Stride (LRN) 8-K K12 Inc. Reports Fiscal 2016 Revenue of $872.7 Million

EXHIBIT 99.1

K12 Inc. Reports Fiscal 2016 Revenue of $872.7 Million

HERNDON, Va., Aug. 09, 2016 (GLOBE NEWSWIRE) -- K12 Inc. (NYSE:LRN), a technology-based education company and leading provider of proprietary curriculum and online school programs for students in pre-K through high school, today announced its results for the fourth fiscal quarter and full fiscal year ended June 30, 2016. 

Financial Highlights for the Three Months Ended June 30, 2016 (Fourth Quarter Fiscal Year 2016)

• Revenues of $221.3 million, compared to $235.7 million in the fourth quarter of FY 2015.
• Operating income of $0.5 million, compared to an operating loss of $16.3 million in the fourth quarter of FY 2015.
• Net loss attributable to common stockholders of $1.0 million, compared to net loss of $11.6 million in the fourth quarter of FY 2015. 
• Diluted net loss attributable to common stockholders per share of $0.03, compared to net loss of $0.31 in the fourth quarter of FY 2015. 
• EBITDA, a non-GAAP measure (see reconciliation below), of $18.1 million, compared to $15.2 million in the fourth quarter of FY 2015.

Financial Highlights for the Year Ended June 30, 2016

• Revenues of $872.7 million, compared to $948.3 million for the full fiscal year of 2015.
• Operating income of $13.9 million, compared to $18.4 million for the full fiscal year of 2015.
• Net income attributable to common stockholders of $9.0 million, compared to $11.0 million for the full fiscal year of 2015.
• Diluted net income attributable to common stockholders per share was $0.23, compared to $0.29 for the full fiscal year of 2015.
• EBITDA, a non-GAAP measure (see reconciliation below), of $82.1 million, compared to $102.2 million for the full fiscal year of 2015.

On July 8, 2016, K12 announced that it had reached a settlement with the State of California resolving all claims related to an Attorney General inquiry with no admission of liability or wrongdoing, and no fines or penalties.  K12 took a net charge during the fourth quarter of fiscal 2016 related to this settlement of $7.1 million.  The $7.1 million is comprised of: $2.6 million settlement payments; $6.0 million to defray the cost to taxpayers for the Attorney General's expenses related to its investigation of K12 Inc. as part of an industry-wide probe of for profit virtual schools; and a $1.5 million insurance reimbursement related to these events.

During the quarter ended June 30, 2015, the Company incurred charges totaling $28.4 million (products, software and inventory reserve of $14.3 million, accounts receivable reserves of $10.7 million, and severance costs of $3.4 million).

Excluding the impact of those charges, and the aforementioned net settlement costs, for the three months ended June 30, 2016 the comparisons to prior year results would have been as follows (see Appendix A, B and C below for more details).

• Operating income of $7.6 million, compared to operating income of $8.9 million for the fourth quarter of FY 2015.
• Net income attributable to common stockholders of $3.5 million, compared to net income of $6.8 million for the fourth quarter of FY 2015.
• Diluted net income attributable to common stockholders per share of $0.09 as compared to diluted net income attributable to common stockholders per share of $0.18 for the fourth quarter of FY 2015.
• EBITDA of $25.2 million, compared to the $26.6 million for the fourth quarter of FY 2015.

For the full year, excluding the impact of the aforementioned net settlement and charges, the comparisons to prior year results would have been as follows. (see Appendix A, B and C below for more details).

• Operating income of $21.0 million compared to $43.7 million for the full fiscal year of 2015.
• Net income attributable to common stockholders of $13.5 million compared to $29.4 million for the full fiscal year of 2015.
• Diluted net income attributable to common stockholders per share would have been $0.35, compared to $0.78 for the full fiscal year of 2015.
• EBITDA of $89.2 million compared to $113.6 million for the full fiscal year of 2015.

Comments from Management                         

“We continue to focus on improving academic outcomes for the students we serve,” said Stuart Udell, Chief Executive Officer.  “At the same time, we selectively invested in strategic growth areas, including expanding our state and school footprint, launching new program offerings, and executing on a strategic acquisition,” added Udell.

