Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 28, 2018 | Jun. 30, 2017 | |
Document And Entity Information [Abstract] | |||
Entity Registrant Name | Cambium Learning Group, Inc. | ||
Entity Central Index Key | 1,466,815 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Trading Symbol | ABCD | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 70,182,560 | ||
Entity Common Stock, Shares Outstanding | 46,859,127 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Net revenues: | ||
Product revenues | $ 155,344 | $ 148,558 |
Service revenues | 2,840 | 3,800 |
Total net revenues | 158,184 | 152,358 |
Cost of revenues: | ||
Cost of product revenues | 25,954 | 27,761 |
Cost of service revenues | 1,612 | 2,361 |
Amortization expense | 17,968 | 18,142 |
Total cost of revenues | 45,534 | 48,264 |
Research and development expense | 13,651 | 12,865 |
Sales and marketing expense | 49,470 | 47,238 |
General and administrative expense | 20,620 | 21,062 |
Shipping and handling costs | 825 | 912 |
Depreciation and amortization expense | 2,797 | 3,406 |
Goodwill impairment | 4,325 | 0 |
Total costs and expenses | 137,222 | 133,747 |
Income before interest, other expense and income taxes | 20,962 | 18,611 |
Net interest income (expense): | ||
Interest income | 23 | 16 |
Interest expense | (4,868) | (7,206) |
Net interest expense | (4,845) | (7,190) |
Loss on extinguishment of debt | (360) | (698) |
Income before income taxes | 15,757 | 10,723 |
Income tax benefit (expense) | 29,298 | (293) |
Net income | 45,055 | 10,430 |
Other comprehensive income (loss): | ||
Net pension gain (loss) | (255) | 690 |
Amortization of net pension loss | 91 | 149 |
Net income per common share: | $ 44,891 | $ 11,269 |
Net income per common share: | ||
Basic net income per common share (in USD per share) | $ 0.97 | $ 0.23 |
Diluted net income per common share (in USD per share) | $ 0.95 | $ 0.22 |
Average number of common shares and equivalents outstanding: | ||
Basic (shares) | 46,416 | 45,861 |
Diluted (shares) | 47,594 | 47,217 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 8,493 | $ 4,930 |
Accounts receivable, net | 12,937 | 13,378 |
Inventory | 2,382 | 2,864 |
Restricted assets, current | 961 | 988 |
Other current assets | 11,193 | 11,235 |
Total current assets | 35,966 | 33,395 |
Property, equipment and software at cost | 65,250 | 62,885 |
Accumulated depreciation and amortization | (43,164) | (39,378) |
Property, equipment and software, net | 22,086 | 23,507 |
Goodwill | 43,518 | 47,842 |
Other intangible assets, net | 3,607 | 4,001 |
Pre-publication costs, net | 17,758 | 17,397 |
Restricted assets, less current portion | 1,293 | 2,278 |
Deferred tax assets | 30,614 | 0 |
Other assets | 3,712 | 3,520 |
Total assets | 158,554 | 131,940 |
Current liabilities: | ||
Accounts payable | 2,388 | 2,172 |
Accrued expenses | 12,121 | 11,720 |
Current portion of long-term debt | 5,958 | 7,350 |
Deferred revenue, current | 86,913 | 83,318 |
Total current liabilities | 107,380 | 104,560 |
Long-term liabilities: | ||
Long-term debt | 41,841 | 67,130 |
Deferred revenue, less current portion | 13,995 | 11,395 |
Other liabilities | 9,630 | 10,117 |
Total long-term liabilities | 65,466 | 88,642 |
Commitments and contingencies (See Note 16) | ||
Stockholders' equity (deficit): | ||
Preferred Stock ($0.001 par value, 15,000 shares authorized, zero shares issued and outstanding at December 31, 2017 and 2016) | 0 | 0 |
Common stock ($0.001 par value, 150,000 shares authorized, 53,333 and 52,738 shares issued, and 46,800 and 46,206 shares outstanding at December 31, 2017 and 2016, respectively) | 53 | 53 |
Capital surplus | 289,022 | 286,943 |
Accumulated deficit | (288,490) | (333,545) |
Treasury stock at cost (6,532 shares at December 31, 2017 and 2016) | (12,784) | (12,784) |
Accumulated other comprehensive loss: | ||
Pension and postretirement plans | (2,093) | (1,929) |
Accumulated other comprehensive loss | (2,093) | (1,929) |
Total stockholders' equity (deficit) | (14,292) | (61,262) |
Total liabilities and stockholders' equity (deficit) | $ 158,554 | $ 131,940 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (shares) | 15,000,000 | 15,000,000 |
Preferred stock, shares issued (shares) | 0 | 0 |
Preferred stock, shares outstanding (shares) | 0 | 0 |
Common stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (shares) | 150,000,000 | 150,000,000 |
Common stock, shares issued (shares) | 53,332,560 | 52,738,000 |
Common stock, shares outstanding (shares) | 46,800,371 | 46,206,000 |
Treasury stock (shares) | 6,532,000 | 6,532,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Operating activities: | ||
Net income | $ 45,055 | $ 10,430 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 20,765 | 21,548 |
Goodwill impairment | 4,325 | 0 |
Loss on extinguishment of debt | 360 | 698 |
Amortization of note discount and deferred financing costs | 790 | 1,091 |
Stock-based compensation and expense | 865 | 928 |
Deferred income taxes | (30,614) | 0 |
Other | (2) | 3 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | 452 | 1,262 |
Inventory | 482 | 1,830 |
Other current assets | 50 | (1,254) |
Other assets | (373) | 1,116 |
Restricted assets | 1,012 | 1,098 |
Accounts payable | 216 | 179 |
Accrued expenses | 276 | (2,504) |
Deferred revenue | 6,195 | 9,125 |
Other long-term liabilities | (651) | (1,071) |
Net cash provided by operating activities | 49,203 | 44,479 |
Investing activities: | ||
Cash paid for acquisition, net of cash acquired | (1,044) | 0 |
Expenditures for property, equipment, software and pre-publication costs | (18,160) | (20,054) |
Net cash used in investing activities | (19,204) | (20,054) |
Financing activities: | ||
Repayment of debt | (27,650) | (28,850) |
Proceeds from exercise of stock options | 1,214 | 710 |
Borrowings under revolving credit facility | 16,000 | 15,000 |
Payment of revolving credit facility | (16,000) | (15,000) |
Net cash used in financing activities | (26,436) | (28,140) |
Change in cash and cash equivalents | 3,563 | (3,715) |
Cash and cash equivalents, beginning of period | 4,930 | 8,645 |
Cash and cash equivalents, end of period | 8,493 | 4,930 |
Supplemental disclosure of cash flow information: | ||
Net income taxes paid | 1,136 | 822 |
Interest paid | $ 4,164 | $ 6,359 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) $ in Thousands | Total | Common Stock | Capital Surplus | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit |
Beginning balance at Dec. 31, 2015 | $ (74,169) | $ 52 | $ 285,306 | $ (12,784) | $ (2,768) | $ (343,975) |
Beginning balance, shares (shares) at Dec. 31, 2015 | 52,268,000 | (6,532,000) | ||||
Stock-based compensation and expense | 928 | 928 | ||||
Issuance of restricted stock (shares) | 4,000 | |||||
Exercise of stock options and warrants | 710 | $ 1 | 709 | |||
Exercise of stock options and warrants (shares) | 466,000 | |||||
Net income | 10,430 | 10,430 | ||||
Pension plan | 839 | 839 | ||||
Ending balance at Dec. 31, 2016 | $ (61,262) | $ 53 | 286,943 | $ (12,784) | (1,929) | (333,545) |
Ending balance, shares (shares) at Dec. 31, 2016 | 46,206,000 | 52,738,000 | (6,532,000) | |||
Stock-based compensation and expense | $ 865 | 865 | ||||
Cancellation of restricted stock (shares) | (4,000) | |||||
Exercise of stock options and warrants | $ 1,214 | $ 0 | 1,214 | |||
Exercise of stock options and warrants (shares) | 598,206 | 598,000 | ||||
Net income | $ 45,055 | 45,055 | ||||
Pension plan | (164) | (164) | ||||
Ending balance at Dec. 31, 2017 | $ (14,292) | $ 53 | $ 289,022 | $ (12,784) | $ (2,093) | $ (288,490) |
Ending balance, shares (shares) at Dec. 31, 2017 | 46,800,371 | 53,333,000 | (6,532,000) |
Basis of Presentation
Basis of Presentation | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Cambium Learning Group, Inc. Cambium Learning ® Group, Inc. (the “Company”) was incorporated under the laws of the State of Delaware in June 2009. On December 8, 2009, the Company completed the mergers of Voyager Learning Company (“VLCY”) and VSS-Cambium Holdings II Corp. (“Cambium”) into two of its wholly-owned subsidiaries, resulting in VLCY and Cambium becoming wholly-owned subsidiaries. Following the completion of the mergers, all of the outstanding capital stock of VLCY’s operating subsidiaries, Voyager Expanded Learning, Inc. and LAZEL, Inc., was transferred to Cambium Learning, Inc., Cambium’s operating subsidiary (“Cambium Learning”). The transaction was accounted for as an “acquisition” of VLCY by Cambium, as that term is used under U.S. Generally Accepted Accounting Principles (“GAAP”), for accounting and financial reporting purposes under the applicable accounting guidance for business combinations. Fiscal Year The consolidated financial statements present the Company as of a calendar year ending on December 31st. Nature of Operations and Segments The Company has three reportable segments with separate management teams and infrastructures that offer various products and services: Learning A-Z ® , ExploreLearning ® , and Voyager Sopris Learning ® . Segment results of operations include Other, which consists of unallocated shared services, such as accounting, legal, human resources, and corporate related items, as well as depreciation and amortization expense, goodwill impairment, interest income and expense, loss on extinguishment of debt and income taxes. The Company does not allocate any of these costs to its segments, and its chief operating decision maker evaluates performance of operating segments excluding these items. See Note 18 — Segment Reporting for further information on the Company’s segment reporting structure. Learning A-Z Segment Learning A-Z is a literacy-focused PreK-6 educational provider of technology-enabled learning resources. Founded in 2002, Learning A-Z’s resources are now used by more than 5 million students in more than 170 countries. Learning A-Z products blend traditional teacher-led instruction with robust online resources to make teaching more effective and efficient, practice more accessible and personalized, assessment more strategic and automated, and learning more informed and proactive. With a comprehensive and blended approach, Learning A-Z delivers the tools students need without limiting a teacher’s ability to differentiate instruction as they see fit. Learning A-Z’s approach to literacy emphasizes knowledge and individual potential by recognizing that while reading and writing remain essential to attaining academic success, they are dynamic and dependent on real-world application and the incorporation of many other 21st century skills. Students today must read and write well, and they must also be able to think critically and analyze what they learn, solve problems, innovate and apply creativity, utilize advancing technology, communicate effectively orally and in writing, and collaborate with their peers. With a robust library of incredibly effective and flexible curriculum resources, Learning A-Z provides the tools teachers need to deliver personalized instruction for a wide range of student needs. Learning A-Z operates the following subscription-based websites: Reading A-Z ® , Raz-Kids ® , Headsprout ® , Science A-Z® , Writing A-Z ™ , Vocabulary A-Z ™ , and ReadyTest A-Z ™ . These websites can be purchased stand-alone or in collections, for a comprehensive solution that provides online supplemental books, lessons, assessments and other instructional resources for individual classrooms, schools, and districts. Learning A-Z’s premier offering is an integration of teacher centric Reading A-Z with student centric Raz-Kids in a bundled product marketed as Raz-Plus ™. ExploreLearning Segment ExploreLearning makes online solutions that help students succeed in math and science. ExploreLearning combines research-proven instructional methods with innovative technology to create new pathways for learning. Founded in 1999, ExploreLearning solutions are now used in every U.S. state and over 50 countries worldwide. ExploreLearning offers two products that supplement core instruction in the classroom: Gizmos ® for grades 3-12 and Reflex ® for grades 2-8. Gizmos is a library of over 400 inquiry-based math and science simulations that help students make connections and draw conclusions through interaction, visualization and what-if exploration. Reflex is a highly-effective, game-based math fact fluency system that helps students of all ability levels succeed by continually adapting to students’ instructional needs and providing motivational rewards for their effort. Voyager Sopris Learning Segment Voyager Sopris Learning is a leading provider of technology, materials, and professional development for educators to ensure all students graduate prepared for college, career, and satisfaction in life after K-12. It has built a nearly 40 -year legacy on research and data-based curriculum development, while remaining nimble and responsive to the shifts and changes required by new standards, more demanding and rigorous content, new and competitive technological capabilities, and the needs of educators today. On a daily basis, Voyager Sopris Learning listens to the challenges of teachers and students, and its products are designed to respond to the need for exciting intervention and supplemental curricula that engage students, while remaining 100% purpose-and data-driven in their delivery. Voyager Sopris Learning programs are steeped in research and evidence, but they are also built with a deep consideration and understanding of the realities and struggles of education today. The Voyager Sopris Learning segment also includes Kurzweil Education ® brand solutions, which are now fully integrated within the Voyager Sopris Learning management structure. Voyager Sopris Learning solutions include LANGUAGE! ® Live, Language Essentials for Teachers of Reading and Spelling ( LETRS ® ), Step Up to Writing ® , TransMath ® , Vmath, Velocity TM and Kurzweil 3000 ® among other instructional resources. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Subsequent actual results may differ from those estimates. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. Revenue Recognition Learning A-Z and ExploreLearning Segments The Learning A-Z and ExploreLearning segments derive revenue from sales of online subscriptions to their literacy, math and science websites and related training and professional development. Typically, the subscriptions are for a twelve -month period (although they can be for longer periods) and the revenue is recognized ratably over the period the online access is available to the customer. Any training or professional development related to an online subscription is recognized over the same period of online access. Voyager Sopris Learning Segment Revenues for the Voyager Sopris Learning brand solutions are derived from sales of literacy and math educational solutions and services to school districts. Sales include printed materials, interactive web-based programs and online educational content, training and implementation services, and professional development. Revenue from the sale of printed materials is recognized when the product is shipped to or received by the customer, depending on the shipping terms of the arrangement. Revenue for interactive web-based programs and online educational content, which may be sold separately or included with printed curriculum materials are recognized ratably over the subscription or contractual period, typically a school year. Professional services such as training, implementation, and professional development are recognized as delivered or over the period a subscription product is delivered. Printed materials, materials and programs accessed online, and ongoing support and services often qualify as separate units of accounting and the division of revenue among these units is determined in accordance with the accounting guidance for revenue arrangements with multiple deliverables. Under this guidance, the Company is required to allocate revenue among the deliverables in an arrangement using the relative selling price method. The guidance requires use of a selling price hierarchy for determining the selling price of each deliverable, which includes (1) vendor-specific objective evidence (“VSOE”), if available, (2) third-party evidence (“TPE”), if VSOE is not available, and (3) best estimate of selling price (“BESP”), if neither VSOE nor TPE is available. The objective of BESP is to determine the price at which the Company would transact a sale if the product or service were sold on a stand-alone basis. The Company is not able to establish VSOE for each deliverable. Whenever VSOE cannot be established, the Company reviews the offerings of competitors to determine whether TPE can be established. TPE is determined based on the prices charged by the Company’s competitors for a similar deliverable when sold separately. It may be difficult to obtain sufficient information on competitor pricing to substantiate TPE and, therefore, the Company may not always be able to use TPE. The Company also uses BESP to determine the selling price of certain deliverables, primarily for certain printed materials which have historically been priced on a bundled basis with related online materials. The determination of BESP considers the anticipated margin on that deliverable, the selling price and profit margin for similar parts or services, and the Company’s ongoing pricing strategy and