Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 05, 2017 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | AMERICAN PUBLIC EDUCATION INC | |
Entity Central Index Key | 1,201,792 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 16,233,962 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 147,804 | $ 146,351 |
Accounts receivable, net of allowance of $6,748 in 2017 and $8,077 in 2016 | 6,200 | 6,949 |
Prepaid expenses | 7,397 | 5,327 |
Income tax receivable | 4,233 | 0 |
Total current assets | 165,634 | 158,627 |
Property and equipment, net | 95,728 | 97,687 |
Assets held for sale | 2,100 | 2,100 |
Investments | 14,651 | 14,611 |
Goodwill | 33,899 | 33,899 |
Other assets, net | 8,305 | 8,696 |
Total assets | 320,317 | 315,620 |
Current liabilities: | ||
Accounts payable | 4,837 | 6,853 |
Accrued liabilities | 11,822 | 14,124 |
Income tax payable | 23,174 | 20,639 |
Income tax payable | 0 | 559 |
Total current liabilities | 39,833 | 42,175 |
Deferred income taxes | 11,363 | 8,775 |
Total liabilities | 51,196 | 50,950 |
Commitments and contingencies | 0 | 0 |
Stockholders’ equity: | ||
Preferred stock, $.01 par value; Authorized shares - 10,000; no shares issued or outstanding | 0 | 0 |
Common stock, $.01 par value; Authorized shares - 100,000; 16,233 issued and outstanding in 2017; 16,109 issued and outstanding in 2016 | 162 | 161 |
Additional paid-in capital | 177,002 | 177,061 |
Retained earnings | 91,957 | 87,448 |
Total stockholders’ equity | 269,121 | 264,670 |
Total liabilities and stockholders’ equity | $ 320,317 | $ 315,620 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance | $ 6,748 | $ 8,077 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized shares (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized shares (in shares) | 100,000,000 | 100,000,000 |
Common stock, issued (in shares) | 16,233,000 | 16,109,000 |
Common stock, outstanding (in shares) | 16,233,000 | 16,109,000 |
Consolidated Statements of Inco
Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Statement [Abstract] | ||
Revenue | $ 75,688 | $ 83,966 |
Costs and expenses: | ||
Instructional costs and services | 28,956 | 29,708 |
Selling and promotional | 15,435 | 16,469 |
General and administrative | 17,756 | 16,669 |
Loss on disposals of long-lived assets | 490 | 261 |
Depreciation and amortization | 4,744 | 4,889 |
Total costs and expenses | 67,381 | 67,996 |
Income from continuing operations before interest income and income taxes | 8,307 | 15,970 |
Interest income | 11 | 37 |
Income from continuing operations before income taxes | 8,318 | 16,007 |
Income tax expense | 3,849 | 6,267 |
Equity investment income | 40 | 600 |
Net income | $ 4,509 | $ 10,340 |
Net Income per common share: | ||
Basic (in dollars per share) | $ 0.28 | $ 0.64 |
Diluted (in dollars per share) | $ 0.28 | $ 0.64 |
Weighted average number of common shares: | ||
Basic (in shares) | 16,190,061 | 16,038,243 |
Diluted (in shares) | 16,320,858 | 16,171,424 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Operating activities | ||
Net income | $ 4,509 | $ 10,340 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 4,744 | 4,889 |
Stock-based compensation | 1,246 | 1,502 |
Equity investment income | (40) | (600) |
Deferred income taxes | 2,588 | 1,975 |
Loss on disposals of long-lived assets | 490 | 261 |
Other | 20 | 18 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net of allowance for bad debt | 749 | (643) |
Prepaid expenses and other assets | (2,196) | (438) |
Income tax receivable | (4,233) | (981) |
Accounts payable | (2,016) | 907 |
Accrued liabilities | (2,783) | 2,182 |
Income taxes payable | (559) | 0 |
Deferred revenue | 2,535 | 640 |
Net cash provided by operating activities | 5,054 | 20,052 |
Investing activities | ||
Capital expenditures | (1,670) | (3,139) |
Capitalized program development costs and other assets | (627) | (82) |
Equity investment | 0 | (950) |
Net cash used in investing activities | (2,297) | (4,171) |
Financing activities | ||
Cash paid for repurchase of common stock | (1,402) | (630) |
Cash received from issuance of common stock | 98 | 0 |
Excess tax benefit from stock-based compensation | 0 | (1,000) |
Net cash used in financing activities | (1,304) | (1,630) |
Net increase in cash and cash equivalents | 1,453 | 14,251 |
Cash and cash equivalents at beginning of period | 146,351 | 105,734 |
Cash and cash equivalents at end of period | 147,804 | 119,985 |
Supplemental disclosure of cash flow information | ||
Income taxes paid | $ 6,052 | $ 6,956 |
Nature of the Business
Nature of the Business | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of the Business | Nature of the Business American Public Education, Inc., or APEI, which together with its subsidiaries is referred to as the “Company,” is a provider of online and campus-based postsecondary education to approximately 88,800 students through the operations of two subsidiary institutions: • American Public University System, Inc., or APUS, provides online postsecondary education directed primarily at the needs of the military and public safety communities through American Military University, or AMU, and American Public University, or APU. APUS is regionally accredited by the Higher Learning Commission. • National Education Seminars, Inc., which is referred to herein as Hondros College of Nursing, or HCN, provides nursing education to students at five campuses in the State of Ohio as well as online to serve the needs of the nursing and healthcare communities. HCN is nationally accredited by the Accrediting Council of Independent Colleges and Schools, or ACICS, and the RN-to-BSN Program is accredited by the Commission on Collegiate Nursing Education. In June 2016, HCN was notified that its Diploma