Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jun. 30, 2020 | Jul. 31, 2020 | Dec. 31, 2019 | |
Cover | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Jun. 30, 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 Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
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 | 41,309,402 | ||
Entity Public Float | $ 594,180,562 | ||
Current Fiscal Year End Date | --06-30 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0001157408 | ||
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 30, 2019 |
Current assets | ||
Cash and cash equivalents | $ 212,299 | $ 283,121 |
Accounts receivable, net of allowance of $6,808 and $11,766 at June 30, 2020 and 2019, respectively | 236,134 | 191,639 |
Inventories, net | 28,300 | 29,946 |
Prepaid expenses | 13,058 | 12,643 |
Other current assets | 11,480 | 12,307 |
Total current assets | 501,271 | 529,656 |
Operating lease right-of-use assets, net | 111,768 | |
Property and equipment, net | 38,668 | 31,980 |
Capitalized software, net | 48,493 | 51,165 |
Capitalized curriculum development costs, net | 48,849 | 53,297 |
Intangible assets, net | 77,451 | 14,981 |
Goodwill | 174,939 | 90,197 |
Deposits and other assets | 71,824 | 48,330 |
Total assets | 1,073,263 | 819,606 |
Current liabilities | ||
Accounts payable | 40,428 | 50,488 |
Accrued liabilities | 27,351 | 20,685 |
Accrued compensation and benefits | 47,227 | 41,998 |
Deferred revenue | 24,417 | 22,828 |
Credit facility | 100,000 | |
Current portion of finance lease liability | 13,304 | |
Current portion of finance lease liability | 19,588 | |
Current portion of operating lease liability | 20,689 | |
Total current liabilities | 273,416 | 155,587 |
Long-term finance lease liability | 4,634 | |
Long-term finance lease liability | 5,060 | |
Long-term operating lease liability | 96,544 | |
Deferred tax liability | 13,771 | 16,670 |
Other long-term liabilities | 9,569 | 8,924 |
Total liabilities | 397,934 | 186,241 |
Commitments and contingencies | ||
Stockholders' equity | ||
Preferred stock, par value $0.0001; 10,000,000 shares authorized; zero shares issued or outstanding at June 30, 2020 and 2019 | ||
Common stock, par value $0.0001; 100,000,000 shares authorized; 46,341,627 and 45,575,236 shares issued; and 41,006,884 and 40,240,493 shares outstanding at June 30, 2020 and 2019, respectively | 4 | 4 |
Additional paid-in capital | 730,761 | 713,436 |
Accumulated other comprehensive income (loss) | 93 | (40) |
Retained earnings | 46,953 | 22,447 |
Treasury stock of 5,334,743 shares at cost at June 30, 2020 and 2019 | (102,482) | (102,482) |
Total stockholders' equity | 675,329 | 633,365 |
Total liabilities and stockholders' equity | $ 1,073,263 | $ 819,606 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 30, 2019 |
CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowance (in dollars) | $ 6,808 | $ 11,766 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
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 | 46,341,627 | 45,575,236 |
Common stock, shares outstanding | 41,006,884 | 40,240,493 |
Treasury stock, shares | 5,334,743 | 5,334,743 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | |||
Revenues | $ 1,040,765 | $ 1,015,752 | $ 917,734 |
Instructional costs and services | 693,232 | 663,437 | 592,495 |
Gross margin | 347,533 | 352,315 | 325,239 |
Selling, general, and administrative expenses | 315,076 | 306,829 | 299,694 |
Income from operations | 32,457 | 45,486 | 25,545 |
Interest income, net | 698 | 2,761 | 965 |
Other income, net | 272 | 114 | |
Income before income taxes and loss from equity method investments | 33,427 | 48,361 | 26,510 |
Income tax (expense) benefit | (8,541) | (10,520) | 910 |
Loss from equity method investments | (380) | (632) | |
Net income | 24,506 | 37,209 | 27,420 |
Add net loss attributable to noncontrolling interest | 200 | ||
Net income attributable to common stockholders | $ 24,506 | $ 37,209 | $ 27,620 |
Net income attributable to common stockholders per share: | |||
Basic (in dollars per share) | $ 0.62 | $ 0.96 | $ 0.70 |
Diluted (in dollars per share) | $ 0.60 | $ 0.91 | $ 0.68 |
Weighted average shares used in computing per share amounts: | |||
Basic (in shares) | 39,478,928 | 38,848,780 | 39,282,674 |
Diluted (in shares) | 40,663,224 | 40,944,800 | 40,637,744 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Net income | $ 24,506 | $ 37,209 | $ 27,420 |
Other comprehensive income (loss), net of tax: | |||
Foreign currency translation adjustment | 133 | 212 | (82) |
Total other comprehensive income, net of tax | 24,639 | 37,421 | 27,338 |
Comprehensive loss attributable to noncontrolling interest | 200 | ||
Comprehensive income attributable to common stockholders | $ 24,639 | $ 37,421 | $ 27,538 |
CONSOLIDATED STATEMENT OF EQUIT
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, 2017 | $ 4 | $ 690,488 | $ (170) | $ (40,976) | $ (75,000) | $ 574,346 |
Balance (in shares) at Jun. 30, 2017 | 44,325,772 | (3,502,598) | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Adjustment related to new stock-based compensation guidance | 112 | (76) | 36 | |||
Net income | 27,620 | 27,620 | ||||
Foreign currency translation adjustment | (82) | (82) | ||||
Purchase of treasury stock | $ (27,482) | (27,482) | ||||
Purchase of treasury stock (in shares) | (1,832,145) | |||||
Stock-based compensation expense | 22,869 | 22,869 | ||||
Exercise of stock options | 196 | $ 196 | ||||
Exercise of stock options (in shares) | 14,600 | 14,600 | ||||
Vesting of performance share units, net of tax withholding (in shares) | 199,769 | |||||
Issuance of restricted stock awards (in shares) | 1,210,502 | |||||
Forfeiture of restricted stock awards (in shares) | (335,150) | |||||
Repurchase of restricted stock for tax withholding | (10,314) | $ (10,314) | ||||
Repurchase of restricted stock for tax withholding (in shares) | (512,926) | |||||
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 | 37,209 | 37,209 | ||||
Foreign currency translation adjustment | 212 | 212 | ||||
Stock-based compensation expense | 17,013 | 17,013 | ||||
Exercise of stock options | 3,030 | $ 3,030 | ||||
Exercise of stock options (in shares) | 150,290 | 150,290 | ||||
Vesting of performance share units, net of tax withholding (in shares) | 258,263 | |||||
Issuance of restricted stock awards (in shares) | 828,833 | |||||
Forfeiture of restricted stock awards (in shares) | (235,485) | |||||
Repurchase of restricted stock for tax withholding | (9,958) | $ (9,958) | ||||
Repurchase of restricted stock for tax withholding (in shares) | (329,232) | |||||
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 | ||||||
Adjustment related to new revenue recognition guidance | (1,330) | (1,330) | ||||
Net income | 24,506 | 24,506 | ||||
Foreign currency translation adjustment | 133 | 133 | ||||
Stock-based compensation expense | 24,022 | 24,022 | ||||
Exercise of stock options | 64 | $ 64 | ||||
Exercise of stock options (in shares) | 4,000 | 4,000 | ||||
Issuance of restricted stock awards (in shares) | 1,126,227 | |||||
Forfeiture of restricted stock awards (in shares) | (79,541) | |||||
Repurchase of restricted stock for tax withholding | (6,761) | $ (6,761) | ||||
Repurchase of restricted stock for tax withholding (in shares) | (284,295) | |||||
Balance at Jun. 30, 2020 | $ 4 | $ 730,761 | $ 93 | $ 46,953 | $ (102,482) | $ 675,329 |
Balance (in shares) at Jun. 30, 2020 | 46,341,627 | (5,334,743) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities | |||
Net income | $ 24,506 | $ 37,209 | $ 27,420 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization expense | 72,091 | 71,400 | 75,260 |
Stock-based compensation expense | 23,609 | 16,676 | 20,817 |
Deferred income taxes | (1,305) | 3,693 | (4,015) |
Provision for doubtful accounts | 2,882 | 6,325 | 4,089 |
Other | 19,578 | 3,985 | 4,822 |
Changes in assets and liabilities: | |||
Accounts receivable | (37,772) | (21,637) | 11,987 |
Inventories, prepaid expenses, deposits and other current and long-term assets | (16,181) | (3,321) | (28,491) |
Accounts payable | (6,213) | 20,174 | (2,336) |
Accrued liabilities | 7,424 | 8,295 | (6,273) |
Accrued compensation and benefits | 3,103 | 5,948 | 6,672 |
Operating lease liability | (13,124) | ||
Deferred revenue and other liabilities | 1,817 | (7,141) | (4,506) |
Net cash provided by operating activities | 80,415 | 141,606 | 105,446 |
Cash flows from investing activities | |||
Purchase of property and equipment | (1,677) | (5,477) | (8,743) |
Capitalized software development costs | (23,988) | (26,318) | (24,533) |
Capitalized curriculum development costs | (19,332) | (16,611) | (9,927) |
Sale of long-lived assets | 389 | ||
Acquisition of Galvanize, Inc., net of cash acquired | (167,995) | ||
Other acquisitions and investments, net of distributions | (4,373) | (13,092) | (7,274) |
Net cash used in investing activities | (217,365) | (61,109) | (50,477) |
Cash flows from financing activities | |||
Repayments on finance lease obligations | (27,675) | (21,034) | (13,301) |
Borrowing from credit facility | 105,000 | ||
Repayments on credit facility | (5,000) | ||
Payments of contingent consideration | (1,027) | (1,819) | |
Purchase of treasury stock | (27,482) | ||
Proceeds from exercise of stock options | 64 | 3,030 | 196 |
Repurchase of restricted stock for income tax withholding | (6,761) | (9,958) | (10,314) |
Net cash provided by (used in) financing activities | 65,628 | (28,989) | (52,720) |
Net change in cash, cash equivalents and restricted cash | (71,322) | 51,508 | 2,249 |
Cash, cash equivalents and restricted cash, beginning of period | 284,621 | 233,113 | 230,864 |
Cash, cash equivalents and restricted cash, end of period | $ 213,299 | $ 284,621 | $ 233,113 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 |
Reconciliation of cash, cash equivalents and restricted cash to balance sheet as of December 31st: | |||
Cash and cash equivalents | $ 212,299 | $ 283,121 | $ 231,113 |
Total cash, cash equivalents and restricted cash | 213,299 | 284,621 | 233,113 |
Other current assets | |||
Reconciliation of cash, cash equivalents and restricted cash to balance sheet as of December 31st: | |||
Restricted cash | 500 | 500 | |
Deposits and other assets | |||
Reconciliation of cash, cash equivalents and restricted cash to balance sheet as of December 31st: | |||
Restricted cash | $ 500 | $ 1,000 | $ 2,000 |
Description of the Business
Description of the Business | 12 Months Ended |
Jun. 30, 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 provides talent development for individuals and enterprises in information technology fields . The Company’s acquisition of Galvanize is discussed in more detail in Note 14, “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 | 12 Months Ended |
Jun. 30, 2020 | |
Basis of Presentation | |
Basis of Presentation | 2. Basis of Presentation The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. The Company operates in one operating and reportable |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Jun. 30, 2020 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 3. Summary of Significant Accounting Policies Recent Accounting Pronouncements Accounting Standards Adopted On July 1, 2019, the Company adopted Accounting Standards Codification (“ASC”) Topic 842, Leases Leases 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 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. On July 1, 2019, the Company adopted Accounting Standards Update (“ASU”) 2018-15, Intangibles – Goodwill and Other – Internal-Use Software . Accounting Standards Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities and contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates and assumptions, including those related to the allowance for doubtful accounts, inventory reserves, amortization periods, the allocation of purchase price to the fair value of net assets and liabilities acquired in business combinations, fair values used in asset impairment evaluations, valuation of long-lived assets, accrual for incurred but not reported (“IBNR”) claims, contingencies, income taxes and stock-based compensation expense. The Company bases its estimates on historical experience and various assumptions that it believes are reasonable under the circumstances. The results of the analysis form the basis for making assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. Contracts with Customers Revenues are principally earned from contractual agreements to provide educational services to students through an integrated package of 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 Topic 606, Revenue from Contracts with Customers ● 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 are administered together to support an online or blended public school. Contractual agreements generally span multiple years with performance obligations being isolated to annual periods which generally coincide with the Company’s fiscal year. Customers of 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 expected 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 updates as necessary, by adjusting its year-to-date earned revenues to be proportional to the total expected revenues to be earned during 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). 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 current and prior periods. For the years ended June 30, 2019, 2018 and 2017, the Company’s aggregate funding estimates differed from actual reimbursements impacting total reported revenue by approximately 0.6%, 0.4%, and (0.3)%, respectively. 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, academic progress and historical completion, student location, funding caps and other state specified categorical program funding. Under the contracts where the Company provides products and services to schools, the Company is responsible for substantially all of the expenses incurred by the school and 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 (the school’s expected funding), as reflected in its respective financial statements, including Company charges to the schools. To the extent a school does not receive sufficient 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’s net operating loss may reduce the Company’s ability to collect its management fees in full and recognized revenues are constrained to reflect the expected cash collections from such schools. The Company records the school’s estimated net operating loss against revenues based upon the percentage of actual revenues in the period to total estimated revenues for the fiscal year. Actual school net 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 years ended June 30, 2020, 2019 and 2018, the Company’s revenues included a reduction for net operating losses at the schools of $45.4 million, $54.7 million, and $66.7 million, respectively. Because the Company has agreed to absorb any operating losses of the schools, the Company records the expenses incurred by the school as both revenue and expenses in the consolidated statements of operations. Amounts recorded as revenues and expenses for the years ended June 30, 2020, 2019 and 2018, were $325.5 million, $342.7 million and $314.8 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, and revenues are recorded over the access period based on the agreed upon contract price. In addition, 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 have access for one Disaggregated Revenues The following table presents the Company’s revenues disaggregated based on its three lines of business for the years ended June 30, 2020 and 2019: Year Ended June 30, 2020 2019 (In thousands) Managed Public School Programs $ 920,080 $ 890,275 Institutional Non-managed Public School Programs 36,195 50,623 Institutional Software & Services 38,765 39,330 Total Institutional 74,960 89,953 Private Pay Schools and Other 45,725 35,524 Total Revenues $ 1,040,765 $ 1,015,752 Concentration of Customers During the years ended June 30, 2020, 2019 and 2018, approximately 88%, 88% and 85%, respectively, of the Company’s revenues were recognized from schools that contracted with the Company for Managed Public School Programs. During the years ended June 30, 2020, 2019 and 2018, the Company had zero, one and zero contracts, respectively, that represented greater than 10% of total revenues. In fiscal year 2018, the Company and the Agora Cyber Charter School entered into an agreement related to its outstanding receivable of $28.7 million at June 30, 2018 to be paid over a four-year period. In addition, the term of the service agreement was extended through June 30, 2022. The Company reclassified the long-term portion of $23.2 million to deposits and other assets on the consolidated balance sheets as of June 30, 2018. The aggregate current and long-term balance as of June 30, 2020 was $18.6 million. The Company accrues interest on its long-term receivables based on contracted terms. Contract Balances The timing of revenue recognition, invoicing, and cash collection results in accounts receivable, unbilled receivables (a contract asset) and deferred revenue (a contract liability) in the consolidated balance sheets. Accounts receivable are recorded when there is an executed customer contract and the customer is billed. The collectability of outstanding receivables is evaluated regularly by the Company and an allowance is recorded to reflect probable losses. Unbilled receivables are created when revenue is earned prior to the customer being billed. Deferred revenue is recorded when customers are billed or cash is collected in advance of services being provided. The opening and closing balance of the Company’s accounts receivable, unbilled receivables and deferred revenue are as follows: June 30, 2020 2019 (In thousands) Accounts receivable $ 236,134 $ 191,639 Unbilled receivables (included in accounts receivable) 15,688 16,189 Deferred revenue 24,417 22,828 Deferred revenue, long-term (included in other long-term liabilities) 2,236 — 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, as well as $8.4 million acquired in the purchase of Galvanize. 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, as well as $3.4 million acquired in the purchase of Galvanize. 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 years ended June 30, 2020 and 2019 that was included in the previous July 1 st Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For the majority of its contracts, the Company’s performance obligations are satisfied over time, as the Company delivers, and the customer receives the services, over the service period of the contract. The Company’s payment terms are generally net 30 or net 45, but can vary depending on the customer or when the school receives its funding from the state. unsatisfied 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 recognizes revenue on a straight-line basis. Sales Taxes Sales tax collected from customers is excluded from revenues. Collected but unremitted sales tax is included as part of accrued liabilities in the accompanying consolidated balance sheets. Revenues do not include sales tax as the Company considers itself a pass-through conduit for collecting and remitting sales tax. Shipping and Handling Costs Shipping and handling costs are expensed when incurred and are classified as instructional costs and services in the accompanying consolidated statements of operations. Shipping and handling charges invoiced to a customer are included in revenues. Research and Development Costs All research and development costs, including patent application costs, are expensed as incurred. Research and development costs totaled $9.7 million, $9.5 million and $9.2 million for the years ended June 30, 2020, 2019 and 2018, respectively, and are included within selling, general and administrative expenses in the consolidated statements of operations. Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents generally consist of cash on hand and cash held in money market and demand deposit accounts. The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company periodically has cash balances which exceed federally insured limits. Restricted cash consists of amounts held in escrow related to the Company’s settlement agreement with the Agora Cyber Charter School. The restricted cash which is short-term in nature is included in other current assets, while the portion that is long-term is included in deposits and other assets on the consolidated balance sheets. Allowance for Doubtful Accounts The Company maintains an allowance for uncollectible accounts primarily for estimated losses resulting from the inability or failure of individual customers to make required payments. The Company analyzes accounts receivable, historical percentages of uncollectible accounts, and changes in payment history when evaluating the adequacy of the allowance for uncollectible accounts. The Company writes-off accounts receivable based on the age of the receivable and the facts and circumstances surrounding the customer and reasons for non-payment. The Company records an allowance for estimated uncollectible accounts in an amount approximating probable losses. Actual write-offs might differ from the recorded allowance. 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 June 30, 2020 and 2019, $5.2 million and $4.1 million, respectively, of inventory, net of reserves, was deemed long-term and included in deposits and other assets on the consolidated balance sheets. The provision for excess and obsolete inventory is established based upon the evaluation of the quantity on hand relative to demand. During the years ended June 30, 2020, 2019 and 2018, the Company increased the provision for excess and obsolete inventory by $0.7 million, $0.6 million, and $1.2 million, respectively, primarily related to inventory in excess of anticipated demand and the decision to discontinue certain products. The excess and obsolete inventory reserve was $4.8 million and $4.1 million at June 30, 2020 and 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 Computer hardware 3 - 7 years Computer software 3 Web site development 3 years Office equipment 5 years Furniture and fixtures 7 years Leasehold improvements Shorter of useful life or term of the lease The Company makes an estimate of unreturned student computers based on an analysis of recent trends of returns. The Company recorded accelerated depreciation of $2.4 million, $2.3 million and $2.1 million for the years ended June 30, 2020, 2019 and 2018, respectively, related to the leases exited and unreturned student computers. The Company fully expenses computer peripheral equipment (e.g. keyboards, mouses) upon purchase as recovery has been determined to be uneconomical. These expenses totaled $3.8 million, $4.1 million and $3.4 million for the years ended June 30, 2020, 2019 and 2018, respectively, and are recorded as instructional costs and services. Capitalized Software Costs The Company develops software for internal use. The Company capitalizes software development costs incurred during the application development stage in accordance with ASC 350, Intangibles – Goodwill and Other Capitalized software additions totaled $24.0 million, $26.3 million and $24.5 million for the years ended June 30, 2020, 2019 and 2018, respectively. There were no material write-downs of capitalized software projects for the years ended June 30, 2020, 2019 and 2018. During the three months ended September 30, 2017, the Company recorded an out of period adjustment related to the capitalization of software and curriculum development. The adjustment increased capitalized software development costs and capitalized curriculum development costs by $2.3 million and $0.6 million, respectively, and increased net income by $1.4 million for the year. The Company assessed the materiality of these errors on its prior quarterly and annual financial statements, assessing materiality both quantitatively and qualitatively, in accordance with the Securities and Exchange Commission’s (“SEC”) Staff Accounting Bulletin (“SAB”) No. 99 and SAB No. 108 and concluded that the errors were not material to any of its previously issued financial statements. 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 $19.3 million, $16.6 million and $9.9 million for the years ended June 30, 2020, 2019 and 2018, respectively. These amounts are recorded on the accompanying consolidated balance sheets, net of amortization charges. There were no material write-downs of capitalized curriculum development costs for the years ended June 30, 2020, 2019 and 2018. As mentioned above, capitalized curriculum development additions included an out of period adjustment of $0.6 million. 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 to 3-year payment terms, at varying rates, with a $1 purchase option at the end of each lease term. The Company pledges the assets financed to secure the outstanding leases. 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 1 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 7, “Credit Facility”), the Company has reassessed its incremental borrowing rate as 2.55%. The Company used 2.55% to calculate the present value of the leases acquired from Galvanize. 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. 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 years ended June 30, 2020, 2019 and 2018 was $6.1 million, $3.0 million and $3.0 million, respectively, and is included within selling, general, and administrative expenses in the consolidated statements of operations. Future amortization of intangible assets is expected to be $8.0 million, $7.9 million, $7.7 million, $6.7 million and $5.5 million in the fiscal years ending June 30, 2021 through June 30, 2025, respectively and $41.4 million thereafter. As of June 30, 2020 and 2019, the goodwill balance was $174.9 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. The Company performed a qualitative assessment of coronavirus disease 2019 (“COVID-19”) as a triggering event related to the value of its finite-lived intangible assets and concluded that there was no impairment during the year ended June 30, 2020. The Company has one reporting unit. Goodwill and intangible assets deemed to have an indefinite life are tested for impairment annually, or earlier when events or changes in circumstances suggest the carrying amount may not be fully recoverable. Examples of such events or circumstances include, but are not limited to, significant underperformance relative to historical or projected future operating results, significant changes in the manner of use of acquired assets or the strategy for the Company’s business, significant negative industry or economic trends, and/or a significant decline in the Company’s stock price for a sustained period. 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 31 st th As of June 30, 2020, the Company performed “Step 0” of the impairment test, which included a qualitative assessment of the impact of COVID-19 as a triggering event, 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. On October 2, 2017, the Company acquired 100% interest in Big Universe, Inc. for $3.3 million and contingent consideration. On January 27, 2020, the Company acquired Galvanize for $165.0 million and working capital. The Company’s acquisition of Galvanize is discussed in more detail in Note 14, “Acquisitions and Investments.” The following table represents goodwill additions/reductions resulting from the acquisitions mentioned above during the years ended June 30, 2020, 2019 and 2018: ($ in millions) Amount Goodwill Balance as of June 30, 2017 $ 87.2 Acquisition of Big Universe, Inc. 3.0 Balance as of June 30, 2018 $ 90.2 Adjustments — Balance as of June 30, 2019 $ 90.2 Acquisition of Galvanize, Inc. 84.7 Balance as of June 30, 2020 $ 174.9 June 30, 2020 June 30, 2019 ($ in millions) Gross Accumulated Net Gross Accumulated Net Trade names $ 77.9 $ (12.0) $ 65.9 $ 17.6 $ (9.4) $ 8.2 Customer and distributor relationships 25.3 (17.2) 8.1 20.5 (14.7) 5.8 Developed technology 6.6 (3.5) 3.1 3.2 (2.8) 0.4 Other 1.4 (1.0) 0.4 1.4 (0.8) 0.6 Total $ 111.2 $ (33.7) $ 77.5 $ 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 Income Taxes Deferred tax assets and liabilities are computed based on the difference between the financial reporting and income tax bases of assets and liabilities using the enacted marginal tax rate. ASC 740, Income Taxes Stock-Based Compensation The Company estimates the fair value of share-based awards on the date of grant. The fair value of restricted stock awards is based on the closing price of the Company’s common stock on the date of |
Property and Equipment and Capi
Property and Equipment and Capitalized Software and Curriculum | 12 Months Ended |
Jun. 30, 2020 | |
Property and Equipment and Capitalized Software and Curriculum | |
Property and Equipment and Capitalized Software and Curriculum | 4. Property and Equipment and Capitalized Software and Curriculum Property and equipment consists of the following at: June 30, 2020 2019 (In thousands) Student computers $ 48,153 $ 43,845 Computer software 17,268 17,999 Computer hardware 14,505 14,118 Leasehold improvements 17,396 10,364 State testing computers 7,461 7,470 Furniture and fixtures 7,178 4,058 Office equipment 1,372 1,382 113,333 99,236 Less accumulated depreciation and amortization (74,665) (67,256) $ 38,668 $ 31,980 The Company recorded depreciation expense related to property and equipment reflected in selling, general, and administrative expenses of $4.3 million, $5.2 million and $5.1 million during the years ended June 30, 2020, 2019 and 2018, respectively. Depreciation expense of $17.9 million, $15.0 million and $12.4 million related to computers provided to students is reflected in instructional costs and services during the years ended June 30, 2020, 2019 and 2018, respectively. Amortization expense of zero, zero and $0.5 million related to student software costs is reflected in instructional costs and services during the years ended June 30, 2020, 2019 and 2018, respectively. The Company incurs maintenance and repair expenses, which are expensed as incurred, and recorded in selling, general, and administrative expenses. Maintenance and repair expenses totaled $10.3 million, $13.7 million and $12.1 million for the years ended June 30, 2020, 2019 and 2018, respectively. Capitalized software costs consist of the following at: June 30, 2020 2019 (In thousands) Capitalized software $ 249,720 $ 226,503 Less accumulated depreciation and amortization (201,227) (175,338) $ 48,493 $ 51,165 The Company recorded amortization expense of $20.8 million, $22.3 million and $25.8 million related to capitalized software reflected in instructional costs and services and $5.5 million, $7.4 million and $9.1 million reflected in selling, general, and administrative expenses during the years ended June 30, 2020, 2019 and 2018, respectively. Capitalized curriculum development costs consist of the following at: June 30, 2020 2019 (In thousands) Capitalized curriculum development costs $ 156,018 $ 156,671 Less accumulated depreciation and amortization (107,169) (103,374) $ 48,849 $ 53,297 The Company recorded amortization expense of $17.5 million, $18.5 million and $19.4 million related to capitalized curriculum development cost reflected in instructional costs and services during the years ended June 30, 2020, 2019 and 2018, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Jun. 30, 2020 | |
Income Taxes | |
Income Taxes | 5. Income Taxes The provision for income taxes is based on earnings reported in the 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 year. Deferred tax assets and liabilities result primarily from temporary differences in book versus tax basis accounting. Deferred tax assets and liabilities consist of the following: June 30, 2020 2019 (In thousands) Deferred tax assets Net operating loss carryforward $ 21,850 $ 4,923 Reserves 3,374 4,769 Accrued expenses 4,117 3,492 Stock compensation expense 7,064 5,992 Other assets 2,252 1,524 Deferred rent — 1,056 Deferred revenue 759 461 Lease liability 29,640 — Federal tax credits 20 20 State tax credits 44 363 Total deferred tax assets 69,120 22,600 Deferred tax liabilities Capitalized curriculum development (9,245) (10,143) Capitalized software and website development costs (11,907) (12,659) Property and equipment (6,213) (5,166) Right-of-use assets (28,273) — Returned materials (2,385) (2,643) Purchased intangibles (19,877) (4,110) Total deferred tax liabilities (77,900) (34,721) Net deferred tax liability before valuation allowance (8,780) (12,121) Valuation allowance (4,991) (4,549) Net deferred tax liability $ (13,771) $ (16,670) Reported as: Long-term deferred tax liabilities $ (13,771) $ (16,670) The Company maintained a valuation allowance on net noncurrent deferred tax assets of $5.0 million and $4.5 million as of June 30, 2020 and 2019, respectively, predominantly related to foreign income tax net operating losses ("NOL"). At June 30, 2020, the Company had approximately $65.1 million of available federal NOL carryforwards solely related to the acquisition of Galvanize in January 2020. The federal NOL carryforwards, in the amount of $18.1 million, generated prior to 2018 will begin to expire, if unused, in 2033. Due to the Tax Cuts and Jobs Act (the “Tax Act”), the federal NOL carryforwards, in the amount of $47.0 million, generated after 2017 have an indefinite carryforward period. Section 382 of the Internal Revenue Code limits the utilization of NOL carryforwards following a change of control. The Company has performed an analysis of the Section 382 ownership changes and have determined that it will be able to fully utilize its available NOLs subject to the Section 382 limitation. At June 30, 2020, the Company had tax effected state NOL carryforwards of $3.2 million, net of valuation allowances, and will expire on various dates. The components of the income tax expense (benefit) for the years ended June 30, 2020, 2019 and 2018 were as follows: Year Ended June 30, 2020 2019 2018 (In thousands) Current: Federal $ 6,907 $ 3,919 $ 887 State 1,911 1,988 774 Foreign 1,028 920 1,444 Total current 9,846 6,827 3,105 Deferred: Federal (1,687) 3,412 (4,769) State 382 281 754 Total deferred (1,305) 3,693 (4,015) Total income tax expense (benefit) $ 8,541 $ 10,520 $ (910) The provision for (benefit from) income taxes can be reconciled to the income tax that would result from applying the statutory rate to the net income before income taxes as follows: Year Ended June 30, 2020 2019 2018 U.S. federal tax at statutory rates (1) 21.0 % 21.0 % 28.0 % Permanent items 1.1 0.5 0.6 Lobbying 0.4 0.4 1.2 Non-deductible compensation 9.0 1.6 0.3 State taxes, net of federal benefit 5.3 4.3 3.1 Research and development tax credits (1.8) (0.5) - Domestic production activities deduction - - (0.1) Change in valuation allowance 0.1 0.2 (7.2) Effects of foreign operations 0.3 0.1 - Reserve for unrecognized tax benefits (2.4) (2.1) 0.9 Noncontrolling interests - - 0.4 Other (0.8) (0.4) (3.9) Impact of federal tax rate reduction - - (25.4) Repatriation transition tax - - 6.4 Stock-based compensation (6.4) (3.1) (7.7) Provision for (benefit from) income taxes 25.8 % 22.0 % (3.4) % (1) The corporate tax rate was lowered from 35% to 21% , effective as of January 1, 2018. Under IRC §15 which governs rate changes, fiscal year taxpayers are subject to a “blended” tax rate for tax years that include January 1, 2018. Using the weighted average calculation, the Company’s blended federal tax rate for the year ended June 30, 2018 is 28% . The increase in the effective income tax rate for the year ended June 30, 2020 was primarily due to the increase in the amount of non-deductible compensation, which was partially offset by the increase in excess tax benefit of stock-based compensation. Tax Uncertainties The Company follows the provisions of ASC 740 which applies to all tax positions related to income taxes. ASC 740 provides a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the Company has taken or expects to take on a tax return. ASC 740 clarifies accounting for income taxes by prescribing a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized. If the probability for sustaining a tax position is greater than 50%, then the tax position is warranted and recognition should be at the highest amount which would be expected to be realized upon ultimate settlement related to unrecognized tax benefits. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. As of June 30, 2020, 2019 and 2018, the Company had $0.1 million, $0.2 million and $0.2 million in accrued interest and penalties, respectively. The unrecognized tax benefits for the years ended June 30, 2020, 2019 and 2018 were as follows: Year Ended June 30, 2020 2019 2018 (In thousands) Balance at beginning of the year $ 1,545 $ 2,392 $ 2,260 Additions for prior year tax positions 161 194 585 Additions for current year tax positions 179 87 8 Reductions for prior year tax positions (1,035) (1,128) (461) Balance at end of the year $ 850 $ 1,545 $ 2,392 If recognized, all of the $0.9 million balance of unrecognized tax benefits as of June 30, 2020 would affect the effective tax rate. The Company does not anticipate a significant increase or decrease in unrecognized tax benefits in the next twelve months. The Company remains subject to audit by the Internal Revenue Service for federal tax purposes for tax years after June 30, 2016. Certain state and foreign tax jurisdictions are also either currently under audit or remain open under the statute of limitations for the tax years after June 30, 2014. |
Finance and Operating Leases
Finance and Operating Leases | 12 Months Ended |
Jun. 30, 2020 | |
Finance and Operating Leases | |
