Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Jul. 27, 2017 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | LOPE | |
Entity Registrant Name | GRAND CANYON EDUCATION, INC. | |
Entity Central Index Key | 1,434,588 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 48,115,342 |
Consolidated Income Statements
Consolidated Income Statements (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement [Abstract] | ||||
Net revenue | $ 218,301 | $ 191,279 | $ 466,507 | $ 418,237 |
Costs and expenses: | ||||
Instructional costs and services | 95,030 | 84,599 | 197,604 | 179,253 |
Admissions advisory and related | 31,085 | 28,866 | 63,057 | 58,410 |
Advertising | 24,776 | 22,149 | 49,407 | 43,256 |
Marketing and promotional | 2,264 | 2,108 | 4,724 | 4,350 |
General and administrative | 10,058 | 8,809 | 19,999 | 19,529 |
Total costs and expenses | 163,213 | 146,531 | 334,791 | 304,798 |
Operating income | 55,088 | 44,748 | 131,716 | 113,439 |
Interest expense | (495) | (158) | (1,075) | (487) |
Interest and other income | 739 | 293 | 741 | 2,341 |
Income before income taxes | 55,332 | 44,883 | 131,382 | 115,293 |
Income tax expense | 15,485 | 17,257 | 35,623 | 44,002 |
Net income | $ 39,847 | $ 27,626 | $ 95,759 | $ 71,291 |
Earnings per share: | ||||
Basic income per share | $ 0.85 | $ 0.60 | $ 2.04 | $ 1.56 |
Diluted income per share | $ 0.83 | $ 0.59 | $ 1.99 | $ 1.52 |
Basic weighted average shares outstanding | 47,151 | 46,004 | 46,949 | 45,813 |
Diluted weighted average shares outstanding | 48,192 | 46,990 | 48,131 | 46,925 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 39,847 | $ 27,626 | $ 95,759 | $ 71,291 |
Other comprehensive income, net of tax: | ||||
Unrealized (losses) gains on available-for-sale securities, net of taxes of $10 and $59 for the three months ended June 30, 2017 and 2016, respectively, and $232 and $83 for the six months ended June 30, 2017 and 2016, respectively | (17) | 97 | 376 | 136 |
Unrealized losses on hedging derivatives, net of taxes of $42 and $53 for the three months ended June 30, 2017 and 2016, respectively, and $45 and $201 for the six months ended June 30, 2017 and 2016, respectively | (69) | (87) | (74) | (325) |
Comprehensive income | $ 39,761 | $ 27,636 | $ 96,061 | $ 71,102 |
Consolidated Statements of Com4
Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Unrealized (losses) gains on available-for-sale securities, taxes | $ 10 | $ 59 | $ 232 | $ 83 |
Unrealized losses on hedging derivatives, taxes | $ 42 | $ 53 | $ 45 | $ 201 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 66,282 | $ 45,976 |
Restricted cash and cash equivalents | 79,440 | 84,931 |
Investments | 89,414 | 62,596 |
Accounts receivable, net | 10,933 | 9,999 |
Income tax receivable | 4,546 | 4,686 |
Other current assets | 22,156 | 21,880 |
Total current assets | 272,771 | 230,068 |
Property and equipment, net | 888,184 | 855,528 |
Prepaid royalties | 2,911 | 3,059 |
Goodwill | 2,941 | 2,941 |
Other assets | 1,756 | 897 |
Total assets | 1,168,563 | 1,092,493 |
Current liabilities | ||
Accounts payable | 22,489 | 24,824 |
Accrued compensation and benefits | 19,913 | 19,697 |
Accrued liabilities | 20,641 | 21,283 |
Income taxes payable | 3,636 | 2,734 |
Student deposits | 79,520 | 85,881 |
Deferred revenue | 52,004 | 40,739 |
Current portion of notes payable | 6,665 | 31,636 |
Total current liabilities | 204,868 | 226,794 |
Other noncurrent liabilities | 1,433 | 1,689 |
Deferred income taxes, noncurrent | 26,778 | 23,708 |
Notes payable, less current portion | 63,270 | 66,616 |
Total liabilities | 296,349 | 318,807 |
Commitments and contingencies | ||
Stockholders' equity | ||
Preferred stock, $0.01 par value, 10,000 shares authorized; 0 shares issued and outstanding at June 30, 2017 and December 31, 2016 | ||
Common stock, $0.01 par value, 100,000 shares authorized; 52,168 and 51,509 shares issued and 48,053 and 47,559 shares outstanding at June 30, 2017 and December 31, 2016, respectively | 522 | 515 |
Treasury stock, at cost, 4,115 and 3,950 shares of common stock at June 30, 2017 and December 31, 2016, respectively | (99,051) | (89,394) |
Additional paid-in capital | 224,735 | 212,559 |
Accumulated other comprehensive loss | (608) | (910) |
Retained earnings | 746,616 | 650,916 |
Total stockholders' equity | 872,214 | 773,686 |
Total liabilities and stockholders' equity | $ 1,168,563 | $ 1,092,493 |
Consolidated Balance Sheets (U6
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 52,168,000 | 51,509,000 |
Common stock, shares outstanding | 48,053,000 | 47,559,000 |
Treasury stock, shares | 4,115,000 | 3,950,000 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity (Unaudited) - 6 months ended Jun. 30, 2017 - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock [Member] | Treasury Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Loss [Member] | Retained Earnings [Member] |
Beginning Balance at Dec. 31, 2016 | $ 773,686 | $ 515 | $ (89,394) | $ 212,559 | $ (910) | $ 650,916 |
Beginning Balance, Shares at Dec. 31, 2016 | 51,509 | 3,950 | ||||
Comprehensive income | 96,061 | 302 | 95,759 | |||
Restricted shares forfeited | 0 | $ 0 | $ 0 | 0 | 0 | 0 |
Restricted shares forfeited, Shares | 16 | |||||
Share-based compensation | (3,428) | $ 2 | $ (9,657) | 6,227 | ||
Share-based compensation, Shares | 192 | 149 | ||||
Exercise of stock options | 5,895 | $ 5 | 5,890 | |||
Exercise of stock options, Shares | 467 | |||||
Ending Balance at Jun. 30, 2017 | $ 872,214 | $ 522 | $ (99,051) | 224,735 | $ (608) | 746,616 |
Ending Balance, Shares at Jun. 30, 2017 | 52,168 | 4,115 | ||||
Cumulative effect from the adoption of accounting pronouncements, net of taxes | $ 59 | $ (59) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flows provided by operating activities: | ||
Net income | $ 95,759 | $ 71,291 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Share-based compensation | 6,229 | 5,831 |
Provision for bad debts | 7,830 | 7,963 |
Depreciation and amortization | 26,856 | 21,245 |
Deferred income taxes | 3,372 | 2,478 |
Other | 214 | (1,682) |
Changes in assets and liabilities: | ||
Accounts receivable | (8,764) | (8,745) |
Prepaid expenses and other | (1,413) | 1,221 |
Accounts payable | (1,708) | (2,386) |
Accrued liabilities and employee related liabilities | (439) | 11,481 |
Income taxes receivable/payable | 1,042 | 835 |
Deferred rent | (222) | (535) |
Deferred revenue | 11,265 | 9,344 |
Student deposits | (6,361) | (5,877) |
Net cash provided by operating activities | 133,660 | 112,464 |
Cash flows used in investing activities: | ||
Capital expenditures | (50,491) | (115,615) |
Purchases of land, building and golf course improvements related to off-site development | (9,374) | (24,769) |
Proceeds received from note receivable | 501 | |
Return of equity method investment | 1,749 | |
Purchases of investments | (52,181) | (23,525) |
Proceeds from sale or maturity of investments | 25,363 | 57,449 |
Net cash used in investing activities | (86,683) | (104,210) |
Cash flows (used in) provided by financing activities: | ||
Principal payments on notes payable and capital lease obligations | (3,400) | (3,831) |
Debt issuance costs | (194) | |
Net borrowings from revolving line of credit | (25,000) | 25,000 |
Repurchase of common shares including shares withheld in lieu of income taxes | (9,657) | (19,227) |
Net proceeds from exercise of stock options | 5,895 | 6,972 |
Net cash (used in) provided by financing activities | (32,162) | 8,720 |
Net increase in cash and cash equivalents and restricted cash | 14,815 | 16,974 |
Cash and cash equivalents and restricted cash, beginning of period | 130,907 | 98,420 |
Cash and cash equivalents and restricted cash, end of period | 145,722 | 115,394 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 1,167 | 481 |
Cash paid for income taxes | 31,718 | 40,176 |
Supplemental disclosure of non-cash investing and financing activities | ||
Purchases of property and equipment included in accounts payable | $ 7,118 | 19,798 |
Tax benefit of Spirit warrant intangible | 127 | |
Shortfall tax expense from share-based compensation | $ 257 |
Nature of Business
