Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 08, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | LINCOLN EDUCATIONAL SERVICES CORP | |
Entity Central Index Key | 1,286,613 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 24,719,055 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 7,277 | $ 21,064 |
Restricted cash | 7,189 | 6,399 |
Accounts receivable, less allowance of $13,034 and $12,375 at September 30, 2017 and December 31, 2016, respectively | 18,503 | 15,383 |
Inventories | 1,787 | 1,687 |
Prepaid income taxes and income taxes receivable | 195 | 262 |
Assets held for sale | 3,021 | 16,847 |
Prepaid expenses and other current assets | 2,187 | 2,894 |
Total current assets | 40,159 | 64,536 |
PROPERTY, EQUIPMENT AND FACILITIES - At cost, net of accumulated depreciation and amortization of $162,189 and $157,152 at September 30, 2017 and December 31, 2016, respectively | 54,083 | 55,445 |
OTHER ASSETS: | ||
Noncurrent restricted cash | 0 | 20,252 |
Noncurrent receivables, less allowance of $1,304 and $977 at September 30, 2017 and December 31, 2016, respectively | 7,827 | 7,323 |
Goodwill | 14,536 | 14,536 |
Other assets, net | 954 | 1,115 |
Total other assets | 23,317 | 43,226 |
TOTAL | 117,559 | 163,207 |
CURRENT LIABILITIES: | ||
Current portion of credit agreement and term loan | 0 | 11,713 |
Unearned tuition | 26,200 | 24,778 |
Accounts payable | 10,423 | 13,748 |
Accrued expenses | 14,619 | 15,368 |
Other short-term liabilities | 2,122 | 653 |
Total current liabilities | 53,364 | 66,260 |
NONCURRENT LIABILITIES: | ||
Long-term credit agreement and term loan | 16,721 | 30,244 |
Pension plan liabilities | 4,981 | 5,368 |
Accrued rent | 4,672 | 5,666 |
Other long-term liabilities | 685 | 743 |
Total liabilities | 80,423 | 108,281 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock, no par value - 10,000,000 shares authorized, no shares issued and outstanding at September 30, 2017 and December 31, 2016 | 0 | 0 |
Common stock, no par value - authorized: 100,000,000 shares at September 30, 2017 and December 31, 2016; issued and outstanding: 30,629,596 shares at September 30, 2017 and 30,685,017 shares at December 31, 2016 | 141,377 | 141,377 |
Additional paid-in capital | 29,073 | 28,554 |
Treasury stock at cost - 5,910,541 shares at September 30, 2017 and December 31, 2016 | (82,860) | (82,860) |
Accumulated deficit | (45,234) | (26,044) |
Accumulated other comprehensive loss | (5,220) | (6,101) |
Total stockholders' equity | 37,136 | 54,926 |
TOTAL | $ 117,559 | $ 163,207 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||
Accounts receivable, allowance | $ 13,034 | $ 12,375 |
PROPERTY, EQUIPMENT AND FACILITIES - accumulated depreciation and amortization | 162,189 | 157,152 |
OTHER ASSETS: | ||
Noncurrent receivables, allowance | $ 1,304 | $ 977 |
STOCKHOLDERS' EQUITY: | ||
Preferred stock, par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized (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 | $ 0 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 30,629,596 | 30,685,017 |
Common stock, shares outstanding (in shares) | 30,629,596 | 30,685,017 |
Treasury stock, shares (in shares) | 5,910,541 | 5,910,541 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) [Abstract] | ||||
REVENUE | $ 67,308 | $ 74,267 | $ 194,452 | $ 212,991 |
COSTS AND EXPENSES: | ||||
Educational services and facilities | 34,070 | 37,543 | 99,183 | 110,234 |
Selling, general and administrative | 35,499 | 37,402 | 109,378 | 113,307 |
Gain on sale of assets | (1,530) | (7) | (1,619) | (402) |
Total costs & expenses | 68,039 | 74,938 | 206,942 | 223,139 |
OPERATING LOSS | (731) | (671) | (12,490) | (10,148) |
OTHER: | ||||
Interest income | 7 | 69 | 47 | 141 |
Interest expense | (716) | (1,497) | (6,597) | (4,629) |
Other income | 0 | 1,678 | 0 | 5,109 |
LOSS BEFORE INCOME TAXES | (1,440) | (421) | (19,040) | (9,527) |
PROVISION FOR INCOME TAXES | 50 | 50 | 150 | 150 |
NET LOSS | $ (1,490) | $ (471) | $ (19,190) | $ (9,677) |
Basic | ||||
Net loss per share (in dollars per share) | $ (0.06) | $ (0.02) | $ (0.80) | $ (0.41) |
Diluted | ||||
Net loss per share (in dollars per share) | $ (0.06) | $ (0.02) | $ (0.80) | $ (0.41) |
Weighted average number of common shares outstanding: | ||||
Basic (in shares) | 24,023,540 | 23,498,904 | 23,866,485 | 23,433,015 |
Diluted (in shares) | 24,023,540 | 23,498,904 | 23,866,485 | 23,433,015 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME [Abstract] | ||||
Net loss | $ (1,490) | $ (471) | $ (19,190) | $ (9,677) |
Other comprehensive income | ||||
Employee pension plan adjustments | 440 | 222 | 881 | 666 |
Comprehensive loss | $ (1,050) | $ (249) | $ (18,309) | $ (9,011) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Treasury Stock [Member] | Retained Earnings (Accumulated Deficit) [Member] | Accumulated Other Comprehensive Loss [Member] | Total |
BALANCE at Dec. 31, 2015 | $ 141,377 | $ 27,292 | $ (82,860) | $ 2,260 | $ (7,072) | $ 80,997 |
BALANCE (in shares) at Dec. 31, 2015 | 29,727,555 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | $ 0 | 0 | 0 | (9,677) | 0 | (9,677) |
Employee pension plan adjustments | 0 | 0 | 0 | 0 | 666 | 666 |
Stock-based compensation expense | ||||||
Restricted stock | $ 0 | 1,086 | 0 | 0 | 0 | 1,086 |
Restricted stock (in shares) | 1,079,267 | |||||
Net share settlement for equity-based compensation | $ 0 | (107) | 0 | 0 | 0 | (107) |
Net share settlement for equity-based compensation (in shares) | (38,389) | |||||
BALANCE at Sep. 30, 2016 | $ 141,377 | 28,271 | (82,860) | (7,417) | (6,406) | 72,965 |
BALANCE (in shares) at Sep. 30, 2016 | 30,768,433 | |||||
BALANCE at Dec. 31, 2016 | $ 141,377 | 28,554 | (82,860) | (26,044) | (6,101) | $ 54,926 |
BALANCE (in shares) at Dec. 31, 2016 | 30,685,017 | 30,685,017 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | $ 0 | 0 | 0 | (19,190) | 0 | $ (19,190) |
Employee pension plan adjustments | 0 | 0 | 0 | 0 | 881 | 881 |
Stock-based compensation expense | ||||||
Restricted stock | $ 0 | 948 | 0 | 0 | 0 | 948 |
Restricted stock (in shares) | 128,810 | |||||
Net share settlement for equity-based compensation | $ 0 | (429) | 0 | 0 | 0 | (429) |
Net share settlement for equity-based compensation (in shares) | (184,231) | |||||
BALANCE at Sep. 30, 2017 | $ 141,377 | $ 29,073 | $ (82,860) | $ (45,234) | $ (5,220) | $ 37,136 |
BALANCE (in shares) at Sep. 30, 2017 | 30,629,596 | 30,629,596 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (19,190) | $ (9,677) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 6,438 | 8,590 |
Amortization of deferred finance charges | 503 | 704 |
Write-off of deferred finance charges | 2,161 | 0 |
Gain on disposition of assets | (1,619) | (402) |
Gain on capital lease termination | 0 | (5,032) |
Fixed asset donation | (18) | (123) |
Provision for doubtful accounts | 10,393 | 10,116 |
Stock-based compensation expense | 948 | 1,086 |
Deferred rent | (981) | (358) |
(Increase) decrease in assets: | ||
Accounts receivable | (14,017) | (17,430) |
Inventories | (100) | 24 |
Prepaid income taxes and income taxes receivable | 67 | 75 |
Prepaid expenses and current assets | 699 | 763 |
Other assets, net | (1,173) | (1,401) |
Increase (decrease) in liabilities: | ||
Accounts payable | (3,283) | 3,843 |
Accrued expenses | (762) | 1,611 |
Unearned tuition | 1,422 | (1,966) |
Other liabilities | 1,905 | 64 |
Total adjustments | 2,583 | 164 |
Net cash used in operating activities | (16,607) | (9,513) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Capital expenditures | (3,765) | (2,155) |
Restricted cash | (790) | 1,080 |
Proceeds from sale of property and equipment | 15,452 | 432 |
Net cash provided by (used in) investing activities | 10,897 | (643) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Payments on borrowings | (64,766) | (386) |
Proceeds from borrowings | 38,000 | 0 |
Reclassifications of payments of borrowings from restricted cash | 20,252 | 0 |
Proceeds of borrowings from restricted cash | (5,000) | (5,022) |
Payments of borrowings from restricted cash | 5,000 | 0 |
Payment of deferred finance fees | (1,134) | (645) |
Net share settlement for equity-based compensation | (429) | (107) |
Principal payments under capital lease obligations | 0 | (2,864) |
Net cash used in financing activities | (8,077) | (9,024) |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (13,787) | (19,180) |
CASH AND CASH EQUIVALENTS-Beginning of period | 21,064 | 38,420 |
CASH AND CASH EQUIVALENTS-End of period | 7,277 | 19,240 |
Cash paid for: | ||
Interest | 2,449 | 4,020 |
Income taxes | 121 | 122 |
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES: | ||
Liabilities accrued for or noncash purchases of fixed assets | $ 1,447 | $ 2,033 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Activities — Lincoln Educational Services Corporation and its subsidiaries (collectively, the “Company”, “we”, “our” and “us”, as applicable) provide diversified career-oriented post-secondary education to recent high school graduates and working adults. The Company, which currently operates 25 schools in 15 states, We operate in three reportable business segments: (a) Transportation and Skilled Trades segment, (b) Healthcare and Other Professions (“HOPS”) segment, and (c) Transitional segment which refers to businesses that have been or are currently being taught out. In November 2015, the Board of Directors approved a plan for the Company to divest the schools included in the HOPS segment due to a strategic shift in the Company’s business strategy. The Company underwent an exhaustive process to divest the HOPS schools which proved successful in attracting various purchasers but, ultimately, did not result in a transaction that our Board believed would enhance shareholder value. When the decision was first made by the Board of Directors to divest HOPS, 18 campuses were operating in this segment. By the end of 2017, we will have strategically closed seven underperforming campuses leaving a total of eleven campuses remaining under the HOPS segment. The Company believes that the closures and planned closures of the aforementioned campuses has positioned this segment and the Company to be profitable going forward as well as maximizing returns for the Company’s shareholders. The combination of several factors, including the inability of a prospective buyer of the HOPS segment to close on the purchase, the improvements the Company has implemented in the operations of the HOPS segment, the closure of seven underperforming campuses and the change in federal government administration, resulted in the