Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 02, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | BRIDGEPOINT EDUCATION INC | |
Entity Central Index Key | 0001305323 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q/A | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | true | |
Amendment Description | Amended to reflect restatement for Revenue, Accounts Receivable, Deferred Revenue and Restricted Cash | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 27,142,295 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 163,091 | $ 185,098 |
Restricted cash | 19,786 | 20,428 |
Investments | 2,203 | 2,065 |
Accounts receivable, net | 28,920 | 24,174 |
Prepaid expenses and other current assets | 20,427 | 22,388 |
Total current assets | 234,427 | 254,153 |
Property and equipment, net | 14,715 | 10,434 |
Goodwill and intangibles, net | 13,332 | 14,593 |
Other long-term assets | 8,688 | 5,456 |
Total assets | 271,162 | 284,636 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 58,369 | 71,165 |
Deferred revenue and student deposits | 58,399 | 70,766 |
Total current liabilities | 116,768 | 141,931 |
Rent liability | 4,790 | 7,001 |
Other long-term liabilities | 9,819 | 12,708 |
Total liabilities | 131,377 | 161,640 |
Commitments and contingencies (see Note 15) | ||
Preferred stock, $0.01 par value: | ||
20,000 shares authorized; zero shares issued and outstanding at both September 30, 2018, and December 31, 2017 | 0 | 0 |
Common stock, $0.01 par value: | ||
300,000 shares authorized; 65,257 and 64,887 issued, and 27,136 and 27,158 outstanding, at September 30, 2018 and December 31, 2017, respectively | 653 | 649 |
Additional paid-in capital | 203,913 | 201,755 |
Retained earnings | 443,407 | 426,356 |
Treasury stock, 38,121 shares at cost at September 30, 2018, and 37,729 shares at cost at December 31, 2017 | (508,188) | (505,764) |
Total stockholders' equity | 139,785 | 122,996 |
Total liabilities and stockholders' equity | 271,162 | 284,636 |
Retained Earnings | ||
Common stock, $0.01 par value: | ||
Total stockholders' equity | $ 443,407 | $ 426,356 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets - Parenthetical - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Stockholders' equity: | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 65,257,000 | 64,887,000 |
Common stock, shares outstanding | 27,136,000 | 27,158,000 |
Treasury stock, shares at cost | 38,121,000 | 37,729,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Revenues | $ 112,846 | $ 118,419 | $ 348,660 | $ 370,061 |
Costs and expenses: | ||||
Instructional costs and services | 55,109 | 56,741 | 166,120 | 180,532 |
Admissions advisory and marketing | 41,902 | 43,669 | 129,971 | 132,133 |
General and administrative | 13,731 | 11,441 | 39,028 | 37,019 |
Legal settlement expense | 0 | 0 | 141 | 0 |
Restructuring and impairment expense | 1,225 | 8,004 | 3,795 | 8,004 |
Total costs and expenses | 111,967 | 119,855 | 339,055 | 357,688 |
Operating income (loss) | 879 | (1,436) | 9,605 | 12,373 |
Other income, net | 367 | 381 | 899 | 1,165 |
Income (loss) before income taxes | 1,246 | (1,055) | 10,504 | 13,538 |
Income tax benefit | (415) | (1,161) | (7,547) | (718) |
Net income | $ 1,661 | $ 106 | $ 18,051 | $ 14,256 |
Income per share: | ||||
Basic (in usd per share) | $ 0.06 | $ 0 | $ 0.67 | $ 0.43 |
Diluted (in usd per share) | $ 0.06 | $ 0 | $ 0.66 | $ 0.42 |
Weighted average number of common shares outstanding used in computing income per share: | ||||
Basic (in shares) | 27,061 | 29,123 | 27,131 | 33,333 |
Diluted (in shares) | 27,589 | 29,671 | 27,532 | 34,193 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 1,661 | $ 106 | $ 18,051 | $ 14,256 |
Other comprehensive income, net of tax: | ||||
Unrealized gains on investments | 0 | 0 | 0 | 1 |
Comprehensive income | $ 1,661 | $ 106 | $ 18,051 | $ 14,257 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income | Treasury Stock |
Balance, shares at Dec. 31, 2016 | 64,035 | |||||
Balance at Dec. 31, 2016 | $ 276,670 | $ 641 | $ 195,854 | $ (1) | $ (337,069) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation | 2,834 | 2,834 | ||||
Exercise of stock options, shares | 479 | |||||
Exercise of stock options | 3,799 | $ 4 | 3,795 | |||
Stock issued under employee stock purchase plan, shares | 15 | |||||
Stock issued under employee stock purchase plan | 141 | $ 0 | 141 | |||
Stock issued under stock incentive plan, net of shares held for taxes, shares | 265 | |||||
Stock issued under stock incentive plan, net of shares held for taxes | (1,762) | $ 3 | (1,765) | |||
Stock repurchase | (152,000) | (152,000) | ||||
Net income | 14,256 | $ 14,256 | ||||
Unrealized gains on investments, net of tax | 1 | 1 | ||||
Balance, shares at Sep. 30, 2017 | 64,794 | |||||
Balance at Sep. 30, 2017 | 143,939 | $ 648 | 200,859 | 0 | (489,069) | |
Balance, shares at Dec. 31, 2017 | 64,887 | |||||
Balance at Dec. 31, 2017 | 122,996 | $ 649 | 201,755 | 426,356 | 0 | (505,764) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Adoption of accounting standards | (1,000) | (1,000) | ||||
Stock-based compensation | 3,590 | 3,590 | ||||
Exercise of stock options, shares | 122 | |||||
Exercise of stock options | 455 | $ 2 | 453 | |||
Tax withholdings related to net issuance of stock options | (1,097) | (1,097) | ||||
Stock issued under employee stock purchase plan, shares | 16 | |||||
Stock issued under employee stock purchase plan | 98 | $ 0 | 98 | |||
Stock issued under stock incentive plan, net of shares held for taxes, shares | 232 | |||||
Stock issued under stock incentive plan, net of shares held for taxes | (884) | $ 2 | (886) | |||
Stock repurchase | (2,424) | (2,424) | ||||
Net income | 18,051 | 18,051 | ||||
Unrealized gains on investments, net of tax | 0 | |||||
Balance, shares at Sep. 30, 2018 | 65,257 | |||||
Balance at Sep. 30, 2018 | $ 139,785 | $ 653 | $ 203,913 | $ 443,407 | $ 0 | $ (508,188) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 18,051 | $ 14,256 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Provision for bad debts | 19,339 | 23,028 |
Depreciation and amortization | 5,200 | 6,821 |
Amortization of premium/discount | 0 | 20 |
Deferred income taxes | 54 | 25 |
Stock-based compensation | 3,590 | 2,834 |
Net gain on marketable securities | (63) | (193) |
Reassessment of lease charges | 1,864 | 5,829 |
Loss on disposal or impairment of fixed assets | 334 | 66 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (25,418) | (30,003) |
Prepaid expenses and other current assets | 1,962 | (1,081) |
Other long-term assets | 2,082 | (3,164) |
Accounts payable and accrued liabilities | (14,743) | (13,920) |
Deferred revenue and student deposits | (12,034) | (11,857) |
Other liabilities | (10,886) | (9,405) |
Net cash used in operating activities | (10,668) | (16,744) |
Cash flows from investing activities: | ||
Capital expenditures | (1,696) | (2,876) |
Purchases of investments | (1,050) | (83) |
Capitalized costs for intangible assets | (700) | (438) |
Sales of investments | 975 | 0 |
Maturities of investments | 0 | 22,725 |
Net cash (used in) provided by investing activities | (2,471) | 19,328 |
Cash flows from financing activities: | ||
Proceeds from exercise of stock options | 455 | 3,799 |
Proceeds from the issuance of stock under employee stock purchase plan | 98 | 141 |
Repurchase of common stock | (2,424) | (152,000) |
Net cash used in financing activities | (3,852) | (149,822) |
Net decrease in cash, cash equivalents and restricted cash | (16,991) | (147,238) |
Cash, cash equivalents and restricted cash at beginning of period | 205,526 | 332,335 |
Cash, cash equivalents and restricted cash at end of period | 188,535 | 185,097 |
Supplemental disclosure of non-cash transactions: | ||
Purchase of equipment included in accounts payable and accrued liabilities | 462 | 67 |
Issuance of common stock for vested restricted stock units | 2,569 | 4,520 |
Fair Value of Assets Acquired | 6,076 | 0 |
Total cash, cash equivalents and restricted cash | 205,526 | 332,335 |
Stock options | ||
Cash flows from financing activities: | ||
Tax withholdings on issuance of stock awards | (1,097) | 0 |
Restricted Stock Units | ||
Cash flows from financing activities: | ||
Tax withholdings on issuance of stock awards | $ (884) | $ (1,762) |
Nature of Business
Nature of Business | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | Nature of Business Bridgepoint Education, Inc. (together with its subsidiaries, the “Company”), incorporated in 1999, is a provider of postsecondary education services. Its wholly-owned subsidiary, Ashford University ® , is a regionally accredited academic institution, which delivers programs primarily online. Ashford University offers associate’s, bachelor’s, master’s and doctoral programs. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Principles of Consolidation The condensed consolidated financial statements include the accounts of Bridgepoint Education, Inc. and its wholly owned subsidiaries. Intercompany transactions have been eliminated in consolidation. Unaudited Interim Financial Information The condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for complete annual financial statements and should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 , which was filed with the Securities and Exchange Commission (“SEC”) on February 21, 2018 . In the opinion of management, the condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, considered necessary to present a fair statement of the Company’s condensed consolidated financial position, results of operations and cash flows as of and for the periods presented. Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements. Actual results could differ from those estimates. Restatement of Previously Issued Consolidated Financial Statements Subsequent to the issuance of the Company’s unaudited condensed consolidated financial statements as of, and for the three and nine months ended September 30, 2018, the Company determined that such financial statements had errors related to: (i) revenue for the Full Tuition Grant program portion of our student contracts which was misstated due to allowances that had not been properly determined and computational errors, which also resulted in misstatements in accounts receivable and its provision for bad debts, deferred revenue and student deposits, and the related income tax impact; (ii) classification error of $5.7 million between restricted cash and other long term-assets as of September 30, 2018 related to a long-term letter of credit issued as collateral for the build-to-suit lease, and (iii) a misstatement in the adjustment to beginning retained earnings as of January 1, 2018 as a result of the incorrect adoption of ASU 2014-09, Revenue from Contracts with Customers, or Accounting Standards Codification Topic 606 (“ASC 606”) as it relates to the Full Tuition Grant Program, resulting in a decrease of $2.2 million from the amount previously reported of $3.2 million to $1.0 million , as restated. As a result, the Company has restated the accompanying condensed consolidated financial statements from amounts previously reported to correct these matters. The restatement does not impact net cash flows used in operations in any period. Management considers the restatement of financial statements prior to September 30, 2018 to be immaterial. The following tables present a summary of the impact of the restatement corrections and other immaterial adjustments on the condensed consolidated balance sheets as of September 30, 2018 and December 31, 2017, and the condensed consolidated statements of income (loss), comprehensive income, and cash flows for the three and nine months ended September 30, 2018 and 2017. The following tables are presented in thousands, except per share data: As Reported As Restated As Reported As Restated Condensed consolidated balance sheet data: September 30, 2018 December 31, 2017 Restricted cash $ 25,444 $ 19,786 $ 20,428 $ 20,428 Accounts receivable, net $ 33,566 $ 28,920 $ 27,077 $ 24,174 Prepaid expenses and other current assets $ 20,361 $ 20,427 $ 22,388 $ 22,388 Total current assets $ 244,665 $ 234,427 $ 257,056 $ 254,153 Other long-term assets $ 3,030 $ 8,688 $ 5,456 $ 5,456 Total assets $ 275,742 $ 271,162 $ 287,539 $ 284,636 Deferred revenue and student deposits $ 53,870 $ 58,399 $ 68,207 $ 70,766 Total current liabilities $ 112,239 $ 116,768 $ 139,372 $ 141,931 Other long-term liabilities $ 9,835 $ 9,819 $ 12,708 $ 12,708 Total liabilities $ 126,864 $ 131,377 $ 159,081 $ 161,640 Retained earnings $ 452,500 $ 443,407 $ 431,818 $ 426,356 Total stockholders’ equity $ 148,878 $ 139,785 $ 128,458 $ 122,996 Total liabilities and stockholders’ equity $ 275,742 $ 271,162 $ 287,539 $ 284,636 As Reported As Restated As Reported As Restated As Reported As Restated As Reported As Restated Three Months Ended Nine Months Ended Condensed consolidated statements of income (loss) and comprehensive income data: September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017 Revenue $ 114,858 $ 112,846 $ 119,367 $ 118,419 $ 353,723 $ 348,660 $ 373,438 $ 370,061 Instructional costs and services $ 54,470 $ 55,109 $ 57,756 $ 56,741 $ 165,318 $ 166,120 $ 181,943 $ 180,532 Total costs and expenses $ 111,328 $ 111,967 $ 120,870 $ 119,855 $ 338,253 $ 339,055 $ 359,099 $ 357,688 Operating income (loss) $ 3,530 $ 879 $ (1,503 ) $ (1,436 ) $ 15,470 $ 9,605 $ 14,339 $ 12,373 Income (loss) before income taxes $ 3,897 $ 1,246 $ (1,122 ) $ (1,055 ) $ 16,369 $ 10,504 $ 15,504 $ 13,538 Income tax benefit $ (408 ) $ (415 ) $ (1,161 ) $ (1,161 ) $ (7,464 ) $ (7,547 ) $ (718 ) $ (718 ) Net income $ 4,305 $ 1,661 $ 39 $ 106 $ 23,833 $ 18,051 $ 16,222 $ 14,256 Basic earnings per share $ 0.16 $ 0.06 $ 0.00 $ 0.00 $ 0.88 $ 0.67 $ 0.49 $ 0.43 Diluted earnings per share $ 0.16 $ 0.06 $ 0.00 $ 0.00 $ 0.87 $ 0.66 $ 0.47 $ 0.42 Comprehensive income $ 4,305 $ 1,661 $ 39 $ 106 $ 23,833 $ 18,051 $ 16,223 $ 14,257 As Reported As Restated As Reported As Restated Nine Months Ended Condensed consolidated statement of cash flow data: September 30, 2018 September 30, 2017 Net income $ 23,833 $ 18,051 $ 16,222 $ 14,256 Provision for