Nature of Business | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | 1. Nature of Business Grand Canyon Education, Inc. (together with its subsidiaries, the “University”) is a comprehensive regionally accredited university that offers over 220 graduate and undergraduate degree programs, emphases and certificates across nine colleges both online and on ground at our over 270 acre campus in Phoenix, Arizona, at leased facilities and at facilities owned by third party employers. Our undergraduate programs are designed to be innovative and to meet the future needs of employers, while providing students with the needed critical thinking and effective communication skills developed through a Christian-oriented, liberal arts foundation. We offer master’s and doctoral degrees in contemporary fields that are designed to provide students with the capacity for transformational leadership in their chosen industry, emphasizing the immediate relevance of theory, application, and evaluation to promote personal and organizational change. The University is accredited by The Higher Learning Commission. The University’s wholly-owned subsidiaries are primarily used to facilitate expansion of the University campus. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of the University and its wholly-owned subsidiaries. Intercompany transactions have been eliminated in consolidation. Unaudited Interim Financial Information The accompanying unaudited interim consolidated financial statements of the University have been prepared in accordance with U.S. generally accepted accounting principles and pursuant to the rules and regulations of the United States Securities and Exchange Commission and the instructions to Form 10-Q 10-K Restricted Cash and Cash Equivalents A significant portion of the University’s revenue is received from students who participate in government financial aid and assistance programs. Restricted cash and cash equivalents primarily represent amounts received from the federal and state governments under various student aid grant and loan programs, such as Title IV. The University receives these funds subsequent to the completion of the authorization and disbursement process and holds them for the benefit of the student. The U.S. Department of Education (“Department of Education”) requires Title IV funds collected in advance of student billings to be restricted until the course begins. The University records all of these amounts as a current asset in restricted cash and cash equivalents. The majority of these funds remains as restricted for an average of 60 to 90 days from the date of receipt. Investments The University considers its investments in municipal securities as available-for-sale Available-for-sale Derivatives and Hedging Derivative financial instruments are recorded on the balance sheet as assets or liabilities and re-measured Derivative financial instruments enable the University to manage its exposure to interest rate risk. The University does not engage in any derivative instrument trading activity. Credit risk associated with the University’s derivatives is limited to the risk that a derivative counterparty will not perform in accordance with the terms of the contract. Exposure to counterparty credit risk is considered low because these agreements have been entered into with institutions with strong credit ratings, and they are expected to perform fully under the terms of the agreements. On February 27, 2013, the University entered into an interest rate corridor to manage its 30 Day LIBOR interest exposure related to its variable rate debt. The fair value of the interest rate corridor instrument as of June 30, 2017 and December 31, 2016 was $372 and $490, respectively, which is included in other assets. The fair value of the derivative instrument was determined using a hypothetical derivative transaction and Level 2 of the hierarchy of valuation inputs. This derivative instrument was originally designated as a cash flow hedge of variable rate debt obligations. The adjustment of $119 and $526 for the six months ended June 30, 2017 and 2016, respectively, for the effective portion of the losses on the derivatives is included as a component of other comprehensive income, net of taxes. The interest rate corridor instrument reduces variable interest rate risk starting March 1, 2013 through December 20, 2019 with a notional amount of $70,000 as of June 30, 2017. The corridor instrument’s terms permits the University to hedge its interest rate risk at several thresholds; the University pays variable interest monthly based on the 30 Day LIBOR rates until that index reaches 1.5%. If 30 Day LIBOR is equal to 1.5% through 3.0%, the University pays 1.5%. If 30 Day LIBOR exceeds 3.0%, the University pays actual 30 Day LIBOR less 1.5%. As of June 30, 2017, no derivative ineffectiveness was identified. Any ineffectiveness in the University’s derivative instrument designated as a hedge is reported in interest expense in the income statement. At June 30, 2017, the University does not expect to reclassify gains or losses on derivative instruments from accumulated other comprehensive income (loss) into earnings during the next 12 months. Fair Value of Financial Instruments The carrying value of cash and cash equivalents, investments, accounts receivable, accounts payable, accrued compensation and benefits, and accrued liabilities expenses approximate their fair value based on the liquidity or the short-term maturities of these instruments. The carrying value of notes payable approximates fair value as it is based on variable rate index. The carrying value of capital lease obligations approximate fair value based upon market interest rates available to the University for debt of similar risk and maturities. Derivative financial instruments are carried at fair value, determined using Level 2 of the hierarchy of valuation inputs, with the use of inputs other than quoted prices that are observable for the asset or liability. The fair value of investments, primarily municipal securities, were determined using Level 2 of the hierarchy of valuation inputs, with the use of inputs other than quoted prices that are observable for the assets. The unit of account used for valuation is the individual underlying security. The municipal securities are comprised of city and county bonds related to schools, water and sewer, utilities, transportation, healthcare and housing. Revenue Recognition Net revenues consist primarily of tuition and fees derived from courses taught by the University online, on ground at its over 270 acre campus in Phoenix, Arizona, and at facilities it leases or those of employers, as well as from related educational resources that the University provides to its students, such as access to online materials. Tuition revenue and most fees from related educational resources are recognized pro-rata pro-rata Allowance for Doubtful Accounts The University records an allowance for doubtful accounts for estimated losses resulting from the inability, failure or refusal of its students to make required payments, which includes the recovery of financial aid funds advanced to a student for amounts in excess of the student’s cost of tuition and related fees. The University determines the adequacy of its allowance for doubtful accounts based on an analysis of its historical bad debt experience, current economic trends, the aging of the accounts receivable and student status. The University applies reserves to its receivables based upon an estimate of the risk presented by the age of the receivables and student status. The University writes off accounts receivable balances at the earlier of the time the balances were deemed uncollectible, or one year after the revenue is generated. The University accelerates the write off of inactive student accounts such that the accounts are written off by day 150. The University reflects accounts receivable with an offsetting allowance as long as management believes there is a reasonable possibility of collection. Bad debt expense is recorded as an instructional costs and services expense in the consolidated income statement. Long-Lived Assets (other than goodwill) The University evaluates the recoverability of our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Instructional Costs and Services Instructional costs and services consist primarily of costs related to the administration and delivery of the University’s educational programs. This expense category includes salaries, benefits and share-based compensation for full-time and adjunct faculty and administrative personnel, information technology costs, bad debt expense, curriculum and new program development costs (which are expensed as incurred) and costs associated with other support groups that provide services directly to the students. This category also includes an allocation of depreciation, amortization, rent, and occupancy costs attributable to the provision of educational services, primarily at the University’s Phoenix, Arizona campus. Admissions Advisory and Related Admissions advisory and related expenses include salaries and benefits for admissions advisory personnel as well as an allocation of depreciation, amortization, rent and occupancy costs attributable to the admissions advisory personnel. Advertising Advertising expenses include brand advertising, marketing leads and other branding activities. Advertising costs are expensed as incurred. Marketing and Promotional Marketing and promotional expenses include salaries, benefits and share-based compensation for marketing personnel, and other