based on preliminary estimates and assumptions, and is subject to revision based on final analyses that support the underlying estimates, which will be completed within the measurement period of up to 12 months from the date of the Acquisition. Accordingly, the allocation is subject to change and the impact of such changes could be material. During the second quarter of 2016, there was a measurement period adjustment to goodwill and deferred tax liabilities of $0.2 million. The allocation of the purchase price, including the measurement period adjustment recorded in the second quarter of 2016, is as follows: Purchase Price Allocation Useful Life Cash $ Other assets Intangibles: Trade name Indefinite Goodwill Liabilities assumed Total assets acquired and liabilities assumed, net Less: contingent consideration Less: cash acquired Cash paid for acquisition, net of cash acquired $ The fair value of the contingent consideration was measured by applying a probability weighted discounted cash flow model based on significant inputs not observable in the market (Level 3 inputs). Key assumptions include a discount rate of 4.5% and expected future value of payments of $12.5 million, based on management’s assessment that NYCDA will achieve its performance targets after the five-year measurement period. The fair value of assets acquired and liabilities assumed was determined based on assumptions that reasonable market participants would use while employing the concept of highest and best use of the respective items. The following assumptions were used, the majority of which include significant unobservable inputs (Level 3), and valuation methodologies to determine fair value: · Intangibles – Income approaches were used to value the substantial majority of the acquired intangibles. The trade name was valued using the relief from-royalty method, which represents the benefit of owning these intangible assets rather than paying royalties for their use. · Other assets and liabilities – The carrying value of all other assets and liabilities approximated fair value at the time of acquisition. |
Restructuring and Related Charg
Restructuring and Related Charges | 9 Months Ended |
Sep. 30, 2016 | |
Restructuring and Related Charges [Abstract] | |
Restructuring and Related Charges | 4. Restructuring and Related Charges In October 2013, the Company implemented a restructuring to better align the Company’s resources with student enrollments at the time. This restructuring included the closing of 20 physical locations and reductions in the number of campus-based and corporate employees. A liability for lease obligations, some of which continue through 2022, was recorded and is measured at fair value using a discounted cash flow approach encompassing significant unobservable inputs (Level 3). The estimation of future cash flows includes non-cancelable contractual lease costs over the remaining terms of the leases discounted at the Company’s marginal borrowing rate of 4.5%, partially offset by estimated future sublease rental income discounted at credit-adjusted rates. The Company’s estimates, which involve significant judgment, also consider the amount and timing of sublease rental income based on subleases that have been executed and subleases expected to be executed based on current commercial real estate market data and conditions, and other qualitative factors specific to the facilities. The estimates are subject to adjustment as market conditions change or as new information becomes available, including the execution of additional sublease agreements. The following details the changes in the Company’s restructuring liability for lease and related costs during the nine months ended September 30, 2015 and 2016 (in thousands): September 30, September 30, 2015 2016 Balance at beginning of period (1) $ $ Adjustments (2) Payments Balance at end of period (1) $ $ (1) The current portion of restructuring liabilities was $4.8 million and $5.0 million as of December 31, 2015 and September 30, 2016, respectively, which are included in accounts payable and accrued expenses. The long-term portion is included in other long-term liabilities. (2) Adjustments include accretion of interest on lease costs, partially offset by changes in the timing and expected income from sublease agreements. |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Sep. 30, 2016 | |
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 September 30, 2016 (in thousands): Fair Value Measurements at Reporting Date Using Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable September 30, Assets/Liabilities Inputs Inputs 2016 (Level 1) (Level 2) (Level 3) Assets: Money market funds $ $ $ — $ — Liabilities: Deferred payments $ $ — $ — $ 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 Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable December 31, Assets/Liabilities Inputs Inputs 2015 (Level 1) (Level 2) (Level 3) Assets: Money market funds $ $ $ — $ — Liabilities: Deferred payments $ $ — $ — $ The Company measures the above items on a recurring basis at fair value as follows: · Money market funds – Classified in Level 1 is excess cash the Company holds in both taxable and tax-exempt money market funds and are included in cash and cash equivalents in the accompanying unaudited condensed consolidated balance sheets. The Company records any net unrealized gains and losses for changes in fair value as a component of Accumulated other comprehensive income in stockholders' equity. The Company's cash and cash equivalents held at December 31, 2015 and September 30, 2016, approximate fair value and are not disclosed in the above tables because of the short-term nature of the financial instruments. · Deferred payments – The Company acquired certain assets and entered into deferred payment arrangements with the sellers in transactions in 2011 and January 2016, which are classified within Level 3 as there is no liquid market for similarly priced instruments. The deferred payments are valued using a discounted cash flow model that encompasses significant unobservable inputs to estimate the operating results of the acquired assets. The assumptions used to prepare the discounted cash flows include estimates for interest rates, enrollment growth, retention rates, obtaining regulatory approvals for expansion into new markets, and pricing strategies. These assumptions are subject to change as the underlying data sources evolve and the programs mature. The short-term portion of deferred payments was $1.1 million as of September 30, 2016 and is included in accounts payable and accrued expense. 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 4 for further discussion of the Company’s lease loss liability. 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 nine months ended September 30, 2015 or 2016. Changes in the fair value of the Company’s Level 3 liabilities during the nine months ended September 30, 2016 are as follows (in thousands): Deferred Payments Balance at December 31, 2015 $ Amounts paid Contingent consideration in connection with NYCDA acquisition Other adjustments to fair value Balance at September 30, 2016 $ |
Long Term Debt
Long Term Debt | 9 Months Ended |
Sep. 30, 2016 | |
Long Term Debt [Abstract] | |