bad debts $ 18,538 $ 19,339 $ 24,440 $ 23,028 Accounts receivable $ (27,713 ) $ (25,418 ) $ (32,286 ) $ (30,003 ) Prepaid expenses and other current assets $ 2,027 $ 1,962 $ (1,081 ) $ (1,081 ) Deferred revenue and student deposits $ (14,801 ) $ (12,034 ) $ (12,952 ) $ (11,857 ) Other liabilities $ (10,870 ) $ (10,886 ) $ (9,405 ) $ (9,405 ) Cash flows used in operating activities $ (10,668 ) $ (10,668 ) $ (16,744 ) $ (16,744 ) The following table presents a summary of the impact to retained earnings and total stockholders’ equity in the condensed consolidated statement of stockholders’ equity as of the dates indicated: As Reported As Restated As Reported As Restated Condensed consolidated statement of stockholders equity data: September 30, 2017 December 31, 2016 Retained earnings $ 437,503 $ 431,501 $ 421,281 $ 417,245 Total stockholders’ equity $ 149,941 $ 143,939 $ 280,706 $ 276,670 Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers, or Accounting Standards Codification Topic 606 (“ASC 606”), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition (“ASC 605”). This literature is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The accounting guidance also requires additional disclosure regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, as well as assets recognized from costs incurred to obtain or fulfill a contract. On January 1, 2018, the Company adopted ASC 606 using the modified retrospective adoption method. In accordance with the modified retrospective adoption method, the Company elected to retroactively adjust only those contracts that did not meet the definition of a completed contract at the date of initial application. The new guidance impacted the amount and timing of the Company’s revenue recognition as follows: • Prior to the adoption of ASC 606, we recognized revenue to the extent of cash receipts when collectibility was not reasonably assured. Under ASC 606, collectibility issues may indicate an implied price concession, which is accounted for as variable consideration. Consequently, revenues for these types of contracts are accelerated, net of any amounts which we do not expect to collect. • Under ASC 606, once a student is deemed to have a history of collection issues, future revenues earned are subject to a price concession as the student has demonstrated that they may not pay the full tuition price based on past behavior. This results in a reduction in the transaction price such that revenue is recorded based on the amount to which the Company expects to be entitled if, in the future, a student is deemed to have resolved their collection issues, a price concession will no longer be recorded. At the date of adoption of ASC 606, the Company recorded a cumulative adjustment to its consolidated balance sheet, including an adjustment to retained earnings, to adjust for the aggregate impact of these revenue items, as calculated under the new guidance. The cumulative effect adjustment decreased the opening balance of retained earnings on January 1, 2018, as follows (in thousands): Closing balance at December 31, 2017 Adjustments due to ASC 606 Opening balance at January 1, 2018 Accounts receivable, net $ 24,174 $ (1,333 ) $ 22,841 Deferred revenue and student deposits $ 70,766 $ (333 ) $ 70,433 Retained earnings $ 426,356 $ (1,000 ) $ 425,356 The following tables present the impact of changes to the condensed consolidated financial statement line items as a result of applying ASC 606 to the periods presented (in thousands): For the three months ended September 30, 2018 As Reported under ASC 606 Adjustments due to ASC 606 Amounts under ASC 605 Revenue $ 112,846 $ 2,330 $ 115,176 Instructional costs and services (1) $ 55,109 $ 1,679 $ 56,788 Net income $ 1,661 $ 650 $ 2,311 For the nine months ended September 30, 2018 As Reported under ASC 606 Adjustments due to ASC 606 Amounts under ASC 605 Revenue $ 348,660 $ 3,609 $ 352,269 Instructional costs and services (1) $ 166,120 $ 4,225 $ 170,345 Net income $ 18,051 $ (616 ) $ 17,435 (1) Adjustment for instructional costs and services is due to change in provision for bad debts. As of September 30, 2018 As Reported under ASC 606 Adjustments due to ASC 606 Amounts under ASC 605 Accounts receivable, net $ 28,920 $ 1,107 $ 30,027 Deferred revenue and student deposits $ 58,399 $ 723 $ 59,122 Retained earnings $ 443,407 $ (384 ) $ 443,023 Comparative historical information on the condensed consolidated statement of income has not been retrospectively restated and continues to be reported under ASC 605 . For further information regarding the disaggregation of revenue recorded in the current period, refer to Note 3, “Revenue Recognition” to the condensed consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize the following for all leases at the lease commencement date: (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Lessees will no longer be provided with a source of off-balance sheet financing. Public companies should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the implementation date. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. The Company expects to adopt ASU 2016-02 on January 1, 2019. While the Company continues to assess all potential impacts of the standard on existing leases and contracts, it currently believes the most significant impact relates to its accounting for office operating leases. The Company anticipates that the adoption of ASU 2016-02 will have a material impact on the Company’s condensed consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Improvements to Non-Employee Share-Based Payment Accounting , which simplifies the accounting for share-based payments granted to non-employees for goods and services. Under the literature, most of the guidance on such payments to non-employees would be aligned with the requirements for share-based payments granted to employees currently under ASC 718, Compensation - Stock Compensation . Board members are the only non-employees that the Company grants to, who are treated as “employees” under ASC 718. The guidance is effective for public companies for fiscal years, and interim fiscal periods within those fiscal years, beginning after December 15, 2018. The Company believes that the adoption of ASU 2018-07 will not have a significant impact on the Company’s condensed consolidated financial statements. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2018 | |
Revenue Recognition [Abstract] | |
Revenue Recognition | Revenue Recognition Revenues are recognized when control of the promised goods or services are transferred to the institutions’ students, in an amount that reflects the consideration the Company expects to be entitled in exchange for those goods or services. Determining whether a valid customer contract exists includes an assessment of whether amounts due under the contract are collectible. The Company performs this assessment at the beginning of every contract and subsequently thereafter if new information indicates there has been a significant change in facts and circumstances. The Company’s contracts with customers generally include multiple performance obligations, which it identifies by assessing whether each good and service promised in the contract is distinct. For each performance obligation, the Company allocates the transaction price, including fixed and variable consideration, on the basis of the relative standalone selling prices of each good and service in the contract, which is determined using observable prices. The following table presents the Company’s net revenue disaggregated based on the revenue source (in thousands): Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 Tuition revenue, net $ 102,352 $ 317,353 Digital materials revenue, net 6,284 18,951 Technology fee revenue, net 3,777 10,861 Other revenue, net (1) 433 1,495 Total revenue, net $ 112,846 $ 348,660 (1) Primarily consists of revenues generated from services such as graduation fees, transcript fees, and other miscellaneous services. The following table presents the Company’s net revenue disaggregated based on the timing of revenue recognition (in thousands): Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 Over time, over period of instruction $ 96,735 $ 301,905 Over time, full tuition grant (1) 9,986 27,825 Point in time (2) 6,125 18,930 Total revenue, net $ 112,846 $ 348,660 (1) Represents revenue generated from the corporate full tuition grant (“FTG”) program. (2) Represents revenue generated from digital textbooks and other miscellaneous fees. The Company operates under one reportable segment and has no foreign operations or assets located outside of the United States. The Company generates the majority of its revenue from tuition, technology fees, and digital materials related to students whose primary funding source is governmental funding. Tuition represents amounts charged for course instruction, and technology fees represent amounts charged for the students’ use of the technology platform on which course instruction is delivered. Digital materials fees represent amounts charged for the digital textbooks that accompany the majority of courses taught at the Company’s institution. With the exception of students attending courses within the three-week conditional admission period at Ashford University, the majority of tuition and technology fees are recognized as revenue as control of the services is transferred to the student, which occurs over the applicable period of instruction. Similarly, the majority of digital materials fees are recognized as revenue when control of the product has been transferred to the student, which occurs when the student is granted unrestricted access to the digital textbook, generally, on the first day of the course. Revenue generated from students within the conditional admission period is deferred and recognized when the student matriculates into the institution, which occurs in the fourth week of the course. The Company's institutions' online students generally enroll in a program that encompasses a series of five to six-week courses that are taken consecutively over the length of the program. With the exception of those students under conditional admission and students enrolled under the FTG program, online students are billed on a payment period basis on the first day of a course. Students under conditional admission are billed for the payment period upon matriculation. If a student's attendance in a class precedes the receipt of cash from the student's source of funding, the Company establishes an account receivable and corresponding deferred revenue in the amount of the tuition due for that payment period. Cash received either directly from the student or from the student's source of funding reduces the balance of accounts receivable due from the student. Financial aid from sources such as the federal government's Title IV programs pertains to the online student's award year and is generally divided into two disbursement periods. As such, each disbursement period may contain funding for up to four courses. Financial aid disbursements are typically received during the online student's attendance in the first or second course. Since the majority of disbursements cover more courses than for which a student is currently enrolled, the amount received in excess effectively represents a prepayment from the online student for up to four courses. At the end of each accounting period, the deferred revenue and related account receivable balances are reduced to present amounts attributable to the current course. In certain cases, the Company's institution provide scholarships to students who qualify under various programs. These scholarships are recognized as direct reductions of revenue consistent with the timing of recognition associated with the related performance obligations. Also, for some customers, we do not expect to collect 100% of the consideration to which we are contractually entitled and, as a result, those customers may receive discounts or price adjustments that, based on historical Company practice, represent implied price concessions and are accounted for as variable consideration. The majority of these price concessions relate to amounts charged to students for goods and services, which management has determined will not be covered by the student’s primary funding source (generally, government aid) and, as a result, the student will become directly financially responsible for them. The reduction in the transaction price that results from this estimate of variable consideration reflects the amount the Company does not expect to be entitled to in exchange for the goods and services it will transfer to the students, as determined using historical experience and current factors, and includes performing a constraint analysis. These estimates of variable consideration are recorded as direct reductions of revenue consistent with the timing of recognition associated with the related performance obligation. A portion of tuition revenue, technology fee revenue, and digital materials revenue is generated from contracts with students enrolled under the corporate FTG program, which is a 12-month grant that, when combined with a corporate partner’s annual tuition assistance program, enables eligible students to earn their degree without incurring student loan debt. Students enrolled under this program are eligible to take up to ten undergraduate or eight graduate courses per 12-month grant period and must first utilize 100% of the funds awarded under their employer’s annual tuition assistance program before they can be awarded the FTG grant. The grants awarded by Ashford University under the FTG program are considered a material right, and, as such, the Company records a contract liability for a portion of the consideration received or due under these contracts. The contract liability is recorded in deferred revenue and student deposits on the Company’s condensed consolidated balance sheets, and further discussed in the deferred revenue section below. The standalone selling price of the material right is determined based on the observable standalone selling price of the