promotional expenses. This category also includes an allocation of depreciation, amortization, rent, and occupancy costs attributable to marketing and promotional activities. Marketing and promotional costs are expensed as incurred. General and Administrative General and administrative expenses include salaries, benefits and share-based compensation of employees engaged in corporate management, finance, human resources, compliance, and other corporate functions. General and administrative expenses also include an allocation of depreciation, amortization, rent, and occupancy costs attributable to the departments providing general and administrative functions. Commitments and Contingencies The University accrues for contingent obligations when it is probable that a liability has been incurred and the amount is reasonably estimable. When the University becomes aware of a claim or potential claim, the likelihood of any loss exposure is assessed. If it is probable that a loss will result and the amount of the loss is estimable, the University records a liability for the estimated loss. If the loss is not probable or the amount of the potential loss is not estimable, the University will disclose the claim if the likelihood of a potential loss is reasonably possible and the amount of the potential loss could be material. Estimates that are particularly sensitive to future changes include tax, legal, and other regulatory matters, which are subject to change as events evolve, and as additional information becomes available during the administrative and litigation process. The University expenses legal fees as incurred. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Segment Information The University operates as a single educational delivery operation using a core infrastructure that serves the curriculum and educational delivery needs of both its ground and online students regardless of geography. The University’s Chief Executive Officer manages the University’s operations as a whole and no expense or operating income information is generated or evaluated on any component level. Accounting Pronouncements Adopted in 2017 In March 2016, the FASB issued “Compensation – Stock Compensation: Improvement to Employee Share-Based Payment Accounting,” to simplify certain aspects of the accounting for share-based payment transactions to employees. The new standard requires excess tax benefits and tax deficiencies to be recorded in the consolidated statements of income as a component of the provision for income taxes when stock awards vest or options are exercised. In addition, it eliminates the requirement to reclassify cash flows related to excess tax benefits from operating activities to financing activities on the consolidated statements of cash flows. The standard also provides an accounting policy election to account for forfeitures as they occur, allows us to withhold more of an employee’s vesting shares for tax withholding purposes without triggering liability accounting, and clarifies that all cash payments made to tax authorities on an employee’s behalf for withheld shares should be presented as a financing activity on our consolidated cash flows statement. The University adopted the new guidance in the first quarter of 2017 which required us to reflect any adjustments as of January 1, 2017. Upon adoption, excess tax benefits or deficiencies from share-based awards or options are now reflected in the consolidated statement of income as a component of the provision for income taxes, whereas previously they were recognized in equity. The University elected to account for forfeitures as they occur, rather than estimate expected forfeitures. The net cumulative effect of this change increased additional paid-in The University adopted the provisions of the standard impacting the cash flow presentation retrospectively, and accordingly, to conform to the current period presentation, we reclassified $5,484 of excess tax benefits which had been included as a financing activity to an operating activity for the six months ended June 30, 2016 in our consolidated statement of cash flows. The presentation requirement for cash flows related to employee taxes paid for withheld shares had no impact on our consolidated statement of cash flows since such cash flows have historically been presented as a financing activity. Adoption of the provision of the new standard related to income taxes was adopted prospectively and resulted in a reduction to our provision for income taxes of $13,752 for the six months ended June 30, 2017, due to the recognition of excess tax benefits from restricted stock awards that vested or stock options that were exercised in 2017. Our restricted stock awards vest in March each year so the excess tax benefits and deficiencies is greatest in the first quarter each year. The inclusion of excess tax benefits and deficiencies as a component of our income tax expense will increase volatility within our provision for income taxes as the amount of excess tax benefits or deficiencies from share-based compensation awards are dependent on our stock price at the date the restricted awards vest, our stock price on the date an option is exercised, and the quantity of options exercised. In August 2016, the FASB issued a new standard that clarifies how certain cash receipts and cash payments are presented and classified in the consolidated statement of cash flows. The University elected to early adopt this guidance in the first quarter of 2017 on a retrospective basis. There was no reclassification impact of the adoption on our consolidated statement of cash flows for the six months ended June 30, 2017 and 2016, as our historical statements have been presented in accordance with this new guidance. In November 2016, the FASB issued a new standard that requires restricted cash and cash equivalents to be included with the amount of cash and cash equivalents that are reconciled on the consolidated statement of cash flows. The University elected to early adopt this guidance in the first quarter of 2017 on a retrospective basis, and accordingly, to conform to the current period presentation, we reclassified our restricted cash and cash equivalents to be included in the total of cash and cash equivalents presented at the bottom of our consolidated statement of cash flows for both the beginning and ending periods for our six months ended June 30, 2017 and 2016. As a result, the amount of the change in our net cash provided by operating activities no longer includes the impact of the change in restricted cash and cash equivalents for either period. The following table summarizes the effects related to the adoption of both accounting standards (share-based compensation and restricted cash and cash equivalents) for the six months ended June 30, 2016: Consolidated Statement of Cash Flows Data: June 30, 2016 As reported As adjusted Net cash provided by operating activities $ 114,024 $ 112,464 Net cash used in investing activities $ (106,710 ) $ (104,210 ) Net cash provided by financing activities $ 14,204 $ 8,720 Net increase in cash and cash equivalents and restricted cash $ 21,518 $ 16,974 Cash and cash equivalents and restricted cash, beginning of period $ 23,036 $ 98,420 Cash and cash equivalents and restricted cash, end of period $ 44,544 $ 115,394 Recent Accounting Pronouncements In May 2014, the FASB issued “ Revenue from Contracts with Customers one-year Revenue from Contracts with Customers pro-rata In January 2016, the FASB issued “ Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, the FASB issued “ Leases right-of-use In June 2016, the FASB issued “ Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments The University has determined that no other recent accounting pronouncements apply to its operations or could otherwise have a material impact on its consolidated financial statements. |
Investments
Investments | 6 Months Ended |
Jun. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | 3. Investments The following is a summary of investments as of June 30, 2017 and December 31, 2016. The University considers all investments as available for sale. As of June 30, 2017 Adjusted Cost Gross Gains Gross Unrealized (Losses) Estimated Fair Value Municipal securities $ 89,501 $ 40 $ (127 ) $ 89,414 As of December 31, 2016 Adjusted Cost Gross Unrealized Gains Gross Unrealized (Losses) Estimated Fair Value Municipal securities $ 62,769 $ 12 $ (185 ) $ 62,596 The cash flows of municipal securities are backed by the issuing municipality’s credit worthiness. All municipal securities are due in one year or less as of June 30, 2017. For the six months ended June 30, 2017, the net unrealized losses on available-for-sale |
Net Income Per Common Share