in Practical Nursing and Associates Degree in Nursing Programs have been granted pre-accreditation candidacy status by the National League for Nursing Commission for Nursing Education Accreditation. The Company’s institutions are licensed or otherwise authorized, or are in the process of obtaining such licenses or authorizations, to offer postsecondary education programs by state authorities to the extent the institutions believe such licenses or authorizations are required, and are certified by the United States Department of Education, or ED, to participate in student financial aid programs authorized under Title IV of the Higher Education Act of 1965, as amended, or Title IV programs. The Company’s operations are organized into two reportable segments: • American Public Education Segment, or APEI Segment. This segment reflects the operational activities at APUS, other corporate activities, and minority investments. • Hondros College of Nursing Segment, or HCN Segment. This segment reflects the operational activities of HCN. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of presentation and accounting The accompanying unaudited interim Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. Certain prior year amounts have been reclassified for comparative purposes to conform with the current presentation. Principles of consolidation The accompanying unaudited interim Consolidated Financial Statements include accounts of APEI and its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation. Unaudited Interim Financial Information The unaudited interim Consolidated Financial Statements do not include all of the information and notes required by GAAP for complete financial statement presentations. In the opinion of management, these statements include all adjustments (consisting of normal recurring adjustments) considered necessary to present a fair statement of the Company’s consolidated results of operations, financial position, and cash flows. Operating results for any interim period are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Consolidated Financial Statements and accompanying notes in its audited financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2016, or Annual Report. Use of Estimates The preparation of the Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts in these unaudited interim Consolidated Financial Statements and accompanying notes. Actual results could differ from those estimates. Restricted Cash Cash and cash equivalents includes funds held for students for unbilled educational services that were received from Title IV programs. As a trustee of these Title IV program funds, the Company is required to maintain and restrict these funds pursuant to the terms of each subsidiary institution’s program participation agreement with ED. Restricted cash on the Company’s Consolidated Balance Sheets was $1.5 million and $1.6 million as of March 31, 2017 and December 31, 2016 , respectively. Changes in restricted cash that represent funds held for students as described above are included in cash flows from operating activities on the Company’s Consolidated Statements of Cash Flows because these restricted funds are related to a core activity of its operations. Recent Accounting Pronouncements The Company considers the applicability and impact of all Accounting Standards Updates, or ASUs, issued by the Financial Accounting Standards Board, or FASB. ASUs issued but not listed below were assessed and determined to be either not applicable or expected to have minimal impact on our consolidated financial position and/or results of operations. In November 2015 the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes . The standard requires that deferred tax assets and deferred tax liabilities be classified as non-current on the balance sheet rather than being separated into current and non-current. This standard was effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. The guidance permitted either retrospective or prospective application. The Company adopted this ASU effective January 1, 2017 and it was applied retrospectively. As a result, the $5.1 million current deferred tax asset as of December 31, 2016 was reclassified against the $13.9 million non-current deferred tax liability on the Company’s Consolidated Balance Sheets in these Consolidated Financial Statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , changing how entities account for certain aspects of share-based payments to employees. The new guidance requires excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the income statement, and could introduce volatility to the Company’s provision for income taxes. Excess tax benefits must be presented as an operating activity on the statement of cash flows rather than a financing activity. ASU 2016-09 requires companies to make an accounting policy election at the time of adoption to either estimate the number of awards that are expected to vest (consistent with existing U.S. GAAP) or account for forfeitures when they occur. The forfeiture election provision must be applied using a retrospective transition approach, with a cumulative-effect adjustment recorded to retained earnings as of the beginning of the period of adoption. The new guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company adopted ASU No, 2016-09 effective January 1, 2017 and elected to continue to estimate the number of awards that are expected to vest using the forfeiture option. The adoption of 2016-09 increased the Company’s income tax expense by approximately $0.5 million for the period ending March 31, 2017 and may increase reported income tax expense between $0.6 million and $0.9 million in the first quarter of 2018 due to expiring stock options with an exercise price greater than the current stock price. Other increases in income tax expense may occur throughout the year for the vesting of restricted stock, determined by the stock price at the end of each reporting period. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment , which eliminates step two from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss should be recognized in an amount equal to the excess, but limited to the total amount of goodwill allocated to the reporting unit. The guidance must be applied on a prospective basis and disclosure of the nature of and reason for the change in accounting principle is required upon transition. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact this standard will have on its Consolidated Financial Statements. There have been no other applicable material pronouncements issued since the filing of the Company’s Annual Report. |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment All property and equipment is recorded at cost less accumulated depreciation, except the acquired assets of HCN, which were recorded at fair value at the acquisition date. Depreciation and amortization are calculated on a straight-line basis over the estimated useful lives of the assets. Different depreciation and amortization methods are used for tax purposes. Maintenance and repairs are expensed as incurred, while other costs are capitalized if they extend the useful life of the asset. The Company’s Partnership At a Distance TM system, or PAD, is a customized student information and services system used by APUS to manage admissions, online orientation, course registrations, tuition payments, grade reporting, progress toward degrees, and various other functions. Costs associated with this system have been capitalized in accordance with Financial Accounting Standards Board Accounting Standards Codification, or FASB ASC, Subtopic 350-40, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use , and classified as property and equipment. These costs are amortized over the estimated useful life of five years. The company also capitalizes certain costs for academic program development. These costs are transferred to property and equipment upon completion of each program and amortized over an estimated life not to exceed three years. The carrying amounts of long-lived assets are reviewed whenever certain events or changes in circumstances indicate that the carrying amounts may not be recoverable. Losses incurred on long-lived assets are included as loss on disposals of long-lived assets in these unaudited interim Consolidated Financial Statements. |
Assets Held for Sale
Assets Held for Sale | 3 Months Ended |
Mar. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Assets Held for Sale | Assets Held for Sale Assets held for sale represent excess real property located in Charles Town, West Virginia for our APEI Segment, which is no longer in use due to the relocation of employees to a new facility. Long-lived assets are classified as held for sale when the assets are expected to be sold within the next 12 months and meet the other relevant held-for-sale criteria. As such, the property is recorded at the lower of the carrying value or fair value, less cost to sell, until such time as the asset is sold. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments | Investments In February 2013, the Company made a $4.0 million investment in preferred stock of Fidelis Education, Inc., or Fidelis Education, representing approximately 21.6% of its fully diluted equity. Fidelis Education offers a learning relationship management platform that has the goal of improving education advising and career mentoring services offered to students as they pursue college degrees. On February 1, 2016, the Company made an additional $950,000 investment in preferred stock of Fidelis Education, increasing its investment in Fidelis Education to approximately 22% of its fully diluted equity. In connection with the investment, the Company is entitled to certain rights, including the right to representation on the Board of Directors of Fidelis Education. The Company accounts for its investments in Fidelis Education under the equity method of accounting. Therefore, the Company recorded the investments at cost and recognizes its share of earnings or losses in Fidelis Education in the periods for which they are reported with a corresponding adjustment in the carrying amount of the investment. On September 30, 2012, the Company made a $6.8 million investment in preferred stock of NWHW Holdings, Inc., or NWHW Holdings, a holding company that operates an information technology training company, New Horizons Worldwide, Inc., or New Horizons, representing approximately 19.9% of the fully diluted equity of NWHW Holdings. During the three months ended September 30, 2016, the Company received a dividend of $3.0 million from NWHW Holdings. The Company accounts for its investment in NWHW Holdings using the equity method of accounting, and therefore recorded a corresponding reduction in the carrying amount of its investment. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets In connection with its November 1, 2013 acquisition of HCN, the Company applied ASC 805, Business Combinations, using the acquisition method of accounting. The Company recorded $38.6 million of goodwill, representing the excess of the purchase price over the amount assigned to the net assets acquired and the fair value assigned to identified intangible assets, and recorded $8.1 million of identified intangible assets. In conjunction with the preparation of the Company’s September 30, 2016 financial statements, the Company completed an interim goodwill assessment and recorded a $4.7 million impairment. Subsequently, the Company completed its annual goodwill assessment and determined that the fair value exceed the carrying value. In the first quarter, a qualitative assessment of goodwill was completed in connection with the preparation of these unaudited interim Consolidated Financial Statements. The qualitative assessment concluded that goodwill was not impaired as of March 31, 2017. |