Cash, Capital Expenditures and Capital Leases

For the year ended June 30, 2016, the Company had cash and cash equivalents of $214.0 million, an increase of $18.1 million compared to the $195.9 million reported at June 30, 2015.

Capital expenditures for the year ended June 30, 2016 were $62.9 million, an increase of $1.1 million from the prior year’s full fiscal year, and was comprised of:

• $5.0 million for property and equipment,
• $36.3 million for capitalized software development, and
• $21.6 million for capitalized curriculum

Capital leases financed additional purchases of $10.9 million during the year ended June 30, 2016, primarily for student computers.  This compares to capital leases financed during the year ended June 30, 2015 of $14.7 million.

Revenue and Enrollment Data

Revenue

The Company’s revenues are generally in three categories -- Managed Public School Programs (management, technology and academic support services provided to public schools), Institutional (Non-managed Public School Programs – curriculum, technology and other educational services where K12 does not provide primary administrative oversight, and Institutional Software and Services – educational software and services provided to school districts, public schools and other educational institutions), and Private Pay Schools and Other (private schools for which it charges student tuition and makes direct consumer sales) – The following table sets forth the Company’s revenues for the periods indicated:

	Three Months Ended				Change						Year Ended				Change
	June 30,				2016 / 2015						June 30,				2016 / 2015
($ in thousands)		2016		2015	$			%				2016		2015	$			%
Managed Public School Programs (1)	$	183,426	$	201,333	$	(17,907	)		-8.9	%	$	717,059	$	813,677	$	(96,618	)		-11.9	%
Institutional
Non-managed Public School Programs (1)		11,160		8,312		2,848			34.3	%		55,601		39,321		16,280			41.4	%
Institutional Software & Services		16,856		13,101		3,755			28.7	%		52,990		48,770		4,220			8.7	%
Total Institutional		28,016		21,413		6,603			30.8	%		108,591		88,091		20,500			23.3	%
Private Pay Schools and Other		9,877		12,909		(3,032	)		-23.5	%		47,050		46,526		524			1.1	%
Total	$	221,319	$	235,655	$	(14,336	)		-6.1	%	$	872,700	$	948,294	$	(75,594	)		-8.0	%

Enrollment Data

The following table sets forth average enrollment data for the periods indicated.  These figures exclude enrollments from classroom pilot programs and consumer programs.

	Three Months Ended  June 30,		2016 / 2015						Year Ended  June 30,		2016 / 2015
	2016	2015	Change			Change %			2016	2015	Change			Change %
Managed Public School Programs (1,2,3)	98,406	108,913		(10,507	)		-9.6	%	102,935	114,579		(11,644	)	-10.2	%
Non-managed Public School Programs (1)	25,723	19,044		6,679			35.1	%	26,970	20,053		6,917		34.5	%

(1	)	If a school changes from a Managed to a Non-managed program, the corresponding enrollment classification would change in the period in which the contract arrangement changed.
(2	)	Managed Public School Programs include enrollments for which K12 receives no public funding or revenue.
(3	)	Managed Public School Program enrollments are lower than those reported in our historical average student enrollments for Managed Public Schools due to reclassifying certain schools that meet the current definition of Non-managed Programs.

Revenue per Enrollment Data

The following table sets forth revenue per average enrollment data for students in Public School Programs for the periods indicated.

	Three Months Ended				Change						Year Ended				Change
	June 30,				2016 / 2015						June 30,				2016 / 2015
		2016		2015	$			%				2016		2015	$			%
Managed Public School Programs	$	1,864	$	1,849	$	15			0.8	%	$	6,966	$	7,101	$	(135	)		-1.9	%
Non-managed Public School Programs		434		436		(2	)		-0.5	%		2,062		1,961		101			5.2	%

Fiscal Year 2017 Outlook

As previously disclosed, the Company will provide an outlook for fiscal 2017 results as part of the first quarter results report for fiscal year 2017.  This first quarter results is planned to be published at or near the end of October 2016.  No separate guidance communication, or enrollment counts, for fiscal 2017 will be provided before that time.