Net Income Per Common Share | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Net Income Per Common Share | 4. Net Income Per Common Share Basic earnings per common share is calculated by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per common share reflects the assumed conversion of all potentially dilutive securities, consisting of stock options and restricted stock awards, for which the estimated fair value exceeds the exercise price, less shares which could have been purchased with the related proceeds, unless anti-dilutive. For employee equity awards, repurchased shares are also included for any unearned compensation adjusted for tax. The table below reflects the calculation of the weighted average number of common shares outstanding, on an as if converted basis, used in computing basic and diluted earnings per common share. Three Months Ended Six Months Ended 2017 2016 2017 2016 Denominator: Basic weighted average shares outstanding 47,151 46,004 46,949 45,813 Effect of dilutive stock options and restricted stock 1,041 986 1,182 1,112 Diluted weighted average shares outstanding 48,192 46,990 48,131 46,925 Diluted weighted average shares outstanding exclude the incremental effect of unvested restricted stock and shares that would be issued upon the assumed exercise of stock options in accordance with the treasury stock method. For the six months ended June 30, 2017 and 2016, approximately 4 and 434, respectively, of the University’s stock options and restricted stock awards outstanding were excluded from the calculation of diluted earnings per share as their inclusion would have been anti-dilutive. These options and restricted stock awards could be dilutive in the future. |
Allowance for Doubtful Accounts
Allowance for Doubtful Accounts | 6 Months Ended |
Jun. 30, 2017 | |
Receivables [Abstract] | |
Allowance for Doubtful Accounts | 5. Allowance for Doubtful Accounts Balance at Beginning of Period Charged to Expense Deductions (1) Balance at End of Period Six months ended June 30, 2017 $ 5,918 7,830 (8,179 ) $ 5,569 Six months ended June 30, 2016 $ 5,137 7,963 (7,525 ) $ 5,575 (1) Deductions represent accounts written off, net of recoveries. |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 6. Property and Equipment Property and equipment consist of the following: June 30, 2017 December 31, Land $ 139,782 $ 127,769 Land improvements 24,684 23,158 Buildings 569,363 559,791 Buildings and leasehold improvements 110,702 105,168 Equipment under capital leases 5,937 5,943 Computer equipment 114,327 108,551 Furniture, fixtures and equipment 60,786 59,300 Internally developed software 33,029 30,407 Other 1,176 1,176 Construction in progress 37,964 19,112 1,097,750 1,040,375 Less accumulated depreciation and amortization (209,566 ) (184,847 ) Property and equipment, net $ 888,184 $ 855,528 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 7. Commitments and Contingencies Legal Matters From time to time, the University is a party to various lawsuits, claims, and other legal proceedings that arise in the ordinary course of business, some of which are covered by insurance. When the University is aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, the University records a liability for the loss. If the loss is not probable or the amount of the loss cannot be reasonably estimated, the University discloses the nature of the specific claim if the likelihood of a potential loss is reasonably possible and the amount involved could be material. With respect to the majority of pending litigation matters, the University’s ultimate legal and financial responsibility, if any, cannot be estimated with certainty and, in most cases, any potential losses related to those matters are not considered probable. Upon resolution of any pending legal matters, the University may incur charges in excess of presently established reserves. Management does not believe that any such charges would, individually or in the aggregate, have a material adverse effect on the University’s financial condition, results of operations or cash flows. Tax Reserves, Non-Income From time to time the University has exposure to various non-income |
Share-Based Compensation
Share-Based Compensation | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | 8. Share-Based Compensation Incentive Plans Prior to June 2017, the University made grants of restricted stock and stock options under its 2008 Equity Incentive Plan (the “2008 Plan”). In January 2017, the Board of Directors of the University approved, and at the University’s 2017 annual meeting of stockholders held on June 14, 2017, the University’s stockholders adopted, a 2017 Equity Incentive Plan (the “2017 Plan”). All future grants of equity incentives will be made from the 2017 Plan. Restricted Stock During the six months ended June 30, 2017, the University granted 188 shares of common stock under the 2008 Plan with a service vesting condition to certain of its executives, officers, faculty and employees. The restricted shares have voting rights and vest in five annual installments of 20%, with this first installment vesting in March of the calendar year following the date of grant (the “first vesting date”) and on each of the four anniversaries of the first vesting date. Upon vesting, shares will be held in lieu of taxes equivalent to the minimum statutory tax withholding required to be paid when the restricted stock vests. During the six months ended June 30, 2017, the University withheld 149 shares of common stock in lieu of taxes at a cost of $9,657 on the restricted stock vesting dates. In June 2017, following the annual stockholders meeting, the University granted 4 shares of common stock under the 2017 Plan to the non-employee A summary of the activity related to restricted stock granted under the 2008 Plan and the 2017 Plan since December 31, 2016 is as follows: Total Shares Weighted Average Fair Value per Share Outstanding as of December 31, 2016 993 $ 38.32 Granted 192 $ 70.44 Vested (371 ) $ 32.38 Forfeited, canceled or expired (16 ) $ 41.28 Outstanding as of June 30, 2017 798 $ 48.78 Stock Options During the six months ended June 30, 2017, no options were granted. A summary of the activity since December 31, 2016 related to stock options granted under the 2008 Plan is as follows: Summary of Stock Options Outstanding Total Shares Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value ($)(1) Outstanding as of December 31, 2016 1,272 $ 15.26 Granted — $ — Exercised (467 ) $ 12.60 Forfeited, canceled or expired — $ — Outstanding as of June 30, 2017 805 $ 16.82 3.03 $ 49,517 Exercisable as of June 30, 2017 805 $ 16.82 3.03 $ 49,517 (1) Aggregate intrinsic value represents the value of the University’s closing stock price on June 30, 2017 ($78.41) in excess of the exercise price multiplied by the number of shares underlying options outstanding or exercisable, as applicable. Share-based Compensation Expense The table below outlines share-based compensation expense for the six months ended June 30, 2017 and 2016 related to restricted stock and stock options granted: 2017 2016 Instructional costs and services $ 3,921 $ 3,544 Admissions advisory and related expenses 82 105 Marketing and promotional 77 60 General and administrative 2,149 2,122 Share-based compensation expense included in operating expenses 6,229 5,831 Tax effect of share-based compensation (2,491 ) (2,332 ) Share-based compensation expense, net of tax $ 3,738 $ 3,499 |
Regulatory
Regulatory | 6 Months Ended |
Jun. 30, 2017 | |
Text Block [Abstract] | |
Regulatory | 9. Regulatory The University is subject to extensive regulation by federal and state governmental agencies and accrediting bodies. In particular, the Higher Education Act of 1965, as amended (the “Higher Education Act”), and the regulations promulgated thereunder by the Department of Education, subject the University to significant regulatory scrutiny on the basis of numerous standards that schools must satisfy in order to participate in the various federal student financial assistance programs under Title IV of the Higher Education Act. To participate in the Title IV programs, an institution must be authorized to offer its programs of instruction by the relevant agency of the state in which it is located, accredited by an accrediting agency recognized by the Department of Education and certified as eligible by the Department of Education. The Department of Education will certify an institution to participate in the Title IV programs only after the institution has demonstrated compliance with the Higher Education Act and the Department of Education’s extensive regulations regarding institutional eligibility. An institution must also demonstrate its compliance to the Department of Education on an ongoing basis. The University’s accreditation has been reaffirmed by the Higher Learning Commission (“HLC”) after a comprehensive review of the institution’s academic offerings, governance and administration, mission, finances and resources during an on-site mid-term Because the University operates in a highly regulated industry, it, like other industry participants, may be subject from time to time to investigations, claims of non-compliance, |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the University and its wholly-owned subsidiaries. Intercompany transactions have been eliminated in consolidation. |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The accompanying unaudited interim consolidated financial statements of the University have been prepared in accordance with U.S. generally accepted accounting principles and pursuant to the rules and regulations of the United States Securities and Exchange Commission and the instructions to Form 10-Q 10-K |
