Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2015 | Aug. 06, 2015 | |
Document Information [Line Items] | |||
Document Type | 10-Q | ||
Amendment Flag | false | ||
Document Period End Date | Jun. 30, 2015 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | Q2 | ||
Trading Symbol | APEI | ||
Entity Registrant Name | AMERICAN PUBLIC EDUCATION INC | ||
Entity Central Index Key | 1,201,792 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 16,573,944 |
Consolidated Balance Sheets(Cur
Consolidated Balance Sheets(Current Period Unaudited) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents (Note 2) | $ 103,724 | $ 115,634 |
Accounts receivable, net of allowance of $14,737 in 2015 and $10,699 in 2014 | 5,730 | 6,130 |
Prepaid expenses | 6,570 | 6,379 |
Income tax receivable | 638 | 2,029 |
Deferred income taxes | 6,869 | 6,046 |
Total current assets | 123,531 | 136,218 |
Property and equipment, net | 108,240 | 102,424 |
Investments | 12,302 | 12,051 |
Goodwill | 38,634 | 38,634 |
Other assets, net | 8,735 | 8,577 |
Total assets | 291,442 | 297,904 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
Accounts payable | 7,051 | 11,029 |
Accrued liabilities | 14,190 | 13,416 |
Deferred revenue and student deposits | 21,374 | 23,805 |
Total current liabilities | 42,615 | 48,250 |
Deferred income taxes | 16,487 | 15,436 |
Total liabilities | $ 59,102 | $ 63,686 |
Commitments and contingencies (Note 2) | ||
Stockholders’ equity: | ||
Preferred stock, $.01 par value; Authorized shares - 10,000; no shares issued or outstanding | ||
Common stock, $.01 par value; Authorized shares - 100,000; 16,574 issued and outstanding in 2015; 17,152 issued and outstanding in 2014 | $ 166 | $ 172 |
Additional paid-in capital | 170,469 | 169,654 |
Retained earnings | 61,705 | 64,392 |
Total stockholders’ equity | 232,340 | 234,218 |
Total liabilities and stockholders’ equity | $ 291,442 | $ 297,904 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance | $ 14,737 | $ 10,699 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, Authorized shares (in shares) | 10,000 | 10,000 |
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 | 100,000 |
Common stock, issued (in shares) | 16,574 | 17,152 |
Common stock, outstanding (in shares) | 16,574 | 17,152 |
Consolidated Statements of Inco
Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement [Abstract] | ||||
Revenue | $ 80,263 | $ 85,463 | $ 165,707 | $ 174,016 |
Costs and expenses: | ||||
Instructional costs and services | 29,696 | 30,197 | 59,956 | 61,545 |
Selling and promotional | 16,152 | 16,982 | 33,171 | 34,049 |
General and administrative | 18,141 | 18,491 | 37,246 | 38,015 |
Depreciation and amortization | 4,698 | 3,958 | 9,287 | 7,847 |
Total costs and expenses | 68,687 | 69,628 | 139,660 | 141,456 |
Income from operations before interest income and income taxes | 11,576 | 15,835 | 26,047 | 32,560 |
Interest income | 31 | 98 | 41 | 179 |
Income before income taxes | 11,607 | 15,933 | 26,088 | 32,739 |
Income tax expense | 4,548 | 6,173 | 10,198 | 12,500 |
Equity investment income/(loss), net of taxes | 14 | 42 | (24) | (1) |
Net income | $ 7,073 | $ 9,802 | $ 15,866 | $ 20,238 |
Net Income per common share: (in dollars per share) | ||||
Basic | $ 0.42 | $ 0.56 | $ 0.93 | $ 1.16 |
Diluted | $ 0.42 | $ 0.56 | $ 0.93 | $ 1.15 |
Weighted average number of common shares: (in shares) | ||||
Basic | 16,819,833 | 17,367,328 | 16,971,990 | 17,440,207 |
Diluted | 16,922,637 | 17,472,602 | 17,101,801 | 17,626,492 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Operating activities | ||
Net income | $ 15,866 | $ 20,238 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 9,287 | 7,847 |
Stock-based compensation | 2,742 | 2,424 |
Investment loss | 24 | 1 |
Deferred income taxes | 228 | (1,337) |
Other | 61 | 60 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net of allowance for bad debt | 400 | 1,049 |
Prepaid expenses and other assets | (318) | (261) |
Income tax receivable | 1,391 | 2,372 |
Accounts payable | (3,978) | (248) |
Accrued liabilities | (541) | (8,307) |
Income taxes payable | 0 | 0 |
Deferred revenue and student deposits | (2,431) | (1,613) |
Net cash provided by operating activities | 22,731 | 22,225 |
Investing activities | ||
Capital expenditures | (12,763) | (9,215) |
Equity investment | (293) | (1,630) |
Note receivable | (225) | (380) |
Capitalized program development costs and other assets | (738) | (951) |
Net cash used in investing activities | (14,019) | (12,176) |
Financing activities | ||
Cash paid for repurchase of common stock | (20,058) | (15,756) |
Cash received from issuance of common stock | 0 | 361 |