Long Term Debt | 6. Long Term Debt 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 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% 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, 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 its subsidiaries. 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: · A leverage ratio of not greater than 2 to 1. Leverage ratio is defined as the ratio of total debt to trailing four-quarter EBITDA (earnings before interest, taxes, depreciation, amortization and non-cash charges such as stock-based compensation). · A coverage ratio of not less than 1.75 to 1. Coverage ratio is defined as the ratio of trailing four-quarter EBITDA and rent expense to trailing four-quarter interest and rent expense. · A Department of Education Financial Responsibility Composite Score of not less than 1.5. The Company was in compliance with all the terms of the Amended Credit Facility as of September 30, 2016. During the three and nine months ended September 30, 2016, the Company paid cash interest of $0.2 million and $0.3 million, respectively, compared to $0.1 million and $2.3 million during the three and nine months ended September 30, 2015, respectively. The Company had no balance outstanding under the Revolver as of September 30, 2016. |
Stock Options, Restricted Stock
Stock Options, Restricted Stock and Restricted Stock Units | 9 Months Ended |
Sep. 30, 2016 | |
Stock Options, Restricted Stock and Restricted Stock Units [Abstract] | |
Stock Options, Restricted Stock and Restricted Stock Units | 7. Stock Options, Restricted Stock and Restricted Stock Units On May 5, 2015, the Company’s shareholders approved the Strayer Education, Inc. 2015 Equity Compensation Plan (the “2015 Plan”), which 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 Company’s previously existing equity compensation plans at the time of stockholder approval of the 2015 Plan, and plus the number of shares which may in the future become available under any previously existing equity compensation plan due to forfeitures of outstanding awards. In February 2016, the Company’s Board of Directors approved grants of 176,802 shares of restricted stock and restricted stock units to certain employees. These shares, which vest over a two to four year period, were granted pursuant to the 2015 Plan. The Company’s stock price closed at $50.67 on the date of these restricted stock grants. In May 2016, the Company’s Board of Directors approved grants of 11,365 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 $49.27 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 of termination of employment prior to vesting in the award, unless waived by the Board of Directors. Restricted Stock and Restricted Stock Units The table below sets forth the restricted stock and restricted stock units activity for the nine months ended September 30, 2016: Number of shares or units Weighted- average Grant price Balance, December 31, 2015 $ Grants Vested shares Forfeitures Balance, September 30, 2016 $ Stock Options The table below sets forth the stock option activity and other stock option information as of and for the nine months ended September 30, 2016: Weighted- average Weighted- remaining Aggregate Number of average contractual intrinsic value(1) shares exercise price life (years) (in thousands) Balance, December 31, 2015 $ $ Grants — — Exercises — — Forfeitures/Expirations — — Balance, September 30, 2016 $ $ — Exercisable, September 30, 2016 $ $ — (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. Valuation and Expense Information under Stock Compensation Topic ASC 718 At September 30, 2016, total stock-based compensation cost which has not yet been recognized was $23.6 million for unvested restricted stock, restricted stock units, and stock option awards. This cost is expected to be recognized over the next 28 months on a weighted-average basis. Awards of approximately 550,000 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 three and nine months ended September 30, 2015 and 2016 (in thousands): For the three months ended For the nine months ended September 30, September 30, 2015 2016 2015 2016 Instruction and educational support $ $ $ $ Marketing — — — — Admissions advisory — — — — General and administration Stock-based compensation expense included in operating expense Tax benefit Stock-based compensation expense, net of tax $ $ $ $ During the nine months ended September 30, 2015 and 2016, the Company recognized a tax shortfall related to share-based payment arrangements of approximately $25,000 and $51,000, respectively. No stock options were exercised during the nine months ended September 30, 2015 or 2016. |
Other Long-Term Liabilities
Other Long-Term Liabilities | 9 Months Ended |
Sep. 30, 2016 | |
Other Long-Term Liabilities [Abstract] | |
Other Long-Term Liabilities | 8. Other Long-Term Liabilities Other long-term liabilities consist of the following (in thousands): December 31, 2015 September 30, 2016 Deferred payments related to acquisitions $ $ Deferred revenue, net of current portion Loss on facilities not in use Deferred rent and other facility costs Lease incentives Deferred gain on sale of campus building — $ $ Deferred Payments Related to Acquisitions In the first quarter of 2016, the Company acquired NYCDA and entered into deferred payment arrangements with the sellers in connection with this transaction. In April and August 2016, NYCDA achieved certain performance targets and the Company subsequently paid $6.0 million and $0.5 million of deferred payments to the sellers, respectively. The deferred payment arrangements of up to $11.5 million are valued at approximately $8.7 million as of September 30, 2016. See Note 3 for further information on the NYCDA deferred payments. In 2011, the Company acquired certain assets and entered into deferred payment arrangements with the sellers in connection with that acquisition. The deferred payment arrangements are valued at approximately $3.3 million and $2.9 million as of December 31, 2015 and September 30, 2016, respectively. In addition, one of the sellers contributed $2.8 million to the Company representing the seller’s continuing interest in the assets acquired. 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. 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 4). 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. 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. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2016 | |
Income Taxes [Abstract] | |
Income Taxes | 9 . Income Taxes The Company had $0.2 million of unrecognized tax benefits at September 30, 2016, all of which resulted from tax positions taken prior to the year ended December 31, 2015. The Company recognized approximately $0.3 million of benefits in the nine months ended September 30, 2016. The Company also recorded approximately $0.1 million of expense in the nine months ended September 30, 2016, related to interest and penalties. It is reasonably possible that approximately $0.1 million of unrecognized tax benefits will be reduced in the next twelve months due to expiration of the applicable statutes of limitations, which 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. The Company does not anticipate significant changes to other unrecognized tax benefits. The Company paid $21.0 million and $25.0 million in income taxes during the nine months ended September 30, 2015 and 2016, respectively. |
Litigation
Litigation | 9 Months Ended |
Sep. 30, 2016 | |
Litigation [Abstract] | |
Litigation | 10. 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 or its property are subject. |
Regulation
Regulation | 9 Months Ended |
Sep. 30, 2016 | |
Regulation [Abstract] | |