policies. The Company analyzes the selling prices used in the allocation of arrangement consideration at least annually. Selling prices are analyzed on a more frequent basis if a significant change in the business necessitates a more timely analysis or if the Company experiences significant variances in selling prices. In some cases, such as the Company’s blended learning solution LANGUAGE! Live , printed materials and related services do not qualify as separate units of accounting. When this occurs, all deliverables associated with the sale are recognized over the life of the online subscription which is typically a school year. Shipments to school book depositories are on consignment and revenue is recognized based on shipments from the depositories to the schools. For all reportable segments, the Company may enter into agreements to license or sell certain publishing rights and content. The Company recognizes the revenue from these agreements when the license amount is fixed and determinable, collection is reasonably assured, and when either the license period, if applicable, has commenced or transfer of content, if applicable, has occurred. See “Recently Issued Financial Accounting Standards” for the expected impact of the Company’s adoption of the new revenue standard. Accounts Receivable Accounts receivable are stated net of allowances for doubtful accounts and estimated sales returns. The allowance for doubtful accounts and estimated sales returns totaled $0.1 million and $0.2 million at December 31, 2017 and 2016 , respectively. The allowance for doubtful accounts is based on a review of the outstanding balances and historical collection experience. The reserve for sales returns is based on historical rates of returns as well as other factors that in the Company’s judgment could reasonably be expected to cause sales returns to differ from historical experience. A reconciliation of the accounts receivable reserve is shown in the table below for the periods indicated: December 31, (in thousands) 2017 2016 Accounts receivable reserve, beginning of period $ 210 $ 231 Charged to costs and expenses 76 554 Charged to other accounts (1) (73 ) 29 Write-offs (86 ) (604 ) Accounts receivable reserve, end of period $ 127 $ 210 (1) Changes in sales return reserve Net Income per Common Share Basic income per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted net income per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period; including potential dilutive shares of common stock, assuming the dilutive effect of outstanding stock options and restricted stock awards using the treasury stock method. Weighted-average shares from common share equivalents in the amount 653,497 and 489,450 for the years ended December 31, 2017 and 2016 , respectively, were excluded from dilutive shares outstanding because their effect was anti-dilutive. The following table presents the calculation of basic and diluted net income per share: Year Ended December 31, (in thousands, except per share data) 2017 2016 Numerator: Net income $ 45,055 $ 10,430 Denominator: Basic: Weighted-average common shares used in computing basic net income per share 46,416 45,861 Diluted: Add weighted average effect of dilutive securities: Stock options and restricted stock awards 1,178 1,356 Weighted-average common shares used in computing diluted net income per share 47,594 47,217 Net income per common share: Basic $ 0.97 $ 0.23 Diluted $ 0.95 $ 0.22 Cash and Cash Equivalents The Company considers all highly liquid investments with maturities of three months or less (when purchased) to be cash equivalents. The carrying amount reported in the Consolidated Balance Sheets approximates fair value. Inventory Inventory is stated at the lower of cost, determined using the first-in, first-out (FIFO) method, or net realizable value, and consists of finished goods. The Company reduces slow-moving or obsolete inventory to net realizable value. Inventory values are maintained at an amount that management considers appropriate based on factors such as the inventory aging, historical usage of the product, future sales forecasts, and product development plans. Inventory values are reviewed on a periodic basis. Restricted Assets Restricted assets consist of funds placed in a rabbi trust pursuant to the merger agreement for the purpose of funding certain obligations acquired in the VLCY merger, mostly deferred compensation, pension, and employee-related obligations. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed over the assets’ estimated useful lives using the straight-line method. Estimated lives are as follows: Asset Class Estimated Useful Life Computer and other equipment 3 - 5 years Leasehold improvements Lesser of useful life or lease term Furniture and fixtures 8 years Expenditures for maintenance and repairs, as well as minor renewals, are charged to expense as incurred, while improvements and major renewals are capitalized. Purchased and Developed Software Purchased and developed software includes the costs to purchase third-party software and to develop internal-use software, which includes software as a service offered to customers with an online subscription. The Company follows applicable guidance for the costs of computer software developed or obtained for internal use for capitalizing software projects. Software costs are amortized over the expected economic life of the product, generally on an accelerated basis over a period of five years for internally developed software offered to customers as an online subscription service, and generally on a straight-line basis over a period of three to five years for other software. At December 31, 2017 and 2016 , unamortized capitalized software was $17.5 million and $19.0 million , respectively, which included amounts of software under development of $0.5 million and $0.3 million , respectively. Interest capitalized during the years ended December 31, 2017 and 2016 totaled $0.1 million and $0.2 million , respectively. Acquired Curriculum and Technology Acquired curriculum and technology represents curriculum and developed technology acquired in the acquisitions of Headsprout in 2013 and VLCY in 2009, and is the initial purchase accounting value placed on the past development and refinement of the core methodologies, processes, measurement techniques, and technologies by which the Company structures curriculum. Acquired curriculum and technology is being amortized using an accelerated method over six to seven years, as it has an economic benefit declining over the estimated useful life. The Company periodically reviews the recoverability of the acquired curriculum and technology based on expected net realizable value, and generally retires the assets once fully depreciated. Acquired curriculum and technology is presented net of accumulated amortization of $21.8 million and $21.3 million at December 31, 2017 and 2016 , respectively. See Note 4 — Goodwill and Other Intangible Assets and Note 10 — Fair Value of Financial Instruments for further discussion of the Company’s curriculum and technology assets. Pre-Publication Costs The Company capitalizes certain pre-publication costs of its curriculum, including art, prepress, editorial, and other costs incurred in the creation of the master copy of its curriculum products. Pre-publication costs are amortized over the expected life of the education program, generally on an accelerated basis over a period of five years . The amortization methods and periods chosen reflect the expected sales generated by the education programs. The Company periodically reviews the recoverability of the capitalized costs based on expected net realizable value, and generally retires assets once fully depreciated. Pre-publication costs are presented net of accumulated amortization of $24.6 million and $21.4 million at December 31, 2017 and 2016 , respectively. Interest capitalized was $0.1 million during the years ended December 31, 2017 and 2016 . See Note 10 — Fair Value of Financial Instruments for further discussion of the Company’s pre-publication costs. Goodwill and Other Intangible Assets Goodwill and other intangible assets relate to the acquisitions of Headsprout in 2013, VLCY in 2009, and Cambium Learning in 2007. Other intangible assets include trade names/trademarks, reseller networks, and customer relationships/lists, which are being amortized on a straight-line basis over estimated lives ranging from seven to fifteen years . Other intangible assets are presented net of accumulated amortization of $3.4 million and $19.6 million at December 31, 2017 and 2016 , respectively. See Note 4 — Goodwill and Other Intangible Assets and Note 10 — Fair Value of Financial Instruments for further discussion of the Company’s goodwill and other intangible assets. Depreciation and Amortization Depreciation and amortization for the years ended December 31, 2017 and 2016 consisted of the following: Year Ended December 31, (in thousands) 2017 2016 Acquired publishing rights $ 585 $ 874 Acquired curriculum and technology 532 1,465 Pre-publication costs 8,109 7,715 Internally developed software related to product 8,742 8,088 Total amortization included in cost of revenues 17,968 18,142 Trade names and trademarks 377 398 Other intangible assets 49 683 Property, equipment and software 2,371 2,325 Total depreciation and amortization included in operating expense 2,797 3,406 Total depreciation and amortization $ 20,765 $ 21,548 Impairment of Long Lived Assets The Company reviews the carrying value of definite-lived long lived assets for impairment whenever events or changes in circumstances indicate net book value may not be recoverable from the estimated undiscounted future cash flows. If the review indicates any assets are impaired, the impairment of those assets is measured as the amount by which the carrying amount exceeds the fair value as estimated by either quoted market prices or discounted cash flows. Assets to be disposed of are reported at the lower of the carrying amount or fair value less cost of disposal. The determination whether the Company’s definite-lived intangible assets are impaired involves significant assumptions and estimates, including projections of future cash flows, the percentage of future revenues and cash flows attributable to the intangible assets, asset lives used to generate future cash flows, and royalty relief savings attributable to trademarks. Deferred Costs Certain up-front costs associated with completing the sale of the Company’s products are deferred and recognized as the related revenue is recognized. Advertising Costs The Company may ship products to prospective customers as samples. Samples costs are expensed to sales and marketing expense upon shipment and totaled $0.3 million and $0.4 million for the years ended December 31, 2017 and 2016 , respectively. Other costs of advertising, which include advertising, print, and photography expenses, are expensed as incurred and totaled $1.7 million and $1.3 million for the years ended December 31, 2017 and 2016 , respectively. Income Taxes Provision is made for the expense, or benefit, associated with taxes based on income. The provision for income taxes is based on laws currently enacted in each jurisdiction in which the Company does business and considers laws mitigating the taxation of the same income by more than one jurisdiction. Significant judgment is required in determining income tax expense, current tax receivables and payables, deferred tax assets and liabilities, and the need of any valuation allowance recorded against the net deferred tax assets. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, taxable income in prior carryback years, loss carryforward limitations, and tax planning strategies in assessing the extent to which deferred tax assets may be realized in future periods. If, after consideration of these factors, management believes it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if available evidence indicates that it is more likely than not that the position will be sustained on audit. The second step requires the Company to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company reevaluates its uncertain tax positions on a periodic basis, based on factors such as changes in facts and circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. The Company accrues interest and penalties, if any, related to unrecognized tax benefits as a component of income tax expense. Sales Taxes The Company reports sales taxes collected from customers and remitted to governmental authorities on a net basis. Sales tax collected from customers is excluded from revenues. Collected but unremitted sales tax is included as part of Accrued Expenses in the accompanying Consolidated Balance Sheets. Stock-Based Compensation The Company accounts for its stock-based compensation in accordance with applicable accounting guidance for share-based payments. This guidance requires all share-based payments to be recognized in the Consolidated Statements of Operations and Comprehensive Income based on their fair values. Compensation costs for awards with graded vesting are recognized on a straight-line basis over the anticipated vesting period. Recently Issued Financial Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. The new revenue guidance defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP. The guidance requires improved disclosures to help users of the financial statements better understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 allows for either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). The original effective date was for annual periods beginning after December 15, 2016. On July 9, 2015, the FASB elected to defer the effective date of the new revenue recognition standard by one year, for annual periods beginning after December 15, 2017. The Company will adopt this guidance using the modified retrospective approach on January 1, 2018. The Company has concluded that revenue recognition for its most significant revenue stream—subscription-based educational technology solutions—will not change materially under the new accounting standard and will continue to be recognized pro rata over the subscription period. The Company expects to defer additional revenue related to several provisions of the new guidance, including additional customer support obligations. This change is not expected to have a significant impact on the Company’s financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (ASU 2016-02). The guidance in ASU 2016-02 requires entities to record the assets and liabilities created by leases greater than one year. This ASU is effective for interim periods and fiscal years beginning after December 15, 2018, and early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance. In March 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . The guidance simplifies the accounting for goodwill impairment by eliminating the requirement to calculate the implied fair value of goodwill as the second step of the goodwill impairment evaluation. Companies are instead required to recognize goodwill impairment based on the excess of the reporting unit’s carrying value compared to its fair value. This ASU is effective in 2020 for calendar year entities, and early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance. Recently Adopted Financial Accounting Standards In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory (ASU 2015-11). ASU 2015-11 requires an entity to measure inventory within the scope of the update at the lower of cost and net realizable value. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. This ASU is effective for interim periods and fiscal years beginning after December 15, 2016. The Company adopted ASU 2015-11 in the first quarter of 2017 with no material impact to the financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation, Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). The guidance simplifies certain aspects of accounting for stock-based accounting. ASU 2016-09 is effective for interim periods and fiscal years beginning after December 15, 2016. The Company prospectively adopted ASU 2016-09 in the first quarter of 2017 and has elected to account for forfeitures as they occur. There was no material impact to the Company’s consolidated financial position, results of operations, equity, or cash flows. In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718) Scope of Modification Accounting (ASU 2017-09). The ASU provides guidance on the various types of changes which would trigger modification accounting for share-based payment awards. ASU 2017-09 is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The Company has early adopted ASU 2017-09 in the third quarter of 2017 with no material impact to the financial statements. |
Property, Equipment, and Softwa