Special Note on Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We have tried, whenever possible, to identify these forward-looking statements using words such as “anticipates,” “believes,” “estimates,” “continues,” “likely,” “may,” “opportunity,” “potential,” “projects,” “will,” “expects,” “plans,” “intends” and similar expressions to identify forward looking statements, whether in the negative or the affirmative. These statements reflect our current beliefs and are based upon information currently available to us. Accordingly, such forward-looking statements involve known and unknown risks, uncertainties and other factors which could cause our actual results, performance or achievements to differ materially from those expressed in, or implied by, such statements. These risks, uncertainties, factors and contingencies include, but are not limited to: reduction of per pupil funding amounts at the schools we serve; inability to achieve sufficient levels of new enrollments to sustain or to grow our business model; failure of the schools we serve to comply with regulations resulting in a loss of funding or an obligation to repay funds previously received; declines or variations in academic performance outcomes as curriculum and testing standards evolve; harm to our reputation resulting from poor performance or misconduct by operators or us in any school in our industry and in any school in which we operate; legal and regulatory challenges from opponents of virtual public education, public charter schools or for-profit education companies; discrepancies in interpretation of legislation by regulatory agencies that may lead to payment or funding disputes; termination of our contracts with schools due to a loss of authorizing charter; failure to enter into new school contracts or renew existing contracts, in part or in their entirety; unsuccessful integration of mergers, acquisitions and joint ventures; failure to further develop, maintain and enhance our technology, products, services and brands; inadequate recruiting, training and retention of effective teachers and employees; infringement  of our intellectual property; non-compliance with laws and regulations related to operating schools in a foreign jurisdiction; entry of new competitors with superior competitive technologies and lower prices; and other risks and uncertainties associated with our business described in the Company’s filings with the Securities and Exchange Commission. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of August 9, 2016, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

Conference Call

The Company will discuss its fourth quarter and full year fiscal year 2016 financial results during a conference call scheduled for Tuesday, August 9, 2016 at 8:30 a.m. eastern time (ET).

The conference call will be webcast and available at http://public.viavid.com/index.php?id=120283.  Please access the web site at least 15 minutes prior to the start of the call.

To participate in the live call, investors and analysts should dial (877) 407-4019 (domestic) or (201) 689-8337 (international) at 8:15 a.m. (ET). No passcode is required. 

A replay of the call will be available starting on August 9, 2016 at 11:00 a.m. ET through September 9, 2016 at 11:00 a.m. ET, at (877) 660-6853 (domestic) or (201) 612-7415 (international) using conference ID 13640973. A webcast replay of the call will be available at http://public.viavid.com/index.php?id=120283 for 30 days.

Financial Statements

The financial statements set forth below are not the complete set of K12 Inc.’s financial statements for the three months and full fiscal year ended June 30, 2016, and is presented below without footnotes. Readers are encouraged to obtain and carefully review K12 Inc.’s Form 10-K for the year ended June 30, 2016, including all financial statements contained therein and the footnotes thereto, filed with the SEC. The Form 10-K may be retrieved from the SEC's website at www.sec.gov or from K12 Inc.’s website at www.k12.com.

K12 INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
	June 30,
		2016			2015
	(In thousands, except share and per share data)
ASSETS
Current assets
Cash and cash equivalents	$	213,989		$	195,852
Accounts receivable, net of allowance of $10,813 and $9,657 at June 30, 2016 and June 30, 2015, respectively		169,554			188,246
Inventories, net		30,631			29,571
Deferred tax asset		-			8,989
Prepaid expenses		9,634			11,428
Other current assets		22,047			24,877
Total current assets		445,855			458,963
Property and equipment, net		28,447			34,407
Capitalized software, net		70,055			62,683
Capitalized curriculum development costs, net		63,367			58,696
Intangible assets, net		23,102			21,195
Goodwill		87,285			66,160
Deposits and other assets		15,944			6,495
Total assets	$	734,055		$	708,599
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY
Current liabilities
Current portion of capital lease obligations	$	13,210		$	16,635
Accounts payable		25,919			29,819
Accrued liabilities		26,877			12,486
Accrued compensation and benefits		31,042			26,790
Deferred revenue		25,964			24,927
Total current liabilities		123,012			110,657
Capital lease obligations, net of current portion		9,922			13,022
Deferred rent, net of current portion		6,661			7,692
Deferred tax liability		18,458			22,456
Other long term liabilities		9,780			8,233
Total liabilities		167,833			162,060
Commitments and contingencies		-			-
Redeemable noncontrolling interest		7,502			9,601
Equity:
K12 Inc. stockholders’ equity
Common stock, par value $0.0001; 100,000,000 shares authorized; 43,184,068 and 41,837,894 shares issued and 39,681,470 and 38,335,296 shares outstanding at June 30, 2016 and June 30, 2015, respectively		4			4
Additional paid-in capital		675,436			663,461
Accumulated other comprehensive loss		(293	)		(1,065	)
Accumulated deficit		(41,427	)		(50,462	)
Treasury stock of 3,502,598 and 2,195,196 shares at cost at June 30, 2015 and June 30, 2014, respectively		(75,000	)		(75,000	)
Total K12 Inc. stockholders’ equity		558,720			536,938
Total liabilities, redeemable noncontrolling interest and equity	$	734,055		$	708,599