Net Income Per Common Share
Net Income Per Common Share | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Net Income Per Common Share | Net Income Per Common Share Basic net income per common share is based on the weighted average number of shares of common stock outstanding during the period. Diluted net income per common share increases the shares used in the per share calculation by the dilutive effects of options and restricted stock awards. Stock options are not included in the computation of diluted earnings per share when their effect is anti-dilutive. There were 134,757 anti-dilutive stock options excluded from the calculation for the three months ended March 31, 2017 compared to 250,834 anti-dilutive stock options excluded from the calculation for the three months ended March 31, 2016 . |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company is subject to U.S. Federal income taxes as well as income taxes of multiple state jurisdictions. For Federal and state tax purposes, the tax years from 2013 to 2016 remain open to examination. The Company recognized income tax expense for the three months ended March 31, 2017 and March 31, 2016 of $3.8 million and $6.3 million , respectively, or effective tax rates of 46.1% and 37.7% , respectively. The increase in the effective tax rate is primarily due to the implementation of ASU No. 2016-09, Compensation - Stock Compensation (Topic 718) which resulted in an additional $0.5 million in additional income tax expense in the current year period. Under ASU No. 2016-09, excess tax benefits and tax deficiencies associated with stock based compensation must be recognized in the income statement and in operating activities on the statements of cash flows. Previously, the excess tax benefits and tax deficiencies were recorded in additional paid-in capital under stockholders’ equity on the balance sheet and under financing activities on the statements of cash flow. Because expiring stock options with an exercise price greater than the current stock price expired during the quarter, the reversal of the tax benefit that was reported when the stock options were issued is now recorded in the income statement. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation On March 15, 2011, the Company’s Board of Directors adopted the American Public Education, Inc. 2011 Omnibus Incentive Plan, or the 2011 Incentive Plan, and the Company’s stockholders approved the 2011 Incentive Plan on May 6, 2011, at which time the 2011 Incentive Plan became effective. Upon effectiveness of the 2011 Incentive Plan, the Company ceased making awards under the American Public Education, Inc. 2007 Omnibus Incentive Plan, or the 2007 Incentive Plan. The 2011 Incentive Plan allows the Company to grant up to 2,000,000 shares plus any shares of common stock that are subject to outstanding awards under the 2007 Incentive Plan or the American Public Education, Inc. 2002 Stock Plan, or the 2002 Stock Plan, that terminate due to expiration, forfeiture, cancellation or otherwise without the issuance of such shares. Prior to 2012, the Company issued a mix of stock options and restricted stock, but since 2011 the Company has not issued any stock options. Restricted Stock and Restricted Stock Unit Awards Stock-based compensation expense related to restricted stock and restricted stock unit grants is expensed over the vesting period using the straight-line method for Company employees and the graded-vesting method for members of the Board of Directors, and is measured using the Company’s stock price on the date of grant. The Company estimates forfeitures of share-based awards at the time of grant and revises such estimates in subsequent periods if actual forfeitures differ from original estimates. The table below summarizes the restricted stock and restricted stock unit awards activity for the three months ended March 31, 2017 (unaudited): Number of Shares Weighted-Average Grant Price and Fair Value Non-vested, December 31, 2016 437,971 $ 21.54 Shares granted 243,650 $ 23.25 Vested shares (169,241 ) $ 25.76 Shares forfeited (12,778 ) $ 21.73 Non-vested, March 31, 2017 499,602 $ 21.20 Option Awards The fair value of each option award is estimated at the date of grant using a Black-Scholes option-pricing model. Prior to 2012, the Company calculated the expected term of stock option awards using the “simplified method” in accordance with Securities and Exchange Commission Staff Accounting Bulletins No. 107 and 110 because the Company lacked historical data and was unable to make reasonable assumptions regarding the future. The Company makes assumptions with respect to expected stock price volatility based on the average historical volatility of peers with similar attributes. In addition, the Company determines the risk-free interest rate by selecting the U.S. Treasury five-year constant maturity, quoted on an investment basis in effect at the time of grant for that business day. Estimates of fair value are subjective and are not intended to predict actual future events, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made under FASB ASC Topic 718. Options previously granted vest ratably over periods of three to five years and expire in seven to ten years from the date of grant. Option activity is summarized as follows (unaudited): Number of Options Weighted Average Exercise Price