Board reevaluating its divestiture plan and the determination that shareholder value would more likely be enhanced by continuing to operate our HOPS segment as revitalized. Consequently, in the first quarter of 2017, the Board of Directors abandoned the plan to divest the HOPS segment and the Company intends to retain the HOPS segment. The results of operations of the campuses included in the HOPS segment are reflected as continuing operations in the condensed consolidated financial statements. In the fourth quarter of 2016, the Company completed the teach-out of its Hartford, Connecticut and Henderson (Green Valley), Nevada campuses which originally operated in the HOPS segment. Also in 2017, the Company completed the teach-out of its Northeast Philadelphia, Pennsylvania; Center City Philadelphia, Pennsylvania; and West Palm Beach, Florida facilities which also originally operated in the HOPS segment. In addition, in March 2017, the Board of Directors approved On August 14, 2017, New England Institute of Technology at Palm Beach, Inc., a wholly-owned subsidiary of the Company, consummated the anticipated sale of the real property located at 2400 and 2410 Metrocentre Boulevard East, West Palm Beach, Florida, including the improvements and other personal property located thereon (the “West Palm Beach Property”) to Tambone Companies, LLC (“Tambone”), pursuant to a previously disclosed purchase and sale agreement (the “West Palm Sale Agreement”) entered into on March 14, 2017. Pursuant to the terms of the West Palm Sale Agreement, as subsequently amended, the purchase price for the West Palm Beach Property was $15.8 million. As a result, the Company recorded a gain on the sale in the amount of $1.5 million. As previously disclosed, the West Palm Beach Property served as collateral for a short term loan in the principal amount of $8.0 million obtained by the Company from its lender, Sterling National Bank, on April 28, 2017, which loan matured upon the earlier of the sale of the West Palm Beach Property or October 1, 2017. Accordingly, on August 14, 2017, concurrently with the consummation of the sale of the West Palm Beach Property, the Company repaid the term loan in an aggregate amount of $8.0 million, consisting of principal and accrued interest. Liquidity — In addition to the current sources of capital discussed above that provide short term liquidity, the Company has been making efforts to sell its remaining West Palm Beach, Florida property and associated assets originally operated in the HOPS segment, which has been classified as held for sale and is expected to be sold within one year from the date of classification which was December 31, 2016. Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. Use of Estimates in the Preparation of Financial Statements New Accounting Pronouncements “Compensation—Stock Compensation (Topic 718) — Scope of Modification Accounting.” In March 2017, the FASB issued ASU 2017-07, "Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment.” Intangibles - Goodwill and Other, The FASB has recently issued several amendments to the new standard on revenue recognition, ASU 2014-09, “ Revenue from Contracts with Customers Revenue from Contracts with Customers (Topic 606)—Principal versus Agent Considerations , “Revenue from Contracts with Customers (Topic 606)—Identifying Performance Obligations and Licensing The new standard is effective for annual reporting periods beginning after December 15, 2017, with early adoption permitted for annual reporting periods beginning after December 15, 2016. We have not adopted the new standard as yet but we will adopt the new standard effective January 1, 2018 using the modified retrospective approach. The Company’s assessment of the potential impact is substantially complete based on our review of current enrollment agreements and other revenue generating contracts. We believe the timing of recognizing revenue for tuition and student fees will not significantly change. The Company is closely reviewing its book revenue stream to determine whether the performance obligation of the Company is satisfied over time and revenue is recognized over the length of the student contract, which is the Company’s current practice with respect to revenue recognition, or whether the performance obligation of the Company is satisfied at the point in time and revenue is recognized when students’ books are delivered. Additionally, we are currently assessing the impacts related to the accounting for contract assets separately from accounts receivable and are evaluating the point at which a student’s contract asset becomes a receivable. We are in the process of updating our revenue accounting policy and implementing changes to our business processes and controls in response to the new standard, as necessary. During the remainder of 2017, we are finalizing our revenue related documentation. The Company expects to adopt the new standard on a modified retrospective basis with the cumulative effect of the change reflected in retained earnings as of January 1, 2018 but not restated for prior periods. In November 2016, the FASB issued ASU 2016-18: “ Statement of Cash Flows (Topic 230): Restricted Cash In August 2016, the FASB issued ASU 2016-15, “ Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments The Company prospectively applied ASU 2016-09, “Improvements to Employee Share Based Payment Accounting,” The presentation requirements for cash flows related to employee taxes paid for withheld shares had no impact to any of the periods presented in the condensed consolidated statements of cash flows, since such cash flows have historically been presented in financing activities. In February 2016, the FASB issued guidance requiring lessees to recognize a right-of-use asset and a lease liability on the balance sheet for substantially all leases, with the exception of short-term leases. Leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the statements of income. The guidance is effective for annual periods, including interim periods within those periods, beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the impact that the update will have on our results of operations, financial condition and financial statement disclosures. Stock-Based Compensation The Company measures the value of service and performance-based restricted stock on the fair value of a share of common stock on the date of the grant. The Company amortizes the fair value of service-based restricted stock utilizing straight-line amortization of compensation expense over the requisite service period of the grant. The Company amortizes the fair value of the performance-based restricted stock based on the determination of the probable outcome of the performance condition. If the performance condition is expected to be met, then the Company amortizes the fair value of the number of shares expected to vest utilizing straight-line basis over the requisite performance period of the grant. However, if the associated performance condition is not expected to be met, then the Company does not recognize the stock-based compensation expense. Income Taxes – The Company Income Taxes In accordance with ASC 740, the Company assesses its deferred tax asset to determine whether all or any portion of the asset is more likely than not unrealizable. A valuation allowance is required to be established or maintained when, based on currently available information, it is more likely than not that all or a portion of a deferred tax asset will not be realized. In accordance with ASC 740, the Company’s assessment considers whether there has been sufficient income in recent years and whether sufficient income is expected in future years in order to utilize the deferred tax asset. In evaluating the realizability of deferred income tax assets, the Company considered, among other things, historical levels of income, expected future income, the expected timing of the reversals of existing temporary reporting differences, and the expected impact of tax planning strategies that may be implemented to prevent the potential loss of future income tax benefits. Significant judgment is required in determining the future tax consequences of events that have been recognized in the Company’s consolidated financial statements and/or tax returns. Differences between anticipated and actual outcomes of these future tax consequences could have a material impact on the Company’s consolidated financial position or results of operations. Changes in, among other things, income tax legislation, statutory income tax rates, or future income levels could materially impact the Company’s valuation of income tax assets and liabilities and could cause the Company’s income tax provision to vary significantly among financial reporting periods. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. During the three and nine months ended September 30, 2017 and 2016, the Company did not recognize any interest and penalties expense associated with uncertain tax positions. |
WEIGHTED AVERAGE COMMON SHARES
WEIGHTED AVERAGE COMMON SHARES | 9 Months Ended |
Sep. 30, 2017 | |
WEIGHTED AVERAGE COMMON SHARES [Abstract] | |
WEIGHTED AVERAGE COMMON SHARES | 2. WEIGHTED AVERAGE COMMON SHARES The weighted average number of common shares used to compute basic and diluted loss per share for the three and nine months ended September 30, 2017 and 2016 was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Basic shares outstanding 24,023,540 23,498,904 23,866,485 23,433,015 Dilutive effect of stock options - - - - Diluted shares outstanding 24,023,540 23,498,904 23,866,485 23,433,015 For the three months ended September 30, 2017 and 2016, options to acquire 552,189 and 1,181,073 shares were excluded from the above table because the Company reported a net loss for each period and, therefore, their impact on reported loss per share would have been antidilutive. For the nine months ended September 30, 2017 and 2016, options to acquire 572,428 and 668,307 shares were excluded from the above table because the Company reported a net loss for each quarter and, therefore, their impact on reported loss per share would have been antidilutive. For the three and nine months ended September 30, 2017, options to acquire 170,667 shares were excluded from the above table because they have an exercise price that is greater than the average market price of the Company’s common stock and, therefore, their impact on reported income (loss) per share would have been antidilutive. |
GOODWILL AND LONG-LIVED ASSETS
GOODWILL AND LONG-LIVED ASSETS | 9 Months Ended |