courses. The transaction price in each FTG contract is allocated to this material right on a relative standalone selling price basis. The contract liability is recognized as revenue at the earlier of satisfaction of the future obligation or contract termination. Billing of products and services transferred under a FTG student contract generally occurs after the conclusion of a course. There are no material differences between the timing of the products and services transferred and the payment terms. Deferred Revenue Deferred revenue consists of cash payments that are received or due in advance of the Company’s performance as well as deferrals associated with certain contracts that include a material right. Below are the opening and closing balances of deferred revenue from the Company’s contracts with customers (in thousands): Deferred Revenue Opening balance, January 1, 2018 $ 22,001 Closing balance, September 30, 2018 23,833 Increase (Decrease) $ 1,832 For further information on deferred revenue and student deposits, refer to Note 7, “Other Significant Balance Sheet Accounts - Deferred Revenue and Student Deposits” and for further information on receivables, refer to Note 6, “Accounts Receivable, Net” within the condensed consolidated financial statements. For the majority of the Company’s customers, payment for products and services is due at the beginning of each course. Billing of products and services transferred under a FTG student contract generally occurs after the conclusion of a course. Under special circumstances, some customers may be offered non-interest bearing payment plan arrangements that can extend for up to a maximum of three years. These payment plan arrangements give rise to a significant financing component. However, since the Company historically collects substantially all of the consideration to which it expects to be entitled under such payment plans within one year or less, the impact of the significant financing component in these transactions is not material to any period presented. The difference between the opening and closing balances of deferred revenue primarily results from the timing difference between the Company’s performance and the customer’s payment. For the nine months ended September 30, 2018, we recognized $21.9 million of revenue that was included in the deferred revenue balance as of January 1, 2018. Amounts reported in the closing balance of deferred revenue are expected to be recognized as revenue within the next 12 months. |
Restructuring and Impairment Ex
Restructuring and Impairment Expense | 9 Months Ended |
Sep. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Impairment Expense (Credit) | Restructuring and Impairment Expense The Company has implemented various restructuring plans to better align its resources with its business strategy and the related amounts are recorded in restructuring and impairment expense on the Company’s condensed consolidated statements of income. During the three and nine months ended September 30, 2018 , the Company recognized a total of $1.2 million and $3.8 million , respectively, to restructuring and impairment expense, which were comprised of the components described below. There was $8.0 million of restructuring and impairment expense during each of the three and nine months ended September 30, 2017 . The Company closed Ashford University’s residential campus in Clinton, Iowa during 2016. With this closure, ground-based Ashford University students were provided opportunities to continue to pursue their degrees as reflected in their respective student transfer agreements. The Company previously recorded restructuring charges relating to future cash expenditures for student transfer agreements. For each of the three and nine months ended September 30, 2018 , the Company reassessed this estimate and adjusted the related restructuring charges by an immaterial amount. During the nine months ended September 30, 2018 , the Company executed a strategic reorganization resulting in reductions in force. The reorganization was part of the Company’s overall reassessment of resources based upon benchmarking activities with competitors in the Company’s industry. As a result, for the three and nine months ended September 30, 2018 , the Company recognized $0.9 million and $1.9 million , respectively, as restructuring and impairment expense relating to severance costs for wages and benefits. There was $2.2 million of such charges during each of the three and nine months ended September 30, 2017 . The Company anticipates that these costs will be paid out by the end of the fourth quarter of 2018 from existing cash on hand. The Company had previously vacated or consolidated properties in San Diego and Denver, and subsequently reassessed its obligations on non-cancelable leases. As a result of these reassessments, during the three and nine months ended September 30, 2018 , the Company recognized expense of $0.6 million and $1.9 million , respectively. There was $5.8 million of such charges during each of the three and nine months ended September 30, 2017 . The Company vacated certain leased space and retired $0.3 million of assets during the nine months ended September 30, 2018 . There were no such charges in the three months ended September 30, 2018 , nor in the three and nine months ended September 30, 2017 . The following table summarizes the amounts recorded in the restructuring and impairment charges line item on the Company’s condensed consolidated statements of income for each of the periods presented (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Asset impairment $ — $ — $ 325 $ — Student transfer agreement costs (268 ) — (268 ) — Severance costs 855 2,175 1,874 2,175 Lease exit and other costs 638 5,829 1,864 5,829 Total restructuring and impairment charges $ 1,225 $ 8,004 $ 3,795 $ 8,004 The following table summarizes the changes in the Company's restructuring and impairment liability by type during the nine months ended September 30, 2018 (in thousands): Asset Impairment Student Transfer Agreement Costs Severance Costs Lease Exit and Other Costs Total Balance at December 31, 2017 $ — $ 594 $ 195 $ 10,643 $ 11,432 Restructuring and impairment expense 325 (268 ) 1,874 1,864 3,795 Payments and adjustments (325 ) (270 ) (1,459 ) (10,605 ) (12,659 ) Balance at September 30, 2018 $ — $ 56 $ 610 $ 1,902 $ 2,568 The restructuring liability amounts are recorded within either the (i) accounts payable and accrued liabilities account, (ii) rent liability account or (iii) other long-term liabilities account on the condensed consolidated balance sheets. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Investments | Investments The following tables summarize the fair value information for investments as of September 30, 2018 and December 31, 2017 , respectively (in thousands): As of September 30, 2018 Level 1 Level 2 Level 3 Total Mutual funds $ 2,203 $ — $ — $ 2,203 As of December 31, 2017 Level 1 Level 2 Level 3 Total Mutual funds $ 2,065 $ — $ — $ 2,065 The mutual funds in the tables above, represent the deferred compensation asset balances, which are considered to be trading securities. There were no transfers between level categories for investments during the periods presented. The Company’s money market securities are recorded in the cash and cash equivalents line item on the Company’s condensed consolidated balance sheets, and are classified as Level 1 securities. There were no differences between amortized cost and fair value of investments as of September 30, 2018 and December 31, 2017 , respectively. There were no reclassifications out of accumulated other comprehensive income during either the nine months ended September 30, 2018 and 2017 . |
Accounts Receivable, Net
Accounts Receivable, Net | 9 Months Ended |
Sep. 30, 2018 | |
Receivables [Abstract] | |
Accounts Receivable, Net | Accounts Receivable, Net Accounts receivable, net, consists of the following (in thousands): As of As of Accounts receivable $ 43,254 $ 39,363 Less allowance for doubtful accounts (14,334 ) (15,189 ) Accounts receivable, net $ 28,920 $ 24,174 There is an immaterial amount of accounts receivable, net, at each balance sheet date with a payment due date of greater than one year. The following table presents the changes in the allowance for doubtful accounts for accounts receivable for the periods indicated (in thousands): Allowance for doubtful accounts receivable: Beginning Balance Charged to Expense Deductions (1) Ending Balance For the nine months ended September 30, 2018 $ (15,189 ) $ 19,339 $ (20,194 ) $ (14,334 ) For the nine months ended September 30, 2017 $ (15,621 ) $ 23,028 $ (22,540 ) $ (16,109 ) (1) Deductions represent accounts written off, net of recoveries. |
Other Significant Balance Sheet
Other Significant Balance Sheet Accounts | 9 Months Ended |
Sep. 30, 2018 | |
Balance Sheet Related Disclosures [Abstract] | |
Other Significant Balance Sheet Accounts | Other Significant Balance Sheet Accounts Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consists of the following (in thousands): As of As of Prepaid expenses $ 6,106 $ 6,195 Prepaid licenses 5,554 4,882 Income tax receivable 5,037 8,889 Prepaid insurance 2,625 1,215 Insurance recoverable 682 1,192 Other current assets 423 15 Total prepaid expenses and other current assets $ 20,427 $ 22,388 Property and Equipment, Net Property and equipment, net, consists of the following (in thousands): As of As of Buildings, build-to-suit $ 6,076 $ — Furniture and office equipment 43,538 43,330 Software 12,516 12,313 Leasehold improvements 5,375 5,445 Vehicles 22 22 Total property and equipment 67,527 61,110 Less accumulated depreciation and amortization (52,812 ) (50,676 ) Total property and equipment, net $ 14,715 $ 10,434 For the three months ended September 30, 2018 and 2017 , depreciation and amortization expense related to property and equipment was $1.0 million and $1.3 million , respectively. For the nine months ended September 30, 2018 and 2017 , depreciation and amortization expense was $3.2 million and $4.2 million , respectively. Goodwill and Intangibles, Net Goodwill and intangibles, net, consists of the following (in thousands): September 30, 2018 Definite-lived intangible assets: Gross Carrying Amount Accumulated Amortization Net Carrying Amount Capitalized curriculum costs $ 21,954 $ (20,127 ) $ 1,827 Purchased intangible assets 15,850 (6,912 ) 8,938 Total definite-lived intangible assets $ 37,804 $ (27,039 ) $ 10,765 Goodwill and indefinite-lived intangibles 2,567 Total goodwill and intangibles, net $ 13,332 December 31, 2017 Definite-lived intangible assets: Gross Carrying Amount Accumulated Amortization Net Carrying Amount Capitalized curriculum costs $ 21,463 $ (19,300 ) $ 2,163 Purchased intangible assets 15,850 (5,987 ) 9,863 Total definite-lived intangible assets $ 37,313 $ (25,287 ) $ 12,026 Goodwill and indefinite-lived intangibles 2,567 Total goodwill and intangibles, net $ 14,593 For the three months ended September 30, 2018 and 2017 , amortization expense was $0.6 million and $0.8 million , respectively. For the nine months ended September 30, 2018 and 2017 , amortization expense was $2.0 million and $2.6 million , respectively. The following table summarizes the estimated remaining amortization expense as of each fiscal year ended below (in thousands): Year Ended December 31, Remainder of 2018 $ 566 2019 2,000 2020 1,733 2021 1,495 2022 1,264 Thereafter 3,707 Total future amortization expense $ 10,765 Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities consists of the following (in thousands): As of As of Accounts payable $ 4,004 $ 5,619 Accrued salaries and wages 5,186 8,573 Accrued bonus 6,707 6,924 Accrued vacation 8,089 8,237 Accrued litigation and fees 8,041 9,886 Accrued expenses 19,970 16,024 Current leases payable 4,122 12,971 Accrued insurance liability 2,250 2,931 Total accounts payable and accrued liabilities $ 58,369 $ 71,165 Deferred Revenue and Student Deposits Deferred revenue and student deposits consists of the following (in thousands): As of As of Deferred revenue $ 23,832 $ 22,001 Student deposits 34,567 48,765 Total deferred revenue and student deposits $ 58,399 $ 70,766 Other Long-Term Liabilities Other long-term liabilities consists of the following (in thousands): As of As of Uncertain tax positions $ 842 $ 8,893 Lease financing obligation 6,076 — Other long-term liabilities 2,901 3,815 Total other long-term liabilities $ 9,819 $ 12,708 |
Credit Facilities
Credit Facilities | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Credit Facilities | Credit Facilities The Company has issued letters of credit that are collateralized with cash in the aggregate amount of $15.4 million , which is included in restricted cash as of September 30, 2018 . As part of its normal business operations, the Company is required to provide surety bonds in certain states in which the Company does business. The Company has entered into a surety bond facility with an insurance company to provide such bonds when required. As of September 30, 2018 , the Company’s total available surety bond facility was $6.5 million and the surety had issued bonds totaling $4.3 million on the Company’s behalf under such facility. |
Lease Obligations
Lease Obligations | 9 Months Ended |
Sep. 30, 2018 | |
Lease Obligations [Abstract] | |