Regulation | 11. Regulation The Company, the University, and NYCDA are subject to significant state and regulatory oversight, as well as federal oversight in the case of the Company and the University. Gainful Employment 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 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, which are applicable to the University but not NYCDA, include two debt-to-earnings measures, consisting of an annual earnings rate and a discretionary income rate. The annual earnings rate is calculated by comparing (1) the annual loan payment required on the median student loan debt incurred by students receiving Title IV funds who completed a particular program and (2) the higher of the mean or median of those graduates’ annual earnings two to four years after graduation. The discretionary income rate is calculated by comparing (1) the annual loan payment required on the median student loan debt incurred by students receiving Title IV funds who completed a particular program and (2) the higher of the mean or median annual earnings of those graduates two to four years after graduation, less 1.5 times the government issued Poverty Guideline. Under the new gainful employment regulation, a program would pass if: · the annual loan payment required on the median student loan debt is less than or equal to 8% of the higher of the mean or median annual earnings of graduates in the relevant period; or · the annual loan payment required on the median student loan debt is less than or equal to 20% of the discretionary income of graduates in the relevant period. In addition, a program that does not pass either of the debt-to-earnings metrics, and that has an annual earnings rate between 8% and 12%, or a discretionary income rate between 20% and 30%, would be considered to be in the “Zone”. A program would fail if the program’s graduates have an annual earnings 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 is in the Zone (or fails) for four consecutive award years. If an institution is notified by the Secretary of Education that a program could become ineligible, based on its final rates, for the next award year: · The institution must provide a warning with respect to the program to students and prospective students indicating, among other things, that students may not be able to use Title IV funds to attend or continue in the program; and · The institution must not enroll, register or enter into a financial commitment with a prospective student until a specified time after providing the warning to the prospective student. On October 20, 2016, the Department issued to institutions draft debt-to-earnings rates for the first gainful employment debt measurement year and certain underlying data used to calculate those rates. According to the Department’s draft rates, none of the University’s programs fail. The draft rates did indicate that two current associate’s degree programs are in the Zone. The Company is currently analyzing the underlying data provided, and has until December 7, 2016, to appeal any inaccuracies it finds in the draft metrics. The Department has indicated that the final rates will be made public in January of 2017. 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 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 University’s academic programs will be affected by factors beyond management’s control such as changes in the University’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. Borrower Defenses to Repayment The Department’s current regulations permit a Federal Direct Loan borrower to obtain a loan discharge if the institution’s acts or omissions give rise to a cause of action against the institution under state law. The regulations do not address the applicable process. In January 2016, the D · the institution has had a judgment issued against it in an action brought by a student or a government official or entity, related to the loan or educational services, in a contested proceeding; · the institution failed to perform its obligations under the terms of a contract with the student; or · the institution made a “substantial misrepresentation” about the nature of its programs, financial charges or employability of its graduates that the borrower reasonably relied upon on when he or she decided to attend or continue attending the institution. In addition, the proposed regulation would permit the Department to grant relief to an individual or group of individuals, including individuals who have not applied to the Department seeking relief. In most cases, the proposed regulation would entitle the Department to seek reimbursement from the institution for any loans discharged under the new procedure. The proposed regulation would also specify triggering events that would automatically lead to a determination that an institution is not able to meet its financial or administrative obligations, to include: · certain lawsuits and other legal actions, including, among others: o the institution incurring a debt or liability arising from an audit, investigation, or similar action initiated by a state, federal, or other oversight entity, including settlements, that is based on claims related to the making of federal loans or the provision of educational services, for an amount that exceeds the lesser of $750,000 or 10% of the institution’s current assets; o the commencement of a suit initiated by a state, federal, or other oversight entity based on claims of any kind, where the potential monetary sanctions or damages arising from the suit are in an amount that exceeds 10% of the institution’s current assets; · a judicial or administrative proceeding, that is not part of a state or federal action, that the institution discloses in a report filed with the SEC; · payment to the Department of substantial monetary liabilities from claims asserted under borrower defense procedures; · action by the institution’s accreditor that could result in the loss of accreditation; · failure of the 90/10 regulation in any given year; and/or · default by the school on its debt obligations. In addition, other triggering events could lead to a determination that the institution is not able to meet its financial obligations, if the Secretary of the Department determines that the event is reasonably likely to have a material effect on the institution, as determined in the discretion of the Secretary. If any of the automatic or discretionary triggering events materialize, the institution would be required to post a letter of credit, for each triggering event, in an amount of at least 10% of the school’s annual Title IV disbursements, and to provide warnings to prospective and current students that the institution has been required to provide enhanced financial protection to the Department. Further, the proposed regulation would establish a new metric to measure student loan repayment rates as a ratio of present balance to original principal balance, and proprietary institutions which fall below an established threshold would be required to provide prospective and current students with disclosures regarding the repayment rate. The Company cannot predict the impact, if any, that these proposed regulations would have if adopted. The effective date of the proposed regulations, if adopted, cannot be determined at this time, but the proposed regulations could be effective as early as July 1, 2017. State authorization for distance education and foreign locations Under the Higher Education Act and the Department’s implementing regulations, in order to be eligible to participate in Title IV programs, an institution must be legally authorized to offer a program of postsecondary education in the state in which the institution is physically located. The Department previously attempted to regulate the state authorization that an institution offering distance education programs must have in order to offer Title