| Summary Of Significant Accounting Policies | Summary of Significant Accounting Policies Consolidation The consolidated financial statements include the accounts of the Company, the University, Sophia, CLS, Hackbright, DevMountain, and Arden University (prior to the divestiture date), after elimination of intercompany accounts and transactions. Arden University was divested during the third quarter of 2016, and prior to the date of sale was presented as discontinued operations within the financial statements and corresponding footnotes. Arden operated on a fiscal year ending October 31, and prior to the divestiture, this was also the date used for consolidation. Refer to Footnote 4 - Discontinued Operations - for further information related to the divestiture of Arden University. During the second quarter of 2016, the Company acquired Hackbright and DevMountain. We accounted for these acquisitions as business combinations as of the close of each transaction. The assets acquired and liabilities assumed in conjunction with the acquisitions were recorded at fair value as of the respective acquisition dates, with the results of operations reflected in the Consolidated Statements of Income from the acquisition dates going forward. Refer to Footnote 15, Acquisitions , for further information related to these acquisitions. Reclassifications During the first quarter of 2017, we reclassified our variable rate demand notes from cash and cash equivalents to marketable securities, current within the Consolidated Balance Sheet to better reflect the nature of these assets. Prior periods have not been restated to conform to the updated classification as marketable securities because the variable rate demand notes were not material to the Company's financial statements as of December 31, 2016. Additionally, during the year-ended December 31, 2017 the Company began presenting the cash outflows associated with taxes paid to taxing authorities on an employee's behalf for restricted stock unit award releases within financing activities in the Consolidated Statements of Cash Flows rather than within operating activities based on the guidance set forth within Accounting Standards Update (ASU) 2016-09. The Company has applied this provision of the new standard retrospectively, and as such has restated net cash provided by operating activities and net cash used in financing activities for the impact of taxes paid to taxing authorities on an employee's behalf for restricted stock unit award releases within the Consolidated Statements of Cash Flows for the prior periods presented. Restructuring Charges In December 2017, the Company eliminated approximately 25 positions in a plan to align the organization with 2018 strategic priorities, incurring charges of approximately $1.3 million during the year-ended December 31, 2017. Restructuring charges relate primarily to severance costs and other termination benefits associated with former Company employees whose employment at the Company was involuntarily terminated during the period as we aligned the organization with 2018 strategic priorities and right-sized the cost structure in the Job-Ready Skills segment. Severance and related termination benefits are recorded during the period in which no additional services are required to be performed by the former employee in order to receive severance benefits. These charges are included within Restructuring charges in the Consolidated Statement of Income for the year-ended December 31, 2017. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Revenue Recognition The Company’s revenues primarily consist of tuition. Tuition revenue is deferred and recognized as revenue ratably over the period of instruction. Revenue derived from course resource fees is recognized in a manner consistent with tuition revenue. For GuidedPath (traditional credit-hour) learners who withdraw or drop a course, the Company follows the University refund policy, which generally is: 100 percent refund through five days, 75 percent refund from six to twelve days, and zero percent refund for the remainder of the period. The refund policy varies slightly for learners within certain states due to state rules or regulations. FlexPath learners receive a 100 percent refund through calendar day twelve of the course for their first billing session only and a zero percent refund after that date and for all subsequent billing sessions. The Company does not recognize revenue for learners who enroll but never engage in the courseroom. Refunds are recorded as a reduction of revenue in the period that the learner withdraws from a course. When the University is required to return funds distributed under Title IV Programs of the Higher Education Act (Title IV or Title IV Programs) to the Department of Education, the learner is not released from his or her payment obligation. Beginning in fiscal year 2016, we record revenue for learners who drop all courses or withdraw from the University with an unpaid tuition balance at the time of cash collection. This change is consistent with the Company's belief that such unpaid balances do not meet the threshold of reasonable collectability which must be met in order to recognize revenue. During the period in which a learner drops all courses or withdraws from the University prior to finalizing coursework, no additional revenue will be recognized until payment is received from the learner. This change did not have a material impact on our revenues or results of operations in the prior or current periods, and is not expected to have a material impact on revenues or results of operations in subsequent periods. Residency tuition revenue is recognized over the length of the residency, which ranges from three to 42 days. Deferred revenue in any period represents the excess of tuition and fees received as compared to tuition and fees recognized as revenue in the consolidated statements of income and is reflected as a current liability on our consolidated balance