K12 INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
	Three Months Ended						Year Ended
	June 30,						June 30,
		2016			2015			2016			2015
	(In thousands, except share and per share data)
Revenues	$	221,319		$	235,655		$	872,700		$	948,294
Cost and expenses
Instructional costs and services		143,136			166,900			546,510			607,756
Selling, administrative, and other operating expenses		76,606			80,756			302,205			307,730
Product development expenses		1,067			4,317			10,071			14,381
Total costs and expenses		220,809			251,973			858,786			929,867
Income (Loss) from operations		510			(16,318	)		13,914			18,427
Interest expense, net		(21	)		(3,158	)		(617	)		(3,291	)
Income (Loss) before income tax expense and noncontrolling interest		489			(19,476	)		13,297			15,136
Income tax expense		(822	)		6,901			(4,746	)		(5,810	)
Net income (loss)		(333	)		(12,575	)		8,551			9,326
Adjust net (income) loss attributable to noncontrolling interest		(649	)		995			484			1,662
Net income (loss) attributable to common stockholders	$	(982	)	$	(11,580	)	$	9,035		$	10,988
Net income (loss) attributable to common stockholders per share
Basic	$	(0.03	)	$	(0.31	)	$	0.24		$	0.29
Diluted	$	(0.03	)	$	(0.31	)	$	0.23		$	0.29
Weighted average shares used in computing per share   amounts:
Basic		37,768,812			37,318,085			37,613,782			37,330,569
Diluted		37,768,812			37,318,085			38,850,388			37,625,425

K12 INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	Year Ended June 30,
		2016			2015
	(In thousands)
Cash flows from operating activities
Net income	$	8,551		$	9,326
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		68,225			80,282
Stock-based compensation expense		18,616			21,299
Excess tax benefit from stock-based compensation		(6	)		(118	)
Deferred income taxes		(3,818	)		(3,094	)
Provision for doubtful accounts		4,610			9,300
Provision for inventory obsolescence		691			1,406
Provision for student computer shrinkage and obsolescence		(459	)		(430	)
Impairment loss on other assets		200			3,200
Expensed computer peripherals		2,625			3,519
Changes in assets and liabilities:
Accounts receivable		14,463			(1,892	)
Inventories		(1,751	)		2,853
Prepaid expenses		1,860			(4,073	)
Other current assets		2,830			(2,579	)
Deposits and other assets		(8,910	)		(1,440	)
Accounts payable		(3,900	)		(1,192	)
Accrued liabilities		15,497			(7,854	)
Accrued compensation and benefits		4,255			9,389
Deferred revenue		636			621
Deferred rent and other liabilities		(2,437	)		1,562
Net cash provided by operating activities		121,778			120,085
Cash flows from investing activities
Purchases of property and equipment		(5,008	)		(9,928	)
Capitalized software development costs		(36,265	)		(33,755	)
Capitalized curriculum development costs		(21,627	)		(18,057	)
Acquisition of LearnBop Inc.		-			(6,512	)
Acquisition of LTS Education Systems, net of cash acquired		(19,953	)		-
Net cash used in investing activities		(82,853	)		(68,252	)
Cash flows from financing activities
Repayments on capital lease obligations		(17,402	)		(21,939	)
Purchase of treasury stock		-			(26,452	)
Proceeds from exercise of stock options		14			553
Excess tax benefit from stock-based compensation		6			118
Retirement of restricted stock for tax withholding		(3,394	)		(2,672	)
Net cash used in financing activities		(20,776	)		(50,392	)
Effect of foreign exchange rate changes on cash and cash equivalents		(12	)		(1,698	)
Net change in cash and cash equivalents		18,137			(257	)
Cash and cash equivalents, beginning of year		195,852			196,109
Cash and cash equivalents, end of year	$	213,989		$	195,852