IV aid to students enrolled in such programs. After a federal court vacated the Department’s regulation on procedural grounds, the Department established a negotiated rulemaking committee to consider state authorization for distance education and foreign locations, among other topics. The negotiations resulted in consensus as to foreign locations, but not as to distance education. In June 2016, the Department issued a Notice of Proposed Rulemaking for public comment. The proposed regulations, among other things, would require an institution offering distance education or correspondence courses to be authorized by each state in which the institution enrolls students, if such authorization is required by the state, in order to award Title IV aid to such students. An institution could obtain such authorization directly from the state or through a state authorization reciprocity agreement. A state authorization reciprocity agreement would be defined as an agreement between two or more states that authorizes an institution located and legally authorized in a state covered by the agreement to provide postsecondary education through distance education or correspondence courses to students in other states covered by the agreement and does not prohibit a participating state from enforcing its own consumer protection laws. The proposed regulations would also require an institution to document the state process for resolving complaints from students enrolled in programs offered through distance education or correspondence courses for each state in which such students reside. The proposed regulations would require an institution to provide public and individualized disclosures to enrolled and prospective students regarding its programs offered solely through distance education or correspondence courses. The public disclosures would include state authorization for the program or course, the process for submitting complaints to relevant states, any adverse actions by a state or accrediting agency related to the distance education program or correspondence course within the past five years, refund policies, and applicable licensure or certification requirements for a career a student prepares to enter and the program’s sufficiency to meet those requirements. An institution must disclose directly to all prospective students when a distance education or correspondence course does not meet the licensure or certification requirements for a state. An institution must disclose to each enrolled and prospective student when an adverse action is taken against an institution’s postsecondary distance education or correspondence program and any determination that a program ceases to meet licensure or certification requirements. The Company cannot predict the impact, if any, that these proposed regulations would have if adopted. The effective date of the proposed regulations, if adopted, cannot be determined at this time, but the proposed regulations could be effective as early as July 1, 2017. The Clery Act 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 (the “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, effective July 1, 2015. 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. Compliance Reviews 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 during 2014. The reviews covered federal financial aid years 2012-2013 and 2013-2014, and two of the reviews also covered compliance with the Clery Act, the Drug-Free Schools and Communities Act, and regulations related thereto. Strayer University received Final Program Review Determination letters for each of the four program reviews, closing out each with no further action required. Program Participation Agreement As a participant in Title IV programs, the University 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. NYCDA NYCDA is licensed to operate in New York, Texas, Georgia, Utah, North Carolina, Washington, Colorado, Washington, D.C., Pennsylvania, New Jersey, and South Carolina, but is not accredited, does not participate in state or federal student financial aid programs, and is not subject to the regulatory requirements applicable to accredited schools and schools that participate in such financial aid programs such as those described above. Programs such as those offered by NYCDA are regulated by each individual state, and the Company is in the process of seeking authorizations in additional states to offer NYCDA programs. |
Significant Accounting Polici19
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Significant Accounting Policies [Abstract] | |
Financial statement presentation | Financial Statement Presentation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. On January 13, 2016, the Company acquired all of the outstanding stock of NYCDA, and the results of NYCDA are included with the Company from the acquisition date. All intercompany accounts and transactions have been eliminated in the consolidated financial statements. All information as of December 31, 2015 and September 30, 2015 and 2016, and for the three and nine months ended September 30, 2015 and 2016 is unaudited but, in the opinion of management, contains all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the condensed consolidated financial position, results of operations, and cash flows of the Company. Certain amounts in the prior period financial statements have been reclassified to conform to the current period’s presentation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015. The results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the results to be expected for the full fiscal year. |
Revenue Recognition | Revenue Recognition The Company’s educational programs typically are offered on a quarterly basis and such periods coincide with the Company’s quarterly financial reporting periods. Approximately 95% of the Company’s revenues during the nine months ended September 30, 2016 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 or program, 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 or program 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 University’s academic terms coincide with the Company’s 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 receive one free course for every three courses that are successfully completed. Students must meet all of the University’s admission requirements, and must be enrolled in a bachelor’s 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. 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 $12.7 million and is included in deferred revenue as a current liability in the unaudited condensed consolidated balance sheets. The table below presents activity in the Graduation Fund for the nine months ended September 30, 2015 and 2016 (in thousands): September 30, September 30, 2015 2016 Balance at beginning of period $ $ Revenue deferred Benefit redeemed Balance at end of period $ $ |