Sep. 30, 2017 | |
GOODWILL AND LONG-LIVED ASSETS [Abstract] | |
GOODWILL AND LONG-LIVED ASSETS | 3. GOODWILL AND LONG-LIVED ASSETS The Company reviews long-lived assets for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. There were no long-lived asset impairments during the nine months ended September 30, 2017 and 2016. The Company reviews goodwill and intangible assets for impairment when indicators of impairment exist. Annually, or more frequently if necessary, the Company evaluates goodwill and intangible assets with indefinite lives for impairment, with any resulting impairment reflected as an operating expense. The Company concluded that, as of September 30, 2017 and 2016, there was no indicator of potential impairment and, accordingly, the Company did not test goodwill for impairment. The carrying amount of goodwill at September 30, 2017 and 2016 is as follows: Gross Goodwill Balance Accumulated Impairment Losses Net Goodwill Balance Balance as of January 1, 2017 $ 117,176 $ (102,640 ) $ 14,536 Adjustments - - - Balance as of September 30, 2017 $ 117,176 $ (102,640 ) $ 14,536 Gross Goodwill Balance Accumulated Impairment Losses Net Goodwill Balance Balance as of January 1, 2016 $ 117,176 $ (93,881 ) $ 23,295 Adjustments - - - Balance as of September 30, 2016 $ 117,176 $ (93,881 ) $ 23,295 As of September 30, 2017, the goodwill balance is related to the Transportation and Skilled Trades segment. As of September 30, 2016, the goodwill balance consists of $14.5 million related to the Transportation and Skilled Trades segment and $8.8 million related to our HOPS segment. Intangible assets, which are included in other assets in the accompanying condensed consolidated balance sheets, consist of the following: Curriculum Gross carrying amount at December 31, 2016 $ 160 Adjustments - Gross carrying amount at September 30, 2017 160 Accumulated amortization at December 31, 2016 128 Amortization 11 Accumulated amortization at September 30, 2017 139 Net carrying amount at September 30, 2017 $ 21 Weighted average amortization period (years) 10 Amortization of intangible assets was less than $0.1 million for each of the three and nine months ended September 30, 2017 and 2016. The following table summarizes the estimated future amortization expense: Year Ending December 31, Remainder of 2017 $ 4 2018 17 $ 21 |
LONG-TERM DEBT
LONG-TERM DEBT | 9 Months Ended |
Sep. 30, 2017 | |
LONG-TERM DEBT [Abstract] | |
LONG-TERM DEBT | 4. LONG-TERM DEBT Long-term debt consist of the following: September 30, 2017 December 31, 2016 Credit agreement (a) $ 17,500 $ - Term loan (a) - 44,267 Deferred Financing Fees (779 ) (2,310 ) 16,721 41,957 Less current maturities - (11,713 ) $ 16,721 $ 30,244 (a) The Credit Facility is secured by a first priority lien in favor of the Bank on substantially all of the personal property owned by the Company as well as mortgages on four parcels of real property owned by the Company in Connecticut, Colorado, Tennessee and Texas at which four of the Company’s schools are located. At the closing of the Credit Facility, the Company drew $25 million under Tranche A of Facility 1, which, pursuant to the terms of the Credit Agreement, was used to repay the Prior Credit Facility and to pay transaction costs associated with closing the Credit Facility. After the disbursement of such amounts, the Company retained approximately $1.8 million of the borrowed amount for working capital purposes. Also, at closing, $5 million was drawn under Tranche B, which, pursuant to the terms of the Credit Agreement, was deposited into an interest-bearing pledged account (the “Pledged Account”) in the name of the Company maintained at the Bank in order to secure payment obligations of the Company with respect to the costs of remediation of any environmental contamination discovered at certain of the mortgaged properties based upon environmental studies undertaken at such properties. During the quarter ended June 30, 2017, the environmental studies were completed and revealed no environmental issues existing at the properties and accordingly, pursuant to the terms of the Credit Agreement, the $5 million in the Pledged Account was released and used to repay the non-revolving loan outstanding under Tranche B. Upon the repayment of Tranche B, the maximum principal amount of Facility 1 was permanently reduced to $25 million. Pursuant to the terms of the Credit Agreement, all draws under Facility 2 for letters of credit or revolving loans are secured by cash collateral in an amount equal to 100% of the aggregate stated amount of the letters of credit issued and revolving loans outstanding through draws from Facility 1 or other available cash of the Company. Accrued interest on each revolving loan is payable monthly in arrears. Revolving loans under Tranche A of Facility 1 bear interest at a rate per annum equal to the greater of (x) the Bank’s prime rate plus 2.50% and (y) 6.00%. The amount borrowed under Tranche B of Facility 1 and revolving loans under Facility 2 will bear interest at a rate per annum equal to the greater of (x) the Bank’s prime rate and (y) 3.50%. Each issuance of a letter of credit under Facility 2 requires the payment of a letter of credit fee to the Bank equal to a rate per annum of 1.75% on the daily amount available to be drawn under the letter of credit, which fee is payable in quarterly installments in arrears. Letters of credit totaling $7.2 million that were outstanding under a $9.5 million letter of credit facility previously provided to the Company by the Bank, which letter of credit facility was set to mature on April 1, 2017, are treated as letters of credit under Facility 2. The terms of the Credit Agreement provide that the Bank be paid an unused facility fee on the average daily unused balance of Facility 1 at a rate per annum equal to 0.50%, which fee is payable quarterly in arrears. In addition, the Company is required to maintain, on deposit in one or more non-interest bearing accounts, a minimum of $5 million in quarterly average aggregate balances. If in any quarter the required average aggregate account balance is not maintained, the Company is required to pay the Bank a fee of $12,500 for that quarter and, in the event that the Company terminates the Credit Facility or refinances with another lender within 18 months of closing, the Company is required to pay the Bank a breakage fee of $500,000. In addition to the foregoing, the Credit Agreement contains customary representations, warranties and affirmative and negative covenants, including financial covenants that restrict capital expenditures, prohibit the incurrence of a net loss commencing on December 31, 2018 and require a minimum adjusted EBITDA and a minimum tangible net worth which is an annual covenant, as well as events of default customary for facilities of this type. As of September 30, 2017, the Company is in compliance with all covenants. In connection with the Credit Agreement, the Company paid an origination fee in the amount of $250,000 and other fees and reimbursements that are customary for facilities of this type. The Company incurred an early termination premium of approximately $1.8 million in connection with the termination of the Prior Credit Facility. On April 28, 2017, the Company entered into an additional secured credit agreement with the Bank, pursuant to which the Company obtained a short term loan in the principal amount of $8 million, the proceeds of which were used for working capital and general corporate purposes. The loan, which had an interest rate per annum equal to the greater of the Bank’s prime rate plus 2.50% or 6.00%, was secured by real property assets located in West Palm Beach, Florida at which schools operated by the Company were located and matured upon the earlier of October 1, 2017 and the date of the sale of the West Palm Beach, Florida property. The Company sold two of three properties located in West Palm Beach, Florida in the third quarter of 2017 and concurrently repaid the $8 million. As of September 30, 2017, the Company had $17.5 million outstanding under the Credit Facility which was offset by $0.8 million of deferred finance fees. As of December 31, 2016, the Company had $44.3 million outstanding under the Prior Credit Facility which was offset by $2.3 million of deferred finance fees, which were written-off. Scheduled maturities of long-term debt at September 30, 2017 are as follows: Year ending December 31, 2017 $ - 2018 - 2019 - 2020 17,500 $ 17,500 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2017 | |
STOCKHOLDERS' EQUITY [Abstract] | |
STOCKHOLDERS' EQUITY | 5. STOCKHOLDERS’ EQUITY Restricted Stock The Company has two stock incentive plans: a Long-Term Incentive Plan (the “LTIP”) and a Non-Employee Directors Restricted Stock Plan (the “Non-Employee Directors Plan”). Under the LTIP, certain employees receive awards of restricted shares of common stock based on service and performance. The number of shares granted to each employee is based on the fair market value of a share of common stock on the date of grant. On May 13, 2016 and January 16, 2017, performance-based restricted shares were granted to certain employees of the Company, which vest on March 15, 2017 and March 15, 2018 based upon the attainment of a financial responsibility ratio during each fiscal year ending December 31, 2016 and 2017. There is no restriction on the right to vote or the right to receive dividends with respect to any of these restricted shares. On June 2, 2014 and December 18, 2014, performance-based restricted shares were granted to certain employees of the Company, which vest over three years based upon the attainment of (i) a specified operating income margin during any one or more of the fiscal years in the period beginning January 1, 2015 and ending December 31, 2017 and (ii) the attainment of earnings before interest, taxes, depreciation and amortization targets during each of the fiscal years ended December 31, 2015 through 2017. There is no restriction on the right to vote or the right to receive dividends with respect to any of these restricted shares. Pursuant to the Non-Employee Directors Plan, each non-employee director of the Company receives an annual award of restricted shares of common stock on the date of the Company’s annual meeting of shareholders. The number of shares granted to each non-employee director is based on the fair market value of a share of common stock on that date. The restricted shares vest on the first anniversary of the grant date. There is no restriction on the right