Excess (tax)/tax benefit from stock-based compensation | (564) | 327 |
Net cash used in financing activities | (20,622) | (15,068) |
Net increase/(decrease) in cash and cash equivalents | (11,910) | (5,019) |
Cash and cash equivalents at beginning of period | 115,634 | 94,820 |
Cash and cash equivalents at end of period | 103,724 | 89,801 |
Supplemental disclosure of cash flow information | ||
Income taxes paid | $ 9,143 | $ 11,138 |
Nature of the Business
Nature of the Business | 6 Months Ended |
Jun. 30, 2015 | |
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 105,950 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 has regional institutional accreditation through the Higher Learning Commission. • National Education Seminars, Inc., which is referred to in these financial statements as Hondros College of Nursing, or HCON, provides nursing education to students at four campuses in the State of Ohio as well as online to serve the needs of the nursing and healthcare community. HCON is nationally accredited by the Accrediting Council of Independent Colleges and Schools and the RN-to-BSN Program is accredited by the Commission on Collegiate Nursing Education. HCON was acquired by APEI on November 1, 2013. 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 Company believes 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. Our 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 HCON Segment. This segment reflects the operational activities of HCON. |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of Presentation The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. All intercompany transactions have been eliminated in consolidation. The financial statements do not include all of the information and footnotes 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, 2015 . This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and footnotes in its audited financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2014 . Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board, or FASB , issued ASU No. 2014-09, “ Revenue from Contracts with Customers (Topic 606) ” (“ASU 2014-09”). The standard is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. As originally issued, ASU 2014-09 would be effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, with early adoption not permitted. Accordingly, the standard would only be effective for the Company for periods beginning on or after January 1, 2017. However, on July 9, 2015, the FASB voted to approve a one-year deferral of the effective date of the new revenue recognition standard. Public companies will now apply the new revenue standard to annual reporting periods beginning after December 15, 2017, and to all interim reporting periods within the year of adoption. Accordingly, the revised revenue recognition standard will be effective for the Company for the year ending December 31, 2018, with early adoption permitted for annual periods beginning after December 16, 2016. The revised standard will be effective for all interim periods within the year of adoption. In April 2015, the FASB issued ASU No. 2015-05, “ Intangibles-Goodwill and Other-Internal-Use Software, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement (Subtopic 350-40) ” (“ASU 2015-05”). ASU 2015-05 requires customers to determine whether a cloud computing arrangement contains a software license. If the arrangement contains a software license, customers must account for fees related to the software license element in a manner consistent with how the acquisition of other software licenses is accounted for under ASC 350-40; if the arrangement does not contain a software license, customers must account for the arrangement as a service contract. ASU 2015-05 will take effect for the Company for the year ending December 31, 2016 and all interim periods therein. Entities may adopt ASU 2015-05: (1) retrospectively, or (2) prospectively to arrangements entered into, or materially modified, after ASU 2015-05's effective date. There have been no other applicable material pronouncements since the Company's Annual Report on Form 10-K for the year ended December 31, 2014 . Investments On April 2, 2014, the Company made a $1.5 million investment in preferred stock of Second Avenue Software, Inc. representing approximately 25.9% of its fully diluted equity. Second Avenue Software is a game-based education software company that develops software on a proprietary and “work-for-hire” basis. In connection with the investment, the Company is entitled to certain rights, including the right to representation on the Board of Directors. The Company accounts for its investment in Second