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 September 30, 2016 or December 31, 2015. 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 or program. 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 generally 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, 2015 and September 30, 2016 (in thousands): December 31, 2015 September 30, 2016 Tuition receivable $ $ Allowance for doubtful accounts Tuition receivable, net $ $ Approximately $2.0 million of tuition receivable is included in other assets as of both December 31, 2015 and September 30, 2016, 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 the three and nine months ended September 30, 2015 and 2016 (in thousands): For the three months ended For the nine months ended September 30, September 30, 2015 2016 2015 2016 Allowance for doubtful accounts, beginning of period $ $ $ $ Additions charged to expense Write-offs, net of recoveries Allowance for doubtful accounts, end of 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: · Level 1 assets or liabilities use quoted prices in active markets for identical assets or liabilities as of the measurement date; · Level 2 assets or liabilities use observable inputs, other than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities; and · Level 3 assets or liabilities use unobservable inputs that are supported by little or no market activity. 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 trade names, are recorded at fair market value on their acquisition date. An indefinite life was assigned to the trade names because they have the continued ability to generate cash flows indefinitely. Goodwill and the indefinite-lived intangible assets 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 , the Company is permitted, but not required, to first assess qualitative factors to determine whether it is necessary to perform the more thorough quantitative goodwill impairment test. Following its qualitative assessment, the Company determined it was not more likely than not that the fair value of its goodwill was less than the carrying amount and, accordingly, no impairment existed at September 30, 2016. |
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 11,027,177 and 11,093,958 shares were issued and outstanding as of December 31, 2015 and September 30, 2016, 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. |
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 unaudited consolidated statements of income for each of the three and nine months ended September 30, 2015 and 2016 is based on awards ultimately expected to vest and, therefore, has been adjusted for estimated forfeitures. The Company estimates forfeitures at the time of grant and revises 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. Set forth below is a reconciliation of shares used to calculate basic and diluted earnings per share for the three and nine months ended September 30, 2015 and 2016 (in thousands): For the three months ended For the nine months ended September 30, September 30, 2015 2016 2015 2016 Weighted average shares outstanding used to compute basic earnings per share Incremental shares issuable upon the assumed exercise of stock options — — — — Unvested restricted stock Shares used to compute diluted earnings per share |
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 2013-2015 remain open for Federal tax examination and the tax years 2012-2015 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, fair value of contingent consideration, and the provision for income taxes. Actual results could differ from those estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements 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 Company adopted ASU 2015-17 effective January 1, 2016 and reclassified approximately $6.4 million of its deferred tax asset from current to non-current assets in the condensed consolidated balance sheet as of December 31, 2015, to conform to the current period presentation. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). The new guidance requires the recognition of right-of-use assets and lease liabilities on the balance sheet for most leases. Under current guidance, operating leases are off-balance sheet. ASU 2016-02 also requires more extensive quantitative and qualitative disclosures about leasing arrangements. ASU 2016-02 applies to fiscal periods beginning after December 15, 2018, using the modified retrospective method, with early adoption permitted. The Company anticipates that the impact of ASU 2016-02 on its consolidated balance sheet will be material as the Company will record significant asset and liability balances in connection with its leased properties. In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). ASU 2016-09 impacts several aspects of the accounting for share-based payment transactions, including classification of certain items on the consolidated statement of cash flows and accounting for income taxes. Specifically, ASU 2016-09 requires excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in earnings, which could introduce significant volatility to the Company’s provision for income taxes. In addition, ASU 2016-09 allows companies to recognize the impact of stock award forfeitures at the time of forfeiture, rather than as an estimate ratably over the life of awards. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The transition method varies for each of the areas in ASU 2016-09. The Company does not plan to early adopt and is currently evaluating the impact of ASU 2016-09 on its Consolidated Financial Statements. 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. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date , which defers the effective date of ASU 2014-09 by one year to fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted for fiscal years, and interim periods within those years, beginning after December 15, 2016. Accordingly, the new revenue recognition standard is effective for the Company on January 1, 2018 using either a full retrospective or a modified retrospective approach. The Company is currently evaluating which transition approach to use and the impact that the new revenue recognition standard will have on our Consolidated Financial Statements. There have been three new ASUs issued amending certain aspects of ASU 2014-09. ASU No. 2016-08 Principal versus Agent Considerations (Reporting Revenue Gross Versus Net) , was issued in March, 2016 to clarify certain aspects of the principal versus agent guidance in ASU 2014-09. In addition, ASU No. 2016-10, Identifying Performance Obligations and Licensing , issued in April 2016, amends other sections of ASU 2014-09 including clarifying guidance related to identifying performance obligations and licensing implementation. ASU No. 2016-12, Revenue from Contracts with Customers – Narrow Scope Improvements and Practical Expedients, was issued in May 2016 and provides amendments and practical expedients to the guidance in ASU 2014-09 in the areas of assessing collectibility, presentation of sales taxes received from customers, noncash consideration, contract modification and clarification of using the full retrospective approach to adopt ASU 2014-09. With its evaluation of the impact of ASU 2014-09, the Company will also consider the impact related to the updated guidance provided by these three new ASUs. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses, which is included in ASC Topic 326, Measurement of Credit Losses on Financial Instruments. The new guidance revises the accounting requirements related to the measurement of credit losses and will require organizations to measure all expected credit losses for financial assets based on historical experience, current conditions and reasonable and supportable forecasts about collectibility. Assets must be presented in the financial statements at the net amount expected to be collected. The guidance will be effective for the Company's annual and interim reporting periods beginning January 1, 2020, with early adoption permitted. The Company is evaluating the impact this standard will have on its financial condition, results of operations, and disclosures. In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-15, Classification of Certain Cash Receipts and Cash Payments, which is included in FASB Accounting Standards Codification (ASC) Topic 230, Statement of Cash Flows. The new guidance clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows, including contingent consideration payments made after a business acquisition. Specifically, cash payments to settle a contingent consideration liability which are not made soon after the acquisition date should be classified as cash used in financing activities up to the initial amount of contingent consideration recognized with the remaining amount classified as cash flows from operating activities. The guidance will be effective for the Company's annual and interim reporting periods beginning January 1, 2018, and early adoption is permitted. The Company does not expect adoption of this guidance to have a material impact on its financial condition, results of operations, or disclosures. Other ASUs issued by the FASB but not yet effective are not expected to have a material effect on the Company’s Consolidated Financial Statements. |