to vote or the right to receive dividends with respect to any of these restricted shares. For the nine months ended September 30, 2017 and 2016, the Company completed a net share settlement for 184,231 and 38,389 restricted shares, respectively, on behalf of certain employees that participate in the LTIP upon the vesting of the restricted shares pursuant to the terms of the LTIP. The net share settlement was in connection with income taxes incurred on restricted shares that vested and were transferred to the employees during 2017 and/or 2016, creating taxable income for the employees. At the employees’ request, the Company will pay these taxes on behalf of the employees in exchange for the employees returning an equivalent value of restricted shares to the Company. These transactions resulted in a decrease of $0.4 million and $0.1 million for each of the nine months ended September 30, 2017 and 2016, respectively, to equity on the condensed consolidated balance sheets as the cash payment of the taxes effectively was a repurchase of the restricted shares granted in previous years. The following is a summary of transactions pertaining to restricted stock: Shares Weighted Average Grant Date Fair Value Per Share Nonvested restricted stock outstanding at December 31, 2016 1,143,599 $ 1.89 Granted 181,208 2.58 Canceled (52,398 ) 5.63 Vested (650,130 ) 1.74 Nonvested restricted stock outstanding at September 30, 2017 622,279 1.92 The restricted stock expense for the three months ended September 30, 2017 and 2016 was $0.3 million and $0.4 million, respectively. The restricted stock expense for the nine months ended September 30, 2017 and 2016 was $0.9 million and $1.1 million, respectively. The unrecognized restricted stock expense as of September 30, 2017 and December 31, 2016 was $0.6 million and $1.5 million, respectively. As of September 30, 2017, outstanding restricted shares under the LTIP had aggregate intrinsic value of $1.6 million. Stock Options The fair value of the stock options used to compute stock-based compensation is the estimated present value at the date of grant using the Black-Scholes option pricing model. The following is a summary of transactions pertaining to stock options: Shares Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2016 218,167 $ 12.11 3.33 years $ - Canceled (47,500 ) 12.37 - Outstanding at September 30, 2017 170,667 12.04 3.24 years - Vested or expected to vest 170,667 12.04 3.24 years - Exercisable as of September 30, 2017 170,667 12.04 3.24 years - As of September 30, 2017, there was no unrecognized pre-tax compensation expense. The following table presents a summary of stock options outstanding: At September 30, 2017 Stock Options Outstanding Stock Options Exercisable Range of Exercise Prices Shares Contractual Weighted Average Life (years) Weighted Average Price Shares Weighted Average Exercise Price $ 4.00-$13.99 122,667 3.50 $ 8.77 122,667 $ 8.77 $ 14.00-$19.99 17,000 2.09 19.98 17,000 19.98 $ 20.00-$25.00 31,000 2.85 20.62 31,000 20.62 170,667 3.24 12.04 170,667 12.04 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2017 | |
INCOME TAXES [Abstract] | |
INCOME TAXES | 6. INCOME TAXES The provision for income taxes for the three months ended September 30, 2017 and 2016 was less than $0.1 million, or 3.5% of pretax loss, and less than $0.1 million, or 11.9% of pretax loss, respectively. The provision for income taxes for the nine months ended September 30, 2017 and 2016 was $0.2 million, or 0.8% of pretax loss, and $0.2 million, or 1.6% of pretax loss, respectively. The Company assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to recover the existing deferred tax assets. In this regard, a significant objective negative evidence was the cumulative losses incurred by the Company in recent years. On the basis of this evaluation, the realization of the Company’s deferred tax assets was not deemed to be more likely than not and, thus, the Company maintained a full valuation allowance on its net deferred tax assets as of September 30, 2017. |
CONTINGENCIES
CONTINGENCIES | 9 Months Ended |
Sep. 30, 2017 | |
CONTINGENCIES [Abstract] | |
CONTINGENCIES | 7. CONTINGENCIES In the ordinary conduct of its business, the Company is subject to certain lawsuits, investigations and claims, including, but not limited to, claims involving students or graduates and routine employment matters. Although the Company cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against it, the Company does not believe that any currently pending legal proceedings to which it is a party will have a material adverse effect on the Company’s business, financial condition, and results of operations or cash flows. |
SEGMENTS
SEGMENTS | 9 Months Ended |
Sep. 30, 2017 | |
SEGMENTS [Abstract] | |
SEGMENTS | 8. SEGMENTS We currently operate in three reportable segments: (a) Transportation and Skilled Trades segment (b) Healthcare and Other Professions segment and (c) Transitional segment. Our reportable segments represent a group of post-secondary education providers that offer a variety of degree and non-degree academic programs. These segments are organized by key market segments to enhance operational alignment within each segment to more effectively execute our strategic plan. Each of the Company’s schools is a reporting unit and an operating segment which have been determined based on a method by which we evaluate performance and allocate resources. Our operating segments have been aggregated into three reportable segments because, in our judgment, the operating segments have similar services, types of customers, regulatory environment and economic characteristics. Our reportable segments are described below. Transportation and Skilled Trades – Healthcare and Other Professions – Transitional – In addition, in March 2017, the Board of Directors approved The Company continually evaluates all campuses for profitability, earning potential, and customer satisfaction. This evaluation takes several factors into consideration, including the campus’s geographic location, the programs offered at the campus, as well as skillsets required of our students by their potential employers. The purpose of this evaluation is to ensure that our programs provide our students with the best possible opportunity to succeed in the marketplace with the goals of attracting more students to our programs and, ultimately, to provide the shareholders with the maximum return on their investment. Campuses in the Transitional segment have been subject to this process and have been strategically identified for closure. We evaluate segment performance based on operating results. Adjustments to reconcile segment results to consolidated results are included under the caption “Corporate,” which primarily includes unallocated corporate activity. Summary financial information by reporting segment is as follows: For the Three Months Ended September 30, Revenue Operating Income (Loss) 2017 % of Total 2016 % of Total 2017 2016 Transportation and Skilled Trades $ 47,694 70.9 % $ 47,939 64.5 % $ 6,061 $ 6,120 Healthcare and Other Professions 18,428 27.4 % 18,559 25.0 % (574 ) (41 ) Transitional 1,186 1.8 % 7,769 10.5 % (2,495 ) (2,029 ) Corporate - 0.0 % - 0.0 % (3,723 ) (4,721 ) Total $ 67,308 100.0 % $ 74,267 100.0 % $ (731 ) $ (671 ) For the Nine Months Ended September 30, Revenue Operating Income (Loss) 2017 % of Total 2016 % of Total 2017 2016 Transportation and Skilled Trades $ 131,169 67.5 % $ 131,243 61.6 % $ 8,960 $ 11,916 Healthcare and Other Professions 55,199 28.4 % 57,030 26.8 % (1,047 ) 2,634 Transitional 8,084 4.2 % 24,718 11.6 % (3,900 ) (7,132 ) Corporate - 0.0 % - 0.0 % (16,503 ) (17,566 ) Total $ 194,452 100.0 % $ 212,991 100.0 % $ (12,490 ) $ (10,148 ) Total Assets September 30, 2017 December 31, 2016 Transportation and Skilled Trades $ 83,272 $ 83,320 Healthcare and Other Professions 10,005 7,506 Transitional 4,219 18,874 Corporate 20,063 53,507 Total $ 117,559 $ 163,207 |
FAIR VALUE
FAIR VALUE | 9 Months Ended |
Sep. 30, 2017 | |
FAIR VALUE [Abstract] | |
FAIR VALUE | 9. FAIR VALUE The carrying amount and estimated fair value of the Company’s financial instrument assets and liabilities, which are not measured at fair value on the Condensed Consolidated Balance Sheet, are listed in the table below: At September 30, 2017 Carrying Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Amount (Level 1) (Level 2) (Level 3) Total Financial Assets: Cash and cash equivalents $ 7,277 $ 7,277 $ - $ - $ 7,277 Restricted cash 7,189 7,189 - - 7,189 Prepaid expenses and other current assets 2,187 - 2,187 - 2,187 Financial Liabilities: Accrued expenses $ 14,619 $ - $ 14,619 $ - $ 14,619 Other short term liabilities 2,122 - 2,122 - 2,122 Credit facility 16,721 - 16,721 - 16,721 The fair value of the revolving credit facility approximates the carrying amount at September 30, 2017 as the instrument had variable interest rates that reflected current market rates available to the Company. The carrying amounts reported on the Consolidated Balance Sheets for Cash and cash equivalents, Restricted cash and Noncurrent restricted cash approximate fair value because they are highly liquid. The carrying amounts reported on the Consolidated Balance Sheets for Prepaid expenses and other current assets, Accrued expenses and Other short term liabilities approximate fair value due to the short-term nature of these items. |
RELATED PARTY
RELATED PARTY | 9 Months Ended |
Sep. 30, 2017 | |
RELATED PARTY [Abstract] | |
RELATED PARTY | 10. RELATED PARTY The Company has an agreement with MATCO Tools whereby MATCO provides the Company, on an advance commission basis, credits in MATCO branded tools, tool storage, equipment, and diagnostics products. The chief executive officer of the parent Company of MATCO is considered an immediate family member of one of the Company’s board members. The Company’s payable balances from this third party was immaterial at September 30, 2017 and 2016. Management believes that its agreement with MATCO is an arm’s length transaction and on similar terms as would have been obtained from unaffiliated third parties. |
