Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Mar. 31, 2020 | Apr. 17, 2020 | |
Cover | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2020 | |
Entity File Number | 001-33883 | |
Entity Registrant Name | K12 Inc | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 95-4774688 | |
Entity Address, Address Line One | 2300 Corporate Park Drive | |
Entity Address, City or Town | Herndon | |
Entity Address, State or Province | VA | |
Entity Address, Postal Zip Code | 20171 | |
City Area Code | 703 | |
Local Phone Number | 483-7000 | |
Title of 12(b) Security | Common Stock, $0.0001 par value | |
Trading Symbol | LRN | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 40,991,727 | |
Current Fiscal Year End Date | --06-30 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001157408 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2020 | Jun. 30, 2019 |
Current assets | ||
Cash and cash equivalents | $ 150,034 | $ 283,121 |
Accounts receivable, net of allowance of $4,981 and $11,766 at March 31, 2020 and June 30, 2019, respectively | 284,326 | 191,639 |
Inventories, net | 19,579 | 29,946 |
Prepaid expenses | 18,945 | 12,643 |
Other current assets | 13,814 | 12,307 |
Total current assets | 486,698 | 529,656 |
Operating lease right-of-use assets, net | 106,929 | 0 |
Property and equipment, net | 44,174 | 31,980 |
Capitalized software, net | 48,304 | 51,165 |
Capitalized curriculum development costs, net | 51,717 | 53,297 |
Intangible assets, net | 43,893 | 14,981 |
Goodwill | 197,803 | 90,197 |
Deposits and other assets | 56,487 | 48,330 |
Total assets | 1,036,005 | 819,606 |
Current liabilities | ||
Accounts payable | 25,235 | 50,488 |
Accrued liabilities | 25,953 | 20,685 |
Accrued compensation and benefits | 28,384 | 41,998 |
Deferred revenue | 39,618 | 22,828 |
Credit facility | 100,000 | |
Current portion of finance lease liability | 17,988 | |
Current portion of finance lease liability | 19,588 | |
Current portion of operating lease liability | 20,441 | |
Total current liabilities | 257,619 | 155,587 |
Long-term finance lease liability | 5,265 | |
Long-term finance lease liability | 5,060 | |
Long-term operating lease liability | 100,803 | |
Deferred tax liability | 1,252 | 16,670 |
Other long-term liabilities | 6,438 | 8,924 |
Total liabilities | 371,377 | 186,241 |
Commitments and contingencies | ||
Stockholders' equity | ||
Common stock, par value $0.0001; 100,000,000 shares authorized; 46,274,270 and 45,575,236 shares issued; and 40,939,527 and 40,240,493 shares outstanding at March 31, 2020 and June 30, 2019, respectively | 4 | 4 |
Additional paid-in capital | 724,992 | 713,436 |
Accumulated other comprehensive income (loss) | 49 | (40) |
Retained earnings (accumulated deficit) | 42,065 | 22,447 |
Treasury stock of 5,334,743 shares at cost at March 31, 2020 and June 30, 2019 | (102,482) | (102,482) |
Total stockholders' equity | 664,628 | 633,365 |
Total liabilities and stockholders' equity | $ 1,036,005 | $ 819,606 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Jun. 30, 2019 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowance (in dollars) | $ 4,981 | $ 11,766 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 46,274,270 | 45,575,236 |
Common stock, shares outstanding | 40,939,527 | 40,240,493 |
Treasury stock, shares | 5,334,743 | 5,334,743 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Revenues | $ 257,154 | $ 253,252 | $ 771,834 | $ 759,438 |
Instructional costs and services | 178,968 | 168,260 | 515,796 | 487,574 |
Gross margin | 78,186 | 84,992 | 256,038 | 271,864 |
Selling, general, and administrative expenses | 63,687 | 61,725 | 230,622 | 229,059 |
Income from operations | 14,499 | 23,267 | 25,416 | 42,805 |
Interest income (expense), net | (76) | 754 | 1,275 | 1,547 |
Other income (expense), net | (1,093) | 556 | (736) | (40) |
Income before income taxes and loss from equity method investments | 13,330 | 24,577 | 25,955 | 44,312 |
Income tax expense | (4,419) | (5,842) | (5,993) | (9,858) |
Loss from equity method investments | (157) | (273) | (344) | (562) |
Net income attributable to common stockholders | $ 8,754 | $ 18,462 | $ 19,618 | $ 33,892 |
Net income attributable to common stockholders per share: | ||||
Basic (in dollars per share) | $ 0.22 | $ 0.47 | $ 0.50 | $ 0.87 |
Diluted (in dollars per share) | $ 0.22 | $ 0.44 | $ 0.48 | $ 0.84 |
Weighted average shares used in computing per share amounts: | ||||
Basic (in shares) | 39,539,791 | 39,008,990 | 39,426,121 | 38,753,236 |
Diluted (in shares) | 39,938,898 | 41,753,323 | 40,461,290 | 40,548,959 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 8,754 | $ 18,462 | $ 19,618 | $ 33,892 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustment | 237 | (122) | 89 | 71 |
Comprehensive income attributable to common stockholders | $ 8,991 | $ 18,340 | $ 19,707 | $ 33,963 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Retained Earnings (Accumulated Deficit) | Treasury Stock | Total |
Balance at Jun. 30, 2018 | $ 4 | $ 703,351 | $ (252) | $ (13,432) | $ (102,482) | $ 587,189 |
Balance (in shares) at Jun. 30, 2018 | 44,902,567 | (5,334,743) | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | (8,282) | (8,282) | ||||
Foreign currency translation adjustment | 72 | 72 | ||||
Stock-based compensation expense | 4,109 | 4,109 | ||||
Exercise of stock options | 10 | 10 | ||||
Exercise of stock options (in shares) | 687 | |||||
Vesting of performance share units, net of tax withholding (in shares) | 258,263 | |||||
Issuance of restricted stock awards (in shares) | 722,809 | |||||
Forfeiture of restricted stock awards (in shares) | (122,242) | |||||
Repurchase of restricted stock for tax withholding | (6,072) | (6,072) | ||||
Repurchase of restricted stock for tax withholding (in shares) | (188,804) | |||||
Balance at Sep. 30, 2018 | $ 4 | 701,398 | (180) | (23,044) | $ (102,482) | 575,696 |
Balance (in shares) at Sep. 30, 2018 | 45,573,280 | (5,334,743) | ||||
Balance at Jun. 30, 2018 | $ 4 | 703,351 | (252) | (13,432) | $ (102,482) | 587,189 |
Balance (in shares) at Jun. 30, 2018 | 44,902,567 | (5,334,743) | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | 33,892 | |||||
Balance at Mar. 31, 2019 | $ 4 | 708,269 | (181) | 19,130 | $ (102,482) | 624,740 |
Balance (in shares) at Mar. 31, 2019 | 45,542,026 | (5,334,743) | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Adjustment related to new accounting guidance | (1,330) | (1,330) | ||||
Balance at Sep. 30, 2018 | $ 4 | 701,398 | (180) | (23,044) | $ (102,482) | 575,696 |
Balance (in shares) at Sep. 30, 2018 | 45,573,280 | (5,334,743) | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | 23,712 | 23,712 | ||||
Foreign currency translation adjustment | 121 | 121 | ||||
Stock-based compensation expense | 4,235 | 4,235 | ||||
Exercise of stock options | 1,025 | 1,025 | ||||
Exercise of stock options (in shares) | 51,050 | |||||
Issuance of restricted stock awards (in shares) | 26,000 | |||||
Forfeiture of restricted stock awards (in shares) | (54,054) | |||||
Repurchase of restricted stock for tax withholding | (833) | (833) | ||||
Repurchase of restricted stock for tax withholding (in shares) | (45,960) | |||||
Balance at Dec. 31, 2018 | $ 4 | 705,825 | (59) | 668 | $ (102,482) | 603,956 |
Balance (in shares) at Dec. 31, 2018 | 45,550,316 | (5,334,743) | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | 18,462 | 18,462 | ||||
Foreign currency translation adjustment | (122) | (122) | ||||
Stock-based compensation expense | 4,047 | 4,047 | ||||
Exercise of stock options | 1,148 | 1,148 | ||||
Exercise of stock options (in shares) | 54,753 | |||||
Issuance of restricted stock awards (in shares) | 73,524 | |||||
Forfeiture of restricted stock awards (in shares) | (51,435) | |||||
Repurchase of restricted stock for tax withholding | (2,751) | (2,751) | ||||
Repurchase of restricted stock for tax withholding (in shares) | (85,132) | |||||
Balance at Mar. 31, 2019 | $ 4 | 708,269 | (181) | 19,130 | $ (102,482) | 624,740 |
Balance (in shares) at Mar. 31, 2019 | 45,542,026 | (5,334,743) | ||||
Balance at Jun. 30, 2019 | $ 4 | 713,436 | (40) | 22,447 | $ (102,482) | 633,365 |
Balance (in shares) at Jun. 30, 2019 | 45,575,236 | (5,334,743) | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | (9,730) | (9,730) | ||||
Foreign currency translation adjustment | 139 | 139 | ||||
Stock-based compensation expense | 5,594 | 5,594 | ||||
Exercise of stock options | 42 | 42 | ||||
Exercise of stock options (in shares) | 2,500 | |||||
Issuance of restricted stock awards (in shares) | 918,702 | |||||
Forfeiture of restricted stock awards (in shares) | (34,090) | |||||
Repurchase of restricted stock for tax withholding | (4,698) | (4,698) | ||||
Repurchase of restricted stock for tax withholding (in shares) | (171,778) | |||||
Balance at Sep. 30, 2019 | $ 4 | 714,374 | 99 | 12,717 | $ (102,482) | 624,712 |
Balance (in shares) at Sep. 30, 2019 | 46,290,570 | (5,334,743) | ||||
Balance at Jun. 30, 2019 | $ 4 | 713,436 | (40) | 22,447 | $ (102,482) | 633,365 |
Balance (in shares) at Jun. 30, 2019 | 45,575,236 | (5,334,743) | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | 19,618 | |||||
Balance at Mar. 31, 2020 | $ 4 | 724,992 | 49 | 42,065 | $ (102,482) | 664,628 |
Balance (in shares) at Mar. 31, 2020 | 46,274,270 | (5,334,743) | ||||
Balance at Sep. 30, 2019 | $ 4 | 714,374 | 99 | 12,717 | $ (102,482) | 624,712 |
Balance (in shares) at Sep. 30, 2019 | 46,290,570 | (5,334,743) | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | 20,594 | 20,594 | ||||
Foreign currency translation adjustment | (287) | (287) | ||||
Stock-based compensation expense | 6,256 | 6,256 | ||||
Exercise of stock options | 6 | 6 | ||||
Exercise of stock options (in shares) | 500 | |||||
Issuance of restricted stock awards (in shares) | 18,000 | |||||
Forfeiture of restricted stock awards (in shares) | (18,019) | |||||
Repurchase of restricted stock for tax withholding | (185) | (185) | ||||
Repurchase of restricted stock for tax withholding (in shares) | (8,878) | |||||
Balance at Dec. 31, 2019 | $ 4 | 720,451 | (188) | 33,311 | $ (102,482) | 651,096 |
Balance (in shares) at Dec. 31, 2019 | 46,282,173 | (5,334,743) | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | 8,754 | 8,754 | ||||
Foreign currency translation adjustment | 237 | 237 | ||||
Stock-based compensation expense | 6,162 | 6,162 | ||||
Issuance of restricted stock awards (in shares) | 108,959 | |||||
Forfeiture of restricted stock awards (in shares) | (23,900) | |||||
Repurchase of restricted stock for tax withholding | (1,621) | (1,621) | ||||
Repurchase of restricted stock for tax withholding (in shares) | (92,962) | |||||
Balance at Mar. 31, 2020 | $ 4 | $ 724,992 | $ 49 | $ 42,065 | $ (102,482) | $ 664,628 |
Balance (in shares) at Mar. 31, 2020 | 46,274,270 | (5,334,743) |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities | ||
Net income | $ 19,618 | $ 33,892 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization expense | 52,790 | 53,259 |
Stock-based compensation expense | 17,785 | 12,114 |
Deferred income taxes | 1,151 | 5,327 |
(Recovery of) provision for doubtful accounts | (88) | 2,854 |
Other | 11,605 | 5,291 |
Changes in assets and liabilities: | ||
Accounts receivable | (76,187) | (58,726) |
Inventories, prepaid expenses, deposits and other current and long-term assets | 240 | 4,620 |
Accounts payable | (20,066) | (3,134) |
Accrued liabilities | 6,260 | 5,211 |
Accrued compensation and benefits | (15,543) | (5,501) |
Operating lease liability | (8,151) | |
Deferred revenue and other liabilities | 13,611 | 18,089 |
Net cash provided by operating activities | 3,025 | 73,296 |
Cash flows from investing activities | ||
Purchase of property and equipment | (1,493) | (2,397) |
Capitalized software development costs | (18,825) | (20,580) |
Capitalized curriculum development costs | (15,463) | (13,746) |
Sale of long-lived assets | 389 | |
Acquisitions, net | (4,277) | (11,652) |
Net cash used in investing activities | (208,053) | (47,986) |
Cash flows from financing activities | ||
Repayments on finance lease obligations | (21,603) | (13,898) |
Borrowing from credit facility | 105,000 | |
Repayments on credit facility | (5,000) | |
Payments of contingent consideration | (1,027) | |
Proceeds from exercise of stock options | 48 | 2,183 |
Repurchase of restricted stock for income tax withholding | (6,504) | (9,656) |
Net cash provided by (used in) financing activities | 71,941 | (22,398) |
Net change in cash, cash equivalents and restricted cash | (133,087) | 2,912 |
Cash, cash equivalents and restricted cash, beginning of period | 284,621 | 233,113 |
Cash, cash equivalents and restricted cash, end of period | 151,534 | $ 236,025 |
Galvanize Inc | ||
Cash flows from investing activities | ||
Acquisitions, net | $ (167,995) |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Mar. 31, 2019 |
Reconciliation of cash, cash equivalents and restricted cash to balance sheet as of December 31st: | ||
Cash and cash equivalents | $ 150,034 | $ 234,025 |
Total cash, cash equivalents and restricted cash | 151,534 | 236,025 |
Other current assets | ||
Reconciliation of cash, cash equivalents and restricted cash to balance sheet as of December 31st: | ||
Restricted cash | 500 | |
Deposits and other assets | ||
Reconciliation of cash, cash equivalents and restricted cash to balance sheet as of December 31st: | ||
Restricted cash | $ 1,000 | $ 2,000 |
Description of the Business
Description of the Business | 9 Months Ended |
Mar. 31, 2020 | |
Description of the Business | |
Description of the Business | 1. Description of the Business K12 Inc., together with its subsidiaries (“K12” or the “Company”), is a technology-based education company. The Company offers proprietary and third party curriculum, software systems and educational services designed to facilitate individualized learning for students primarily in kindergarten through 12th grade, or K-12. The Company’s learning systems combine curriculum, instruction and related support services to create an individualized learning approach. The Company’s learning systems are well-suited for virtual and blended public schools, school districts, charter schools, and private schools that utilize varying degrees of online and traditional classroom instruction, and other educational applications. These products and services are provided through three lines of business: ● Managed Public School Programs – programs which offer an integrated package of systems, services, products, and professional expertise that K12 administers to support an online or blended public school, including: administrative support (e.g., budget proposals, financial reporting, student data reporting, and staff recruitment), information technology and provisioning, academic support services, curriculum, learning systems, and instructional services; ● Institutional – Non-managed Public School Programs – programs which provide instruction, curriculum, supplemental courses, marketing, enrollment and other educational services where K12 does not provide primary administrative support services, 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 the Company charges student tuition and makes direct consumer sales; and Galvanize, Inc. (“Galvanize”), which is a leader in developing talent and capabilities for individuals and corporations in technical fields such as software engineering and data science. The Company’s acquisition of Galvanize is discussed in more detail in Note 11, “Acquisitions and Investments.” The Company works closely as a partner with public schools, school districts, charter schools, and private schools, enabling them to offer their students an array of solutions, including full-time virtual programs, semester courses and supplemental solutions. In addition to curriculum, systems and programs, the Company provides teacher training, teaching services, and other academic and technology support services. |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Mar. 31, 2020 | |
Basis of Presentation | |
Basis of Presentation | 2. Basis of Presentation The accompanying condensed consolidated balance sheet as of March 31, 2020, the condensed consolidated statements of operations and comprehensive income for the three and nine months ended March 31, 2020 and 2019, the condensed consolidated statements of cash flows for the nine months ended March 31, 2020 and 2019, and the condensed consolidated statements of stockholders’ equity for the three and nine months ended March 31, 2020 and 2019 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the annual financial statements, and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position and results of operations for the periods presented. The results for the three and nine months ended March 31, 2020 are not necessarily indicative of the results to be expected for the year ending June 30, 2020, for any other interim period or for any other future fiscal year. The condensed consolidated balance sheet as of June 30, 2019 has been derived from the audited consolidated financial statements at that date. The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, the Company does not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, these statements include all adjustments (consisting of normal recurring adjustments) considered necessary to present a fair statement of the Company’s condensed consolidated results of operations, financial position and cash flows. Preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and footnotes. Actual results could differ from those estimates. This quarterly report on Form 10-Q should be read in conjunction with the financial statements and the notes thereto included in the Company’s latest annual report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on August 7, 2019, which contains the Company’s audited financial statements for the fiscal year ended June 30, 2019. The Company operates in one operating and reportable |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Mar. 31, 2020 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 3. Summary of Significant Accounting Policies Recent Accounting Pronouncements Accounting Standards Adopted In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”) (“ASC 842”) (“ASC 840”) The most significant impact to the Company was its accounting for operating leases, which under ASC 840, were not recorded on the balance sheet. The Company reviewed its rent expense to ensure all leases were captured. The Company concluded that these leases were operating leases under ASC 842. Additionally, the Company’s capital leases under ASC 840 were reviewed and determined to be finance leases under ASC 842. The Company adopted this standard during the first quarter of fiscal year 2020 using the modified retrospective approach. Under this method, the Company applied ASC 842 to existing leases that had commenced as of July 1, 2019. The comparative information for prior periods has not been restated and continues to be reported under ASC 840. The Company has provided the required disclosures under ASC 840 for the comparative periods. The Company elected to apply the package of practical expedients that was available upon adoption of ASC 842 to not reassess (1) whether any expired or existing contracts contain a lease, (2) the lease classification of any expired or existing lease, and (3) the initial direct costs for existing leases. The adoption of ASC 842 resulted in the recognition of a new lease liability for its operating leases of $22.7 