Significant Accounting Polici20
Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Significant Accounting Policies [Abstract] | |
Schedule of graduation fund liability | The table below presents activity in the Graduation Fund for the nine months ended September 30, 2015 and 2016 (in thousands): September 30, September 30, 2015 2016 Balance at beginning of period $ $ Revenue deferred Benefit redeemed Balance at end of period $ $ |
Schedule of tuition receivable and allowance for doubtful accounts | December 31, 2015 September 30, 2016 Tuition receivable $ $ Allowance for doubtful accounts Tuition receivable, net $ $ |
Schedule of allowance for doubtful accounts | For the three months ended For the nine months ended September 30, September 30, 2015 2016 2015 2016 Allowance for doubtful accounts, beginning of period $ $ $ $ Additions charged to expense Write-offs, net of recoveries Allowance for doubtful accounts, end of period $ $ $ $ |
Schedule of reconciliation of shares used to calculate basic and diluted earnings per share | For the three months ended For the nine months ended September 30, September 30, 2015 2016 2015 2016 Weighted average shares outstanding used to compute basic earnings per share Incremental shares issuable upon the assumed exercise of stock options — — — — Unvested restricted stock Shares used to compute diluted earnings per share |
Acquisition of New York Code 21
Acquisition of New York Code and Design Academy (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Acquisition of New York Code and Design Academy [Abstract] | |
Summary of purchase price allocated to assets acquired and liabilities assumed at fair value | Purchase Price Allocation Useful Life Cash $ Other assets Intangibles: Trade name Indefinite Goodwill Liabilities assumed Total assets acquired and liabilities assumed, net Less: contingent consideration Less: cash acquired Cash paid for acquisition, net of cash acquired $ |
Restructuring and Related Cha22
Restructuring and Related Charges (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Restructuring and Related Charges [Abstract] | |
Schedule of restructuring liability by type of cost | September 30, September 30, 2015 2016 Balance at beginning of period (1) $ $ Adjustments (2) Payments Balance at end of period (1) $ $ |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Measurement [Abstract] | |
Schedule of assets and liabilities measured at fair value on a recurring basis | Assets and liabilities measured at fair value on a recurring basis consist of the following as of September 30, 2016 (in thousands): Fair Value Measurements at Reporting Date Using Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable September 30, Assets/Liabilities Inputs Inputs 2016 (Level 1) (Level 2) (Level 3) Assets: Money market funds $ $ $ — $ — Liabilities: Deferred payments $ $ — $ — $ 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 Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable December 31, Assets/Liabilities Inputs Inputs 2015 (Level 1) (Level 2) (Level 3) Assets: Money market funds $ $ $ — $ — Liabilities: Deferred payments $ $ — $ — $ |
Schedule of changes in fair value of level 3 liability | Deferred Payments Balance at December 31, 2015 $ Amounts paid Contingent consideration in connection with NYCDA acquisition Other adjustments to fair value Balance at September 30, 2016 $ |
Stock Options, Restricted Sto24
Stock Options, Restricted Stock and Restricted Stock Units (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Stock Options, Restricted Stock and Restricted Stock Units [Abstract] | |
Schedule of restricted stock and restricted stock units activity | Number of shares or units Weighted- average Grant price Balance, December 31, 2015 $ Grants Vested shares Forfeitures Balance, September 30, 2016 $ |
Schedule of stock option activity and other stock option information | Weighted- average Weighted- remaining Aggregate Number of average contractual intrinsic value(1) shares exercise price life (years) (in thousands) Balance, December 31, 2015 $ $ Grants — — Exercises — — Forfeitures/Expirations — — Balance, September 30, 2016 $ $ — Exercisable, September 30, 2016 $ $ — |
Schedule of stock-based compensation expense | For the three months ended For the nine months ended September 30, September 30, 2015 2016 2015 2016 Instruction and educational support $ $ $ $ Marketing — — — — Admissions advisory — — — — General and administration Stock-based compensation expense included in operating expense Tax benefit Stock-based compensation expense, net of tax $ $ $ $ |
Other Long-Term Liabilities (Ta
Other Long-Term Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Other Long-Term Liabilities [Abstract] | |
Schedule of other long-term liabilities | December 31, 2015 September 30, 2016 Deferred payments related to acquisitions $ $ Deferred revenue, net of current portion Loss on facilities not in use Deferred rent and other facility costs Lease incentives Deferred gain on sale of campus building — $ $ |
Nature of Operations (Details)
Nature of Operations (Details) | 9 Months Ended |
Sep. 30, 2016segment | |
Nature of Operations [Abstract] | |
Number of reporting segments | 1 |
Significant Accounting Polici27
Significant Accounting Policies (Details) | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Significant Accounting Policies [Abstract] | |
Percentage of tuition revenue in total revenue | 95.00% |
Unused books and academic material refundable period | 21 days |
Goodwill and intangible assets impairment | $ 0 |
Significant Accounting Polici28
Significant Accounting Policies - Graduation Fund (Details) | 9 Months Ended | ||
Sep. 30, 2016USD ($)item | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
Schedule of activity in the Graduation Fund | |||
Consecutive terms of non attendance in which Graduation Fund credits will be lost | item | 1 | ||
Number of free courses | item | 1 | ||
Number of successfully completed courses | item | 3 | ||
Expected collection period of tuition receivable | 12 months | ||
Balance at beginning of year | $ 20,937,000 | $ 9,706,000 | |
Revenue deferred | 17,799,000 | 12,423,000 | |
Benefit redeemed | (12,185,000) | (3,974,000) | |
Balance at end of year | 26,551,000 | $ 18,155,000 | |
Current Liability [Member] | |||
Schedule of activity in the Graduation Fund | |||
Graduation fund estimated to be redeemed | 12,700,000 | ||
Other Assets [Member] | |||
Restricted cash | |||
Restricted cash | 0 | $ 0 | |
Minimum protective endowment | $ 500,000 |
Significant Accounting Polici29
Significant Accounting Policies - Tuition Receivable (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Jun. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Dec. 31, 2014 |