SUMMARY OF SIGNIFICANT ACCOUN18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Business Activities | Business Activities — Lincoln Educational Services Corporation and its subsidiaries (collectively, the “Company”, “we”, “our” and “us”, as applicable) provide diversified career-oriented post-secondary education to recent high school graduates and working adults. The Company, which currently operates 25 schools in 15 states, We operate in three reportable business segments: (a) Transportation and Skilled Trades segment, (b) Healthcare and Other Professions (“HOPS”) segment, and (c) Transitional segment which refers to businesses that have been or are currently being taught out. In November 2015, the Board of Directors approved a plan for the Company to divest the schools included in the HOPS segment due to a strategic shift in the Company’s business strategy. The Company underwent an exhaustive process to divest the HOPS schools which proved successful in attracting various purchasers but, ultimately, did not result in a transaction that our Board believed would enhance shareholder value. When the decision was first made by the Board of Directors to divest HOPS, 18 campuses were operating in this segment. By the end of 2017, we will have strategically closed seven underperforming campuses leaving a total of eleven campuses remaining under the HOPS segment. The Company believes that the closures and planned closures of the aforementioned campuses has positioned this segment and the Company to be profitable going forward as well as maximizing returns for the Company’s shareholders. The combination of several factors, including the inability of a prospective buyer of the HOPS segment to close on the purchase, the improvements the Company has implemented in the operations of the HOPS segment, the closure of seven underperforming campuses and the change in federal government administration, resulted in the Board reevaluating its divestiture plan and the determination that shareholder value would more likely be enhanced by continuing to operate our HOPS segment as revitalized. Consequently, in the first quarter of 2017, the Board of Directors abandoned the plan to divest the HOPS segment and the Company intends to retain the HOPS segment. The results of operations of the campuses included in the HOPS segment are reflected as continuing operations in the condensed consolidated financial statements. In the fourth quarter of 2016, the Company completed the teach-out of its Hartford, Connecticut and Henderson (Green Valley), Nevada campuses which originally operated in the HOPS segment. Also in 2017, the Company completed the teach-out of its Northeast Philadelphia, Pennsylvania; Center City Philadelphia, Pennsylvania; and West Palm Beach, Florida facilities which also originally operated in the HOPS segment. In addition, in March 2017, the Board of Directors approved On August 14, 2017, New England Institute of Technology at Palm Beach, Inc., a wholly-owned subsidiary of the Company, consummated the anticipated sale of the real property located at 2400 and 2410 Metrocentre Boulevard East, West Palm Beach, Florida, including the improvements and other personal property located thereon (the “West Palm Beach Property”) to Tambone Companies, LLC (“Tambone”), pursuant to a previously disclosed purchase and sale agreement (the “West Palm Sale Agreement”) entered into on March 14, 2017. Pursuant to the terms of the West Palm Sale Agreement, as subsequently amended, the purchase price for the West Palm Beach Property was $15.8 million. As a result, the Company recorded a gain on the sale in the amount of $1.5 million. As previously disclosed, the West Palm Beach Property served as collateral for a short term loan in the principal amount of $8.0 million obtained by the Company from its lender, Sterling National Bank, on April 28, 2017, which loan matured upon the earlier of the sale of the West Palm Beach Property or October 1, 2017. Accordingly, on August 14, 2017, concurrently with the consummation of the sale of the West Palm Beach Property, the Company repaid the term loan in an aggregate amount of $8.0 million, consisting of principal and accrued interest. |
Liquidity | Liquidity — In addition to the current sources of capital discussed above that provide short term liquidity, the Company has been making efforts to sell its remaining West Palm Beach, Florida property and associated assets originally operated in the HOPS segment, which has been classified as held for sale and is expected to be sold within one year from the date of classification which was December 31, 2016. |
Basis of Presentation | Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. |
Use of Estimates in the Preparation of Financial Statements | Use of Estimates in the Preparation of Financial Statements |
New Accounting Pronouncements | New Accounting Pronouncements “Compensation—Stock Compensation (Topic 718) — Scope of Modification Accounting.” In March 2017, the FASB issued ASU 2017-07, "Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment.” Intangibles - Goodwill and Other, The FASB has recently issued several amendments to the new standard on revenue recognition, ASU 2014-09, “ Revenue from Contracts with Customers Revenue from Contracts with Customers (Topic 606)—Principal versus Agent Considerations , “Revenue from Contracts with Customers (Topic 606)—Identifying Performance Obligations and Licensing The new standard is effective for annual reporting periods beginning after December 15, 2017, with early adoption permitted for annual reporting periods beginning after December 15, 2016. We have not adopted the new standard as yet but we will adopt the new standard effective January 1, 2018 using the modified retrospective approach. The Company’s assessment of the potential impact is substantially complete based on our review of current enrollment agreements and other revenue generating contracts. We believe the timing of recognizing revenue for tuition and student fees will not significantly change. The Company is closely reviewing its book revenue stream to determine whether the performance obligation of the Company is satisfied over time and revenue is recognized over the length of the student contract, which is the Company’s current practice with respect to revenue recognition, or whether the performance obligation of the Company is satisfied at the point in time and revenue is recognized when students’ books are delivered. Additionally, we are currently assessing the impacts related to the accounting for contract assets separately from accounts receivable and are evaluating the point at which a student’s contract asset becomes a receivable. We are in the process of updating our revenue accounting policy and implementing changes to our business processes and controls in response to the new standard, as necessary. During the remainder of 2017, we are finalizing our revenue related documentation. The Company expects to adopt the new standard on a modified retrospective basis with the cumulative effect of the change reflected in retained earnings as of January 1, 2018 but not restated for prior periods. In November 2016, the FASB issued ASU 2016-18: “ Statement of Cash Flows (Topic 230): Restricted Cash In August 2016, the FASB issued ASU 2016-15, “ Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments The Company prospectively applied ASU 2016-09, “Improvements to Employee Share Based Payment Accounting,” The presentation requirements for cash flows related to employee taxes paid for withheld shares had no impact to any of the periods presented in the condensed consolidated statements of cash flows, since such cash flows have historically been presented in financing activities. In February 2016, the FASB issued guidance requiring lessees to recognize a right-of-use asset and a lease liability on the balance sheet for substantially all leases, with the exception of short-term leases. Leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the statements of income. The guidance is effective for annual periods, including interim periods within those periods, beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the impact that the update will have on our results of operations, financial condition and financial statement disclosures. |
Stock-Based Compensation | Stock-Based Compensation The Company measures the value of service and performance-based restricted stock on the fair value of a share of common stock on the date of the grant. The Company amortizes the fair value of service-based restricted stock utilizing straight-line amortization of compensation expense over the requisite service period of the grant. The Company amortizes the fair value of the performance-based restricted stock based on the determination of the probable outcome of the performance condition. If the performance condition is expected to be met, then the Company amortizes the fair value of the number of shares expected to vest utilizing straight-line basis over the requisite performance period of the grant. However, if the associated performance condition is not expected to be met, then the Company does not recognize the stock-based compensation expense. |
Income Taxes | Income Taxes – The Company Income Taxes In accordance with ASC 740, the Company assesses its deferred tax asset to determine whether all or any portion of the asset is more likely than not unrealizable. A valuation allowance is required to be established or maintained when, based on currently available information, it is more likely than not that all or a portion of a deferred tax asset will not be realized. In accordance with ASC 740, the Company’s assessment considers whether there has been sufficient income in recent years and whether sufficient income is expected in future years in order to utilize the deferred tax asset. In evaluating the realizability of deferred income tax assets, the Company considered, among other things, historical levels of income, expected future income, the expected timing of the reversals of existing temporary reporting differences, and the expected impact of tax planning strategies that may be implemented to prevent the potential loss of future income tax benefits. Significant judgment is required in determining the future tax consequences of events that have been recognized in the Company’s consolidated financial statements and/or tax returns. Differences between anticipated and actual outcomes of these future tax consequences could have a material impact on the Company’s consolidated financial position or results of operations. Changes in, among other things, income tax legislation, statutory income tax rates, or future income levels could materially impact the Company’s valuation of income tax assets and liabilities and could cause the Company’s income tax provision to vary significantly among financial reporting periods. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. During the three and nine months ended September 30, 2017 and 2016, the Company did not recognize any interest and penalties expense associated with uncertain tax positions. |