Property, Equipment, and Software | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property, Equipment and Software | Property, Equipment and Software Balances of major classes of assets and accumulated depreciation and amortization at December 31, 2017 and 2016 consisted of the following: December 31, (in thousands) 2017 2016 Software $ 48,910 $ 47,822 Computers and other equipment 12,173 11,025 Furniture and fixtures 2,308 2,214 Leasehold improvements 1,859 1,824 Property, equipment and software at cost 65,250 62,885 Accumulated depreciation and amortization 43,164 39,378 Property, equipment and software, net $ 22,086 $ 23,507 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill The changes in the carrying amount of goodwill for the years ended December 31, 2017 and 2016 are as follows: (in thousands) Learning A-Z ExploreLearning Voyager Sopris Total Balance at December 31, 2015 Goodwill, gross $ 13,215 $ 6,947 $ 217,262 $ 237,424 Accumulated impairment loss — — (189,582 ) (189,582 ) Goodwill 13,215 6,947 27,680 47,842 Impairment — — — — Acquisitions — — — — Balance at December 31, 2016 Goodwill, gross 13,215 6,947 217,262 237,424 Accumulated impairment loss — — (189,582 ) (189,582 ) Goodwill 13,215 6,947 27,680 47,842 Impairment — — (4,325 ) (4,325 ) Acquisitions — — — — Balance at December 31, 2017 Goodwill, gross 13,215 6,947 217,262 237,424 Accumulated impairment loss — — (193,906 ) (193,906 ) Goodwill $ 13,215 $ 6,947 $ 23,356 $ 43,518 Impairment Analysis In accordance with GAAP, goodwill and other indefinite-lived intangible assets are not amortized but are instead reviewed for impairment at least annually and if a triggering event is determined to have occurred in an interim period. Relevant accounting guidance provides entities with the option of performing a qualitative assessment to determine if it is more likely than not that goodwill might be impaired (followed by a quantitative two-step goodwill impairment test if necessary) or proceeding directly to a quantitative two-step goodwill impairment test. When the Company elects to perform the qualitative assessment for a reporting unit, management evaluates relevant events and circumstances, such as macroeconomic conditions, industry and market changes, cost changes in key inputs, overall financial performance, and pertinent entity-specific or reporting unit-specific changes. If after assessing the totality of relevant events and circumstances, the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, the quantitative two-step goodwill impairment test is unnecessary. The Company performs its annual impairment test on October 1st each year. 2017 Annual Goodwill Impairment Analysis The Company performed the 2017 annual goodwill impairment analysis using four reporting units: Learning A-Z; ExploreLearning; and Voyager Sopris Learning and Kurzweil Education, which are both included in the Voyager Sopris Learning segment. As the Kurzweil Education reporting unit was fully integrated within the Voyager Sopris Learning management structure during 2017, the reporting units were combined after the October 1, 2017 goodwill analysis was performed. The reporting units have been combined in the table above. During 2017 , the Company elected to perform the optional qualitative assessment for the Learning A-Z and ExploreLearning reporting units. The qualitative assessment did not result in a conclusion that it was more likely than not that the fair value of these reporting units was less than their respective carrying amounts; therefore, it was unnecessary to perform the quantitative two-step goodwill impairment test for the Learning A-Z and ExploreLearning reporting units. During 2017 , the Company elected to perform the quantitative two-step goodwill impairment test for the Voyager Sopris Learning and Kurzweil Education reporting units. The step one calculation determined that the fair value of the Voyager Sopris Learning reporting unit exceeded its carrying amount by at least 10% ; therefore, it was unnecessary to perform the second step of the quantitative impairment test. The step one calculation determined that the fair value of the Kurzweil Education reporting unit was less than its carrying amount; therefore, the Company proceeded to the second step of the quantitative impairment test. Based on the step 2 test, the Company concluded that an impairment of the Kurzweil Education reporting unit was probable and could be reasonably estimated. When performing the two-step quantitative impairment test, the Company first determined the fair market value of the Kurzweil Education reporting unit using a weighted income and market approach. The income approach was dependent on multiple assumptions and estimates, including future cash flow projections with a terminal value multiple and the discount rate used to determine the expected present value of the estimated future cash flows. Future cash flow projections were based on management’s best estimates of economic and market conditions over the projected period, including revenue growth rates, future costs and operating margins, working capital needs, capital and other expenditures, and tax rates. The discount rate applied to the future cash flows was a weighted average cost of capital and took into consideration market and industry conditions, returns for comparable companies, the rate of return an outside investor would expect to earn, and other relevant factors. The market approach was based on historical and projected multiples for the Kurzweil Education reporting unit. As a result, goodwill impairment expense of $4.3 million was recorded in the fourth quarter of 2017. 2016 Annual Goodwill Impairment Analysis The Company performed the 2016 annual goodwill impairment analysis using four reporting units: Learning A-Z; ExploreLearning; and Voyager Sopris Learning and Kurzweil Education, which are both included in the Voyager Sopris Learning segment. During 2016 , the Company elected to perform the optional qualitative assessment for the Learning A-Z and ExploreLearning reporting units. The qualitative assessment did not result in a conclusion that it was more likely than not that the fair value of these reporting units was less than their respective carrying amounts; therefore, it was unnecessary to perform the quantitative two-step goodwill impairment test for the Learning A-Z and ExploreLearning reporting units. During 2016, the Company elected to perform the quantitative two-step goodwill impairment test for the Voyager Sopris Learning and Kurzweil Education reporting units. The step one calculated fair values of these reporting units exceeded their respective carrying amounts by at least 10% ; therefore, it was unnecessary to perform the second step of the quantitative impairment test. Intangible Assets The Company’s definite-lived intangible assets and related accumulated amortization at December 31, 2017 and 2016 consisted of the following: (in thousands) December 31, 2015 Additions Disposals Impairments December 31, 2016 Additions Disposals Impairments December 31, 2017 Intangible assets, gross: Publishing rights $ 26,200 $ — $ — $ — $ 26,200 $ — $ (26,200 ) $ — $ — Trademark 5,110 — — — 5,110 — — — 5,110 Customer relationships 7,717 — (3,417 ) — 4,300 — (4,300 ) — — Acquired curriculum and technology 24,828 — (2,248 ) — 22,580 1,150 — — 23,730 Reseller network 12,300 — — — 12,300 — (12,300 ) — — Total intangible assets, gross 76,155 — (5,665 ) — 70,490 1,150 (42,800 ) — 28,840 Intangible assets, accumulated amortization: Publishing rights (24,741 ) (874 ) — — (25,615 ) (585 ) 26,200 — — Trademark (2,612 ) (398 ) — — (3,010 ) (378 ) — — (3,388 ) Customer relationships (7,127 ) (579 ) 3,417 — (4,289 ) (11 ) 4,300 — — Acquired curriculum and technology (22,096 ) (1,465 ) 2,248 — (21,313 ) (532 ) — — (21,845 ) Reseller network (12,158 ) (104 ) — — (12,262 ) (38 ) 12,300 — — Total intangible assets, accumulated amortization (68,734 ) (3,420 ) 5,665 — (66,489 ) (1,544 ) 42,800 — (25,233 ) Intangible assets, net $ 7,421 $ (3,420 ) $ — $ — $ 4,001 $ (394 ) $ — $ — $ 3,607 Acquired Intangibles In 2017, the Company’s ExploreLearning segment acquired IS3D, LLC, developers of Cogent Education™ Interactive Cases™ – dynamic online experiences that put students in the role of a science, technology, engineering and mathematics (STEM) professional tasked with solving a real-world problem. The Company expects to pay a total cash purchase price of $1.1 million , with $1.0 million paid at close and $0.1 million to be paid after a hold back period of approximately one year. The Company recorded an addition to acquired curriculum intangibles of $1.2 million , with a useful life of seven years, related to the acquisition of IS3D, LLC. Estimated Future Amortization Expense Estimated amortization expense expected for each of the next five years related to intangibles subject to amortization is as follows: (in thousands) Cost of Revenues Operating Expense Amortization 2018 $ 664 $ 327 $ 991 2019 496 311 807 2020 327 297 624 2021 161 284 445 2022 120 269 389 Thereafter 116 235 351 $ 1,884 $ 1,723 $ 3,607 |
Other Current Assets
Other Current Assets | 12 Months Ended |
Dec. 31, 2017 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Current Assets | Other Current Assets Other Current Assets at December 31, 2017 and 2016 consisted of the following: December 31, (in thousands) 2017 2016 Deferred costs $ 9,246 $ 8,650 Prepaid expenses 1,762 1,533 Other current assets 185 1,052 Other current assets $ 11,193 $ 11,235 |
Other Assets
Other Assets | 12 Months Ended |
Dec. 31, 2017 | |
Other Assets [Abstract] | |
Other Assets | Other Assets Other Assets at December 31, 2017 and 2016 consisted of the following: December 31, (in thousands) 2017 2016 Deferred costs, less current portion $ 1,745 $ 1,405 Collateral investments 1,134 1,132 Deferred financing costs - revolving credit facility 530 711 Other 303 272 Other assets $ 3,712 $ 3,520 Deferred Financing Costs Deferred financing costs relate to costs incurred with the issuance in December 2015 of the Company’s $30.0 million Revolving Credit Facility. See Note 11 — Debt for additional information regarding the Company’s debt and the related deferred financing costs. Collateral Investments The Company maintains certificates of deposit to collateralize its outstanding letters of credit associated with workers’ compensation activity. At December 31, 2017 and 2016 , the Company had $0.2 million in certificates of deposit serving as collateral for its outstanding letters of credit. See Note 16 — Commitments and Contingencies for additional information regarding the Company’s outstanding letters of credit. Additionally, the Company maintains a money market fund investment to serve as collateral for a travel card program. The balance of the money market fund investment was $0.9 million at December 31, 2017 and 2016 . |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2017 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued Expenses Accrued Expenses at December 31, 2017 and 2016 consisted of the following: December 31, (in thousands) 2017 2016 Salaries, bonuses and benefits $ 8,550 $ 7,820 Accrued royalties 830 1,006 Pension and post-retirement benefit plans 950 967 Other 1,791 1,927 Accrued expenses $ 12,121 $ 11,720 Restructuring Costs During 2017, in response to the lower-than-expected performance at the Voyager Sopris Learning segment, the Company completed restructuring activities to reduce its cost structure. As a result, net income for 2017 includes restructuring costs totaling $1.4 million . At December 31, 2017, accrued salaries, bonuses, and benefits included $0.9 million of severance cost related to the 2017 restructuring. In 2016, in a separate restructuring event, Voyager Sopris Learning incurred severance costs of $1.1 million . At December 31, 2016, accrued salaries, bonuses, and benefits included $0.6 million of severance cost related to the Voyager Sopris Learning restructuring. Pension and Post-Retirement Benefit Plans See Note 12 — Profit-Sharing, Pension, and Other Postretirement Benefit Plans for further information regarding the Company’s pension and post-retirement benefit plan liabilities. |
Other Liabilities
Other Liabilities | 12 Months Ended |
Dec. 31, 2017 | |
Other Liabilities Disclosure [Abstract] | |
Other Liabilities | Other Liabilities Other Liabilities at December 31, 2017 and 2016 consisted of the following: December 31, (in thousands) 2017 2016 Pension and post-retirement benefit plans, long-term portion $ 8,285 $ 8,642 Deferred rent 587 688 Long-term income tax payable 470 454 Long-term deferred compensation 288 333 Other liabilities $ 9,630 $ 10,117 Pension and Post-Retirement Benefit Plans See Note 12 — Profit-Sharing, Pension, and Other Postretirement Benefit Plans for further information regarding the Company’s pension and post-retirement medical benefits liabilities. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2017 | |
Leases [Abstract] | |
Leases | Leases Operating Leases The Company leases certain facilities and equipment for production, selling, and administrative purposes under agreements with original lease periods up to 8 years. Leases generally include provisions requiring payment of taxes, insurance, and maintenance on leased property. Some leases may include renewal options, rent escalation clauses, or options to purchase the leased property during or at the end of the lease term. Rent holidays and rent escalation provisions are considered in determining straight-line rent expense to be recorded over the applicable lease term. The lease term begins on the commencement date as defined in the relevant lease agreement. Lease renewal periods are considered on a lease-by-lease basis and are generally not included in the initial lease term. Operating rent expense was $2.5 million and $2.2 million for the years ended December 31, 2017 and 2016 , respectively. Future minimum payments under non-cancelable operating leases are as follows: (in thousands) Minimum Operating Lease Payments 2018 $ 2,593 2019 2,763 2020 2,837 2021 1,240 2022 36 Thereafter — Total minimum lease payments $ 9,469 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability (exit price), in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques are based on observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair value hierarchy: • Level 1 — Quoted prices for identical instruments in active markets. • Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant value drivers are observable. • Level 3 — Valuations derived from valuation techniques in which significant value drivers are unobservable. At December 31, 2017 , financial instruments include cash and cash equivalents of $8.5 million , restricted assets of $2.3 million , collateral investments of $1.1 million , and the Senior Secured Credit Facility term loan, net of discount and deferred financing costs, of $47.8 million . At December 31, 2016 , financial instruments include cash and cash equivalents of $4.9 million , restricted assets of $3.3 million , collateral investments of $1.1 million , and Senior Secured Credit Facility term loans, net of discount and deferred financing costs, of $74.5 million . The fair market values of cash equivalents, restricted assets, and collateral investments are equal to their carrying value, as these investments are recorded based on quoted market prices and/or other market data for the same or comparable instruments and transactions as of the end of the applicable reporting period. At December 31, 2017 and 2016 , the carrying value of the Company’s Senior Secured Credit Facility term loans approximates the fair value, as the borrowings are tied to the London Interbank Offered Rate (“LIBOR”) and are market sensitive. Assets and liabilities measured at fair value on a recurring basis at December 31, 2017 and 2016 were as follows: (in thousands) Fair Value at Reporting Date Using Description December 31, 2017 Quoted Prices in Active Markets for Identical Asset (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Restricted Assets: Money Market $ 2,254 $ 2,254 $ — $ — Collateral Investments: Money Market 908 908 — — Certificate of Deposit 226 226 — — (in thousands) Fair Value at Reporting Date Using Description December 31, 2016 Quoted Prices in Active Markets for Identical Asset (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Restricted Assets: Money Market $ 3,266 $ 3,266 $ — $ — Collateral Investments: Money Market 906 906 — — Certificate of Deposit 226 226 — — (in thousands) Total Gains (Losses) Years Ended December 31, Description 2017 2016 Restricted Assets: Money Market $ — $ — Collateral Investments: Money Market — — Certificate of Deposit — — Assets and Liabilities That are Measured at Fair Value on a Nonrecurring Basis Assets and liabilities that are measured at fair value on a nonrecurring basis relate primarily to tangible fixed assets, goodwill, and other intangible assets, which are remeasured when the derived fair value is below carrying value in the Consolidated Balance Sheets. For these assets, the Company does not periodically adjust carrying value to fair value except in the event of impairment. If it is determined that impairment has occurred, the carrying value of the asset is reduced to fair value and the difference is recorded within income before interest, other expense, and income taxes in the Consolidated Statements of Operations and Comprehensive Income. Assets and liabilities measured at fair value on a nonrecurring basis at December 31, 2017 and 2016 were as follows: (in thousands) Fair Value at Reporting Date Using Description December 31, 2017 Quoted Prices in Active Markets for Identical Asset (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Goodwill $ 43,518 $ — $ — $ 43,518 Property, equipment and software, net 22,086 — — 22,086 Pre-publication costs, net 17,758 — — 17,758 Other intangible assets, net 3,607 — — 3,607 (in thousands) Fair Value at Reporting Date Using