sheets. Allowance for Doubtful Accounts The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability, failure or refusal of our learners to make required payments. The Company determines the allowance for doubtful accounts amount based on an analysis of our accounts receivable portfolio and historical write-off experience, and current economic conditions, recoveries and trends. Bad debt expense is recorded as an instructional costs and services expense in the consolidated statements of income. The Company generally writes off accounts receivable balances once the account is deemed to be uncollectible, which typically occurs after outside collection agencies have pursued collection efforts. The Company recorded bad debt expense of $12.7 million , $10.7 million , and $14.3 million for the years ended December 31, 2017 , 2016 , and 2015 , respectively. Cash and Cash Equivalents The Company considers all highly liquid marketable securities with maturities of three months or less at the time of purchase to be cash equivalents. The Company's cash equivalents consist of cash held as demand deposits with financial institutions and short-term money market funds. Cash equivalents are carried at fair value. Marketable Securities Management determines the appropriate designation of marketable securities at the time of purchase and reevaluates such designation as of each balance sheet date. All of the Company’s marketable securities are designated as available-for-sale as of December 31, 2017 and 2016 and consist of tax-exempt municipal securities, variable rate demand notes, and corporate debt securities. Available-for-sale marketable securities are carried at fair value as determined by quoted market prices or other inputs either directly or indirectly observable in the marketplace for identical or similar assets, with unrealized gains and losses, net of tax, recognized as a component of accumulated other comprehensive income (loss) within shareholders’ equity. Management reviews the fair value of the portfolio at least monthly, and evaluates individual securities with fair value below amortized cost at the balance sheet date for impairment. In order to determine whether impairment is other than temporary, management evaluates whether the Company intends to sell the impaired security and whether it is more likely than not that the Company will be required to sell the security before recovering its amortized cost basis. If management intends to sell an impaired debt security, or it is more likely than not the Company will be required to sell the security prior to recovering its amortized cost basis, an other-than-temporary impairment is deemed to have occurred. The amount of an other-than-temporary impairment related to a credit loss, or securities that management intends to sell before recovery, is recognized in earnings. The amount of an other-than-temporary impairment on debt securities related to other factors is recorded consistent with changes in the fair value of all other available-for-sale securities as a component of accumulated other comprehensive income (loss) within shareholders’ equity. The cost of securities sold is based on the specific identification method. Amortization of premiums, accretion of discounts, interest, dividend income and realized gains and losses are included in other income (expense). The contractual maturity date of available-for-sale securities is based on the days remaining to the effective maturity. The Company classifies marketable securities as either current or non-current assets based on management’s intent with regard to usage of those funds, which is dependent upon the security's maturity date and liquidity considerations based on current market conditions. If management intends to hold the securities for longer than one year as of the balance sheet date, they are classified as non-current. Fair Value Measurement Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company classifies assets and liabilities recorded at fair value under the fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. The fair value measurements are classified under the following hierarchy: • Level 1 – Observable inputs that reflect quoted market prices (unadjusted) for identical assets and liabilities in active markets; • Level 2 – Observable inputs, other than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities; and • Level 3 – Unobservable inputs that are supported by little or no market activity that are significant to the fair value of assets or liabilities. Concentration of Credit Risk Financial instruments, which potentially subject the Company to credit risk, consist primarily of cash equivalents, marketable securities and accounts receivable. Management believes the credit risk related to cash equivalents and marketable securities is limited due to the adherence to an investment policy that requires marketable securities to have a minimum credit rating of A minus (or equivalent) at the time of purchase. All of the Company’s cash equivalents and marketable securities as of December 31, 2017 and 2016 consist of investments rated A - or higher by at least one rating agency. In addition, the Company utilizes money managers who conduct initial and ongoing credit analysis on its investment portfolio to monitor and minimize the potential impact of market risk associated with its cash equivalents and marketable securities. Management believes that the credit risk related to accounts receivable is mitigated due to the large number and diversity of learners that principally comprise the Company’s customer base. The Company’s credit risk with respect to these accounts receivable is mitigated through the participation of a majority of the learners in federally funded financial aid programs. For the years ended December 31, 2017 , 2016 , and 2015 , 75.53% , 76.94% , and 75.47% of Capella University's revenues (calculated on a cash basis) were collected from funds distributed under Title IV Programs, respectively. The