WEIGHTED AVERAGE COMMON SHARES
WEIGHTED AVERAGE COMMON SHARES (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
WEIGHTED AVERAGE COMMON SHARES [Abstract] | |
Weighted average numbers of common shares used to compute basic and diluted loss per share | The weighted average number of common shares used to compute basic and diluted loss per share for the three and nine months ended September 30, 2017 and 2016 was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Basic shares outstanding 24,023,540 23,498,904 23,866,485 23,433,015 Dilutive effect of stock options - - - - Diluted shares outstanding 24,023,540 23,498,904 23,866,485 23,433,015 |
GOODWILL AND LONG-LIVED ASSETS
GOODWILL AND LONG-LIVED ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
GOODWILL AND LONG-LIVED ASSETS [Abstract] | |
Changes in carrying amount of goodwill | The carrying amount of goodwill at September 30, 2017 and 2016 is as follows: Gross Goodwill Balance Accumulated Impairment Losses Net Goodwill Balance Balance as of January 1, 2017 $ 117,176 $ (102,640 ) $ 14,536 Adjustments - - - Balance as of September 30, 2017 $ 117,176 $ (102,640 ) $ 14,536 Gross Goodwill Balance Accumulated Impairment Losses Net Goodwill Balance Balance as of January 1, 2016 $ 117,176 $ (93,881 ) $ 23,295 Adjustments - - - Balance as of September 30, 2016 $ 117,176 $ (93,881 ) $ 23,295 |
Summary of finite-lived intangible assets | Intangible assets, which are included in other assets in the accompanying condensed consolidated balance sheets, consist of the following: Curriculum Gross carrying amount at December 31, 2016 $ 160 Adjustments - Gross carrying amount at September 30, 2017 160 Accumulated amortization at December 31, 2016 128 Amortization 11 Accumulated amortization at September 30, 2017 139 Net carrying amount at September 30, 2017 $ 21 Weighted average amortization period (years) 10 |
Summary of estimated future amortization expense | The following table summarizes the estimated future amortization expense: Year Ending December 31, Remainder of 2017 $ 4 2018 17 $ 21 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
LONG-TERM DEBT [Abstract] | |
Long-term debt | Long-term debt consist of the following: September 30, 2017 December 31, 2016 Credit agreement (a) $ 17,500 $ - Term loan (a) - 44,267 Deferred Financing Fees (779 ) (2,310 ) 16,721 41,957 Less current maturities - (11,713 ) $ 16,721 $ 30,244 |
Scheduled maturities of long-term debt | Scheduled maturities of long-term debt at September 30, 2017 are as follows: Year ending December 31, 2017 $ - 2018 - 2019 - 2020 17,500 $ 17,500 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
STOCKHOLDERS' EQUITY [Abstract] | |
Summary of transactions pertaining to restricted stock | The following is a summary of transactions pertaining to restricted stock: Shares Weighted Average Grant Date Fair Value Per Share Nonvested restricted stock outstanding at December 31, 2016 1,143,599 $ 1.89 Granted 181,208 2.58 Canceled (52,398 ) 5.63 Vested (650,130 ) 1.74 Nonvested restricted stock outstanding at September 30, 2017 622,279 1.92 |
Summary of transactions pertaining to option plans | The following is a summary of transactions pertaining to stock options: Shares Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2016 218,167 $ 12.11 3.33 years $ - Canceled (47,500 ) 12.37 - Outstanding at September 30, 2017 170,667 12.04 3.24 years - Vested or expected to vest 170,667 12.04 3.24 years - Exercisable as of September 30, 2017 170,667 12.04 3.24 years - |
Summary of options outstanding | The following table presents a summary of stock options outstanding: At September 30, 2017 Stock Options Outstanding Stock Options Exercisable Range of Exercise Prices Shares Contractual Weighted Average Life (years) Weighted Average Price Shares Weighted Average Exercise Price $ 4.00-$13.99 122,667 3.50 $ 8.77 122,667 $ 8.77 $ 14.00-$19.99 17,000 2.09 19.98 17,000 19.98 $ 20.00-$25.00 31,000 2.85 20.62 31,000 20.62 170,667 3.24 12.04 170,667 12.04 |
SEGMENTS (Tables)
SEGMENTS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
SEGMENTS [Abstract] | |
Summary financial information by reporting segment | Summary financial information by reporting segment is as follows: For the Three Months Ended September 30, Revenue Operating Income (Loss) 2017 % of Total 2016 % of Total 2017 2016 Transportation and Skilled Trades $ 47,694 70.9 % $ 47,939 64.5 % $ 6,061 $ 6,120 Healthcare and Other Professions 18,428 27.4 % 18,559 25.0 % (574 ) (41 ) Transitional 1,186 1.8 % 7,769 10.5 % (2,495 ) (2,029 ) Corporate - 0.0 % - 0.0 % (3,723 ) (4,721 ) Total $ 67,308 100.0 % $ 74,267 100.0 % $ (731 ) $ (671 ) For the Nine Months Ended September 30, Revenue Operating Income (Loss) 2017 % of Total 2016 % of Total 2017 2016 Transportation and Skilled Trades $ 131,169 67.5 % $ 131,243 61.6 % $ 8,960 $ 11,916 Healthcare and Other Professions 55,199 28.4 % 57,030 26.8 % (1,047 ) 2,634 Transitional 8,084 4.2 % 24,718 11.6 % (3,900 ) (7,132 ) Corporate - 0.0 % - 0.0 % (16,503 ) (17,566 ) Total $ 194,452 100.0 % $ 212,991 100.0 % $ (12,490 ) $ (10,148 ) Total Assets September 30, 2017 December 31, 2016 Transportation and Skilled Trades $ 83,272 $ 83,320 Healthcare and Other Professions 10,005 7,506 Transitional 4,219 18,874 Corporate 20,063 53,507 Total $ 117,559 $ 163,207 |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
FAIR VALUE [Abstract] | |
Fair value, by balance sheet grouping | The carrying amount and estimated fair value of the Company’s financial instrument assets and liabilities, which are not measured at fair value on the Condensed Consolidated Balance Sheet, are listed in the table below: At September 30, 2017 Carrying Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Amount (Level 1) (Level 2) (Level 3) Total Financial Assets: Cash and cash equivalents $ 7,277 $ 7,277 $ - $ - $ 7,277 Restricted cash 7,189 7,189 - - 7,189 Prepaid expenses and other current assets 2,187 - 2,187 - 2,187 Financial Liabilities: Accrued expenses $ 14,619 $ - $ 14,619 $ - $ 14,619 Other short term liabilities 2,122 - 2,122 - 2,122 Credit facility 16,721 - 16,721 - 16,721 |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Thousands | Aug. 14, 2017USD ($) | Oct. 31, 2017USD ($) | Sep. 30, 2017USD ($)State | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)SchoolStateCampusSegment | Sep. 30, 2016USD ($) | Apr. 28, 2017USD ($) |
Business Activities [Abstract] | |||||||
Number of schools | School | 25 | ||||||
Number of states in which schools operate across the United States | State | 15 | 15 | |||||
Number of campuses treated as destination schools | Campus | 5 | ||||||
Number of reportable segments | Segment | 3 | ||||||
Number of campuses operating under HOPS | Campus | 18 | ||||||
Number of campuses closed under HOPS | Campus | 7 | ||||||
Number of campuses remaining under HOPS | Campus | 11 | ||||||
Liquidity [Abstract] | |||||||
Cash and cash equivalents | $ 14,500 | $ 14,500 | |||||
Restricted cash | 7,200 | 7,200 | |||||
Revolving loan facility, available amount | 7,500 | 7,500 | |||||
Gain on sale of property | 1,530 | $ 7 | 1,619 | $ 402 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Income tax benefit | 50 | 50 | 150 | 150 | |||
Income Taxes [Abstract] | |||||||
Interest and penalties expense | 0 | $ 0 | 0 | 0 | |||
Subsequent Event [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Lease termination value | $ 1,500 | ||||||
West Palm Beach Property [Member] | |||||||
Liquidity [Abstract] | |||||||
Cash purchase price | $ 15,800 | $ 8,000 | |||||
Gain on sale of property | 1,500 | ||||||
Short term loan | $ 8,000 | ||||||
Repayment of term loan | $ 8,000 | ||||||
ASU 2016-09 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Income tax benefit | $ 0 | $ 0 |
WEIGHTED AVERAGE COMMON SHARE26
WEIGHTED AVERAGE COMMON SHARES (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Shares used to compute basic and diluted loss income per share [Abstract] | ||||
Basic shares outstanding (in shares) | 24,023,540 | 23,498,904 | 23,866,485 | 23,433,015 |
Dilutive effect of stock options (in shares) | 0 | 0 | 0 | 0 |
Diluted shares outstanding (in shares) | 24,023,540 | 23,498,904 | 23,866,485 | 23,433,015 |
Stock Option 2 [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive shares excluded from computation of income (loss) per share (in shares) | 552,189 | 1,181,073 | 572,428 | 668,307 |
Stock Option 1 [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive shares excluded from computation of income (loss) per share (in shares) | 170,667 | 170,667 |
GOODWILL AND LONG-LIVED ASSET27
GOODWILL AND LONG-LIVED ASSETS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
GOODWILL AND LONG-LIVED ASSETS [Abstract] | |||||||
Impairment of long-lived assets | $ 0 | $ 0 | |||||
Changes in carrying amount of goodwill [Abstract] | |||||||
Gross Goodwill Balance | $ 117,176 | 117,176 | $ 117,176 | $ 117,176 | $ 117,176 | ||
Accumulated Impairment Losses | (93,881) | (93,881) | (102,640) | (102,640) | (93,881) | ||
Adjustments | 0 | 0 | |||||
Net Goodwill Balance | 23,295 | 23,295 | 14,536 | $ 14,536 | $ 23,295 | ||
Finite-Lived Intangible Assets [Line Items] | |||||||
Net carrying amount | $ 21 | 21 | |||||
Estimated future amortization expense [Abstract] | |||||||
Remainder of 2017 | 4 | ||||||
2,018 | 17 | ||||||
Total | 21 | 21 | 21 | ||||
Maximum [Member] | |||||||
Finite-Lived Intangible Assets [Line Items] | |||||||
Amortization | 100 | 100 | 100 | 100 | |||
Transportation and Skilled Trades [Member] | |||||||
Changes in carrying amount of goodwill [Abstract] | |||||||
Net Goodwill Balance | 14,500 | 14,500 | |||||
Healthcare and Other Professions [Member] | |||||||
Changes in carrying amount of goodwill [Abstract] | |||||||
Net Goodwill Balance | $ 8,800 | $ 8,800 | |||||
Curriculum [Member] | |||||||
Finite-Lived Intangible Assets [Line Items] | |||||||
Gross carrying amount, beginning balance | 160 | ||||||
Adjustments | 0 | ||||||
Gross carrying amount, ending balance | 160 | 160 | |||||
Accumulated amortization, beginning balance | 128 | ||||||
Amortization | 11 | ||||||
Accumulated amortization, ending balance | 139 | 139 | |||||
Net carrying amount | 21 | $ 21 | |||||
Weighted average amortization period | 10 years | ||||||
Estimated future amortization expense [Abstract] | |||||||
Total | $ 21 | $ 21 | $ 21 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) | Aug. 14, 2017USD ($) | Sep. 30, 2017USD ($)Property | Mar. 31, 2017USD ($) | Sep. 30, 2017USD ($)Property | Apr. 28, 2017USD ($) | Dec. 31, 2016USD ($) | |