Description December 31, 2016 Quoted Prices in Active Markets for Identical Asset (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Goodwill $ 47,842 $ — $ — $ 47,842 Property, equipment and software, net 23,507 — — 23,507 Pre-publication costs, net 17,397 — — 17,397 Other intangible assets, net 4,001 — — 4,001 (in thousands) Total Gains (Losses) Years Ended December 31, Description 2017 2016 Goodwill $ (4,325 ) $ — Property, equipment and software, net — — Pre-publication costs, net — — Other intangible assets, net — — |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Debt Debt at December 31, 2017 and 2016 consisted of the following: December 31, (in thousands) 2017 2016 Senior secured credit facility term loans maturing December 10, 2020 $ 48,500 $ 76,150 Less: Unamortized discount (380 ) (923 ) Less: Unamortized deferred financing costs (321 ) (747 ) Term loans, net of discount and deferred costs 47,799 74,480 Less: current portion of long-term debt 5,958 7,350 Long-term debt $ 41,841 $ 67,130 Senior Secured Credit Facility On December 10, 2015, Cambium Learning, Inc. (the “Borrower”), a wholly-owned subsidiary of Cambium Learning Group, Inc., entered into a $135.0 million Senior Secured Credit Agreement (the “Credit Agreement”) among the Borrower, the Company, Webster Bank, N.A., as Administrative Agent, L/C Issuer and a Lender, and the other Lenders party thereto, with Webster Bank, N.A., as Joint Lead Arranger, the Governor and Company of the Bank of Ireland, as a Joint Lead Arranger and Syndication Agent, and Capital One National Association, and Babson Capital Finance, LLC, as Co-Documentation Agents (the “Senior Secured Credit Facility”). The Senior Secured Credit Facility consists of a term loan A which had an initial principal amount of $70.0 million (“Term Loan A”), a term loan B which had an initial principal amount of $35.0 million (“Term Loan B”) and a $30.0 million revolving credit facility (the “Revolving Credit Facility”), secured by a lien on substantially all assets and capital stock of the Company, the Borrower and the Borrower’s subsidiaries (collectively, the “Loan Parties”). The Senior Secured Credit Facility matures on December 10, 2020 . In 2017, the Company repaid the remaining principal amount outstanding of the Term Loan B. At December 31, 2017, the Company had an outstanding principal balance of $48.5 million under Term Loan A, no outstanding borrowings under the Term Loan B and Revolving Credit Facility, and had $29.8 million borrowing availability under the Revolving Credit Facility. Borrowings under the Senior Secured Credit Facility bear interest equal to either a Base Rate, as defined in the Credit Agreement, or LIBOR (subject to a 1.0% floor), at the Borrower’s option, plus an applicable margin. The applicable margin for the Term Loan A and Revolving Credit Facility ranges between 2.75% and 3.50% for Base Rate loans and 3.75% and 4.50% for LIBOR loans. The applicable margin for the Term Loan A and Revolving Credit Facility is based on a leverage calculation. The applicable margin for the Term Loan B is 4.25% for Base Rate loans and 5.25% for LIBOR loans. As of December 31, 2017, the lowest tier of the applicable margins were in effect, and the interest rate for the Term Loan A was 5.44% . Additionally, unused borrowing capacity under the Revolving Credit Facility is subject to a commitment fee of 0.5% . Interest is payable in arrears every three months or less, based on the selected LIBOR interest period. The Term Loan A requires scheduled quarterly principal payments which began on March 31, 2016, with the balance due at maturity. The Borrower is subject to certain prepayment requirements, including an Excess Cash Flow Payment, as defined in the Credit Agreement. The Company expects to make an Excess Cash Flow Payment of $0.3 million in 2018. The scheduled annual minimum principal payments, excluding any potential Excess Cash Flow Payments, are as follows: (in thousands) Future Payments 2018 $ 5,706 2019 7,132 2020 35,662 2021 — 2022 — Thereafter — $ 48,500 The Credit Agreement contains affirmative, negative and financial covenants customary for financings of this type, including, among other things, limits on the creation of liens, limits on the incurrence indebtedness, restrictions on investments and dispositions, limitations on fundamental changes to the Loan Parties, a maximum consolidated net leverage ratio, and minimum fixed charge coverage ratio. Upon an event of default, and after any applicable cure period, the Administrative Agent can accelerate the maturity of the loan. Events of default include customary items, such as failure to pay principal and interest in a timely manner and breach of covenants. At December 31, 2017 , the Company was in compliance with all covenants related to the Credit Facility. The principal balances of the Senior Secured Credit Facility were issued at a discount, representing fees paid to lenders, of $1.9 million , which will be amortized over the life of the debt using the effective interest rate method. Unamortized discount at December 31, 2017 was $0.4 million . The Company incurred debt issuance costs of $2.3 million associated with the Senior Secured Credit Facility, including $1.4 million paid to an affiliate of Veronis Suhler Stevenson pursuant to the consulting fee agreement between the Company and Veronis Suhler Stevenson. These costs were deferred and will be amortized over the term of the related debt using the effective interest method. Unamortized deferred financing costs related to the Senior Secured Credit Facility totaled $0.9 million at December 31, 2017 , including $0.3 million related to the Term Loan A presented as a reduction to Long-term debt and $0.5 million related to the Revolving Credit Facility classified as Other Assets in the Consolidated Balance Sheets. As of December 31, 2016, unamortized deferred financing costs totaled $1.5 million , including $0.7 million related to the Term Loan A and Term Loan B presented as a reduction to Long-term debt and $0.7 million related to the Revolving Credit Facility. In February 2016, the Company paid $0.1 million to enter into interest rate cap agreements for approximately half of its expected outstanding Term Loan A and Term Loan B loans, for a three -year period. Under the interest rate cap agreements, the Company will receive payments for any period that the three-month LIBOR rate exceeds 2.5% . During the year ended December 31, 2017 , the Company made voluntary prepayments of $20.6 million aggregate principal amount of the Senior Secured Credit Facility. This extinguishment resulted in a loss of $0.4 million , due to the write-off of unamortized deferred financing costs and debt discount. During the year ended December 31, 2016, the Company made voluntary prepayments of $25.0 million aggregate principal amount on the Term Loan B of the Senior Secured Credit Facility. This extinguishment resulted in a loss of $0.7 million , due to the write-off of $0.3 million of unamortized deferred financing costs and $0.4 million of unamortized debt discount. |
Profit-Sharing, Pension, and Ot
Profit-Sharing, Pension, and Other Postretirement Benefit Plans | 12 Months Ended |
Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
Profit-Sharing, Pension, and Other Postretirement Benefit Plans | Profit-Sharing, Pension, and Other Postretirement Benefit Plans Defined Contribution Plans The Company’s 401(k) plan provides matching contributions of 50% of participant contributions up to 6% . Additionally, the Company may make discretionary contributions based upon exceeding Company performance targets of up to 3% of eligible earnings for all employees regardless of participation. The 401(k) matching contribution expense was $1.4 million and $1.3 million for the years ended December 31, 2017 and 2016 , respectively. No discretionary contributions were made in the years ended December 31, 2017 and 2016 . As a result of the acquisition of VLCY, the Company also has contractual obligations under a frozen replacement benefit plan (“RBP”) for a small number of terminated and retired executives. Because the RBP is frozen, no participant can make or is entitled to additional contributions. Instead, the Company has accrued a liability totaling $0.3 million at both December 31, 2017 and 2016 , to reflect its estimated future obligation under the RBP. The current portion of the RBP liability, which was $11 thousand and $21 thousand at December 31, 2017 and 2016 , respectively, is included in Other in Note 7 — Accrued Expenses . The long-term portion of the RBP liability, which was $0.3 million at December 31, 2017 and 2016 , is included in Long-Term Deferred Compensation in Note 8 — Other Liabilities . Defined Benefit Plan As a result of the acquisition of VLCY, the Company also has a frozen defined benefit pension plan covering certain terminated and retired domestic employees. The benefits are primarily based on years of service and/or compensation during the years immediately preceding retirement. The Company uses a measurement date of December 31 st for its pension plan. GAAP requires reporting of the funded status of defined benefit postretirement plans as an asset or liability in the statement of financial position, recognizing changes in the funded status due to gains or losses, prior service costs, and net transition assets or obligations in other comprehensive income in the year the changes occur, adjusting other comprehensive income when the gains or losses, prior service costs, and net transition assets or obligations are recognized as components of net periodic benefit cost through amortization, and measuring the funded status of a plan as of the date of the statement of financial position, with limited exceptions. The net costs of the Company’s defined benefit pension plan for the years ended December 31, 2017 and 2016 were as follows: Year Ended December 31, (in thousands) 2017 2016 Interest cost $ 342 $ 392 Recognized net actuarial (gain) loss 255 (690 ) Total recognized in net pension cost and other comprehensive income $ 597 $ (298 ) Obligation and Funded Status The funded status of the Company’s U.S. defined benefit pension plan as of December 31, 2017 and 2016 was as follows: December 31, (in thousands) 2017 2016 Change in Benefit Obligation: Benefit obligation, beginning of period $ 9,609 $ 10,996 Service cost — — Interest cost 342 392 Actuarial loss (gain) 255 (690 ) Benefits paid (972 ) (1,089 ) Benefit obligation, end of period $ 9,235 $ 9,609 Change in Plan Assets: Fair value, beginning of period $ — $ — Company contributions 972 1,089 Benefits paid (972 ) (1,089 ) Fair value, end of period $ — $ — Unfunded status $ (9,235 ) $ (9,609 ) Accrued benefit cost $ (9,235 ) $ (9,609 ) Amounts recognized in the Consolidated Balance Sheets Current accrued benefit liability $ (950 ) $ (967 ) Non-current accrued benefit liability (8,285 ) (8,642 ) Net amount recognized $ (9,235 ) $ (9,609 ) The Company had a net actuarial (gain) loss of $ 0.3 million and $(0.7) million for its U.S. pension plan in the years ended December 31, 2017 and 2016 , respectively. These amounts are included in Accumulated Other Comprehensive Income (Loss) in the Consolidated Balance Sheets. Of this amount, the Company recognized $0.1 million as a component of net periodic pension cost during the years ended December 31, 2017 and 2016 , and expects to recognize approximately $0.1 million in 2018. Plan Assumptions Year Ended December 31, 2017 2016 Discount rate 3.40% 3.75% The discount rate is determined by analyzing the average returns of high-quality fixed income investments defined as AA-rated or better. The Company also utilizes an interest rate yield curve for instruments with maturities corresponding to the benefit obligations. Additional Information For the Company’s U.S. defined benefit pension plan, the projected benefit obligation and accumulated benefit obligation at December 31, 2017 and 2016 were as follows: December 31, (in thousands) 2017 2016 Projected benefit obligation $ 9,235 $ 9,609 Accumulated benefit obligation 9,235 9,609 Future Contributions Total contributions expected to be paid under the Company’s frozen U.S. retirement plans or to the beneficiaries thereof during fiscal 2018 are $1.0 million , consisting of $1.0 million to its U.S. defined benefit plan and $11 thousand to the RBP. Gross benefit payment obligations under the Company’s continuing plans for the next ten years are anticipated to be as follows: U.S. Retirement Plans (in thousands) (Pension Plan and RBP) 2018 $ 961 2019 918 2020 919 2021 832 2022 788 2023 - 2027 3,240 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) | 12 Months Ended |
Dec. 31, 2017 | |
Stockholders' Equity Attributable to Parent [Abstract] | |
Stockholders' Equity (Deficit) | Stockholders’ Equity (Deficit) Common Stock Shares Authorized, Issued, and Outstanding The Company is authorized to issue 150,000,000 shares of common stock, par value $0.001 per share. At December 31, 2017 , there were 53,332,560 shares of common stock issued, 46,800,371 shares of common stock outstanding, and an additional 3,527,569 shares of common stock reserved for issuance pursuant to the Cambium Learning Group, Inc. 2009 Equity Incentive Plan. Shares of the Company’s common stock are not convertible into or exchangeable for shares of any other class of capital stock. There are no redemption or sinking fund provisions applicable to the common shares. Treasury Stock Repurchased shares are recorded in Treasury Stock at Cost in the Consolidated Balance Sheets with an offset to Common Stock and Capital Surplus. Upon repurchase, treasury shares are no longer registered shares of the Company. Voting Rights Each holder of shares of the Company’s common stock is entitled to one vote for each share held of record on the applicable record date on all matters submitted to a vote of stockholders, including the election of directors. Dividend Rights Holders of the Company’s common stock are entitled to receive dividends when, as, and if declared by the board of directors out of funds legally available for payment, subject to the rights of holders of the Company’s preferred stock, if any. The Company has not historically paid dividends and does not anticipate doing so in the short term. In addition, the Company’s ability to pay cash dividends is limited by covenants of the existing Credit Agreement described in Note 11 — Debt . Rights Upon Liquidation In the event of a voluntary or involuntary liquidation, dissolution or winding up, the holders of the Company’s common stock will be entitled to share equally in any of the assets available for distribution after payment in full of all debts and after the holders of all series of the Company’s outstanding preferred stock, if any, have received their liquidation preferences in full. Preemptive Rights In general, holders of the Company’s common stock have no preemptive rights to purchase, subscribe for, or otherwise acquire any unissued or treasury shares or its other securities. However, under the terms of the stockholders agreement, entered into in connection with the mergers (the “Stockholders Agreement”) except with respect to specified exempt issuances, for so long as VSS-Cambium Holdings III, LLC and funds managed or controlled by Veronis Suhler Stevenson, (individually and collectively “VSS”) beneficially own in the aggregate at least 25% of the outstanding shares of the Company’s common stock, VSS has preemptive rights to purchase the Company’s common stock (or other securities that may be approved by the audit committee of the board of directors), in connection with any proposed securities offering by the Company. These preemptive rights generally give VSS the opportunity to purchase an amount of common stock (or such other securities as may be approved by the audit committee) in the new issuance sufficient to enable VSS to maintain their same collective percentage ownership following the new issuance. Tax Asset Protection Rights Agreement In September 2016, the Company entered into a Tax Asset Protection Rights Agreement (the “Rights Agreement”), between the Company and Wells Fargo Bank, National Association, as Rights Agent. The Rights Agreement is designed to preserve the Company’s substantial NOLs and other significant tax benefits which may be available to reduce potential future tax liabilities. The Rights Agreement is not intended to be an antitakeover measure or to deter offers that are fair and otherwise in the best interests of the Company’s stockholders. Preferred Stock Shares Authorized and Outstanding The Company is authorized to issue 15,000,000 shares of preferred stock, par value $0.001 per share. At December 31, 2017 , there were no shares of preferred stock issued or outstanding. Blank Check Preferred Stock Under the certificate of incorporation, without further stockholder action, the board of directors is authorized to provide for the issuance of shares of preferred stock in one or more series, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and any qualifications, limitations, or restrictions on such shares. The board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of the Company’s common stock. |
Stock-Based Compensation and Ex