million and a right-of-use asset of $17.7 million (net of existing deferred rent and lease impairment liabilities) on July 1, 2019. In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) (“ASU 2018-15”). Accounting Standards Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”) the Company in the first quarter of fiscal year 2021, and early adoption is permitted. The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements and will evaluate whether to increase the allowance for doubtful accounts at the time of adoption. Contracts with Customers Revenues are principally earned from contractual agreements to provide online curriculum, books, materials, computers and management services to virtual and blended schools, traditional public schools, school districts, and private schools through its three lines of business; Managed Public School Programs, Institutional, and Private Pay Schools and Other. Under ASC 606, revenue is recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services using the following steps: ● identify the contract, or contracts, with a customer; ● identify the performance obligations in the contract; ● determine the transaction price; ● allocate the transaction price to the performance obligations in the contract; and ● recognize revenue when, or as, the Company satisfies a performance obligation. Revenue Recognition Managed Public School Programs The Company provides an integrated package of systems, services, products, and professional expertise that we administer to support an online or blended public school. Contractual agreements generally span multiple years with performance obligations being isolated to annual periods. Customers for these programs can obtain the administrative support, information technology, academic support services, online curriculum, learning systems platforms and instructional services under the terms of a negotiated service agreement. The schools receive funding on a per student basis from the state in which the public school or school district is located. Shipments of materials for schools that occur in the fourth fiscal quarter and for the upcoming school year are recorded in deferred revenue. The Company generates revenues under contracts with virtual and blended public schools and include the following components, where required: ● providing each of a school’s students with access to the Company’s online school and lessons; ● offline learning kits, which include books and materials to supplement the online lessons; ● the use of a personal computer and associated reclamation services; ● internet access and technology support services; ● instruction by a state-certified teacher; and ● management and technology services necessary to support a virtual public or blended school. In certain contracts, revenues are determined directly by per enrollment funding. To determine the pro rata amount of revenue to recognize in a fiscal quarter, the Company estimates the total funds each school will receive in a particular school year. Total funds for a school are primarily a function of the number of students enrolled in the school and established per enrollment funding levels, which are generally published on an annual basis by the state or school district. The Company reviews its estimates of funding periodically, and revises as necessary, amortizing any adjustments to earned revenues over the remaining portion of the fiscal year. Actual school funding may vary from these estimates and the impact of these differences could impact the Company’s results of operations. Since the end of the school year coincides with the end of the Company’s fiscal year, annual revenues are generally based on actual school funding and actual costs incurred (including costs for the Company’s services to the schools plus other costs the schools may incur) in the calculation of school operating losses. The Company’s schools’ reported results are subject to annual school district financial audits, which incorporate enrollment counts, funding and other routine financial audit considerations. The results of these audits are incorporated into the Company’s monthly funding estimates for the three and nine months ended March 31, 2020 and 2019. Each state and/or school district has variations in the school funding formulas and methodologies that it uses to estimate funding for revenue recognition at its respective schools. As the Company estimates funding for each school, it takes into account the state definition for count dates on which reported enrollment numbers will be used for per pupil funding. The parameters the Company considers in estimating funding for revenue recognition purposes include school district count definitions, withdrawal rates, average daily attendance, special needs enrollment, student demographics, academic progress and historical completion, student location, funding caps and other state specified categorical program funding. Under the contracts where the Company provides services to schools, the Company has generally agreed to absorb any operating losses of the schools in a given school year. These school operating losses represent the excess of costs incurred over revenues earned by the virtual or blended public school as reflected on its respective financial statements, including Company charges to the schools. To the extent a school does not receive funding for each student enrolled in the school, the school would still incur costs associated with serving the unfunded enrollment. If losses due to unfunded enrollments result in a net operating loss for the year that loss is reflected as a reduction in the revenues and net receivables that the Company collects from the school. A school net operating loss in one year does not necessarily mean the Company anticipates losing money on the entire contract with the school. However, a school operating loss may reduce the Company’s ability to collect its management fees in full and recognized revenues are reduced accordingly to reflect the expected cash collections from such schools. The Company amortizes the estimated school operating loss against revenues based upon the percentage of actual revenues in the period to total estimated revenues for the fiscal year. Management periodically reviews its estimates of full-year school revenues and operating expenses, and amortizes the net impact of any changes to these estimates over the remainder of the fiscal year. Actual school operating losses may vary from these estimates or revisions, and the impact of these differences could have a material impact on results of operations. For the three months ended March 31, 2020 and 2019, the Company’s revenues included a reduction for these school operating losses of $11.0 million and $9.2 million, respectively, and $38.5 million and $43.2 million for the nine months ended March 31, 2020 and 2019, respectively. The Company has certain contracts where it is responsible for substantially all of the expenses incurred by the school. For these contracts, the Company records both revenue and expenses incurred by the schools. Amounts recorded as revenues for the three months ended March 31, 2020 and 2019 were $78.3 million and $85.8 million, respectively, and for the nine months ended March 31, 2020 and 2019 were $247.7 million and $259.9 million, respectively. Institutional The products and services delivered to the Company’s Institutional customers include curriculum and technology for full-time virtual and blended programs, as well as instruction, curriculum and associated materials, supplemental courses, marketing, enrollment and other educational services. Each of these contracts are considered to be one performance obligation under ASC 606. The Company provides certain online curriculum and services to schools and school districts under subscription agreements. Revenues from the licensing of curriculum under subscription arrangements are recognized on a ratable basis over the subscription period. Revenues from professional consulting, training and support services are deferred and recognized ratably over the service period. Private Pay Schools and Other Private Pay Schools and Other revenues are generated from individual customers who prepay and have access for one period. Each of these contracts are considered to be one performance obligation under ASC 606. The Company recognizes these revenues pro rata over the maximum term of the customer contract. Disaggregated Revenues The following table presents the Company’s revenues disaggregated based on its three lines of business for the three and nine months ended March 31, 2020 and 2019: Three Months Ended March 31, Nine Months Ended March 31, 2020 2019 2020 2019 (In thousands) Managed Public School Programs $ 228,335 $ 222,645 $ 685,446 $ 665,981 Institutional Non-managed Public School Programs 8,173 12,776 26,792 37,398 Institutional Software & Services 8,580 8,530 30,246 29,515 Total Institutional 16,753 21,306 57,038 66,913 Private Pay Schools and Other 12,066 9,301 29,350 26,544 Total Revenues $ 257,154 $ 253,252 $ 771,834 $ 759,438 Concentration of Customers During the three and nine months ended March 31, 2020, the Company had no contracts that represented greater than 10% of total revenues. For the three and nine months ended March 31, 2019, the Company had one contract that represented greater than 10% of total revenues. Contract Balances The opening and closing balances of the Company’s accounts receivable, unbilled receivables and deferred revenue are as follows: March 31, June 30, 2020 2019 (In thousands) Accounts receivable $ 284,326 $ 191,639 Unbilled receivables (included in accounts receivable) 17,323 16,189 Deferred revenue 39,618 22,828 Deferred revenue, long-term (included in other long-term liabilities) 2,155 — The difference between the opening and closing balance of the accounts receivable and unbilled receivables relates to the timing of the Company’s billing in relation to month end and contractual agreements. The difference between the opening and closing balance of the deferred revenue relates to the timing difference between billings to customers and the service periods under the contract. Typically, each of these balances are at their highest during the first quarter of the fiscal year and lowest at the end of the fiscal year. The amount of revenue recognized during the three months ended March 31, 2020 and 2019 that was included in the previous January 1 st $24.9 million, respectively. The amount of revenue recognized during the nine months ended March 31, 2020 and 2019 that was included in the previous July 1 st During the three months ended March 31, 2020 and 2019, the Company recorded revenues of $1.5 million and $3.2 million, respectively, and $4.3 million and $3.7 million, respectively, during the nine months ended March 31, 2020 and 2019, related to performance obligations satisfied in prior periods. Performance Obligations one Significant Judgments The Company has determined that the time elapsed method as described under ASC 606 is the most appropriate measure of progress towards the satisfaction of the performance obligation. The Company delivers the integrated products and services package related to its Managed Public School Programs largely over the course of the Company’s fiscal year. This package includes enrollment, marketing, teacher training, etc. in addition to the core curriculum and instruction. All of these activities are necessary and contribute to the overall education of its students, which occurs evenly throughout the year. Accordingly, the Company will recognize revenue on a straight-line basis. Sales Taxes Consolidation The condensed consolidated financial statements include the accounts of the Company, the wholly-owned and affiliated companies that the Company owns, directly or indirectly, and all controlled subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. Inventories Inventories consist primarily of textbooks and curriculum materials, a majority of which are supplied to virtual public schools and blended public schools, and utilized directly by students. Inventories represent items that are purchased and held for sale and are recorded at the lower of cost (first-in, first-out method) or net realizable value. The Company classifies its inventory as current or long-term based on the holding period. As of March 31, 2020 and June 30, 2019, $3.8 million and $4.1 million, respectively, of inventory, net of reserves, was deemed long-term and included in deposits and other assets on the condensed consolidated balance sheets. The provision for excess and obsolete inventory is established based upon the evaluation of the quantity on hand relative to demand. The excess and obsolete inventory reserve was $4.7 million and $4.1 million at March 31, 2020 and June 30, 2019, respectively. Other Current Assets Other current assets consist primarily of textbooks, curriculum materials and other supplies which are expected to be returned upon the completion of the school year. Materials not returned are expensed as part of instructional costs and services. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense is calculated using the straight-line method over the estimated useful life of the asset (or the lesser of the term of the lease and the estimated useful life of the asset under the finance lease). Amortization of assets capitalized under finance lease arrangements is included in depreciation expense. Leasehold improvements are amortized over the lesser of the lease term or the estimated useful life of the asset. The determination of the lease term is discussed below under “Leases.” Property and equipment are depreciated over the following useful lives: Useful Life Student and state testing computers 3 - 5 years Computer hardware 3 years Computer software 3 - 5 years Web site development 3 years Office equipment 5 years Furniture and fixtures 7 years Leasehold improvements 3 - 12 years The Company makes an estimate of unreturned student computers based on an analysis of recent trends of returns. The Company recorded accelerated depreciation of $0.5 million and $0.5 million for the three months ended March 31, 2020 and 2019, respectively, and $1.8 million and $1.6 million for the nine months ended March 31, 2020 and 2019, respectively, related to unreturned student computers. Depreciation expense for property and equipment, including accelerated depreciation, for the three months ended March 31, 2020 and 2019 was $5.7 million and $4.9 million, respectively, and $16.2 million and $15.2 million for the nine months ended March 31, 2020 and 2019, respectively. The Company fully expenses computer peripheral equipment (e.g. keyboards, mouses) upon purchase as recovery has been determined to be uneconomical. These expenses totaled $0.7 million and $0.7 million for the three months ended March 31, 2020 and 2019, respectively, and $3.9 million and $4.0 million for the nine months ended March 31, 2020 and 2019, respectively, and are recorded as instructional costs and services. Capitalized Software Costs The Company develops software for internal use. Software development costs incurred during the application development stage are capitalized in accordance with ASC 350, Intangibles – Goodwill and Other (“ASC 350”) Capitalized software additions totaled $18.8 million and $20.6 million for the nine months ended March 31, 2020 and 2019, respectively. Amortization expense for the three months ended March 31, 2020 and 2019 was $6.4 million and $7.0 million, respectively, and $20.0 million and $22.4 million for the nine months ended March 31, 2020 and 2019, respectively. Capitalized Curriculum Development Costs The Company internally develops curriculum, which is primarily provided as online content and accessed via the Internet. The Company also creates textbooks and other materials that are complementary to online content. The Company capitalizes curriculum development costs incurred during the application development stage in accordance with ASC 350. The Company capitalizes curriculum development costs during the design and deployment phases of the project. As a result, a significant portion of the Company’s courseware development costs qualify for capitalization due to the concentration of its development efforts on the content of the courseware. Capitalization ends when a course is available for general release to its customers, at which time amortization of the capitalized costs begins. The period of time over which these development costs are amortized is generally five years. Total capitalized curriculum development additions were $15.5 million and $13.7 million for the nine months ended March 31, 2020 and 2019, respectively. These amounts are recorded on the accompanying condensed consolidated balance sheets net of amortization charges. Amortization is recorded in instructional costs and services on the accompanying condensed consolidated statements of operations. Amortization expense for the three months ended March 31, 2020 and 2019 was $4.5 million and $4.5 million, respectively, and $13.3 million and $13.5 million for the nine months ended March 31, 2020 and 2019, respectively. Leases The Company’s principal leasing activities include student computers and peripherals, classified as finance leases, and facilities, classified as operating leases. Under ASC 842, for a lessee, leases are classified as operating leases unless they meet any of the criteria below to be classified as a finance lease: ● the lease transfers ownership of the asset at the end of the lease; ● the lease grants an option to purchase the asset which the lessee is expected to exercise; ● the lease term reflects a major part of the asset’s economic life; ● the present value of the lease payments equals or exceeds the fair value of the asset; or ● the asset is specialized with no alternative use to the lessor at the end of the term. Finance Leases The Company enters into agreements to finance the purchase of student computers and peripherals provided to students of its schools. Individual leases typically include 1 Operating Leases The Company enters into agreements for facilities that serve as offices for its headquarters, sales and enrollment teams, and school operations. Initial lease terms vary between 1 lease liability. As of the adoption date, the remaining lease terms varied between 1 Discount Rate Under ASC 842, the present value of the lease payments is calculated using either the rate implicit in the lease, or the lessee’s incremental borrowing rate, over the lease term. For the Company’s finance leases, the stated rate is defined within the lease terms; while for the Company’s operating leases, the rate is not implicit. For operating leases, the Company uses its incremental borrowing rate as the discount rate; determined as the Company’s borrowing rate on a collateralized basis for a similar term and amount to the term and amount of the lease. For its adoption of ASC 842, the Company utilized its agreements used for its finance leases as the basis for calculating its incremental borrowing rate. The rate was collateralized and its term reflected a similar term of the remaining lease payments of the Company’s largest operating lease. As of the adoption date, the incremental borrowing rate was 3.86%. Upon the execution of its senior secured revolving credit facility (see Note 6, “Credit Facility”), the Company has reassessed its incremental borrowing rate as 2.55%. The incremental borrowing rate is subsequently reassessed upon modification