Restricted Cash and Cash Equivalents | Restricted Cash and Cash Equivalents A significant portion of the University’s revenue is received from students who participate in government financial aid and assistance programs. Restricted cash and cash equivalents primarily represent amounts received from the federal and state governments under various student aid grant and loan programs, such as Title IV. The University receives these funds subsequent to the completion of the authorization and disbursement process and holds them for the benefit of the student. The U.S. Department of Education (“Department of Education”) requires Title IV funds collected in advance of student billings to be restricted until the course begins. The University records all of these amounts as a current asset in restricted cash and cash equivalents. The majority of these funds remains as restricted for an average of 60 to 90 days from the date of receipt. |
Investments | Investments The University considers its investments in municipal securities as available-for-sale Available-for-sale |
Derivatives and Hedging | Derivatives and Hedging Derivative financial instruments are recorded on the balance sheet as assets or liabilities and re-measured Derivative financial instruments enable the University to manage its exposure to interest rate risk. The University does not engage in any derivative instrument trading activity. Credit risk associated with the University’s derivatives is limited to the risk that a derivative counterparty will not perform in accordance with the terms of the contract. Exposure to counterparty credit risk is considered low because these agreements have been entered into with institutions with strong credit ratings, and they are expected to perform fully under the terms of the agreements. On February 27, 2013, the University entered into an interest rate corridor to manage its 30 Day LIBOR interest exposure related to its variable rate debt. The fair value of the interest rate corridor instrument as of June 30, 2017 and December 31, 2016 was $372 and $490, respectively, which is included in other assets. The fair value of the derivative instrument was determined using a hypothetical derivative transaction and Level 2 of the hierarchy of valuation inputs. This derivative instrument was originally designated as a cash flow hedge of variable rate debt obligations. The adjustment of $119 and $526 for the six months ended June 30, 2017 and 2016, respectively, for the effective portion of the losses on the derivatives is included as a component of other comprehensive income, net of taxes. The interest rate corridor instrument reduces variable interest rate risk starting March 1, 2013 through December 20, 2019 with a notional amount of $70,000 as of June 30, 2017. The corridor instrument’s terms permits the University to hedge its interest rate risk at several thresholds; the University pays variable interest monthly based on the 30 Day LIBOR rates until that index reaches 1.5%. If 30 Day LIBOR is equal to 1.5% through 3.0%, the University pays 1.5%. If 30 Day LIBOR exceeds 3.0%, the University pays actual 30 Day LIBOR less 1.5%. As of June 30, 2017, no derivative ineffectiveness was identified. Any ineffectiveness in the University’s derivative instrument designated as a hedge is reported in interest expense in the income statement. At June 30, 2017, the University does not expect to reclassify gains or losses on derivative instruments from accumulated other comprehensive income (loss) into earnings during the next 12 months. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying value of cash and cash equivalents, investments, accounts receivable, accounts payable, accrued compensation and benefits, and accrued liabilities expenses approximate their fair value based on the liquidity or the short-term maturities of these instruments. The carrying value of notes payable approximates fair value as it is based on variable rate index. The carrying value of capital lease obligations approximate fair value based upon market interest rates available to the University for debt of similar risk and maturities. Derivative financial instruments are carried at fair value, determined using Level 2 of the hierarchy of valuation inputs, with the use of inputs other than quoted prices that are observable for the asset or liability. The fair value of investments, primarily municipal securities, were determined using Level 2 of the hierarchy of valuation inputs, with the use of inputs other than quoted prices that are observable for the assets. The unit of account used for valuation is the individual underlying security. The municipal securities are comprised of city and county bonds related to schools, water and sewer, utilities, transportation, healthcare and housing. |
Revenue Recognition | Revenue Recognition Net revenues consist primarily of tuition and fees derived from courses taught by the University online, on ground at its over 270 acre campus in Phoenix, Arizona, and at facilities it leases or those of employers, as well as from related educational resources that the University provides to its students, such as access to online materials. Tuition revenue and most fees from related educational resources are recognized pro-rata pro-rata |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The University records an allowance for doubtful accounts for estimated losses resulting from the inability, failure or refusal of its students to make required payments, which includes the recovery of financial aid funds advanced to a student for amounts in excess of the student’s cost of tuition and related fees. The University determines the adequacy of its allowance for doubtful accounts based on an analysis of its historical bad debt experience, current economic trends, the aging of the accounts receivable and student status. The University applies reserves to its receivables based upon an estimate of the risk presented by the age of the receivables and student status. The University writes off accounts receivable balances at the earlier of the time the balances were deemed uncollectible, or one year after the revenue is generated. The University accelerates the write off of inactive student accounts such that the accounts are written off by day 150. The University reflects accounts receivable with an offsetting allowance as long as management believes there is a reasonable possibility of collection. Bad debt expense is recorded as an instructional costs and services expense in the consolidated income statement. |
Long-Lived Assets (other than goodwill) | Long-Lived Assets (other than goodwill) The University evaluates the recoverability of our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. |
Instructional Costs and Services | Instructional Costs and Services Instructional costs and services consist primarily of costs related to the administration and delivery of the University’s educational programs. This expense category includes salaries, benefits and share-based compensation for full-time and adjunct faculty and administrative personnel, information technology costs, bad debt expense, curriculum and new program development costs (which are expensed as incurred) and costs associated with other support groups that provide services directly to the students. This category also includes an allocation of depreciation, amortization, rent, and occupancy costs attributable to the provision of educational services, primarily at the University’s Phoenix, Arizona campus. |
Admissions Advisory and Related | Admissions Advisory and Related Admissions advisory and related expenses include salaries and benefits for admissions advisory personnel as well as an allocation of depreciation, amortization, rent and occupancy costs attributable to the admissions advisory personnel. |
Advertising | Advertising Advertising expenses include brand advertising, marketing leads and other branding activities. Advertising costs are expensed as incurred. |