Stock-Based Compensation and Expense | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation and Expense | Stock-Based Compensation and Expense Cambium Learning Group, Inc. 2009 Equity Incentive Plan In 2009, the Company adopted the Cambium Learning Group, Inc. 2009 Equity Incentive Plan (“Incentive Plan”). Under the Incentive Plan, 5,000,000 shares of common stock were reserved for issuance of awards which may be granted in the form of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, conversion stock options, conversion stock appreciation rights, and other stock or cash awards. The Incentive Plan is administered by the board of directors, which has the authority to establish the terms and conditions of awards granted under the Incentive Plan. Stock Option Activity Stock option awards generally vest in equal monthly installments on the last day of each month of the four -year period beginning on the first day of the month of grant. The term of each option is typically ten years from the date of grant. All outstanding options were granted at exercise prices equal to the fair market value of the Company’s common stock at the date of grant. The following table summarizes stock option transactions under the Incentive Plan for the year ended December 31, 2017 : Year Ended December 31, 2017 Options Weighted Average Exercise Price Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2016 2,655,581 $ 2.39 Granted 455,000 $ 5.60 Exercised (598,206 ) $ 2.03 Cancelled/Forfeited (130,066 ) $ 3.91 Outstanding at December 31, 2017 2,382,309 $ 3.02 5.8 $ 6,483 Exercisable at December 31, 2017 1,624,891 $ 2.14 4.5 $ 5,756 Vested and Expected to Vest at December 31, 2017 2,282,309 $ 2.87 5.7 $ 6,483 The weighted average grant date fair value of options granted during the years ended December 31, 2017 and 2016 was $3.22 and $2.81 , respectively. The aggregate intrinsic value of stock options exercised in the years ended December 31, 2017 and 2016 was $2.1 million and $1.6 million , respectively. During the years ended December 31, 2017 and 2016 , 412,024 and 735,945 options vested, respectively. The total fair value of the options that vested was $0.9 million and $0.9 million , respectively. At December 31, 2017 , total future compensation costs related to unvested stock options to be recognized in the consolidated statements of operations was $1.8 million , with a weighted average period over which this cost is expected to be recognized of 2.7 years . Stock Option Valuation Assumptions The Company utilizes the Black-Scholes option-pricing model to determine the fair value of stock option awards on the date of grant. The following assumptions were used in the Black-Scholes option-pricing model to estimate the fair value of the awards granted during the years ended December 31, 2017 and 2016 : Year Ended December 31, 2017 2016 Expected stock volatility 59.90 % 64.00 % Risk-free interest rate 2.07% – 2.12% 1.26% – 1.57% Expected years until exercise 6.25 6.25 Dividend yield 0.00 % 0.00 % Due to a lack of exercise history or other means to reasonably estimate future exercise behavior, the Company used the simplified method to estimate the expected years until exercise on new awards as described in applicable accounting guidance for stock-based compensation. Restricted Stock As of December 31, 2017 , the Company had no outstanding restricted stock awards. Stock-Based Compensation and Expense Stock-based compensation and expense for the years ended December 31, 2017 and 2016 was allocated as follows: Year Ended December 31, (in thousands) 2017 2016 Cost of revenues $ 55 $ 59 Research and development expense 158 171 Sales and marketing expense 207 206 General and administrative expense 445 492 Stock-based compensation and expense $ 865 $ 928 The total income tax expense recognized for book purposes in the Consolidated Statements of Operations and Comprehensive Income related to stock-based compensation was zero for the years ended December 31, 2017 and 2016 . The total tax benefit realized was zero for all years presented. Securities Authorized for Issuance Securities authorized for issuance under equity compensation plans at December 31, 2017 are as follows: (in thousands, except per share amounts) Plan Category Number of securities Weighted-average Number of securities Equity compensation plans approved by 2,382 $ 3.02 1,145 Equity compensation plans not approved — — — Total 2,382 $ 3.02 1,145 (a) Excludes securities reflected in the first column, “Number of securities to be issued upon exercise of outstanding options”. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income or loss before income taxes for the years ended December 31, 2017 and 2016 were primarily attributable to the United States. Income tax expense attributable to income included the following: Year Ended December 31, (in thousands) 2017 2016 Current income tax expense: United States federal $ 326 $ 126 Foreign 87 34 State and local 903 105 Total current income tax expense 1,316 265 Deferred income tax (benefit) expense: United States federal (27,719 ) — State and local (2,895 ) 28 Total deferred income tax (benefit) expense (30,614 ) 28 Income tax (benefit) expense $ (29,298 ) $ 293 Reconciliation of income tax (benefit) expense and the domestic federal statutory income tax expense is as follows: Year Ended December 31, (in thousands) 2017 2016 Income tax expense at U.S. federal statutory rate $ 5,515 $ 3,753 Increase (reduction) from: State taxes (net of federal benefit) (2,269 ) 133 Change in valuation allowance (52,501 ) (3,779 ) Change in federal statutory tax rate 14,497 — Amortization of goodwill (621 ) (621 ) Goodwill impairment 1,514 — Stock compensation (1,000 ) — Adjustments to federal deferred tax assets 5,290 — Non-deductible expenses 163 148 Other 114 659 Income tax (benefit) expense $ (29,298 ) $ 293 Deferred income taxes include temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities. At December 31, 2017, the Company determined that a full valuation allowance was no longer required against its deferred tax assets. The Company recorded a benefit to income tax expense of $43.2 million for the release of substantially all of the valuation allowance on those deferred tax assets. On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (“the Tax Act”) which significantly changed U.S. tax law. The Tax Act lowered the Company’s statutory federal income tax rate from 35% to 21% effective January 1, 2018. At December 31, 2017, the Company remeasured its deferred tax balances to reflect the new tax rate and recorded a charge to income tax expense of $14.5 million . The tax effects of each type of temporary difference and carryforward that gave rise to a significant portion of deferred tax assets (liabilities) at December 31, 2017 and 2016 were as follows: December 31, (in thousands) 2017 2016 Deferred tax assets attributable to : Net operating loss carryforwards $ 14,473 $ 29,660 Tax credit carryforwards 7,858 7,622 Reserves 2,550 3,810 Inventory 4,126 2,931 Deferred revenue 3,571 4,388 Intangibles — 5,848 Other 2,378 2,073 Total gross deferred tax assets 34,956 56,332 Valuation allowance (1,297 ) (53,798 ) Net deferred tax assets 33,659 2,534 Deferred tax liabilities attributable to: Intangibles (1,332 ) (2,370 ) Fixed assets (1,649 ) (164 ) Other (64 ) — Net deferred tax asset $ 30,614 $ — The valuation allowance decreased in 2017 by $52.5 million primarily because of the release of substantially all of the valuation allowance previously recorded against the Company’s deferred tax assets. The valuation allowance decreased in 2016 by $3.8 million because it offset the decrease in the deferred tax asset derived from pre-tax gains. As of December 31, 2017 , there is no amount of the valuation allowance for which subsequently recognized benefits will be allocated to reduce goodwill. At December 31, 2017 , the amounts and expiration dates of loss and tax credit carryforwards were as follows: (in thousands) Amount as of December 31, 2017 Expire or start expiring at the end of: U.S. net operating loss (1) $ 63,629 2028 U.S. federal capital losses 3,785 2019 State tax net operating losses 22,560 2017 – 2035 Tax credits: Minimum tax credit 7,771 Carry forward indefinitely Other tax credits 2,467 2017 – 2021 Total tax credits $ 10,238 (1) $20.5 million of the U.S. net operating loss (NOL) above is related to the VLCY acquisition. Income taxes paid, net of tax refunds, was $1.1 million and $0.8 million for the years ended December 31, 2017 and 2016 , respectively. Uncertain Tax Positions The Company recognizes the financial statement impacts of a tax return position when it is more likely than not, based on technical merits, that the position will ultimately be sustained. For tax positions that meet this recognition threshold, the Company applies judgment, taking into account applicable tax laws, experience managing tax audits, and relevant GAAP to determine the amount of tax benefits to recognize in the financial statements. For each position, the difference between the benefit realized on the Company’s tax return and the benefit reflected in the financial statements is recorded to Other Liabilities in the Consolidated Balance Sheets as an unrecognized tax benefit (“UTB”). The Company updates its UTBs at each financial statement date to reflect the impacts of audit settlements and other resolution of audit issues, expiration of statutes of limitation, developments in tax law, and ongoing discussions with tax authorities. A reconciliation of the change in the UTB balance for the years ended December 31, 2017 and 2016 is as follows: Year Ended December 31, (in thousands) 2017 2016 Unrecognized tax benefit, beginning of period $ 5,936 $ 6,236 Increases for tax positions in prior periods 46 — Decreases for effectively settled tax positions — (300 ) Decreases for expiration of the statute of limitations (3,351 ) — Unrecognized tax benefit, end of period $ 2,631 $ 5,936 Included in the balance of unrecognized tax benefits at December 31, 2017 are approximately $0.3 million of tax benefits that, if recognized, would affect the effective tax rate. The recognition of the remaining uncertain tax positions would not affect the effective tax rate, but would instead increase or would have increased available tax attributes. However, the recognition of the tax attribute would be offset by an increase in the deferred tax asset valuation allowance resulting in no net impact in the effective tax rate. The Company recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense. Related to the unrecognized tax benefits noted above, the Company recognized no penalties (gross) and an immaterial amount of interest (gross) during the year ended December 31, 2017 . At December 31, 2017 , the Company had liabilities of $0.1 million for penalties (gross) and $0.1 million for interest (gross). The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. All U.S. tax years prior to 2008 related to the VLCY-acquired entities have been audited by the Internal Revenue Service. Cambium and its subsidiaries have been examined by the Internal Revenue Service through the end of 2006. The Company has been audited by various state tax authorities through 2007. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Proceedings The Company is involved in various legal proceedings incidental to its business. Management believes that the outcome of these proceedings will not have a material adverse effect upon the Company’s consolidated operations or financial condition and the Company has recognized appropriate liabilities as necessary based on facts and circumstances known to management. The Company expenses legal costs related to legal contingencies as incurred. Letters of Credit The Company had letters of credit outstanding at December 31, 2017 in the amount of $0.4 million to support workers’ compensation activity. The Company maintains certificates of deposit of $0.2 million to serve as collateral for these letters of credit. The Company also maintains a $0.9 million money market fund investment as collateral for a travel card program. The certificates of deposit and money market fund investment are included in Collateral Investments in Note 6 — Other Assets . |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Agreements with VSS Jeffrey Stevenson and David Bainbridge, each of whom serves on the Company’s board of directors, are affiliates of VSS. Funds managed by VSS own a majority of the equity interests of VSS-Cambium Holdings III, LLC, which holds approximately 69% of the Company’s outstanding common stock. As such, VSS-Cambium Holdings III, LLC has the ability to determine the outcome of matters submitted to the Company’s stockholders for approval, including the election and removal of directors and any merger, consolidation, or sale of all or substantially all of the Company’s assets, and will likely have the ability to control the Company’s management, affairs and operations. In 2009, the Company entered into a consulting fee agreement, as amended, with VSS Fund Management LLC (the “Consulting Agreement”) entitling VSS to the following fees: (i) a fee equal to 1% of the gross proceeds of any debt or equity financing by the Company, and (ii) a fee equal to 1% of the enterprise value of any entities acquired or disposed of by the Company. These obligations will remain in effect until the earliest of the date on which (i) VSS no longer has any employees serving on the Company’s board of directors, (ii) funds managed by VSS cease to beneficially own at least 10% of the Company’s outstanding common stock, and (iii) unless the Company’s audit committee renews the Consulting Agreement, January 1, 2017. The Company and VSS agreed to amend the Consulting Agreement, effective March 19, 2013, and have entered into Amendment No. 1 to the Consulting Agreement (the “Amendment”) such that, in addition to the fees currently payable to VSS thereunder, on January 1st of each calendar year, with the first payment payable to VSS as of January 1, 2013, VSS will be entitled to an annual payment of $70 thousand for monitoring services for the then-current calendar year, provided that if an employee of VSS serves as Chairman of the Company’s Board of Directors (the “Board”), such fee is subject to a dollar-for-dollar reduction in the amount of the annual retainer received by such VSS employee (as contemplated by the Company’s then current board compensation program). The Amendment also allows VSS to designate from time to time one or more of its affiliates to receive any of the fees payable under the Consulting Agreement. The Company and VSS agreed to amend the Consulting Agreement and have entered into Amendment No. 2 to the Consulting Agreement on December 16, 2016 (the “Second Amendment”). The Second Amendment provides that the Consulting Agreement will remain in effect until the earliest of (i) the date on which VSS no longer has any employees serving on the Board, (ii) the date on which funds managed by VSS cease to beneficially own at least 10% of the Company’s outstanding common stock, and (iii) unless the Company’s audit committee renews the Consulting Agreement, January 1, 2021. In connection with the Credit Agreement, VSS Fund Management LLC provided to the Administrative Agent, on behalf of the Lenders under the Credit Agreement, a management fee subordination agreement. This agreement limits the ability of VSS Fund Management LLC to amend the terms of the Consulting Agreement, as amended. VSS also currently receives an annual retainer of $65 thousand each for the services of Mr. Stevenson and Mr. Bainbridge on the Board. In total, VSS received $0.2 million in cash during each of the years ended December 31, 2017 and 2016 related to the services of these directors, plus reimbursement of out-of-pocket expenses. In 2017, the Company retained the Tax Credit Co., an affiliate of VSS, to identify and document potential research and development tax credits. The Company agreed to pay a contingency fee based on the value of the tax credits identified, and during 2017, the Company paid $0.3 million to the Tax Credit Co. Stockholders Agreement The Company entered into the Stockholders Agreement on December 8, 2009, at the effective time of the mergers, with VSS-Cambium Holdings III, LLC and Vowel Representative, LLC, the stockholder representative for the former VLCY stockholders. Preemptive Rights Except with respect to specified exempt issuances that are described below, so long as VSS-Cambium Holdings III, LLC and funds managed or controlled by VSS beneficially own in the aggregate at least 25% of the outstanding shares of the Company’s common stock, they will have preemptive rights to purchase the Company’s common stock (or such other securities as may be approved by the audit committee) in connection with any proposed issuance of securities after December 8, 2009. These preemptive rights generally give the holders of those rights the opportunity to purchase an amount of the Company’s securities in the new issuance that would enable the holders of those rights to maintain their same collective percentage ownership following the new issuance. Certain specified issuances of securities by the Company constitute “exempt issuances” and will not be subject to these preemptive rights. Walsh Employment Agreement On April 30, 2013, the Company entered into an employment agreement with Joe Walsh, Chairman of the Board. For his services as Chairman and as a consultant to the Company, Mr. Walsh receives total annual compensation of $0.3 million . |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting Geographic Information and Concentrations of Credit Risk The Company’s geographic area of operation is predominantly the United States. Export or foreign sales to locations outside the United States was approximately 9% and 8% of total sales for the years ended December 31, 2017 and 2016 , respectively, with approximately 4% of total sales in Canada in each year. No single customer accounted for more than 10% of consolidated net revenues for any years presented. No single customer accounted for more than 10% of the accounts receivable balance at December 31, 2017 . One single customer accounted for approximately 11% of the accounts receivable balance at December 31, 2016 . Although the loss of a single customer or a few customers would not have a material adverse effect on the Company’s business, schedules of school adoptions, available funding for school districts, and market acceptance of the Company’s products can materially affect year-to-year revenue performance. Segment Results of Operation The Company operates in three reportable segments with separate management teams and infrastructures that offer various products and services. The Company and its chief operating decision maker use net revenues, operating expenses, income from operations, and capital expenditures as measures of the reportable segment’s operating performance. The Company does not track assets by segment and the chief operating decision maker does not use assets as a measure of the reportable segments’ operating performance; therefore, this information is not reported. The significant accounting policies of the reportable segments are the same as those for the Company. There were no intersegment revenues or transfers. The reportable segments’ results of operations for the years ended December 31, 2017 and 2016 are presented in the tables below. Year Ended December 31, 2017 (in thousands) Learning A-Z Explore Voyager Other Consolidated Product revenues $ 75,148 $ 27,857 $ 52,339 $ — $ 155,344 Service revenues — — 2,840 — 2,840 Total net revenues 75,148 27,857 55,179 — 158,184 Cost of product revenues 3,641 3,741 18,572 — 25,954 Cost of service revenues — — 1,612 — 1,612 Amortization expense — — — 17,968 17,968 Total cost of revenues 3,641 3,741 20,184 17,968 45,534 Other operating expenses 32,723 13,415 24,142 14,286 84,566 Depreciation and amortization expense — — — 2,797 2,797 Goodwill impairment — — — 4,325 4,325 Total costs and expenses 36,364 17,156 44,326 39,376 137,222 Income before interest, other expense and income taxes 38,784 10,701 10,853 (39,376 ) 20,962 Net interest expense — — — (4,845 ) (4,845 ) Loss on extinguishment of debt — — — (360 ) (360 ) Income tax benefit — — — 29,298 29,298 Segment net income $ 38,784 $ 10,701 $ 10,853 $ (15,283 ) $ 45,055 Expenditures for property, equipment, software and pre-publication costs $ 8,847 $ 3,515 $ 5,274 $ 524 $ 18,160 Year Ended December 31, 2016 (in thousands) Learning A-Z Explore Voyager Other Consolidated Product revenues $ 66,049 $ 23,739 $ 58,770 $ — $ 148,558 Service revenues — — 3,800 — 3,800 Total net revenues 66,049 23,739 62,570 — 152,358 Cost of product revenues 2,576 3,606 21,579 — 27,761 Cost of service revenues — — 2,361 — 2,361 Amortization expense — — — 18,142 18,142 Total cost of revenues 2,576 3,606 23,940 18,142 48,264 Other operating expenses 29,794 11,498 26,085 14,700 82,077 Depreciation and amortization expense — — — 3,406 3,406 Total costs and expenses 32,370 15,104 50,025 36,248 133,747 Income before interest, other expenses and income taxes 33,679 8,635 12,545 (36,248 ) 18,611 Net interest expense — — — (7,190 ) (7,190 ) Loss on extinguishment of debt — — — (698 ) (698 ) Income tax expense — — — (293 ) (293 ) Segment net income $ 33,679 $ 8,635 $ 12,545 $ (44,429 ) $ 10,430 Expenditures for property, equipment, software and pre-publication costs $ 8,519 $ 2,846 $ 7,988 $ 701 $ 20,054 |
Interim Financial Information (
Interim Financial Information (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Interim Financial Information (Unaudited) | Note 19 — Interim Financial Information (Unaudited) The following table presents the Company’s quarterly results of operations for the years ended December 31, 2017 and 2016 . Three Months Ended (in thousands, except per share data) March 31, June 30, September 30, December 31, Fiscal Year Fiscal 2017 Net revenues $ 35,970 $ 40,362 $ 43,523 $ 38,329 $ 158,184 Cost of revenues 6,185 7,215 7,928 6,238 27,566 Other operating expenses 25,888 25,685 27,448 30,635 109,656 Income before income taxes 2,670 6,126 6,876 85 15,757 Income tax (expense) benefit (140 ) (334 ) (399 ) 30,171 29,298 Net income $ 2,530 $ 5,792 $ 6,477 $ 30,256 $ 45,055 Basic income per share $ 0.05 $ 0.13 $ 0.14 $ 0.65 $ 0.97 Diluted income per share $ 0.05 $ 0.12 $ 0.14 $ 0.63 $ 0.95 Fiscal 2016 Net revenues $ 33,674 $ 39,084 $ 42,113 $ 37,487 $ 152,358 Cost of revenues 7,007 7,732 8,876 6,507 30,122 Other operating expenses 25,083 25,519 27,360 25,663 103,625 Income (loss) before income taxes (180 ) 3,875 4,001 3,027 10,723 Income tax (expense) benefit 78 (111 ) (173 ) (87 ) (293 ) Net income (loss) $ (102 ) $ 3,764 $ 3,828 $ 2,940 $ 10,430 Basic income (loss) per share $ — $ 0.08 $ 0.08 $ 0.06 $ 0.23 Diluted income (loss) per share $ — $ 0.08 $ 0.08 $ 0.05 $ 0.22 |
Significant Accounting Polici26
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Subsequent actual results may differ from those estimates. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. |
Revenue Recognition | Revenue Recognition Learning A-Z and ExploreLearning Segments The Learning A-Z and ExploreLearning segments derive revenue from sales of online subscriptions to their literacy, math and science websites and related training and professional development. Typically, the subscriptions are for a twelve -month period (although they can be for longer periods) and the revenue is recognized ratably over the period the online access is available to the customer. Any training or professional development related to an online subscription is recognized over the same period of online access. Voyager Sopris Learning Segment Revenues for the Voyager Sopris Learning brand solutions are derived from sales of literacy and math educational solutions and services to school districts. Sales include printed materials, interactive web-based programs and online educational content, training and implementation services, and professional development. Revenue from the sale of printed materials is recognized when the product is shipped to or received by the customer, depending on the shipping terms of the arrangement. Revenue for interactive web-based programs and online educational content, which may be sold separately or included with printed curriculum materials are recognized ratably over the subscription or contractual period, typically a school year. Professional services such as training, implementation, and professional development are recognized as delivered or over the period a subscription product is delivered. Printed materials, materials and programs accessed online, and ongoing support and services often qualify as separate units of accounting and the division of revenue among these units is determined in accordance with the accounting guidance for revenue arrangements with multiple deliverables. Under this guidance, the Company is required to allocate revenue among the deliverables in an arrangement using the relative selling price method. The guidance requires use of a selling price hierarchy for determining the selling price of each deliverable, which includes (1) vendor-specific objective evidence (“VSOE”), if available, (2) third-party evidence (“TPE”), if VSOE is not available, and (3) best estimate of selling price (“BESP”), if neither VSOE nor TPE is available. The objective of BESP is to determine the price at which the Company would transact a sale if the product or service were sold on a stand-alone basis. The Company is not able to establish VSOE for each deliverable. Whenever VSOE cannot be established, the Company reviews the offerings of competitors to determine whether TPE can be established. TPE is determined based on the prices charged by the Company’s competitors for a similar deliverable when sold separately. It may be difficult to obtain sufficient information on competitor pricing to substantiate TPE and, therefore, the Company may not always be able to use TPE. The Company also uses BESP to determine the selling price of certain deliverables, primarily for certain printed materials which have historically been priced on a bundled basis with related online materials. The determination of BESP considers the anticipated margin on that deliverable, the selling price and profit margin for similar parts or services, and the Company’s ongoing pricing strategy and policies. The Company analyzes the selling prices used in the allocation of arrangement consideration at least annually. Selling prices are analyzed on a more frequent basis if a significant change in the business necessitates a more timely analysis or if the Company experiences significant variances in selling prices. In some cases, such as the Company’s blended learning solution LANGUAGE! Live , printed materials and related services do not qualify as separate units of accounting. When this occurs, all deliverables associated with the sale are recognized over the life of the online subscription which is typically a school year. Shipments to school book depositories are on consignment and revenue is recognized based on shipments from the depositories to the schools. For all reportable segments, the Company may enter into agreements to license or sell certain publishing rights and content. The Company recognizes the revenue from these agreements when the license amount is fixed and determinable, collection is reasonably assured, and when either the license period, if applicable, has commenced or transfer of content, if applicable, has occurred. See “Recently Issued Financial Accounting Standards” for the expected impact of the Company’s adoption of the new revenue standard. |
Accounts Receivable | Accounts Receivable Accounts receivable are stated net of allowances for doubtful accounts and estimated sales returns. The allowance for doubtful accounts and estimated sales returns totaled $0.1 million and $0.2 million at December 31, 2017 and 2016 , respectively. The allowance for doubtful accounts is based on a review of the outstanding balances and historical collection experience. The reserve for sales returns is based on historical rates of returns as well as other factors that in the Company’s judgment could reasonably be expected to cause sales returns to differ from historical experience. A reconciliation of the accounts receivable reserve is shown in the table below for the periods indicated: December 31, (in thousands) 2017 2016 Accounts receivable reserve, beginning of period $ 210 $ 231 Charged to costs and expenses 76 554 Charged to other accounts (1) (73 ) 29 Write-offs (86 ) (604 ) Accounts receivable reserve, end of period $ 127 $ 210 (1) Changes in sales return reserve |
Net Income per Common Share | Net Income per Common Share Basic income per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted net income per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period; including potential dilutive shares of common stock, assuming the dilutive effect of outstanding stock options and restricted stock awards using the treasury stock method. Weighted-average shares from common share equivalents in the amount 653,497 and 489,450 for the years ended December 31, 2017 and 2016 , respectively, were excluded from dilutive shares outstanding because their effect was anti-dilutive. The following table presents the calculation of basic and diluted net income per share: Year Ended December 31, (in thousands, except per share data) 2017 2016 Numerator: Net income $ 45,055 $ 10,430 Denominator: Basic: Weighted-average common shares used in computing basic net income per share 46,416 45,861 Diluted: Add weighted average effect of dilutive securities: Stock options and restricted stock awards 1,178 1,356 Weighted-average common shares used in computing diluted net income per share 47,594 47,217 Net income per common share: Basic $ 0.97 $ 0.23 Diluted $ 0.95 $ 0.22 |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with maturities of three months or less (when purchased) to be cash equivalents. The carrying amount reported in the Consolidated Balance Sheets approximates fair value. |
Inventory | Inventory Inventory is stated at the lower of cost, determined using the first-in, first-out (FIFO) method, or net realizable value, and consists of finished goods. The Company reduces slow-moving or obsolete inventory to net realizable value. Inventory values are maintained at an amount that management considers appropriate based on factors such as the inventory aging, historical usage of the product, future sales forecasts, and product development plans. Inventory values are reviewed on a periodic basis. |
Restricted Assets | Restricted Assets Restricted assets consist of funds placed in a rabbi trust pursuant to the merger agreement for the purpose of funding certain obligations acquired in the VLCY merger, mostly deferred compensation, pension, and employee-related obligations. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed over the assets’ estimated useful lives using the straight-line method. Estimated lives are as follows: Asset Class Estimated Useful Life Computer and other equipment 3 - 5 years Leasehold improvements Lesser of useful life or lease term Furniture and fixtures 8 years Expenditures for maintenance and repairs, as well as minor renewals, are charged to expense as incurred, while improvements and major renewals are capitalized. |
Purchased and Developed Software | Purchased and Developed Software Purchased and developed software includes the costs to purchase third-party software and to develop internal-use software, which includes software as a service offered to customers with an online subscription. The Company follows applicable guidance for the costs of computer software developed or obtained for internal use for capitalizing software projects. Software costs are amortized over the expected economic life of the product, generally on an accelerated basis over a period of five years for internally developed software offered to customers as an online subscription service, and generally on a straight-line basis over a period of three to five years for other software. At December 31, 2017 and 2016 , unamortized capitalized software was $17.5 million and $19.0 million , respectively, which included amounts of software under development of $0.5 million and $0.3 million , respectively. Interest capitalized during the years ended December 31, 2017 and 2016 totaled $0.1 million and $0.2 million , respectively. |
Acquired Curriculum and Technology | Acquired Curriculum and Technology Acquired curriculum and technology represents curriculum and developed technology acquired in the acquisitions of Headsprout in 2013 and VLCY in 2009, and is the initial purchase accounting value placed on the past development and refinement of the core methodologies, processes, measurement techniques, and technologies by which the Company structures curriculum. Acquired curriculum and technology is being amortized using an accelerated method over six to seven years, as it has an economic benefit declining over the estimated useful life. The Company periodically reviews the recoverability of the acquired curriculum and technology based on expected net realizable value, and generally retires the assets once fully depreciated. Acquired curriculum and technology is presented net of accumulated amortization of $21.8 million and $21.3 million at December 31, 2017 and 2016 , respectively. See Note 4 — Goodwill and Other Intangible Assets and Note 10 — Fair Value of Financial Instruments for further discussion of the Company’s curriculum and technology assets. |
Pre-Publication Costs | Pre-Publication Costs The Company capitalizes certain pre-publication costs of its curriculum, including art, prepress, editorial, and other costs incurred in the creation of the master copy of its curriculum products. Pre-publication costs are amortized over the expected life of the education program, generally on an accelerated basis over a period of five years . The amortization methods and periods chosen reflect the expected sales generated by the education programs. The Company periodically reviews the recoverability of the capitalized costs based on expected net realizable value, and generally retires assets once fully depreciated. Pre-publication costs are presented net of accumulated amortization of $24.6 million and $21.4 million at December 31, 2017 and 2016 , respectively. Interest capitalized was $0.1 million during the years ended December 31, 2017 and 2016 . See Note 10 — Fair Value of Financial Instruments for further discussion of the Company’s pre-publication costs. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill and other intangible assets relate to the acquisitions of Headsprout in 2013, VLCY in 2009, and Cambium Learning in 2007. Other intangible assets include trade names/trademarks, reseller networks, and customer relationships/lists, which are being amortized on a straight-line basis over estimated lives ranging from seven to fifteen years . Other intangible assets are presented net of accumulated amortization of $3.4 million and $19.6 million at December 31, 2017 and 2016 , respectively. See Note 4 — Goodwill and Other Intangible Assets and Note 10 — Fair Value of Financial Instruments for further discussion of the Company’s goodwill and other intangible assets. |