financial aid and assistance programs are subject to political and budgetary considerations. There is no assurance that such funding will be maintained at current levels. Extensive and complex regulations govern the financial assistance programs in which Capella University's learners participate. Capella University's administration of these programs is periodically reviewed by various regulatory agencies. Any regulatory violation could be the basis for the initiation of potential adverse actions, including a suspension, limitation, or termination proceeding, which could have a material adverse effect on the Company. If the University were to lose its eligibility to participate in federal student financial aid programs, the learners at the University would lose access to funds derived from those programs and would have to seek alternative sources of funds to pay their tuition and fees. Property and Equipment Property and equipment are stated at cost. Computer software is included in property and equipment and consists of purchased software, capitalized website development costs and internally developed software. Capitalized website development costs consist mainly of salaries and outside development fees directly related to websites and various databases. Website content development is generally expensed as incurred. Internally developed software represents qualifying salary and consulting costs for time spent on developing internal use software. The Company capitalizes certain costs associated with internally developed software, primarily consisting of the direct labor associated with creating the internally developed software. Software development projects generally include three stages: the preliminary project stage (all costs are expensed as incurred), the application development stage (certain costs are capitalized and certain costs are expensed as incurred), and the post-implementation/operation stage (all costs are expensed as incurred). The costs capitalized in the application development stage include the costs of designing the application, coding, installation of hardware, and testing. The capitalization of software requires judgment in determining when a project has reached the application development stage and the period over which the Company expects to benefit from the use of that software. Depreciation is calculated using the straight-line method, over the following estimated useful lives: Computer equipment 3 to 7 years Furniture and office equipment 5 to 7 years Computer software 3 to 5 years Leasehold improvements are amortized on a straight-line basis over the related lease term or estimated useful life, whichever is shorter. The Company reviews its property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the asset. If such assets are considered not recoverable, an impairment loss is recognized to the extent the carrying amount of the assets exceeds the fair value of the assets. The Company recorded impairment charges related to property and equipment of $0.4 million , $0.4 million , and $0.9 million during the years ended December 31, 2017 , 2016 , and 2015 , respectively. The impairment charges primarily consist of technology-related projects for which the expected future net cash flows may not exceed the carrying value of the related assets as well as furniture and office equipment deemed to be impaired in conjunction with the initiative to re-design corporate office space. These charges are recorded in the Consolidated Statements of Income and classified as instructional costs and services, marketing and promotional, admissions advisory, or general and administrative expense based on the primary function with which the asset was associated. Income Taxes The Company uses the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts. The Company has deferred tax assets and liabilities that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are measured using the enacted statutory tax rates that are expected to apply in the years in which the temporary differences are expected to be recovered or paid. Deferred tax assets are subject to periodic recoverability assessments. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized. The Company considers all positive and negative evidence relating to the realization of the deferred tax assets in assessing the need for a valuation allowance. The Company records a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The Company accounts for uncertainty in income taxes using a two-step approach for evaluating tax positions. Step one, recognition, occurs when the Company concludes that a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination. Step two, measurement, is only addressed if the position is more likely than not to be sustained. Under step two, the tax benefit is measured as the largest amount of benefit, determined on a cumulative probability basis, which is more likely than not to be realized upon ultimate settlement. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. Contingencies The Company accrues for costs associated with contingencies, including regulatory compliance and legal matters, when such costs are probable and reasonably estimable. Contingent liabilities are adjusted as further information is obtained, circumstances change, or contingencies are resolved. The Company bases these accruals on management’s estimate of such costs, which may vary from the cost and expenses ultimately incurred in connection with any such contingency. Intangible Assets Finite-lived intangible assets that are acquired in business combinations are recorded at fair market value on their acquisition dates and are amortized on a straight-line basis over the economic useful life of the asset. Finite-lived intangible assets consist of course content and customer relationships. The Company reviews its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the asset. If such assets are not recoverable, a potential impairment loss is recognized