of its leasing arrangements or with the execution of a new lease agreement. Policy Elections Short-term Leases The Company has elected as an on-going accounting policy election not to apply ASC 842 to short-term facility leases of 12 months or less. By making this election, the Company will not record a right-of-use asset or lease liability at the commencement of the lease, and will continue to expense its lease payments on a straight-line basis over the lease term. The accounting policy election is made by class of underlying asset to which the right of use relates. The Company has elected to apply the accounting policy election only to operating leases. Income Taxes The Company accounts for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”) Goodwill and Intangible Assets The Company records as goodwill the excess of the purchase price over the fair value of the identifiable net assets acquired. Finite-lived intangible assets acquired in business combinations subject to amortization are recorded at their fair value. Finite-lived intangible assets include trade names, acquired customers and distributors, developed technology and non-compete agreements. Such intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization expense for the three months ended March 31, 2020 and 2019 was $1.8 million and $0.7 million, respectively, and for the nine months ended March 31, 2020 and 2019 was $3.3 million and $2.2 million, respectively. Future amortization of intangible assets is expected to be $1.6 million, $5.4 million, $5.2 million, $5.0 million, and $4.0 million in the fiscal years ending June 30, 2020 through June 30, 2024, respectively and $22.4 million thereafter. At March 31, 2020 and June 30, 2019, the goodwill balance was $197.8 million and $90.2 million, respectively. The Company reviews its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between fair value and the carrying value of the asset. ASC 350 prescribes a two-step process for impairment testing of goodwill and intangible assets with indefinite lives, which is performed annually, as well as when an event triggering impairment may have occurred based on one reporting unit. ASC 350 also allows preparers to qualitatively assess goodwill impairment through a screening process which would permit companies to forgo Step 1 of their annual goodwill impairment process. This qualitative screening process will hereinafter be referred to as “Step 0”. The Company performs its annual assessment on May 31st. During the year ended June 30, 2019, the Company performed “Step 0” of the impairment test and determined that there were no facts and circumstances that indicated that the fair value of the reporting unit may be less than its carrying amount, and as a result, the Company determined that no impairment was required. The Company performed a qualitative assessment of Coronavirus disease (“COVID-19”) as a triggering event related to the value of its goodwill and intangible assets and concluded that there were no indicators of impairment during the three and nine months ended March 31, 2020. The following table represents the balance of the Company’s intangible assets as of March 31, 2020 and June 30, 2019: March 31, 2020 June 30, 2019 ($ in millions) Gross Accumulated Net Gross Accumulated Net Trade names $ 41.6 $ (10.3) $ 31.3 $ 17.6 $ (9.4) $ 8.2 Customer and distributor relationships 25.3 (16.4) 8.9 20.5 (14.7) 5.8 Developed technology 6.6 (3.3) 3.3 3.2 (2.8) 0.4 Other 1.4 (1.0) 0.4 1.4 (0.8) 0.6 Total $ 74.9 $ (31.0) $ 43.9 $ 42.7 $ (27.7) $ 15.0 Impairment of Long-Lived Assets Long-lived assets include property, equipment, right-of-use assets, capitalized curriculum and software developed or obtained for internal use. In accordance with ASC 360, Property, Plant and Equipment (“ASC 360”) Fair Value Measurements ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1: Inputs based on quoted market prices for identical assets or liabilities in active markets at the measurement date. Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation. The carrying values reflected in the accompanying condensed consolidated balance sheets for cash and cash equivalents, receivables, and short and long term debt approximate their fair values, as they are largely short-term in nature. The lease exit liability is discussed in more detail in Note 10, “Restructuring.” The Tallo, Inc. convertible note is discussed in more detail in Note 11, “Acquisitions and Investments.” There were no assets or liabilities measured at fair value on a nonrecurring basis at March 31, 2020 – see Note 10, “Restructuring.” The following table summarizes certain fair value information at June 30, 2019 for assets or liabilities measured at fair value on a nonrecurring basis: Fair Value Measurements Using: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Input Inputs Description Fair Value (Level 1) (Level 2) (Level 3) (In thousands) Lease exit liability $ 1,779 $ — $ — $ 1,779 The following table summarizes certain fair value information at March 31, 2020 for assets or liabilities measured at fair value on a recurring basis: Fair Value Measurements Using: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Input Inputs Description Fair Value (Level 1) (Level 2) (Level 3) (In thousands) Convertible note received in acquisition $ 5,006 — — 5,006 The following table summarizes certain fair value information at June 30, 2019 for assets or liabilities measured at fair value on a recurring basis: Fair Value Measurements Using: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Input Inputs Description Fair Value (Level 1) (Level 2) (Level 3) (In thousands) Convertible note received in acquisition $ 5,006 $ — $ — $ 5,006 The following table presents activity related to the Company’s fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis, for the three and nine months ended March 31, 2020 and 2019: Three Months Ended March 31, 2020 Purchases, Fair Value Issuances, Unrealized Fair Value Description December 31, 2019 and Settlements Gains/(Losses) March 31, 2020 (In thousands) Convertible note received in acquisition 5,006 — — 5,006 Three Months Ended March 31, 2019 Purchases, Fair Value Issuances, Unrealized Fair Value Description December 31, 2018 and Settlements Gains/(Losses) March 31, 2019 (In thousands) Contingent consideration associated with acquisitions $ 40 $ (40) $ — $ — Convertible note received in acquisition 5,006 — — 5,006 Nine Months Ended March 31, 2020 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2019 and Settlements Gains (Losses) March 31, 2020 (In thousands) Convertible note received in acquisition 5,006 — — 5,006 Nine Months Ended March 31, 2019 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2018 and Settlements Gains (Losses) March 31, 2019 (In thousands) Contingent consideration associated with acquisitions $ 1,345 $ (1,347) $ 2 $ — Convertible note received in acquisition — 5,006 — 5,006 Net Income (Loss) Per Common Share The Company calculates net income (loss) per share in accordance with ASC 260, Earnings Per Share (“ASC 260”). deductible for income tax purposes are all assumed to be used to repurchase shares of the Company’s common stock. Stock options and restricted stock awards are not included in the computation of diluted net income (loss) per share when they are antidilutive. Common stock outstanding reflected in the Company’s condensed consolidated balance sheets includes restricted stock awards outstanding. The following schedule presents the calculation of basic and diluted net income per share: Three Months Ended Nine Months Ended March 31, March 31, 2020 2019 2020 2019 (In thousands except share and per share data) Basic net income per share computation: Net income attributable to common stockholders $ 8,754 $ 18,462 $ 19,618 $ 33,892 Weighted average common shares — basic 39,539,791 39,008,990 39,426,121 38,753,236 Basic net income per share $ 0.22 $ 0.47 $ 0.50 $ 0.87 Diluted net income per share computation: Net income attributable to common stockholders $ 8,754 $ 18,462 $ 19,618 $ 33,892 Share computation: Weighted average common shares — basic 39,539,791 39,008,990 39,426,121 38,753,236 Effect of dilutive stock options and restricted stock awards 399,107 2,744,333 1,035,169 1,795,723 Weighted average common shares — diluted |
Income Taxes
Income Taxes | 9 Months Ended |
Mar. 31, 2020 | |
Income Taxes | |
Income Taxes | 4. Income Taxes The provision for income taxes is based on earnings reported in the condensed consolidated financial statements. A deferred income tax asset or liability is determined by applying currently enacted tax laws and rates to the expected reversal of the cumulative temporary differences between the carrying value of assets and liabilities for financial statement and income tax purposes. Deferred income tax expense or benefit is measured by the change in the deferred income tax asset or liability during the period. For the three months ended March 31, 2020 and 2019, the Company’s effective income tax rate was 33.5% and 24.0%, respectively, and for the nine months ended March 31, 2020 and 2019, the rate was 23.4% and 22.5%, respectively. |
Finance and Operating Leases
Finance and Operating Leases | 9 Months Ended |
Mar. 31, 2020 | |
Finance and Operating Leases | |
Finance and Operating Leases | 5. Finance and Operating Leases Finance Leases The Company is a lessee under finance leases for student computers and peripherals under agreements with PNC Equipment Finance, LLC (“PNC”) and Banc of America Leasing & Capital, LLC (“BALC”). As of March 31, 2020 and June 30, 2019, the finance lease liability (“capital leases” as of June 30, 2019) was $23.3 million and $24.6 million, respectively, with interest rates ranging from 1.52% to 3.87%. As of March 31, 2020 and June 30, 2019, the balance of the associated right-of-use assets (“student computers” as of June 30, 2019) was $23.9 million and 19.8 million, respectively. The right-of-use asset is recorded within property and equipment, net on the condensed consolidated balance sheets. Lease amortization expense associated with the Company’s finance leases is recorded within selling, general, and administrative expenses on the condensed consolidated statements of operations. Individual leases under the agreement with PNC include 36-month payment terms, at varying rates, with a $1 purchase option at the end of each lease term. The Company has pledged the assets financed to secure the outstanding leases. The Company executed an agreement with BALC in February 2019 for $25.0 million to provide financing for its leases through December 2019 at a fluctuating rate of LIBOR plus 1.25%. The Company executed an additional $25.0 million agreement in March 2020 to provide financing for its leases through January 2021 at a fluctuating rate of LIBOR plus 0.75%. Individual leases with BALC include 12-month payment terms, fixed rates ranging from 1.52% to 3.58%, and a $1 purchase option at the end of each lease term. The Company has pledged the assets financed to secure the outstanding leases. The following is a summary as of March 31, 2020 (under ASC 842) and June 30, 2019 (under ASC 840), respectively, of the present value of the minimum lease payments under the Company’s finance leases: March 31, 2020 June 30, 2019 (in thousands) 2020 $ 6,449 $ 20,070 2021 13,316 4,819 2022 2,383 340 2023 1,532 — Total minimum payments 23,680 25,229 Less: imputed interest (427) (581) Finance lease liability 23,253 24,648 Less: current portion of finance lease liability (17,988) (19,588) Long-term finance lease liability $ 5,265 $ 5,060 Operating Leases The Company is a lessee under operating leases for various facilities to support the Company’s operations. As of March 31, 2020 and June 30, 2019, the operating lease liability was $121.2 million and zero, respectively. As of March 31, 2020 and June 30, 2019, the balance of the associated right-of-use assets was $106.9 million and zero, respectively. Each of the above balances as of March 31, 2020 includes the impact of Galvanize’s adoption of ASC 842 as part of the purchase price accounting which is discussed in more detail in Note 11, “Acquisitions and Investments.” Lease expense associated with the Company’s operating leases is recorded within selling, general, and administrative expenses on the condensed consolidated statements of operations. Individual operating leases range in terms of 1 The following is a summary as of March 31, 2020 (under ASC 842) and June 30, 2019 (under ASC 840), respectively of the present value of the minimum lease payments under the Company’s operating leases: March 31, 2020 June 30, 2019 (in thousands) 2020 $ 5,991 $ 8,441 2021 23,337 8,229 2022 22,054 6,735 2023 15,567 550 2024 14,486 137 Thereafter 52,393 — Total minimum payments 133,828 $ 24,092 Less: imputed interest (12,584) Operating lease liability 121,244 Less: current portion of operating lease liability (20,441) Long-term operating lease liability $ 100,803 The Company is subleasing one of its facilities through June 2021, two others through May 2022 and one through July 2023. The following is a summary as of March 31, 2020 and June 30, 2019, respectively, of the expected sublease income: March 31, 2020 June 30, 2019 (in thousands) 2020 $ 494 $ 930 2021 1,976 961 2022 1,513 528 2023 813 — 2024 67 — Total sublease income $ 4,863 $ 2,419 The following is a summary of the Company’s lease cost, weighted-average remaining lease term, weighted-average discount rate and certain other cash flows as it relates to its operating leases for the three and nine months ended March 31, 2020: Three months ended Nine months ended March 31, 2020 March 31, 2020 Lease cost Finance lease cost: Amortization of right-of-use assets $ 4,232 $ 12,418 Interest on lease liabilities 276 657 Operating lease cost 4,035 7,370 Short-term lease cost 280 987 Sublease income (215) (531) Total lease cost $ 8,608 $ 20,901 Other information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ (4,062) $ (8,151) Financing cash flows from finance leases (6,644) (21,603) Right-of-use assets obtained in exchange for new finance lease liabilities 3,715 16,490 Right-of-use assets obtained in exchange for new operating lease liabilities 502 5,349 Weighted-average remaining lease term - finance leases 0.90 yrs. Weighted-average remaining lease term - operating leases 7.32 yrs. Weighted-average discount rate - finance leases 2.88 % Weighted-average discount rate - operating leases 2.78 % |
Credit Facility
Credit Facility | 9 Months Ended |
Mar. 31, 2020 | |
Credit Facility | |
Credit Facility | 6. Credit Facility On January 27, 2020, the Company executed a $100.0 million senior secured revolving credit facility (“Credit Facility”) to be used for general corporate operating purposes with PNC Capital Markets LLC. The Credit Facility has a five-year term and incorporates customary financial and other covenants, including but not limited to a maximum leverage ratio and a minimum interest coverage ratio. The majority of the Company’s borrowings under the Credit Facility are at LIBOR plus an additional rate ranging from 0.875% - 1.50% based on the Company’s leverage ratio as defined in the agreement. As of March 31, 2020, the Company was in compliance with the financial covenants. As of March 31, 2020, the Company had $100.0 million outstanding on the Credit Facility. The Credit Facility also includes a $200 million accordion feature. |
Equity Incentive Plan
Equity Incentive Plan | 9 Months Ended |
Mar. 31, 2020 | |
Equity Incentive Plan | |
Equity Incentive Plan | 7. Equity Incentive Plan On December 15, 2016 (the “Effective Date”), the Company’s stockholders approved the 2016 Incentive Award Plan (the “Plan”). The Plan is designed to attract, retain and motivate employees who make important contributions to the Company by providing such individuals with equity ownership opportunities. Awards granted under the Plan may include stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based awards. Under the Plan, the following types of shares go back into the pool of shares available for issuance: ● unissued shares related to forfeited or cancelled restricted stock and stock options from Plan awards and Prior Plan awards (that were outstanding as of the Effective Date); and ● shares tendered to satisfy the tax withholding obligation related to the vesting of restricted stock (but not stock options). Unlike the Company’s 2007 Equity Incentive Award Plan (the “Prior Plan”), the Plan has no evergreen provision to increase the shares available for issuance; any new shares would require stockholder approval. The Prior Plan was set to expire in October 2017; however, with the approval of the Plan, the Company will no longer award equity from the Prior Plan. As of March 31, 2020, the remaining aggregate number of shares of the Company’s common stock authorized for future issuance under the Plan was 1,393,643. As of March 31, 2020, there were 5,013,246 shares of the Company’s common stock that remain outstanding or nonvested under the Plan and Prior Plan. Stock Options Stock option activity including stand-alone agreements during the nine months ended March 31, 2020 was as follows: Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Life (Years) Value Outstanding, June 30, 2019 1,036,017 $ 19.82 Granted — — Exercised (3,000) 16.13 Forfeited or canceled (10,500) 30.92 Outstanding and exercisable, March 31, 2020 1,022,517 $ 19.73 1.90 $ 1,618,890 The total intrinsic value of options exercised during the nine months ended March 31, 2020 and 2019 was $0.0 million and $0.7 million, respectively. During the three months ended March 31, 2020 and 2019, the Company recognized zero and $0.2 million, respectively, of stock-based compensation expense related to stock options. During the nine months ended March 31, 2020 and 2019, the expense was $0.1 million and $0.5 million, respectively. Restricted Stock Awards Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2019 1,322,552 $ 17.08 Granted 1,045,661 27.12 Vested (721,665) 16.89 Canceled (76,009) 21.46 Nonvested, March 31, 2020 1,570,539 $ 23.64 Performance Based Restricted Stock Awards (included above) During the nine months ended March 31, 2020, 499,818 new performance based restricted stock awards were granted and 559,089 remain nonvested at March 31, 2020. During the nine months ended March 31, 2020, 210,467 performance based restricted stock awards vested. Vesting of the performance based restricted stock awards is contingent on the achievement of certain financial performance goals and service vesting conditions. two remaining one one two Equity Incentive Market Based Restricted Stock Awards (included above) During fiscal year 2017, the Company granted equity incentive market based restricted stock awards which were subject to the attainment of an average stock price of $14.35 for 30 consecutive days after the date of the Company’s earnings release for the fourth quarter and fiscal year ended June 30, 2017. During the nine months ended March 31, 2020, the remaining 6,800 equity incentive market based restricted stock awards vested. Service Based Restricted Stock Awards (included above) During the nine months ended March 31, 2020, 545,843 new service based restricted stock awards were granted and 1,011,450 remain nonvested at March 31, 2020. During the nine months ended March 31, 2020, 504,398 service based restricted stock awards vested. Summary of All Restricted Stock Awards As of March 31, 2020, there was $28.0 million of total unrecognized compensation