Avenue Software under the equity method of accounting. Therefore, the Company recorded the investment at cost and will recognize its share of earnings or losses in the investee in the periods for which they are reported with a corresponding adjustment in the carrying amount of the investment. Revenue Recognition - APEI Segment APUS recognizes revenue on a pro rata basis over the period of its courses as APUS completes the tasks entitling it to the benefits represented by such revenue. If a student withdraws during the academic term, APUS recognizes as revenue the remaining non-refundable amount due from the student in the period the withdrawal occurs. The calculation of the remaining non-refundable amount is based upon the APUS student refund policy. For those students who have an outstanding receivable balance at the date of withdrawal, APUS assesses collectability and only recognizes as revenue those amounts where collectability is reasonably assured based on APUS’s history with similar student accounts. This policy was implemented effective January 1, 2015. Prior to this, APUS recognized revenue for all student withdrawals and established an allowance for those receivables considered uncollectible. 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 of its subsidiary institution's program participation agreements with the U.S. Department of Education. Restricted cash on our Consolidated Balance Sheets as of June 30, 2015 (unaudited) and December 31, 2014 is $ 2.5 million and $ 3.9 million , respectively. Changes in restricted cash that represent funds held for students as described above are included in cash flows from operating activities on our Consolidated Statements of Cash Flows because these restricted funds are related to a core activity of our operations. 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 cost 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 aware of any pending or threatened litigation matters the resolution of which, in the opinion of management, will have a material adverse effect on the Company’s business, operations, financial condition or cash flows. Concentration APUS students utilize various payment sources and programs to finance tuition. These programs include funds from Department of Defense, or DoD, tuition assistance programs, education benefit programs administered by the U.S. Department of Veterans Affairs, or VA, and federal student aid from Title IV programs, as well as cash and other sources. Reductions in or changes to DoD tuition assistance, VA education benefits, Title IV programs and other payment sources could have a significant impact on the Company’s business, operations, financial condition or cash flows. A summary of APEI Segment revenue derived from students by primary funding source for the three and six months ended June 30, 2015 and June 30, 2014 is included in the table below (unaudited). Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Title IV programs 31.5% 34.6% 32.1% 34.7% DoD tuition assistance programs 34.6% 35.4% 34.7% 35.8% VA education benefits 21.1% 18.2% 20.6% 17.7% Cash and other sources 12.8% 11.8% 12.6% 11.8% HCON's students also utilize various payment sources and programs to finance tuition, including funds from Title IV programs and VA education benefits. For the three and six months ended June 30, 2015 , approximately 85.4% and 85.5% of the HCON Segment’s revenue, respectively, was derived from Title IV programs. |
Net Income Per Common Share
Net Income Per Common Share | 6 Months Ended |
Jun. 30, 2015 | |
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 332,478 and 337,245 anti-dilutive stock options excluded from the calculation for the three and six months ended June 30, 2015 , respectively, compared to 146,909 and 1,197 anti-dilutive stock options excluded from the calculation for the three and six months ended June 30, 2014 , respectively. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2015 | |
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 2012 to 2014 remain open to examination. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2015 | |