to the extent the carrying amount of the assets exceeds the fair value of the assets. Fair value is generally determined using a discounted cash flow approach. Indefinite-lived intangible assets are recorded at fair market value on their acquisition date and evaluated for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable. Indefinite-lived intangible assets consist of trade names. The Company reviews its indefinite-lived intangible assets annually for impairment on the first day of the fourth quarter, or more frequently if events occur or circumstances change between annual tests that would more likely than not reduce fair value below its carrying amount. The Company’s indefinite-lived intangible asset impairment test includes an option to first assess qualitative factors to determine whether it is more likely than not that the fair value of the asset is less than its carrying amount. If the Company concludes that it is more likely than not that the fair value of the asset is less than its carrying amount based on the qualitative assessment, or that a qualitative assessment should not be performed, the Company proceeds with performing a quantitative impairment test. If performed, the quantitative impairment test compares the fair value to the carrying value of the indefinite-lived intangible asset. Fair value is generally determined using a discounted cash flow approach, using the relief from royalty method. This method incorporates assumptions regarding future sales projections, discount and royalty rates. If, based on this analysis, carrying value exceeds fair value, the indefinite-lived intangible asset is considered impaired and an impairment charge is recorded to the extent that fair value is less than carrying value. Goodwill Goodwill represents the excess of the purchase price of an acquired business over the fair value assigned to the underlying assets acquired and assumed liabilities. At the time of an acquisition, the Company allocates the goodwill and related assets and liabilities to its respective reporting unit. The Company identifies its reporting units by assessing whether the components of its operating segment constitute businesses for which discrete financial information is available and management regularly reviews the operating results of those components. The Company assesses goodwill for impairment at least annually on the first day of the fourth quarter, 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. The Company's goodwill impairment test includes an option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount based on the qualitative assessment, or that a qualitative assessment should not be performed for a reporting unit, the Company proceeds with performing a quantitative goodwill impairment test. In performing the quantitative goodwill impairment test, the Company compares the fair value of the reporting unit to the carrying value of its net assets. If the fair value of the reporting unit exceeds the carrying value of the net assets of the reporting unit, goodwill is not impaired and no further testing is required. If the carrying value of the net assets of the reporting unit exceeds the fair value of the reporting unit, an impairment loss is recognized to the extent the fair value of the reporting unit is less than the carrying value of the reporting unit's net assets. The process of evaluating the potential impairment of goodwill is subjective and requires significant judgment at many points during the analysis, including determining whether to perform the optional qualitative assessment and determining the fair value of the reporting unit under the quantitative test. The quantitative goodwill testing process includes the use of industry accepted valuation methods, management review and approval of certain criteria and assumptions and engaging third-party valuation specialists to assist with the analysis. Advertising The Company expenses all advertising costs as incurred, other than production-related advertising costs primarily attributable to television commercials, which are capitalized as a prepaid expense when paid and subsequently expensed at the time of first airing. Advertising costs for 2017 , 2016 , and 2015 were $71.3 million , $67.0 million , and $68.9 million , respectively, which are included within marketing and promotional expenses in our Consolidated Statements of Income. Net Income per Common Share Basic net income per common share is based on the weighted average number of shares of common stock outstanding during the period. Dilutive shares are computed using the Treasury Stock method and include the incremental effect of shares that would be issued upon the assumed exercise of stock options, vesting of restricted stock units, and satisfaction of service conditions for market stock units. The following table presents a reconciliation of the numerator and denominator in the basic and diluted net income per common share calculation, broken out for continuing and discontinued operations, in thousands, except per share amounts. Year-Ended December 31, 2017 2016 2015 Numerator: Income from continuing operations $ 23,410 $ 42,404 $ 43,630 Income (loss) from discontinued operations, net of tax 95 565 (3,442 ) Net income $ 23,505 $ 42,969 $ 40,188 Denominator: Denominator for basic net income per common share - weighted average shares outstanding 11,623 11,614 12,079 Effect of dilutive stock options, restricted stock, and market stock units 327 242 222 Denominator for diluted net income per common share - weighted average shares outstanding 11,950 11,856 12,301 Basic net income (loss) per common share Continuing operations $ 2.01 $ 3.65 $ 3.61 Discontinued operations 0.01 0.05 (0.28 ) Basic net income per common share $ 2.02 $ 3.70 $ 3.33 Diluted net income (loss) per common share Continuing operations $ 1.96 $ 3.58 $ 3.55 Discontinued operations 0.01 0.04 (0.28 ) Diluted net income per common share $ 1.97 $ 3.62 $ 3.27 Options to purchase 0.1 million , 0.3 