Lease Obligations | Lease Obligations Operating Leases The Company leases certain office facilities and office equipment under non-cancelable lease arrangements that expire at various dates through 2023. The office leases contain certain renewal options. Rent expense under non-cancelable operating lease arrangements is accounted for on a straight-line basis and totaled $11.3 million for each of the nine months ended September 30, 2018 and 2017 , respectively. Rent expense in certain periods also includes the restructuring and impairment charges recorded and therefore, may differ significantly from cash payments. For additional information, refer to Note 4, “Restructuring and Impairment Expense.” The following table summarizes the future minimum rental payments under non-cancelable operating lease arrangements in effect at September 30, 2018 (in thousands): Year Ended December 31, Remainder of 2018 $ 5,104 2019 21,010 2020 11,209 2021 7,321 2022 3,825 Thereafter 20,677 Total minimum payments $ 69,146 During the third quarter of 2018, the Company entered into a lease agreement consisting of approximately 131,000 square feet of office space located in Chandler, Arizona. Although the Company is not the legal owner of the leased space, the Company is involved in the construction and the build-out of the space, and as such, serves as the construction agent on behalf of the landlord. Under such arrangement, the Company has obligations to fund cost over-runs in its capacity as the construction agent, and accordingly has determined that under lease accounting standard ASC 840, Leases, it bears substantially all of the risks and rewards of ownership as measured under GAAP. The Company is therefore required to report the landlord's costs of construction on its balance sheet as a fixed asset during the construction period as if the Company owned such asset. In connection with this arrangement, the Company has recorded a $6.1 million building in construction in property and equipment, net, and an equal and corresponding lease financing obligation in other long-term liabilities, on the condensed consolidated balance sheets as of September 30, 2018. |
Income Per Share
Income Per Share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Income Per Share | Income Per Share Basic income per share is calculated by dividing net income available to common stockholders for the period by the weighted average number of common shares outstanding for the period. Diluted income per share is calculated by dividing net income available to common stockholders for the period by the sum of (i) the weighted average number of common shares outstanding for the period, plus (ii) potentially dilutive securities outstanding during the period, if the effect is dilutive. Potentially dilutive securities for the periods presented include stock options, unvested restricted stock units (“RSUs”) and unvested performance stock units (“PSUs”). The following table sets forth the computation of basic and diluted income per share for the periods indicated (in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Numerator: Net income $ 1,661 $ 106 $ 18,051 $ 14,256 Denominator: Weighted average number of common shares outstanding 27,061 29,123 27,131 33,333 Effect of dilutive options and stock units 528 548 401 860 Diluted weighted average number of common shares outstanding 27,589 29,671 27,532 34,193 Income per share: Basic $ 0.06 $ 0.00 $ 0.67 $ 0.43 Diluted $ 0.06 $ 0.00 $ 0.66 $ 0.42 The following table sets forth the number of stock options, RSUs and PSUs, excluded from the computation of diluted income per share for the periods indicated below because their effect was anti-dilutive (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Stock options 1,560 2,625 2,709 1,858 RSUs and PSUs 2 19 2 9 |
Stock Repurchase Program Stock
Stock Repurchase Program Stock Repurchase Program | 9 Months Ended |
Sep. 30, 2018 | |
Stock Repurchase Programs [Abstract] | |
Stock Repurchase Program | Stock Repurchase Program The Company's board of directors (“board”) may authorize the Company to repurchase outstanding shares of its common stock from time to time in the open market through block trades or otherwise depending on market conditions and other considerations, pursuant to the applicable rules of the SEC. The Company's policy is to retain these repurchased shares as treasury shares and not to retire them. The amount and timing of future share repurchases, if any, will be determined as market and business conditions warrant. During the nine months ended September 30, 2017 , the Company repurchased approximately 18.1 million shares of the Company's common stock for an aggregate purchase price of approximately $152.0 million , including fees. On November 17, 2017, the Company's board authorized a share repurchase program of up to $20.0 million in aggregate value of shares of its common stock over the next 12 months. The timing and extent of any repurchases will depend upon market conditions, the trading price of the Company's shares and other factors, and subject to the restrictions relating to volume, price and timing under applicable law. The Company may commence or suspend share repurchases at any time, or from time to time. Under this program, during the nine months ended September 30, 2018 , the Company repurchased approximately 0.4 million shares of the Company’s common stock for an aggregate purchase price of approximately $2.4 million , including fees. Separate from the authorized repurchase program noted above, on November 21, 2017, the Company repurchased 2.1 million shares of the Company's common stock for an aggregate purchase price of approximately $16.7 million , including fees. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation The Company recorded $1.3 million and $1.1 million of stock-based compensation expense for the three months ended September 30, 2018 and 2017 , respectively, and $3.6 million and $2.8 million of stock-based compensation expense for the nine months ended September 30, 2018 and 2017 , respectively. The related income tax benefit was $0.3 million and $0.4 million for the three months ended September 30, 2018 and 2017 , respectively, and $0.9 million and $1.1 million for the nine months ended September 30, 2018 and 2017 , respectively. During the nine months ended September 30, 2018 , the Company granted 0.8 million RSUs at a grant date fair value of $6.84 and 0.4 million RSUs vested. During the nine months ended September 30, 2017 , the Company granted 0.5 million RSUs at a grant date fair value of $10.48 and 0.4 million RSUs vested. During the nine months ended September 30, 2018 and 2017 , no performance-based or market-based PSUs were granted and no performance-based or market-based PSUs vested. During the nine months ended September 30, 2018 , the Company granted 35,088 stock options at a grant date fair value of $2.97 and 0.8 million stock options were exercised. During the nine months ended September 30, 2017 , the Company granted 0.3 million stock options at a grant date fair value of $4.76 and 0.5 million stock options were exercised. As of September 30, 2018 , there was unrecognized compensation cost of $5.9 million related to unvested stock options, RSUs and PSUs. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company uses the asset-liability method to account for taxes. Under this method, deferred income tax assets and liabilities result from temporary differences between the tax basis of assets and liabilities and their reported amounts in the condensed consolidated financial statements that will result in income and deductions in future years. The Company recognizes deferred tax assets if realization of such assets is more-likely-than-not. In order to make this determination, the Company evaluates a number of factors including the ability to generate future taxable income from reversing taxable temporary differences, forecasts of financial and taxable income or loss, and the ability to carryback certain operating losses to refund taxes paid in prior years. The cumulative loss incurred over the three-year period ended September 30, 2018 constituted significant negative objective evidence against the Company’s ability to realize a benefit from its federal deferred tax assets. Such objective evidence limited the ability of the Company to consider in its evaluation certain subjective evidence such as the Company’s projections for future growth. On the basis of its evaluation, the Company determined that its deferred tax assets were not more-likely-than-not to be realized and that a valuation allowance against its deferred tax assets should continue to be maintained as of September 30, 2018 . The Company determines the interim income tax provision by applying the estimated effective income tax rate expected to be applicable for the full fiscal year to income before income taxes for the period. In determining the full year estimate, the Company does not include the estimated impact of unusual and/or infrequent items, which may cause significant variations in the customary relationship between income tax expense and income before income taxes. The Company’s current effective income tax rate that has been applied to normal, recurring operations for the nine months ended September 30, 2018 was 1.4% . The Company’s actual effective income tax rate was (71.8)% for the nine months ended September 30, 2018 , which includes a discrete tax benefit of $1.8 million recorded in the first quarter of 2018 associated with refund claims for qualified production activities tax deductions for the tax years 2013 and 2014, a discrete benefit of $5.7 million recorded in the second quarter of 2018 associated with a reduction in uncertain tax position mainly associated with the California audit examination settlement for the tax years 2008 through 2012, a discrete benefit of $0.1 million recorded in the third quarter of 2018 associated with a reduction in uncertain tax position associated with the Oregon audit examination settlement for the tax years 2012 through 2014 as well as other states. On December 22, 2017, President Donald Trump signed into law H.R.1, formerly known as the Tax Cuts and Jobs Act (the “Tax Legislation”). The Tax Legislation significantly revised the U.S. tax code that will affect the Company’s year ending December 31, 2018, including, but not limited to, lowering the U.S. federal corporate income tax rate from 35% to 21% ; bonus depreciation that will allow for full expensing of qualified property; limitations on the deductibility of certain executive compensation and other deductions; and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017. The enactment of the Tax Legislation resulted in a one-time remeasurement of the Company’s U.S. federal deferred tax assets and liabilities from 35% to the lower enacted corporate tax rate of 21% . The provisional remeasurement of the Company’s deferred tax balance was primarily offset by a corresponding change in the valuation allowance. The Company is still analyzing the impact the Tax Legislation will have on the remeasurement of the deferred taxes or whether new deferred taxes exist. Where the Company has not yet been able to make reasonable estimates of the impact of certain elements, it has not recorded any amounts related to those elements and has continued to account for them in accordance with ASC 740 on the basis of the tax laws in effect immediately prior to the enactment of the Tax Legislation. Examples of certain elements include accounting for the existence of deferred taxes, as well as the impact the Tax Legislation may have on state jurisdictions. New guidance from regulators, interpretation of the law, and refinement of the Company’s estimates from ongoing analysis of data and tax positions may change the provisional amounts. As of September 30, 2018 , the Company had $0.8 million of gross unrecognized tax benefits, of which $0.7 million would impact the effective income tax rate if recognized. As of December 31, 2017 , the Company had $18.9 million of gross unrecognized tax benefits, of which $14.8 million would impact the effective income tax rate if recognized. Although the Company cannot predict the timing of resolution with taxing authorities, if any, the Company believes it is reasonably possible that the total of the unrecognized tax benefits could change in the next twelve months due to settlement with tax authorities or expiration of the applicable statute of limitations. These unrecognized tax benefits primarily relate to apportionment of online service revenues for corporate income tax purposes. Although the Company believes the tax accruals provided are reasonable, the final determination of tax returns under review or returns that may be reviewed in the future and any related litigation could result in tax liabilities that materially differ from the Company’s historical income tax provisions and accruals. The Company has analyzed filing positions in all of the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. The tax years 2001 through 2017 are open to examination by major taxing jurisdictions to which the Company is subject. The Company is currently under Internal Revenue Service audit examinations of the Company’s income and payroll tax returns for the years 2013 through 2016. During the prior quarter ended June 30, 2018, the Company executed a Closing Agreement with the California Franchise Tax Board to settle a tax audit examination principally associated with sales factor apportionment issues. The settlement resolved the sales factor sourcing and research and development credit issues for the audit period covering the California income tax returns for fiscal years 2008 through 2012. The sales factor sourcing issues under the aforementioned audit period have no impact on the future years due to the California tax law changes that were in effect starting in 2011. The unrecognized tax benefits previously recorded for the audit were $7.8 million . Upon executing the Closing Agreement, an income tax benefit of $5.7 million was recognized for the prior quarter ended June 30, 2018. The Company’s income tax returns for the tax years 2013 through 2015 are under examination by the FTB and the Company continues to work toward resolution, and based on all available information the Company has accrued for any uncertain tax positions that may be addressed in the audit. In September 2018, the Company executed a Closing Agreement with the Oregon Department of Revenue to settle a tax audit examination. The unrecognized tax benefits previously recorded for the audit, less the settlement, were recognized for the quarter ended September 30, 2018. In March 2018, the Company was notified by the Florida Department of Revenue that the Company’s income tax returns are under examination for the tax years 2014 through 2016. The Company was notified in early July 2018 that no adjustments would be made to the income tax returns filed for all examination years. Accordingly, the Company executed a Taxpayer Agreement to close the tax audit examination for the aforementioned audit period in July 2018. |