Long-term debt [Abstract] | |||||||
Deferred Financing Fees | $ (779,000) | $ (779,000) | $ (2,310,000) | ||||
Long term debt | 16,721,000 | 16,721,000 | 41,957,000 | ||||
Less current maturities | 0 | 0 | (11,713,000) | ||||
Long-term debt, excluding current maturities | 16,721,000 | 16,721,000 | 30,244,000 | ||||
Scheduled maturities of long-term debt [Abstract] | |||||||
2,017 | 0 | 0 | |||||
2,018 | 0 | 0 | |||||
2,019 | 0 | 0 | |||||
2,020 | 17,500,000 | 17,500,000 | |||||
Total maturities of long term debt | $ 17,500,000 | $ 17,500,000 | |||||
West Palm Beach Property [Member] | |||||||
Long-term debt [Abstract] | |||||||
Number of properties owned | Property | 3 | 3 | |||||
Short term loan | $ 8,000,000 | ||||||
Number of properties agreed to be sold | Property | 2 | ||||||
Purchase price | $ 15,800,000 | $ 8,000,000 | |||||
Credit Agreement [Member] | |||||||
Long-term debt [Abstract] | |||||||
Long-term line of credit | [1] | $ 17,500,000 | $ 17,500,000 | 0 | |||
Term of credit facility | 38 months | ||||||
Expiration date of credit facility | May 31, 2020 | ||||||
Number of properties owned | Property | 4 | 4 | |||||
Percentage of letters of credit margin against available funds in cash collateral | 100.00% | ||||||
Percentage of unused facility fee payable quarterly | 0.50% | ||||||
Minimum quarterly average aggregate balances to be maintained | $ 5,000,000 | ||||||
Bank fees if minimum quarterly average aggregate balances is not maintained | $ 12,500 | ||||||
Closing term to terminate the credit facility | 18 months | ||||||
Breakage fee | $ 500,000 | ||||||
Bank origination fee | 250,000 | $ 250,000 | |||||
Letter of Credit [Member] | |||||||
Long-term debt [Abstract] | |||||||
Line of credit facility, maximum borrowing capacity | $ 10,000,000 | ||||||
Expiration date of credit facility | Apr. 1, 2017 | ||||||
Percentage of letter of credit fee, quarterly installment | 1.75% | ||||||
Letters of credit outstanding | 7,200,000 | $ 7,200,000 | 6,200,000 | ||||
Maximum availability under the facility previously provided | 9,500,000 | 9,500,000 | |||||
Term Loan [Member] | |||||||
Long-term debt [Abstract] | |||||||
Long-term line of credit | [1] | 0 | 0 | 44,267,000 | |||
Revolving Credit Facility 2 [Member] | |||||||
Long-term debt [Abstract] | |||||||
Line of credit facility, maximum borrowing capacity | 25,000,000 | ||||||
Line of credit facility, amount outstanding | 0 | 0 | |||||
Prior Credit Agreement [Member] | |||||||
Long-term debt [Abstract] | |||||||
Long-term line of credit | $ 44,300,000 | ||||||
Termination premium incurred | 1,800,000 | ||||||
Credit Facility 1 [Member] | |||||||
Long-term debt [Abstract] | |||||||
Line of credit facility, maximum borrowing capacity | 30,000,000 | ||||||
Outstanding principal balance after released from the pledged account | 25,000,000 | 25,000,000 | |||||
Line of credit facility, amount outstanding | 17,500,000 | $ 17,500,000 | |||||
Minimum [Member] | Prime Rate [Member] | |||||||
Long-term debt [Abstract] | |||||||
Interest rate on credit facility | 2.50% | ||||||
Maximum [Member] | Prime Rate [Member] | |||||||
Long-term debt [Abstract] | |||||||
Interest rate on credit facility | 6.00% | ||||||
Maximum [Member] | Credit Agreement [Member] | |||||||
Long-term debt [Abstract] | |||||||
Line of credit facility, maximum borrowing capacity | 55,000,000 | ||||||
Tranche A [Member] | Credit Agreement [Member] | |||||||
Long-term debt [Abstract] | |||||||
Long-term line of credit | 25,000,000 | $ 25,000,000 | |||||
Tranche A [Member] | Revolving Credit Facility 1 [Member] | |||||||
Long-term debt [Abstract] | |||||||
Line of credit facility, maximum borrowing capacity | 25,000,000 | ||||||
Amount borrowed for working capital | 1,800,000 | $ 1,800,000 | |||||
Interest rate on credit facility | 6.00% | ||||||
Tranche A [Member] | Revolving Credit Facility 1 [Member] | Prime Rate [Member] | |||||||
Long-term debt [Abstract] | |||||||
Interest rate on credit facility | 2.50% | ||||||
Tranche B [Member] | Credit Agreement [Member] | |||||||
Long-term debt [Abstract] | |||||||
Long-term line of credit | 5,000,000 | $ 5,000,000 | |||||
Tranche B [Member] | Non-Revolving Credit Facility [Member] | |||||||
Long-term debt [Abstract] | |||||||
Line of credit facility, maximum borrowing capacity | $ 5,000,000 | ||||||
Outstanding principal balance after released from the pledged account | $ 0 | $ 0 | |||||
Tranche B [Member] | Non-Revolving Credit Facility [Member] | Prime Rate [Member] | |||||||
Long-term debt [Abstract] | |||||||
Interest rate on credit facility | 3.50% | ||||||
Tranche B [Member] | Revolving Credit Facility 2 [Member] | Prime Rate [Member] | |||||||
Long-term debt [Abstract] | |||||||
Interest rate on credit facility | 3.50% | ||||||
[1] | On March 31, 2017, the Company entered into a secured revolving credit agreement (the "Credit Agreement") with Sterling National Bank (the "Bank") pursuant to which the Company obtained a credit facility in the aggregate principal amount of up to $55 million (the "Credit Facility"). The Credit Facility consists of (a) a $30 million loan facility ("Facility 1"), which is comprised of a $25 million revolving loan designated as "Tranche A" and a $5 million non-revolving loan designated as "Tranche B," which Tranche B was repaid during the quarter ended June 30, 2017, and (b) a $25 million revolving loan facility ("Facility 2"), which includes a sublimit amount for letters of credit of $10 million. The Credit Facility replaces a term loan facility (the "Prior Credit Facility") which was repaid and terminated concurrently with the effectiveness of the Credit Facility. The term of the Credit Facility is 38 months, maturing on May 31, 2020. The Credit Facility is secured by a first priority lien in favor of the Bank on substantially all of the personal property owned by the Company as well as mortgages on four parcels of real property owned by the Company in Connecticut, Colorado, Tennessee and Texas at which four of the Company's schools are located. At the closing of the Credit Facility, the Company drew $25 million under Tranche A of Facility 1, which, pursuant to the terms of the Credit Agreement, was used to repay the Prior Credit Facility and to pay transaction costs associated with closing the Credit Facility. After the disbursement of such amounts, the Company retained approximately $1.8 million of the borrowed amount for working capital purposes. Also, at closing, $5 million was drawn under Tranche B, which, pursuant to the terms of the Credit Agreement, was deposited into an interest-bearing pledged account (the "Pledged Account") in the name of the Company maintained at the Bank in order to secure payment obligations of the Company with respect to the costs of remediation of any environmental contamination discovered at certain of the mortgaged properties based upon environmental studies undertaken at such properties. During the quarter ended June 30, 2017, the environmental studies were completed and revealed no environmental issues existing at the properties and accordingly, pursuant to the terms of the Credit Agreement, the $5 million in the Pledged Account was released and used to repay the non-revolving loan outstanding under Tranche B. Upon the repayment of Tranche B, the maximum principal amount of Facility 1 was permanently reduced to $25 million. Pursuant to the terms of the Credit Agreement, all draws under Facility 2 for letters of credit or revolving loans are secured by cash collateral in an amount equal to 100% of the aggregate stated amount of the letters of credit issued and revolving loans outstanding through draws from Facility 1 or other available cash of the Company. Accrued interest on each revolving loan is payable monthly in arrears. Revolving loans under Tranche A of Facility 1 bear interest at a rate per annum equal to the greater of (x) the Bank's prime rate plus 2.50% and (y) 6.00%. The amount borrowed under Tranche B of Facility 1 and revolving loans under Facility 2 will bear interest at a rate per annum equal to the greater of (x) the Bank's prime rate and (y) 3.50%. Each issuance of a letter of credit under Facility 2 requires the payment of a letter of credit fee to the Bank equal to a rate per annum of 1.75% on the daily amount available to be drawn under the letter of credit, which fee is payable in quarterly installments in arrears. Letters of credit totaling $7.2 million that were outstanding under a $9.5 million letter of credit facility previously provided to the Company by the Bank, which letter of credit facility was set to mature on April 1, 2017, are treated as letters of credit under Facility 2. The terms of the Credit Agreement provide that the Bank be paid an unused facility fee on the average daily unused balance of Facility 1 at a rate per annum equal to 0.50%, which fee is payable quarterly in arrears. In addition, the Company is required to maintain, on deposit in one or more non-interest bearing accounts, a minimum of $5 million in quarterly average aggregate balances. If in any quarter the required average aggregate account balance is not maintained, the Company is required to pay the Bank a fee of $12,500 for that quarter and, in the event that the Company terminates the Credit Facility or refinances with another lender within 18 months of closing, the Company is required to pay the Bank a breakage fee of $500,000. In addition to the foregoing, the Credit Agreement contains customary representations, warranties and affirmative and negative covenants, including financial covenants that restrict capital expenditures, prohibit the incurrence of a net loss commencing on December 31, 2018 and require a minimum adjusted EBITDA and a minimum tangible net worth which is an annual covenant, as well as events of default customary for facilities of this type. As of September 30, 2017, the Company is in compliance with all covenants. In connection with the Credit Agreement, the Company paid an origination fee in the amount of $250,000 and other fees and reimbursements that are customary for facilities of this type. The Company incurred an early termination premium of approximately $1.8 million in connection with the termination of the Prior Credit Facility. On April 28, 2017, the Company entered into an additional secured credit agreement with the Bank, pursuant to which the Company obtained a short term loan in the principal amount of $8 million, the proceeds of which were used for working capital and general corporate purposes. The loan, which had an interest rate per annum equal to the greater of the Bank's prime rate plus 2.50% or 6.00%, was secured by real property assets located in West Palm Beach, Florida at which schools operated by the Company were located and matured upon the earlier of October 1, 2017 and the date of the sale of the West Palm Beach, Florida property. The Company sold two of three properties located in West Palm Beach, Florida in the third quarter of 2017 and concurrently repaid the $8 million. As of September 30, 2017, the Company had $17.5 million outstanding under the Credit Facility which was offset by $0.8 million of deferred finance fees. As of December 31, 2016, the Company had $44.3 million outstanding under the Prior Credit Facility which was offset by $2.3 million of deferred finance fees, which were written-off. As of September 30, 2017 and December 31, 2016, there were letters of credit in the aggregate principal amount of $7.2 million and $6.2 million outstanding, respectively. |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017USD ($)$ / sharesshares | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)Plan$ / sharesshares | Sep. 30, 2016USD ($)shares | Dec. 31, 2016USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of stock incentive plans | Plan | 2 | ||||