Weighted-Average Contractual Life (Years) Aggregate Intrinsic Value (In thousands) Outstanding, December 31, 2016 259,969 $ 34.68 0.53 246 Options granted — $ — Awards exercised (14,002 ) $ 6.99 Awards forfeited (115,600 ) $ 34.83 Outstanding, March 31, 2017 130,367 $ 37.52 0.75 $ — Exercisable, March 31, 2017 130,367 $ 37.52 0.75 $ — Stock-Based Compensation Expense Stock-based compensation expense charged against income during the three months ended March 31, 2017 and 2016 is as follows (unaudited): Three Months Ended 2017 2016 (In thousands) Instructional costs and services $ 312 $ 430 Selling and promotional 175 184 General and administrative 759 888 Stock-based compensation expense in operating income 1,246 1,502 Tax benefit (494 ) (595 ) Stock-based compensation expense, net of tax $ 752 $ 907 As of March 31, 2017 , there was $9.2 million of total unrecognized compensation cost, representing unrecognized compensation cost associated with non-vested restricted stock and restricted stock units. The total remaining cost is expected to be recognized over a weighted average period of 2.4 years. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company has two operating segments that are managed in the following reportable segments: • American Public Education Segment, or APEI Segment; and • Hondros College of Nursing Segment, or HCN Segment. In accordance with FASB ASC Topic 280, Segment Reporting , the chief operating decision-maker has been identified as the Company’s Chief Executive Officer. The Company’s Chief Executive Officer reviews operating results to make decisions about allocating resources and assessing performance for the APEI Segment and HCN Segment. A summary of financial information by reportable segment is as follows (unaudited): Three Months Ended 2017 2016 (In thousands) Revenue: American Public Education Segment $ 68,129 $ 76,265 Hondros College of Nursing Segment 7,559 7,701 Total Revenue $ 75,688 $ 83,966 Depreciation and amortization: American Public Education Segment $ 4,406 $ 4,579 Hondros College of Nursing Segment 338 310 Total Depreciation and amortization $ 4,744 $ 4,889 Income from continuing operations before interest income and income taxes: American Public Education Segment $ 7,927 $ 15,237 Hondros College of Nursing Segment 380 733 Total income from continuing operations before interest income and income taxes $ 8,307 $ 15,970 Interest income, net: American Public Education Segment $ 11 $ 37 Hondros College of Nursing Segment — — Total Interest income, net $ 11 $ 37 Income tax expense: American Public Education Segment $ 3,689 $ 5,975 Hondros College of Nursing Segment 160 292 Total Income tax expense $ 3,849 $ 6,267 Capital expenditures: American Public Education Segment $ 1,566 $ 2,854 Hondros College of Nursing Segment 104 285 Total Capital expenditures $ 1,670 $ 3,139 A summary of the Company’s consolidated assets by reportable segment is as follows (current period unaudited): As of March 31, 2017 As of December 31, 2016 (Unaudited) (In thousands) Assets: American Public Education Segment $ 271,650 $ 267,260 Hondros College of Nursing Segment 48,667 48,360 Total Assets $ 320,317 $ 315,620 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company accrues for costs associated with contingencies including, but not limited to, regulatory compliance and legal matters when such costs are probable and can be reasonably estimated. Liabilities established to provide for contingencies are adjusted as further information develops, circumstances change, or contingencies are resolved. The Company bases these accruals on management’s estimate of such costs, which may vary from the ultimate costs and expenses associated with any such contingency. From time to time the Company may be involved in litigation in the normal course of its business. The Company is not currently subject to any pending material legal proceedings. |
Concentration
Concentration | 3 Months Ended |
Mar. 31, 2017 | |
Risks and Uncertainties [Abstract] | |
Concentration Risk Disclosure [Text Block] | Concentration APUS students utilize various payment sources and programs to finance their educational expenses. These programs include funds from: Department of Defense, or DoD, tuition assistance programs; federal student aid from Title IV programs; and education benefit programs administered by the U.S. Department of Veterans Affairs, or VA education benefits; as well as cash and other sources. Reductions in or changes to DoD tuition assistance, Title IV programs, VA education benefits, and other payment sources could have a significant impact on the Company’s business, operations, financial condition and cash flows. A summary of APEI Segment revenue derived from APUS students by primary funding source for the three months ended March 31, 2017 and March 31, 2016 is included in the table below (unaudited). Three Months Ended 2017 2016 DoD tuition assistance programs 37.0% 36.0% Title IV programs 27.0% 29.0% VA education benefits 22.0% 22.0% Cash and other sources 14.0% 13.0% HCN students also utilize various payment sources and programs to finance their educational expenses, including Title IV programs and VA education benefits. For the three months ended March 31, 2017 and 2016, approximately 83.6% and 85.0% , respectively, of the HCN Segment’s revenue was derived from Title IV programs. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of the Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts in these unaudited interim Consolidated Financial Statements and accompanying notes. Actual results could differ from those estimates. |