Non-GAAP Financial Measures

EBITDA

EBITDA consists of net income plus net interest expense and other, plus income tax expense, minus income tax benefit, plus depreciation and amortization and non-controlling interest. Interest expense primarily consists of interest expense for capital leases. We use EBITDA in addition to income from operations and net income as a measure of operating performance. However, EBITDA is not a recognized measurement under U.S. generally accepted accounting principles, or GAAP, and when analyzing our operating performance, investors should use EBITDA in addition to, and not as an alternative for, net income as determined in accordance with GAAP. Not all companies use identical calculations for EBITDA, therefore our presentation of EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, EBITDA is not intended to be a measure of free cash flow for our management's discretionary use, as it does not consider certain cash requirements such as capital expenditures, tax payments, interest payments, or other working capital.

We believe EBITDA is useful to an investor in evaluating our operating performance because it is widely used to measure a company's operating performance without regard to items such as depreciation and amortization, which can vary depending upon accounting methods and the book value of assets, and to present a meaningful measure of corporate performance exclusive of our capital structure and the method by which assets were acquired. Our management uses EBITDA:

• as an additional measurement of operating performance because it assists us in comparing our performance on a consistent basis; and
• in presentations to the members of our Board of Directors to enable our Board to have the same measurement basis of operating performance as is used by management to compare our current operating results with corresponding prior periods and with the results of other companies in our industry.

The following tables provide a reconciliation of net income (loss) to EBITDA:

	Three Months Ended June 30,						Year Ended June 30,
		2016			2015			2016			2015
	(In thousands)						(In thousands)
Net income (loss) — K12 Inc.	$	(982	)	$	(11,580	)	$	9,035		$	10,988
Interest income (expense), net and other		21			3,158			617			3,291
Income tax expense (benefit)		822			(6,901	)		4,746			5,810
Depreciation and amortization		17,603			31,528			68,225			83,801
Net income (loss) attributable to noncontrolling interest		649			(995	)		(484	)		(1,662	)
EBITDA	$	18,113		$	15,210		$	82,139		$	102,228

Appendix

(A) The following summary table is provided as reference only and compares fourth quarter and full year 2016 results with the same periods in 2015 adjusted for the $7.1 million net settlement incurred in the fourth quarter of 2016, and the $28.4 million in charges incurred in fourth quarter of FY 2015.

	Three Months Ended				Change						Year Ended				Change
	June 30,				2016 / 2015						June 30,				2016 / 2015
($ in millions except per share amounts)		2016		2015	$			%				2016		2015	$			%
Operating Income	$	7.6	$	8.9	$	(1.3	)		-14.6	%	$	21.0	$	43.7	$	(22.7	)		-51.9	%
Net Income attributable to common and Series A stockholders	$	3.5	$	6.8	$	(3.3	)		-48.5	%	$	13.5	$	29.4	$	(15.9	)		-54.1	%
Diluted net income attributable to common stockholders per share, excluding Series A stockholders	$	0.09	$	0.18	$	(0.09	)		-50.0	%	$	0.35	$	0.78	$	(0.43	)		-55.1	%
EBITDA	$	25.2	$	26.6	$	(1.4	)		-5.3	%	$	89.2	$	113.6	$	(24.4	)		-21.5	%

(B) The following tables are provided as reference only and adjust fourth quarter and full year 2016 results for the $7.1 million net settlement incurred in the fourth quarter of FY 2016.