expense related to nonvested restricted stock awards. The cost is expected to be recognized over a weighted average period of 1.7 years. The fair value of restricted stock awards granted for the nine months ended March 31, 2020 and 2019 was $28.4 million and $15.1 million, respectively. The total fair value of shares vested for the nine months ended March 31, 2020 and 2019 was $17.2 million and $19.6 million, respectively. During the three months ended March 31, 2020 and 2019, the Company recognized $4.5 million and $2.6 million, respectively, of stock-based compensation expense related to restricted stock awards. During the nine months ended March 31, 2020 and 2019, the expense was $12.9 million and $9.5 million, respectively. Performance Share Units (“PSU”) Certain PSUs vest upon achievement of performance criteria associated with a Board-approved Transaction Related Incentive Plan (“TRIP”) and continuation of employee service over a defined period related to employees of Galvanize. The level of performance will determine the number of PSUs earned as measured against threshold, target and outperform achievement levels of the TRIP. The TRIP is a grant of a fixed monetary amount, in which the number of shares to be granted, will be calculated at the end of the performance period based on the value of the Company’s stock. At that time, the Company will issue shares of the Company’s common stock, or at the option of the Company, an equivalent amount of cash, and is classified as a liability award in accordance with ASC 718. Certain PSUs vest upon achievement of performance criteria associated with a Board-approved Long Term Incentive Plan (“LTIP”) and continuation of employee service over a defined period. The level of performance will determine the number of PSUs earned as measured against threshold, target and outperform achievement levels of the LTIP. Each PSU represents the right to receive one share of the Company’s common stock, or at the option of the Company, an equivalent amount of cash, and is classified as an equity award in accordance with ASC 718. In addition to the LTIP performance conditions, there is a service vesting condition which is dependent upon continuing service by the grantee as an employee of the Company, unless the grantee is eligible for earlier vesting upon a change in control and qualifying termination, as defined by the PSU agreement. For equity performance awards, including the PSUs, subject to graduated vesting schedules for which vesting is based on achievement of a performance metric in addition to grantee service, stock-based compensation expense is recognized on an accelerated basis by treating each vesting tranche as if it was a separate grant. Fiscal Year 2020 TRIP During the third quarter of fiscal year 2020, the Company granted a target level of $12.3 million under the TRIP that was driven by certain revenue and EBITDA targets related to the performance of Galvanize. Seventy percent of the earned award is based on the performance of Galvanize for the calendar year 2021 (“Tranche #1”) and thirty percent of the earned award is based on the performance of Galvanize for the calendar year 2022 (“Tranche 2”), both of which are expected to vest in January following each of the calendar year ends. The revenue and EBITDA targets are split sixty percent and forty percent, respectively for both tranches. In all cases, vesting is dependent upon continuing service by the grantee as an employee of the Company. The Company determined the achievement of the performance conditions associated with all tranches are not able to be determined at this time. Fiscal Year 2019 LTIP During fiscal year 2019 and first quarter of fiscal year 2020, the Company granted 278,135 PSUs at target under a LTIP that was driven by certain revenue targets and enrollment levels, as well as students’ academic progress. These PSUs had a grant date fair value of $8.3 million, or a weighted average grant-date fair value of $29.95 per share. Forty-five percent of the earned award is based on students’ academic progress (“Tranche #1”) and twenty-five percent of the earned award is based on certain enrollment levels (“Tranche 2”), both of which will vest on October 15, 2021. The remaining thirty percent of the earned award is based on certain revenue targets (“Tranche #3”) and will vest on August 15, 2022. In all cases, vesting is dependent upon continuing service by the grantee as an employee of the Company. The Company determined the achievement of the performance conditions associated with all three tranches were not probable and therefore no expense was recorded during the three and nine months ended March 31, 2020. Fiscal Year 2019 SPP During fiscal year 2019, the Company adopted a new long-term shareholder performance plan (“2019 SPP”) that provides for incentive award opportunities to its key senior executives. The awards were granted in the form of PSUs and will be earned based on the Company’s market capitalization growth over a completed three-year performance period. The 2019 SPP was designed to provide the executives with a percentage of shareholder value growth. No amounts will be earned if total stock price growth over the three-year period is below 25% (7.6% annualized). An amount of 6% of total value growth will be earned based on achieving total stock price growth of 33% (10% annualized) and a maximum of 7.5% of total value growth will be earned if total stock price growth equals or exceeds 95% (25% annualized). During fiscal year 2019, the Company granted 2,108,305 PSUs at a weighted average grant-date fair value of $8.18 per share, based on the highest level of performance. The final amount of PSUs will be determined (and vesting will occur) based on the 30-day average price of the Company’s stock subsequent to seven days after the release of fiscal year 2021 results. The fair value was determined using a Monte Carlo simulation model and will be amortized on a straight-line basis over the vesting period. Summary of All Performance Share Units As of March 31, 2020, there was $8.7 million of total unrecognized compensation expense related to nonvested PSUs. The cost is expected to be recognized over a weighted average period of 1.5 years. During the three months ended March 31, 2020 and 2019, the Company recognized $1.5 million and $1.3 million, respectively, of stock-based compensation expense related to PSUs. During the nine months ended March 31, 2020 and 2019, the expense was $4.6 million and $2.4 million, respectively. Performance share unit activity (excluding the Fiscal Year 2020 TRIP) during the nine months ended March 31, 2020 was as follows: Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2019 2,372,241 $ 10.61 Granted 14,199 28.17 Vested — — Canceled (8,352) 29.93 Nonvested, March 31, 2020 2,378,088 $ 10.65 Deferred Stock Units (“DSU”) During the three months ended March 31, 2020, the Company granted 23,844 DSUs at a weighted average grant-date fair value of $20.13 per share. The DSUs vest on the grant-date anniversary and are settled in the form of shares of common stock issued to the holder upon separation from the Company. The DSUs are excluded from the tables above. As of March 31, 2020, 42,102 DSUs remain unissued. During the three months ended March 31, 2020 and 2019, the Company recognized $0.2 million and $0.1 million, respectively, of stock-based compensation expense related to DSUs. During the nine months ended March 31, 2020 and 2019, the expense was $0.4 million and $0.1 million, respectively. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions | |
Related Party Transactions | 8. Related Party Transactions During fiscal years 2020 and 2019, the Company contributed to Future of School. Future of School is a related party as an executive officer of the Company serves on its Board of Directors. For the three months ended March 31, 2020 and 2019, contributions made by the Company to Future of School were $0.2 million and $0.1 million, respectively, and $1.0 million and $0.9 million for the nine months ended March 31, 2020 and 2019. The amounts shown for fiscal year 2020 were accrued in fiscal year 2019, and as of March 31, 2020, $1.4 million remains outstanding. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | 9. Commitments and Contingencies Litigation Employment Agreements The Company has entered into employment agreements with certain executive officers that provide for severance payments and, in some cases other benefits, upon certain terminations of employment. Except for the agreement with the Company’s Chairman and Chief Executive Officer with an amended extended term to September 30, 2022, all other agreements provide for employment on an “at-will” basis. If the employee resigns for “good reason” or is terminated without cause, the employee is entitled to salary continuation, and in some cases benefit continuation, for varying periods depending on the agreement. Off-Balance Sheet Arrangements As of March 31, 2020, the Company provided guarantees of approximately $1.1 million related to lease commitments on the buildings for certain of the Company’s schools. In addition, the Company contractually guarantees that certain schools under the Company’s management will not have annual operating deficits and the Company’s management fees from these schools may be reduced accordingly to cover any school operating deficits. Other than these lease and operating deficit guarantees, the Company did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. Risks and Uncertainties Impacts of COVID-19 to K12’s Business The impacts of the global emergence of COVID-19 on the Company’s business are currently not estimable or determinable. The Company is conducting business as usual with some modifications to employee travel, employee work locations, and cancellation of certain events, among other modifications. The Company has observed other companies taking precautionary and preemptive actions to address COVID-19 and companies may take further actions that alter their normal business operations. The Company will continue to actively monitor the situation and may take further actions that alter its business operations as may be required by federal, state or local authorities or that it determines is in the best interests of its employees, customers, partners, suppliers and stockholders. It is not clear what the potential effects any such alterations or modifications may have on the Company’s business, including the effects on its customers and prospects, or on its financial results for the fourth quarter of fiscal year 2020. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act (“Act”) was enacted and signed into law. The Company has evaluated the business provisions in the Act and adopted the deferral of the employer portion of the social security payroll tax (6.2%) outlined within. The deferral is effective from the enactment date through December 31, 2020. The deferred amount will be paid in two installments and the amount will be considered timely paid if 50% of the deferred amount is paid by December 31, 2021 and the remainder by December 31, 2022. |
Restructuring
Restructuring | 9 Months Ended |
Mar. 31, 2020 | |
Restructuring | |
Restructuring | 10. Restructuring In the third quarter of fiscal year 2017, the Company exited three facilities that were no longer being utilized, which were subject to operating leases. In aggregate, during fiscal year 2017, the Company recorded an impairment of $5.4 million for the three leases. As part of the adoption of ASC 842, the lease impairment liability of $1.8 million as of June 30, 2019 was offset against the right-of-use asset. |
Acquisitions and Investments
Acquisitions and Investments | 9 Months Ended |
Mar. 31, 2020 | |
Acquisitions and Investments. | |
Acquisitions and Investments | 11. Acquisitions and Investments Acquisition of Galvanize, Inc. On January 27, 2020, the Company acquired 100% of Galvanize in exchange for $177.2 million in cash, inclusive of the working capital adjustment. Galvanize provides talent development for individuals and corporations in technical fields. The acquisition of Galvanize positions the Company as a premier provider of career readiness education services and a leader in skills training, technology staffing and developing talent and capabilities for Fortune 500 companies. The Galvanize management team, brand recognition, network of alumni, campuses, and industry-leading software engineering and data science programs will allow the Company to accelerate its entry into this important and growing market. The acquisition has been accounted for as a business combination, under the acquisition method of accounting, which results in acquired assets and assumed liabilities being measured at their estimated fair values as of January 27, 2020, the acquisition date. As of the acquisition date, goodwill is measured as the excess of consideration transferred and the fair values of the assets acquired and liabilities assumed. Based on management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on estimates and assumptions that are subject to change, the preliminary estimated purchase price is allocated as follows (in thousands): Allocation of Purchase Price (In thousands) Cash $ 9,232 Current assets, excluding cash 16,960 Property and equipment, net 11,270 Operating lease right-of-use assets, net 90,716 Intangible assets, net 32,162 Goodwill 107,606 Other assets 1,804 Current liabilities (4,730) Deferred revenue (3,649) Deferred tax liability 17,389 Current operating lease liability (11,620) Long-term operating lease liability (89,782) Other long-term liabilities (130) Total consideration $ 177,228 The final purchase price allocation will be completed within one year of the acquisition date (“measurement period”). If information becomes available which would indicate material adjustments are required to the purchase price allocation, such adjustments will be included in the purchase price allocation retrospectively. The estimated fair values for deferred revenue and the intangible assets are considered preliminary and are subject to change based on final purchase price valuation amounts. Section 382 of the Internal Revenue Code could limit the Company’s ability to utilize Galvanize’s net operating losses and the analysis under Section 382 is preliminary. The purchase price valuation and Section 382 analysis are still under review. The Company has not made an assessment of its unfavorable/favorable leases as it relates to the value assigned to its operating lease right-of-use assets. It expects to complete that assessment within the measurement period. The fair value of the identified intangible assets was determined primarily using an income-based approach of either the multi-period excess earnings method or relief from royalty method, as well as the replacement cost approach. Intangible assets are amortized on a straight-line basis over the amortization periods noted below. Intangible Assets Estimated Intangible Assets Amount Useful Life (in Years) (In thousands) Customer relationships $ 4,785 4.22 years Developed technology 3,357 4.00 years Trade names 24,020 18.00 years $ 32,162 Goodwill represents the excess of the purchase price of an acquired business over the fair value of the tangible and intangible assets acquired and liabilities assumed. Goodwill will not be amortized but instead will be tested for impairment at least annually (more frequently if indicators of impairment arise). In the event that management determines that the goodwill has become impaired, the Company will incur an accounting charge for the amount of the impairment during the fiscal quarter in which the determination is made. Goodwill is not deductible for tax purposes. Included in the Company’s condensed consolidated results of operations are revenues of $3.2 million and loss from operations of $8.1 million, related to Galvanize. The following unaudited pro forma combined results of operations give effect to the acquisition of Galvanize, as if it had occurred on July 1, 2018. The unaudited pro forma combined results of operations are provided for informational purposes only and do not purport to represent the Company’s actual consolidated results of operations had the acquisition occurred on the dates assumed, nor are these financial statements necessarily indicative of the Company’s future consolidated results of operations. The unaudited pro forma combined results of operations do not reflect the costs of any integration activities or any benefits that may result from operating efficiencies or revenue synergies. Pro forma results include non-recurring transaction costs of $0.9 million, which are included in selling, general and administrative expenses. Three Months Ended Nine Months Ended March 31, March 31, (In thousands) 2020 2019 2020 2019 Revenues $ 260,556 $ 266,665 $ 797,566 $ 796,366 Income (loss) from operations (3,687) 19,745 1,051 27,250 Net income (loss) (9,564) 14,822 (5,283) 16,918 Investments in Limited Partnerships Investment in Tallo, Inc. |
Supplemental Disclosure of Cash
Supplemental Disclosure of Cash Flow Information | 9 Months Ended |
Mar. 31, 2020 | |
Supplemental Disclosure of Cash Flow Information | |
Supplemental Disclosure of Cash Flow Information | 12. Supplemental Disclosure of Cash Flow Information Nine Months Ended March 31, 2020 2019 (In thousands) Cash paid for interest $ 660 $ 862 Cash paid for taxes $ 2,796 $ 1,010 Right-of-use assets obtained as a result of the adoption of ASC 842 (1) $ 108,368 $ — Supplemental disclosure of non-cash financing activities: Right-of-use assets obtained in exchange for new finance lease liabilities (2) $ 16,490 $ 19,076 Supplemental disclosure of non-cash investing activities: Stock-based compensation expense capitalized on software development $ 92 $ 101 Stock-based compensation expense capitalized on curriculum development $ 135 $ 176 (1) Includes right-of-use assets obtained as a result of the acquisition of Galvanize (2) Previously referred to as property and equipment financed by capital lease obligations, including student peripherals. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Mar. 31, 2020 | |
Summary of Significant Accounting Policies | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Accounting Standards Adopted In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”) (“ASC 842”) (“ASC 840”) The most significant impact to the Company was its accounting for operating leases, which under ASC 840, were not recorded on the balance sheet. The Company reviewed its rent expense to ensure all leases were captured. The Company concluded that these leases were operating leases under ASC 842. Additionally, the Company’s capital leases under ASC 840 were reviewed and determined to be finance leases under ASC 842. The Company adopted this standard during the first quarter of fiscal year 2020 using the modified retrospective approach. Under this method, the Company applied ASC 842 to existing leases that had commenced as of July 1, 2019. The comparative information for prior periods has not been restated and continues to be reported under ASC 840. The Company has provided the required disclosures under ASC 840 for the comparative periods. The Company elected to apply the package of practical expedients that was available upon adoption of ASC 842 to not reassess (1) whether any expired or existing contracts contain a lease, (2) the lease classification of any expired or existing lease, and (3) the initial direct costs for existing leases. The adoption of ASC 842 resulted in the recognition of a new lease liability for its operating leases of $22.7 million and a right-of-use asset of $17.7 million (net of existing deferred rent and lease impairment liabilities) on July 1, 2019. In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) (“ASU 2018-15”). Accounting Standards Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”) the Company in the first quarter of fiscal year 2021, and early adoption is permitted. The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements and will evaluate whether to increase the allowance for doubtful accounts at the time of adoption. |