Finance and Operating Leases | 6. Finance and Operating Leases Finance Leases The Company is a lessee under finance leases for student computers and peripherals under loan agreements with PNC Equipment Finance, LLC (“PNC”) and Banc of America Leasing & Capital, LLC (“BALC”). As of June 30, 2020 and 2019, the finance lease liability (“capital leases” as of June 30, 2019) was $17.9 million and $24.6 million, respectively, with lease interest rates ranging from 1.52% to 3.87%. As of June 30, 2020 and 2019, the balance of the associated right-of-use assets (“student computers” as of June 30, 2019) was $19.8 million and $19.8 million, respectively. The right-of-use asset is recorded within property and equipment, net on the consolidated balance sheets. Lease amortization expense associated with the Company’s finance leases is recorded within selling, general, and administrative expenses on the 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 entered into an agreement with BALC in February 2019 for $25.0 million to provide financing for its leases through December 2019 at varying rates. The Company entered into an additional $25.0 million agreement in April 2020 to provide financing for its leases through March 2021 at varying rates. In July 2020, the limit was increased from $25.0 million to $41.0 million at the same terms. Individual leases with BALC include 12-month and 36-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 June 30, 2020 (under ASC 842) and June 30, 2019 (under ASC 840), respectively, of the present value of the net minimum lease payments under the Company’s finance leases: June 30, 2020 2019 (in thousands) 2020 $ — $ 20,070 2021 13,587 4,819 2022 2,653 340 2023 2,040 — Total minimum payments 18,280 25,229 Less: imputed interest (342) (581) Finance lease liability 17,938 24,648 Less: current portion of finance lease liability (13,304) (19,588) Long-term finance lease liability $ 4,634 $ 5,060 Operating Leases The Company is a lessee under operating leases for various facilities to support the Company’s operations. As of June 30, 2020, the operating lease liability was $117.2 million. As of June 30, 2020, the balance of the associated right-of-use assets was $111.8 million. Each of the above balances as of June 30, 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 14, “Acquisitions and Investments.” Lease expense associated with the Company’s operating leases is recorded within selling, general, and administrative expenses on the consolidated statements of operations. Individual operating leases range in terms of 1 to 11 years and expire on various dates through fiscal year 2031 and the minimum lease payments are discounted using the Company’s incremental borrowing rate of 3.86% or 2.55%. The following is a summary as of June 30, 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: June 30, 2020 2019 (in thousands) 2020 $ — $ 8,441 2021 23,626 8,229 2022 22,326 6,735 2023 15,841 550 2024 14,769 137 2025 13,949 — Thereafter 38,544 — Total minimum payments 129,055 $ 24,092 Less: imputed interest (11,822) Operating lease liability 117,233 Less: current portion of operating lease liability (20,689) Long-term operating lease liability $ 96,544 The Company is subleasing one of its facilities through June 2021, two others through May 2022 and one through July 2023. Sublease income is recorded as an offset to the related lease expense within selling, general, and administrative expenses on the consolidated statements of operations. The following is a summary as of June 30, 2020 and June 30, 2019, respectively, of the expected sublease income: Year Ended June 30, 2020 2019 (in thousands) 2020 $ — $ 930 2021 1,960 961 2022 1,496 528 2023 797 — 2024 66 — Total sublease income $ 4,319 $ 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 year ended June 30, 2020: June 30, 2020 (in thousands) Lease cost Finance lease cost: Amortization of right-of-use assets $ 16,740 Interest on lease liabilities 820 Operating lease cost 13,129 Short-term lease cost 1,214 Sublease income (760) Total lease cost $ 31,143 Other information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ (13,124) Financing cash flows from finance leases (27,675) Right-of-use assets obtained in exchange for new finance lease liabilities 17,160 Right-of-use assets obtained in exchange for new operating lease liabilities 6,311 Weighted-average remaining lease term - finance leases 0.79 yrs. Weighted-average remaining lease term - operating leases 7.15 yrs. Weighted-average discount rate - finance leases 2.86 % Weighted-average discount rate - operating leases 2.76 % |
Credit Facility
Credit Facility | 12 Months Ended |
Jun. 30, 2020 | |
Credit Facility | |
Credit Facility | 7. Credit Facility the agreement. The Credit Facility is secured by the Company’s assets. As of June 30, 2020, the Company was in compliance with the financial covenants. As of June 30, 2020, the Company had $100.0 million outstanding on the Credit Facility. The Credit Facility also includes a $200.0 million accordion feature. |
Equity Transactions
Equity Transactions | 12 Months Ended |
Jun. 30, 2020 | |
Equity Transactions | |
Equity Transactions | 8. Equity Transactions The Company’s Fourth Amended and Restated Certificate of Incorporation authorizes the Company to issue 100,000,000 shares of common stock and 10,000,000 shares of preferred stock. No preferred stock was issued or outstanding as of June 30, 2020 or 2019. Common Stock Repurchases On May 16, 2018, the Company entered into a stock repurchase agreement pursuant to which the Company repurchased 1,832,145 shares of its common stock in a single transaction at a purchase price of $15.00 per share, representing aggregate consideration of $27.5 million. |
Equity Incentive Plan
Equity Incentive Plan | 12 Months Ended |
Jun. 30, 2020 | |
Equity Incentive Plan | |
Equity Incentive Plan | 9. 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 expired in October 2017, and the Company no longer awards equity from the Prior Plan. At June 30, 2020, the remaining aggregate number of shares of the Company’s common stock authorized for future issuance under the Plan was 1,260,352. At June 30, 2020, there were 5,127,245 shares of the Company’s common stock that remain outstanding or nonvested under the Plan and Prior Plan. Compensation expense for all equity-based compensation awards is based on the grant-date fair value estimated in accordance with the provisions of ASC 718 , Compensation—Stock Compensation Stock Options Each stock option is exercisable pursuant to the vesting schedule set forth in the stock option agreement granting such stock option, generally over four years. No stock option shall be exercisable after the expiration of its option term. The Company has granted stock options under the Prior Plan and the Company has also granted stock options to executive officers under stand-alone agreements outside the Prior Plan. Stock option activity including stand-alone agreements during the years ended June 30, 2020, 2019 and 2018 was as follows: Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Life (Years) Value Outstanding, June 30, 2017 1,356,528 $ 20.19 4.46 $ 1,481,585 Granted — — Exercised (14,600) 13.45 Forfeited or canceled (142,621) 22.71 Outstanding, June 30, 2018 1,199,307 $ 19.97 3.55 $ 788,277 Granted — — Exercised (150,290) 20.16 Forfeited or canceled (13,000) 29.82 Outstanding, June 30, 2019 1,036,017 $ 19.82 2.64 $ 11,312,871 Granted — — Exercised (4,000) 16.07 Forfeited or canceled (10,500) 30.92 Outstanding and exercisable, June 30, 2020 1,021,517 $ 19.73 1.65 $ 8,325,869 The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last day of the year and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on June 30, 2020. The amount of aggregate intrinsic value will change based on the fair market value of the Company’s stock. The total intrinsic value of options exercised for the years ended June 30, 2020, 2019 and 2018 was $0.0 million, $1.2 million, and $0.0 million, respectively. As of June 30, 2020, there was no unrecognized compensation expense related to nonvested stock options granted. During the years ended June 30, 2020, 2019 and 2018, the Company recognized $0.1 million, $0.6 million and $1.2 million, respectively, of stock-based compensation expense related to stock options. Restricted Stock Awards The Company has approved grants of restricted stock awards (“RSA”) pursuant to the Plan and Prior Plan. Under the Plan and Prior Plan, employees, outside directors and independent contractors are able to participate in the Company’s future performance through the awards of restricted stock. Each RSA vests pursuant to the vesting schedule set forth in the restricted stock agreement granting such RSAs, generally over three years. Under the Plan and Prior Plan, there have been no awards of restricted stock to independent contractors. Restricted stock award activity during the years ended June 30, 2020, 2019 and 2018 was as follows: Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2017 2,141,047 $ 12.34 Granted 1,210,502 16.68 Vested (1,339,492) 12.29 Canceled (335,150) 14.31 Nonvested, June 30, 2018 1,676,907 $ 15.12 Granted 828,833 18.44 Vested (947,703) 14.72 Canceled (235,485) 17.40 Nonvested, June 30, 2019 1,322,552 $ 17.08 Granted 1,126,227 26.84 Vested (750,634) 16.93 Canceled (79,541) 21.48 Nonvested, June 30, 2020 1,618,604 $ 23.73 Performance-Based Restricted Stock Awards (included above) During the year ended June 30, 2020, 499,818 new performance-based restricted stock awards were granted and 559,089 remain nonvested at June 30, 2020. During the year ended June 30, 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. During fiscal year 2020, the Company granted 358,294 performance-based restricted stock awards to the Company’s CEO with a weighted average grant-date fair value of $27.91 per share. These awards were granted pursuant to the Plan and are subject to the achievement of target free cash flow metrics in each of the fiscal years 2020 through 2022. The metrics are measured at the end of each fiscal year; however, the first two -thirds of the award will not vest until fiscal year 2021. The remaining one -third will vest in fiscal year 2022, if achieved. Additionally, if either of the first two tranches are not achieved, the awards may still vest if the free cash flow metric in aggregate is met over the three-year life of the award. The Company is currently amortizing the second and third tranches over their vesting periods because it believes that it is probable that the free cash flow targets will be met each year. The free cash flow metric was not met for fiscal year 2020, however, the Company believes that it will be met in aggregate, and therefore is amortizing the first tranche over a three-year period. During fiscal year 2020, the Company granted 141,524 performance-based restricted stock awards to the Company’s named executive officers (“NEOs”) with a weighted average grant-date fair value of $27.91 per share. These awards were granted pursuant to the Plan and are subject to the achievement of Adjusted EBITDA metrics in fiscal year 2020. If achieved, 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 year ended June 30, 2020, the remaining 6,800 equity incentive market-based restricted stock awards vested. Service-Based Restricted Stock Awards (included above) During the year ended June 30, 2020, 626,409 new service-based restricted stock awards were granted and 1,059,515 remain nonvested at June 30, 2020. During the year ended June 30, 2020, 533,367 service-based restricted stock awards vested. Summary of All Restricted Stock Awards As of June 30, 2020, there was $25.6 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 1.6 years. The fair value of restricted stock awards granted for the years ended June 30, 2020 and 2019 was $30.2 million and $15.3 million, respectively. The total fair value of shares vested for the years ended June 30, 2020 and 2019 was $17.9 million and $20.6 million, respectively. During the years ended June 30, 2020, 2019 and 2018, the Company recognized $17.1 million, $12.3 million and $15.7 million, respectively, of stock-based compensation expense related to restricted stock awards. Performance Share Units (“PSU”) 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, the Company granted 263,936 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 $7.9 million, or a weighted average grant-date fair value of $30.05 per share. During fiscal year 2020, the Company granted an additional 14,199 PSUs at target with a grant date fair value of $0.4 million, or $28.17 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 year ended June 30, 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. During the fourth quarter of fiscal year 2020, the Company granted an additional 66,934 PSUs at a weighted average grant-date fair value of $12.56 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 June 30, 2020, there was $7.9 million of total unrecognized compensation expense related to nonvested PSUs. The cost is expected to be recognized over a weighted average period of 1.2 years. During the years ended June 30, 2020, 2019 and 2018, the Company recognized $6.3 million, $3.9 million and $5.9 million, respectively, of stock-based compensation expense related to PSUs. Performance share unit activity (excluding the fiscal year 2020 TRIP) during the years ended June 30, 2020, 2019 and 2018 was as follows: Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2017 1,043,602 $ 13.16 Granted 138,241 12.81 Vested (320,340) 12.62 Canceled (152,524) 14.00 Nonvested, June 30, 2018 708,979 $ 13.15 Granted 2,372,241 10.61 Vested (427,954) 13.24 Canceled (281,025) 13.02 Nonvested, June 30, 2019 2,372,241 $ 10.61 Granted 81,133 15.30 Vested — — Canceled (8,352) 29.93 Nonvested, June 30, 2020 2,445,022 $ 10.70 Deferred Stock Units (“DSU”) 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. Deferred stock unit activity during the years ended June 30, 2020 and 2019 was as follows: Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2018 — $ — Granted 18,258 25.41 Vested — — Canceled — — Nonvested, June 30, 2019 18,258 $ 25.41 Granted 23,844 20.13 Vested — — Canceled — — Nonvested, June 30, 2020 42,102 $ 22.42 Summary of All Deferred Stock Units As of June 30, 2020, there was $0.2 million of total unrecognized compensation expense related to nonvested DSUs. The cost is expected to be recognized over a weighted average period of 0.5 years. During the years ended June 30, 2020, 2019 and 2018, the Company recognized $0.5 million, $0.5 million and zero, respectively, of stock-based compensation expense related to DSUs. |
Redeemable Noncontrolling Inter
Redeemable Noncontrolling Interest | 12 Months Ended |
Jun. 30, 2020 | |
Redeemable Noncontrolling Interest | |
Redeemable Noncontrolling Interest | 10. Redeemable Noncontrolling Interest Investment in LearnBop, Inc. On July 31, 2014, the Company acquired a majority interest in LearnBop, Inc. (“LearnBop”), for $6.5 million in return for a 51% interest in LearnBop. The purpose of the acquisition was to complement the Company’s K-12 math curriculum as LearnBop has developed an adaptive math curriculum learning software. As part of this transaction, the minority shareholders have a non-transferable put right, which was exercisable between July 31, 2018 and December 31, 2018 for the remaining minority interest. In January 2018, prior to the commencement of the exercise period, the Company and the minority shareholders entered into a stock purchase agreement to purchase the remaining 49% interest for $0.5 million. As a result, LearnBop became a wholly owned subsidiary of the Company. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | 11. Commitments and Contingencies Litigation In the ordinary conduct of the Company’s business, the Company is subject to lawsuits, arbitrations and administrative proceedings from time to time. The Company vigorously defends these claims; however, no assurances can be given as to the outcome of any pending legal proceedings. The Company believes, based on currently available information, that the outcome of any existing or known threatened proceedings, even if determined adversely, should not have a material adverse effect on its business, financial condition, liquidity or results of operations. On May 10, 2019, K12 Virtual Schools LLC filed a demand for arbitration with the American Arbitration Association (“AAA”), Case No. 01-19-001-4778, naming Georgia Cyber Academy, Inc. (“GCA”) as the respondent. The demand asserted claims for GCA’s breach and anticipatory breach of the Educational Products and Services Agreement between GCA and K12 Virtual Schools LLC, as amended on January 4, 2019, based on GCA’s engagement of other educational products and service providers for the school year 2019-2020. On May 29, 2019, GCA filed counterclaims against K12 Virtual Schools, LLC for breach of contract, fraud, breach of the duty of good faith and fair dealing, and negligent misrepresentation. The AAA appointed an arbitrator on June 12, 2019, and the parties presented evidence in support of their respective claims during merits hearings in March and June 2020. On July 8, 2020, the parties executed an agreement, effective June 30, 2020, to resolve all of their claims. Under the terms of the settlement agreement, GCA will pay the Company $19 million over a period of two years, of which $10 million was paid in July 2020. The Company recorded revenues of $4.6 million for services provided by the Company during fiscal year 2020 and the remaining $14.4 million reflected a prior year receivable, as part of a comprehensive settlement agreement. 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 June 30, 2020, the Company provided guarantees of approximately $1.0 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 Impact of COVID-19 to K12’s Business The impact of the global emergence of COVID-19 on the Company’s business is 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. 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 fiscal year 2021. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted and signed into law. The Company has evaluated the business provisions in the CARES 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, 50% of the deferred amount by December 31, 2021 and the remainder by December 31, 2022. The deferred payroll taxes are recorded within other long-term liabilities on the consolidated balance sheets. |
Restructuring
Restructuring | 12 Months Ended |
Jun. 30, 2020 | |
Restructuring | |
Restructuring | 12. 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. |
Severance
Severance | 12 Months Ended |
Jun. 30, 2020 | |
Severance | |
Severance | 13. Severance |
Acquisitions and Investments
Acquisitions and Investments | 12 Months Ended |
Jun. 30, 2020 | |
Acquisitions and Investments | |