Regulatory
Regulatory | 9 Months Ended |
Sep. 30, 2018 | |
Regulatory [Abstract] | |
Regulatory | Regulatory The Company is subject to extensive regulation by federal and state governmental agencies and accrediting bodies. In particular, the Higher Education Act of 1965, as amended (“Higher Education Act”), and the regulations promulgated thereunder by the U.S. Department of Education (“Department”) subject the Company to significant regulatory scrutiny on the basis of numerous standards that institutions of higher education must satisfy in order to participate in the various federal student financial aid programs under Title IV of the Higher Education Act (“Title IV programs”). Ashford University is regionally accredited by WASC Senior College and University Commission (“WSCUC”). Department of Education Open Program Review of Ashford University On July 7, 2016, Ashford University was notified by the Department that an off-site program review had been scheduled to assess Ashford University’s administration of the Title IV programs in which it participates. The off-site program review commenced on July 25, 2016 and covered students identified in the 2009-2012 calendar year data previously provided by Ashford University to the Department in response to a request for information received from the Multi-Regional and Foreign School Participation Division of the Department’s Office of Federal Student Aid (“FSA”) on December 10, 2015, but may be expanded if the Department deems such expansion appropriate. On December 9, 2016, the Department informed Ashford University that it intended to continue the program review on-site at Ashford University. The on-site program review commenced on January 23, 2017 and initially covered the 2015-2016 and 2016-2017 award years, but may be expanded if the Department deems such expansion appropriate. To date, the Company has not received a draft report from the Department. Program Participation Agreement for Ashford University On April 23, 2018, Ashford University received an updated Program Participation Agreement from the Department. Based on the updated Program Participation Agreement, Ashford University is provisionally certified to participate in Federal Student Financial Aid Programs until March 31, 2021. Ashford University is required to submit its reapplication for continued certification by December 31, 2020. WSCUC Accreditation of Ashford University In July 2013, WSCUC granted Initial Accreditation to Ashford University for five years, until July 15, 2018. In December 2013, Ashford University effected its transition to WSCUC accreditation and designated its San Diego, California facilities as its main campus and its Clinton, Iowa campus as an additional location. As part of a continuing monitoring process, Ashford University hosted a visiting team from WSCUC on a special visit in April 2015. In July 2015, Ashford University received an Action Letter from WSCUC outlining the findings arising out of its visiting team's special visit. The Action Letter stated that the WSCUC visiting team found evidence that Ashford University continues to make progress in all six areas recommended by WSCUC in 2013. As part of its institutional review process, WSCUC commenced its comprehensive review of Ashford University with an off-site review in March 2018. Ashford University was notified on June 8, 2018 that the Ashford University Accreditation Visit originally scheduled for fall 2018 had been rescheduled to April 3-5, 2019. GI Bill Benefits On May 20, 2016, the Company received a letter from the Iowa Department of Education (“Iowa DOE”) indicating that, as a result of the planned closure of the Clinton Campus, the Iowa State Approving Agency (“ISAA”) would no longer continue to approve Ashford University’s programs for benefits under the GI Bill after June 30, 2016, and recommending Ashford University seek approval through the State Approving Agency of jurisdiction for any location that meets the definition of a “main campus” or “branch campus.” Ashford University began the process of applying for approval through the State Approving Agency in California (“CSAAVE”), and the Company subsequently disclosed that on June 20, 2016 it received a second letter from the Iowa DOE indicating that the Iowa DOE had issued a stay of the ISAA’s withdrawal of approval of Ashford University’s programs for GI Bill benefits effective immediately until the earlier of (i) 90 days from June 20, 2016 or (ii) the date on which CSAAVE completed its review and issued a decision regarding the approval of Ashford University in California. Ashford University received communication from CSAAVE indicating that additional information and documentation would be required before Ashford University’s application could be considered for CSAAVE approval. Ashford University subsequently withdrew the CSAAVE application and continued working with the U.S. Department of Veterans Affairs (“VA”), the Iowa DOE and the ISAA to obtain continued approval of Ashford University’s programs for GI Bill benefits and to prevent any disruption of educational benefits to Ashford University’s veteran students. On September 15, 2016, in response to a Petition for Declaratory and Injunctive Relief (“Petition”) filed by Ashford University, the Iowa District Court for Polk County entered a written order (“Order”) staying the Iowa DOE’s announced intention to withdraw the approval of Ashford University as a GI Bill eligible institution until the entry of a final and appealable order and judgment in the action. On June 23, 2017, the Iowa District Court held a hearing on Ashford University’s Petition and on July 17, 2017, the Court ruled in favor of the Iowa DOE and denied the petition. Ashford University filed a motion for reconsideration of this ruling, which was denied on August 17, 2017. On August 23, 2017, Ashford University filed a Petition to Vacate or Modify the Iowa District Court’s July 17, 2017 ruling, based on material evidence, newly discovered, which could not with reasonable diligence have been previously discovered by Ashford University (“First Petition to Vacate”). On September 18, 2017, Ashford University appealed, inter alia , the July 17, 2017 ruling to the Iowa Supreme Court and posted an appeal bond, which stayed this matter pending resolution of Ashford University’s appeal. As a result, Ashford University’s approval was not withdrawn, and Ashford University’s programs remain approved for GI Bill purposes. The Assistant Attorney General handling this matter on behalf of the Iowa DOE also advised Ashford University that the Iowa DOE would take no action pending the post-ruling motions and appeal. On October 12, 2017, Judge Eliza Ovrom, the Iowa District Court Judge who issued the July 17, 2017 ruling, filed a Disclosure Statement revealing family ties to the Iowa Attorney General’s Office. Following motions by Ashford University for her recusal, Judge Ovrom recused herself from all further proceedings. On October 24, 2017, Ashford University filed with the Iowa Supreme Court a Petition to Vacate or, in the Alternative, for Limited Remand (“Second Petition to Vacate”), in which Ashford University argued that the July 17, 2017 ruling and all other material orders entered by Judge Ovrom should be vacated due to her previously undisclosed conflict of interest. On January 8, 2018, the Iowa Supreme Court remanded the Second Petition to Vacate to the District Court, where all proceedings in this matter were consolidated before Judge Michael Huppert. On April 26, 2018, Judge Huppert granted the Second Petition to Vacate and vacated all material rulings by Judge Ovrom, including the July 17, 2017 ruling, thus on June 21, 2018, the Iowa Supreme Court issued a Procedendo stating that the appeal was concluded. Judge Huppert’s decision mooted the First Petition to Vacate and Ashford’s appeal of, inter alia , the July 17, 2017 ruling. The case will now proceed on the merits de novo before Judge Huppert. On July 6, 2017, Ashford University received approval from the Arizona State Approving Agency (“ASAA”) to provide GI Bill benefits to its students. On September 13, 2017, the VA accepted the ASAA’s approval, subject to Ashford University's compliance with the approval requirements, and the University subsequently received a facility code from the VA. On November 9, 2017, the VA informed Ashford University that the ASAA had not provided sufficient evidence to establish that it has jurisdictional authority over Ashford University’s online programs. The VA stated that they intend to suspend payment of educational assistance and approval of new student enrollments and student re-enrollments for Ashford University’s online programs in 60 days unless corrective action was taken. On November 17, 2017, Ashford University filed a petition for review in the United States Court of Appeals for the Federal Circuit challenging the VA’s actions. In response to that petition, the VA agreed to stay the actions with respect to the suspension and reenrollment it had announced on November 9, 2017 through the entry of judgment in the Federal Circuit case, on the condition that Ashford University request and submit an application for approval to CSAAVE on or before January 8, 2018. Ashford University submitted an application to CSAAVE for approval on January 5, 2018. On February 21, 2018, CSAAVE provided notice of its intention not to act on Ashford University’s initial application for approval for the training of veterans and other eligible persons. The notice directs Ashford University to request approval of its application by the VA. Ashford University continues to work in good faith with the VA while its petition for review remains pending with the Federal Circuit. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation From time to time, the Company is a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. When the Company becomes aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. In accordance with GAAP, the Company records loss contingencies in its financial statements only for matters in which losses are probable and can be reasonably estimated. Where a range of loss can be reasonably estimated, the best estimate within that range should be accrued. If no estimate is better than another, the Company records the minimum estimated liability in the range. If the loss is not probable or the amount of the loss cannot be reasonably estimated, the Company discloses the nature of the specific claim if the likelihood of a potential loss is reasonably possible and the amount involved could be material. The Company continuously assesses the potential liability related to the Company’s pending litigation and revises its estimates when additional information becomes available. Below is a list of material legal proceedings to which the Company or its subsidiaries is a party. California Attorney General Investigation of For-Profit Educational Institutions In January 2013, the Company received from the Attorney General of the State of California (“CA Attorney General”) an Investigative Subpoena relating to the CA Attorney General’s investigation of for-profit educational institutions. Pursuant to the Investigative Subpoena, the CA Attorney General requested documents and detailed information for the time period March 1, 2009 to present. On July 24, 2013, the CA Attorney General filed a petition to enforce certain categories of the Investigative Subpoena related to recorded calls and electronic marketing data. On September 25, 2013, the Company reached an agreement with the CA Attorney General to produce certain categories of the documents requested in the petition and stipulated to continue the hearing on the petition to enforce from October 3, 2013 to January 9, 2014. On January 13, 2014 and June 19, 2014, the Company received additional Investigative Subpoenas from the CA Attorney General, each requesting additional documents and information for the time period March 1, 2009 through the current date. Representatives from the Company met with representatives from the CA Attorney General’s office on several occasions to discuss the status of the investigation, additional information requests, and specific concerns related to possible unfair business practices in connection with the Company’s recruitment of students and debt collection practices. The parties also discussed a potential resolution involving injunctive relief, other non-monetary remedies and a payment to the CA Attorney General and the Company recorded an expense of $8.0 million related to the cost of resolving this matter. The parties did not reach a resolution and on November 29, 2017, the CA Attorney General filed suit against Ashford University and Bridgepoint Education. The Company intends to vigorously defend this case and emphatically denies the allegations made by the CA Attorney General that it ever deliberately misled its students, falsely advertised its programs, or in any way was not fully accurate in its statements to investors. However, the outcome of this legal proceeding is uncertain at this point because of the many questions of fact and law that may arise. At present, the Company cannot reasonably estimate any updated range of loss for this action based on currently available information and as such, the prior accrual remains. Massachusetts Attorney General Investigation of Bridgepoint Education, Inc. and Ashford University On July 21, 2014, the Company and Ashford University received from the Attorney General of the State of Massachusetts (“MA Attorney General”) a Civil Investigative Demand (“MA CID”) relating to the MA Attorney General’s investigation of for-profit educational institutions and whether the university’s business practices complied with Massachusetts consumer protection laws. Pursuant to the MA CID, the MA Attorney General has requested from the Company and Ashford University documents and information for the time period January 1, 2006 to present. The Company is