Contracts with Customers | Contracts with Customers Revenues are principally earned from contractual agreements to provide online curriculum, books, materials, computers and management services to virtual and blended schools, traditional public schools, school districts, and private schools through its three lines of business; Managed Public School Programs, Institutional, and Private Pay Schools and Other. Under ASC 606, revenue is recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services using the following steps: ● identify the contract, or contracts, with a customer; ● identify the performance obligations in the contract; ● determine the transaction price; ● allocate the transaction price to the performance obligations in the contract; and ● recognize revenue when, or as, the Company satisfies a performance obligation. Revenue Recognition Managed Public School Programs The Company provides an integrated package of systems, services, products, and professional expertise that we administer to support an online or blended public school. Contractual agreements generally span multiple years with performance obligations being isolated to annual periods. Customers for these programs can obtain the administrative support, information technology, academic support services, online curriculum, learning systems platforms and instructional services under the terms of a negotiated service agreement. The schools receive funding on a per student basis from the state in which the public school or school district is located. Shipments of materials for schools that occur in the fourth fiscal quarter and for the upcoming school year are recorded in deferred revenue. The Company generates revenues under contracts with virtual and blended public schools and include the following components, where required: ● providing each of a school’s students with access to the Company’s online school and lessons; ● offline learning kits, which include books and materials to supplement the online lessons; ● the use of a personal computer and associated reclamation services; ● internet access and technology support services; ● instruction by a state-certified teacher; and ● management and technology services necessary to support a virtual public or blended school. In certain contracts, revenues are determined directly by per enrollment funding. To determine the pro rata amount of revenue to recognize in a fiscal quarter, the Company estimates the total funds each school will receive in a particular school year. Total funds for a school are primarily a function of the number of students enrolled in the school and established per enrollment funding levels, which are generally published on an annual basis by the state or school district. The Company reviews its estimates of funding periodically, and revises as necessary, amortizing any adjustments to earned revenues over the remaining portion of the fiscal year. Actual school funding may vary from these estimates and the impact of these differences could impact the Company’s results of operations. Since the end of the school year coincides with the end of the Company’s fiscal year, annual revenues are generally based on actual school funding and actual costs incurred (including costs for the Company’s services to the schools plus other costs the schools may incur) in the calculation of school operating losses. The Company’s schools’ reported results are subject to annual school district financial audits, which incorporate enrollment counts, funding and other routine financial audit considerations. The results of these audits are incorporated into the Company’s monthly funding estimates for the three and nine months ended March 31, 2020 and 2019. Each state and/or school district has variations in the school funding formulas and methodologies that it uses to estimate funding for revenue recognition at its respective schools. As the Company estimates funding for each school, it takes into account the state definition for count dates on which reported enrollment numbers will be used for per pupil funding. The parameters the Company considers in estimating funding for revenue recognition purposes include school district count definitions, withdrawal rates, average daily attendance, special needs enrollment, student demographics, academic progress and historical completion, student location, funding caps and other state specified categorical program funding. Under the contracts where the Company provides services to schools, the Company has generally agreed to absorb any operating losses of the schools in a given school year. These school operating losses represent the excess of costs incurred over revenues earned by the virtual or blended public school as reflected on its respective financial statements, including Company charges to the schools. To the extent a school does not receive funding for each student enrolled in the school, the school would still incur costs associated with serving the unfunded enrollment. If losses due to unfunded enrollments result in a net operating loss for the year that loss is reflected as a reduction in the revenues and net receivables that the Company collects from the school. A school net operating loss in one year does not necessarily mean the Company anticipates losing money on the entire contract with the school. However, a school operating loss may reduce the Company’s ability to collect its management fees in full and recognized revenues are reduced accordingly to reflect the expected cash collections from such schools. The Company amortizes the estimated school operating loss against revenues based upon the percentage of actual revenues in the period to total estimated revenues for the fiscal year. Management periodically reviews its estimates of full-year school revenues and operating expenses, and amortizes the net impact of any changes to these estimates over the remainder of the fiscal year. Actual school operating losses may vary from these estimates or revisions, and the impact of these differences could have a material impact on results of operations. For the three months ended March 31, 2020 and 2019, the Company’s revenues included a reduction for these school operating losses of $11.0 million and $9.2 million, respectively, and $38.5 million and $43.2 million for the nine months ended March 31, 2020 and 2019, respectively. The Company has certain contracts where it is responsible for substantially all of the expenses incurred by the school. For these contracts, the Company records both revenue and expenses incurred by the schools. Amounts recorded as revenues for the three months ended March 31, 2020 and 2019 were $78.3 million and $85.8 million, respectively, and for the nine months ended March 31, 2020 and 2019 were $247.7 million and $259.9 million, respectively. Institutional The products and services delivered to the Company’s Institutional customers include curriculum and technology for full-time virtual and blended programs, as well as instruction, curriculum and associated materials, supplemental courses, marketing, enrollment and other educational services. Each of these contracts are considered to be one performance obligation under ASC 606. The Company provides certain online curriculum and services to schools and school districts under subscription agreements. Revenues from the licensing of curriculum under subscription arrangements are recognized on a ratable basis over the subscription period. Revenues from professional consulting, training and support services are deferred and recognized ratably over the service period. Private Pay Schools and Other Private Pay Schools and Other revenues are generated from individual customers who prepay and have access for one period. Each of these contracts are considered to be one performance obligation under ASC 606. The Company recognizes these revenues pro rata over the maximum term of the customer contract. Disaggregated Revenues The following table presents the Company’s revenues disaggregated based on its three lines of business for the three and nine months ended March 31, 2020 and 2019: Three Months Ended March 31, Nine Months Ended March 31, 2020 2019 2020 2019 (In thousands) Managed Public School Programs $ 228,335 $ 222,645 $ 685,446 $ 665,981 Institutional Non-managed Public School Programs 8,173 12,776 26,792 37,398 Institutional Software & Services 8,580 8,530 30,246 29,515 Total Institutional 16,753 21,306 57,038 66,913 Private Pay Schools and Other 12,066 9,301 29,350 26,544 Total Revenues $ 257,154 $ 253,252 $ 771,834 $ 759,438 Concentration of Customers During the three and nine months ended March 31, 2020, the Company had no contracts that represented greater than 10% of total revenues. For the three and nine months ended March 31, 2019, the Company had one contract that represented greater than 10% of total revenues. Contract Balances The opening and closing balances of the Company’s accounts receivable, unbilled receivables and deferred revenue are as follows: March 31, June 30, 2020 2019 (In thousands) Accounts receivable $ 284,326 $ 191,639 Unbilled receivables (included in accounts receivable) 17,323 16,189 Deferred revenue 39,618 22,828 Deferred revenue, long-term (included in other long-term liabilities) 2,155 — The difference between the opening and closing balance of the accounts receivable and unbilled receivables relates to the timing of the Company’s billing in relation to month end and contractual agreements. The difference between the opening and closing balance of the deferred revenue relates to the timing difference between billings to customers and the service periods under the contract. Typically, each of these balances are at their highest during the first quarter of the fiscal year and lowest at the end of the fiscal year. The amount of revenue recognized during the three months ended March 31, 2020 and 2019 that was included in the previous January 1 st $24.9 million, respectively. The amount of revenue recognized during the nine months ended March 31, 2020 and 2019 that was included in the previous July 1 st During the three months ended March 31, 2020 and 2019, the Company recorded revenues of $1.5 million and $3.2 million, respectively, and $4.3 million and $3.7 million, respectively, during the nine months ended March 31, 2020 and 2019, related to performance obligations satisfied in prior periods. Performance Obligations one Significant Judgments The Company has determined that the time elapsed method as described under ASC 606 is the most appropriate measure of progress towards the satisfaction of the performance obligation. The Company delivers the integrated products and services package related to its Managed Public School Programs largely over the course of the Company’s fiscal year. This package includes enrollment, marketing, teacher training, etc. in addition to the core curriculum and instruction. All of these activities are necessary and contribute to the overall education of its students, which occurs evenly throughout the year. Accordingly, the Company will recognize revenue on a straight-line basis. Sales Taxes |
Consolidation | Consolidation The condensed consolidated financial statements include the accounts of the Company, the wholly-owned and affiliated companies that the Company owns, directly or indirectly, and all controlled subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. |
Inventories | Inventories Inventories consist primarily of textbooks and curriculum materials, a majority of which are supplied to virtual public schools and blended public schools, and utilized directly by students. Inventories represent items that are purchased and held for sale and are recorded at the lower of cost (first-in, first-out method) or net realizable value. The Company classifies its inventory as current or long-term based on the holding period. As of March 31, 2020 and June 30, 2019, $3.8 million and $4.1 million, respectively, of inventory, net of reserves, was deemed long-term and included in deposits and other assets on the condensed consolidated balance sheets. The provision for excess and obsolete inventory is established based upon the evaluation of the quantity on hand relative to demand. The excess and obsolete inventory reserve was $4.7 million and $4.1 million at March 31, 2020 and June 30, 2019, respectively. |
Other Current Assets | Other Current Assets Other current assets consist primarily of textbooks, curriculum materials and other supplies which are expected to be returned upon the completion of the school year. Materials not returned are expensed as part of instructional costs and services. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense is calculated using the straight-line method over the estimated useful life of the asset (or the lesser of the term of the lease and the estimated useful life of the asset under the finance lease). Amortization of assets capitalized under finance lease arrangements is included in depreciation expense. Leasehold improvements are amortized over the lesser of the lease term or the estimated useful life of the asset. The determination of the lease term is discussed below under “Leases.” Property and equipment are depreciated over the following useful lives: Useful Life Student and state testing computers 3 - 5 years Computer hardware 3 years Computer software 3 - 5 years Web site development 3 years Office equipment 5 years Furniture and fixtures 7 years Leasehold improvements 3 - 12 years The Company makes an estimate of unreturned student computers based on an analysis of recent trends of returns. The Company recorded accelerated depreciation of $0.5 million and $0.5 million for the three months ended March 31, 2020 and 2019, respectively, and $1.8 million and $1.6 million for the nine months ended March 31, 2020 and 2019, respectively, related to unreturned student computers. Depreciation expense for property and equipment, including accelerated depreciation, for the three months ended March 31, 2020 and 2019 was $5.7 million and $4.9 million, respectively, and $16.2 million and $15.2 million for the nine months ended March 31, 2020 and 2019, respectively. The Company fully expenses computer peripheral equipment (e.g. keyboards, mouses) upon purchase as recovery has been determined to be uneconomical. These expenses totaled $0.7 million and $0.7 million for the three months ended March 31, 2020 and 2019, respectively, and $3.9 million and $4.0 million for the nine months ended March 31, 2020 and 2019, respectively, and are recorded as instructional costs and services. |
Capitalized Software Costs | Capitalized Software Costs The Company develops software for internal use. Software development costs incurred during the application development stage are capitalized in accordance with ASC 350, Intangibles – Goodwill and Other (“ASC 350”) Capitalized software additions totaled $18.8 million and $20.6 million for the nine months ended March 31, 2020 and 2019, respectively. Amortization expense for the three months ended March 31, 2020 and 2019 was $6.4 million and $7.0 million, respectively, and $20.0 million and $22.4 million for the nine months ended March 31, 2020 and 2019, respectively. |
Capitalized Curriculum Development Costs | Capitalized Curriculum Development Costs The Company internally develops curriculum, which is primarily provided as online content and accessed via the Internet. The Company also creates textbooks and other materials that are complementary to online content. The Company capitalizes curriculum development costs incurred during the application development stage in accordance with ASC 350. The Company capitalizes curriculum development costs during the design and deployment phases of the project. As a result, a significant portion of the Company’s courseware development costs qualify for capitalization due to the concentration of its development efforts on the content of the courseware. Capitalization ends when a course is available for general release to its customers, at which time amortization of the capitalized costs begins. The period of time over which these development costs are amortized is generally five years. Total capitalized curriculum development additions were $15.5 million and $13.7 million for the nine months ended March 31, 2020 and 2019, respectively. These amounts are recorded on the accompanying condensed consolidated balance sheets net of amortization charges. Amortization is recorded in instructional costs and services on the accompanying condensed consolidated statements of operations. Amortization expense for the three months ended March 31, 2020 and 2019 was $4.5 million and $4.5 million, respectively, and $13.3 million and $13.5 million for the nine months ended March 31, 2020 and 2019, respectively. |