Acquisitions and Investments | 14. Acquisitions and Investments Acquisition of Galvanize, Inc. On January 27, 2020, the Company acquired 100% of Galvanize in exchange for $165.0 million, plus working capital of $12.2 million. Galvanize provides talent development for individuals and enterprises in information technology fields. The acquisition of Galvanize expands the Company’s offerings to include post-secondary skills training in data science and software engineering, technology staffing and developing talent and capabilities for companies. The Company also plans to use Galvanize’s curriculum to create appropriate content to offer high school students. 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. Allocation of Purchase Price Cash $ 9,232 Current assets, excluding cash 8,888 Property and equipment, net 11,270 Operating lease right-of-use assets, net 99,676 Intangible assets, net 68,483 Goodwill 84,741 Other assets 1,802 Current liabilities (4,370) Deferred revenue (3,374) Deferred tax asset (liability) 2,412 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 value of the trade names increased from $24.0 million to $60.3 million and the estimated useful life decreased from 18 years to 15 years . Amortization expense during the fourth quarter of fiscal year 2020 included an adjustment of $0.4 million to reflect the updated balance and estimated useful life as of the acquisition date. ● The value of the operating lease right-of-use assets, net increased from $90.7 million to $99.7 million. Lease expense during the fourth quarter of fiscal year 2020 included an adjustment of $0.1 million to reflect the updated balance as of the acquisition date. ● The deferred tax liability decreased from $17.4 million to $2.4 million, mostly as a result of the change to the trade names and changes to the preliminary Section 382 analysis. ● Goodwill decreased from $107.6 million to $84.7 million, mostly as a result of the transactions above. Intangible Assets Estimated Intangible Assets Amount Useful Life (In thousands) (In years) Customer relationships $ 4,785 4.22 Developed technology 3,357 4.00 Trade names 60,341 15.00 $ 68,483 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 (or 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. Year Ended June 30, (In thousands) 2020 2019 Revenues $ 1,066,547 $ 1,066,304 Income (loss) from operations 6,574 23,148 Net income (loss) (1,519) 13,729 Investments in Limited Partnerships Investment in Tallo, Inc. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions | |
Related Party Transactions | 15. Related Party Transactions The Company contributed to Future of School, a charity focused on access to quality education. Future of School is a related party as an executive officer of the Company serves on its Board of Directors. During the years ended June 30, 2020, 2019 and 2018, contributions made by the Company to Future of School were $1.2 million, $1.4 million, and $0.3 million, respectively. In fiscal year 2019, the Company accrued $2.5 million for contributions to be made in subsequent years. The amounts shown for fiscal year 2020 reduced that obligation and as of June 30, 2020, $1.3 million remains outstanding. |
Employee Benefits
Employee Benefits | 12 Months Ended |
Jun. 30, 2020 | |
Employee Benefits | |
Employee Benefits | 16. Employee Benefits The Company maintains a 401(k) salary deferral plan (the “401(k) Plan”) for its employees. Employees who have been employed for at least 30 |
Supplemental Disclosure of Cash
Supplemental Disclosure of Cash Flow Information | 12 Months Ended |
Jun. 30, 2020 | |
Supplemental Disclosure of Cash Flow Information | |
Supplemental Disclosure of Cash Flow Information | 17. Supplemental Disclosure of Cash Flow Information Year Ended June 30, 2020 2019 2018 Cash paid for interest $ 1,287 $ 1,108 $ 778 Cash paid for taxes 3,384 4,453 12,210 Supplemental disclosure of non-cash financing activities: Right-of-use assets obtained as a result of the adoption of ASC 842 (1) $ 117,328 $ — $ — Right-of-use assets obtained in exchange for new finance lease liabilities (2) 17,160 19,664 17,414 Supplemental disclosure of non-cash investing activities: Stock-based compensation expense capitalized on software development $ 229 $ 167 $ 1,083 Stock-based compensation expense capitalized on curriculum development 184 170 969 Business combinations: Acquired assets $ 130,868 $ — $ 209 Intangible assets 68,483 — 695 Goodwill 84,741 — 2,983 Assumed liabilities (103,490) — (734) Deferred revenue (3,374) — (361) (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. |
Quarterly Results of Operations
Quarterly Results of Operations (Unaudited) | 12 Months Ended |
Jun. 30, 2020 | |
Quarterly Results of Operations (Unaudited) | |
Quarterly Results of Operations (Unaudited) | 18. Quarterly Results of Operations (Unaudited) The unaudited consolidated interim financial information presented should be read in conjunction with other information included in the Company’s consolidated financial statements. The following unaudited consolidated financial information reflects all adjustments necessary for the fair presentation of the results of interim periods. The following tables set forth selected unaudited quarterly financial information for each of the Company’s last eight quarters. Fiscal Year 2020 Jun 30, Mar 31, Dec 31, Sep 30, 2020 2020 2019 2019 (In thousands) Consolidated Quarterly Statements of Operations Revenues $ 268,931 $ 257,154 $ 257,559 $ 257,121 Instructional costs and services 177,436 178,968 167,470 169,358 Gross margin 91,495 78,186 90,089 87,763 Selling, general, and administrative expenses 84,454 63,687 59,784 107,151 Income (loss) from operations 7,041 14,499 30,305 (19,388) Interest income (expense), net (577) (76) 441 910 Other income (expense), net 1,008 (1,093) 365 (8) Income (loss) before income taxes and loss from equity method investments 7,472 13,330 31,111 (18,486) Income tax (expense) benefit (2,548) (4,419) (10,392) 8,818 Loss from equity method investments (36) (157) (125) (62) Net income (loss) attributable to common stockholders $ 4,888 $ 8,754 $ 20,594 $ (9,730) Net income (loss) attributable to common stockholders per share: Basic $ 0.12 $ 0.22 $ 0.52 $ (0.25) Diluted $ 0.12 $ 0.22 $ 0.52 $ (0.25) Weighted average shares used in computing per share amounts: Basic 39,637,347 39,539,791 39,450,017 39,288,557 Diluted 41,166,794 39,938,898 39,973,933 39,288,557 Fiscal Year 2019 Jun 30, Mar 31, Dec 31, Sep 30, 2019 2019 2018 2018 (In thousands) Consolidated Quarterly Statements of Operations Revenues $ 256,314 $ 253,252 $ 254,872 $ 251,314 Instructional costs and services 175,863 168,260 160,329 158,985 Gross margin 80,451 84,992 94,543 92,329 Selling, general, and administrative expenses 77,770 61,725 61,253 106,081 Income (loss) from operations 2,681 23,267 33,290 (13,752) Interest income, net 1,214 754 477 316 Other income (expense), net 154 556 (789) 193 Income (loss) before income taxes and loss from equity method investments 4,049 24,577 32,978 (13,243) Income tax (expense) benefit (662) (5,842) (9,074) 5,058 Loss from equity method investments (70) (273) (192) (97) Net income (loss) attributable to common stockholders $ 3,317 $ 18,462 $ 23,712 $ (8,282) Net income attributable to common stockholders per share: Basic $ 0.08 $ 0.47 $ 0.61 $ (0.22) Diluted $ 0.08 $ 0.44 $ 0.59 $ (0.22) Weighted average shares used in computing per share amounts: Basic 39,135,413 39,008,990 38,816,669 38,434,049 Diluted 41,667,000 41,753,323 40,325,260 38,434,049 |
SCHEDULE II VALUATION AND QUALI
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Jun. 30, 2020 | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | SCHEDULE II K12 INC. VALUATION AND QUALIFYING ACCOUNTS Years Ending June 30, 2020, 2019 and 2018 1. ALLOWANCE FOR DOUBTFUL ACCOUNTS Additions Balance at Charged to Deductions Beginning Cost and from Balance at of Period Expenses Allowance End of Period June 30, 2020 $ 11,765,869 2,882,067 7,840,262 $ 6,807,674 June 30, 2019 $ 12,384,279 6,325,188 6,943,598 $ 11,765,869 June 30, 2018 $ 14,791,171 4,088,592 6,495,484 $ 12,384,279 2. INVENTORY RESERVES Balance at Charged to Deductions, Beginning Cost and Shrinkage and Balance at of Period Expenses Obsolescence End of Period June 30, 2020 $ 4,131,386 877,357 191,443 $ 4,817,300 June 30, 2019 $ 3,491,655 1,359,595 719,864 $ 4,131,386 June 30, 2018 $ 2,310,309 1,314,225 132,879 $ 3,491,655 3. COMPUTER RESERVE (1) Additions Balance at Charged to Deductions, Beginning Cost and Shrinkage and Balance at of Period Expenses Obsolescence End of Period June 30, 2020 $ 788,230 835,488 812,036 $ 811,682 June 30, 2019 $ 899,654 383,770 495,194 $ 788,230 June 30, 2018 $ 819,042 550,142 469,530 $ 899,654 (1) A reserve account is maintained against potential obsolescence of, and damage beyond economic repair to, computers provided to the Company’s students. The reserve is calculated based upon several factors including historical percentages, the net book value and the remaining useful life. During fiscal years 2020, 2019 and 2018, certain computers were written off against the reserve. 4. INCOME TAX VALUATION ALLOWANCE Additions to Deductions in Balance at Net Deferred Net Deferred Beginning Tax Asset Tax Asset Balance at of Period Allowance Allowance End of Period June 30, 2020 $ 4,548,900 441,868 — $ 4,990,768 June 30, 2019 $ 4,458,517 90,383 — $ 4,548,900 June 30, 2018 $ 7,152,860 22,388 2,716,731 $ 4,458,517 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2020 | |
Summary of Significant Accounting Policies | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Accounting Standards Adopted On July 1, 2019, the Company adopted Accounting Standards Codification (“ASC”) Topic 842, Leases Leases 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 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. On July 1, 2019, the Company adopted Accounting Standards Update (“ASU”) 2018-15, Intangibles – Goodwill and Other – Internal-Use Software . Accounting Standards Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities and contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates and assumptions, including those related to the allowance for doubtful accounts, inventory reserves, amortization periods, the allocation of purchase price to the fair value of net assets and liabilities acquired in business combinations, fair values used in asset impairment evaluations, valuation of long-lived assets, accrual for incurred but not reported (“IBNR”) claims, contingencies, income taxes and stock-based compensation expense. The Company bases its estimates on historical experience and various assumptions that it believes are reasonable under the circumstances. The results of the analysis form the basis for making assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. |
Contracts with Customers | Contracts with Customers Revenues are principally earned from contractual agreements to provide educational services to students through an integrated package of 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 Topic 606, Revenue from Contracts with Customers ● 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 are administered together to support an online or blended public school. Contractual agreements generally span multiple years with performance obligations being isolated to annual periods which generally coincide with the Company’s fiscal year. Customers of 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 expected 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 updates as necessary, by adjusting its year-to-date earned revenues to be proportional to the total expected revenues to be earned during 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). 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 current and prior periods. For the years ended June 30, 2019, 2018 and 2017, the Company’s aggregate funding estimates differed from actual reimbursements impacting total reported revenue by approximately 0.6%, 0.4%, and (0.3)%, respectively. 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, academic progress and historical completion, student location, funding caps and other state specified categorical program funding. Under the contracts where the Company provides products and services to schools, the Company is responsible for substantially all of the expenses incurred by the school and 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 (the school’s expected funding), as reflected in its respective financial statements, including Company charges to the schools. To the extent a school does not receive sufficient 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’s net operating loss may reduce the Company’s ability to collect its management fees in full and recognized revenues are constrained to reflect the expected cash collections from such schools. The Company records the school’s estimated net operating loss against revenues based upon the percentage of actual revenues in the period to total estimated revenues for the fiscal year. Actual school net 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 years ended June 30, 2020, 2019 and 2018, the Company’s revenues included a reduction for net operating losses at the schools of $45.4 million, $54.7 million, and $66.7 million, respectively. Because the Company has agreed to absorb any operating losses of the schools, the Company records the expenses incurred by the school as both revenue and expenses in the consolidated statements of operations. Amounts recorded as revenues and expenses for the years ended June 30, 2020, 2019 and 2018, were $325.5 million, $342.7 million and $314.8 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, and revenues are recorded over the access period based on the agreed upon contract price. In addition, 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 have access for one Disaggregated Revenues The following table presents the Company’s revenues disaggregated based on its three lines of business for the years ended June 30, 2020 and 2019: Year Ended June 30, 2020 2019 (In thousands) Managed Public School Programs $ 920,080 $ 890,275 Institutional Non-managed Public School Programs 36,195 50,623 Institutional Software & Services 38,765 39,330 Total Institutional 74,960 89,953 Private Pay Schools and Other 45,725 35,524 Total Revenues $ 1,040,765 $ 1,015,752 Concentration of Customers During the years ended June 30, 2020, 2019 and 2018, approximately 88%, 88% and 85%, respectively, of the Company’s revenues were recognized from schools that contracted with the Company for Managed Public School Programs. During the years ended June 30, 2020, 2019 and 2018, the Company had zero, one and zero contracts, respectively, that represented greater than 10% of total revenues. In fiscal year 2018, the Company and the Agora Cyber Charter School entered into an agreement related to its outstanding receivable of $28.7 million at June 30, 2018 to be paid over a four-year period. In addition, the term of the service agreement was extended through June 30, 2022. The Company reclassified the long-term portion of $23.2 million to deposits and other assets on the consolidated balance sheets as of June 30, 2018. The aggregate current and long-term balance as of June 30, 2020 was $18.6 million. The Company accrues interest on its long-term receivables based on contracted terms. Contract Balances The timing of revenue recognition, invoicing, and cash collection results in accounts receivable, unbilled receivables (a contract asset) and deferred revenue (a contract liability) in the consolidated balance sheets. Accounts receivable are recorded when there is an executed customer contract and the customer is billed. The collectability of outstanding receivables is evaluated regularly by the Company and an allowance is recorded to reflect probable losses. Unbilled receivables are created when revenue is earned prior to the customer being billed. Deferred revenue is recorded when customers are billed or cash is collected in advance of services being provided. The opening and closing balance of the Company’s accounts receivable, unbilled receivables and deferred revenue are as follows: June 30, 2020 2019 (In thousands) Accounts receivable $ 236,134 $ 191,639 Unbilled receivables (included in accounts receivable) 15,688 16,189 Deferred revenue 24,417 22,828 Deferred revenue, long-term (included in other long-term liabilities) 2,236 — 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, as well as $8.4 million acquired in the purchase of Galvanize. 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, as well as $3.4 million acquired in the purchase of Galvanize. 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 years ended June 30, 2020 and 2019 that was included in the previous July 1 st Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For the majority of its contracts, the Company’s performance obligations are satisfied over time, as the Company delivers, and the customer receives the services, over the service period of the contract. The Company’s payment terms are generally net 30 or net 45, but can vary depending on the customer or when the school receives its funding from the state. unsatisfied 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 recognizes revenue on a straight-line basis. Sales Taxes Sales tax collected from customers is excluded from revenues. Collected but unremitted sales tax is included as part of accrued liabilities in the accompanying consolidated balance sheets. Revenues do not include sales tax as the Company considers itself a pass-through conduit for collecting and remitting sales tax. |
Shipping and Handling Costs | Shipping and Handling Costs Shipping and handling costs are expensed when incurred and are classified as instructional costs and services in the accompanying consolidated statements of operations. Shipping and handling charges invoiced to a customer are included in revenues. |
Research and Developments Costs | Research and Development Costs All research and development costs, including patent application costs, are expensed as incurred. Research and development costs totaled $9.7 million, $9.5 million and $9.2 million for the years ended June 30, 2020, 2019 and 2018, respectively, and are included within selling, general and administrative expenses in the consolidated statements of operations. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents generally consist of cash on hand and cash held in money market and demand deposit accounts. The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company periodically has cash balances which exceed federally insured limits. Restricted cash consists of amounts held in escrow related to the Company’s settlement agreement with the Agora Cyber Charter School. The restricted cash which is short-term in nature is included in other current assets, while the portion that is long-term is included in deposits and other assets on the consolidated balance sheets. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company maintains an allowance for uncollectible accounts primarily for estimated losses resulting from the inability or failure of individual customers to make required payments. The Company analyzes accounts receivable, historical percentages of uncollectible accounts, and changes in payment history when evaluating the adequacy of the allowance for uncollectible accounts. The Company writes-off accounts receivable based on the age of the receivable and the facts and circumstances surrounding the customer and reasons for non-payment. The Company records an allowance for estimated uncollectible accounts in an amount approximating probable losses. Actual write-offs might differ from the recorded allowance. |