Schedule of tuition receivable and allowance for doubtful accounts | ||||||
Tuition receivable | $ 28,719 | $ 28,543 | ||||
Allowance for doubtful accounts | (9,794) | $ (9,981) | (10,024) | $ (9,776) | $ (8,733) | $ (8,835) |
Tuition receivable, net | 18,925 | 18,519 | ||||
Other Assets [Member] | ||||||
Schedule of tuition receivable and allowance for doubtful accounts | ||||||
Tuition receivable included in other assets | $ 2,000 | $ 2,000 |
Significant Accounting Polici30
Significant Accounting Policies - Doubtful Accounts (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Schedule of allowance for doubtful accounts | ||||
Beginning allowance for doubtful accounts | $ 9,981 | $ 8,733 | $ 10,024 | $ 8,835 |
Additions charged to expense | 3,865 | 2,293 | 11,069 | 9,315 |
Write-offs, net of recoveries | (4,052) | (1,250) | (11,299) | (8,374) |
Ending allowance for doubtful accounts | $ 9,794 | $ 9,776 | $ 9,794 | $ 9,776 |
Significant Accounting Polici31
Significant Accounting Policies - EPS (Details) - $ / shares | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
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 | 10,616,000 | 10,593,000 | 10,608,000 | 10,586,000 | |
Unvested restricted stock | 212,000 | 143,000 | 195,000 | 140,000 | |
Shares used to compute diluted earnings per share | 10,828,000 | 10,736,000 | 10,803,000 | 10,726,000 | |
Common stock, shares authorized | 20,000,000 | 20,000,000 | 20,000,000 | ||
Common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 | ||
Common stock, shares issued | 11,093,958 | 11,093,958 | 11,027,177 | ||
Common stock, shares outstanding | 11,093,958 | 11,093,958 | 11,027,177 | ||
Preferred stock, shares authorized | 8,000,000 | 8,000,000 | 8,000,000 | ||
Preferred stock, shares issued | 0 | 0 | 0 | ||
Preferred stock, shares outstanding | 0 | 0 | 0 |
Significant Accounting Polici32
Significant Accounting Policies - Accounting Pronouncements (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Deferred tax assets, noncurrent | $ 27,894 | $ 26,449 |
Accounting Standards Update 2015 17 | Adjustments for New Accounting Principle, Early Adoption | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Deferred tax assets, current | (6,400) | |
Deferred tax assets, noncurrent | $ 6,400 |
Acquisition of New York Code 33
Acquisition of New York Code and Design Academy (Details) - New York Code And Design Academy, Inc. $ in Millions | Jan. 13, 2016USD ($) | Aug. 31, 2016USD ($) | Apr. 30, 2016USD ($) | Sep. 30, 2016USD ($)individual |
Business Acquisition [Line Items] | ||||
Cash paid up front | $ 2.4 | |||
Contingent consideration | $ 25 | |||
Contingent consideration payment | $ 0.5 | $ 6 | $ 4.6 | |
Number of founders | individual | 2 | |||
Employment term | 3 years | |||
Contingent Consideration Results of Operations Over Five Year Period [Member] | ||||
Business Acquisition [Line Items] | ||||
Contingent consideration | $ 12.5 | |||
Term of additional contingent payments | 5 years | |||
Contingent Consideration Receipt Of State Regulatory Permit [Member] | ||||
Business Acquisition [Line Items] | ||||
Contingent consideration | $ 5.5 | |||
Contingent Consideration Accelerated Earnout Upon Receipt Of One State Regulatory Permit [Member] | ||||
Business Acquisition [Line Items] | ||||
Contingent consideration | 1 | |||
Selling, General and Administrative Expenses [Member] | ||||
Business Acquisition [Line Items] | ||||
Transaction Costs | $ 0.2 |
Acquisition of New York Code 34
Acquisition of New York Code and Design Academy - Purchase Price Allocation (Details) - USD ($) $ in Thousands | Jan. 13, 2016 | Jun. 30, 2016 | Sep. 30, 2016 | Dec. 31, 2015 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 20,793 | $ 6,800 | ||
Cash paid for acquisition, net of cash acquired | $ 7,635 | |||
New York Code And Design Academy, Inc. | ||||
Business Acquisition [Line Items] | ||||
Cash | $ 790 | |||
Other assets | 1,265 | |||
Trade name | 5,660 | |||
Goodwill | 13,993 | |||
Liabilities assumed | (4,783) | |||
Total assets acquired and liabilities assumed, net | 16,925 | |||
Contingent Consideration | (14,500) | |||
Cash paid for acquisition, net of cash acquired | $ 1,635 | |||
Discount rate | 4.50% | |||
Measurement adjustment to goodwill | $ 200 | |||
Measurement adjustment to deferred tax liabilities | $ 200 |
Restructuring and Related Cha35
Restructuring and Related Charges (Details) - item | 1 Months Ended | 9 Months Ended |
Oct. 31, 2013 | Sep. 30, 2016 | |
Restructuring and Related Charges [Abstract] | ||
Campus location closed | 20 | |
Lease marginal borrowing rate | 4.50% |
Restructuring and Related Cha36
Restructuring and Related Charges - Liability for lease (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Schedule of restructuring liability | |||
Beginning balance | $ 20,055 | $ 27,283 | |
Adjustments | (1,695) | 265 | |
Payments | (4,434) | (5,040) | |
Ending balance | 13,926 | $ 22,508 | |
Accounts payable and accrued expenses | |||
Schedule of restructuring liability | |||
Restructuring liabilities | $ 5,000 | $ 4,800 |
Fair Value Measurement (Details
Fair Value Measurement (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Money Market Funds [Member] | ||
Cash equivalents: | ||
Total assets at fair value on a recurring basis | $ 10,108 | $ 100 |
Deferred payments [Member] | ||
Other long-term liabilities: | ||
Total liabilities at fair value on a recurring basis | 12,340 | 3,278 |
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 | 10,108 | 100 |
Significant Unobservable Inputs (Level 3) [Member] | Deferred payments [Member] | ||
Other long-term liabilities: | ||
Total liabilities at fair value on a recurring basis | $ 12,340 | $ 3,278 |
Fair Value Measurement - Level
Fair Value Measurement - Level 3 Liability (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Accounts payable and accrued expenses | |
Fair Value, Liabilities Measured On Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Short-term portion of deferred payments | $ 1,100 |
Deferred payments [Member] | |
Schedule of changes in fair value of level 3 liability | |
Balance at beginning of year | 3,278 |
Amounts paid | (7,358) |
Contingent consideration in connection with NYCDA acquisition | 14,500 |
Other adjustments to fair value | 1,920 |
Balance at end of year | $ 12,340 |
Long Term Debt (Details)
Long Term Debt (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Jul. 02, 2015USD ($) | |
Debt Instrument [Line Items] | |||||
Revolving credit facility, value | $ 150,000,000 | ||||
Maximum aggregate incremental term loans | $ 50,000,000 | ||||
Payments of debt financing costs | $ 900,000 | ||||
Cash interest paid | $ 200,000 | $ 100,000 | $ 300,000 | $ 2,300,000 | |
Maximum total leverage ratio | 2 | 2 | |||
Minimum coverage ratio | 1.75 | 1.75 | |||
Minimum department of education financial composite score | 1.5 | 1.5 | |||
Revolving credit facility, outstanding | $ 0 | $ 0 | |||
Revolving Credit Facility [Member] | Base Rate [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt instrument description of variable rate basis | base rate | ||||
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt instrument description of variable rate basis | LIBOR | ||||
Revolving Credit Facility [Member] | Minimum [Member] | |||||
Debt Instrument [Line Items] | |||||
Margin rate for interest if using base rate | 1.75% | ||||
Unused commitment fee | 0.25% | ||||
Revolving Credit Facility [Member] | Maximum [Member] | |||||
Debt Instrument [Line Items] | |||||
Margin rate for interest if using base rate | 2.25% | ||||
Unused commitment fee | 0.35% |