cooperating with the investigation and cannot predict the eventual scope, duration or outcome of the investigation at this time. The Company has not accrued any liability associated with this action. Department of Justice Civil Investigative Demand On July 7, 2016, the Company received from the U.S. Department of Justice (“DOJ”) a Civil Investigative Demand (“DOJ CID”) related to the DOJ's investigation concerning allegations that the Company may have misstated Title IV refund revenue or overstated revenue associated with private secondary loan programs and thereby misrepresented its compliance with the 90/10 rule of the Higher Education Act. Pursuant to the DOJ CID, the DOJ has requested from the Company documents and information for fiscal years 2011 to 2015. The Company is cooperating with the DOJ and cannot predict the eventual scope, duration or outcome of the investigation at this time. The Company has not accrued any liability associated with this action. Shareholder Derivative Actions In re Bridgepoint, Inc. Shareholder Derivative Action On July 24, 2012, a shareholder derivative complaint was filed in California Superior Court by Alonzo Martinez. In the complaint, the plaintiff asserts a derivative claim on the Company’s behalf against certain of its current and former officers and directors. The complaint is captioned Martinez v. Clark, et al. and generally alleges that the individual defendants breached their fiduciary duties of candor, good faith and loyalty, wasted corporate assets and were unjustly enriched. The lawsuit seeks unspecified monetary relief and disgorgement on behalf of the Company, as well as other equitable relief and attorneys’ fees. On September 28, 2012, a substantially similar shareholder derivative complaint was filed in California Superior Court by David Adolph-Laroche. In the complaint, the plaintiff asserts a derivative claim on the Company’s behalf against certain of its current and former officers and directors. The complaint is captioned Adolph-Laroche v. Clark, et al. and generally alleges that the individual defendants breached their fiduciary duties of candor, good faith and loyalty, wasted corporate assets and were unjustly enriched. On October 11, 2012, the Adolph-Laroche action was consolidated with the Martinez action and the case is now captioned In re Bridgepoint, Inc. Shareholder Derivative Action . A consolidated complaint was filed on December 18, 2012 and the defendants filed a motion to stay the case while the underlying securities class action is pending. The motion was granted by the Court on April 11, 2013. A status conference was held on October 10, 2013, during which the Court ordered the stay continued for the duration of discovery in the underlying securities class action, but permitted the plaintiff to receive copies of any discovery responses served in the underlying securities class action. The stay was lifted following the settlement of the underlying securities class action and all defendants filed demurrers on October 3, 2016, which were granted with leave to amend on October 6, 2017. On October 17, 2017, the plaintiff submitted a litigation demand to the Company's Board of Directors, which appointed a working group to evaluate the demand. The Board refused the demand and the Plaintiff filed a Second Amended Complaint on October 3, 2018. The Defendants are evaluating the Complaint and intend to file another motion to dismiss. Reardon v. Clark, et al. On March 18, 2015, a shareholder derivative complaint was filed in the Superior Court of the State of California in San Diego. The complaint asserts derivative claims on the Company’s behalf against certain of its current and former officers and directors. The complaint is captioned Reardon v. Clark, et al. and generally alleges that the individual defendants breached their fiduciary duties of candor, good faith and loyalty, wasted corporate assets and were unjustly enriched. The lawsuit seeks unspecified monetary relief and disgorgement, as well as other equitable relief and attorneys’ fees. Following the dismissal of the underlying Zamir securities class action and pursuant to a stipulation among the parties, on May 10, 2018, the Court ordered the case stayed while the Company’s Board of Directors evaluates a litigation demand submitted by the plaintiff. Larson v. Hackett, et al. On January 19, 2017, a shareholder derivative complaint was filed in the Superior Court of the State of California in San Diego. The complaint asserts derivative claims on the Company's behalf against certain of its current and former officers and directors. The complaint is captioned Larson v. Hackett, et al. and generally alleges that the individual defendants breached their fiduciary duties of candor, good faith and loyalty, wasted corporate assets and were unjustly enriched. The lawsuit seeks unspecified monetary relief and disgorgement, as well as other equitable relief and attorneys’ fees. Following the dismissal of the underlying Zamir securities class action and pursuant to a stipulation among the parties, on May 10, 2018, the Court ordered the case stayed while the Company’s Board of Directors evaluates a litigation demand submitted by the plaintiff. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of Bridgepoint Education, Inc. and its wholly owned subsidiaries. Intercompany transactions have been eliminated in consolidation. |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for complete annual financial statements and should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 , which was filed with the Securities and Exchange Commission (“SEC”) on February 21, 2018 . In the opinion of management, the condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, considered necessary to present a fair statement of the Company’s condensed consolidated financial position, results of operations and cash flows as of and for the periods presented. Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. |
Use of Estimates | Use of Estimates The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements. Actual results could differ from those estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers, or Accounting Standards Codification Topic 606 (“ASC 606”), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition (“ASC 605”). This literature is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The accounting guidance also requires additional disclosure regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, as well as assets recognized from costs incurred to obtain or fulfill a contract. On January 1, 2018, the Company adopted ASC 606 using the modified retrospective adoption method. In accordance with the modified retrospective adoption method, the Company elected to retroactively adjust only those contracts that did not meet the definition of a completed contract at the date of initial application. The new guidance impacted the amount and timing of the Company’s revenue recognition as follows: • Prior to the adoption of ASC 606, we recognized revenue to the extent of cash receipts when collectibility was not reasonably assured. Under ASC 606, collectibility issues may indicate an implied price concession, which is accounted for as variable consideration. Consequently, revenues for these types of contracts are accelerated, net of any amounts which we do not expect to collect. • Under ASC 606, once a student is deemed to have a history of collection issues, future revenues earned are subject to a price concession as the student has demonstrated that they may not pay the full tuition price based on past behavior. This results in a reduction in the transaction price such that revenue is recorded based on the amount to which the Company expects to be entitled if, in the future, a student is deemed to have resolved their collection issues, a price concession will no longer be recorded. At the date of adoption of ASC 606, the Company recorded a cumulative adjustment to its consolidated balance sheet, including an adjustment to retained earnings, to adjust for the aggregate impact of these revenue items, as calculated under the new guidance. The cumulative effect adjustment decreased the opening balance of retained earnings on January 1, 2018, as follows (in thousands): Closing balance at December 31, 2017 Adjustments due to ASC 606 Opening balance at January 1, 2018 Accounts receivable, net $ 24,174 $ (1,333 ) $ 22,841 Deferred revenue and student deposits $ 70,766 $ (333 ) $ 70,433 Retained earnings $ 426,356 $ (1,000 ) $ 425,356 The following tables present the impact of changes to the condensed consolidated financial statement line items as a result of applying ASC 606 to the periods presented (in thousands): For the three months ended September 30, 2018 As Reported under ASC 606 Adjustments due to ASC 606 Amounts under ASC 605 Revenue $ 112,846 $ 2,330 $ 115,176 Instructional costs and services (1) $ 55,109 $ 1,679 $ 56,788 Net income $ 1,661 $ 650 $ 2,311 For the nine months ended September 30, 2018 As Reported under ASC 606 Adjustments due to ASC 606 Amounts under ASC 605 Revenue $ 348,660 $ 3,609 $ 352,269 Instructional costs and services (1) $ 166,120 $ 4,225 $ 170,345 Net income $ 18,051 $ (616 ) $ 17,435 (1) Adjustment for instructional costs and services is due to change in provision for bad debts. As of September 30, 2018 As Reported under ASC 606 Adjustments due to ASC 606 Amounts under ASC 605 Accounts receivable, net $ 28,920 $ 1,107 $ 30,027 Deferred revenue and student deposits $ 58,399 $ 723 $ 59,122 Retained earnings $ 443,407 $ (384 ) $ 443,023 Comparative historical information on the condensed consolidated statement of income has not been retrospectively restated and continues to be reported under ASC 605 . For further information regarding the disaggregation of revenue recorded in the current period, refer to Note 3, “Revenue Recognition” to the condensed consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize the following for all leases at the lease commencement date: (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Lessees will no longer be provided with a source of off-balance sheet financing. Public companies should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the implementation date. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. The Company expects to adopt ASU 2016-02 on January 1, 2019. While the Company continues to assess all potential impacts of the standard on existing leases and contracts, it currently believes the most significant impact relates to its accounting for office operating leases. The Company anticipates that the adoption of ASU 2016-02 will have a material impact on the Company’s condensed consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Improvements to Non-Employee Share-Based Payment Accounting , which simplifies the accounting for share-based payments granted to non-employees for goods and services. Under the literature, most of the guidance on such payments to non-employees would be aligned with the requirements for share-based payments granted to employees currently under ASC 718, Compensation - Stock Compensation . Board members are the only non-employees that the Company grants to, who are treated as “employees” under ASC 718. The guidance is effective for public companies for fiscal years, and interim fiscal periods within those fiscal years, beginning after December 15, 2018. The Company believes that the adoption of ASU 2018-07 will not have a significant impact on the Company’s condensed consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block] | The cumulative effect adjustment decreased the opening balance of retained earnings on January 1, 2018, as follows (in thousands): Closing balance at December 31, 2017 Adjustments due to ASC 606 Opening balance at January 1, 2018 Accounts receivable, net $ 24,174 $ (1,333 ) $ 22,841 Deferred revenue and student deposits $ 70,766 $ (333 ) $ 70,433 Retained earnings $ 426,356 $ (1,000 ) $ 425,356 The following tables present the impact of changes to the condensed consolidated financial statement line items as a result of applying ASC 606 to the periods presented (in thousands): For the three months ended September 30, 2018 As Reported under ASC 606 Adjustments due to ASC 606 Amounts under ASC 605 Revenue $ 112,846 $ 2,330 $ 115,176 Instructional costs and services (1) $ 55,109 $ 1,679 $ 56,788 Net income $ 1,661 $ 650 $ 2,311 For the nine months ended September 30, 2018 As Reported under ASC 606 Adjustments due to ASC 606 Amounts under ASC 605 Revenue $ 348,660 $ 3,609 $ 352,269 Instructional costs and services (1) $ 166,120 $ 4,225 $ 170,345 Net income $ 18,051 $ (616 ) $ 17,435 (1) Adjustment for instructional costs and services is due to change in provision for bad debts. As of September 30, 2018 As Reported under ASC 606 Adjustments due to ASC 606 Amounts under ASC 605 Accounts receivable, net $ 28,920 $ 1,107 $ 30,027 Deferred revenue and student deposits $ 58,399 $ 723 $ 59,122 Retained earnings $ 443,407 $ (384 ) $ 443,023 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue Recognition [Abstract] | |
Disaggregation of revenue | The following table presents the Company’s net revenue disaggregated based on the timing of revenue recognition (in thousands): Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 Over time, over period of instruction $ 96,735 $ 301,905 Over time, full tuition grant (1) 9,986 27,825 Point in time (2) 6,125 18,930 Total revenue, net $ 112,846 $ 348,660 (1) Represents revenue generated from the corporate full tuition grant (“FTG”) program. (2) Represents revenue generated from digital textbooks and other miscellaneous fees. The following table presents the Company’s net revenue disaggregated based on the revenue source (in thousands): Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 Tuition revenue, net $ 102,352 $ 317,353 Digital materials revenue, net 6,284 18,951 Technology fee revenue, net 3,777 10,861 Other revenue, net (1) 433 1,495 Total revenue, net $ 112,846 $ 348,660 (1) Primarily consists of revenues generated from services such as graduation fees, transcript fees, and other miscellaneous services. |