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 June 30, 2020 and 2019, $5.2 million and $4.1 million, respectively, of inventory, net of reserves, was deemed long-term and included in deposits and other assets on the consolidated balance sheets. The provision for excess and obsolete inventory is established based upon the evaluation of the quantity on hand relative to demand. During the years ended June 30, 2020, 2019 and 2018, the Company increased the provision for excess and obsolete inventory by $0.7 million, $0.6 million, and $1.2 million, respectively, primarily related to inventory in excess of anticipated demand and the decision to discontinue certain products. The excess and obsolete inventory reserve was $4.8 million and $4.1 million at June 30, 2020 and 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 Computer hardware 3 - 7 years Computer software 3 Web site development 3 years Office equipment 5 years Furniture and fixtures 7 years Leasehold improvements Shorter of useful life or term of the lease The Company makes an estimate of unreturned student computers based on an analysis of recent trends of returns. The Company recorded accelerated depreciation of $2.4 million, $2.3 million and $2.1 million for the years ended June 30, 2020, 2019 and 2018, respectively, related to the leases exited and unreturned student computers. The Company fully expenses computer peripheral equipment (e.g. keyboards, mouses) upon purchase as recovery has been determined to be uneconomical. These expenses totaled $3.8 million, $4.1 million and $3.4 million for the years ended June 30, 2020, 2019 and 2018, respectively, and are recorded as instructional costs and services. |
Capitalized Software Costs | Capitalized Software Costs The Company develops software for internal use. The Company capitalizes software development costs incurred during the application development stage in accordance with ASC 350, Intangibles – Goodwill and Other Capitalized software additions totaled $24.0 million, $26.3 million and $24.5 million for the years ended June 30, 2020, 2019 and 2018, respectively. There were no material write-downs of capitalized software projects for the years ended June 30, 2020, 2019 and 2018. During the three months ended September 30, 2017, the Company recorded an out of period adjustment related to the capitalization of software and curriculum development. The adjustment increased capitalized software development costs and capitalized curriculum development costs by $2.3 million and $0.6 million, respectively, and increased net income by $1.4 million for the year. The Company assessed the materiality of these errors on its prior quarterly and annual financial statements, assessing materiality both quantitatively and qualitatively, in accordance with the Securities and Exchange Commission’s (“SEC”) Staff Accounting Bulletin (“SAB”) No. 99 and SAB No. 108 and concluded that the errors were not material to any of its previously issued financial statements. |
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 $19.3 million, $16.6 million and $9.9 million for the years ended June 30, 2020, 2019 and 2018, respectively. These amounts are recorded on the accompanying consolidated balance sheets, net of amortization charges. There were no material write-downs of capitalized curriculum development costs for the years ended June 30, 2020, 2019 and 2018. As mentioned above, capitalized curriculum development additions included an out of period adjustment of $0.6 million. |
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 to 3-year payment terms, at varying rates, with a $1 purchase option at the end of each lease term. The Company pledges the assets financed to secure the outstanding leases. 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 1 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 7, “Credit Facility”), the Company has reassessed its incremental borrowing rate as 2.55%. The Company used 2.55% to calculate the present value of the leases acquired from Galvanize. 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. |
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 years ended June 30, 2020, 2019 and 2018 was $6.1 million, $3.0 million and $3.0 million, respectively, and is included within selling, general, and administrative expenses in the consolidated statements of operations. Future amortization of intangible assets is expected to be $8.0 million, $7.9 million, $7.7 million, $6.7 million and $5.5 million in the fiscal years ending June 30, 2021 through June 30, 2025, respectively and $41.4 million thereafter. As of June 30, 2020 and 2019, the goodwill balance was $174.9 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. The Company performed a qualitative assessment of coronavirus disease 2019 (“COVID-19”) as a triggering event related to the value of its finite-lived intangible assets and concluded that there was no impairment during the year ended June 30, 2020. The Company has one reporting unit. Goodwill and intangible assets deemed to have an indefinite life are tested for impairment annually, or earlier when events or changes in circumstances suggest the carrying amount may not be fully recoverable. Examples of such events or circumstances include, but are not limited to, significant underperformance relative to historical or projected future operating results, significant changes in the manner of use of acquired assets or the strategy for the Company’s business, significant negative industry or economic trends, and/or a significant decline in the Company’s stock price for a sustained period. 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 31 st th As of June 30, 2020, the Company performed “Step 0” of the impairment test, which included a qualitative assessment of the impact of COVID-19 as a triggering event, 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. On October 2, 2017, the Company acquired 100% interest in Big Universe, Inc. for $3.3 million and contingent consideration. On January 27, 2020, the Company acquired Galvanize for $165.0 million and working capital. The Company’s acquisition of Galvanize is discussed in more detail in Note 14, “Acquisitions and Investments.” The following table represents goodwill additions/reductions resulting from the acquisitions mentioned above during the years ended June 30, 2020, 2019 and 2018: ($ in millions) Amount Goodwill Balance as of June 30, 2017 $ 87.2 Acquisition of Big Universe, Inc. 3.0 Balance as of June 30, 2018 $ 90.2 Adjustments — Balance as of June 30, 2019 $ 90.2 Acquisition of Galvanize, Inc. 84.7 Balance as of June 30, 2020 $ 174.9 June 30, 2020 June 30, 2019 ($ in millions) Gross Accumulated Net Gross Accumulated Net Trade names $ 77.9 $ (12.0) $ 65.9 $ 17.6 $ (9.4) $ 8.2 Customer and distributor relationships 25.3 (17.2) 8.1 20.5 (14.7) 5.8 Developed technology 6.6 (3.5) 3.1 3.2 (2.8) 0.4 Other 1.4 (1.0) 0.4 1.4 (0.8) 0.6 Total $ 111.2 $ (33.7) $ 77.5 $ 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 |
Income Taxes | Income Taxes Deferred tax assets and liabilities are computed based on the difference between the financial reporting and income tax bases of assets and liabilities using the enacted marginal tax rate. ASC 740, Income Taxes |
Stock-Based Compensation | Stock-Based Compensation The Company estimates the fair value of share-based awards on the date of grant. The fair value of restricted stock awards is based on the closing price of the Company’s common stock on the date of grant. Certain restricted stock awards with a market-based performance component are valued using a Monte Carlo simulation model that considers a variety of factors including, but not limited to, the Company’s common stock price, risk-free rate, and expected stock price volatility over the expected life of awards. The Company recognizes forfeitures of share-based awards as they occur in the period of forfeiture rather than estimating the number of awards expected to be forfeited at the grant date and subsequently adjusting the estimate when awards are actually forfeited. |
Advertising and Marketing Costs | Advertising and Marketing Costs Advertising and marketing costs consist primarily of internet advertising, online marketing, direct mail, print media and television commercials and are expensed when incurred. Advertising costs totaled $32.7 million, $38.0 million and $37.5 million for the years ended June 30, 2020, 2019 and 2018, respectively, and are included within selling, general, and administrative expenses in the consolidated statements of operations. |
Net Income Per Common Share | Net Income Per Common Share The Company calculates net income (loss) per share in accordance with ASC 260, Earnings Per Share . The following schedule presents the calculation of basic and diluted net income per share: Year Ended June 30, 2020 2019 2018 (In thousands except share and per share data) Basic net income per share computation: Net income attributable to common stockholders $ 24,506 $ 37,209 $ 27,620 Weighted average common shares — basic 39,478,928 38,848,780 39,282,674 Basic net income per share $ 0.62 $ 0.96 $ 0.70 Diluted net income per share computation: Net income attributable to common stockholders $ 24,506 $ 37,209 $ 27,620 Share computation: Weighted average common shares — basic 39,478,928 38,848,780 39,282,674 Effect of dilutive stock options and restricted stock awards 1,184,296 2,096,020 1,355,070 Weighted average common shares — diluted 40,663,224 40,944,800 40,637,744 Diluted net income per share $ 0.60 $ 0.91 $ 0.68 For the years ended June 30, 2020, 2019 and 2018, shares issuable in connection with stock options and restricted stock of 729,008, 140,657 and 1,026,472, respectively, were excluded from the diluted income per common share calculation because the effect would have been antidilutive. As of June 30, 2020, the Company had 46,341,627 shares of common stock issued and 41,006,884 shares outstanding. |
Fair Value Measurements | Fair Value Measurements ASC 820, Fair Value Measurements and Disclosures , 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 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 12, “Restructuring.” The Tallo, Inc. convertible note is discussed in more detail in Note 14, “Acquisitions and Investments.” There were no assets or liabilities measured at fair value on a nonrecurring basis at June 30, 2020 – see Note 12, “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 June 30, 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 year ended June 30, 2020. Year Ended June 30, 2020 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2019 and Settlements Gains (Losses) June 30, 2020 (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 year ended June 30, 2019. Year Ended June 30, 2019 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2018 and Settlements Gains (Losses) June 30, 2019 (In thousands) Contingent consideration associated with acquisitions $ 1,345 $ (1,347) $ 2 $ — 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 year ended June 30, 2018. Year Ended June 30, 2018 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2017 and Settlements Gains (Losses) June 30, 2018 (In thousands) Contingent consideration associated with acquisitions 2,806 (1,319) (142) 1,345 |
Reclassifications | Reclassifications 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 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) | 12 Months Ended |
Jun. 30, 2020 | |
Summary of Significant Accounting Policies | |
Schedule of disaggregation of revenue | Year Ended June 30, 2020 2019 (In thousands) Managed Public School Programs $ 920,080 $ 890,275 Institutional Non-managed Public School Programs 36,195 50,623 Institutional Software & Services 38,765 39,330 Total Institutional 74,960 89,953 Private Pay Schools and Other 45,725 35,524 Total Revenues $ 1,040,765 $ 1,015,752 |
Schedule of accounts receivables, unbilled receivables and deferred revenue | June 30, 2020 2019 (In thousands) Accounts receivable $ 236,134 $ 191,639 Unbilled receivables (included in accounts receivable) 15,688 16,189 Deferred revenue 24,417 22,828 Deferred revenue, long-term (included in other long-term liabilities) 2,236 — |
Schedule of useful lives of property and equipment | Useful Life Student and state testing computers 3 Computer hardware 3 - 7 years Computer software 3 Web site development 3 years Office equipment 5 years Furniture and fixtures 7 years Leasehold improvements Shorter of useful life or term of the lease |
Schedule of goodwill activity | ($ in millions) Amount Goodwill Balance as of June 30, 2017 $ 87.2 Acquisition of Big Universe, Inc. 3.0 Balance as of June 30, 2018 $ 90.2 Adjustments — Balance as of June 30, 2019 $ 90.2 Acquisition of Galvanize, Inc. 84.7 Balance as of June 30, 2020 $ 174.9 |
Schedule of intangible assets | June 30, 2020 June 30, 2019 ($ in millions) Gross Accumulated Net Gross Accumulated Net Trade names $ 77.9 $ (12.0) $ 65.9 $ 17.6 $ (9.4) $ 8.2 Customer and distributor relationships 25.3 (17.2) 8.1 20.5 (14.7) 5.8 Developed technology 6.6 (3.5) 3.1 3.2 (2.8) 0.4 Other 1.4 (1.0) 0.4 1.4 (0.8) 0.6 Total $ 111.2 $ (33.7) $ 77.5 $ 42.7 $ (27.7) $ 15.0 |
Schedule of calculation of basic and diluted net income (loss) per share | Year Ended June 30, 2020 2019 2018 (In thousands except share and per share data) Basic net income per share computation: Net income attributable to common stockholders $ 24,506 $ 37,209 $ 27,620 Weighted average common shares — basic 39,478,928 38,848,780 39,282,674 Basic net income per share $ 0.62 $ 0.96 $ 0.70 Diluted net income per share computation: Net income attributable to common stockholders $ 24,506 $ 37,209 $ 27,620 Share computation: Weighted average common shares — basic 39,478,928 38,848,780 39,282,674 Effect of dilutive stock options and restricted stock awards 1,184,296 2,096,020 1,355,070 Weighted average common shares — diluted 40,663,224 40,944,800 40,637,744 Diluted net income per share $ 0.60 $ 0.91 $ 0.68 |
Schedule of assets and liabilities measured at fair value on a nonrecurring basis | There were no assets or liabilities measured at fair value on a nonrecurring basis at June 30, 2020 – see Note 12, “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 |
Schedule of assets and liabilities measured at fair value on a recurring basis | The following table summarizes certain fair value information at June 30, 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 | 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 year ended June 30, 2020. Year Ended June 30, 2020 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2019 and Settlements Gains (Losses) June 30, 2020 (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 year ended June 30, 2019. Year Ended June 30, 2019 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2018 and Settlements Gains (Losses) June 30, 2019 (In thousands) Contingent consideration associated with acquisitions $ 1,345 $ (1,347) $ 2 $ — 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 year ended June 30, 2018. Year Ended June 30, 2018 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2017 and Settlements Gains (Losses) June 30, 2018 (In thousands) Contingent consideration associated with acquisitions 2,806 (1,319) (142) 1,345 |
Property and Equipment and Ca_2
Property and Equipment and Capitalized Software and Curriculum (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Property and Equipment and Capitalized Software and Curriculum | |
Schedule of property and equipment | June 30, 2020 2019 (In thousands) Student computers $ 48,153 $ 43,845 Computer software 17,268 17,999 Computer hardware 14,505 14,118 Leasehold improvements 17,396 10,364 State testing computers 7,461 7,470 Furniture and fixtures 7,178 4,058 Office equipment 1,372 1,382 113,333 99,236 Less accumulated depreciation and amortization (74,665) (67,256) $ 38,668 $ 31,980 |
Schedule of capitalized software | June 30, 2020 2019 (In thousands) Capitalized software $ 249,720 $ 226,503 Less accumulated depreciation and amortization (201,227) (175,338) $ 48,493 $ 51,165 |
Schedule of capitalized curriculum development costs | June 30, 2020 2019 (In thousands) Capitalized curriculum development costs $ 156,018 $ 156,671 Less accumulated depreciation and amortization (107,169) (103,374) $ 48,849 $ 53,297 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Income Taxes | |
Schedule of deferred tax assets and liabilities | June 30, 2020 2019 (In thousands) Deferred tax assets Net operating loss carryforward $ 21,850 $ 4,923 Reserves 3,374 4,769 Accrued expenses 4,117 3,492 Stock compensation expense 7,064 5,992 Other assets 2,252 1,524 Deferred rent — 1,056 Deferred revenue 759 461 Lease liability 29,640 — Federal tax credits 20 20 State tax credits 44 363 Total deferred tax assets 69,120 22,600 Deferred tax liabilities Capitalized curriculum development (9,245) (10,143) Capitalized software and website development costs (11,907) (12,659) Property and equipment (6,213) (5,166) Right-of-use assets (28,273) — Returned materials (2,385) (2,643) Purchased intangibles (19,877) (4,110) Total deferred tax liabilities (77,900) (34,721) Net deferred tax liability before valuation allowance (8,780) (12,121) Valuation allowance (4,991) (4,549) Net deferred tax liability $ (13,771) $ (16,670) Reported as: Long-term deferred tax liabilities $ (13,771) $ (16,670) |
Schedule of related components of the income tax expense | Year Ended June 30, 2020 2019 2018 (In thousands) Current: Federal $ 6,907 $ 3,919 $ 887 State 1,911 1,988 774 Foreign 1,028 920 1,444 Total current 9,846 6,827 3,105 Deferred: Federal (1,687) 3,412 (4,769) State 382 281 754 Total deferred (1,305) 3,693 (4,015) Total income tax expense (benefit) $ 8,541 $ 10,520 $ (910) |
Schedule of reconciliation of provision for income taxes to the income tax from applying the statutory rate | Year Ended June 30, 2020 2019 2018 U.S. federal tax at statutory rates (1) 21.0 % 21.0 % 28.0 % Permanent items 1.1 0.5 0.6 Lobbying 0.4 0.4 1.2 Non-deductible compensation 9.0 1.6 0.3 State taxes, net of federal benefit 5.3 4.3 3.1 Research and development tax credits (1.8) (0.5) - Domestic production activities deduction - - (0.1) Change in valuation allowance 0.1 0.2 (7.2) Effects of foreign operations 0.3 0.1 - Reserve for unrecognized tax benefits (2.4) (2.1) 0.9 Noncontrolling interests - - 0.4 Other (0.8) (0.4) (3.9) Impact of federal tax rate reduction - - (25.4) Repatriation transition tax - - 6.4 Stock-based compensation (6.4) (3.1) (7.7) Provision for (benefit from) income taxes 25.8 % 22.0 % (3.4) % (1) The corporate tax rate was lowered from 35% to 21% , effective as of January 1, 2018. Under IRC §15 which governs rate changes, fiscal year taxpayers are subject to a “blended” tax rate for tax years that include January 1, 2018. Using the weighted average calculation, the Company’s blended federal tax rate for the year ended June 30, 2018 is 28% . |
Schedule of unrecognized tax benefits | Year Ended June 30, 2020 2019 2018 (In thousands) Balance at beginning of the year $ 1,545 $ 2,392 $ 2,260 Additions for prior year tax positions 161 194 585 Additions for current year tax positions 179 87 8 Reductions for prior year tax positions (1,035) (1,128) (461) Balance at end of the year $ 850 $ 1,545 $ 2,392 |
Finance and Operating Leases (T
Finance and Operating Leases (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Finance and Operating Leases | |
Schedule of present value of the minimum lease payments on finance leases | June 30, 2020 2019 (in thousands) 2020 $ — $ 20,070 2021 13,587 4,819 2022 2,653 340 2023 2,040 — Total minimum payments 18,280 25,229 Less: imputed interest (342) (581) Finance lease liability 17,938 24,648 Less: current portion of finance lease liability (13,304) (19,588) Long-term finance lease liability $ 4,634 $ 5,060 |