Stock Options, Restricted Sto40
Stock Options, Restricted Stock and Restricted Stock Units (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 9 Months Ended | |
May 31, 2016 | Feb. 29, 2016 | Sep. 30, 2016 | |
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 | $ 23.6 | ||
Stock-based compensation cost recognized period, in months | 28 months | ||
Restricted stock awarded subject to performance condition | 550,000 | ||
Restricted stock and restricted stock units [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Additional shares authorized for grants | 11,365 | ||
Shares authorized for grants | 176,802 | ||
Vesting period | 3 years | ||
Share Price | $ 49.27 | $ 50.67 | |
Restricted stock and restricted stock units [Member] | Minimum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 2 years | ||
Restricted stock and restricted stock units [Member] | Maximum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 4 years |
Stock Options, Restricted Sto41
Stock Options, Restricted Stock and Restricted Stock Units - RSU (Details) - Restricted stock and restricted stock units [Member] | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Schedule of restricted stock and restricted stock units activity | |
Beginning Balance, Number of shares or units | shares | 634,327 |
Grants, Number of shares or units | shares | 188,167 |
Vested shares, Number of shares or units | shares | (23,539) |
Forfeitures, Number of shares or units | shares | (71,386) |
Ending Balance, Number of shares or units | shares | 727,569 |
Beginning Balance, Weighted-average grant price | $ / shares | $ 104.66 |
Grants, Weighted-average grant price | $ / shares | 50.59 |
Vested shares, Weighted-average grant price | $ / shares | 50.43 |
Forfeitures, Weighted-average grant price | $ / shares | 61.64 |
Ending Balance, Weighted-average grant price | $ / shares | $ 97.58 |
Stock Options, Restricted Sto42
Stock Options, Restricted Stock and Restricted Stock Units - Options (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Schedule of stock option activity and other stock option information | |||
Exercises, Number of shares | 0 | 0 | |
Stock options [Member] | |||
Schedule of stock option activity and other stock option information | |||
Beginning Balance, Number of shares | 100,000 | ||
Grants, Number of shares | |||
Exercises, Number of shares | |||
Forfeitures/Expirations, Number of shares | |||
Ending Balance, Number of shares | 100,000 | 100,000 | |
Exercisable, Number of shares | 100,000 | ||
Beginning Balance, Weighted-average exercise price | $ 51.95 | ||
Grants, Weighted-average exercise price | |||
Exercises, Weighted-average exercise price | |||
Forfeitures/Expirations, Weighted-average exercise price | |||
Ending Balance, Weighted-average exercise price | 51.95 | $ 51.95 | |
Exercisable, Weighted-average exercise price | $ 51.95 | ||
Weighted-average remaining contractual life (years) | 4 years 3 months 18 days | 5 years 1 month 6 days | |
Exercisable, Weighted-average remaining contractual life (years) | 4 years 3 months 18 days | ||
Beginning Balance, Aggregate intrinsic value | $ 817 | ||
Ending Balance, Aggregate intrinsic value | $ 817 |
Stock Options, Restricted Sto43
Stock Options, Restricted Stock and Restricted Stock Units - Stock-based compensation (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Schedule of stock-based compensation expense | ||||
Stock-based compensation expense included in operating expense | $ 2,404,000 | $ 2,653,000 | $ 7,330,000 | $ 7,576,000 |
Tax benefit | 957,000 | 1,048,000 | 2,857,000 | 2,990,000 |
Stock-based compensation expense, net of income tax | 1,447,000 | 1,605,000 | 4,473,000 | 4,586,000 |
Tax shortfall related to share-based payment arrangements | $ 51,000 | $ 25,000 | ||
Stock options exercised | 0 | 0 | ||
Instruction and educational support [Member] | ||||
Schedule of stock-based compensation expense | ||||
Stock-based compensation expense included in operating expense | 522,000 | 619,000 | $ 678,000 | $ 1,532,000 |
General and administration [Member] | ||||
Schedule of stock-based compensation expense | ||||
Stock-based compensation expense included in operating expense | $ 1,882,000 | $ 2,034,000 | $ 6,652,000 | $ 6,044,000 |
Other Long-Term Liabilities (De
Other Long-Term Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Other Long-Term Liabilities [Abstract] | ||
Deferred payments related to acquisition | $ 14,353 | $ 6,078 |
Deferred revenue, net of current portion | 16,961 | 14,429 |
Loss on facilities not in use | 8,891 | 15,229 |
Deferred rent and other facility costs | 8,601 | 8,993 |
Lease incentives | 2,825 | 3,125 |
Deferred gain on sale of campus building | 133 | |
Total other long-term liabilities | $ 51,631 | $ 47,987 |
Other Long-Term Liabilities - D
Other Long-Term Liabilities - Deferred (Details) $ in Millions | 1 Months Ended | 9 Months Ended | |||
Aug. 31, 2016USD ($) | Apr. 30, 2016USD ($) | Jun. 30, 2007USD ($)Asset | Sep. 30, 2016USD ($) | Dec. 31, 2015USD ($) | |
Sale price of one of campus buildings | $ 5.8 | ||||
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 | $ 2.9 | $ 3.3 | |||
Minimum [Member] | |||||
Leasehold improvements and long-term liability amortization period | 5 years | ||||
Maximum [Member] | |||||
Leasehold improvements and long-term liability amortization period | 10 years | ||||
New York Code And Design Academy, Inc. | |||||
Deferred payment arrangements value | $ 8.7 | ||||
Contingent consideration payment | $ 0.5 | $ 6 | 4.6 | ||
New York Code And Design Academy, Inc. | Maximum [Member] | |||||
Deferred payment arrangements value | $ 11.5 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Income Taxes [Abstract] | ||
Unrecognized tax benefits | $ 0.2 | |
Recognition of tax benefits | 0.3 | |
Amount of interest and penalties | 0.1 | |
Reduction of unrecognized tax benefits in the next twelve months, due to expiration of applicable statues of limitation | 0.1 | |
Cash payments for income taxes | $ 25 | $ 21 |
Regulation (Details)
Regulation (Details) | 1 Months Ended | 9 Months Ended |
Oct. 31, 2016item | Sep. 30, 2016USD ($)itemstate | |
Regulation [Line Items] | ||
Average of median annual earning percentage. | 8.00% | |
Average of median discretionary percentage | 20.00% | |
Number of categories of borrower defenses | 3 | |
Number of states needed for state authorization reciprocity agreement | state | 2 | |
Number of years an adverse action must be disclosed | 5 years | |
Minimum [Member] | ||
Regulation [Line Items] | ||
Average of median annual earning percentage. | 8.00% | |
Average of median discretionary percentage | 20.00% | |
Maximum [Member] | ||
Regulation [Line Items] | ||
Average of median annual earning percentage. | 12.00% | |
Average of median discretionary percentage | 30.00% | |
Strayer University | ||
Regulation [Line Items] | ||
Number of debt-to-earnings measures | 2 | |
Earnings measurement times Poverty Guideline | 1.5 | |
Amount of liability triggering event | $ | $ 750,000 | |
Percentage of current assets triggering event | 10.00% | |
Percentage of annual Title IV disbursements | 10.00% | |
Number of conducted compliance reviews | 4 | |
Number of states in which compliance reviews were conducted | state | 3 | |
Number of reviews also covered compliance with additional agencies | 2 | |
Strayer University | Minimum [Member] | ||
Regulation [Line Items] | ||
Years after graduation | 2 years | |
Strayer University | Maximum [Member] | ||
Regulation [Line Items] | ||
Years after graduation | 4 years | |
Strayer University | Forecast | ||
Regulation [Line Items] | ||
Number of current associate degree programs n the Zone | 2 |