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. As of June 30, 2015 , there were 339,998 shares subject to outstanding awards under the 2011 Incentive Plan, and 385,254 shares subject to outstanding awards under the 2007 Incentive Plan and the 2002 Stock Plan. 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 projections. 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, 2014 434,401 $ 30.04 Options granted — $ — Awards exercised — $ — Awards forfeited (49,147 ) $ 35.97 Outstanding, June 30, 2015 385,254 $ 29.28 1.65 $ 1,820 Exercisable, June 30, 2015 385,254 $ 29.28 1.65 $ 1,820 The following table summarizes information regarding stock option exercises (unaudited): Six Months Ended Six Months Ended (In thousands) Proceeds from stock options exercised $ — $ 361 Intrinsic value of stock options exercised $ — $ 858 Tax benefit from exercises $ — $ 142 The table below summarizes the restricted stock awards activity for the six months ended June 30, 2015 (unaudited): Number of Shares Weighted-Average Grant Price and Fair Value Non-vested, December 31, 2014 360,769 $ 37.03 Shares granted 127,469 $ 35.15 Vested shares (127,830 ) $ 40.97 Shares forfeited (21,238 ) $ 37.16 Non-vested, June 30, 2015 339,170 $ 34.89 Stock-based compensation cost charged against income during the three and six month periods ended June 30, 2015 and June 30, 2014 is as follows (unaudited): Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 (In thousands) Instructional costs and services $ 394 $ 317 $ 778 $ 608 Marketing and promotional 163 135 328 260 General and administrative 792 816 1,636 1,556 Stock-based compensation expense in operating income 1,349 1,268 2,742 2,424 Tax benefit (549 ) (502 ) (1,123 ) (960 ) Stock-based compensation expense, net of tax $ 800 $ 766 $ 1,619 $ 1,464 As of June 30, 2015 , there was $8.7 million of total unrecognized compensation cost, representing unrecognized compensation cost associated with non-vested restricted stock. The total remaining cost is expected to be recognized over a weighted average period of 1.9 years. |
Other Employee Benefits
Other Employee Benefits | 6 Months Ended |
Jun. 30, 2015 | |
Postemployment Benefits [Abstract] | |
Other employee benefits | Other Employee Benefits In November 2007, the Company adopted the American Public Education Employee Stock Purchase Plan, or the ESPP, which was implemented effective July 1, 2008. There were initially 100,000 shares of common stock available for purchase by participating employees under the ESPP. On June 13, 2014, the Company's shareholders approved an amendment to the ESPP to increase the number of shares of the Company’s common stock available for issuance under the plan by 100,000 shares, extend the term of the ESPP to March 7, 2024, and make other administrative changes. As of June 30, 2015 , 83,166 shares remained available for purchase under the ESPP. In June 2015, the Company's 401K Plan, or the Plan, was amended so that effective August 31, 2015, the Plan will no longer allow participants to invest future contributions in the Company's common stock. The Plan will completely remove the Company's common stock as an investment election on June 30, 2016. Any of the Company's common stock held by Plan participants as of June 30, 2016 will be sold and automatically re-allocated to an age-appropriate mutual fund. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment information | Segment Information The Company has identified two operating segments that are managed in the following reportable segments: • American Public Education Segment, or APEI Segment • Hondros College of Nursing Segment, or HCON Segment In accordance with FASB ASC Topic 280, Segment Reporting , the chief operating decision-maker has been identified as the Chief Executive Officer. The Chief Executive Officer reviews operating results to make decisions about allocating resources and assessing performance for the APEI and HCON segments. A summary of financial information by reportable segment is as follows (unaudited): Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 (In thousands) Revenue: American Public Education Segment $ 72,578 $ 78,295 $ 150,030 $ 159,644 Hondros College of Nursing Segment 7,685 7,168 15,677 14,372 Total Revenue $ 80,263 $ 85,463 $ 165,707 $ 174,016 Depreciation and Amortization: American Public Education Segment $ 4,424 $ 3,654 $ 8,739 $ 7,219 Hondros College of Nursing Segment 274 304 548 628 Total Depreciation and Amortization $ 4,698 $ 3,958 $ 9,287 $ 7,847 Income from continuing operations before interest income and income taxes: American Public Education Segment $ 10,815 $ 15,052 $ 24,131 $ 31,079 Hondros College of Nursing Segment 761 783 1,916 1,481 Total income from continuing operations before interest income and income taxes $ 11,576 $ 15,835 $ 26,047 $ 32,560 Capital Expenditures: American Public Education Segment $ 6,943 $ 4,392 $ 12,134 $ 8,980 Hondros College of Nursing Segment 588 211 629 235 Total Capital Expenditures $ 7,531 $ 4,603 $ 12,763 $ 9,215 A summary of the Company’s consolidated assets by reportable segment is as follows (unaudited): As of June 30, 2015 2014 (In thousands) Assets: American Public Education Segment $ 237,295 $ 221,576 Hondros College of Nursing Segment 54,147 51,163 Total Assets $ 291,442 $ 272,739 |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Use of estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