Schedule of future minimum lease payments under non-cancelable operating leases | June 30, 2020 2019 (in thousands) 2020 $ — $ 8,441 2021 23,626 8,229 2022 22,326 6,735 2023 15,841 550 2024 14,769 137 2025 13,949 — Thereafter 38,544 — Total minimum payments 129,055 $ 24,092 Less: imputed interest (11,822) Operating lease liability 117,233 Less: current portion of operating lease liability (20,689) Long-term operating lease liability $ 96,544 |
Schedule of subleasing | Year Ended June 30, 2020 2019 (in thousands) 2020 $ — $ 930 2021 1,960 961 2022 1,496 528 2023 797 — 2024 66 — Total sublease income $ 4,319 $ 2,419 |
Schedule of lease cost, weighted-average remaining lease term, weighted-average discount rate | June 30, 2020 (in thousands) Lease cost Finance lease cost: Amortization of right-of-use assets $ 16,740 Interest on lease liabilities 820 Operating lease cost 13,129 Short-term lease cost 1,214 Sublease income (760) Total lease cost $ 31,143 Other information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ (13,124) Financing cash flows from finance leases (27,675) Right-of-use assets obtained in exchange for new finance lease liabilities 17,160 Right-of-use assets obtained in exchange for new operating lease liabilities 6,311 Weighted-average remaining lease term - finance leases 0.79 yrs. Weighted-average remaining lease term - operating leases 7.15 yrs. Weighted-average discount rate - finance leases 2.86 % Weighted-average discount rate - operating leases 2.76 % |
Equity Incentive Plan (Tables)
Equity Incentive Plan (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Schedule of stock option activity | Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Life (Years) Value Outstanding, June 30, 2017 1,356,528 $ 20.19 4.46 $ 1,481,585 Granted — — Exercised (14,600) 13.45 Forfeited or canceled (142,621) 22.71 Outstanding, June 30, 2018 1,199,307 $ 19.97 3.55 $ 788,277 Granted — — Exercised (150,290) 20.16 Forfeited or canceled (13,000) 29.82 Outstanding, June 30, 2019 1,036,017 $ 19.82 2.64 $ 11,312,871 Granted — — Exercised (4,000) 16.07 Forfeited or canceled (10,500) 30.92 Outstanding and exercisable, June 30, 2020 1,021,517 $ 19.73 1.65 $ 8,325,869 |
Schedule of restricted stock award activity | Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2017 2,141,047 $ 12.34 Granted 1,210,502 16.68 Vested (1,339,492) 12.29 Canceled (335,150) 14.31 Nonvested, June 30, 2018 1,676,907 $ 15.12 Granted 828,833 18.44 Vested (947,703) 14.72 Canceled (235,485) 17.40 Nonvested, June 30, 2019 1,322,552 $ 17.08 Granted 1,126,227 26.84 Vested (750,634) 16.93 Canceled (79,541) 21.48 Nonvested, June 30, 2020 1,618,604 $ 23.73 |
Schedule of performance share units award activity | Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2017 1,043,602 $ 13.16 Granted 138,241 12.81 Vested (320,340) 12.62 Canceled (152,524) 14.00 Nonvested, June 30, 2018 708,979 $ 13.15 Granted 2,372,241 10.61 Vested (427,954) 13.24 Canceled (281,025) 13.02 Nonvested, June 30, 2019 2,372,241 $ 10.61 Granted 81,133 15.30 Vested — — Canceled (8,352) 29.93 Nonvested, June 30, 2020 2,445,022 $ 10.70 |
Deferred Stock Units | |
Schedule of performance share units award activity | Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2018 — $ — Granted 18,258 25.41 Vested — — Canceled — — Nonvested, June 30, 2019 18,258 $ 25.41 Granted 23,844 20.13 Vested — — Canceled — — Nonvested, June 30, 2020 42,102 $ 22.42 |
Acquisitions and Investments (T
Acquisitions and Investments (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Acquisitions | |
Schedule of intangible assets | June 30, 2020 June 30, 2019 ($ in millions) Gross Accumulated Net Gross Accumulated Net Trade names $ 77.9 $ (12.0) $ 65.9 $ 17.6 $ (9.4) $ 8.2 Customer and distributor relationships 25.3 (17.2) 8.1 20.5 (14.7) 5.8 Developed technology 6.6 (3.5) 3.1 3.2 (2.8) 0.4 Other 1.4 (1.0) 0.4 1.4 (0.8) 0.6 Total $ 111.2 $ (33.7) $ 77.5 $ 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 Cash $ 9,232 Current assets, excluding cash 8,888 Property and equipment, net 11,270 Operating lease right-of-use assets, net 99,676 Intangible assets, net 68,483 Goodwill 84,741 Other assets 1,802 Current liabilities (4,370) Deferred revenue (3,374) Deferred tax asset (liability) 2,412 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 thousands) (In years) Customer relationships $ 4,785 4.22 Developed technology 3,357 4.00 Trade names 60,341 15.00 $ 68,483 |
Schedule of unaudited pro forma combined results of operations | Year Ended June 30, (In thousands) 2020 2019 Revenues $ 1,066,547 $ 1,066,304 Income (loss) from operations 6,574 23,148 Net income (loss) (1,519) 13,729 |
Supplemental Disclosure of Ca_2
Supplemental Disclosure of Cash Flow Information (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Supplemental Disclosure of Cash Flow Information | |
Schedule of supplemental disclosure of cash flow information | Year Ended June 30, 2020 2019 2018 Cash paid for interest $ 1,287 $ 1,108 $ 778 Cash paid for taxes 3,384 4,453 12,210 Supplemental disclosure of non-cash financing activities: Right-of-use assets obtained as a result of the adoption of ASC 842 (1) $ 117,328 $ — $ — Right-of-use assets obtained in exchange for new finance lease liabilities (2) 17,160 19,664 17,414 Supplemental disclosure of non-cash investing activities: Stock-based compensation expense capitalized on software development $ 229 $ 167 $ 1,083 Stock-based compensation expense capitalized on curriculum development 184 170 969 Business combinations: Acquired assets $ 130,868 $ — $ 209 Intangible assets 68,483 — 695 Goodwill 84,741 — 2,983 Assumed liabilities (103,490) — (734) Deferred revenue (3,374) — (361) (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. |
Quarterly Results of Operatio_2
Quarterly Results of Operations (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Quarterly Results of Operations (Unaudited) | |
Schedule of selected unaudited quarterly financial information | Fiscal Year 2020 Jun 30, Mar 31, Dec 31, Sep 30, 2020 2020 2019 2019 (In thousands) Consolidated Quarterly Statements of Operations Revenues $ 268,931 $ 257,154 $ 257,559 $ 257,121 Instructional costs and services 177,436 178,968 167,470 169,358 Gross margin 91,495 78,186 90,089 87,763 Selling, general, and administrative expenses 84,454 63,687 59,784 107,151 Income (loss) from operations 7,041 14,499 30,305 (19,388) Interest income (expense), net (577) (76) 441 910 Other income (expense), net 1,008 (1,093) 365 (8) Income (loss) before income taxes and loss from equity method investments 7,472 13,330 31,111 (18,486) Income tax (expense) benefit (2,548) (4,419) (10,392) 8,818 Loss from equity method investments (36) (157) (125) (62) Net income (loss) attributable to common stockholders $ 4,888 $ 8,754 $ 20,594 $ (9,730) Net income (loss) attributable to common stockholders per share: Basic $ 0.12 $ 0.22 $ 0.52 $ (0.25) Diluted $ 0.12 $ 0.22 $ 0.52 $ (0.25) Weighted average shares used in computing per share amounts: Basic 39,637,347 39,539,791 39,450,017 39,288,557 Diluted 41,166,794 39,938,898 39,973,933 39,288,557 Fiscal Year 2019 Jun 30, Mar 31, Dec 31, Sep 30, 2019 2019 2018 2018 (In thousands) Consolidated Quarterly Statements of Operations Revenues $ 256,314 $ 253,252 $ 254,872 $ 251,314 Instructional costs and services 175,863 168,260 160,329 158,985 Gross margin 80,451 84,992 94,543 92,329 Selling, general, and administrative expenses 77,770 61,725 61,253 106,081 Income (loss) from operations 2,681 23,267 33,290 (13,752) Interest income, net 1,214 754 477 316 Other income (expense), net 154 556 (789) 193 Income (loss) before income taxes and loss from equity method investments 4,049 24,577 32,978 (13,243) Income tax (expense) benefit (662) (5,842) (9,074) 5,058 Loss from equity method investments (70) (273) (192) (97) Net income (loss) attributable to common stockholders $ 3,317 $ 18,462 $ 23,712 $ (8,282) Net income attributable to common stockholders per share: Basic $ 0.08 $ 0.47 $ 0.61 $ (0.22) Diluted $ 0.08 $ 0.44 $ 0.59 $ (0.22) Weighted average shares used in computing per share amounts: Basic 39,135,413 39,008,990 38,816,669 38,434,049 Diluted 41,667,000 41,753,323 40,325,260 38,434,049 |
Description of the Business (De
Description of the Business (Details) | 12 Months Ended |
Jun. 30, 2020item | |
Description of the Business | |
Number of lines of business | 3 |
Basis of Presentation (Details)
Basis of Presentation (Details) | 12 Months Ended |
Jun. 30, 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 | 12 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jul. 01, 2020 | Jul. 01, 2019 | |
Summary of Significant Accounting Policies | ||||
Lease liability | $ 117,233 | |||
Operating lease right-of-use assets, net | 111,768 | |||
Internal-use software implementation costs | $ 1,200 | |||
Accounts receivable allowance for credit losses | 6,808 | $ 11,766 | ||
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 | 11,900 | |||
ASU 2018-15 | Prepaid expenses | ||||
Summary of Significant Accounting Policies | ||||
Implementation costs capitalized | 800 | |||
ASU 2018-15 | Deposits and other assets | ||||
Summary of Significant Accounting Policies | ||||
Implementation costs capitalized | $ 11,100 | |||
ASU 2016-13 | Scenario Forecast Adjustment | Minimum | ||||
Summary of Significant Accounting Policies | ||||
Accounts receivable allowance for credit losses | $ 7,000 | |||
ASU 2016-13 | Scenario Forecast Adjustment | Maximum | ||||
Summary of Significant Accounting Policies | ||||
Accounts receivable allowance for credit losses | $ 9,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Summary of Significant Accounting Policies | ||||||||||||
Revenues | $ 268,931 | $ 257,154 | $ 257,559 | $ 257,121 | $ 256,314 | $ 253,252 | $ 254,872 | $ 251,314 | $ 1,040,765 | $ 1,015,752 | $ 917,734 | |
Percentage of impact on total revenue | 0.60% | 0.40% | 0.30% | |||||||||
School operating losses included in the entity's revenue | $ 45,400 | $ 54,700 | $ 66,700 | |||||||||
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 | $ 325,500 | $ 342,700 | $ 314,800 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Disaggregation of revenue (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2020USD ($)item | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | |
Summary of Significant Accounting Policies | |||||||||||
Number of lines of business | item | 3 | ||||||||||
Total Revenues | $ 268,931 | $ 257,154 | $ 257,559 | $ 257,121 | $ 256,314 | $ 253,252 | $ 254,872 | $ 251,314 | $ 1,040,765 | $ 1,015,752 | $ 917,734 |
Managed Public School Programs | |||||||||||
Summary of Significant Accounting Policies | |||||||||||
Total Revenues | 920,080 | 890,275 | |||||||||
Institutional | |||||||||||
Summary of Significant Accounting Policies | |||||||||||
Total Revenues | 74,960 | 89,953 | |||||||||
Non-managed Public School Programs | |||||||||||
Summary of Significant Accounting Policies | |||||||||||
Total Revenues | 36,195 | 50,623 | |||||||||
Institutional Software & Services | |||||||||||
Summary of Significant Accounting Policies | |||||||||||
Total Revenues | 38,765 | 39,330 | |||||||||
Private Pay Schools and Other | |||||||||||
Summary of Significant Accounting Policies | |||||||||||
Total Revenues | $ 45,725 | $ 35,524 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Concentration Risk and Inventories (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Concentration of revenues | |||
Accounts receivable | $ 236,134 | $ 191,639 | |
Deposits and other assets | 71,824 | 48,330 | |
Current and long-term balance | 18,600 | ||
Inventories | |||
Inventory deemed long-term and included in deposits and other assets | 5,200 | 4,100 | |
Increase (decrease) in provision for excess and obsolete inventory | 700 | 600 | $ 1,200 |
Excess and obsolete inventory reserve | $ 4,800 | $ 4,100 | |
Revenue | Customer Concentration Risk | |||
Concentration of revenues | |||
Concentration risk (as a percent) | 10.00% | 10.00% | 10.00% |
Revenue | Customer Concentration Risk | Managed Schools | |||
Concentration of revenues | |||
Concentration risk (as a percent) | 88.00% | 88.00% | 85.00% |
Number of customers with concentration | 0 | 1 | 0 |
Agora | |||
Concentration of revenues | |||
Accounts receivable | $ 28,700 | ||
Settlement repayment period | 4 years | ||
Deposits and other assets | $ 23,200 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Contract Balances (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jan. 27, 2020 | Jun. 30, 2018 | |
Accounts receivables, contract assets and deferred revenue | ||||
Accounts receivable | $ 236,134 | $ 191,639 | ||
Unbilled receivables (included in accounts receivable) | 15,688 | 16,189 | ||
Deferred revenue | 24,417 | 22,828 | ||
Deferred revenue, long-term (included in other long-term liabilities) | 2,236 | |||
Revenue recognized that was included in opening deferred revenue balance | 21,500 | 23,700 | ||
Revenue recognized from performance obligation satisfied in prior periods | 5,900 | $ 4,100 | ||
Deferred revenue acquired | 3,374 | $ 361 | ||
Galvanize Inc | ||||
Accounts receivables, contract assets and deferred revenue | ||||
Accounts receivable acquired | 8,400 | |||
Deferred revenue acquired | $ 3,400 | $ 3,374 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Performance Obligations (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
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 | ||
Research and development costs | $ 9.7 | $ 9.5 | $ 9.2 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Property and Equipment and Leases (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Sep. 30, 2017 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | Jan. 27, 2020 | Jul. 01, 2019 | |
Property and equipment | ||||||
Equipment expense | $ 3,800,000 | $ 4,100,000 | $ 3,400,000 | |||
Capitalized software development costs | 23,988,000 | 26,318,000 | 24,533,000 | |||
Net income | 24,506,000 | 37,209,000 | 27,420,000 | |||
Finance Leases | ||||||
Purchase option | $ 1 | |||||
Operating Leases | ||||||
Incremental borrowing rate used as discount rate | 2.55% | 3.86% | ||||
Capitalized Curriculum Development Costs | ||||||
Estimated useful life of the software | 5 years | |||||
Capitalized curriculum development costs | $ 19,332,000 | 16,611,000 | 9,927,000 | |||
Minimum | ||||||
Finance Leases | ||||||
Finance lease term | 1 year | |||||
Operating Leases | ||||||
Operating leases initial term | 1 year | |||||
Operating lease remaining lease term | 1 year | |||||
Maximum | ||||||
Finance Leases | ||||||
Finance lease term | 3 years | |||||
Operating Leases | ||||||
Operating leases initial term | 17 years | |||||
Operating lease remaining lease term | 5 years | |||||
Out of period adjustment | ||||||
Property and equipment | ||||||
Capitalized software development costs | $ 2,300,000 | |||||
Net income | 1,400,000 | |||||
Capitalized Curriculum Development Costs | ||||||
Capitalized curriculum development costs | 600,000 | |||||
Capitalized curriculum development costs write down | $ 600,000 | |||||
Student and state testing computers | Minimum | ||||||
Property and equipment | ||||||
Useful Life | 3 years | |||||
Student and state testing computers | Maximum | ||||||
Property and equipment | ||||||
Useful Life | 5 years | |||||
Student computers | ||||||
Property and equipment | ||||||
Accelerated depreciation | $ 2,400,000 | 2,300,000 | 2,100,000 | |||
Computer hardware | Minimum | ||||||
Property and equipment | ||||||
Useful Life | 3 years | |||||
Computer hardware | Maximum | ||||||
Property and equipment | ||||||
Useful Life | 7 years | |||||
Computer software | ||||||
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 | |||||
Capitalized software | ||||||
Property and equipment | ||||||
Capitalized software development additions | $ 24,000,000 | $ 26,300,000 | $ 24,500,000 | |||
Galvanize Inc | Minimum | ||||||
Operating Leases | ||||||
Operating lease remaining lease term | 1 year | |||||
Galvanize Inc | Maximum | ||||||
Operating Leases | ||||||
Operating lease remaining lease term | 11 years |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Goodwill and Intangible Assets (Details) $ in Thousands | Jan. 27, 2020USD ($) | Oct. 02, 2017USD ($) | Jul. 31, 2014USD ($) | Jan. 31, 2018USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2020USD ($)item | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2020USD ($) | Jan. 27, 2020USD ($) | Jun. 30, 2019USD ($) |
Intangible Assets: | |||||||||||
Amortization expense | $ 6,100 | $ 3,000 | $ 3,000 | ||||||||
Goodwill | $ 174,939 | 90,197 | 90,200 | 90,200 | $ 174,939 | $ 90,197 | |||||
Impairment of goodwill | $ 0 | ||||||||||
Number of reporting units | item | 1 | ||||||||||
Future amortization of intangible assets | |||||||||||
Fiscal 2021 | 8,000 | ||||||||||
Fiscal 2022 | 7,900 | ||||||||||
Fiscal 2023 | 7,700 | ||||||||||
Fiscal 2024 | 6,700 | ||||||||||
Fiscal 2025 | 5,500 | ||||||||||
Thereafter | 41,400 | ||||||||||
Rollforward of Goodwill | |||||||||||
Balance at the beginning of the period | $ 90,197 | 90,200 | 87,200 | ||||||||
Acquisition | 84,741 | 2,983 | |||||||||
Balance at the end of the period | 174,939 | 174,939 | $ 90,197 | 90,200 | |||||||
Intangible Assets | |||||||||||
Gross Carrying Amount | 111,200 | 42,700 | |||||||||
Accumulated Amortization | (33,700) | (27,700) | |||||||||
Net Carrying Value | 77,500 | 15,000 | |||||||||
Trade names | |||||||||||
Intangible Assets | |||||||||||
Gross Carrying Amount | 77,900 | 17,600 | |||||||||
Accumulated Amortization | (12,000) | (9,400) | |||||||||
Net Carrying Value | 65,900 | 8,200 | |||||||||
Customer and distributor relationships | |||||||||||
Intangible Assets | |||||||||||
Gross Carrying Amount | 25,300 | 20,500 | |||||||||
Accumulated Amortization | (17,200) | (14,700) | |||||||||
Net Carrying Value | 8,100 | 5,800 | |||||||||
Developed technology | |||||||||||
Intangible Assets | |||||||||||
Gross Carrying Amount | 6,600 | 3,200 | |||||||||
Accumulated Amortization | (3,500) | (2,800) | |||||||||
Net Carrying Value | 3,100 | 400 | |||||||||
Other | |||||||||||
Intangible Assets | |||||||||||
Gross Carrying Amount | 1,400 | 1,400 | |||||||||
Accumulated Amortization | (1,000) | (800) | |||||||||
Net Carrying Value | 400 | $ 600 | |||||||||
LearnBop | |||||||||||
Intangible Assets: | |||||||||||
Ownership percentage acquired (as a percent) | 51.00% | 49.00% | |||||||||
Cash purchase price | $ 6,500 | $ 500 | |||||||||
Galvanize Inc | |||||||||||
Intangible Assets: | |||||||||||
Amortization expense | 400 | ||||||||||
Goodwill | $ 84,741 | 84,700 | 84,700 | $ 84,700 | $ 84,741 | ||||||
Ownership percentage acquired (as a percent) | 100.00% | ||||||||||
Cash and contingent consideration paid | 165,000 | ||||||||||
Rollforward of Goodwill | |||||||||||
Balance at the beginning of the period | 107,600 | ||||||||||
Acquisition | 84,700 | ||||||||||
Balance at the end of the period | $ 84,741 | $ 84,700 | $ 84,700 | ||||||||
Big Universe Inc. | |||||||||||
Intangible Assets: | |||||||||||