Deferred revenue of Company's contracts with customers | Below are the opening and closing balances of deferred revenue from the Company’s contracts with customers (in thousands): Deferred Revenue Opening balance, January 1, 2018 $ 22,001 Closing balance, September 30, 2018 23,833 Increase (Decrease) $ 1,832 |
Restructuring and Impairment _2
Restructuring and Impairment Expense Restructuring and Impairment Expense (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and impairment charges | The following table summarizes the amounts recorded in the restructuring and impairment charges line item on the Company’s condensed consolidated statements of income for each of the periods presented (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Asset impairment $ — $ — $ 325 $ — Student transfer agreement costs (268 ) — (268 ) — Severance costs 855 2,175 1,874 2,175 Lease exit and other costs 638 5,829 1,864 5,829 Total restructuring and impairment charges $ 1,225 $ 8,004 $ 3,795 $ 8,004 |
Schedule of restructuring reserve by type of cost | The following table summarizes the changes in the Company's restructuring and impairment liability by type during the nine months ended September 30, 2018 (in thousands): Asset Impairment Student Transfer Agreement Costs Severance Costs Lease Exit and Other Costs Total Balance at December 31, 2017 $ — $ 594 $ 195 $ 10,643 $ 11,432 Restructuring and impairment expense 325 (268 ) 1,874 1,864 3,795 Payments and adjustments (325 ) (270 ) (1,459 ) (10,605 ) (12,659 ) Balance at September 30, 2018 $ — $ 56 $ 610 $ 1,902 $ 2,568 |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Information of Short and Long-term Investments | The following tables summarize the fair value information for investments as of September 30, 2018 and December 31, 2017 , respectively (in thousands): As of September 30, 2018 Level 1 Level 2 Level 3 Total Mutual funds $ 2,203 $ — $ — $ 2,203 As of December 31, 2017 Level 1 Level 2 Level 3 Total Mutual funds $ 2,065 $ — $ — $ 2,065 |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable, Net | Accounts receivable, net, consists of the following (in thousands): As of As of Accounts receivable $ 43,254 $ 39,363 Less allowance for doubtful accounts (14,334 ) (15,189 ) Accounts receivable, net $ 28,920 $ 24,174 |
Changes in Allowance for Doubtful Accounts, Accounts Receivable | The following table presents the changes in the allowance for doubtful accounts for accounts receivable for the periods indicated (in thousands): Allowance for doubtful accounts receivable: Beginning Balance Charged to Expense Deductions (1) Ending Balance For the nine months ended September 30, 2018 $ (15,189 ) $ 19,339 $ (20,194 ) $ (14,334 ) For the nine months ended September 30, 2017 $ (15,621 ) $ 23,028 $ (22,540 ) $ (16,109 ) (1) Deductions represent accounts written off, net of recoveries. |
Other Significant Balance She_2
Other Significant Balance Sheet Accounts (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Balance Sheet Related Disclosures [Abstract] | |
Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consists of the following (in thousands): As of As of Prepaid expenses $ 6,106 $ 6,195 Prepaid licenses 5,554 4,882 Income tax receivable 5,037 8,889 Prepaid insurance 2,625 1,215 Insurance recoverable 682 1,192 Other current assets 423 15 Total prepaid expenses and other current assets $ 20,427 $ 22,388 |
Property and Equipment, Net | Property and equipment, net, consists of the following (in thousands): As of As of Buildings, build-to-suit $ 6,076 $ — Furniture and office equipment 43,538 43,330 Software 12,516 12,313 Leasehold improvements 5,375 5,445 Vehicles 22 22 Total property and equipment 67,527 61,110 Less accumulated depreciation and amortization (52,812 ) (50,676 ) Total property and equipment, net $ 14,715 $ 10,434 |
Goodwill and Intangibles, Net | Goodwill and intangibles, net, consists of the following (in thousands): September 30, 2018 Definite-lived intangible assets: Gross Carrying Amount Accumulated Amortization Net Carrying Amount Capitalized curriculum costs $ 21,954 $ (20,127 ) $ 1,827 Purchased intangible assets 15,850 (6,912 ) 8,938 Total definite-lived intangible assets $ 37,804 $ (27,039 ) $ 10,765 Goodwill and indefinite-lived intangibles 2,567 Total goodwill and intangibles, net $ 13,332 December 31, 2017 Definite-lived intangible assets: Gross Carrying Amount Accumulated Amortization Net Carrying Amount Capitalized curriculum costs $ 21,463 $ (19,300 ) $ 2,163 Purchased intangible assets 15,850 (5,987 ) 9,863 Total definite-lived intangible assets $ 37,313 $ (25,287 ) $ 12,026 Goodwill and indefinite-lived intangibles 2,567 Total goodwill and intangibles, net $ 14,593 |
Intangibles, Estimated Remaining Amortization Expense | The following table summarizes the estimated remaining amortization expense as of each fiscal year ended below (in thousands): Year Ended December 31, Remainder of 2018 $ 566 2019 2,000 2020 1,733 2021 1,495 2022 1,264 Thereafter 3,707 Total future amortization expense $ 10,765 |
Accounts Payable and Accrued Liabilities | Accounts payable and accrued liabilities consists of the following (in thousands): As of As of Accounts payable $ 4,004 $ 5,619 Accrued salaries and wages 5,186 8,573 Accrued bonus 6,707 6,924 Accrued vacation 8,089 8,237 Accrued litigation and fees 8,041 9,886 Accrued expenses 19,970 16,024 Current leases payable 4,122 12,971 Accrued insurance liability 2,250 2,931 Total accounts payable and accrued liabilities $ 58,369 $ 71,165 |
Deferred Revenue and Student Deposits | Deferred revenue and student deposits consists of the following (in thousands): As of As of Deferred revenue $ 23,832 $ 22,001 Student deposits 34,567 48,765 Total deferred revenue and student deposits $ 58,399 $ 70,766 |
Other Long-Term Liabilities | Other long-term liabilities consists of the following (in thousands): As of As of Uncertain tax positions $ 842 $ 8,893 Lease financing obligation 6,076 — Other long-term liabilities 2,901 3,815 Total other long-term liabilities $ 9,819 $ 12,708 |
Lease Obligations (Tables)
Lease Obligations (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Lease Obligations [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | The following table summarizes the future minimum rental payments under non-cancelable operating lease arrangements in effect at September 30, 2018 (in thousands): Year Ended December 31, Remainder of 2018 $ 5,104 2019 21,010 2020 11,209 2021 7,321 2022 3,825 Thereafter 20,677 Total minimum payments $ 69,146 During the third quarter of 2018, the Company entered into a lease agreement consisting of approximately 131,000 square feet of office space located in Chandler, Arizona. Although the Company is not the legal owner of the leased space, the Company is involved in the construction and the build-out of the space, and as such, serves as the construction agent on behalf of the landlord. Under such arrangement, the Company has obligations to fund cost over-runs in its capacity as the construction agent, and accordingly has determined that under lease accounting standard ASC 840, Leases, it bears substantially all of the risks and rewards of ownership as measured under GAAP. The Company is therefore required to report the landlord's costs of construction on its balance sheet as a fixed asset during the construction period as if the Company owned such asset. In connection with this arrangement, the Company has recorded a $6.1 million building in construction in property and equipment, net, and an equal and corresponding lease financing obligation in other long-term liabilities, on the condensed consolidated balance sheets as of September 30, 2018. |
Income Per Share (Tables)
Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Earnings Per Common Share | The following table sets forth the computation of basic and diluted income per share for the periods indicated (in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Numerator: Net income $ 1,661 $ 106 $ 18,051 $ 14,256 Denominator: Weighted average number of common shares outstanding 27,061 29,123 27,131 33,333 Effect of dilutive options and stock units 528 548 401 860 Diluted weighted average number of common shares outstanding 27,589 29,671 27,532 34,193 Income per share: Basic $ 0.06 $ 0.00 $ 0.67 $ 0.43 Diluted $ 0.06 $ 0.00 $ 0.66 $ 0.42 |
Antidilutive Securities | The following table sets forth the number of stock options, RSUs and PSUs, excluded from the computation of diluted income per share for the periods indicated below because their effect was anti-dilutive (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Stock options 1,560 2,625 2,709 1,858 RSUs and PSUs 2 19 2 9 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies Recent Accounting Pronouncements (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Restricted cash | $ 19,786 | $ 19,921 | $ 19,786 | $ 19,921 | $ 20,428 | ||
Accounts receivable, net | 28,920 | 28,920 | $ 22,841 | 24,174 | |||
Prepaid Expense and Other Assets, Current | 20,427 | 20,427 | 22,388 | ||||
Deferred revenue and student deposits | 58,399 | 58,399 | 70,433 | 70,766 | |||
Retained earnings | 443,407 | 443,407 | 425,356 | 426,356 | |||
Revenues | 112,846 | 118,419 | 348,660 | 370,061 | |||
Instructional costs and services | 55,109 | 56,741 | 166,120 | 180,532 | |||
Net income | 1,661 | 106 | 18,051 | 14,256 | |||
Assets, Current | 234,427 | 234,427 | 254,153 | ||||
Other long-term assets | 8,688 | 8,688 | 5,456 | ||||
Assets | 271,162 | 271,162 | 284,636 | ||||
Liabilities, Current | 116,768 | 116,768 | 141,931 | ||||
Other long-term liabilities | 9,819 | 9,819 | 12,708 | ||||
Liabilities | 131,377 | 131,377 | 161,640 | ||||
Total stockholders equity | 139,785 | 143,939 | 139,785 | 143,939 | 122,996 | $ 276,670 | |
Liabilities and Equity | 271,162 | 271,162 | 284,636 | ||||
Costs and Expenses | 111,967 | 119,855 | 339,055 | 357,688 | |||
Operating Income (Loss) | 879 | (1,436) | 9,605 | 12,373 | |||
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest | 1,246 | (1,055) | 10,504 | 13,538 | |||
Income tax benefit | $ (415) | $ (1,161) | $ (7,547) | $ (718) | |||
Basic (in usd per share) | $ 0.06 | $ 0 | $ 0.67 | $ 0.43 | |||
Diluted (in usd per share) | $ 0.06 | $ 0 | $ 0.66 | $ 0.42 | |||
Provision for bad debts | $ 19,339 | $ 23,028 | |||||
Accounts receivable | (25,418) | (30,003) | |||||
Increase (Decrease) in Prepaid Expense and Other Assets | 1,962 | (1,081) | |||||
Increase (Decrease) In Contracts With Customer, Liability And Refund Liability | (12,034) | (11,857) | |||||
Increase (Decrease) in Other Operating Liabilities | (10,886) | (9,405) | |||||
Net Cash Provided by (Used in) Operating Activities | (10,668) | (16,744) | |||||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent | $ 1,661 | $ 106 | 18,051 | 14,257 | |||
Calculated under Revenue Guidance in Effect before Topic 606 | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Accounts receivable, net | 30,027 | 30,027 | 24,174 | ||||
Deferred revenue and student deposits | 59,122 | 59,122 | 70,766 | ||||
Retained earnings | 443,023 | 443,023 | 426,356 | ||||
Revenues | 115,176 | 352,269 | |||||
Instructional costs and services | 56,788 | 170,345 | |||||
Net income | 2,311 | 17,435 | |||||
ASU 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606 | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Accounts receivable, net | 1,107 | 1,107 | (1,333) | ||||
Deferred revenue and student deposits | 723 | 723 | (333) | ||||
Retained earnings | (384) | (384) | (1,000) | ||||
Revenues | 2,330 | 3,609 | |||||
Instructional costs and services | 1,679 | 4,225 | |||||
Net income | 650 | (616) | |||||
Previously Reported [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Restricted cash | 25,444 | 25,444 | 20,428 | ||||
Accounts receivable, net | 33,566 | 33,566 | 27,077 | ||||
Prepaid Expense and Other Assets, Current | 20,361 | 20,361 | 22,388 | ||||
Retained earnings | 452,500 | 437,503 | 452,500 | 437,503 | 431,818 | 421,281 | |
Revenues | 114,858 | 119,367 | 353,723 | 373,438 | |||
Instructional costs and services | 54,470 | 57,756 | 165,318 | 181,943 | |||
Net income | 4,305 | 39 | 23,833 | 16,222 | |||
Assets, Current | 244,665 | 244,665 | 257,056 | ||||
Other long-term assets | 3,030 | 3,030 | 5,456 | ||||
Assets | 275,742 | 275,742 | 287,539 | ||||
Deferred Revenue and Credits, Current | 53,870 | 53,870 | 68,207 | ||||
Liabilities, Current | 112,239 | 112,239 | 139,372 | ||||
Other long-term liabilities | 9,835 | 9,835 | 12,708 | ||||
Liabilities | 126,864 | 126,864 | 159,081 | ||||
Total stockholders equity | 148,878 | 149,941 | 148,878 | 149,941 | 128,458 | $ 280,706 | |
Liabilities and Equity | 275,742 | 275,742 | $ 287,539 | ||||
Costs and Expenses | 111,328 | 120,870 | 338,253 | 359,099 | |||
Operating Income (Loss) | 3,530 | (1,503) | 15,470 | 14,339 | |||
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest | 3,897 | (1,122) | 16,369 | 15,504 | |||
Income tax benefit | $ (408) | $ (1,161) | $ (7,464) | $ (718) | |||
Basic (in usd per share) | $ 0.16 | $ 0 | $ 0.88 | $ 0.49 | |||
Diluted (in usd per share) | $ 0.16 | $ 0 | $ 0.87 | $ 0.47 | |||
Provision for bad debts | $ 18,538 | $ 24,440 | |||||
Accounts receivable | (27,713) | (32,286) | |||||
Increase (Decrease) in Prepaid Expense and Other Assets | 2,027 | ||||||
Increase (Decrease) in Deferred Revenue and Customer Advances and Deposits | (14,801) | (12,952) | |||||
Increase (Decrease) in Other Operating Liabilities | (10,870) | ||||||
Net Cash Provided by (Used in) Operating Activities | (10,668) | (16,744) | |||||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent | $ 4,305 | $ 39 | $ 23,833 | $ 16,223 | |||
Previously Reported [Member] | ASU 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606 | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Retained earnings | $ (3,200) |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies Restatement of Previously Issued Financials (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Restricted Cash and Cash Equivalents, Noncurrent | $ 5,658 | $ 0 | |||
Impact of Restatement on Opening Retained Earnings, Net of Tax | $ 2,200 | ||||