Marketing and Promotional | Marketing and Promotional Marketing and promotional expenses include salaries, benefits and share-based compensation for marketing personnel, and other promotional expenses. This category also includes an allocation of depreciation, amortization, rent, and occupancy costs attributable to marketing and promotional activities. Marketing and promotional costs are expensed as incurred. |
General and Administrative | General and Administrative General and administrative expenses include salaries, benefits and share-based compensation of employees engaged in corporate management, finance, human resources, compliance, and other corporate functions. General and administrative expenses also include an allocation of depreciation, amortization, rent, and occupancy costs attributable to the departments providing general and administrative functions. |
Commitments and Contingencies | Commitments and Contingencies The University accrues for contingent obligations when it is probable that a liability has been incurred and the amount is reasonably estimable. When the University becomes aware of a claim or potential claim, the likelihood of any loss exposure is assessed. If it is probable that a loss will result and the amount of the loss is estimable, the University records a liability for the estimated loss. If the loss is not probable or the amount of the potential loss is not estimable, the University will disclose the claim if the likelihood of a potential loss is reasonably possible and the amount of the potential loss could be material. Estimates that are particularly sensitive to future changes include tax, legal, and other regulatory matters, which are subject to change as events evolve, and as additional information becomes available during the administrative and litigation process. The University expenses legal fees as incurred. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
Segment Information | Segment Information The University operates as a single educational delivery operation using a core infrastructure that serves the curriculum and educational delivery needs of both its ground and online students regardless of geography. The University’s Chief Executive Officer manages the University’s operations as a whole and no expense or operating income information is generated or evaluated on any component level. |
Accounting Pronouncements Adopted in 2017 | Accounting Pronouncements Adopted in 2017 In March 2016, the FASB issued “Compensation – Stock Compensation: Improvement to Employee Share-Based Payment Accounting,” to simplify certain aspects of the accounting for share-based payment transactions to employees. The new standard requires excess tax benefits and tax deficiencies to be recorded in the consolidated statements of income as a component of the provision for income taxes when stock awards vest or options are exercised. In addition, it eliminates the requirement to reclassify cash flows related to excess tax benefits from operating activities to financing activities on the consolidated statements of cash flows. The standard also provides an accounting policy election to account for forfeitures as they occur, allows us to withhold more of an employee’s vesting shares for tax withholding purposes without triggering liability accounting, and clarifies that all cash payments made to tax authorities on an employee’s behalf for withheld shares should be presented as a financing activity on our consolidated cash flows statement. The University adopted the new guidance in the first quarter of 2017 which required us to reflect any adjustments as of January 1, 2017. Upon adoption, excess tax benefits or deficiencies from share-based awards or options are now reflected in the consolidated statement of income as a component of the provision for income taxes, whereas previously they were recognized in equity. The University elected to account for forfeitures as they occur, rather than estimate expected forfeitures. The net cumulative effect of this change increased additional paid-in The University adopted the provisions of the standard impacting the cash flow presentation retrospectively, and accordingly, to conform to the current period presentation, we reclassified $5,484 of excess tax benefits which had been included as a financing activity to an operating activity for the six months ended June 30, 2016 in our consolidated statement of cash flows. The presentation requirement for cash flows related to employee taxes paid for withheld shares had no impact on our consolidated statement of cash flows since such cash flows have historically been presented as a financing activity. Adoption of the provision of the new standard related to income taxes was adopted prospectively and resulted in a reduction to our provision for income taxes of $13,752 for the six months ended June 30, 2017, due to the recognition of excess tax benefits from restricted stock awards that vested or stock options that were exercised in 2017. Our restricted stock awards vest in March each year so the excess tax benefits and deficiencies is greatest in the first quarter each year. The inclusion of excess tax benefits and deficiencies as a component of our income tax expense will increase volatility within our provision for income taxes as the amount of excess tax benefits or deficiencies from share-based compensation awards are dependent on our stock price at the date the restricted awards vest, our stock price on the date an option is exercised, and the quantity of options exercised. In August 2016, the FASB issued a new standard that clarifies how certain cash receipts and cash payments are presented and classified in the consolidated statement of cash flows. The University elected to early adopt this guidance in the first quarter of 2017 on a retrospective basis. There was no reclassification impact of the adoption on our consolidated statement of cash flows for the six months ended June 30, 2017 and 2016, as our historical statements have been presented in accordance with this new guidance. In November 2016, the FASB issued a new standard that requires restricted cash and cash equivalents to be included with the amount of cash and cash equivalents that are reconciled on the consolidated statement of cash flows. The University elected to early adopt this guidance in the first quarter of 2017 on a retrospective basis, and accordingly, to conform to the current period presentation, we reclassified our restricted cash and cash equivalents to be included in the total of cash and cash equivalents presented at the bottom of our consolidated statement of cash flows for both the beginning and ending periods for our six months ended June 30, 2017 and 2016. As a result, the amount of the change in our net cash provided by operating activities no longer includes the impact of the change in restricted cash and cash equivalents for either period. The following table summarizes the effects related to the adoption of both accounting standards (share-based compensation and restricted cash and cash equivalents) for the six months ended June 30, 2016: Consolidated Statement of Cash Flows Data: June 30, 2016 As reported As adjusted Net cash provided by operating activities $ 114,024 $ 112,464 Net cash used in investing activities $ (106,710 ) $ (104,210 ) Net cash provided by financing activities $ 14,204 $ 8,720 Net increase in cash and cash equivalents and restricted cash $ 21,518 $ 16,974 Cash and cash equivalents and restricted cash, beginning of period $ 23,036 $ 98,420 Cash and cash equivalents and restricted cash, end of period $ 44,544 $ 115,394 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued “ Revenue from Contracts with Customers one-year Revenue from Contracts with Customers pro-rata In January 2016, the FASB issued “ Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, the FASB issued “ Leases right-of-use In June 2016, the FASB issued “ Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments The University has determined that no other recent accounting pronouncements apply to its operations or could otherwise have a material impact on its consolidated financial statements. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Schedule Related to Adoption of Accounting Standards (Share-Based Compensation and Restricted Cash and Cash Equivalents) | The following table summarizes the effects related to the adoption of both accounting standards (share-based compensation and restricted cash and cash equivalents) for the six months ended June 30, 2016: Consolidated Statement of Cash Flows Data: June 30, 2016 As reported As adjusted Net cash provided by operating activities $ 114,024 $ 112,464 Net cash used in investing activities $ (106,710 ) $ (104,210 ) Net cash provided by financing activities $ 14,204 $ 8,720 Net increase in cash and cash equivalents and restricted cash $ 21,518 $ 16,974 Cash and cash equivalents and restricted cash, beginning of period $ 23,036 $ 98,420 Cash and cash equivalents and restricted cash, end of period $ 44,544 $ 115,394 |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Summary of Investments | The following is a summary of investments as of June 30, 2017 and December 31, 2016. The University considers all investments as available for sale. As of June 30, 2017 Adjusted Cost Gross Gains Gross Unrealized (Losses) Estimated Fair Value Municipal securities $ 89,501 $ 40 $ (127 ) $ 89,414 As of December 31, 2016 Adjusted Cost Gross Unrealized Gains Gross Unrealized (Losses) Estimated Fair Value Municipal securities $ 62,769 $ 12 $ (185 ) $ 62,596 |