Ownership percentage acquired (as a percent) | 100.00% | ||||||||||
Cash and contingent consideration paid | $ 3,300 | ||||||||||
Rollforward of Goodwill | |||||||||||
Acquisition | $ 3,000 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Advertising and Marketing Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Advertising and Marketing Costs | |||
Advertising costs | $ 32.7 | $ 38 | $ 37.5 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Net Income Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Basic and diluted income (loss) per share computation: | |||||||||||
Net income attributable to common stockholders | $ 4,888 | $ 8,754 | $ 20,594 | $ (9,730) | $ 3,317 | $ 18,462 | $ 23,712 | $ (8,282) | $ 24,506 | $ 37,209 | $ 27,620 |
Weighted average common shares-basic | 39,637,347 | 39,539,791 | 39,450,017 | 39,288,557 | 39,135,413 | 39,008,990 | 38,816,669 | 38,434,049 | 39,478,928 | 38,848,780 | 39,282,674 |
Basic net income per share (in dollars per share) | $ 0.12 | $ 0.22 | $ 0.52 | $ (0.25) | $ 0.08 | $ 0.47 | $ 0.61 | $ (0.22) | $ 0.62 | $ 0.96 | $ 0.70 |
Dilutive earnings per share computation: | |||||||||||
Net income attributable to common stockholders | $ 4,888 | $ 8,754 | $ 20,594 | $ (9,730) | $ 3,317 | $ 18,462 | $ 23,712 | $ (8,282) | $ 24,506 | $ 37,209 | $ 27,620 |
Additional disclosures | |||||||||||
Weighted average common shares-basic | 39,637,347 | 39,539,791 | 39,450,017 | 39,288,557 | 39,135,413 | 39,008,990 | 38,816,669 | 38,434,049 | 39,478,928 | 38,848,780 | 39,282,674 |
Effect of dilutive stock options and restricted stock awards (in shares) | 1,184,296 | 2,096,020 | 1,355,070 | ||||||||
Weighted average common shares-diluted | 41,166,794 | 39,938,898 | 39,973,933 | 39,288,557 | 41,667,000 | 41,753,323 | 40,325,260 | 38,434,049 | 40,663,224 | 40,944,800 | 40,637,744 |
Diluted net income per share (in dollars per share) | $ 0.12 | $ 0.22 | $ 0.52 | $ (0.25) | $ 0.08 | $ 0.44 | $ 0.59 | $ (0.22) | $ 0.60 | $ 0.91 | $ 0.68 |
Common stock, shares issued | 46,341,627 | 45,575,236 | 46,341,627 | 45,575,236 | |||||||
Common stock, shares outstanding | 41,006,884 | 40,240,493 | 41,006,884 | 40,240,493 | |||||||
Anti-dilutive shares | 729,008 | 140,657 | 1,026,472 |
Summary of Significant Accou_14
Summary of Significant Accounting Policies - Fair Value (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2017 | |
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | ||||
Assets, Fair Value Disclosure | $ 0 | |||
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 | Significant Unobservable Inputs (Level 3) | ||||
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | ||||
Convertible note | $ 1,345 | $ 2,806 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) | (1,319) | |||
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 | |||
Acquisitions | Measured on a recurring basis | Significant Unobservable Inputs (Level 3) | Contingent Consideration | ||||
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | ||||
Convertible note | $ 1,345 | |||
Acquisitions | Corporate Note Securities [Member] | Measured on a recurring basis | ||||
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | ||||
Convertible note | 5,006 | 5,006 | ||
Acquisitions | Corporate Note Securities [Member] | Measured on a recurring basis | Significant Unobservable Inputs (Level 3) | ||||
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | ||||
Convertible note | $ 5,006 | $ 5,006 |
Summary of Significant Accou_15
Summary of Significant Accounting Policies - Fair Value Measurements (Details) - Acquisitions - Measured on a recurring basis - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Corporate Note Securities [Member] | ||
Fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis | ||
Fair Value, ending of period | $ 5,006 | |
Significant Unobservable Inputs (Level 3) | ||
Fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis | ||
Fair Value, beginning of period | 1,345 | $ 2,806 |
Unrealized Gains/(Losses) | (142) | |
Fair Value, ending of period | 1,345 | |
Significant Unobservable Inputs (Level 3) | Contingent Consideration | ||
Fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis | ||
Fair Value, beginning of period | 1,345 | |
Purchases, Issuances and Settlements | (1,347) | |
Unrealized Gains/(Losses) | 2 | |
Fair Value, ending of period | $ 1,345 | |
Significant Unobservable Inputs (Level 3) | Convertible Note | ||
Fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis | ||
Purchases, Issuances and Settlements | 5,006 | |
Fair Value, ending of period | 5,006 | |
Significant Unobservable Inputs (Level 3) | Corporate Note Securities [Member] | ||
Fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis | ||
Fair Value, ending of period | $ 5,006 |
Property and Equipment and Ca_3
Property and Equipment and Capitalized Software and Curriculum (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Property and equipment and capitalized software | |||
Property and equipment and capitalized software, gross | $ 113,333 | $ 99,236 | |
Less accumulated depreciation and amortization | (74,665) | (67,256) | |
Property and equipment and capitalized software, Net | 38,668 | 31,980 | |
Maintenance and repair expenses | 10,300 | 13,700 | $ 12,100 |
Selling, administrative and other operating expenses | |||
Property and equipment and capitalized software | |||
Depreciation expense | 4,300 | 5,200 | 5,100 |
Student computers | |||
Property and equipment and capitalized software | |||
Property and equipment and capitalized software, gross | 48,153 | 43,845 | |
Student computers | Instructional costs and services | |||
Property and equipment and capitalized software | |||
Depreciation expense | 17,900 | 15,000 | 12,400 |
Amortization expense | 0 | 0 | 500 |
Computer software | |||
Property and equipment and capitalized software | |||
Property and equipment and capitalized software, gross | 17,268 | 17,999 | |
Computer hardware | |||
Property and equipment and capitalized software | |||
Property and equipment and capitalized software, gross | 14,505 | 14,118 | |
Leasehold improvements | |||
Property and equipment and capitalized software | |||
Property and equipment and capitalized software, gross | 17,396 | 10,364 | |
Office equipment | |||
Property and equipment and capitalized software | |||
Property and equipment and capitalized software, gross | 1,372 | 1,382 | |
Furniture and fixtures | |||
Property and equipment and capitalized software | |||
Property and equipment and capitalized software, gross | 7,178 | 4,058 | |
State testing computers | |||
Property and equipment and capitalized software | |||
Property and equipment and capitalized software, gross | 7,461 | 7,470 | |
Capitalized software | |||
Property and equipment and capitalized software | |||
Property and equipment and capitalized software, gross | 249,720 | 226,503 | |
Less accumulated depreciation and amortization | (201,227) | (175,338) | |
Property and equipment and capitalized software, Net | 48,493 | 51,165 | |
Capitalized software | Selling, administrative and other operating expenses | |||
Property and equipment and capitalized software | |||
Amortization expense | 5,500 | 7,400 | 9,100 |
Capitalized software | Instructional costs and services | |||
Property and equipment and capitalized software | |||
Amortization expense | 20,800 | 22,300 | 25,800 |
Capitalized curriculum | |||
Property and equipment and capitalized software | |||
Property and equipment and capitalized software, gross | 156,018 | 156,671 | |
Less accumulated depreciation and amortization | (107,169) | (103,374) | |
Property and equipment and capitalized software, Net | 48,849 | 53,297 | |
Amortization expense | $ 17,500 | $ 18,500 | $ 19,400 |
Income Taxes - Deferred (Detail
Income Taxes - Deferred (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 30, 2019 |
Deferred tax assets: | ||
Net operating loss carryforward | $ 21,850 | $ 4,923 |
Reserves | 3,374 | 4,769 |
Accrued expenses | 4,117 | 3,492 |
Stock compensation expense | 7,064 | 5,992 |
Other assets | 2,252 | 1,524 |
Deferred rent | 1,056 | |
Deferred revenue | 759 | 461 |
Lease liability | 29,640 | |
Federal tax credits | 20 | 20 |
State tax credits | 44 | 363 |
Total deferred tax assets | 69,120 | 22,600 |
Deferred tax liabilities: | ||
Capitalized curriculum development | (9,245) | (10,143) |
Capitalized software and website development costs | (11,907) | (12,659) |
Property and equipment | (6,213) | (5,166) |
Right-of-use assets | (28,273) | |
Returned materials | (2,385) | (2,643) |
Purchased intangibles | (19,877) | (4,110) |
Total deferred tax liabilities | (77,900) | (34,721) |
Net deferred tax liability before valuation allowance | (8,780) | (12,121) |
Valuation Allowance | (4,991) | (4,549) |
Net deferred tax liability | (13,771) | (16,670) |
Reported as: | ||
Long-term deferred tax liabilities | $ (13,771) | $ (16,670) |
Income Taxes - Carryforward (De
Income Taxes - Carryforward (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 30, 2019 |
Income Taxes | ||
NOL carryforward | $ 65,100 | |
Operating Loss Carryforwards, Subject to Expiration | 18,100 | |
Operating Loss Carryforwards, Not Subject to Expiration | 47,000 | |
Deferred Tax Assets, Operating Loss Carryforwards, Subject to Expiration | 3,200 | |
Valuation Allowance | $ 4,991 | $ 4,549 |
Income Taxes - Other (Details)
Income Taxes - Other (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Dec. 31, 2017 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 |
Current: | |||||||||||||
Federal | $ 6,907 | $ 3,919 | $ 887 | ||||||||||
State | 1,911 | 1,988 | 774 | ||||||||||
Foreign | 1,028 | 920 | 1,444 | ||||||||||
Total current | 9,846 | 6,827 | 3,105 | ||||||||||
Deferred: | |||||||||||||
Federal | (1,687) | 3,412 | (4,769) | ||||||||||
State | 382 | 281 | 754 | ||||||||||
Total deferred | (1,305) | 3,693 | (4,015) | ||||||||||
Total income tax expense (benefit) | $ 2,548 | $ 4,419 | $ 10,392 | $ (8,818) | $ 662 | $ 5,842 | $ 9,074 | $ (5,058) | $ 8,541 | $ 10,520 | $ (910) | ||
Reconciliation to income tax at the statutory rate: | |||||||||||||
U.S. Federal tax at statutory rates (as a percent) | 21.00% | 35.00% | 21.00% | 21.00% | 28.00% | ||||||||
Permanent items (as a percent) | 1.10% | 0.50% | 0.60% | ||||||||||
Lobbying (as a percent) | 0.40% | 0.40% | 1.20% | ||||||||||
Non-deductible compensation | 9.00% | 1.60% | 0.30% | ||||||||||
State taxes, net of federal benefit (as a percent) | 5.30% | 4.30% | 3.10% | ||||||||||
Research and development tax credits (as a percent) | (1.80%) | (0.50%) | |||||||||||
Domestic production activities deduction (as a percent) | (0.10%) | ||||||||||||
Change in valuation allowance (as a percent) | 0.10% | 0.20% | (7.20%) | ||||||||||
Effects of foreign operations (as a percent) | 0.30% | 0.10% | |||||||||||
Reserve for unrecognized tax benefits (as a percent) | (2.40%) | (2.10%) | 0.90% | ||||||||||
Noncontrolling Interests (as a percent) | 0.40% | ||||||||||||
Other (as a percent) | (0.80%) | (0.40%) | (3.90%) | ||||||||||
Impact of federal tax rate reduction | (25.40%) | ||||||||||||
Repatriation transition tax | 6.40% | ||||||||||||
Stock-based compensation | (6.40%) | (3.10%) | (7.70%) | ||||||||||
Provision for (benefit from) income taxes | 25.80% | 22.00% | (3.40%) | ||||||||||
Blended federal tax rate | 28.00% |
Income Taxes - Tax Uncertaintie
Income Taxes - Tax Uncertainties (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Tax Uncertainties | |||
Interest and penalties accrued | $ 100 | $ 200 | $ 200 |
Balance at beginning of the year | 1,545 | 2,392 | 2,260 |
Additions for prior year tax positions | 161 | 194 | 585 |
Additions for current year tax positions | 179 | 87 | 8 |
Reductions for prior year tax positions | (1,035) | (1,128) | (461) |
Balance at end of the year | 850 | $ 1,545 | $ 2,392 |
Unrecognized tax benefits that would affect the effective tax rate | $ 900 |
Finance and Operating Leases (D
Finance and Operating Leases (Details) - USD ($) | Jun. 30, 2020 | Apr. 30, 2020 | Mar. 31, 2020 | Jan. 27, 2020 | Jul. 01, 2019 | Jun. 30, 2019 | Feb. 28, 2019 |
Finance and Operating Leases | |||||||
Finance lease liability | $ 17,938,000 | $ 24,600,000 | |||||
Finance lease right-of-use assets | 19,800,000 | $ 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 years | 36 months | |||||
Purchase option | $ 1 | ||||||
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 | Jun. 30, 2020 | Jun. 30, 2019 |
Finance leases (ASC 842) | ||
2021 | $ 13,587 | |
2022 | 2,653 | |
2023 | 2,040 | |
Total minimum payments | 18,280 | |
Less: imputed interest | (342) | |
Finance lease liability | 17,938 | $ 24,600 |
Less: current portion of finance lease liability | (13,304) | |
Long-term finance lease liability | $ 4,634 | |
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 | Jun. 30, 2020 | Jun. 30, 2019 |
Operating Leases (ASC 842) | ||
2021 | $ 23,626 | |
2022 | 22,326 | |
2023 | 15,841 | |
2024 | 14,769 | |
2025 | 13,949 | |
Thereafter | 38,544 | |
Total minimum payments | 129,055 | |
Less: imputed interest | (11,822) | |
Operating lease liability | 117,233 | |
Less: current portion of operating lease liability | (20,689) | |
Long-term operating lease liability | 96,544 | |
Operating lease right-of-use assets, net | $ 111,768 | |
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 | 17 years | |
Buildings | Minimum | ||
Operating Leases (ASC 842) | ||
Operating leases initial term | 1 year | |
Buildings | 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 | Jun. 30, 2020USD ($)facility | Jun. 30, 2019USD ($) |
Finance and Operating Leases | ||
Year 1 | $ 1,960 | $ 930 |
Year 2 | 1,496 | 961 |
Year 3 | 797 | 528 |
Year 4 | 66 | |
Total sublease income | $ 4,319 | $ 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 | 12 Months Ended |
Jun. 30, 2020USD ($) | |
Finance lease cost: | |
Amortization of right-of-use assets | $ 16,740 |
Interest on lease liabilities | 820 |
Operating lease cost | 13,129 |
Short-term lease cost | 1,214 |
Sublease income | (760) |
Total lease cost | 31,143 |
Cash paid for amounts included in the measurement of lease liabilities | |
Operating cash flows from operating leases | (13,124) |
Financing cash flows from finance leases | (27,675) |
Right-of-use assets obtained in exchange for new finance lease liabilities | 17,160 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 6,311 |
Weighted-average remaining lease term - finance leases | 9 months 14 days |
Weighted-average remaining lease term - operating leases | 7 years 1 month 24 days |
Weighted-average discount rate - finance leases | 2.86% |
Weighted-average discount rate - operating leases | 2.76% |
Credit Facility (Details)
Credit Facility (Details) - Credit Facility - USD ($) $ in Millions | Jan. 27, 2020 | Jun. 30, 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 Transactions (Details)
Equity Transactions (Details) - USD ($) $ / shares in Units, $ in Thousands | May 16, 2018 | Jun. 30, 2018 | Jun. 30, 2020 | Jun. 30, 2019 |
Equity Transactions | ||||
Amount paid to repurchase common stock | $ 27,500 | $ 27,482 | ||
Common stock redeemed (in shares) | 1,832,145 | |||
Common stock redeemed, average price (in dollars per share) | $ 15 | |||
Equity Transactions | ||||
Common stock authorized (in shares) | 100,000,000 | 100,000,000 | ||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | ||
Preferred stock, shares issued | 0 | 0 | ||
Preferred stock, shares outstanding | 0 | 0 |
Equity Incentive Plan (Details)
Equity Incentive Plan (Details) - shares | 12 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Equity Transactions | ||||
Options outstanding (in shares) | 1,021,517 | 1,036,017 | 1,199,307 | 1,356,528 |
Employee and Non Employees Stock Option | ||||
Equity Transactions | ||||
Vesting period | 4 years | |||
Exercisable (in shares) | 0 | |||
Plan | ||||
Equity Transactions | ||||
Shares reserved for issuance | 1,260,352 | |||
Plan and prior plan | ||||
Equity Transactions | ||||
Options outstanding (in shares) | 5,127,245 |
Equity Incentive Plan - Activit
Equity Incentive Plan - Activity (Details) - USD ($) | 12 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Shares | ||||
Outstanding at the beginning of the period (in shares) | 1,036,017 | 1,199,307 | 1,356,528 | |
Exercised (in shares) | (4,000) | (150,290) | (14,600) | |
Forfeited or canceled (in shares) | (10,500) | (13,000) | (142,621) | |
Outstanding at the end of the period (in shares) | 1,021,517 | 1,036,017 | 1,199,307 | 1,356,528 |
Weighted-Average Exercise Price | ||||
Outstanding at the beginning of the period (in dollars per share) | $ 19.82 | $ 19.97 | $ 20.19 | |
Exercised (in dollars per share) | 16.07 | 20.16 | 13.45 | |
Forfeited or canceled (in dollars per share) | 30.92 | 29.82 | 22.71 | |
Outstanding at the end of the period (in dollars per share) | $ 19.73 | $ 19.82 | $ 19.97 | $ 20.19 |
Additional information | ||||
Weighted Average Remaining Contractual Life | 1 year 7 months 24 days | 2 years 7 months 20 days | 3 years 6 months 18 days | 4 years 5 months 15 days |
Aggregate Intrinsic Value | $ 8,325,869 | $ 11,312,871 | $ 788,277 | $ 1,481,585 |
Employee and Non Employees Stock Option | ||||
Additional information | ||||
Exercisable (in shares) | 0 |
Equity Incentive Plan - Relatio
Equity Incentive Plan - Relationship (Details) - Employee and Non Employees Stock Option - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Equity Transactions | |||
Intrinsic value of options exercised | $ 0 | $ 1,200 | $ 0 |
Unrecognized compensation | 0 | ||
Stock based compensation expense | $ 100 | $ 600 | $ 1,200 |
Equity Incentive Plan - Other (
Equity Incentive Plan - Other (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | 24 Months Ended | |||||
Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | |
2019 SPP | ||||||||
Equity Transactions | ||||||||
Vesting period | 3 years | |||||||
Equity Incentive Market Based Restricted Stock Awards | ||||||||
Equity Transactions | ||||||||
Performance shares | 6,800 | 6,800 | 6,800 | 6,800 | ||||
Number of consecutive days considered for the computation of average closing stock prices | 30 days | |||||||
Granted (in shares) | 14.35 | |||||||
Nonvested at the end of the period (in shares) | 6,800 | 6,800 | 6,800 | |||||
Restricted Stock | ||||||||
Equity Transactions | ||||||||
Stock based compensation expense | $ 17.1 | $ 12.3 | $ 15.7 | |||||
Fair value of share-based compensation awards granted in period | 30.2 | 15.3 | ||||||
Fair value of share-based compensation awards vested in period | $ 17.9 | $ 20.6 | ||||||
Vesting period | 3 years | |||||||
Performance shares | 1,618,604 | 1,618,604 | 1,322,552 | 1,676,907 | 2,141,047 | 1,618,604 | 1,618,604 | 1,322,552 |
Unrecognized compensation | $ 25.6 | |||||||
Weighted average period for recognition of total unrecognized compensation expense related to unvested stock options granted | 1 year 7 months 6 days | |||||||
Nonvested at the beginning of the period (in shares) | 1,322,552 | 1,676,907 | 2,141,047 | 1,676,907 | ||||
Granted (in shares) | 1,126,227 | 828,833 | 1,210,502 | |||||
Vested (in shares) | (750,634) | (947,703) | (1,339,492) | |||||
Forfeited or canceled (in shares) | (79,541) | (235,485) | (335,150) | |||||