Depreciation and Amortization | Depreciation and Amortization Depreciation and amortization for the years ended December 31, 2017 and 2016 consisted of the following: Year Ended December 31, (in thousands) 2017 2016 Acquired publishing rights $ 585 $ 874 Acquired curriculum and technology 532 1,465 Pre-publication costs 8,109 7,715 Internally developed software related to product 8,742 8,088 Total amortization included in cost of revenues 17,968 18,142 Trade names and trademarks 377 398 Other intangible assets 49 683 Property, equipment and software 2,371 2,325 Total depreciation and amortization included in operating expense 2,797 3,406 Total depreciation and amortization $ 20,765 $ 21,548 |
Impairment of Long Lived Assets | Impairment of Long Lived Assets The Company reviews the carrying value of definite-lived long lived assets for impairment whenever events or changes in circumstances indicate net book value may not be recoverable from the estimated undiscounted future cash flows. If the review indicates any assets are impaired, the impairment of those assets is measured as the amount by which the carrying amount exceeds the fair value as estimated by either quoted market prices or discounted cash flows. Assets to be disposed of are reported at the lower of the carrying amount or fair value less cost of disposal. The determination whether the Company’s definite-lived intangible assets are impaired involves significant assumptions and estimates, including projections of future cash flows, the percentage of future revenues and cash flows attributable to the intangible assets, asset lives used to generate future cash flows, and royalty relief savings attributable to trademarks. |
Deferred Costs | Deferred Costs Certain up-front costs associated with completing the sale of the Company’s products are deferred and recognized as the related revenue is recognized. |
Advertising Costs | Advertising Costs The Company may ship products to prospective customers as samples. Samples costs are expensed to sales and marketing expense upon shipment and totaled $0.3 million and $0.4 million for the years ended December 31, 2017 and 2016 , respectively. Other costs of advertising, which include advertising, print, and photography expenses, are expensed as incurred and totaled $1.7 million and $1.3 million for the years ended December 31, 2017 and 2016 , respectively. |
Income Taxes | Income Taxes Provision is made for the expense, or benefit, associated with taxes based on income. The provision for income taxes is based on laws currently enacted in each jurisdiction in which the Company does business and considers laws mitigating the taxation of the same income by more than one jurisdiction. Significant judgment is required in determining income tax expense, current tax receivables and payables, deferred tax assets and liabilities, and the need of any valuation allowance recorded against the net deferred tax assets. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, taxable income in prior carryback years, loss carryforward limitations, and tax planning strategies in assessing the extent to which deferred tax assets may be realized in future periods. If, after consideration of these factors, management believes it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if available evidence indicates that it is more likely than not that the position will be sustained on audit. The second step requires the Company to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company reevaluates its uncertain tax positions on a periodic basis, based on factors such as changes in facts and circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. The Company accrues interest and penalties, if any, related to unrecognized tax benefits as a component of income tax expense. |
Sales Taxes | Sales Taxes The Company reports sales taxes collected from customers and remitted to governmental authorities on a net basis. Sales tax collected from customers is excluded from revenues. Collected but unremitted sales tax is included as part of Accrued Expenses in the accompanying Consolidated Balance Sheets. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for its stock-based compensation in accordance with applicable accounting guidance for share-based payments. This guidance requires all share-based payments to be recognized in the Consolidated Statements of Operations and Comprehensive Income based on their fair values. Compensation costs for awards with graded vesting are recognized on a straight-line basis over the anticipated vesting period. |
Recently Issued Financial Accounting Standards | Recently Issued Financial Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. The new revenue guidance defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP. The guidance requires improved disclosures to help users of the financial statements better understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 allows for either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). The original effective date was for annual periods beginning after December 15, 2016. On July 9, 2015, the FASB elected to defer the effective date of the new revenue recognition standard by one year, for annual periods beginning after December 15, 2017. The Company will adopt this guidance using the modified retrospective approach on January 1, 2018. The Company has concluded that revenue recognition for its most significant revenue stream—subscription-based educational technology solutions—will not change materially under the new accounting standard and will continue to be recognized pro rata over the subscription period. The Company expects to defer additional revenue related to several provisions of the new guidance, including additional customer support obligations. This change is not expected to have a significant impact on the Company’s financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (ASU 2016-02). The guidance in ASU 2016-02 requires entities to record the assets and liabilities created by leases greater than one year. This ASU is effective for interim periods and fiscal years beginning after December 15, 2018, and early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance. In March 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . The guidance simplifies the accounting for goodwill impairment by eliminating the requirement to calculate the implied fair value of goodwill as the second step of the goodwill impairment evaluation. Companies are instead required to recognize goodwill impairment based on the excess of the reporting unit’s carrying value compared to its fair value. This ASU is effective in 2020 for calendar year entities, and early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance. Recently Adopted Financial Accounting Standards In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory (ASU 2015-11). ASU 2015-11 requires an entity to measure inventory within the scope of the update at the lower of cost and net realizable value. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. This ASU is effective for interim periods and fiscal years beginning after December 15, 2016. The Company adopted ASU 2015-11 in the first quarter of 2017 with no material impact to the financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation, Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). The guidance simplifies certain aspects of accounting for stock-based accounting. ASU 2016-09 is effective for interim periods and fiscal years beginning after December 15, 2016. The Company prospectively adopted ASU 2016-09 in the first quarter of 2017 and has elected to account for forfeitures as they occur. There was no material impact to the Company’s consolidated financial position, results of operations, equity, or cash flows. In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718) Scope of Modification Accounting (ASU 2017-09). The ASU provides guidance on the various types of changes which would trigger modification accounting for share-based payment awards. ASU 2017-09 is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The Company has early adopted ASU 2017-09 in the third quarter of 2017 with no material impact to the financial statements. |
Significant Accounting Polici27
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Reconciliation of the Accounts Receivable Reserve | A reconciliation of the accounts receivable reserve is shown in the table below for the periods indicated: December 31, (in thousands) 2017 2016 Accounts receivable reserve, beginning of period $ 210 $ 231 Charged to costs and expenses 76 554 Charged to other accounts (1) (73 ) 29 Write-offs (86 ) (604 ) Accounts receivable reserve, end of period $ 127 $ 210 (1) Changes in sales return reserve |
Schedule of Calculation of Basic and Diluted Net Loss Per Share | The following table presents the calculation of basic and diluted net income per share: Year Ended December 31, (in thousands, except per share data) 2017 2016 Numerator: Net income $ 45,055 $ 10,430 Denominator: Basic: Weighted-average common shares used in computing basic net income per share 46,416 45,861 Diluted: Add weighted average effect of dilutive securities: Stock options and restricted stock awards 1,178 1,356 Weighted-average common shares used in computing diluted net income per share 47,594 47,217 Net income per common share: Basic $ 0.97 $ 0.23 Diluted $ 0.95 $ 0.22 |
Estimated Lives | Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed over the assets’ estimated useful lives using the straight-line method. Estimated lives are as follows: Asset Class Estimated Useful Life Computer and other equipment 3 - 5 years Leasehold improvements Lesser of useful life or lease term Furniture and fixtures 8 years |
Depreciation and Amortization | Depreciation and amortization for the years ended December 31, 2017 and 2016 consisted of the following: Year Ended December 31, (in thousands) 2017 2016 Acquired publishing rights $ 585 $ 874 Acquired curriculum and technology 532 1,465 Pre-publication costs 8,109 7,715 Internally developed software related to product 8,742 8,088 Total amortization included in cost of revenues 17,968 18,142 Trade names and trademarks 377 398 Other intangible assets 49 683 Property, equipment and software 2,371 2,325 Total depreciation and amortization included in operating expense 2,797 3,406 Total depreciation and amortization $ 20,765 $ 21,548 |
Property, Equipment, and Soft28
Property, Equipment, and Software (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Balances of major classes of assets and accumulated depreciation and amortization | Balances of major classes of assets and accumulated depreciation and amortization at December 31, 2017 and 2016 consisted of the following: December 31, (in thousands) 2017 2016 Software $ 48,910 $ 47,822 Computers and other equipment 12,173 11,025 Furniture and fixtures 2,308 2,214 Leasehold improvements 1,859 1,824 Property, equipment and software at cost 65,250 62,885 Accumulated depreciation and amortization 43,164 39,378 Property, equipment and software, net $ 22,086 $ 23,507 |
Goodwill and Other Intangible29
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the years ended December 31, 2017 and 2016 are as follows: (in thousands) Learning A-Z ExploreLearning Voyager Sopris Total Balance at December 31, 2015 Goodwill, gross $ 13,215 $ 6,947 $ 217,262 $ 237,424 Accumulated impairment loss — — (189,582 ) (189,582 ) Goodwill 13,215 6,947 27,680 47,842 Impairment — — — — Acquisitions — — — — Balance at December 31, 2016 Goodwill, gross 13,215 6,947 217,262 237,424 Accumulated impairment loss — — (189,582 ) (189,582 ) Goodwill 13,215 6,947 27,680 47,842 Impairment — — (4,325 ) (4,325 ) Acquisitions — — — — Balance at December 31, 2017 Goodwill, gross 13,215 6,947 217,262 237,424 Accumulated impairment loss — — (193,906 ) (193,906 ) Goodwill $ 13,215 $ 6,947 $ 23,356 $ 43,518 |
Company's Definite Lived Intangible Assets and Related Accumulated Amortization | The Company’s definite-lived intangible assets and related accumulated amortization at December 31, 2017 and 2016 consisted of the following: (in thousands) December 31, 2015 Additions Disposals Impairments December 31, 2016 Additions Disposals Impairments December 31, 2017 Intangible assets, gross: Publishing rights $ 26,200 $ — $ — $ — $ 26,200 $ — $ (26,200 ) $ — $ — Trademark 5,110 — — — 5,110 — — — 5,110 Customer relationships 7,717 — (3,417 ) — 4,300 — (4,300 ) — — Acquired curriculum and technology 24,828 — (2,248 ) — 22,580 1,150 — — 23,730 Reseller network 12,300 — — — 12,300 — (12,300 ) — — Total intangible assets, gross 76,155 — (5,665 ) — 70,490 1,150 (42,800 ) — 28,840 Intangible assets, accumulated amortization: Publishing rights (24,741 ) (874 ) — — (25,615 ) (585 ) 26,200 — — Trademark (2,612 ) (398 ) — — (3,010 ) (378 ) — — (3,388 ) Customer relationships (7,127 ) (579 ) 3,417 — (4,289 ) (11 ) 4,300 — — Acquired curriculum and technology (22,096 ) (1,465 ) 2,248 — (21,313 ) (532 ) — — (21,845 ) Reseller network (12,158 ) (104 ) — — (12,262 ) (38 ) 12,300 — — Total intangible assets, accumulated amortization (68,734 ) (3,420 ) 5,665 — (66,489 ) (1,544 ) 42,800 — (25,233 ) Intangible assets, net $ 7,421 $ (3,420 ) $ — $ — $ 4,001 $ (394 ) $ — $ — $ 3,607 |
Estimated Amortization Expense | Estimated amortization expense expected for each of the next five years related to intangibles subject to amortization is as follows: (in thousands) Cost of Revenues Operating Expense Amortization 2018 $ 664 $ 327 $ 991 2019 496 311 807 2020 327 297 624 2021 161 284 445 2022 120 269 389 Thereafter 116 235 351 $ 1,884 $ 1,723 $ 3,607 |
Other Current Assets (Tables)
Other Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Current Assets | Other Current Assets at December 31, 2017 and 2016 consisted of the following: December 31, (in thousands) 2017 2016 Deferred costs $ 9,246 $ 8,650 Prepaid expenses 1,762 1,533 Other current assets 185 1,052 Other current assets $ 11,193 $ 11,235 |
Other Assets (Tables)
Other Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Other Assets [Abstract] | |
Other Assets | Other Assets at December 31, 2017 and 2016 consisted of the following: December 31, (in thousands) 2017 2016 Deferred costs, less current portion $ 1,745 $ 1,405 Collateral investments 1,134 1,132 Deferred financing costs - revolving credit facility 530 711 Other 303 272 Other assets $ 3,712 $ 3,520 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued Expenses at December 31, 2017 and 2016 consisted of the following: December 31, (in thousands) 2017 2016 Salaries, bonuses and benefits $ 8,550 $ 7,820 Accrued royalties 830 1,006 Pension and post-retirement benefit plans 950 967 Other 1,791 1,927 Accrued expenses $ 12,121 $ 11,720 |
Other Liabilities (Tables)
Other Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Other Liabilities Disclosure [Abstract] | |
Other Liabilities | Other Liabilities at December 31, 2017 and 2016 consisted of the following: December 31, (in thousands) 2017 2016 Pension and post-retirement benefit plans, long-term portion $ 8,285 $ 8,642 Deferred rent 587 688 Long-term income tax payable 470 454 Long-term deferred compensation 288 333 Other liabilities $ 9,630 $ 10,117 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Leases [Abstract] | |
Future Minimum Payments under Non-Cancelable Operating Leases | Future minimum payments under non-cancelable operating leases are as follows: (in thousands) Minimum Operating Lease Payments 2018 $ 2,593 2019 2,763 2020 2,837 2021 1,240 2022 36 Thereafter — Total minimum lease payments $ 9,469 |
Fair Value of Financial Instr35
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Assets and liabilities measured at fair value on a recurring basis at December 31, 2017 and 2016 were as follows: (in thousands) Fair Value at Reporting Date Using Description December 31, 2017 Quoted Prices in Active Markets for Identical Asset (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Restricted Assets: Money Market $ 2,254 $ 2,254 $ — $ — Collateral Investments: Money Market 908 908 — — Certificate of Deposit 226 226 — — (in thousands) Fair Value at Reporting Date Using Description December 31, 2016 Quoted Prices in Active Markets for Identical Asset (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Restricted Assets: Money Market $ 3,266 $ 3,266 $ — $ — Collateral Investments: Money Market 906 906 — — Certificate of Deposit 226 226 — — (in thousands) Total Gains (Losses) Years Ended December 31, Description 2017 2016 Restricted Assets: Money Market $ — $ — Collateral Investments: Money Market — — Certificate of Deposit — — |