Net Income Per Common Share (Ta
Net Income Per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Summary of Weighted Average Number of Common Shares Outstanding | The table below reflects the calculation of the weighted average number of common shares outstanding, on an as if converted basis, used in computing basic and diluted earnings per common share. Three Months Ended Six Months Ended 2017 2016 2017 2016 Denominator: Basic weighted average shares outstanding 47,151 46,004 46,949 45,813 Effect of dilutive stock options and restricted stock 1,041 986 1,182 1,112 Diluted weighted average shares outstanding 48,192 46,990 48,131 46,925 |
Allowance for Doubtful Accoun22
Allowance for Doubtful Accounts (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Receivables [Abstract] | |
Schedule of Allowance for Doubtful Accounts | Balance at Beginning of Period Charged to Expense Deductions (1) Balance at End of Period Six months ended June 30, 2017 $ 5,918 7,830 (8,179 ) $ 5,569 Six months ended June 30, 2016 $ 5,137 7,963 (7,525 ) $ 5,575 (1) Deductions represent accounts written off, net of recoveries. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property and Equipment | Property and equipment consist of the following: June 30, 2017 December 31, Land $ 139,782 $ 127,769 Land improvements 24,684 23,158 Buildings 569,363 559,791 Buildings and leasehold improvements 110,702 105,168 Equipment under capital leases 5,937 5,943 Computer equipment 114,327 108,551 Furniture, fixtures and equipment 60,786 59,300 Internally developed software 33,029 30,407 Other 1,176 1,176 Construction in progress 37,964 19,112 1,097,750 1,040,375 Less accumulated depreciation and amortization (209,566 ) (184,847 ) Property and equipment, net $ 888,184 $ 855,528 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Activity Related to Restricted Stock Granted under Incentive Plans | A summary of the activity related to restricted stock granted under the 2008 Plan and the 2017 Plan since December 31, 2016 is as follows: Total Shares Weighted Average Fair Value per Share Outstanding as of December 31, 2016 993 $ 38.32 Granted 192 $ 70.44 Vested (371 ) $ 32.38 Forfeited, canceled or expired (16 ) $ 41.28 Outstanding as of June 30, 2017 798 $ 48.78 |
Summary of Activity Related to Stock Options Granted under 2008 Plan | A summary of the activity since December 31, 2016 related to stock options granted under the 2008 Plan is as follows: Summary of Stock Options Outstanding Total Shares Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value ($)(1) Outstanding as of December 31, 2016 1,272 $ 15.26 Granted — $ — Exercised (467 ) $ 12.60 Forfeited, canceled or expired — $ — Outstanding as of June 30, 2017 805 $ 16.82 3.03 $ 49,517 Exercisable as of June 30, 2017 805 $ 16.82 3.03 $ 49,517 (1) Aggregate intrinsic value represents the value of the University’s closing stock price on June 30, 2017 ($78.41) in excess of the exercise price multiplied by the number of shares underlying options outstanding or exercisable, as applicable. |
Share-Based Compensation Expense | The table below outlines share-based compensation expense for the six months ended June 30, 2017 and 2016 related to restricted stock and stock options granted: 2017 2016 Instructional costs and services $ 3,921 $ 3,544 Admissions advisory and related expenses 82 105 Marketing and promotional 77 60 General and administrative 2,149 2,122 Share-based compensation expense included in operating expenses 6,229 5,831 Tax effect of share-based compensation (2,491 ) (2,332 ) Share-based compensation expense, net of tax $ 3,738 $ 3,499 |
Nature of Business - Additional
Nature of Business - Additional Information (Detail) | 6 Months Ended |
Jun. 30, 2017DegreesColleges | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of area of the company's campus in Phoenix, Arizona | 270 acre campus |
Number of colleges in Phoenix, Arizona | Colleges | 9 |
Number of degree programs and certificates | Degrees | 220 |
Summary of Significant Accoun26
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Jan. 01, 2017 | Dec. 31, 2016 | |
Summary Of Significant Accounting Policies [Line Items] | ||||||
Average days from the date of receipt in which funds remain as restricted cash and cash equivalents | 60 to 90 days | |||||
Period of LIBOR interest rate | 30 days | |||||
Effective portion of loss on derivatives included as a component of other comprehensive income, net of taxes | $ (17,000) | $ 97,000 | $ 376,000 | $ 136,000 | ||
Description of area of the company's campus in Phoenix, Arizona | 270 acre campus | |||||
Reduction in revenue due to scholarships offered to students | $ 91,703,000 | 85,308,000 | ||||
Period for write off of inactive student accounts | 150 days | |||||
Excess tax benefits from financing activities | 5,484,000 | |||||
Reduction in provision for income taxes | 13,752,000 | $ 13,752,000 | ||||
Interest Rate Corridor [Member] | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Notional amount of derivative instrument | 70,000,000 | $ 70,000,000 | ||||
Description of interest rate risk hedge at several thresholds | The University pays variable interest monthly based on the 30 Day LIBOR rates until that index reaches 1.5%. If 30 Day LIBOR is equal to 1.5% through 3.0%, the University pays 1.5%. If 30 Day LIBOR exceeds 3.0%, the University pays actual 30 Day LIBOR less 1.5%. | |||||
Interest Rate Corridor [Member] | LIBOR [Member] | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Maximum percentage of variable interest rates based on LIBOR | 1.50% | |||||
Percentage of amount paid by University | 1.50% | |||||
Percentage deducted from LIBOR for actual payment | 1.50% | |||||
Cash Flow Hedging [Member] | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Effective portion of loss on derivatives included as a component of other comprehensive income, net of taxes | $ 119,000 | $ 526,000 | ||||
Retained Earnings [Member] | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Cumulative effect from the adoption of accounting pronouncements, net of taxes | (59,000) | (59,000) | $ (59,000) | |||
Additional Paid-in Capital [Member] | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Cumulative effect from the adoption of accounting pronouncements, net of taxes | 59,000 | 59,000 | $ 59,000 | |||
Other Assets [Member] | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Fair values of interest rate corridor instrument | $ 372,000 | $ 372,000 | $ 490,000 | |||
Minimum [Member] | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Number of days from the date of receipt in which funds remain as restricted cash and cash equivalents | 60 days | |||||
Minimum [Member] | Interest Rate Corridor [Member] | LIBOR [Member] | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Percentage of LIBOR | 1.50% | 1.50% | ||||
Maximum [Member] | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Number of days from the date of receipt in which funds remain as restricted cash and cash equivalents | 90 days | |||||
Maximum [Member] | Interest Rate Corridor [Member] | LIBOR [Member] | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Percentage of LIBOR | 3.00% | 3.00% |
Summary of Significant Accoun27
Summary of Significant Accounting Policies - Schedule Related to Adoption of Accounting Standards (Share-Based Compensation and Restricted Cash and Cash Equivalents) (Detail) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Condensed Cash Flow Statements, Captions [Line Items] | ||
Net cash provided by operating activities | $ 133,660 | $ 112,464 |
Net cash used in investing activities | (86,683) | (104,210) |
Net cash provided by financing activities | (32,162) | 8,720 |
Net increase in cash and cash equivalents and restricted cash | 14,815 | 16,974 |
Cash and cash equivalents and restricted cash, beginning of period | 130,907 | 98,420 |
Cash and cash equivalents and restricted cash, end of period | $ 145,722 | 115,394 |
As Reported [Member] | ||
Condensed Cash Flow Statements, Captions [Line Items] | ||
Net cash provided by operating activities | 114,024 | |
Net cash used in investing activities | (106,710) | |
Net cash provided by financing activities | 14,204 | |
Net increase in cash and cash equivalents and restricted cash | 21,518 | |