	Three Months Ended June 30, 2016
	Reported Results			Net Settlement Impact			Results Excluding Settlement			Reported Results			Results Excluding Settlement
	(In thousands, except share and per share data)									(% of Revenue)
Revenues	$	221,319		$	-		$	221,319			100.0	%		100.0	%
Cost and expenses
Instructional costs and services		143,136			-			143,136			64.7	%		64.7	%
Selling, administrative, and other operating expenses		76,606			7,080			69,526			34.6	%		31.4	%
Product development expenses		1,067			-			1,067			0.5	%		0.5	%
Total costs and expenses		220,809			7,080			213,729			99.8	%		96.6	%
Income (loss) from operations		510			(7,080	)		7,590			0.2	%		3.4	%
Interest (expense), net and other		(21	)		-			(21	)		(0.0	%)		(0.0	%)
Income (loss) before income tax expense and noncontrolling interest		489			(7,080	)		7,569			0.2	%		3.4	%
Income tax (expense) benefit		(822	)		2,613			(3,435	)		(0.4	%)		(1.6	%)
Net income (loss)		(333	)		(4,467	)		4,134			(0.2	%)		1.9	%
Adjust net income attributable to noncontrolling interest		(649	)		-			(649	)		(0.3	%)		(0.3	%)
Net income (loss) attributable to common stockholders	$	(982	)	$	(4,467	)	$	3,485			(0.4	%)		1.6	%
Net income (loss) attributable to common stockholders per share
Basic	$	(0.03	)	$	(0.12	)	$	0.09
Diluted	$	(0.03	)	$	(0.12	)	$	0.09
Weighted average shares used in computing per share   amounts:
Basic	37,768,812			37,768,812				37,768,812
Diluted	37,768,812			37,768,812				37,768,812

	Year Ended June 30, 2016
	Reported Results			Net Settlement Impact			Results Excluding Settlement			Reported Results			Results Excluding Settlement
	(In thousands, except share and per share data)									(% of Revenue)
Revenues	$	872,700		$	-		$	872,700			100.0	%		100.0	%
Cost and expenses
Instructional costs and services		546,510			-			546,510			62.6	%		62.6	%
Selling, administrative, and other operating expenses		302,205			7,080			295,125			34.6	%		33.8	%
Product development expenses		10,071			-			10,071			1.2	%		1.2	%
Total costs and expenses		858,786			7,080			851,706			98.4	%		97.6	%
Income (loss) from operations		13,914			(7,080	)		20,994			1.6	%		2.4	%
Interest (expense), net and other		(617	)		-			(617	)		(0.1	%)		(0.1	%)
Income (loss) before income tax expense and noncontrolling interest		13,297			(7,080	)		20,377			1.5	%		2.3	%
Income tax (expense) benefit		(4,746	)		2,613			(7,359	)		(0.5	%)		(0.8	%)
Net income (loss)		8,551			(4,467	)		13,018			1.0	%		1.5	%
Adjust net loss attributable to noncontrolling interest		484			-			484			0.1	%		0.1	%
Net income (loss) attributable to common stockholders	$	9,035		$	(4,467	)	$	13,502			1.0	%		1.5	%
Net income (loss) attributable to common stockholders per share
Basic	$	0.24		$	(0.12	)	$	0.36
Diluted	$	0.23		$	(0.11	)	$	0.35
Weighted average shares used in computing per share amounts:
Basic	37,613,782			37,613,782				37,613,782
Diluted	38,850,388			38,850,388				38,850,388

(C)	During the quarter ended June 30, 2015, the Company incurred the following charges totaling $28.4 million of which $0.5 million were cash charges.
	·	Reserves and write downs related to end of life products, software and inventory of $14.3 million.
	·	Incremental accounts receivable reserves of $10.7 million, primarily related to closed schools, a funding deficit in one state and the interest on a receivable.
	·	Severance costs of $3.4 million.
	The following tables are provided as reference only and adjust fourth quarter and full year 2015 results for the removal of $28.4 million charges incurred in the fourth quarter of FY 2015.

The following tables are provided as reference only and adjust fourth quarter and full year 2015 results for the removal of $28.4 million charges incurred in the fourth quarter of FY 2015.