Leases | Leases The Company’s principal leasing activities include student computers and peripherals, classified as finance leases, and facilities, classified as operating leases. Under ASC 842, for a lessee, leases are classified as operating leases unless they meet any of the criteria below to be classified as a finance lease: ● the lease transfers ownership of the asset at the end of the lease; ● the lease grants an option to purchase the asset which the lessee is expected to exercise; ● the lease term reflects a major part of the asset’s economic life; ● the present value of the lease payments equals or exceeds the fair value of the asset; or ● the asset is specialized with no alternative use to the lessor at the end of the term. Finance Leases The Company enters into agreements to finance the purchase of student computers and peripherals provided to students of its schools. Individual leases typically include 1 Operating Leases The Company enters into agreements for facilities that serve as offices for its headquarters, sales and enrollment teams, and school operations. Initial lease terms vary between 1 lease liability. As of the adoption date, the remaining lease terms varied between 1 Discount Rate Under ASC 842, the present value of the lease payments is calculated using either the rate implicit in the lease, or the lessee’s incremental borrowing rate, over the lease term. For the Company’s finance leases, the stated rate is defined within the lease terms; while for the Company’s operating leases, the rate is not implicit. For operating leases, the Company uses its incremental borrowing rate as the discount rate; determined as the Company’s borrowing rate on a collateralized basis for a similar term and amount to the term and amount of the lease. For its adoption of ASC 842, the Company utilized its agreements used for its finance leases as the basis for calculating its incremental borrowing rate. The rate was collateralized and its term reflected a similar term of the remaining lease payments of the Company’s largest operating lease. As of the adoption date, the incremental borrowing rate was 3.86%. Upon the execution of its senior secured revolving credit facility (see Note 6, “Credit Facility”), the Company has reassessed its incremental borrowing rate as 2.55%. The incremental borrowing rate is subsequently reassessed upon modification of its leasing arrangements or with the execution of a new lease agreement. Policy Elections Short-term Leases The Company has elected as an on-going accounting policy election not to apply ASC 842 to short-term facility leases of 12 months or less. By making this election, the Company will not record a right-of-use asset or lease liability at the commencement of the lease, and will continue to expense its lease payments on a straight-line basis over the lease term. The accounting policy election is made by class of underlying asset to which the right of use relates. The Company has elected to apply the accounting policy election only to operating leases. |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”) |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The Company records as goodwill the excess of the purchase price over the fair value of the identifiable net assets acquired. Finite-lived intangible assets acquired in business combinations subject to amortization are recorded at their fair value. Finite-lived intangible assets include trade names, acquired customers and distributors, developed technology and non-compete agreements. Such intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization expense for the three months ended March 31, 2020 and 2019 was $1.8 million and $0.7 million, respectively, and for the nine months ended March 31, 2020 and 2019 was $3.3 million and $2.2 million, respectively. Future amortization of intangible assets is expected to be $1.6 million, $5.4 million, $5.2 million, $5.0 million, and $4.0 million in the fiscal years ending June 30, 2020 through June 30, 2024, respectively and $22.4 million thereafter. At March 31, 2020 and June 30, 2019, the goodwill balance was $197.8 million and $90.2 million, respectively. The Company reviews its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between fair value and the carrying value of the asset. ASC 350 prescribes a two-step process for impairment testing of goodwill and intangible assets with indefinite lives, which is performed annually, as well as when an event triggering impairment may have occurred based on one reporting unit. ASC 350 also allows preparers to qualitatively assess goodwill impairment through a screening process which would permit companies to forgo Step 1 of their annual goodwill impairment process. This qualitative screening process will hereinafter be referred to as “Step 0”. The Company performs its annual assessment on May 31st. During the year ended June 30, 2019, the Company performed “Step 0” of the impairment test and determined that there were no facts and circumstances that indicated that the fair value of the reporting unit may be less than its carrying amount, and as a result, the Company determined that no impairment was required. The Company performed a qualitative assessment of Coronavirus disease (“COVID-19”) as a triggering event related to the value of its goodwill and intangible assets and concluded that there were no indicators of impairment during the three and nine months ended March 31, 2020. The following table represents the balance of the Company’s intangible assets as of March 31, 2020 and June 30, 2019: March 31, 2020 June 30, 2019 ($ in millions) Gross Accumulated Net Gross Accumulated Net Trade names $ 41.6 $ (10.3) $ 31.3 $ 17.6 $ (9.4) $ 8.2 Customer and distributor relationships 25.3 (16.4) 8.9 20.5 (14.7) 5.8 Developed technology 6.6 (3.3) 3.3 3.2 (2.8) 0.4 Other 1.4 (1.0) 0.4 1.4 (0.8) 0.6 Total $ 74.9 $ (31.0) $ 43.9 $ 42.7 $ (27.7) $ 15.0 |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets include property, equipment, right-of-use assets, capitalized curriculum and software developed or obtained for internal use. In accordance with ASC 360, Property, Plant and Equipment (“ASC 360”) |
Fair Value Measurements | Fair Value Measurements ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1: Inputs based on quoted market prices for identical assets or liabilities in active markets at the measurement date. Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation. The carrying values reflected in the accompanying condensed consolidated balance sheets for cash and cash equivalents, receivables, and short and long term debt approximate their fair values, as they are largely short-term in nature. The lease exit liability is discussed in more detail in Note 10, “Restructuring.” The Tallo, Inc. convertible note is discussed in more detail in Note 11, “Acquisitions and Investments.” There were no assets or liabilities measured at fair value on a nonrecurring basis at March 31, 2020 – see Note 10, “Restructuring.” The following table summarizes certain fair value information at June 30, 2019 for assets or liabilities measured at fair value on a nonrecurring basis: Fair Value Measurements Using: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Input Inputs Description Fair Value (Level 1) (Level 2) (Level 3) (In thousands) Lease exit liability $ 1,779 $ — $ — $ 1,779 The following table summarizes certain fair value information at March 31, 2020 for assets or liabilities measured at fair value on a recurring basis: Fair Value Measurements Using: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Input Inputs Description Fair Value (Level 1) (Level 2) (Level 3) (In thousands) Convertible note received in acquisition $ 5,006 — — 5,006 The following table summarizes certain fair value information at June 30, 2019 for assets or liabilities measured at fair value on a recurring basis: Fair Value Measurements Using: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Input Inputs Description Fair Value (Level 1) (Level 2) (Level 3) (In thousands) Convertible note received in acquisition $ 5,006 $ — $ — $ 5,006 The following table presents activity related to the Company’s fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis, for the three and nine months ended March 31, 2020 and 2019: Three Months Ended March 31, 2020 Purchases, Fair Value Issuances, Unrealized Fair Value Description December 31, 2019 and Settlements Gains/(Losses) March 31, 2020 (In thousands) Convertible note received in acquisition 5,006 — — 5,006 Three Months Ended March 31, 2019 Purchases, Fair Value Issuances, Unrealized Fair Value Description December 31, 2018 and Settlements Gains/(Losses) March 31, 2019 (In thousands) Contingent consideration associated with acquisitions $ 40 $ (40) $ — $ — Convertible note received in acquisition 5,006 — — 5,006 Nine Months Ended March 31, 2020 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2019 and Settlements Gains (Losses) March 31, 2020 (In thousands) Convertible note received in acquisition 5,006 — — 5,006 Nine Months Ended March 31, 2019 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2018 and Settlements Gains (Losses) March 31, 2019 (In thousands) Contingent consideration associated with acquisitions $ 1,345 $ (1,347) $ 2 $ — Convertible note received in acquisition — 5,006 — 5,006 |
Net Income (Loss) Per Common Share | Net Income (Loss) Per Common Share The Company calculates net income (loss) per share in accordance with ASC 260, Earnings Per Share (“ASC 260”). deductible for income tax purposes are all assumed to be used to repurchase shares of the Company’s common stock. Stock options and restricted stock awards are not included in the computation of diluted net income (loss) per share when they are antidilutive. Common stock outstanding reflected in the Company’s condensed consolidated balance sheets includes restricted stock awards outstanding. The following schedule presents the calculation of basic and diluted net income per share: Three Months Ended Nine Months Ended March 31, March 31, 2020 2019 2020 2019 (In thousands except share and per share data) Basic net income per share computation: Net income attributable to common stockholders $ 8,754 $ 18,462 $ 19,618 $ 33,892 Weighted average common shares — basic 39,539,791 39,008,990 39,426,121 38,753,236 Basic net income per share $ 0.22 $ 0.47 $ 0.50 $ 0.87 Diluted net income per share computation: Net income attributable to common stockholders $ 8,754 $ 18,462 $ 19,618 $ 33,892 Share computation: Weighted average common shares — basic 39,539,791 39,008,990 39,426,121 38,753,236 Effect of dilutive stock options and restricted stock awards 399,107 2,744,333 1,035,169 1,795,723 Weighted average common shares — diluted 39,938,898 41,753,323 40,461,290 40,548,959 Diluted net income per share $ 0.22 $ 0.44 $ 0.48 $ 0.84 For the three months ended March 31, 2020 and 2019, 1,429,479 and 119,343 shares issuable in connection with stock options and restricted stock were excluded from the diluted income per share calculation because the effect would have been antidilutive. For the nine months ended March 31, 2020 and 2019, 855,110 and 148,355 shares were excluded, respectively. As of March 31, 2020, the Company had 46,274,270 shares issued and 40,939,527 shares outstanding. |
Revision to Previously Issued Financial Statements | Revision to Previously Issued Financial Statements The Company has corrected the unaudited condensed consolidated statements of cash flows for the three, six, and nine month periods previously disclosed in the 2019 Form 10-Q’s to correct cash flows resulting from changes in accounts receivable and deferred revenue and other liabilities. The revisions are a result of an adjustment to the unaudited condensed consolidated balance sheets as of September 30, 2018, December 31, 2018, and March 31, 2019 to correct the overstatement of accounts receivable and deferred revenue as of each respective date. The adjustments had no impact on the consolidated balance sheet as of June 30, 2019, the consolidated statement of cash flows for the year ended June 30, 2019 or any consolidated statements of operations (audited or unaudited) reported in fiscal year 2019. Three Months Ended September 30, 2018 Six Months Ended December 31, 2018 Nine Months Ended March 31, 2019 Year Ended June 30, 2019 As Previously As Currently As Previously As Currently As Previously As Currently Reported Adjustment Reported Reported Adjustment Reported Reported Adjustment Reported Adjustment (In thousands) Changes in assets and liabilities: Accounts receivable $ (107,930) $ 15,346 $ (92,584) $ (64,116) $ 11,942 $ (52,174) $ (65,147) $ 6,421 $ (58,726) $ — Deferred revenue and other liabilities 42,837 (15,346) 27,491 24,795 (11,942) 12,853 24,510 (6,421) 18,089 — Additionally, certain previous year amounts have been reclassified to conform with current year presentations, as related to the impact of the adoption of ASC 842 and the Company’s presentation of deferred rent as a separate line item on the condensed consolidated balance sheet as of June 30, 2019. Deferred rent is now included in other long-term liabilities. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policy (Tables) | 9 Months Ended |
Mar. 31, 2020 | |
Summary of Significant Accounting Policies | |
Schedule of disaggregation of revenue | Three Months Ended March 31, Nine Months Ended March 31, 2020 2019 2020 2019 (In thousands) Managed Public School Programs $ 228,335 $ 222,645 $ 685,446 $ 665,981 Institutional Non-managed Public School Programs 8,173 12,776 26,792 37,398 Institutional Software & Services 8,580 8,530 30,246 29,515 Total Institutional 16,753 21,306 57,038 66,913 Private Pay Schools and Other 12,066 9,301 29,350 26,544 Total Revenues $ 257,154 $ 253,252 $ 771,834 $ 759,438 |
Schedule of accounts receivables, unbilled receivables and deferred revenue | March 31, June 30, 2020 2019 (In thousands) Accounts receivable $ 284,326 $ 191,639 Unbilled receivables (included in accounts receivable) 17,323 16,189 Deferred revenue 39,618 22,828 Deferred revenue, long-term (included in other long-term liabilities) 2,155 — |
Schedule of useful lives of property and equipment | Useful Life Student and state testing computers 3 - 5 years Computer hardware 3 years Computer software 3 - 5 years Web site development 3 years Office equipment 5 years Furniture and fixtures 7 years Leasehold improvements 3 - 12 years |
Schedule of intangible assets | March 31, 2020 June 30, 2019 ($ in millions) Gross Accumulated Net Gross Accumulated Net Trade names $ 41.6 $ (10.3) $ 31.3 $ 17.6 $ (9.4) $ 8.2 Customer and distributor relationships 25.3 (16.4) 8.9 20.5 (14.7) 5.8 Developed technology 6.6 (3.3) 3.3 3.2 (2.8) 0.4 Other 1.4 (1.0) 0.4 1.4 (0.8) 0.6 Total $ 74.9 $ (31.0) $ 43.9 $ 42.7 $ (27.7) $ 15.0 |
Schedule of assets and liabilities measured at fair value on a nonrecurring basis | The following table summarizes certain fair value information at June 30, 2019 for assets or liabilities measured at fair value on a nonrecurring basis: Fair Value Measurements Using: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Input Inputs Description Fair Value (Level 1) (Level 2) (Level 3) (In thousands) Lease exit liability $ 1,779 $ — $ — $ 1,779 |
Schedule of assets and liabilities measured at fair value on a recurring basis | The following table summarizes certain fair value information at March 31, 2020 for assets or liabilities measured at fair value on a recurring basis: Fair Value Measurements Using: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Input Inputs Description Fair Value (Level 1) (Level 2) (Level 3) (In thousands) Convertible note received in acquisition $ 5,006 — — 5,006 The following table summarizes certain fair value information at June 30, 2019 for assets or liabilities measured at fair value on a recurring basis: Fair Value Measurements Using: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Input Inputs Description Fair Value (Level 1) (Level 2) (Level 3) (In thousands) Convertible note received in acquisition $ 5,006 $ — $ — $ 5,006 |
Schedule of activity related to fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis | Three Months Ended March 31, 2020 Purchases, Fair Value Issuances, Unrealized Fair Value Description December 31, 2019 and Settlements Gains/(Losses) March 31, 2020 (In thousands) Convertible note received in acquisition 5,006 — — 5,006 Three Months Ended March 31, 2019 Purchases, Fair Value Issuances, Unrealized Fair Value Description December 31, 2018 and Settlements Gains/(Losses) March 31, 2019 (In thousands) Contingent consideration associated with acquisitions $ 40 $ (40) $ — $ — Convertible note received in acquisition 5,006 — — 5,006 Nine Months Ended March 31, 2020 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2019 and Settlements Gains (Losses) March 31, 2020 (In thousands) Convertible note received in acquisition 5,006 — — 5,006 Nine Months Ended March 31, 2019 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2018 and Settlements Gains (Losses) March 31, 2019 (In thousands) Contingent consideration associated with acquisitions $ 1,345 $ (1,347) $ 2 $ — Convertible note received in acquisition — 5,006 — 5,006 |
Schedule of calculation of basic and diluted net income (loss) per share | Three Months Ended Nine Months Ended March 31, March 31, 2020 2019 2020 2019 (In thousands except share and per share data) Basic net income per share computation: Net income attributable to common stockholders $ 8,754 $ 18,462 $ 19,618 $ 33,892 Weighted average common shares — basic 39,539,791 39,008,990 39,426,121 38,753,236 Basic net income per share $ 0.22 $ 0.47 $ 0.50 $ 0.87 Diluted net income per share computation: Net income attributable to common stockholders $ 8,754 $ 18,462 $ 19,618 $ 33,892 Share computation: Weighted average common shares — basic 39,539,791 39,008,990 39,426,121 38,753,236 Effect of dilutive stock options and restricted stock awards 399,107 2,744,333 1,035,169 1,795,723 Weighted average common shares — diluted 39,938,898 41,753,323 40,461,290 40,548,959 Diluted net income per share $ 0.22 $ 0.44 $ 0.48 $ 0.84 |
Schedule of revision to previously issued financial statements | Three Months Ended September 30, 2018 Six Months Ended December 31, 2018 Nine Months Ended March 31, 2019 Year Ended June 30, 2019 As Previously As Currently As Previously As Currently As Previously As Currently Reported Adjustment Reported Reported Adjustment Reported Reported Adjustment Reported Adjustment (In thousands) Changes in assets and liabilities: Accounts receivable $ (107,930) $ 15,346 $ (92,584) $ (64,116) $ 11,942 $ (52,174) $ (65,147) $ 6,421 $ (58,726) $ — Deferred revenue and other liabilities 42,837 (15,346) 27,491 24,795 (11,942) 12,853 24,510 (6,421) 18,089 — |
Finance and Operating Leases (T
Finance and Operating Leases (Tables) | 9 Months Ended |
Mar. 31, 2020 | |
Finance and Operating Leases | |
Schedule of present value of the minimum lease payments on finance leases | March 31, 2020 June 30, 2019 (in thousands) 2020 $ 6,449 $ 20,070 2021 13,316 4,819 2022 2,383 340 2023 1,532 — Total minimum payments 23,680 25,229 Less: imputed interest (427) (581) Finance lease liability 23,253 24,648 Less: current portion of finance lease liability (17,988) (19,588) Long-term finance lease liability $ 5,265 $ 5,060 |
Schedule of future minimum lease payments under non-cancelable operating leases | March 31, 2020 June 30, 2019 (in thousands) 2020 $ 5,991 $ 8,441 2021 23,337 8,229 2022 22,054 6,735 2023 15,567 550 2024 14,486 137 Thereafter 52,393 — Total minimum payments 133,828 $ 24,092 Less: imputed interest (12,584) Operating lease liability 121,244 Less: current portion of operating lease liability (20,441) Long-term operating lease liability $ 100,803 |
Schedule of subleasing | March 31, 2020 June 30, 2019 (in thousands) 2020 $ 494 $ 930 2021 1,976 961 2022 1,513 528 2023 813 — 2024 67 — Total sublease income $ 4,863 $ 2,419 |
Schedule of lease cost, weighted-average remaining lease term, weighted-average discount rate | Three months ended Nine months ended March 31, 2020 March 31, 2020 Lease cost Finance lease cost: Amortization of right-of-use assets $ 4,232 $ 12,418 Interest on lease liabilities 276 657 Operating lease cost 4,035 7,370 Short-term lease cost 280 987 Sublease income (215) (531) Total lease cost $ 8,608 $ 20,901 Other information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ (4,062) $ (8,151) Financing cash flows from finance leases (6,644) (21,603) Right-of-use assets obtained in exchange for new finance lease liabilities 3,715 16,490 Right-of-use assets obtained in exchange for new operating lease liabilities 502 5,349 Weighted-average remaining lease term - finance leases 0.90 yrs. Weighted-average remaining lease term - operating leases 7.32 yrs. Weighted-average discount rate - finance leases 2.88 % Weighted-average discount rate - operating leases 2.78 % |
Equity Transactions (Tables)
Equity Transactions (Tables) | 9 Months Ended |
Mar. 31, 2020 | |
Equity Incentive Plan | |
Schedule of stock option activity | Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Life (Years) Value Outstanding, June 30, 2019 1,036,017 $ 19.82 Granted — — Exercised (3,000) 16.13 Forfeited or canceled (10,500) 30.92 Outstanding and exercisable, March 31, 2020 1,022,517 $ 19.73 1.90 $ 1,618,890 |
Schedule of restricted stock award activity | Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2019 1,322,552 $ 17.08 Granted 1,045,661 27.12 Vested (721,665) 16.89 Canceled (76,009) 21.46 Nonvested, March 31, 2020 1,570,539 $ 23.64 |