Cash and cash equivalents and restricted cash, beginning of period | 23,036 | |
Cash and cash equivalents and restricted cash, end of period | $ 44,544 |
Investments - Summary of Invest
Investments - Summary of Investments (Detail) - Municipal Securities [Member] - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Schedule of Available-for-sale Securities [Line Items] | ||
Adjusted Cost | $ 89,501 | $ 62,769 |
Gross Unrealized Gains | 40 | 12 |
Gross Unrealized (Losses) | (127) | (185) |
Estimated Fair Value | $ 89,414 | $ 62,596 |
Investments - Additional Inform
Investments - Additional Information (Detail) $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Schedule of Available-for-sale Securities [Line Items] | |
Unrealized net (losses) gains on available-for-sale securities | $ 54 |
Municipal Securities [Member] | |
Schedule of Available-for-sale Securities [Line Items] | |
Maturity period of investments | One year or less |
Net Income Per Common Share - S
Net Income Per Common Share - Summary of Weighted Average Number of Common Shares Outstanding (Detail) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Denominator: | ||||
Basic weighted average shares outstanding | 47,151 | 46,004 | 46,949 | 45,813 |
Effect of dilutive stock options and restricted stock | 1,041 | 986 | 1,182 | 1,112 |
Diluted weighted average shares outstanding | 48,192 | 46,990 | 48,131 | 46,925 |
Net Income Per Common Share - A
Net Income Per Common Share - Additional Information (Detail) - shares shares in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Stock Option And Restricted Stock Awards [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
University's stock options and restricted stock awards outstanding were excluded from the calculation of diluted earnings | 4 | 434 |
Allowance for Doubtful Accoun32
Allowance for Doubtful Accounts - Schedule of Allowance for Doubtful Accounts (Detail) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Receivables [Abstract] | ||
Balance at Beginning of Period | $ 5,918 | $ 5,137 |
Charged to Expense | 7,830 | 7,963 |
Deductions | (8,179) | (7,525) |
Balance at End of Period | $ 5,569 | $ 5,575 |
Property and Equipment - Summar
Property and Equipment - Summary of Property and Equipment (Detail) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 1,097,750 | $ 1,040,375 |
Less accumulated depreciation and amortization | (209,566) | (184,847) |
Property and equipment, net | 888,184 | 855,528 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 139,782 | 127,769 |
Land Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 24,684 | 23,158 |
Buildings [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 569,363 | 559,791 |
Buildings and Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 110,702 | 105,168 |
Equipment under Capital Leases [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 5,937 | 5,943 |
Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 114,327 | 108,551 |
Furniture, Fixtures and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 60,786 | 59,300 |
Internally Developed Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 33,029 | 30,407 |
Other [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 1,176 | 1,176 |
Construction in Progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 37,964 | $ 19,112 |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Detail) $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($)Anniversariesshares | |
2008 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options granted | 0 |
Restricted Stock Grants [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares granted | 192,000 |
Shares withheld for taxes | 149,000 |
Common stock in lieu of taxes | $ | $ 9,657 |
Restricted Stock Grants [Member] | 2008 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares granted | 188,000 |
Vesting period | 5 years |
Number of anniversaries of the vesting date following the date of grant | Anniversaries | 4 |
Restricted Stock Grants [Member] | Share-based Compensation Award, Tranche One [Member] | 2008 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting right percentage | 20.00% |
Restricted Stock Grants [Member] | Share-based Compensation Award, Tranche Two [Member] | 2008 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting right percentage | 20.00% |
Restricted Stock Grants [Member] | Share-based Compensation Award, Tranche Three [Member] | 2008 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting right percentage | 20.00% |
Restricted Stock Grants [Member] | Share-based Compensation Award Tranche Four [Member] | 2008 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting right percentage | 20.00% |
Restricted Stock Grants [Member] | Share-based Compensation Award Tranche Five [Member] | 2008 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting right percentage | 20.00% |
Restricted Stock Grants [Member] | Non-employee [Member] | 2017 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares granted | 4,000 |
Vesting period | 1 year |
Employee Stock Option [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options granted | 0 |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of Activity Related to Restricted Stock Granted under Incentive Plans (Detail) - Restricted Stock Grants [Member] shares in Thousands | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Total Shares, Outstanding, Beginning Balance | shares | 993 |
Total Shares, Granted | shares | 192 |
Total Shares, Vested | shares | (371) |
Total Shares, Forfeited, canceled or expired | shares | (16) |
Total Shares, Outstanding, Ending Balance | shares | 798 |
Weighted Average Grant Date Fair Value, Beginning Balance | $ / shares | $ 38.32 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | 70.44 |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 32.38 |
Weighted Average Grant Date Fair Value, Forfeited, cancelled or expired | $ / shares | 41.28 |
Weighted Average Grant Date Fair Value, Ending Balance | $ / shares | $ 48.78 |
Share-Based Compensation - Su36
Share-Based Compensation - Summary of Activity Related to Stock Options Granted under 2008 Plan (Detail) $ / shares in Units, $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($)$ / sharesshares | |
2008 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Total Shares outstanding, Beginning balance | 1,272,000 |
Total Shares, Granted | 0 |
Total Shares, Exercised | (467,000) |
Total Shares, Forfeited, canceled or expired | 0 |
Total Shares outstanding, Ending balance | 805,000 |
Total Shares, Exercisable | 805,000 |
Employee Stock Option [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Total Shares, Granted | 0 |
Employee Stock Option [Member] | 2008 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Weighted Average Exercise Price per Share Outstanding, Beginning balance | $ / shares | $ 15.26 |
Weighted Average Exercise Price per Share, Granted | $ / shares | 0 |
Weighted Average Exercise Price per Share, Exercised | $ / shares | 12.60 |
Weighted Average Exercise Price per Share, Forfeited, canceled or expired | $ / shares | 0 |
Weighted Average Exercise Price per Share Outstanding, Ending balance | $ / shares | 16.82 |
Weighted Average Exercise Price per Share, Exercisable | $ / shares | $ 16.82 |
Weighted Average Remaining Contractual Term (Years), Outstanding | 3 years 11 days |
Weighted Average Remaining Contractual Term (Years), Exercisable | 3 years 11 days |
Aggregate Intrinsic Value, Outstanding | $ | $ 49,517 |
Aggregate Intrinsic Value, Exercisable | $ | $ 49,517 |
Share-Based Compensation - Su37
Share-Based Compensation - Summary of Activity Related to Stock Options Granted under 2008 Plan (Parenthetical) (Detail) | Jun. 30, 2017$ / shares |
2008 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Value of closing stock price | $ 78.41 |
Share-Based Compensation - Shar
Share-Based Compensation - Share-Based Compensation Expense (Detail) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Share-based compensation expense | $ 6,229 | $ 5,831 |
Tax effect of share-based compensation | (2,491) | (2,332) |
Share-based compensation expense, net of tax | 3,738 | 3,499 |
Instructional Costs and Services [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Share-based compensation expense | 3,921 | 3,544 |
Admissions Advisory and Related [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Share-based compensation expense | 82 | 105 |
Marketing and Promotional [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Share-based compensation expense | 77 | 60 |
General and Administrative [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Share-based compensation expense | $ 2,149 | $ 2,122 |
Regulatory - Additional Informa
Regulatory - Additional Information (Detail) | 6 Months Ended |
Jun. 30, 2017 | |
Regulated Operations [Abstract] | |
Comprehensive review period | 10 years |
Mid-term report period | 4 years |