	Three Months Ended June 30, 2015
	Reported Results			Specific Charges			Results Excluding Charges			Reported Results			Results Excluding Charges
	(In thousands, except share and per share data)									(% of Revenue)
Revenues	$	235,655		$	-		$	235,655			100.0	%		100.0	%
Cost and expenses
Instructional costs and services		166,900			9,565			157,335			70.8	%		66.8	%
Selling, administrative, and other operating expenses		80,756			15,670			65,086			34.3	%		27.6	%
Product development expenses		4,317			-			4,317			1.8	%		1.8	%
Total costs and expenses		251,973			25,235			226,738			106.9	%		96.2	%
Income (loss) from operations		(16,318	)		(25,235	)		8,917			(6.9	%)		3.8	%
Realized gain on sale of assets		-			-			-			0.0	%		0.0	%
Interest (expense), net and other		(3,158	)		(3,200	)		42			(1.3	%)		0.0	%
Income (loss) before income tax expense and noncontrolling interest		(19,476	)		(28,435	)		8,959			(8.3	%)		3.8	%
Income tax (expense) benefit		6,901			10,006			(3,105	)		2.9	%		(1.3	%)
Net income (loss)		(12,575	)		(18,429	)		5,854			(5.3	%)		2.5	%
Adjust net loss attributable to noncontrolling interest		995			-			995			0.4	%		0.4	%
Net income (loss) attributable to common stockholders	$	(11,580	)	$	(18,429	)	$	6,849			(4.9	%)		2.9	%
Net income (loss) attributable to common stockholders per share
Basic	$	(0.31	)	$	(0.49	)	$	0.18
Diluted	$	(0.31	)	$	(0.49	)	$	0.18
Weighted average shares used in computing per share amounts:
Basic	37,318,085			37,318,085				37,318,085
Diluted	37,318,085			37,318,085				37,318,085

	Year Ended June 30, 2015
	Reported Results			Specific Charges			Results Excluding Charges			Reported Results			Results Excluding Charges
	(In thousands, except share and per share data)									(% of Revenue)
Revenues	$	948,294		$	-		$	948,294			100.0	%		100.0	%
Cost and expenses
Instructional costs and services		607,756			9,565			598,191			64.1	%		63.1	%
Selling, administrative, and other operating expenses		307,730			15,670			292,060			32.5	%		30.8	%
Product development expenses		14,381			-			14,381			1.5	%		1.5	%
Total costs and expenses		929,867			25,235			904,632			98.1	%		95.4	%
Income (loss) from operations		18,427			(25,235	)		43,662			1.9	%		4.6	%
Realized gain on sale of assets		-			-			-			0.0	%		0.0	%
Interest (expense), net and other		(3,291	)		(3,200	)		(91	)		(0.3	%)		(0.0	%)
Income (loss) before income tax expense and noncontrolling interest		15,136			(28,435	)		43,571			1.6	%		4.6	%
Income tax (expense) benefit		(5,810	)		10,006			(15,816	)		(0.6	%)		(1.7	%)
Net income (loss)		9,326			(18,429	)		27,755			1.0	%		2.9	%
Adjust net loss attributable to noncontrolling interest		1,662			-			1,662			0.2	%		0.2	%
Net income (loss) attributable to common stockholders	$	10,988		$	(18,429	)	$	29,417			1.2	%		3.1	%
Net income (loss) attributable to common stockholders per share
Basic	$	0.29		$	(0.49	)	$	0.79
Diluted	$	0.29		$	(0.49	)	$	0.78
Weighted average shares used in computing per share   amounts:
Basic	37,330,569			37,330,569				37,330,569
Diluted	37,625,425			37,625,425				37,625,425

About K12 Inc.

K12 Inc. (NYSE:LRN) is driving innovation and advancing the quality of education by delivering state-of-the-art, digital learning platforms and technology to students and school districts across the globe. K12’s award winning curriculum serves over 2,000 schools and school districts and has delivered more than four million courses over the past decade. K12 is a company of educators with the nation's largest network of K-12 online school teachers, providing instruction, academic services, and learning solutions to public schools and districts, traditional classrooms, blended school programs, and directly to families. The K12 program is offered through K12 partner public schools in approximately two-thirds of the states and the District of Columbia, and through private schools serving students in all 50 states and more than 100 countries.  More information can be found at K12.com.

K12 Inc.
Investor and Press Contact:
Mike Kraft, 571-353-7778
VP Finance
mkraft@k12.com