Schedule of performance share units award activity | Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2019 2,372,241 $ 10.61 Granted 14,199 28.17 Vested — — Canceled (8,352) 29.93 Nonvested, March 31, 2020 2,378,088 $ 10.65 |
Acquisitions and Investments (T
Acquisitions and Investments (Tables) | 9 Months Ended |
Mar. 31, 2020 | |
Acquisitions | |
Schedule of intangible assets | March 31, 2020 June 30, 2019 ($ in millions) Gross Accumulated Net Gross Accumulated Net Trade names $ 41.6 $ (10.3) $ 31.3 $ 17.6 $ (9.4) $ 8.2 Customer and distributor relationships 25.3 (16.4) 8.9 20.5 (14.7) 5.8 Developed technology 6.6 (3.3) 3.3 3.2 (2.8) 0.4 Other 1.4 (1.0) 0.4 1.4 (0.8) 0.6 Total $ 74.9 $ (31.0) $ 43.9 $ 42.7 $ (27.7) $ 15.0 |
Galvanize Inc | |
Acquisitions | |
Schedule estimated fair value of consideration paid and identifiable assets acquired and liabilities assumed | Allocation of Purchase Price (In thousands) Cash $ 9,232 Current assets, excluding cash 16,960 Property and equipment, net 11,270 Operating lease right-of-use assets, net 90,716 Intangible assets, net 32,162 Goodwill 107,606 Other assets 1,804 Current liabilities (4,730) Deferred revenue (3,649) Deferred tax liability 17,389 Current operating lease liability (11,620) Long-term operating lease liability (89,782) Other long-term liabilities (130) Total consideration $ 177,228 |
Schedule of intangible assets | Intangible Assets Estimated Intangible Assets Amount Useful Life (in Years) (In thousands) Customer relationships $ 4,785 4.22 years Developed technology 3,357 4.00 years Trade names 24,020 18.00 years $ 32,162 |
Schedule of unaudited pro forma combined results of operations | Three Months Ended Nine Months Ended March 31, March 31, (In thousands) 2020 2019 2020 2019 Revenues $ 260,556 $ 266,665 $ 797,566 $ 796,366 Income (loss) from operations (3,687) 19,745 1,051 27,250 Net income (loss) (9,564) 14,822 (5,283) 16,918 |
Supplemental Disclosure of Ca_2
Supplemental Disclosure of Cash Flow Information (Tables) | 9 Months Ended |
Mar. 31, 2020 | |
Supplemental Disclosure of Cash Flow Information | |
Schedule of supplemental disclosure of cash flow information | Nine Months Ended March 31, 2020 2019 (In thousands) Cash paid for interest $ 660 $ 862 Cash paid for taxes $ 2,796 $ 1,010 Right-of-use assets obtained as a result of the adoption of ASC 842 (1) $ 108,368 $ — Supplemental disclosure of non-cash financing activities: Right-of-use assets obtained in exchange for new finance lease liabilities (2) $ 16,490 $ 19,076 Supplemental disclosure of non-cash investing activities: Stock-based compensation expense capitalized on software development $ 92 $ 101 Stock-based compensation expense capitalized on curriculum development $ 135 $ 176 (1) Includes right-of-use assets obtained as a result of the acquisition of Galvanize (2) Previously referred to as property and equipment financed by capital lease obligations, including student peripherals. |
Description of the Business (De
Description of the Business (Details) | 9 Months Ended |
Mar. 31, 2020item | |
Description of the Business | |
Number of lines of business | 3 |
Basis of Presentation (Details)
Basis of Presentation (Details) | 9 Months Ended |
Mar. 31, 2020segment | |
Basis of Presentation | |
Number of operating segments | 1 |
Number of reportable business segments | 1 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - ASU (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2020 | Jul. 01, 2019 | Jun. 30, 2019 | |
Summary of Significant Accounting Policies | ||||
Lease liability | $ 121,244 | $ 121,244 | $ 0 | |
Operating lease right-of-use assets, net | 106,929 | 106,929 | $ 0 | |
ASU 2016-02 | ||||
Summary of Significant Accounting Policies | ||||
Lease liability | $ 22,700 | |||
Operating lease right-of-use assets, net | $ 17,700 | |||
ASU 2018-15 | ||||
Summary of Significant Accounting Policies | ||||
Implementation costs capitalized | $ 3,200 | $ 7,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Revenue Recognition (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2020USD ($)contract | Mar. 31, 2019USD ($)contract | Mar. 31, 2020USD ($)contract | Mar. 31, 2019USD ($)contract | |
Summary of Significant Accounting Policies | ||||
Revenues | $ 257,154 | $ 253,252 | $ 771,834 | $ 759,438 |
School operating losses included in the entity's revenue | 11,000 | 9,200 | $ 38,500 | 43,200 |
Minimum | ||||
Summary of Significant Accounting Policies | ||||
Duration of contracts providing access to curriculum via the entity's Web site | 1 year | |||
Maximum | ||||
Summary of Significant Accounting Policies | ||||
Duration of contracts providing access to curriculum via the entity's Web site | 2 years | |||
Primary Obligor | ||||
Summary of Significant Accounting Policies | ||||
Revenues | $ 78,300 | $ 85,800 | $ 247,700 | $ 259,900 |
Revenue | Customer Concentration Risk | ||||
Summary of Significant Accounting Policies | ||||
Number of customers with concentration | contract | 0 | 1 | 0 | 1 |
Concentration risk (as a percent) | 10.00% | 10.00% | 10.00% | 10.00% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Disaggregation of revenue (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Mar. 31, 2020USD ($)item | Mar. 31, 2019USD ($) | |
Summary of Significant Accounting Policies | ||||
Number of lines of business | item | 3 | |||
Total Revenues | $ 257,154 | $ 253,252 | $ 771,834 | $ 759,438 |
Managed Public School Programs | ||||
Summary of Significant Accounting Policies | ||||
Total Revenues | 228,335 | 222,645 | 685,446 | 665,981 |
Institutional | ||||
Summary of Significant Accounting Policies | ||||
Total Revenues | 16,753 | 21,306 | 57,038 | 66,913 |
Non-managed Public School Programs | ||||
Summary of Significant Accounting Policies | ||||
Total Revenues | 8,173 | 12,776 | 26,792 | 37,398 |
Institutional Software & Services | ||||
Summary of Significant Accounting Policies | ||||
Total Revenues | 8,580 | 8,530 | 30,246 | 29,515 |
Private Pay Schools and Other | ||||
Summary of Significant Accounting Policies | ||||
Total Revenues | $ 12,066 | $ 9,301 | $ 29,350 | $ 26,544 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Contract Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Jun. 30, 2019 | |
Accounts receivables, contract assets and deferred revenue | |||||
Accounts receivable | $ 284,326 | $ 284,326 | $ 191,639 | ||
Unbilled receivables (included in accounts receivable) | 17,323 | 17,323 | 16,189 | ||
Deferred revenue | 39,618 | 39,618 | $ 22,828 | ||
Deferred revenue, long-term (included in other long-term liabilities) | 2,155 | 2,155 | |||
Revenue recognized that was included in opening deferred revenue balance | 29,600 | $ 24,900 | 19,200 | $ 21,500 | |
Revenue recognized from performance obligation satisfied in prior periods | $ 1,500 | $ 3,200 | $ 4,300 | $ 3,700 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Performance Obligations (Details) $ in Millions | 9 Months Ended |
Mar. 31, 2020USD ($) | |
Summary of Significant Accounting Policies | |
Minimum payment term | 30 days |
Maximum payment term | 45 days |
Practical expedient | |
Unsatisfied performance obligations | true |
Unsatisfied performance obligations amount | $ 2.2 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Inventories (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Jun. 30, 2019 |
Summary of Significant Accounting Policies | ||
Inventory deemed long-term and included in deposits and other assets | $ 3.8 | $ 4.1 |
Excess and obsolete inventory reserve | $ 4.7 | $ 4.1 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Property and Equipment and Leases (Details) - USD ($) | Jul. 01, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Jan. 27, 2020 |
Property and equipment | ||||||
Depreciation expense | $ 5,700,000 | $ 4,900,000 | $ 16,200,000 | $ 15,200,000 | ||
Equipment expense | 700,000 | 700,000 | 3,900,000 | 4,000,000 | ||
Capitalized software development costs | $ 18,825,000 | 20,580,000 | ||||
Capitalized Curriculum Development Costs | ||||||
Estimated useful life of the software | 5 years | |||||
Capitalized curriculum development additions | $ 15,463,000 | 13,746,000 | ||||
Amortization expense | 4,500,000 | 4,500,000 | 13,300,000 | 13,500,000 | ||
Finance Leases | ||||||
Purchase option | $ 1 | $ 1 | ||||
Operating Leases | ||||||
Incremental borrowing rate used as discount rate | 3.86% | 2.55% | ||||
Minimum | ||||||
Finance Leases | ||||||
Finance lease term | 1 year | 1 year | ||||
Operating Leases | ||||||
Operating leases initial term | 1 year | 1 year | ||||
Operating lease remaining lease term | 1 year | |||||
Maximum | ||||||
Finance Leases | ||||||
Finance lease term | 3 years | 3 years | ||||
Operating Leases | ||||||
Operating leases initial term | 11 years | 11 years | ||||
Operating lease remaining lease term | 5 years | |||||
Student computers | ||||||
Property and equipment | ||||||
Accelerated depreciation | $ 500,000 | 500,000 | $ 1,800,000 | 1,600,000 | ||
Student computers | Minimum | ||||||
Property and equipment | ||||||
Useful Life | 3 years | |||||
Student computers | Maximum | ||||||
Property and equipment | ||||||
Useful Life | 5 years | |||||
Computer hardware | ||||||
Property and equipment | ||||||
Useful Life | 3 years | |||||
Computer software | Minimum | ||||||
Property and equipment | ||||||
Useful Life | 3 years | |||||
Computer software | Maximum | ||||||
Property and equipment | ||||||
Useful Life | 5 years | |||||
Web site development costs | ||||||
Property and equipment | ||||||
Useful Life | 3 years | |||||
Office equipment | ||||||
Property and equipment | ||||||
Useful Life | 5 years | |||||
Furniture and fixtures | ||||||
Property and equipment | ||||||
Useful Life | 7 years | |||||
Leasehold improvements | Minimum | ||||||
Property and equipment | ||||||
Useful Life | 3 years | |||||
Leasehold improvements | Maximum | ||||||
Property and equipment | ||||||
Useful Life | 12 years | |||||
Capitalized software | ||||||
Property and equipment | ||||||
Useful Life | 3 years | |||||
Amortization expense | $ 6,400,000 | $ 7,000,000 | $ 20,000,000 | $ 22,400,000 | ||
Buildings | Minimum | ||||||
Operating Leases | ||||||
Operating leases initial term | 1 year | 1 year | ||||
Buildings | Maximum | ||||||
Operating Leases | ||||||
Operating leases initial term | 15 years | 15 years |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Goodwill and Intangibles (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Jun. 30, 2019 | |
Intangible Assets: | |||||
Amortization expense | $ 1,800 | $ 700 | $ 3,300 | $ 2,200 | |
Goodwill | 197,803 | 197,803 | $ 90,197 | ||
Intangible assets, net | 43,893 | 43,893 | 14,981 | ||
Gross Carrying Amount | 74,900 | 74,900 | 42,700 | ||
Accumulated Amortization | (31,000) | (31,000) | (27,700) | ||
Net Carrying Value | 43,900 | 43,900 | 15,000 | ||
Impairment of goodwill | 0 | ||||
Future amortization of intangible assets | |||||
Fiscal 2020 | 1,600 | 1,600 | |||
Fiscal 2021 | 5,400 | 5,400 | |||
Fiscal 2022 | 5,200 | 5,200 | |||
Fiscal 2023 | 5,000 | 5,000 | |||
Fiscal 2024 | 4,000 | 4,000 | |||
Thereafter | 22,400 | 22,400 | |||
Trade names | |||||
Intangible Assets: | |||||
Gross Carrying Amount | 41,600 | 41,600 | 17,600 | ||
Accumulated Amortization | (10,300) | (10,300) | (9,400) | ||
Net Carrying Value | 31,300 | 31,300 | 8,200 | ||
Customer and distributor relationships | |||||
Intangible Assets: | |||||
Gross Carrying Amount | 25,300 | 25,300 | 20,500 | ||
Accumulated Amortization | (16,400) | (16,400) | (14,700) | ||
Net Carrying Value | 8,900 | 8,900 | 5,800 | ||
Developed technology | |||||
Intangible Assets: | |||||
Gross Carrying Amount | 6,600 | 6,600 | 3,200 | ||
Accumulated Amortization | (3,300) | (3,300) | (2,800) | ||
Net Carrying Value | 3,300 | 3,300 | 400 | ||
Other | |||||
Intangible Assets: | |||||
Gross Carrying Amount | 1,400 | 1,400 | 1,400 | ||
Accumulated Amortization | (1,000) | (1,000) | (800) | ||
Net Carrying Value | $ 400 | $ 400 | $ 600 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Measured on a recurring basis | Convertible Note | |||||
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | |||||
Convertible note | $ 5,006 | $ 5,006 | $ 5,006 | ||
Measured on a nonrecurring basis | |||||
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | |||||
Lease exit liability | 1,779 | ||||
Measured on a nonrecurring basis | Significant Unobservable Inputs (Level 3) | |||||
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | |||||
Lease exit liability | 1,779 | ||||
Acquisitions | Measured on a recurring basis | Convertible Note | |||||
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | |||||
Convertible note | 5,006 | 5,006 | $ 5,006 | $ 5,006 | |
Acquisitions | Measured on a recurring basis | Significant Unobservable Inputs (Level 3) | Convertible Note | |||||
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | |||||
Convertible note | $ 5,006 | $ 5,006 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Fair Value Measurements (Details) - Measured on a recurring basis - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | |
Convertible Note | |||
Fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis | |||
Fair Value, beginning of period | $ 5,006 | ||
Purchases, Issuances and Settlements | 0 | ||
Fair Value, ending of period | 5,006 | ||
Acquisitions | Contingent Consideration | |||
Fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis | |||
Fair Value, beginning of period | $ 40 | $ 1,345 | |
Purchases, Issuances and Settlements | (40) | (1,347) | |
Unrealized Gains/(Losses) | 2 | ||
Acquisitions | Convertible Note | |||
Fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis | |||
Fair Value, beginning of period | 5,006 | 5,006 | |
Purchases, Issuances and Settlements | 5,006 | ||
Fair Value, ending of period | $ 5,006 | 5,006 | $ 5,006 |
Acquisitions | Significant Unobservable Inputs (Level 3) | Convertible Note | |||
Fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis | |||
Fair Value, beginning of period | 5,006 | ||
Fair Value, ending of period | $ 5,006 |
Summary of Significant Accou_14
Summary of Significant Accounting Policies - Net Income Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Mar. 31, 2020 | Mar. 31, 2019 | Jun. 30, 2019 | |
Basic and diluted income (loss) per share computation: | |||||||||
Net income attributable to common stockholders | $ 8,754 | $ 20,594 | $ (9,730) | $ 18,462 | $ 23,712 | $ (8,282) | $ 19,618 | $ 33,892 | |
Weighted average common shares-basic | 39,539,791 | 39,008,990 | 39,426,121 | 38,753,236 | |||||
Basic net income per share (in dollars per share) | $ 0.22 | $ 0.47 | $ 0.50 | $ 0.87 | |||||
Effect of dilutive stock options and restricted stock awards (in shares) | 399,107 | 2,744,333 | 1,035,169 | 1,795,723 | |||||
Weighted average common shares-diluted | 39,938,898 | 41,753,323 | 40,461,290 | 40,548,959 | |||||
Diluted net income per share (in dollars per share) | $ 0.22 | $ 0.44 | $ 0.48 | $ 0.84 | |||||
Additional disclosures | |||||||||
Common stock, shares issued | 46,274,270 | 46,274,270 | 45,575,236 | ||||||
Common stock, shares outstanding | 40,939,527 | 40,939,527 | 40,240,493 | ||||||
Stock options and restricted stock | |||||||||
Basic and diluted income (loss) per share computation: | |||||||||
Anti-dilutive shares | 1,429,479 | 119,343 | 855,110 | 148,355 |
Summary of Significant Accou_15
Summary of Significant Accounting Policies - Revision to Previously Issued Financial Statements (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2018 | Mar. 31, 2020 | Mar. 31, 2019 | |
Changes in assets and liabilities: | ||||
Accounts receivable | $ (92,584) | $ (52,174) | $ (76,187) | $ (58,726) |
Deferred revenue and other liabilities | 27,491 | 12,853 | 18,089 | |
As Previously Reported | ||||
Changes in assets and liabilities: | ||||
Accounts receivable | (107,930) | (64,116) | (65,147) | |
Deferred revenue and other liabilities | 42,837 | 24,795 | 24,510 | |
Out of period adjustment | ||||
Changes in assets and liabilities: | ||||
Accounts receivable | 15,346 | 11,942 | 6,421 | |
Deferred revenue and other liabilities | $ (15,346) | $ (11,942) | $ (6,421) |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | |
Reconciliation to income tax at the statutory rate: | ||||
Effective income tax rate (as a percent) | 33.50% | 24.00% | 23.40% | 22.50% |
Finance and Operating Leases (D
Finance and Operating Leases (Details) - USD ($) | 1 Months Ended | ||||
Mar. 31, 2020 | Feb. 28, 2019 | Jan. 27, 2020 | Jul. 01, 2019 | Jun. 30, 2019 | |
Finance and Operating Leases | |||||
Finance lease liability | $ 23,253,000 | ||||
Finance lease right-of-use assets | 23,900,000 | $ 19,800,000 | |||
Purchase option | $ 1 | ||||
Incremental borrowing rate used as discount rate | 2.55% | 3.86% | |||
Minimum | |||||
Finance and Operating Leases | |||||
Interest rate on finance lease (as a percent) | 1.52% | ||||
Finance lease term | 1 year | ||||
Maximum | |||||
Finance and Operating Leases | |||||
Interest rate on finance lease (as a percent) | 3.87% | ||||
Finance lease term | 3 years | ||||
PNC | |||||
Finance and Operating Leases | |||||
Finance lease term | 36 months | ||||
Purchase option | $ 1 | ||||
BALC | |||||
Finance and Operating Leases | |||||
Available line of credit | $ 25,000,000 | $ 25,000,000 | |||
Finance lease term | 12 months | ||||
Purchase option | $ 1 | ||||
BALC | LIBOR | |||||
Finance and Operating Leases | |||||
Interest rate spread added to base rate (as a percent) | 0.75% | 1.25% | |||
BALC | Minimum | |||||
Finance and Operating Leases | |||||
Fixed interest rate (as a percent) | 1.52% | ||||
BALC | Maximum | |||||
Finance and Operating Leases | |||||
Fixed interest rate (as a percent) | 3.58% |
Finance and Operating Leases -
Finance and Operating Leases - Finance leases (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Jun. 30, 2019 |
Finance leases (ASC 842) | ||
2020 | $ 6,449 | |
2021 | 13,316 | |
2022 | 2,383 | |
2023 | 1,532 | |
Total minimum payments | 23,680 | |
Less: imputed interest | (427) | |
Finance lease liability | 23,253 | |
Less: current portion of finance lease liability | (17,988) | |
Long-term finance lease liability | $ 5,265 | |
Finance leases (ASC 840) | ||
2020 | $ 20,070 | |
2021 | 4,819 | |
2022 | 340 | |
Total minimum payments | 25,229 | |
Less: imputed interest | (581) | |
Finance lease liability | 24,648 | |
Less: current portion of finance lease liability | (19,588) | |
Long-term finance lease liability | $ 5,060 |
Finance and Operating Leases _2
Finance and Operating Leases - Operating Leases (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Jun. 30, 2019 |
Operating Leases (ASC 842) | ||
2020 | $ 5,991 | |
2021 | 23,337 | |
2022 | 22,054 | |
2023 | 15,567 | |
2024 | 14,486 | |
Thereafter | 52,393 | |
Total minimum payments | 133,828 | |
Less: imputed interest | (12,584) | |
Operating lease liability | 121,244 | $ 0 |
Less: current portion of operating lease liability | (20,441) | |
Long-term operating lease liability | 100,803 | |
Operating lease right-of-use assets, net | $ 106,929 | 0 |
Operating Leases (ASC 840) | ||
2020 | 8,441 | |
2021 | 8,229 | |
2022 | 6,735 | |
2023 | 550 | |
2024 | 137 | |
Total minimum payments | $ 24,092 | |
Minimum | ||
Operating Leases (ASC 842) | ||
Operating leases initial term | 1 year | |
Maximum | ||
Operating Leases (ASC 842) | ||
Operating leases initial term | 11 years |
Finance and Operating Leases _3
Finance and Operating Leases - Sub Leases (Details) $ in Thousands | Mar. 31, 2020USD ($)facility | Jun. 30, 2019USD ($) |
Finance and Operating Leases | ||