Retained earnings | 443,407 | 425,356 | 426,356 | ||
Total stockholders equity | 139,785 | 122,996 | $ 143,939 | $ 276,670 | |
Previously Reported [Member] | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Retained earnings | 452,500 | 431,818 | 437,503 | 421,281 | |
Total stockholders equity | 148,878 | 128,458 | 149,941 | 280,706 | |
Retained Earnings | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Retained earnings | $ 431,501 | $ 417,245 | |||
Total stockholders equity | 443,407 | $ 426,356 | |||
ASU 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606 | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Retained earnings | $ (384) | (1,000) | |||
ASU 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606 | Previously Reported [Member] | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Retained earnings | $ (3,200) |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Jan. 01, 2018 | |
Disaggregation of Revenue [Line Items] | |||||
Revenues | $ 112,846 | $ 118,419 | $ 348,660 | $ 370,061 | |
Deferred revenue, opening balance | 23,833 | 23,833 | $ 22,001 | ||
Deferred revenue, ending balance | 23,833 | 23,833 | $ 22,001 | ||
Deferred revenue, increase (decrease) | 1,832 | ||||
Deferred revenue, revenue recognized | 21,900 | ||||
Over time, over period of instruction | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 96,735 | 301,905 | |||
Over time, full tuition grant | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 9,986 | 27,825 | |||
Point in time | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 6,125 | 18,930 | |||
Tuition revenue, net | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 102,352 | 317,353 | |||
Digital materials revenue, net | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 6,284 | 18,951 | |||
Technology fee revenue, net | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 3,777 | 10,861 | |||
Other revenue, net | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | $ 433 | $ 1,495 |
Restructuring and Impairment _3
Restructuring and Impairment Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve at beginning of period | $ 11,432 | |||
Restructuring and impairment expense | $ 1,225 | $ 8,004 | 3,795 | $ 8,004 |
Payments and adjustments | (12,659) | |||
Restructuring reserve at end of period | 2,568 | 2,568 | ||
Asset Impairment | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve at beginning of period | 0 | |||
Restructuring and impairment expense | 0 | 0 | 325 | 0 |
Payments and adjustments | (325) | |||
Restructuring reserve at end of period | 0 | 0 | ||
Student Transfer Agreement Costs | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve at beginning of period | 594 | |||
Restructuring and impairment expense | (268) | 0 | (268) | 0 |
Payments and adjustments | (270) | |||
Restructuring reserve at end of period | 56 | 56 | ||
Severance Costs | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve at beginning of period | 195 | |||
Restructuring and impairment expense | 855 | 2,175 | 1,874 | 2,175 |
Payments and adjustments | (1,459) | |||
Restructuring reserve at end of period | 610 | 610 | ||
Lease Exit and Other Costs | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve at beginning of period | 10,643 | |||
Restructuring and impairment expense | 638 | $ 5,829 | 1,864 | $ 5,829 |
Payments and adjustments | (10,605) | |||
Restructuring reserve at end of period | $ 1,902 | $ 1,902 |
Investments (Details)
Investments (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax | $ 0 | $ 0 | |
Mutual funds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Available-for-sale securities | 2,203,000 | $ 2,065,000 | |
Mutual funds | Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Available-for-sale securities | 2,203,000 | 2,065,000 | |
Mutual funds | Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Available-for-sale securities | 0 | 0 | |
Mutual funds | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Available-for-sale securities | $ 0 | $ 0 |
Accounts Receivable, Net (Detai
Accounts Receivable, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Receivables [Abstract] | |||
Accounts receivable | $ 43,254 | $ 39,363 | |
Less allowance for doubtful accounts | (14,334) | (15,189) | |
Accounts receivable, net | $ 28,920 | $ 22,841 | $ 24,174 |
Accounts Receivable, Net (Chang
Accounts Receivable, Net (Change in Allowance) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Receivables [Abstract] | ||
Beginning Balance | $ (15,189) | $ (15,621) |
Provision for bad debts | 19,339 | 23,028 |
Deductions | (20,194) | (22,540) |
Ending Balance | $ (14,334) | $ (16,109) |
Other Significant Balance She_3
Other Significant Balance Sheet Accounts (Prepaid Expenses and Other Current Assets) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Prepaid Expense and Other Assets, Current [Abstract] | ||
Prepaid expenses | $ 6,106 | $ 6,195 |
Prepaid licenses | 5,554 | 4,882 |
Income tax receivable | 5,037 | 8,889 |
Prepaid insurance | 2,625 | 1,215 |
Insurance recoverable | 682 | 1,192 |
Other current assets | 423 | 15 |
Total prepaid expenses and other current assets | $ 20,427 | $ 22,388 |
Other Significant Balance She_4
Other Significant Balance Sheet Accounts (Property and Equipment, Net) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 67,527 | $ 67,527 | $ 61,110 | ||
Less accumulated depreciation and amortization | (52,812) | (52,812) | (50,676) | ||
Total property and equipment, net | 14,715 | 14,715 | 10,434 | ||
Depreciation | 1,000 | $ 1,300 | 3,200 | $ 4,200 | |
Buildings | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 6,076 | 6,076 | 0 | ||
Furniture and office equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 43,538 | 43,538 | 43,330 | ||
Software | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 12,516 | 12,516 | 12,313 | ||
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 5,375 | 5,375 | 5,445 | ||
Vehicles | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 22 | $ 22 | $ 22 |
Other Significant Balance She_5
Other Significant Balance Sheet Accounts (Goodwill and Intangibles, Net) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Goodwill and Intangibles, Net | |||||
Definite-lived intangible assets, gross carrying amount | $ 37,804 | $ 37,804 | $ 37,313 | ||
Definite-lived intangible assets, accumulated amortization | (27,039) | (27,039) | (25,287) | ||
Definite-lived intangible assets, net carrying amount | 10,765 | 10,765 | 12,026 | ||
Goodwill and indefinite-lived intangibles | 2,567 | 2,567 | 2,567 | ||
Total goodwill and intangibles, net | 13,332 | 13,332 | 14,593 | ||
Amortization of intangible assets | 600 | $ 800 | 2,000 | $ 2,600 | |
Capitalized Curriculum Costs | |||||
Goodwill and Intangibles, Net | |||||
Definite-lived intangible assets, gross carrying amount | 21,954 | 21,954 | 21,463 | ||
Definite-lived intangible assets, accumulated amortization | (20,127) | (20,127) | (19,300) | ||
Definite-lived intangible assets, net carrying amount | 1,827 | 1,827 | 2,163 | ||
Purchased Intangible Assets | |||||
Goodwill and Intangibles, Net | |||||
Definite-lived intangible assets, gross carrying amount | 15,850 | 15,850 | 15,850 | ||
Definite-lived intangible assets, accumulated amortization | (6,912) | (6,912) | (5,987) | ||
Definite-lived intangible assets, net carrying amount | $ 8,938 | $ 8,938 | $ 9,863 |
Other Significant Balance She_6
Other Significant Balance Sheet Accounts (Remaining Amortization Expense) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
Remainder of 2018 | $ 566 | |
2019 | 2,000 | |
2020 | 1,733 | |
2021 | 1,495 | |
2022 | 1,264 | |
Thereafter | 3,707 | |
Definite-lived intangible assets, net carrying amount | $ 10,765 | $ 12,026 |
Other Significant Balance She_7
Other Significant Balance Sheet Accounts (Accounts Payable and Accrued Liabilities) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Balance Sheet Related Disclosures [Abstract] | ||
Accounts payable | $ 4,004 | $ 5,619 |
Accrued salaries and wages | 5,186 | 8,573 |
Accrued bonus | 6,707 | 6,924 |
Accrued vacation | 8,089 | 8,237 |
Accrued litigation and fees | 8,041 | 9,886 |
Accrued expenses | 19,970 | 16,024 |
Current leases payable | 4,122 | 12,971 |
Accrued insurance liability | 2,250 | 2,931 |
Total accounts payable and accrued liabilities | $ 58,369 | $ 71,165 |
Other Significant Balance She_8
Other Significant Balance Sheet Accounts (Deferred Revenue) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Deferred Revenue [Abstract] | |||
Deferred revenue | $ 23,832 | $ 22,001 | |
Student deposits | 34,567 | 48,765 | |
Total deferred revenue and student deposits | $ 58,399 | $ 70,433 | $ 70,766 |
Other Significant Balance She_9
Other Significant Balance Sheet Accounts (Other Long-term Liabilities) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Balance Sheet Related Disclosures [Abstract] | ||
Uncertain tax positions | $ 842 | $ 8,893 |
Other long-term liabilities | 2,901 | 3,815 |
Total other long-term liabilities | 9,819 | 12,708 |
Capital Lease Obligations, Noncurrent | $ 6,076 | $ 0 |
Credit Facilities (Details)
Credit Facilities (Details) $ in Millions | Sep. 30, 2018USD ($) |
Debt Disclosure [Abstract] | |
Revolving line of credit, letters of credit outstanding | $ 15.4 |
Surety Bond Facility [Abstract] | |
Surety bond facility, available amount | 6.5 |
Surety bond facility, issued amount | $ 4.3 |
Lease Obligations (Details)
Lease Obligations (Details) ft² in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)ft² | Dec. 31, 2017USD ($) | |
Operating Leased Assets [Line Items] | ||||
Property and equipment, gross | $ 67,527 | $ 61,110 | ||
Operating leases, rent expense, net | $ 11,300 | $ 11,300 | ||
Remainder of 2018 | 5,104 | |||
2019 | 21,010 | |||
2020 | 11,209 | |||
2021 | 7,321 | |||
2022 | 3,825 | |||
Thereafter | 20,677 | |||
Total minimum payments | 69,146 | |||
Buildings | ||||
Operating Leased Assets [Line Items] | ||||
Property and equipment, gross | $ 6,076 | $ 0 | ||
Build To Suit Leases [Member] | ||||
Operating Leased Assets [Line Items] | ||||
Net Rentable Area | ft² | 131 | |||
Build To Suit Leases [Member] | Buildings | ||||
Operating Leased Assets [Line Items] | ||||
Property and equipment, gross | $ 6,100 |
Income Per Share (Basic and Dil
Income Per Share (Basic and Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Numerator: | ||||
Net income | $ 1,661 | $ 106 | $ 18,051 | $ 14,256 |
Denominator: | ||||
Weighted average number of common shares outstanding (in shares) | 27,061 | 29,123 | 27,131 | 33,333 |
Effect of dilutive options and stock units (in shares) | 528 | 548 | 401 | 860 |
Diluted weighted average number of common shares outstanding (in shares) | 27,589 | 29,671 | 27,532 | 34,193 |
Income per share: | ||||
Basic (in usd per share) | $ 0.06 | $ 0 | $ 0.67 | $ 0.43 |
Diluted (in usd per share) | $ 0.06 | $ 0 | $ 0.66 | $ 0.42 |
Income Per Share (Anti-dilutive
Income Per Share (Anti-dilutive Securities) (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of dilutive common shares outstanding | 1,560 | 2,625 | 2,709 | 1,858 |
RSUs and PSUs | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of dilutive common shares outstanding | 2 | 19 | 2 | 9 |
Stock Repurchase Program Stoc_2
Stock Repurchase Program Stock Repurchase Program (Details) - USD ($) | Nov. 21, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Nov. 17, 2017 |
Stock Repurchase Programs [Abstract] | ||||
Stock repurchased during period (in shares) | 2,100,000 | 391,887 | 18,100,000 | |
Payments for repurchase of common stock | $ 16,700,000 | $ 2,400,000 | $ 152,000,000 | |
Stock repurchase program, authorized amount | $ 20,000,000 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 1.3 | $ 1.1 | $ 3.6 | $ 2.8 |
Income tax benefit of stock-based compensation expense | 0.3 | $ 0.4 | 0.9 | $ 1.1 |
Unrecognized compensation cost related to unvested options and RSUs | $ 5.9 | $ 5.9 | ||
Restricted Stock Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Non-option equity instruments granted during the period (in units) | 800,000 | 500,000 | ||
Grant date fair value (in dollars per share) | $ 6.84 | $ 10.48 | ||
Equity instruments other than options vested during period (in units) | 400,000 | 400,000 | ||
Performance Shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity instruments other than options vested during period (in units) | 0 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 0 | |||
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock options granted (in shares) | 35,088 | 300,000 | ||
Grant date fair value of options granted (in dollars per share) | $ 2.97 | $ 4.76 | ||
Stock options exercised (in shares) | 800,000 | 500,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Sep. 30, 2018 | Jun. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2018 | Dec. 21, 2017 | Mar. 31, 2018 | Dec. 31, 2017 | |
Income Tax Contingency [Line Items] | ||||||||
Effective tax rate | (71.80%) | |||||||
Proceeds from Income Tax Refunds | $ 1,800 | |||||||
Unrecognized tax benefit | $ 100 | $ 5,700 | ||||||
Federal statutory income tax rate, percent | 35.00% | |||||||
Unrecognized tax benefits | 800 | 800 | $ 18,900 | |||||
Gross unrecognized tax benefits that would impact effective tax rate if recognized | $ 700 | $ 700 | $ 14,800 | |||||
Settlement with taxing authority | ||||||||
Income Tax Contingency [Line Items] | ||||||||
Effective tax rate | 1.40% | |||||||
Scenario, forecast | ||||||||
Income Tax Contingency [Line Items] | ||||||||
Federal statutory income tax rate, percent | 21.00% | |||||||
CALIFORNIA | ||||||||
Income Tax Contingency [Line Items] | ||||||||
Unrecognized tax benefit | $ 5,700 | |||||||
Unrecognized tax benefits | $ 7,800 | |||||||
RSUs and PSUs | ||||||||
Income Tax Contingency [Line Items] | ||||||||
Payments Related to Tax Withholding for Share-based Compensation | $ 884 | $ 1,762 | ||||||
Stock options | ||||||||
Income Tax Contingency [Line Items] | ||||||||
Payments Related to Tax Withholding for Share-based Compensation | $ 1,097 | $ 0 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Sep. 30, 2018USD ($) |
CALIFORNIA | |
Loss Contingencies [Line Items] | |
Estimated litigation liability | $ 8 |