Shares [Abstract] | |||||
Outstanding, beginning balance (in shares) | shares | 218,167 | ||||
Canceled (in shares) | shares | (47,500) | ||||
Outstanding, ending balance (in shares) | shares | 170,667 | 170,667 | 218,167 | ||
Vested or expected to vest (in shares) | shares | 170,667 | 170,667 | |||
Exercisable, ending balance (in shares) | shares | 170,667 | 170,667 | |||
Weighted Average Exercise Price Per Share [Abstract] | |||||
Outstanding, beginning balance (in dollars per share) | $ 12.11 | ||||
Cancelled (in dollars per share) | 12.37 | ||||
Outstanding, ending balance (in dollars per share) | $ 12.04 | 12.04 | $ 12.11 | ||
Vested or expected to vest (in dollars per share) | 12.04 | 12.04 | |||
Exercisable, ending balance (in dollars per share) | $ 12.04 | $ 12.04 | |||
Weighted Average Remaining Contractual Term [Abstract] | |||||
Outstanding | 3 years 2 months 26 days | 3 years 3 months 29 days | |||
Vested or expected to vest | 3 years 2 months 26 days | ||||
Exercisable | 3 years 2 months 26 days | ||||
Aggregate Intrinsic Value [Abstract] | |||||
Outstanding, beginning balance | $ | $ 0 | ||||
Canceled | $ | 0 | ||||
Outstanding, ending balance | $ | $ 0 | 0 | $ 0 | ||
Vested or expected to vest | $ | 0 | 0 | |||
Exercisable, ending balance | $ | $ 0 | $ 0 | |||
Stock Options Outstanding [Abstract] | |||||
Shares (in shares) | shares | 170,667 | 170,667 | |||
Contractual Weighted Average Life | 3 years 2 months 26 days | ||||
Weighted Average Price (in dollars per share) | $ 12.04 | $ 12.04 | |||
Stock Options Exercisable [Abstract] | |||||
Shares (in shares) | shares | 170,667 | 170,667 | |||
Weighted Exercise Price (in dollars per share) | $ 12.04 | $ 12.04 | |||
Stock Options [Member] | |||||
Aggregate Intrinsic Value [Abstract] | |||||
Unrecognized pre-tax compensation expense | $ | $ 0 | $ 0 | |||
Restricted Stock [Member] | |||||
Shares [Abstract] | |||||
Nonvested restricted stock outstanding, beginning balance (in shares) | shares | 1,143,599 | ||||
Granted (in shares) | shares | 181,208 | ||||
Canceled (in shares) | shares | (52,398) | ||||
Vested (in shares) | shares | (650,130) | ||||
Nonvested restricted stock outstanding, ending balance (in shares) | shares | 622,279 | 622,279 | 1,143,599 | ||
Weighted Average Grant Date Fair Value [Abstract] | |||||
Nonvested restricted stock outstanding, beginning balance (in dollars per share) | $ 1.89 | ||||
Granted (in dollars per share) | 2.58 | ||||
Canceled (in dollars per share) | 5.63 | ||||
Vested (in dollars per share) | 1.74 | ||||
Nonvested restricted stock outstanding, ending balance (in dollars per share) | $ 1.92 | $ 1.92 | $ 1.89 | ||
Recognized restricted stock expense | $ | $ 300 | $ 400 | $ 900 | $ 1,100 | |
Unrecognized restricted stock expense | $ | 600 | $ 600 | $ 1,500 | ||
LTIP [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Net share settlement for restricted stock (in shares) | shares | 184,231 | 38,389 | |||
Decrease in equity due to payment of tax for employee | $ | $ 400 | $ 100 | |||
LTIP [Member] | June 2, 2014 [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting period of performance-based shares | 3 years | ||||
Specified operating income margin period | 1 year | ||||
LTIP [Member] | December 18, 2014 [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting period of performance-based shares | 3 years | ||||
Specified operating income margin period | 1 year | ||||
LTIP [Member] | Restricted Stock [Member] | |||||
Weighted Average Grant Date Fair Value [Abstract] | |||||
Outstanding restricted shares, intrinsic value | $ | $ 1,600 | $ 1,600 | |||
$ 4.00-$13.99 [Member] | |||||
Range of Exercise Prices [Abstract] | |||||
Range of Exercise Prices, Minimum (in dollars per share) | $ 4 | ||||
Range of Exercise Prices, Maximum (in dollars per share) | $ 13.99 | ||||
Stock Options Outstanding [Abstract] | |||||
Shares (in shares) | shares | 122,667 | 122,667 | |||
Contractual Weighted Average Life | 3 years 6 months | ||||
Weighted Average Price (in dollars per share) | $ 8.77 | $ 8.77 | |||
Stock Options Exercisable [Abstract] | |||||
Shares (in shares) | shares | 122,667 | 122,667 | |||
Weighted Exercise Price (in dollars per share) | $ 8.77 | $ 8.77 | |||
$ 14.00-$19.99 [Member] | |||||
Range of Exercise Prices [Abstract] | |||||
Range of Exercise Prices, Minimum (in dollars per share) | 14 | ||||
Range of Exercise Prices, Maximum (in dollars per share) | $ 19.99 | ||||
Stock Options Outstanding [Abstract] | |||||
Shares (in shares) | shares | 17,000 | 17,000 | |||
Contractual Weighted Average Life | 2 years 1 month 2 days | ||||
Weighted Average Price (in dollars per share) | $ 19.98 | $ 19.98 | |||
Stock Options Exercisable [Abstract] | |||||
Shares (in shares) | shares | 17,000 | 17,000 | |||
Weighted Exercise Price (in dollars per share) | $ 19.98 | $ 19.98 | |||
$ 20.00-$25.00 [Member] | |||||
Range of Exercise Prices [Abstract] | |||||
Range of Exercise Prices, Minimum (in dollars per share) | 20 | ||||
Range of Exercise Prices, Maximum (in dollars per share) | $ 25 | ||||
Stock Options Outstanding [Abstract] | |||||
Shares (in shares) | shares | 31,000 | 31,000 | |||
Contractual Weighted Average Life | 2 years 10 months 6 days | ||||
Weighted Average Price (in dollars per share) | $ 20.62 | $ 20.62 | |||
Stock Options Exercisable [Abstract] | |||||
Shares (in shares) | shares | 31,000 | 31,000 | |||
Weighted Exercise Price (in dollars per share) | $ 20.62 | $ 20.62 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
INCOME TAXES [Abstract] | ||||
Provision for income taxes | $ 50 | $ 50 | $ 150 | $ 150 |
Effective income tax rate | 3.50% | 11.90% | 0.80% | 1.60% |
SEGMENTS (Details)
SEGMENTS (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)Segment | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
SEGMENTS [Abstract] | |||||
Number of reportable segments | Segment | 3 | ||||
Summary financial information by reporting segment [Abstract] | |||||
Revenues | $ 67,308 | $ 74,267 | $ 194,452 | $ 212,991 | |
Percentage of Total Revenue | 100.00% | 100.00% | 100.00% | 100.00% | |
Operating Income (Loss) | $ (731) | $ (671) | $ (12,490) | $ (10,148) | |
Assets | 117,559 | 117,559 | $ 163,207 | ||
Reportable Segments [Member] | Transportation and Skilled Trades [Member] | |||||
Summary financial information by reporting segment [Abstract] | |||||
Revenues | $ 47,694 | $ 47,939 | $ 131,169 | $ 131,243 | |
Percentage of Total Revenue | 70.90% | 64.50% | 67.50% | 61.60% | |
Operating Income (Loss) | $ 6,061 | $ 6,120 | $ 8,960 | $ 11,916 | |
Assets | 83,272 | 83,272 | 83,320 | ||
Reportable Segments [Member] | Healthcare and Other Professions [Member] | |||||
Summary financial information by reporting segment [Abstract] | |||||
Revenues | $ 18,428 | $ 18,559 | $ 55,199 | $ 57,030 | |
Percentage of Total Revenue | 27.40% | 25.00% | 28.40% | 26.80% | |
Operating Income (Loss) | $ (574) | $ (41) | $ (1,047) | $ 2,634 | |
Assets | 10,005 | 10,005 | 7,506 | ||
Reportable Segments [Member] | Transitional [Member] | |||||
Summary financial information by reporting segment [Abstract] | |||||
Revenues | $ 1,186 | $ 7,769 | $ 8,084 | $ 24,718 | |
Percentage of Total Revenue | 1.80% | 10.50% | 4.20% | 11.60% | |
Operating Income (Loss) | $ (2,495) | $ (2,029) | $ (3,900) | $ (7,132) | |
Assets | 4,219 | 4,219 | 18,874 | ||
Corporate [Member] | |||||
Summary financial information by reporting segment [Abstract] | |||||
Revenues | $ 0 | $ 0 | $ 0 | $ 0 | |
Percentage of Total Revenue | 0.00% | 0.00% | 0.00% | 0.00% | |
Operating Income (Loss) | $ (3,723) | $ (4,721) | $ (16,503) | $ (17,566) | |
Assets | $ 20,063 | $ 20,063 | $ 53,507 |
FAIR VALUE (Details)
FAIR VALUE (Details) $ in Thousands | Sep. 30, 2017USD ($) |
Carrying Amount [Member] | |
Financial Assets [Abstract] | |
Cash and cash equivalents | $ 7,277 |
Restricted cash | 7,189 |
Prepaid expenses and other current assets | 2,187 |
Financial Liabilities [Abstract] | |
Accrued expenses | 14,619 |
Other short-term liabilities | 2,122 |
Credit facility | 16,721 |
Fair Value [Member] | |
Financial Assets [Abstract] | |
Cash and cash equivalents | 7,277 |
Restricted cash | 7,189 |
Prepaid expenses and other current assets | 2,187 |
Financial Liabilities [Abstract] | |
Accrued expenses | 14,619 |
Other short-term liabilities | 2,122 |
Credit facility | 16,721 |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value [Member] | |
Financial Assets [Abstract] | |
Cash and cash equivalents | 7,277 |
Restricted cash | 7,189 |
Prepaid expenses and other current assets | 0 |
Financial Liabilities [Abstract] | |
Accrued expenses | 0 |
Other short-term liabilities | 0 |
Credit facility | 0 |
Significant Other Observable Inputs (Level 2) [Member] | Fair Value [Member] | |
Financial Assets [Abstract] | |
Cash and cash equivalents | 0 |
Restricted cash | 0 |
Prepaid expenses and other current assets | 2,187 |
Financial Liabilities [Abstract] | |
Accrued expenses | 14,619 |
Other short-term liabilities | 2,122 |
Credit facility | 16,721 |
Significant Unobservable Inputs (Level 3) [Member] | Fair Value [Member] | |
Financial Assets [Abstract] | |
Cash and cash equivalents | 0 |
Restricted cash | 0 |
Prepaid expenses and other current assets | 0 |
Financial Liabilities [Abstract] | |
Accrued expenses | 0 |
Other short-term liabilities | 0 |
Credit facility | $ 0 |