Recent accounting pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board, or FASB , issued ASU No. 2014-09, “ Revenue from Contracts with Customers (Topic 606) ” (“ASU 2014-09”). The standard is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. As originally issued, ASU 2014-09 would be effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, with early adoption not permitted. Accordingly, the standard would only be effective for the Company for periods beginning on or after January 1, 2017. However, on July 9, 2015, the FASB voted to approve a one-year deferral of the effective date of the new revenue recognition standard. Public companies will now apply the new revenue standard to annual reporting periods beginning after December 15, 2017, and to all interim reporting periods within the year of adoption. Accordingly, the revised revenue recognition standard will be effective for the Company for the year ending December 31, 2018, with early adoption permitted for annual periods beginning after December 16, 2016. The revised standard will be effective for all interim periods within the year of adoption. In April 2015, the FASB issued ASU No. 2015-05, “ Intangibles-Goodwill and Other-Internal-Use Software, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement (Subtopic 350-40) ” (“ASU 2015-05”). ASU 2015-05 requires customers to determine whether a cloud computing arrangement contains a software license. If the arrangement contains a software license, customers must account for fees related to the software license element in a manner consistent with how the acquisition of other software licenses is accounted for under ASC 350-40; if the arrangement does not contain a software license, customers must account for the arrangement as a service contract. ASU 2015-05 will take effect for the Company for the year ending December 31, 2016 and all interim periods therein. Entities may adopt ASU 2015-05: (1) retrospectively, or (2) prospectively to arrangements entered into, or materially modified, after ASU 2015-05's effective date. There have been no other applicable material pronouncements since the Company's Annual Report on Form 10-K for the year ended December 31, 2014 . |
Investments | Investments On April 2, 2014, the Company made a $1.5 million investment in preferred stock of Second Avenue Software, Inc. representing approximately 25.9% of its fully diluted equity. Second Avenue Software is a game-based education software company that develops software on a proprietary and “work-for-hire” basis. In connection with the investment, the Company is entitled to certain rights, including the right to representation on the Board of Directors. The Company accounts for its investment in Second Avenue Software under the equity method of accounting. Therefore, the Company recorded the investment at cost and will recognize its share of earnings or losses in the investee in the periods for which they are reported with a corresponding adjustment in the carrying amount of the investment. |
Revenue recognition - APEI segment | Revenue Recognition - APEI Segment APUS recognizes revenue on a pro rata basis over the period of its courses as APUS completes the tasks entitling it to the benefits represented by such revenue. If a student withdraws during the academic term, APUS recognizes as revenue the remaining non-refundable amount due from the student in the period the withdrawal occurs. The calculation of the remaining non-refundable amount is based upon the APUS student refund policy. For those students who have an outstanding receivable balance at the date of withdrawal, APUS assesses collectability and only recognizes as revenue those amounts where collectability is reasonably assured based on APUS’s history with similar student accounts. This policy was implemented effective January 1, 2015. Prior to this, APUS recognized revenue for all student withdrawals and established an allowance for those receivables considered uncollectible. |
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 of its subsidiary institution's program participation agreements with the U.S. Department of Education. Restricted cash on our Consolidated Balance Sheets as of June 30, 2015 (unaudited) and December 31, 2014 is $ 2.5 million and $ 3.9 million , respectively. Changes in restricted cash that represent funds held for students as described above are included in cash flows from operating activities on our Consolidated Statements of Cash Flows because these restricted funds are related to a core activity of our operations. |