Restricted Cash | Restricted Cash Cash and cash equivalents includes funds held for students for unbilled educational services that were received from Title IV programs. As a trustee of these Title IV program funds, the Company is required to maintain and restrict these funds pursuant to the terms of each subsidiary institution’s program participation agreement with ED. Restricted cash on the Company’s Consolidated Balance Sheets was $1.5 million and $1.6 million as of March 31, 2017 and December 31, 2016 , respectively. Changes in restricted cash that represent funds held for students as described above are included in cash flows from operating activities on the Company’s Consolidated Statements of Cash Flows because these restricted funds are related to a core activity of its operations. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company considers the applicability and impact of all Accounting Standards Updates, or ASUs, issued by the Financial Accounting Standards Board, or FASB. ASUs issued but not listed below were assessed and determined to be either not applicable or expected to have minimal impact on our consolidated financial position and/or results of operations. In November 2015 the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes . The standard requires that deferred tax assets and deferred tax liabilities be classified as non-current on the balance sheet rather than being separated into current and non-current. This standard was effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. The guidance permitted either retrospective or prospective application. The Company adopted this ASU effective January 1, 2017 and it was applied retrospectively. As a result, the $5.1 million current deferred tax asset as of December 31, 2016 was reclassified against the $13.9 million non-current deferred tax liability on the Company’s Consolidated Balance Sheets in these Consolidated Financial Statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , changing how entities account for certain aspects of share-based payments to employees. The new guidance requires excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the income statement, and could introduce volatility to the Company’s provision for income taxes. Excess tax benefits must be presented as an operating activity on the statement of cash flows rather than a financing activity. ASU 2016-09 requires companies to make an accounting policy election at the time of adoption to either estimate the number of awards that are expected to vest (consistent with existing U.S. GAAP) or account for forfeitures when they occur. The forfeiture election provision must be applied using a retrospective transition approach, with a cumulative-effect adjustment recorded to retained earnings as of the beginning of the period of adoption. The new guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company adopted ASU No, 2016-09 effective January 1, 2017 and elected to continue to estimate the number of awards that are expected to vest using the forfeiture option. The adoption of 2016-09 increased the Company’s income tax expense by approximately $0.5 million for the period ending March 31, 2017 and may increase reported income tax expense between $0.6 million and $0.9 million in the first quarter of 2018 due to expiring stock options with an exercise price greater than the current stock price. Other increases in income tax expense may occur throughout the year for the vesting of restricted stock, determined by the stock price at the end of each reporting period. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment , which eliminates step two from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss should be recognized in an amount equal to the excess, but limited to the total amount of goodwill allocated to the reporting unit. The guidance must be applied on a prospective basis and disclosure of the nature of and reason for the change in accounting principle is required upon transition. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact this standard will have on its Consolidated Financial Statements. There have been no other applicable material pronouncements issued since the filing of the Company’s Annual Report. |
Commitments and Contingencies | The Company accrues for costs associated with contingencies including, but not limited to, regulatory compliance and legal matters when such costs are probable and can be reasonably estimated. Liabilities established to provide for contingencies are adjusted as further information develops, circumstances change, or contingencies are resolved. The Company bases these accruals on management’s estimate of such costs, which may vary from the ultimate costs and expenses associated with any such contingency. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of restricted stock and restricted stock unit awards | The table below summarizes the restricted stock and restricted stock unit awards activity for the three months ended March 31, 2017 (unaudited): Number of Shares Weighted-Average Grant Price and Fair Value Non-vested, December 31, 2016 437,971 $ 21.54 Shares granted 243,650 $ 23.25 Vested shares (169,241 ) $ 25.76 Shares forfeited (12,778 ) $ 21.73 Non-vested, March 31, 2017 499,602 $ 21.20 |
Summary of option activity | Option activity is summarized as follows (unaudited): Number of Options Weighted Average Exercise Price Weighted-Average Contractual Life (Years) Aggregate Intrinsic Value (In thousands) Outstanding, December 31, 2016 259,969 $ 34.68 0.53 246 Options granted — $ — Awards exercised (14,002 ) $ 6.99 Awards forfeited (115,600 ) $ 34.83 Outstanding, March 31, 2017 130,367 $ 37.52 0.75 $ — Exercisable, March 31, 2017 130,367 $ 37.52 0.75 $ — |