Nonvested at the end of the period (in shares) | 1,618,604 | 1,618,604 | 1,322,552 | 1,676,907 | 2,141,047 | 1,618,604 | ||
Nonvested at the beginning of the period (in dollars per share) | $ 17.08 | $ 15.12 | $ 12.34 | $ 15.12 | ||||
Granted (in dollars per share) | 26.84 | 18.44 | 16.68 | |||||
Vested (in dollars per share) | 16.93 | 14.72 | 12.29 | |||||
Forfeited or canceled (in dollars per share) | 21.48 | 17.40 | 14.31 | |||||
Nonvested at the end of the period (in dollars per share) | $ 23.73 | $ 23.73 | $ 17.08 | $ 15.12 | $ 12.34 | $ 23.73 | ||
Restricted Stock | Vesting Performance | ||||||||
Equity Transactions | ||||||||
Performance shares | 559,089 | 559,089 | 559,089 | 559,089 | ||||
Granted (in shares) | 499,818 | |||||||
Nonvested at the end of the period (in shares) | 559,089 | 559,089 | 559,089 | |||||
Restricted Stock | Service based awards | ||||||||
Equity Transactions | ||||||||
Performance shares | 1,059,515 | 1,059,515 | 1,059,515 | 1,059,515 | ||||
Granted (in shares) | 626,409 | |||||||
Vested (in shares) | (533,367) | |||||||
Nonvested at the end of the period (in shares) | 1,059,515 | 1,059,515 | 1,059,515 | |||||
Restricted Stock | Vesting Based On Performance And Service | ||||||||
Equity Transactions | ||||||||
Vested (in shares) | (210,467) | |||||||
Performance Share Units | ||||||||
Equity Transactions | ||||||||
Stock based compensation expense | $ 6.3 | $ 3.9 | $ 5.9 | |||||
Granted (in shares) | 66,934 | |||||||
Performance shares | 2,445,022 | 2,445,022 | 2,372,241 | 708,979 | 1,043,602 | 2,445,022 | 2,445,022 | 2,372,241 |
Unrecognized compensation | $ 7.9 | |||||||
Weighted average period for recognition of total unrecognized compensation expense related to unvested stock options granted | 1 year 2 months 12 days | |||||||
Nonvested at the beginning of the period (in shares) | 2,372,241 | 708,979 | 1,043,602 | 708,979 | ||||
Granted (in shares) | 81,133 | 2,372,241 | 138,241 | |||||
Vested (in shares) | (427,954) | (320,340) | ||||||
Forfeited or canceled (in shares) | (8,352) | (281,025) | (152,524) | |||||
Nonvested at the end of the period (in shares) | 2,445,022 | 2,445,022 | 2,372,241 | 708,979 | 1,043,602 | 2,445,022 | ||
Nonvested at the beginning of the period (in dollars per share) | $ 10.61 | $ 13.15 | $ 13.16 | $ 13.15 | ||||
Granted (in dollars per share) | $ 12.56 | 15.30 | 10.61 | 12.81 | ||||
Vested (in dollars per share) | 13.24 | 12.62 | ||||||
Forfeited or canceled (in dollars per share) | 29.93 | 13.02 | 14 | |||||
Nonvested at the end of the period (in dollars per share) | $ 10.70 | $ 10.70 | $ 10.61 | $ 13.15 | $ 13.16 | $ 10.70 | ||
Option holders right (per option) | 1 | |||||||
Performance Share Units | 2019 SPP | ||||||||
Equity Transactions | ||||||||
Granted (in shares) | 2,108,305 | |||||||
Performance Share Units | Fiscal Year 2019 LTIP | ||||||||
Equity Transactions | ||||||||
Stock based compensation expense | $ 0 | |||||||
Granted (in shares) | 14,199 | |||||||
Granted (in dollars per share) | $ 28.17 | |||||||
Fair value | $ 0.4 | $ 7.9 | ||||||
Granted (in shares) | 263,936 | |||||||
Granted (in dollars per share) | $ 30.05 | |||||||
Performance Share Units | Fiscal Year 2020 TRIP | ||||||||
Equity Transactions | ||||||||
Fair value | $ 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% | |||||||
Performance Shares Tranche #1 | Calendar Year 2021 | Fiscal Year 2020 TRIP | ||||||||
Equity Transactions | ||||||||
Earned award vesting percentage | 70.00% | |||||||
Performance Shares Tranche #2 | Fiscal Year 2019 LTIP | ||||||||
Equity Transactions | ||||||||
Earned award vesting percentage | 25.00% | |||||||
Performance Shares Tranche #2 | Calendar Year 2022 | Fiscal Year 2020 TRIP | ||||||||
Equity Transactions | ||||||||
Earned award vesting percentage | 30.00% | |||||||
Performance Shares Tranche #3 | Fiscal Year 2019 LTIP | ||||||||
Equity Transactions | ||||||||
Earned award vesting percentage | 30.00% | |||||||
Deferred Stock Units | ||||||||
Equity Transactions | ||||||||
Stock based compensation expense | $ 0.5 | $ 0.5 | $ 0 | |||||
Performance shares | 42,102 | 42,102 | 18,258 | 42,102 | 42,102 | 18,258 | ||
Unrecognized compensation | $ 0.2 | |||||||
Weighted average period for recognition of total unrecognized compensation expense related to unvested stock options granted | 6 months | |||||||
Nonvested at the beginning of the period (in shares) | 18,258 | |||||||
Granted (in shares) | 23,844 | 18,258 | ||||||
Nonvested at the end of the period (in shares) | 42,102 | 42,102 | 18,258 | 42,102 | ||||
Nonvested at the beginning of the period (in dollars per share) | $ 25.41 | |||||||
Granted (in dollars per share) | 20.13 | $ 25.41 | ||||||
Nonvested at the end of the period (in dollars per share) | $ 22.42 | $ 22.42 | $ 25.41 | $ 22.42 | ||||
Chief Executive Officer And Executive Chairman | Performance Share Units | ||||||||
Equity Transactions | ||||||||
Granted (in shares) | 358,294 | |||||||
Granted (in dollars per share) | $ 27.91 | |||||||
Chief Executive Officer And Executive Chairman | Performance Share Units | Vesting Performance | ||||||||
Equity Transactions | ||||||||
Vesting in first subsequent fiscal year (as a percent) | 66.67% | |||||||
Vesting in second subsequent fiscal year (as a percent) | 33.33% | |||||||
Senior Executives | Performance Share Units | 2019 SPP | ||||||||
Equity Transactions | ||||||||
Market capitalization growth performance period | 3 years | 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 | |||||||
Granted (in dollars per share) | $ 8.18 | |||||||
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% | ||||||||
Equity Transactions | ||||||||
Amount earned as percentage of total value growth | 6.00% | |||||||
Percentage of total stock price growth | 33.00% | |||||||
Senior Executives | Performance Share Units | Total stock price growth 33% | 2019 SPP | ||||||||
Equity Transactions | ||||||||
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 | Vest immediately upon achievement of the performance goals | ||||||||
Equity Transactions | ||||||||
Earned award vesting percentage | 33.33% | |||||||
Executive Officers | Performance Share Units | Vest annually over two years | ||||||||
Equity Transactions | ||||||||
Earned award vesting percentage | 66.67% | |||||||
Vesting period | 2 years | |||||||
Executive Officers | Performance Share Units | Vesting Performance | ||||||||
Equity Transactions | ||||||||
Granted (in shares) | 141,524 | |||||||
Granted (in dollars per share) | $ 27.91 |
Equity Incentive Plan - Vesting
Equity Incentive Plan - Vesting (Details) - $ / shares | 3 Months Ended | 12 Months Ended | 24 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2020 | |
Restricted Stock | |||||
Shares | |||||
Nonvested at the beginning of the period (in shares) | 1,322,552 | 1,676,907 | 2,141,047 | 1,676,907 | |
Granted (in shares) | 1,126,227 | 828,833 | 1,210,502 | ||
Vested (in shares) | (750,634) | (947,703) | (1,339,492) | ||
Forfeited or canceled (in shares) | (79,541) | (235,485) | (335,150) | ||
Nonvested at the end of the period (in shares) | 1,618,604 | 1,618,604 | 1,322,552 | 1,676,907 | 1,618,604 |
Weighted-Average Grant Date Fair Value | |||||
Nonvested at the beginning of the period (in dollars per share) | $ 17.08 | $ 15.12 | $ 12.34 | $ 15.12 | |
Granted (in dollars per share) | 26.84 | 18.44 | 16.68 | ||
Vested (in dollars per share) | 16.93 | 14.72 | 12.29 | ||
Forfeited or canceled (in dollars per share) | 21.48 | 17.40 | 14.31 | ||
Nonvested at the end of the period (in dollars per share) | $ 23.73 | $ 23.73 | $ 17.08 | $ 15.12 | $ 23.73 |
Restricted Stock | Independent contractors | |||||
Shares | |||||
Granted (in shares) | 0 | ||||
Restricted Stock | Vesting Performance | |||||
Shares | |||||
Granted (in shares) | 499,818 | ||||
Nonvested at the end of the period (in shares) | 559,089 | 559,089 | 559,089 | ||
Restricted Stock | Vesting Based On Performance And Service | |||||
Shares | |||||
Vested (in shares) | (210,467) | ||||
Performance Share Units | |||||
Shares | |||||
Nonvested at the beginning of the period (in shares) | 2,372,241 | 708,979 | 1,043,602 | 708,979 | |
Granted (in shares) | 81,133 | 2,372,241 | 138,241 | ||
Vested (in shares) | (427,954) | (320,340) | |||
Forfeited or canceled (in shares) | (8,352) | (281,025) | (152,524) | ||
Nonvested at the end of the period (in shares) | 2,445,022 | 2,445,022 | 2,372,241 | 708,979 | 2,445,022 |
Weighted-Average Grant Date Fair Value | |||||
Nonvested at the beginning of the period (in dollars per share) | $ 10.61 | $ 13.15 | $ 13.16 | $ 13.15 | |
Granted (in dollars per share) | $ 12.56 | 15.30 | 10.61 | 12.81 | |
Vested (in dollars per share) | 13.24 | 12.62 | |||
Forfeited or canceled (in dollars per share) | 29.93 | 13.02 | 14 | ||
Nonvested at the end of the period (in dollars per share) | $ 10.70 | $ 10.70 | $ 10.61 | $ 13.15 | $ 10.70 |
Performance Share Units | Vest immediately upon achievement of the performance goals | Executive Officers | |||||
Weighted-Average Grant Date Fair Value | |||||
Earned award vesting percentage | 33.33% |
Redeemable Noncontrolling Int_2
Redeemable Noncontrolling Interest (Details) - LearnBop - USD ($) $ in Millions | Jul. 31, 2014 | Jan. 31, 2018 |
Cash purchase price | $ 6.5 | $ 0.5 |
Ownership percentage acquired (as a percent) | 51.00% | 49.00% |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Mar. 27, 2020installment | |
Commitments and contingencies | ||||||||||||
Revenues | $ 268,931 | $ 257,154 | $ 257,559 | $ 257,121 | $ 256,314 | $ 253,252 | $ 254,872 | $ 251,314 | $ 1,040,765 | $ 1,015,752 | $ 917,734 | |
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 | 1,000 | 1,000 | ||||||||||
Georgia Cyber Academy, Inc. | ||||||||||||
Commitments and contingencies | ||||||||||||
Settlement and release agreement | $ 19,000 | |||||||||||
Litigation settlement payment receivable period | 2 years | |||||||||||
Proceeds from legal settlements | $ 10,000 | |||||||||||
Revenues | 4,600 | |||||||||||
Settlement assets, current | $ 14,400 | $ 14,400 |
Restructuring (Details)
Restructuring (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017facility | Jun. 30, 2019USD ($) | Jun. 30, 2017USD ($)lease | |
Restructuring | |||
Number of facilities being exited | facility | 3 | ||
Number of lease agreements | lease | 3 | ||
Impairment of leases | $ | $ 1.8 | $ 5.4 |
Severance (Details)
Severance (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Former CEO | |||
Severance | |||
Severance costs | $ 1.5 | $ 1 | $ 6.3 |
Executives and other employees | |||
Severance | |||
Costs associated with accelerated vesting of equity awards | $ 0.1 | $ 0.1 | $ 2.4 |
Acquisitions and Investments (D
Acquisitions and Investments (Details) $ in Thousands | Jan. 27, 2020USD ($) | Aug. 31, 2018USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2020USD ($)fund | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) |
Allocation of Purchase Price | |||||||||
Intangible assets, net | $ 68,483 | $ 68,483 | $ 68,483 | $ 695 | |||||
Goodwill | 174,939 | 174,939 | 174,939 | $ 90,197 | 90,200 | $ 87,200 | |||
Deferred revenue | (3,374) | (3,374) | (3,374) | (361) | |||||
Amortization expense | 6,100 | 3,000 | $ 3,000 | ||||||
Lease cost | 31,143 | ||||||||
Pro forma results | |||||||||
Revenues | 1,066,547 | 1,066,304 | |||||||
Income (loss) from operations | 6,574 | 23,148 | |||||||
Net income (loss) | $ (1,519) | 13,729 | |||||||
Two early stage funds | |||||||||
Pro forma results | |||||||||
Number of limited partnerships invested in | fund | 2 | ||||||||
Investment commitment | $ 13,000 | ||||||||
Investments in limited partnerships | $ 4,200 | ||||||||
New Markets | |||||||||
Pro forma results | |||||||||
Investment recorded at cost | 1,700 | 1,700 | 1,700 | ||||||
Rethink | |||||||||
Pro forma results | |||||||||
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 | 3,670 | ||||||||
Tallo | Base Rate | |||||||||
Pro forma results | |||||||||
Interest rate spread added to base rate (as a percent) | 25.00% | ||||||||
Galvanize Inc | |||||||||
Acquisition and Investments | |||||||||
Ownership percentage acquired (as a percent) | 100.00% | ||||||||
Total consideration | $ 165,000 | ||||||||
Working capital | 12,200 | ||||||||
Allocation of Purchase Price | |||||||||
Cash | 9,232 | ||||||||
Current assets, excluding cash | 8,888 | ||||||||
Property and equipment, net | 11,270 | ||||||||
Operating lease right-of-use assets, net | 99,676 | 99,700 | $ 90,700 | 99,700 | 99,700 | ||||
Intangible assets, net | 68,483 | ||||||||
Goodwill | 84,741 | 84,700 | 107,600 | 84,700 | 84,700 | ||||
Other assets | 1,802 | ||||||||
Current liabilities | (4,370) | ||||||||
Deferred revenue | (3,374) | (3,400) | (3,400) | (3,400) | |||||
Deferred tax asset (liability) | 2,412 | $ 2,400 | 17,400 | 2,400 | 2,400 | ||||
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 | 11,000 | ||||||||
Income (loss) of acquiree | 18,100 | ||||||||
Non-recurring transaction costs of acquirer | 1,000 | ||||||||
Useful life | 15 years | ||||||||
Amortization expense | $ 400 | ||||||||
Lease cost | 100 | ||||||||
Galvanize Inc | Customer and distributor relationships | |||||||||
Allocation of Purchase Price | |||||||||
Intangible assets, net | $ 4,785 | ||||||||
Estimated useful life (in years) | 4 years 2 months 19 days | ||||||||
Galvanize Inc | Developed technology | |||||||||
Allocation of Purchase Price | |||||||||
Intangible assets, net | $ 3,357 | ||||||||
Estimated useful life (in years) | 4 years | ||||||||
Galvanize Inc | Trade names | |||||||||
Allocation of Purchase Price | |||||||||
Intangible assets, net | $ 60,341 | $ 60,300 | $ 24,000 | $ 60,300 | $ 60,300 | ||||
Estimated useful life (in years) | 15 years | ||||||||
Useful life | 18 years |
Related Party Transactions (Det
Related Party Transactions (Details) - Future of School - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Related Party Transactions | |||
Contributions made to related party | $ 1.2 | $ 1.4 | $ 0.3 |
Due to related party | $ 1.3 | ||
Accrued contributions to related party | $ 2.5 |
Employee Benefits (Details)
Employee Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Employee Benefits | |||
Minimum length of service for participation | 30 days | ||
Company match percentage of participant's compensation | 25.00% | ||
Percentage of participant's compensation that company matches on | 4.00% | ||
401(k) Plan expense | $ 1.8 | $ 1.6 | $ 1.4 |
Supplemental Disclosure of Ca_3
Supplemental Disclosure of Cash Flow Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Supplemental Disclosure of Cash Flow Information | |||
Cash paid for interest | $ 1,287 | $ 1,108 | $ 778 |
Cash paid for taxes | 3,384 | 4,453 | 12,210 |
Supplemental disclosure of non-cash financing activities: | |||
Right-of-use assets obtained as a result of the adoption of ASC 842 | 117,328 | ||
Right-of-use assets obtained in exchange for new finance lease liabilities | 17,160 | 19,664 | 17,414 |
Supplemental disclosure of non-cash investing activities: | |||
Stock-based compensation expense capitalized on software development | 229 | 167 | 1,083 |
Stock-based compensation expense capitalized on curriculum development | 184 | $ 170 | 969 |
Business combinations: | |||
Acquired assets | 130,868 | 209 | |
Intangible assets, net | 68,483 | 695 | |
Goodwill | 84,741 | 2,983 | |
Assumed liabilities | (103,490) | (734) | |
Deferred revenue | $ (3,374) | $ (361) |
Quarterly Results of Operatio_3
Quarterly Results of Operations (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Consolidated Quarterly Statements of Operations | |||||||||||
Revenues | $ 268,931 | $ 257,154 | $ 257,559 | $ 257,121 | $ 256,314 | $ 253,252 | $ 254,872 | $ 251,314 | $ 1,040,765 | $ 1,015,752 | $ 917,734 |
Instructional costs and services | 177,436 | 178,968 | 167,470 | 169,358 | 175,863 | 168,260 | 160,329 | 158,985 | 693,232 | 663,437 | 592,495 |
Gross margin | 91,495 | 78,186 | 90,089 | 87,763 | 80,451 | 84,992 | 94,543 | 92,329 | 347,533 | 352,315 | 325,239 |
Selling, general, and administrative expenses | 84,454 | 63,687 | 59,784 | 107,151 | 77,770 | 61,725 | 61,253 | 106,081 | 315,076 | 306,829 | 299,694 |
Income from operations | 7,041 | 14,499 | 30,305 | (19,388) | 2,681 | 23,267 | 33,290 | (13,752) | 32,457 | 45,486 | 25,545 |
Interest income, net | (577) | (76) | 441 | 910 | 1,214 | 754 | 477 | 316 | 698 | 2,761 | 965 |
Other income (expense), net | 1,008 | (1,093) | 365 | (8) | 154 | 556 | (789) | 193 | 272 | 114 | |
Income before income taxes and loss from equity method investments | 7,472 | 13,330 | 31,111 | (18,486) | 4,049 | 24,577 | 32,978 | (13,243) | 33,427 | 48,361 | 26,510 |
Income tax benefit (expense), net | (2,548) | (4,419) | (10,392) | 8,818 | (662) | (5,842) | (9,074) | 5,058 | (8,541) | (10,520) | 910 |
Loss from equity method investments | (36) | (157) | (125) | (62) | (70) | (273) | (192) | (97) | (380) | (632) | |
Net income attributable to common stockholders | $ 4,888 | $ 8,754 | $ 20,594 | $ (9,730) | $ 3,317 | $ 18,462 | $ 23,712 | $ (8,282) | $ 24,506 | $ 37,209 | $ 27,620 |
Net income (loss) attributable to common stockholders per share: | |||||||||||
Basic (in dollars per share) | $ 0.12 | $ 0.22 | $ 0.52 | $ (0.25) | $ 0.08 | $ 0.47 | $ 0.61 | $ (0.22) | $ 0.62 | $ 0.96 | $ 0.70 |
Diluted (in dollars per share) | $ 0.12 | $ 0.22 | $ 0.52 | $ (0.25) | $ 0.08 | $ 0.44 | $ 0.59 | $ (0.22) | $ 0.60 | $ 0.91 | $ 0.68 |
Weighted average shares used in computing per share amounts: | |||||||||||
Basic (in shares) | 39,637,347 | 39,539,791 | 39,450,017 | 39,288,557 | 39,135,413 | 39,008,990 | 38,816,669 | 38,434,049 | 39,478,928 | 38,848,780 | 39,282,674 |
Diluted (in shares) | 41,166,794 | 39,938,898 | 39,973,933 | 39,288,557 | 41,667,000 | 41,753,323 | 40,325,260 | 38,434,049 | 40,663,224 | 40,944,800 | 40,637,744 |
SCHEDULE II - VALUATION AND QUA
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
ALLOWANCE FOR DOUBTFUL ACCOUNTS | |||
Valuation and Qualifying Account Activity | |||
Balance at Beginning of Period | $ 11,765,869 | $ 12,384,279 | $ 14,791,171 |
Additions (Deductions) Charged to Cost and Expenses | 2,882,067 | 6,325,188 | 4,088,592 |
Deductions from Allowance | 7,840,262 | 6,943,598 | 6,495,484 |
Balance at End of Period | 6,807,674 | 11,765,869 | 12,384,279 |
INVENTORY RESERVES | |||
Valuation and Qualifying Account Activity | |||
Balance at Beginning of Period | 4,131,386 | 3,491,655 | 2,310,309 |
Additions (Deductions) Charged to Cost and Expenses | 877,357 | 1,359,595 | 1,314,225 |
Deductions from Allowance | 191,443 | 719,864 | 132,879 |
Balance at End of Period | 4,817,300 | 4,131,386 | 3,491,655 |
COMPUTER RESERVE | |||
Valuation and Qualifying Account Activity | |||
Balance at Beginning of Period | 788,230 | 899,654 | 819,042 |
Additions (Deductions) Charged to Cost and Expenses | 835,488 | 383,770 | 550,142 |
Deductions from Allowance | 812,036 | 495,194 | 469,530 |
Balance at End of Period | 811,682 | 788,230 | 899,654 |
INCOME TAX VALUATION ALLOWANCE | |||
Valuation and Qualifying Account Activity | |||
Balance at Beginning of Period | 4,548,900 | 4,458,517 | 7,152,860 |
Additions to Net Deferred Tax Asset Allowance | 441,868 | 90,383 | 22,388 |
Deductions from Allowance | 2,716,731 | ||
Balance at End of Period | $ 4,990,768 | $ 4,548,900 | $ 4,458,517 |