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 cost 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 aware of any pending or threatened litigation matters the resolution of which, in the opinion of management, will have a material adverse effect on the Company’s business, operations, financial condition or cash flows. |
Concentration | Concentration APUS students utilize various payment sources and programs to finance tuition. These programs include funds from Department of Defense, or DoD, tuition assistance programs, education benefit programs administered by the U.S. Department of Veterans Affairs, or VA, and federal student aid from Title IV programs, as well as cash and other sources. Reductions in or changes to DoD tuition assistance, VA education benefits, Title IV programs and other payment sources could have a significant impact on the Company’s business, operations, financial condition or cash flows. A summary of APEI Segment revenue derived from students by primary funding source for the three and six months ended June 30, 2015 and June 30, 2014 is included in the table below (unaudited). Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Title IV programs 31.5% 34.6% 32.1% 34.7% DoD tuition assistance programs 34.6% 35.4% 34.7% 35.8% VA education benefits 21.1% 18.2% 20.6% 17.7% Cash and other sources 12.8% 11.8% 12.6% 11.8% HCON's students also utilize various payment sources and programs to finance tuition, including funds from Title IV programs and VA education benefits. For the three and six months ended June 30, 2015 , approximately 85.4% and 85.5% of the HCON Segment’s revenue, respectively, was derived from Title IV programs. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Schedule of summary of APEI segment revenues | A summary of APEI Segment revenue derived from students by primary funding source for the three and six months ended June 30, 2015 and June 30, 2014 is included in the table below (unaudited). Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Title IV programs 31.5% 34.6% 32.1% 34.7% DoD tuition assistance programs 34.6% 35.4% 34.7% 35.8% VA education benefits 21.1% 18.2% 20.6% 17.7% Cash and other sources 12.8% 11.8% 12.6% 11.8% |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock 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, 2014 434,401 $ 30.04 Options granted — $ — Awards exercised — $ — Awards forfeited (49,147 ) $ 35.97 Outstanding, June 30, 2015 385,254 $ 29.28 1.65 $ 1,820 Exercisable, June 30, 2015 385,254 $ 29.28 1.65 $ 1,820 |
Stock option exercise | The following table summarizes information regarding stock option exercises (unaudited): Six Months Ended Six Months Ended (In thousands) Proceeds from stock options exercised $ — $ 361 Intrinsic value of stock options exercised $ — $ 858 Tax benefit from exercises $ — $ 142 |
Restricted stock activity | The table below summarizes the restricted stock awards activity for the six months ended June 30, 2015 (unaudited): Number of Shares Weighted-Average Grant Price and Fair Value Non-vested, December 31, 2014 360,769 $ 37.03 Shares granted 127,469 $ 35.15 Vested shares (127,830 ) $ 40.97 Shares forfeited (21,238 ) $ 37.16 Non-vested, June 30, 2015 339,170 $ 34.89 |
Stock-based compensation cost charged against income | Stock-based compensation cost charged against income during the three and six month periods ended June 30, 2015 and June 30, 2014 is as follows (unaudited): Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 (In thousands) Instructional costs and services $ 394 $ 317 $ 778 $ 608 Marketing and promotional 163 135 328 260 General and administrative 792 816 1,636 1,556 Stock-based compensation expense in operating income 1,349 1,268 2,742 2,424 Tax benefit (549 ) (502 ) (1,123 ) (960 ) Stock-based compensation expense, net of tax $ 800 $ 766 $ 1,619 $ 1,464 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
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 June 30, Six Months Ended June 30, 2015 2014 2015 2014 (In thousands) Revenue: American Public Education Segment $ 72,578 $ 78,295 $ 150,030 $ 159,644 Hondros College of Nursing Segment 7,685 7,168 15,677 14,372 Total Revenue $ 80,263 $ 85,463 $ 165,707 $ 174,016 Depreciation and Amortization: American Public Education Segment $ 4,424 $ 3,654 $ 8,739 $ 7,219 Hondros College of Nursing Segment 274 304 548 628 Total Depreciation and Amortization $ 4,698 $ 3,958 $ 9,287 $ 7,847 Income from continuing operations before interest income and income taxes: American Public Education Segment $ 10,815 $ 15,052 $ 24,131 $ 31,079 Hondros College of Nursing Segment 761 783 1,916 1,481 Total income from continuing operations before interest income and income taxes $ 11,576 $ 15,835 $ 26,047 $ 32,560 Capital Expenditures: American Public Education Segment $ 6,943 $ 4,392 $ 12,134 $ 8,980 Hondros College of Nursing Segment 588 211 629 235 Total Capital Expenditures $ 7,531 $ 4,603 $ 12,763 $ 9,215 |