Summary of stock-based compensation cost charged against income | Stock-based compensation expense charged against income during the three months ended March 31, 2017 and 2016 is as follows (unaudited): Three Months Ended 2017 2016 (In thousands) Instructional costs and services $ 312 $ 430 Selling and promotional 175 184 General and administrative 759 888 Stock-based compensation expense in operating income 1,246 1,502 Tax benefit (494 ) (595 ) Stock-based compensation expense, net of tax $ 752 $ 907 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Summary of financial information by reportable segment | A summary of financial information by reportable segment is as follows (unaudited): Three Months Ended 2017 2016 (In thousands) Revenue: American Public Education Segment $ 68,129 $ 76,265 Hondros College of Nursing Segment 7,559 7,701 Total Revenue $ 75,688 $ 83,966 Depreciation and amortization: American Public Education Segment $ 4,406 $ 4,579 Hondros College of Nursing Segment 338 310 Total Depreciation and amortization $ 4,744 $ 4,889 Income from continuing operations before interest income and income taxes: American Public Education Segment $ 7,927 $ 15,237 Hondros College of Nursing Segment 380 733 Total income from continuing operations before interest income and income taxes $ 8,307 $ 15,970 Interest income, net: American Public Education Segment $ 11 $ 37 Hondros College of Nursing Segment — — Total Interest income, net $ 11 $ 37 Income tax expense: American Public Education Segment $ 3,689 $ 5,975 Hondros College of Nursing Segment 160 292 Total Income tax expense $ 3,849 $ 6,267 Capital expenditures: American Public Education Segment $ 1,566 $ 2,854 Hondros College of Nursing Segment 104 285 Total Capital expenditures $ 1,670 $ 3,139 |
Summary of consolidated assets by reportable segment | A summary of the Company’s consolidated assets by reportable segment is as follows (current period unaudited): As of March 31, 2017 As of December 31, 2016 (Unaudited) (In thousands) Assets: American Public Education Segment $ 271,650 $ 267,260 Hondros College of Nursing Segment 48,667 48,360 Total Assets $ 320,317 $ 315,620 |
Concentration (Tables)
Concentration (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
American Public Education Segment | |
Concentration Risk [Line Items] | |
Summary of APEI segment revenue | A summary of APEI Segment revenue derived from APUS students by primary funding source for the three months ended March 31, 2017 and March 31, 2016 is included in the table below (unaudited). Three Months Ended 2017 2016 DoD tuition assistance programs 37.0% 36.0% Title IV programs 27.0% 29.0% VA education benefits 22.0% 22.0% Cash and other sources 14.0% 13.0% |
Nature of the Business (Details
Nature of the Business (Details) | 3 Months Ended |
Mar. 31, 2017subsidiarystudentsegment | |
Segment Reporting Information [Line Items] | |
Number of students | student | 88,800 |
Number of subsidiaries | subsidiary | 2 |
Number of reportable segments | segment | 2 |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Accounting Policies [Abstract] | ||
Restricted cash | $ 1.5 | $ 1.6 |
Property and Equipment (Details
Property and Equipment (Details) | 3 Months Ended |
Mar. 31, 2017 | |
PAD System Development | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 5 years |
Maximum | Academic Program Development | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 3 years |
Investments (Details)
Investments (Details) - USD ($) $ in Thousands | Feb. 01, 2016 | Sep. 30, 2012 | Feb. 28, 2013 | Mar. 31, 2017 | Sep. 30, 2016 | Mar. 31, 2016 |
Schedule of Equity Method Investments [Line Items] | ||||||
Payments to acquire equity method investments | $ 0 | $ 950 | ||||
Fidelis Education | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Payments to acquire equity method investments | $ 950 | $ 4,000 | ||||
Equity method investment, ownership percentage | 22.00% | 21.60% | ||||
NWHW Holdings | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Payments to acquire equity method investments | $ 6,800 | |||||
Equity method investment, ownership percentage | 19.90% | |||||
Dividends received from equity investment | $ 3,000 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2016 | Mar. 31, 2017 | Dec. 31, 2016 | Nov. 01, 2013 | |
Goodwill [Line Items] | ||||
Goodwill | $ 33,899 | $ 33,899 | ||
HCN | ||||
Goodwill [Line Items] | ||||
Goodwill | $ 38,600 | |||
Business combination, identified intangible assets | $ 8,100 | |||
Goodwill impairment loss | $ 4,700 |
Net Income Per Common Share (De
Net Income Per Common Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Stock option | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive stock options (in shares) | 134,757 | 250,834 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense | $ 3,849 | $ 6,267 |
Effective income tax rate | 46.10% | 37.70% |
Additional income tax expense due to implementation of ASU 2016-09 | $ 500 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 15, 2011 | |
Restricted Stock and Restricted Stock Units Awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation cost | $ 9.2 | |
Unrecognized compensation cost, weighted average period | 2 years 5 months | |
Minimum | Stock option | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options previously granted vesting period | 3 years | |
Options previously granted expiration period | 7 years | |
Maximum | Stock option | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options previously granted vesting period | 5 years | |
Options previously granted expiration period | 10 years | |
2011 Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares available for grant (in shares) | 2,000,000 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Restricted Stock Awards Activity (Details) - Restricted Stock and Restricted Stock Units Awards | 3 Months Ended |
Mar. 31, 2017$ / sharesshares | |