million , and 0.3 million common shares, were outstanding but not included in the computation of diluted net income per common share in 2017 , 2016 , and 2015 , respectively, because their effect would be antidilutive. Comprehensive Income Comprehensive income includes net income and all changes in the Company’s equity during a period from non-owner sources, which for the Company consists of unrealized gains and losses on available-for-sale marketable securities, net of tax, and foreign currency translation gains and losses. Share-Based Compensation The Company measures and recognizes compensation expense for share-based payment awards made to employees and directors, including employee stock options, restricted stock units (RSUs), performance-based restricted stock units, and market stock units (MSUs) based on estimated fair values of the share award on the date of grant. • Stock options, restricted stock units, and performance-based restricted stock units. To calculate the estimated fair value of stock options on the date of grant, the Company uses the Black-Scholes option pricing model. The Black-Scholes option pricing model requires the Company to estimate key assumptions such as the expected term, volatility, risk-free interest rate, and dividend yield to determine the fair value of stock options, based on both historical information and management judgment regarding market factors and trends. The Company recognizes share-based compensation expense for stock options and restricted stock unit awards using the straight-line method over the period that the awards are expected to vest, which is also the service period, net of actual forfeitures. Share-based compensation expense for performance-based restricted stock award units is determined based on the expected payout of the award. As part of its adoption of ASU No. 2016-09, the Company made an accounting policy election to change the way in which it accounts for forfeitures of share-based awards. Specifically, beginning in 2017, the Company recognizes forfeitures of share-based awards as they occur in the period of forfeiture rather than estimating the number of awards expected to be forfeited at the grant date and subsequently adjusting the estimate when awards are actually forfeited. As such, adjustments to true-up the estimated forfeiture rate to actual forfeitures are no longer necessary. • Market stock units. To calculate the estimated fair value of MSUs on the date of grant, the Company uses Monte Carlo simulations. The Monte Carlo simulations are based on the expected average market price of the Company's common stock for a defined number of calendar days prior to the stated vesting date to estimate the expected number of MSUs that will convert into common shares at the vesting date. Management's key assumptions include volatility, risk-free interest rates, and dividend yields. The Company recognizes share-based compensation expense for MSU awards using the straight-line method, over the period that the awards are expected to vest. Compensation cost related to an award with a market condition will be recognized regardless of whether the market condition is satisfied, provided that the requisite service has been provided. Recent Accounting Pronouncements In May 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-09, Scope of Modification Accounting , which is included in FASB Accounting Standards Codification (ASC) Topic 718 Compensation - Stock Compensation . The new standard clarifies when changes to the terms and conditions of share-based payment awards must be treated as modifications. Specifically, the new guidance permits companies to make certain changes to awards without accounting for them as modifications. The guidance will be effective for the Company’s annual and interim reporting periods beginning January 1, 2018, with early adoption permitted. The Company adopted this guidance during the fourth quarter of 2017, and it did not have a material impact on its business practices, financial condition, results of operations, or disclosures. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other: Simplifying the Accounting for Goodwill Impairment , which is included in ASC Topic 350, Intangibles - Goodwill and Other . The new standard eliminates the quantitative goodwill impairment analysis requirement to determine the fair value of individual assets and liabilities of a reporting unit to calculate the amount of any goodwill impairment and instead permits an entity to recognize goodwill impairment loss as the excess of a reporting unit's carrying value over the estimated fair value of the reporting unit, to the extent this amount does not exceed the carrying amount of goodwill. The new guidance continues to allow an entity to perform a qualitative assessment over goodwill impairment indicators in lieu of a quantitative assessment in certain situations. The guidance will be effective for the Company's annual and interim reporting periods beginning January 1, 2020, with early adoption permitted. The Company adopted this guidance as of January 1, 2017 and recognized a goodwill impairment charge within the Consolidated Statement of Income for the year ended December 31, 2017 to the extent that the Coding Schools reporting unit's carrying value exceeded the estimated fair value of the reporting unit. We did not proceed with estimating the fair value of individual assets and liabilities or the associated implied fair value of goodwill for the Coding Schools reporting unit (formerly step 2 of the goodwill impairment analysis process) as part of the 2017 goodwill impairment analysis as a result of the adoption of this guidance. Refer to Footnote 8 - Goodwill and Intangible Assets - for further discussion of the impact of adoption of this guidance on the goodwill impairment evaluation process and results of the 2017 goodwill impairment analysis. In January 2017, the FASB issued ASU No. 2017-01, Clarifying the Definition of a Business, included in AS |