Summary of company's consolidated assets by reportable segment | A summary of the Company’s consolidated assets by reportable segment is as follows (unaudited): As of June 30, 2015 2014 (In thousands) Assets: American Public Education Segment $ 237,295 $ 221,576 Hondros College of Nursing Segment 54,147 51,163 Total Assets $ 291,442 $ 272,739 |
Nature of the Business (Detail)
Nature of the Business (Detail) - Jun. 30, 2015 | SubsidiaryPersonCampusSegment |
Business Combination Segment Allocation [Line Items] | |
Number of students | Person | 105,950 |
Number of subsidiaries | 2 |
Number of reportable segments | Segment | 2 |
Hondros college of nursing | |
Business Combination Segment Allocation [Line Items] | |
Number of Campuses | Campus | 4 |
Basis of Presentation - Additio
Basis of Presentation - Additional Presentation (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 | Apr. 02, 2014 |
Schedule of Equity Method Investments [Line Items] | |||
Restricted cash and cash equivalents, current | $ 2.5 | $ 3.9 | |
Preferred stock | Second avenue software, inc. | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity method investment, aggregate cost | $ 1.5 | ||
Equity method investment, ownership percentage | 25.90% |
Summary of Segment Revenues Der
Summary of Segment Revenues Derived from Students by Primary Funding Source (Detail) - Customer concentration risk - Sales revenue, services, net | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
DoD tuition assistance programs | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 34.60% | |||
American public education segment | Title IV programs | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 31.50% | 34.60% | 32.10% | 34.70% |
American public education segment | DoD tuition assistance programs | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 35.40% | 34.70% | 35.80% | |
American public education segment | VA education benefits | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 21.10% | 18.20% | 20.60% | 17.70% |
American public education segment | Cash and other sources | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 12.80% | 11.80% | 12.60% | 11.80% |
Hondros college of nursing | Title IV programs | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 85.40% | 85.50% |
Net Income Per Common Share - A
Net Income Per Common Share - Additional Information (Detail) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Equity option | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from computation of diluted net income per common share | 332,478 | 146,909 | 337,245 | 1,197 |
Income Taxes (Details)
Income Taxes (Details) | 6 Months Ended |
Jun. 30, 2015 | |
Earliest tax year | |
Income Tax Examination [Line Items] | |
Open tax year | 2,012 |
Latest tax year | |
Income Tax Examination [Line Items] | |
Open tax year | 2,014 |
Stock Based Compensation - Addi
Stock Based Compensation - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | ||
Jun. 30, 2015 | Dec. 31, 2014 | May. 06, 2011 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share based compensation award, shares outstanding (in shares) | 385,254 | 434,401 | |
Restricted stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized compensation cost | $ 8.7 | ||
Unrecognized compensation cost, weighted average period for recognition | 1 year 10 months 24 days | ||
2011 Incentive plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share based compensation award, shares authorized for grant (in shares) | 2,000,000 | ||
Share based compensation award, shares outstanding (in shares) | 339,998 | ||
Represents the 2002 stock plan and the 2007 incentive plan adopted by the company for equity-based compensation arrangements. | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share based compensation award, shares outstanding (in shares) | 385,254 |
Summary of Status of Company's
Summary of Status of Company's Stock Incentive Plans and Changes During Periods Ended (Detail) - Jun. 30, 2015 - USD ($) $ / shares in Units, $ in Thousands | Total | Total |
Number of options | ||
Outstanding, beginning balance (in shares) | 434,401 | |
Options granted (in shares) | 0 | |
Awards exercised (in shares) | 0 | |
Awards forfeited (in shares) | (49,147) | |