Number of Shares | |
Non vested, beginning balance (in shares) | shares | 437,971 |
Shares granted (in shares) | shares | 243,650 |
Vested shares (in shares) | shares | (169,241) |
Shares forfeited (in shares) | shares | (12,778) |
Non vested, ending balance (in shares) | shares | 499,602 |
Weighted-Average Grant Price and Fair Value | |
Non vested, beginning balance (in dollars per share) | $ / shares | $ 21.54 |
Shares granted (in dollars per share) | $ / shares | 23.25 |
Vested shares (in dollars per share) | $ / shares | 25.76 |
Shares forfeited (in dollars per share) | $ / shares | 21.73 |
Non vested, ending balance (in dollars per share) | $ / shares | $ 21.20 |
Stock-Based Compensation - Su31
Stock-Based Compensation - Summary of Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Number of Options | ||
Outstanding, beginning balance (in shares) | 259,969 | |
Options granted (in shares) | 0 | |
Awards exercised (in shares) | (14,002) | |
Awards forfeited (in shares) | (115,600) | |
Outstanding, ending balance (in shares) | 130,367 | 259,969 |
Exercisable, ending balance (in shares) | 130,367 | |
Weighted Average Exercise Price | ||
Outstanding, beginning balance (in dollars per share) | $ 34.68 | |
Options granted (in dollars per share) | 0 | |
Awards exercised (in dollars per share) | 6.99 | |
Awards forfeited (in dollars per share) | 34.83 | |
Outstanding, ending balance (in dollars per share) | 37.52 | $ 34.68 |
Exercisable, ending balance (in dollars per share) | $ 37.52 | |
Weighted-Average Contractual Life (Years) and Aggregate Intrinsic Value (In thousands) | ||
Weighted-average contractual life outstanding, ending balance | 9 months | 6 months 12 days |
Weighted-average contractual life exercisable, ending balance | 9 months | |
Aggregate intrinsic value outstanding, ending balance | $ 0 | $ 246 |
Aggregate intrinsic value exercisable, ending balance | $ 0 |
Stock-Based Compensation - Su32
Stock-Based Compensation - Summary of Stock-based Compensation Cost Charged Against Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation expense in operating income | $ 1,246 | $ 1,502 |
Tax benefit | (494) | (595) |
Stock-based compensation expense, net of tax | 752 | 907 |
Instructional costs and services | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation expense in operating income | 312 | 430 |
Selling and promotional | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation expense in operating income | 175 | 184 |
General and administrative | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation expense in operating income | $ 759 | $ 888 |
Segment Information - Narrative
Segment Information - Narrative (Details) | 3 Months Ended |
Mar. 31, 2017segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Segment Information - Summary o
Segment Information - Summary of Financial Information by Reportable Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Revenue: | ||
Total Revenue | $ 75,688 | $ 83,966 |
Depreciation and amortization: | ||
Total Depreciation and amortization | 4,744 | 4,889 |
Income from continuing operations before interest income and income taxes: | ||
Total income from continuing operations before interest income and income taxes | 8,307 | 15,970 |
Interest income, net: | ||
Interest income | 11 | 37 |
Income tax expense: | ||
Total Income tax expense | 3,849 | 6,267 |
Capital expenditures: | ||
Total Capital expenditures | 1,670 | 3,139 |
American Public Education Segment | ||
Revenue: | ||
Total Revenue | 68,129 | 76,265 |
Depreciation and amortization: | ||
Total Depreciation and amortization | 4,406 | 4,579 |
Income from continuing operations before interest income and income taxes: | ||
Total income from continuing operations before interest income and income taxes | 7,927 | 15,237 |
Interest income, net: | ||
Interest income | 11 | 37 |
Income tax expense: | ||
Total Income tax expense | 3,689 | 5,975 |
Capital expenditures: | ||
Total Capital expenditures | 1,566 | 2,854 |
Hondros College of Nursing Segment | ||
Revenue: | ||
Total Revenue | 7,559 | 7,701 |
Depreciation and amortization: | ||
Total Depreciation and amortization | 338 | 310 |
Income from continuing operations before interest income and income taxes: | ||
Total income from continuing operations before interest income and income taxes | 380 | 733 |
Interest income, net: | ||
Interest income | 0 | 0 |
Income tax expense: | ||
Total Income tax expense | 160 | 292 |
Capital expenditures: | ||
Total Capital expenditures | $ 104 | $ 285 |
Segment Information - Summary35
Segment Information - Summary of Consolidated Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Assets: | ||
Total Assets | $ 320,317 | $ 315,620 |
American Public Education Segment | ||
Assets: | ||
Total Assets | 271,650 | 267,260 |
Hondros College of Nursing Segment | ||
Assets: | ||
Total Assets | $ 48,667 | $ 48,360 |
Concentration (Details)
Concentration (Details) - Customer Concentration Risk - Revenue | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
American Public Education Segment | DoD tuition assistance programs | ||
Concentration Risk [Line Items] | ||
Percentage of segment revenue | 37.00% | 36.00% |
American Public Education Segment | Title IV programs | ||
Concentration Risk [Line Items] | ||
Percentage of segment revenue | 27.00% | 29.00% |
American Public Education Segment | VA education benefits | ||
Concentration Risk [Line Items] | ||
Percentage of segment revenue | 22.00% | 22.00% |
American Public Education Segment | Cash and other sources | ||
Concentration Risk [Line Items] | ||
Percentage of segment revenue | 14.00% | 13.00% |
Hondros College of Nursing Segment | Title IV programs | ||
Concentration Risk [Line Items] | ||
Percentage of segment revenue | 83.60% | 85.00% |