2020 | $ 494 | |
2020 | $ 930 | |
2021 | 1,976 | 961 |
2022 | 1,513 | 528 |
2023 | 813 | |
2024 | 67 | |
Total sublease income | $ 4,863 | $ 2,419 |
Number of entity's facilities that are being subleased through June 2021 | facility | 1 | |
Number of entity's facilities that are being subleased through May 2022 | facility | 2 | |
Number of entity's facilities that are being subleased through July 2023 | facility | 1 |
Finance and Operating Leases _4
Finance and Operating Leases - Lease cost and other information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended |
Mar. 31, 2020USD ($) | Mar. 31, 2020USD ($) | |
Finance lease cost: | ||
Amortization of right-of-use assets | $ 4,232 | $ 12,418 |
Interest on lease liabilities | 276 | 657 |
Operating lease cost | 4,035 | 7,370 |
Short-term lease cost | 280 | 987 |
Sublease income | (215) | (531) |
Total lease cost | 8,608 | 20,901 |
Cash paid for amounts included in the measurement of lease liabilities | ||
Operating cash flows from operating leases | (4,062) | (8,151) |
Financing cash flows from finance leases | (6,644) | (21,603) |
Right-of-use assets obtained in exchange for new finance lease liabilities | 3,715 | 16,490 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 502 | $ 5,349 |
Weighted-average remaining lease term - finance leases | 10 months 24 days | 10 months 24 days |
Weighted-average remaining lease term - operating leases | 7 years 3 months 25 days | 7 years 3 months 25 days |
Weighted-average discount rate - finance leases | 2.88% | 2.88% |
Weighted-average discount rate - operating leases | 2.78% | 2.78% |
Credit Facility (Details)
Credit Facility (Details) - Revolving Credit Facility - USD ($) $ in Millions | Jan. 27, 2020 | Mar. 31, 2020 |
Credit Facility | ||
Face amount | $ 100 | |
Term of debt | 5 years | |
Amount outstanding | $ 100 | |
Amount of accordion feature under the credit facility | $ 200 | |
LIBOR | Minimum | ||
Credit Facility | ||
Interest rate spread added to base rate (as a percent) | 0.875% | |
LIBOR | Maximum | ||
Credit Facility | ||
Interest rate spread added to base rate (as a percent) | 1.50% |
Equity Incentive Plan - Share B
Equity Incentive Plan - Share Based Compensation (Details) | 9 Months Ended |
Mar. 31, 2020USD ($)$ / sharesshares | |
Employee and Non Employees Stock Option | |
Shares | |
Outstanding at the beginning of the period (in shares) | 1,036,017 |
Exercised (in shares) | (3,000) |
Forfeited or canceled (in shares) | (10,500) |
Outstanding at the end of the period (in shares) | 1,022,517 |
Weighted-Average Exercise Price | |
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 19.82 |
Exercised (in dollars per share) | $ / shares | 16.13 |
Forfeited or canceled (in dollars per share) | $ / shares | 30.92 |
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 19.73 |
Additional information | |
Weighted Average Remaining Contractual Life | 1 year 10 months 24 days |
Aggregate Intrinsic Value | $ | $ 1,618,890 |
The Plan | |
Stock option activity | |
Shares reserved for issuance | 1,393,643 |
The Plan and Prior Plan | |
Shares | |
Outstanding at the end of the period (in shares) | 5,013,246 |
Equity Equity Incentive Plan -
Equity Equity Incentive Plan - Vesting (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2020 | Sep. 30, 2019 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Jun. 30, 2019 | |
Employee and Non Employees Stock Option | ||||||
Equity Transactions | ||||||
Intrinsic value of options exercised | $ 0 | $ 0.7 | ||||
Stock based compensation expense | $ 0 | $ 0.2 | 0.1 | 0.5 | ||
Restricted Stock | ||||||
Equity Transactions | ||||||
Unrecognized compensation | 28 | $ 28 | ||||
Weighted average period for recognition of total unrecognized compensation expense related to unvested stock options granted | 1 year 8 months 12 days | |||||
Stock based compensation expense | 4.5 | 2.6 | $ 12.9 | 9.5 | ||
Granted (in shares) | 1,045,661 | |||||
Granted (in dollars per share) | $ 27.12 | |||||
Performance Share Units | ||||||
Equity Transactions | ||||||
Unrecognized compensation | 8.7 | $ 8.7 | ||||
Weighted average period for recognition of total unrecognized compensation expense related to unvested stock options granted | 1 year 6 months | |||||
Stock based compensation expense | 1.5 | 1.3 | $ 4.6 | 2.4 | ||
Granted (in shares) | 14,199 | |||||
Granted (in dollars per share) | $ 28.17 | |||||
Performance Share Units | Fiscal Year 2019 LTIP | ||||||
Equity Transactions | ||||||
Stock based compensation expense | 0 | $ 0 | $ 0 | $ 0 | ||
Granted (in shares) | 278,135 | 278,135 | ||||
Fair value | $ 8.3 | $ 8.3 | ||||
Granted (in dollars per share) | $ 29.95 | $ 29.95 | ||||
Performance Share Units | Fiscal Year 2020 TRIP | ||||||
Equity Transactions | ||||||
Fair value | $ 12.3 | $ 12.3 | ||||
Performance Share Units | Revenue | Fiscal Year 2020 TRIP | ||||||
Equity Transactions | ||||||
Earned award vesting percentage | 60.00% | |||||
Performance Share Units | EBITDA | Fiscal Year 2020 TRIP | ||||||
Equity Transactions | ||||||
Earned award vesting percentage | 40.00% | |||||
Performance Shares Tranche #1 | Fiscal Year 2019 LTIP | ||||||
Equity Transactions | ||||||
Earned award vesting percentage | 45.00% | 45.00% | ||||
Performance Shares Tranche #2 | Fiscal Year 2019 LTIP | ||||||
Equity Transactions | ||||||
Earned award vesting percentage | 25.00% | 25.00% | ||||
Performance Shares Tranche #3 | Fiscal Year 2019 LTIP | ||||||
Equity Transactions | ||||||
Earned award vesting percentage | 30.00% | 30.00% | ||||
Calendar Year 2021 | Performance Shares Tranche #1 | Fiscal Year 2020 TRIP | ||||||
Equity Transactions | ||||||
Earned award vesting percentage | 70.00% | |||||
Calendar Year 2022 | Performance Shares Tranche #2 | Fiscal Year 2020 TRIP | ||||||
Equity Transactions | ||||||
Earned award vesting percentage | 30.00% |
Equity Equity Incentive Plan _2
Equity Equity Incentive Plan - Restricted Stock (Details) | 9 Months Ended |
Mar. 31, 2020$ / sharesshares | |
Restricted Stock | |
Shares | |
Nonvested at the beginning of the period (in shares) | 1,322,552 |
Granted (in shares) | 1,045,661 |
Vested (in shares) | (721,665) |
Forfeited or canceled (in shares) | (76,009) |
Nonvested at the end of the period (in shares) | 1,570,539 |
Weighted-Average Grant Date Fair Value | |
Nonvested at the beginning of the period (in dollars per share) | $ / shares | $ 17.08 |
Granted (in dollars per share) | $ / shares | 27.12 |
Vested (in dollars per share) | $ / shares | 16.89 |
Forfeited or canceled (in dollars per share) | $ / shares | 21.46 |
Nonvested at the end of the period (in dollars per share) | $ / shares | $ 23.64 |
Restricted Stock | Vesting Performance | |
Shares | |
Granted (in shares) | 499,818 |
Vested (in shares) | (210,467) |
Nonvested at the end of the period (in shares) | 559,089 |
Performance Share Units | |
Shares | |
Nonvested at the beginning of the period (in shares) | 2,372,241 |
Granted (in shares) | 14,199 |
Forfeited or canceled (in shares) | (8,352) |
Nonvested at the end of the period (in shares) | 2,378,088 |
Weighted-Average Grant Date Fair Value | |
Nonvested at the beginning of the period (in dollars per share) | $ / shares | $ 10.61 |
Granted (in dollars per share) | $ / shares | 28.17 |
Forfeited or canceled (in dollars per share) | $ / shares | 29.93 |
Nonvested at the end of the period (in dollars per share) | $ / shares | $ 10.65 |
Right to receive number of shares | 1 |
Performance Share Units | CEO | |
Shares | |
Granted (in shares) | 358,294 |
Weighted-Average Grant Date Fair Value | |
Granted (in dollars per share) | $ / shares | $ 27.91 |
Performance Share Units | CEO | Vesting Performance | |
Weighted-Average Grant Date Fair Value | |
Vesting in first subsequent fiscal year (as a percent) | 66.67% |
Vesting in second subsequent fiscal year (as a percent) | 33.33% |
Performance Share Units | Executive Officers | Vesting Performance | |
Shares | |
Granted (in shares) | 141,524 |
Weighted-Average Grant Date Fair Value | |
Granted (in dollars per share) | $ / shares | $ 27.91 |
Performance Share Units | Executive Officers | Vest immediately upon achievement of the performance goals | |
Weighted-Average Grant Date Fair Value | |
Earned award vesting percentage | 33.33% |
Performance Share Units | Executive Officers | Vest annually over two years | |
Weighted-Average Grant Date Fair Value | |
Earned award vesting percentage | 66.67% |
Vesting period | 2 years |
Equity Equity Incentive Plan _3
Equity Equity Incentive Plan - Other (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Mar. 31, 2020 | Sep. 30, 2019 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Jun. 30, 2019 | Jun. 30, 2017 | Mar. 31, 2020 | Jun. 30, 2019 | |
Equity Transactions | |||||||||
Fair value of share-based compensation awards granted in period | $ 28.4 | $ 15.1 | |||||||
Fair value of share-based compensation awards vested in period | $ 17.2 | 19.6 | |||||||
2019 SPP | |||||||||
Equity Transactions | |||||||||
Vesting period | 3 years | ||||||||
Vesting Performance | |||||||||
Equity Transactions | |||||||||
Number of consecutive days considered for the computation of average closing stock prices | 30 days | ||||||||
Equity Incentive Market Based Restricted Stock Awards | |||||||||
Equity Transactions | |||||||||
Vested (in shares) | (6,800) | ||||||||
Granted (in dollars per share) | $ 14.35 | ||||||||
Restricted Stock | |||||||||
Equity Transactions | |||||||||
Stock based compensation expense | $ 4.5 | $ 2.6 | $ 12.9 | 9.5 | |||||
Performance shares | 1,570,539 | 1,322,552 | 1,570,539 | 1,322,552 | 1,570,539 | 1,322,552 | |||
Unrecognized compensation | $ 28 | ||||||||
Weighted average period for recognition of total unrecognized compensation expense related to unvested stock options granted | 1 year 8 months 12 days | ||||||||
Nonvested at the beginning of the period (in shares) | 1,322,552 | 1,322,552 | |||||||
Granted (in shares) | 1,045,661 | ||||||||
Vested (in shares) | (721,665) | ||||||||
Forfeited or canceled (in shares) | (76,009) | ||||||||
Nonvested at the end of the period (in shares) | 1,570,539 | 1,570,539 | 1,322,552 | ||||||
Nonvested at the beginning of the period (in dollars per share) | $ 17.08 | $ 17.08 | |||||||
Granted (in dollars per share) | 27.12 | ||||||||
Vested (in dollars per share) | 16.89 | ||||||||
Forfeited or canceled (in dollars per share) | 21.46 | ||||||||
Nonvested at the end of the period (in dollars per share) | $ 23.64 | $ 23.64 | $ 17.08 | ||||||
Restricted Stock | Vesting Performance | |||||||||
Equity Transactions | |||||||||
Performance shares | 559,089 | 559,089 | 559,089 | ||||||
Granted (in shares) | 499,818 | ||||||||
Vested (in shares) | (210,467) | ||||||||
Nonvested at the end of the period (in shares) | 559,089 | 559,089 | |||||||
Restricted Stock | Service based awards | |||||||||
Equity Transactions | |||||||||
Performance shares | 1,011,450 | 1,011,450 | 1,011,450 | ||||||
Granted (in shares) | 545,843 | ||||||||
Vested (in shares) | (504,398) | ||||||||
Nonvested at the end of the period (in shares) | 1,011,450 | 1,011,450 | |||||||
Performance Share Units | |||||||||
Equity Transactions | |||||||||
Stock based compensation expense | $ 1.5 | 1.3 | $ 4.6 | 2.4 | |||||
Granted (in shares) | 2,108,305 | ||||||||
Granted (in dollars per share) | $ 8.18 | ||||||||
Performance shares | 2,378,088 | 2,372,241 | 2,378,088 | 2,372,241 | 2,378,088 | 2,372,241 | |||
Unrecognized compensation | $ 8.7 | ||||||||
Weighted average period for recognition of total unrecognized compensation expense related to unvested stock options granted | 1 year 6 months | ||||||||
Nonvested at the beginning of the period (in shares) | 2,372,241 | 2,372,241 | |||||||
Granted (in shares) | 14,199 | ||||||||
Forfeited or canceled (in shares) | (8,352) | ||||||||
Nonvested at the end of the period (in shares) | 2,378,088 | 2,378,088 | 2,372,241 | ||||||
Nonvested at the beginning of the period (in dollars per share) | $ 10.61 | $ 10.61 | |||||||
Granted (in dollars per share) | 28.17 | ||||||||
Forfeited or canceled (in dollars per share) | 29.93 | ||||||||
Nonvested at the end of the period (in dollars per share) | $ 10.65 | $ 10.65 | $ 10.61 | ||||||
Performance Share Units | Fiscal Year 2019 LTIP | |||||||||
Equity Transactions | |||||||||
Stock based compensation expense | $ 0 | 0 | $ 0 | 0 | |||||
Fair value | $ 8.3 | $ 8.3 | |||||||
Granted (in shares) | 278,135 | 278,135 | |||||||
Granted (in dollars per share) | $ 29.95 | $ 29.95 | |||||||
Performance Shares Tranche #1 | Fiscal Year 2019 LTIP | |||||||||
Equity Transactions | |||||||||
Earned award vesting percentage | 45.00% | 45.00% | |||||||
Performance Shares Tranche #2 | Fiscal Year 2019 LTIP | |||||||||
Equity Transactions | |||||||||
Earned award vesting percentage | 25.00% | 25.00% | |||||||
Performance Shares Tranche #3 | Fiscal Year 2019 LTIP | |||||||||
Equity Transactions | |||||||||
Earned award vesting percentage | 30.00% | 30.00% | |||||||
Deferred Stock Units | |||||||||
Equity Transactions | |||||||||
Stock based compensation expense | $ 0.2 | $ 0.1 | $ 0.4 | $ 0.1 | |||||
Granted (in shares) | 23,844 | ||||||||
Unissued at the end of the period (in shares) | 42,102 | ||||||||
Granted (in dollars per share) | $ 20.13 | ||||||||
Senior Executives | Performance Share Units | 2019 SPP | |||||||||
Equity Transactions | |||||||||
Market capitalization growth performance period | 3 years | ||||||||
Threshold period average price of stock to determine final amount | 30 days | ||||||||
Threshold days after release of fiscal year 2021 results to calculate average price of stock | 7 days | ||||||||
Senior Executives | Performance Share Units | Total stock price growth less than 25% | 2019 SPP | |||||||||
Equity Transactions | |||||||||
Amount earned as percentage of total value growth | 0.00% | ||||||||
Percentage of total stock price growth | 25.00% | ||||||||
Annualized percentage of total stock price growth | 7.60% | ||||||||
Senior Executives | Performance Share Units | Total stock price growth 33% | 2019 SPP | |||||||||
Equity Transactions | |||||||||
Amount earned as percentage of total value growth | 6.00% | ||||||||
Percentage of total stock price growth | 33.00% | ||||||||
Annualized percentage of total stock price growth | 10.00% | ||||||||
Senior Executives | Performance Share Units | Total stock price growth equals or greater than 95% | 2019 SPP | |||||||||
Equity Transactions | |||||||||
Amount earned as percentage of total value growth | 7.50% | ||||||||
Percentage of total stock price growth | 95.00% | ||||||||
Annualized percentage of total stock price growth | 25.00% | ||||||||
Executive Officers | Performance Share Units | Vesting Performance | |||||||||
Equity Transactions | |||||||||
Granted (in shares) | 141,524 | ||||||||
Granted (in dollars per share) | $ 27.91 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | |
Related Party Transactions | ||||
Due to related party | $ 1.4 | $ 1.4 | ||
Future of School | ||||
Related Party Transactions | ||||
Contributions made to related party | $ 0.2 | $ 0.1 | $ 1 | $ 0.9 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Mar. 31, 2020USD ($) | Mar. 27, 2020installment |
Commitments and contingencies | ||
Employer portion of social security payroll tax percentage | 6.20% | |
Number of installments that deferred employer social security payroll taxes will be repaid | installment | 2 | |
Percentage of deferred social security employer payroll tax to be paid by prescribed dates to be considered timely | 50.00% | |
Buildings | ||
Commitments and contingencies | ||
Guarantees related to lease commitments | $ | $ 1.1 |
Restructuring (Details)
Restructuring (Details) - Facility closing $ in Millions | Jul. 01, 2019USD ($) | Mar. 31, 2017facility | Jun. 30, 2017USD ($) |
Restructuring | |||
Number of facilities being exited | facility | 3 | ||
Impairment of leases | $ | $ 1.8 | $ 5.4 |
Acquisitions and Investments (D
Acquisitions and Investments (Details) item in Thousands, $ in Thousands | Jan. 27, 2020USD ($) | Aug. 31, 2018USD ($)item | Mar. 31, 2020USD ($) | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Jun. 30, 2019USD ($)fund |
Allocation of Purchase Price | ||||||||
Goodwill | $ 197,803 | $ 197,803 | $ 197,803 | $ 90,197 | ||||
Two early stage funds | ||||||||
Pro forma results | ||||||||
Number of limited partnerships invested in | fund | 2 | |||||||
Investment commitment | $ 13,000 | |||||||
Investments in limited partnerships | 4,100 | |||||||
Investment recorded at cost | 1,600 | 1,600 | 1,600 | |||||
Equity method investment | 2,500 | |||||||
Tallo | ||||||||
Pro forma results | ||||||||
Investment | $ 6,700 | |||||||
Ownership percentage | 39.50% | |||||||
Convertible note | $ 5,000 | |||||||
Ownership percentage on an if-converted basis | 56.00% | |||||||
Term of debt | 48 months | |||||||
Tallo | Series D Preferred shares | ||||||||
Pro forma results | ||||||||
Convertible into Series D Preferred shares | item | 3,670 | |||||||
Tallo | Base Rate | ||||||||
Pro forma results | ||||||||
Interest rate spread added to base rate (as a percent) | 0.25% | |||||||
Galvanize Inc | ||||||||
Acquisition and Investments | ||||||||
Ownership percentage acquired (as a percent) | 100.00% | |||||||
Total consideration | $ 177,200 | |||||||
Allocation of Purchase Price | ||||||||
Cash | 9,232 | |||||||
Current assets, excluding cash | 16,960 | |||||||
Property and equipment, net | 11,270 | |||||||
Operating lease right-of-use assets, net | 90,716 | |||||||
Intangible assets | 32,162 | |||||||
Goodwill | 107,606 | |||||||
Other assets | 1,804 | |||||||
Current liabilities | (4,730) | |||||||
Deferred revenue | (3,649) | |||||||
Deferred tax liability | 17,389 | |||||||
Current operating lease liability | (11,620) | |||||||
Long-term operating lease liability | (89,782) | |||||||
Other long-term liabilities | (130) | |||||||
Total consideration | 177,228 | |||||||
Revenues of acquiree | 3,200 | |||||||
Income (loss) of acquiree | 8,100 | |||||||
Non-recurring transaction costs of acquirer | $ 900 | |||||||
Pro forma results | ||||||||
Revenues | 260,556 | $ 266,665 | 797,566 | $ 796,366 | ||||
Income (loss) from operations | (3,687) | 19,745 | 1,051 | 27,250 | ||||
Net income (loss) | $ (9,564) | $ 14,822 | $ (5,283) | $ 16,918 | ||||
Galvanize Inc | Customer and distributor relationships | ||||||||
Allocation of Purchase Price | ||||||||
Intangible assets | $ 4,785 | |||||||
Estimated useful life (in years) | 4 years 2 months 19 days | |||||||
Galvanize Inc | Developed technology | ||||||||
Allocation of Purchase Price | ||||||||
Intangible assets | $ 3,357 | |||||||
Estimated useful life (in years) | 4 years | |||||||
Galvanize Inc | Trade names | ||||||||
Allocation of Purchase Price | ||||||||
Intangible assets | $ 24,020 | |||||||
Estimated useful life (in years) | 18 years |
Supplemental Disclosure of Ca_3
Supplemental Disclosure of Cash Flow Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Supplemental Disclosure of Cash Flow Information | ||
Cash paid for interest | $ 660 | $ 862 |
Cash paid for taxes | 2,796 | 1,010 |
Right-of-use assets obtained as a result of the adoption of ASC 842 | 108,368 | |
Supplemental disclosure of non-cash financing activities: | ||
Right-of-use assets obtained in exchange for new finance lease liabilities | 16,490 | 19,076 |
Supplemental disclosure of non-cash investing activities: | ||
Stock-based compensation expense capitalized on software development | 92 | 101 |
Stock-based compensation expense capitalized on curriculum development | $ 135 | $ 176 |