Outstanding, ending balance (in shares) | 385,254 | 385,254 |
Exercisable, ending Balance (in shares) | 385,254 | 385,254 |
Weighted average exercise price | ||
Outstanding, beginning balance (in dollars per share) | $ 30.04 | |
Options granted (in dollars per share) | 0 | |
Awards exercised (in dollars per share) | 0 | |
Awards forfeited (in dollars per share) | 35.97 | |
Outstanding, ending balance (in dollars per share) | $ 29.28 | 29.28 |
Exercisable, ending balance (in dollars per share) | $ 29.28 | $ 29.28 |
Weighted average contractual life (years) | ||
Outstanding, ending balance | 1 year 7 months 24 days | |
Exercisable, ending balance | 1 year 7 months 24 days | |
Outstanding, ending balance | $ 1,820 | $ 1,820 |
Exercisable, ending balance | $ 1,820 | $ 1,820 |
Two thousand two and two thousand seven incentive plan | ||
Number of options | ||
Outstanding, ending balance (in shares) | 385,254 | 385,254 |
Stock Option Exercise (Detail)
Stock Option Exercise (Detail) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Proceeds from stock options exercised | $ 0 | $ 361 |
Intrinsic value of stock options exercised | 0 | 858 |
Tax benefit from exercises | $ 0 | $ 142 |
Restricted Stock Awards Activit
Restricted Stock Awards Activity (Detail) - 6 months ended Jun. 30, 2015 - Restricted stock - $ / shares | Total |
Number of shares | |
Non vested, beginning balance (in shares) | 360,769 |
Shares granted (in shares) | 127,469 |
Vested shares (in shares) | (127,830) |
Shares forfeited (in shares) | (21,238) |
Non vested, ending balance (in shares) | 339,170 |
Weighted-average grant price and fair value | |
Non vested, beginning balance (in dollars per share) | $ 37.03 |
Shares granted (in dollars per share) | 35.15 |
Vested shares (in dollars per share) | 40.97 |
Shares forfeited (in dollars per share) | 37.16 |
Non vested, ending balance (in dollars per share) | $ 34.89 |
Stock-Based Compensation Includ
Stock-Based Compensation Included in Operating Expense Line-Items (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Allocated share-based compensation expense | $ 1,349 | $ 1,268 | $ 2,742 | $ 2,424 |
Tax benefit | (549) | (502) | (1,123) | (960) |
Stock-based compensation expense, net of tax | 800 | 766 | 1,619 | 1,464 |
Instructional costs and services | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Allocated share-based compensation expense | 394 | 317 | 778 | 608 |
Selling and promotional | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Allocated share-based compensation expense | 163 | 135 | 328 | 260 |
General and administrative | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Allocated share-based compensation expense | $ 792 | $ 816 | $ 1,636 | $ 1,556 |
Other Employee Benefits - Addit
Other Employee Benefits - Additional Information (Detail) - American public education, inc. employee stock purchase plan - shares | Jun. 13, 2014 | Jun. 30, 2015 | Jul. 01, 2008 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
ESPP, common stock that may be available for purchase | 100,000 | ||
ESPP, additional shares approved for issuance | 100,000 | ||
ESPP, common stock remained available | 83,166 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) | 3 Months Ended |
Jun. 30, 2015Segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Segment Information Summary of
Segment Information Summary of Financial Information by Reportable Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Segment Reporting Information [Line Items] | |||||
Revenue | $ 80,263 | $ 85,463 | $ 165,707 | $ 174,016 | |
Depreciation and amortization | 4,698 | 3,958 | 9,287 | 7,847 | |
Income from continuing operations before interest income and income taxes | 11,576 | 15,835 | 26,047 | 32,560 | |
Capital expenditures | 7,531 | 4,603 | 12,763 | 9,215 | |
Assets | 291,442 | 272,739 | 291,442 | 272,739 | $ 297,904 |
American public education segment | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 72,578 | 78,295 | 150,030 | 159,644 | |
Depreciation and amortization | 4,424 | 3,654 | 8,739 | 7,219 | |
Income from continuing operations before interest income and income taxes | 10,815 | 15,052 | 24,131 | 31,079 | |
Capital expenditures | 6,943 | 4,392 | 12,134 | 8,980 | |
Assets | 237,295 | 221,576 | 237,295 | 221,576 | |
Hondros college of nursing | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 7,685 | 7,168 | 15,677 | 14,372 | |
Depreciation and amortization | 274 | 304 | 548 | 628 | |
Income from continuing operations before interest income and income taxes | 761 | 783 | 1,916 | 1,481 | |
Capital expenditures | 588 | 211 | 629 | 235 | |
Assets | $ 54,147 | $ 51,163 | $ 54,147 | $ 51,163 |