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis | Assets and liabilities measured at fair value on a nonrecurring basis at December 31, 2017 and 2016 were as follows: (in thousands) Fair Value at Reporting Date Using Description December 31, 2017 Quoted Prices in Active Markets for Identical Asset (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Goodwill $ 43,518 $ — $ — $ 43,518 Property, equipment and software, net 22,086 — — 22,086 Pre-publication costs, net 17,758 — — 17,758 Other intangible assets, net 3,607 — — 3,607 (in thousands) Fair Value at Reporting Date Using Description December 31, 2016 Quoted Prices in Active Markets for Identical Asset (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Goodwill $ 47,842 $ — $ — $ 47,842 Property, equipment and software, net 23,507 — — 23,507 Pre-publication costs, net 17,397 — — 17,397 Other intangible assets, net 4,001 — — 4,001 (in thousands) Total Gains (Losses) Years Ended December 31, Description 2017 2016 Goodwill $ (4,325 ) $ — Property, equipment and software, net — — Pre-publication costs, net — — Other intangible assets, net — — |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Debt at December 31, 2017 and 2016 consisted of the following: December 31, (in thousands) 2017 2016 Senior secured credit facility term loans maturing December 10, 2020 $ 48,500 $ 76,150 Less: Unamortized discount (380 ) (923 ) Less: Unamortized deferred financing costs (321 ) (747 ) Term loans, net of discount and deferred costs 47,799 74,480 Less: current portion of long-term debt 5,958 7,350 Long-term debt $ 41,841 $ 67,130 |
Schedule of Annual Minimum Principal Payments Excluding Potential Excess Cash Flow Payments | The scheduled annual minimum principal payments, excluding any potential Excess Cash Flow Payments, are as follows: (in thousands) Future Payments 2018 $ 5,706 2019 7,132 2020 35,662 2021 — 2022 — Thereafter — $ 48,500 |
Profit-Sharing, Pension, and 37
Profit-Sharing, Pension, and Other Postretirement Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
Schedule of net cost benefit pension plan | The net costs of the Company’s defined benefit pension plan for the years ended December 31, 2017 and 2016 were as follows: Year Ended December 31, (in thousands) 2017 2016 Interest cost $ 342 $ 392 Recognized net actuarial (gain) loss 255 (690 ) Total recognized in net pension cost and other comprehensive income $ 597 $ (298 ) |
Schedule of funded status defined benefit pension plan | The funded status of the Company’s U.S. defined benefit pension plan as of December 31, 2017 and 2016 was as follows: December 31, (in thousands) 2017 2016 Change in Benefit Obligation: Benefit obligation, beginning of period $ 9,609 $ 10,996 Service cost — — Interest cost 342 392 Actuarial loss (gain) 255 (690 ) Benefits paid (972 ) (1,089 ) Benefit obligation, end of period $ 9,235 $ 9,609 Change in Plan Assets: Fair value, beginning of period $ — $ — Company contributions 972 1,089 Benefits paid (972 ) (1,089 ) Fair value, end of period $ — $ — Unfunded status $ (9,235 ) $ (9,609 ) Accrued benefit cost $ (9,235 ) $ (9,609 ) Amounts recognized in the Consolidated Balance Sheets Current accrued benefit liability $ (950 ) $ (967 ) Non-current accrued benefit liability (8,285 ) (8,642 ) Net amount recognized $ (9,235 ) $ (9,609 ) |
Recognized component of net pension cost | Plan Assumptions Year Ended December 31, 2017 2016 Discount rate 3.40% 3.75% |
Projected benefit obligation and accumulated benefit obligation of pension plan | For the Company’s U.S. defined benefit pension plan, the projected benefit obligation and accumulated benefit obligation at December 31, 2017 and 2016 were as follows: December 31, (in thousands) 2017 2016 Projected benefit obligation $ 9,235 $ 9,609 Accumulated benefit obligation 9,235 9,609 |
Gross benefit payment obligations | Gross benefit payment obligations under the Company’s continuing plans for the next ten years are anticipated to be as follows: U.S. Retirement Plans (in thousands) (Pension Plan and RBP) 2018 $ 961 2019 918 2020 919 2021 832 2022 788 2023 - 2027 3,240 |
Stock-Based Compensation and 38
Stock-Based Compensation and Expense (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Stock Option Activity | The following table summarizes stock option transactions under the Incentive Plan for the year ended December 31, 2017 : Year Ended December 31, 2017 Options Weighted Average Exercise Price Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2016 2,655,581 $ 2.39 Granted 455,000 $ 5.60 Exercised (598,206 ) $ 2.03 Cancelled/Forfeited (130,066 ) $ 3.91 Outstanding at December 31, 2017 2,382,309 $ 3.02 5.8 $ 6,483 Exercisable at December 31, 2017 1,624,891 $ 2.14 4.5 $ 5,756 Vested and Expected to Vest at December 31, 2017 2,282,309 $ 2.87 5.7 $ 6,483 |
Black-Scholes Option-Pricing Assumptions Used to Estimate Fair Value of Stock Awards | The Company utilizes the Black-Scholes option-pricing model to determine the fair value of stock option awards on the date of grant. The following assumptions were used in the Black-Scholes option-pricing model to estimate the fair value of the awards granted during the years ended December 31, 2017 and 2016 : Year Ended December 31, 2017 2016 Expected stock volatility 59.90 % 64.00 % Risk-free interest rate 2.07% – 2.12% 1.26% – 1.57% Expected years until exercise 6.25 6.25 Dividend yield 0.00 % 0.00 % |
Stock-Based Compensation and Expense | Stock-based compensation and expense for the years ended December 31, 2017 and 2016 was allocated as follows: Year Ended December 31, (in thousands) 2017 2016 Cost of revenues $ 55 $ 59 Research and development expense 158 171 Sales and marketing expense 207 206 General and administrative expense 445 492 Stock-based compensation and expense $ 865 $ 928 |
Securities Authorized for Issuance Under Equity Compensation Plans | Securities authorized for issuance under equity compensation plans at December 31, 2017 are as follows: (in thousands, except per share amounts) Plan Category Number of securities Weighted-average Number of securities Equity compensation plans approved by 2,382 $ 3.02 1,145 Equity compensation plans not approved — — — Total 2,382 $ 3.02 1,145 (a) Excludes securities reflected in the first column, “Number of securities to be issued upon exercise of outstanding options”. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Tax Expense Attributable to Income | Income tax expense attributable to income included the following: Year Ended December 31, (in thousands) 2017 2016 Current income tax expense: United States federal $ 326 $ 126 Foreign 87 34 State and local 903 105 Total current income tax expense 1,316 265 Deferred income tax (benefit) expense: United States federal (27,719 ) — State and local (2,895 ) 28 Total deferred income tax (benefit) expense (30,614 ) 28 Income tax (benefit) expense $ (29,298 ) $ 293 |
Reconciliation of Income Tax Expense and Domestic Federal Statutory Income Tax Benefit | Reconciliation of income tax (benefit) expense and the domestic federal statutory income tax expense is as follows: Year Ended December 31, (in thousands) 2017 2016 Income tax expense at U.S. federal statutory rate $ 5,515 $ 3,753 Increase (reduction) from: State taxes (net of federal benefit) (2,269 ) 133 Change in valuation allowance (52,501 ) (3,779 ) Change in federal statutory tax rate 14,497 — Amortization of goodwill (621 ) (621 ) Goodwill impairment 1,514 — Stock compensation (1,000 ) — Adjustments to federal deferred tax assets 5,290 — Non-deductible expenses 163 148 Other 114 659 Income tax (benefit) expense $ (29,298 ) $ 293 |
Deferred Tax Assets (Liabilities) | The tax effects of each type of temporary difference and carryforward that gave rise to a significant portion of deferred tax assets (liabilities) at December 31, 2017 and 2016 were as follows: December 31, (in thousands) 2017 2016 Deferred tax assets attributable to : Net operating loss carryforwards $ 14,473 $ 29,660 Tax credit carryforwards 7,858 7,622 Reserves 2,550 3,810 Inventory 4,126 2,931 Deferred revenue 3,571 4,388 Intangibles — 5,848 Other 2,378 2,073 Total gross deferred tax assets 34,956 56,332 Valuation allowance (1,297 ) (53,798 ) Net deferred tax assets 33,659 2,534 Deferred tax liabilities attributable to: Intangibles (1,332 ) (2,370 ) Fixed assets (1,649 ) (164 ) Other (64 ) — Net deferred tax asset $ 30,614 $ — |
Summary of Amounts and Expiration Dates of Loss and Tax Credit Carryforwards | At December 31, 2017 , the amounts and expiration dates of loss and tax credit carryforwards were as follows: (in thousands) Amount as of December 31, 2017 Expire or start expiring at the end of: U.S. net operating loss (1) $ 63,629 2028 U.S. federal capital losses 3,785 2019 State tax net operating losses 22,560 2017 – 2035 Tax credits: Minimum tax credit 7,771 Carry forward indefinitely Other tax credits 2,467 2017 – 2021 Total tax credits $ 10,238 (1) $20.5 million of the U.S. net operating loss (NOL) above is related to the VLCY acquisition. |
Reconciliation of Change in UTB Balance | A reconciliation of the change in the UTB balance for the years ended December 31, 2017 and 2016 is as follows: Year Ended December 31, (in thousands) 2017 2016 Unrecognized tax benefit, beginning of period $ 5,936 $ 6,236 Increases for tax positions in prior periods 46 — Decreases for effectively settled tax positions — (300 ) Decreases for expiration of the statute of limitations (3,351 ) — Unrecognized tax benefit, end of period $ 2,631 $ 5,936 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Reportable Segments' Results of Operations | The reportable segments’ results of operations for the years ended December 31, 2017 and 2016 are presented in the tables below. Year Ended December 31, 2017 (in thousands) Learning A-Z Explore Voyager Other Consolidated Product revenues $ 75,148 $ 27,857 $ 52,339 $ — $ 155,344 Service revenues — — 2,840 — 2,840 Total net revenues 75,148 27,857 55,179 — 158,184 Cost of product revenues 3,641 3,741 18,572 — 25,954 Cost of service revenues — — 1,612 — 1,612 Amortization expense — — — 17,968 17,968 Total cost of revenues 3,641 3,741 20,184 17,968 45,534 Other operating expenses 32,723 13,415 24,142 14,286 84,566 Depreciation and amortization expense — — — 2,797 2,797 Goodwill impairment — — — 4,325 4,325 Total costs and expenses 36,364 17,156 44,326 39,376 137,222 Income before interest, other expense and income taxes 38,784 10,701 10,853 (39,376 ) 20,962 Net interest expense — — — (4,845 ) (4,845 ) Loss on extinguishment of debt — — — (360 ) (360 ) Income tax benefit — — — 29,298 29,298 Segment net income $ 38,784 $ 10,701 $ 10,853 $ (15,283 ) $ 45,055 Expenditures for property, equipment, software and pre-publication costs $ 8,847 $ 3,515 $ 5,274 $ 524 $ 18,160 Year Ended December 31, 2016 (in thousands) Learning A-Z Explore Voyager Other Consolidated Product revenues $ 66,049 $ 23,739 $ 58,770 $ — $ 148,558 Service revenues — — 3,800 — 3,800 Total net revenues 66,049 23,739 62,570 — 152,358 Cost of product revenues 2,576 3,606 21,579 — 27,761 Cost of service revenues — — 2,361 — 2,361 Amortization expense — — — 18,142 18,142 Total cost of revenues 2,576 3,606 23,940 18,142 48,264 Other operating expenses 29,794 11,498 26,085 14,700 82,077 Depreciation and amortization expense — — — 3,406 3,406 Total costs and expenses 32,370 15,104 50,025 36,248 133,747 Income before interest, other expenses and income taxes 33,679 8,635 12,545 (36,248 ) 18,611 Net interest expense — — — (7,190 ) (7,190 ) Loss on extinguishment of debt — — — (698 ) (698 ) Income tax expense — — — (293 ) (293 ) Segment net income $ 33,679 $ 8,635 $ 12,545 $ (44,429 ) $ 10,430 Expenditures for property, equipment, software and pre-publication costs $ 8,519 $ 2,846 $ 7,988 $ 701 $ 20,054 |
Interim Financial Information41
Interim Financial Information (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | The following table presents the Company’s quarterly results of operations for the years ended December 31, 2017 and 2016 . Three Months Ended (in thousands, except per share data) March 31, June 30, September 30, December 31, Fiscal Year Fiscal 2017 Net revenues $ 35,970 $ 40,362 $ 43,523 $ 38,329 $ 158,184 Cost of revenues 6,185 7,215 7,928 6,238 27,566 Other operating expenses 25,888 25,685 27,448 30,635 109,656 Income before income taxes 2,670 6,126 6,876 85 15,757 Income tax (expense) benefit (140 ) (334 ) (399 ) 30,171 29,298 Net income $ 2,530 $ 5,792 $ 6,477 $ 30,256 $ 45,055 Basic income per share $ 0.05 $ 0.13 $ 0.14 $ 0.65 $ 0.97 Diluted income per share $ 0.05 $ 0.12 $ 0.14 $ 0.63 $ 0.95 Fiscal 2016 Net revenues $ 33,674 $ 39,084 $ 42,113 $ 37,487 $ 152,358 Cost of revenues 7,007 7,732 8,876 6,507 30,122 Other operating expenses 25,083 25,519 27,360 25,663 103,625 Income (loss) before income taxes (180 ) 3,875 4,001 3,027 10,723 Income tax (expense) benefit 78 (111 ) (173 ) (87 ) (293 ) Net income (loss) $ (102 ) $ 3,764 $ 3,828 $ 2,940 $ 10,430 Basic income (loss) per share $ — $ 0.08 $ 0.08 $ 0.06 $ 0.23 Diluted income (loss) per share $ — $ 0.08 $ 0.08 $ 0.05 $ 0.22 |
Basis of Presentation (Details
Basis of Presentation (Details Textual) student in Millions | 12 Months Ended |
Dec. 31, 2017studentSubsidiariesProductcountryCountriessegmentsimulation | |
Product Information [Line Items] | |
Number of wholly owned subsidiaries | Subsidiaries | 2 |
Number of reportable business segments | segment | 3 |
Learning A-Z | |
Product Information [Line Items] | |
Number of students who use products | student | 5 |
Number of countries in which product is used | Countries | 170 |
ExploreLearning | |
Product Information [Line Items] | |
Number of countries in which product is used | country | 50 |
Number of products under ExploreLearning | Product | 2 |
Number of Inquiry-based Math and Science Simulations | simulation | 400 |
Voyager Sopris Learning | |
Product Information [Line Items] | |
Legacy of research and data-based curriculum development | 40 years |
Significant Accounting Polici43
Significant Accounting Policies (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Significant Accounting Policies [Line Items] | |||
Allowance for doubtful accounts and estimated sales returns | $ 127 | $ 210 | $ 231 |
Weighted average common shares excluded from dilutive shares outstanding | 653,497 | 489,450 | |
Unamortized capitalized software | $ 17,500 | $ 19,000 | |
Amounts of software under development | 500 | 300 | |
Interest capitalized | 100 | 200 | |
Total other intangibles - accumulated amortization | 25,233 | 66,489 | $ 68,734 |
Samples cost | 300 | 400 | |
Advertising expenses | 1,700 | 1,300 | |
Goodwill and Other Intangible Assets | |||
Significant Accounting Policies [Line Items] | |||
Total other intangibles - accumulated amortization | $ 3,400 | 19,600 | |
Software and Software Development Costs | |||
Significant Accounting Policies [Line Items] | |||
Expected economic life of product | 5 years | ||
Acquired Curriculum and Technology | |||
Significant Accounting Policies [Line Items] | |||
Total other intangibles - accumulated amortization | $ 21,800 | 21,300 | |
Pre-Publication Costs | |||
Significant Accounting Policies [Line Items] | |||
Expected economic life of product | 5 years | ||
Interest capitalized | $ 100 | ||
Total other intangibles - accumulated amortization | $ 24,600 | $ 21,400 | |
Minimum | |||
Significant Accounting Policies [Line Items] | |||
Subscription period | 12 months | ||
Minimum | Goodwill and Other Intangible Assets | |||
Significant Accounting Policies [Line Items] | |||
Expected economic life of product | 7 years | ||
Minimum | Computer Software | |||
Significant Accounting Policies [Line Items] | |||
Expected economic life of product | 3 years | ||
Minimum | Acquired Curriculum and Technology | |||
Significant Accounting Policies [Line Items] | |||
Expected economic life of product | 6 years | ||
Maximum | Goodwill and Other Intangible Assets | |||
Significant Accounting Policies [Line Items] | |||
Expected economic life of product | 15 years | ||
Maximum | Computer Software | |||
Significant Accounting Policies [Line Items] | |||
Expected economic life of product | 5 years | ||
Maximum | Acquired Curriculum and Technology | |||
Significant Accounting Policies [Line Items] | |||
Expected economic life of product | 7 years |
Significant Accounting Polici44
Significant Accounting Policies (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation of the accounts receivable reserve | ||
Accounts receivable reserve, beginning of period | $ 210 | $ 231 |
Charged to costs and expenses | 76 | 554 |
Charged to other accounts | (73) | 29 |
Write-offs | (86) | (604) |
Accounts receivable reserve, end of period | $ 127 | $ 210 |
Significant Accounting Polici45
Significant Accounting Policies (Details 1) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Numerator: | ||||||||||
Net income | $ 30,256 | $ 6,477 | $ 5,792 | $ 2,530 | $ 2,940 | $ 3,828 | $ 3,764 | $ (102) | $ 45,055 | $ 10,430 |
Basic: | ||||||||||
Weighted-average common shares used in computing basic net loss per share (shares) | 46,416 | 45,861 | ||||||||
Add weighted average effect of dilutive securities: | ||||||||||
Stock options and restricted stock awards (in shares) | 1,178 | 1,356 | ||||||||
Weighted-average common shares used in computing diluted net income per share (in shares) | 47,594 | 47,217 | ||||||||
Net income per common share: | ||||||||||
Basic (in USD per share) | $ 0.65 | $ 0.14 | $ 0.13 | $ 0.05 | $ 0.06 | $ 0.08 | $ 0.08 | $ 0 | $ 0.97 | $ 0.23 |
Diluted (in USD per share) | $ 0.63 | $ 0.14 | $ 0.12 | $ 0.05 | $ 0.05 | $ 0.08 | $ 0.08 | $ 0 | $ 0.95 | $ 0.22 |
Significant Accounting Polici46
Significant Accounting Policies (Details 2) | 12 Months Ended |
Dec. 31, 2017 | |
Computer and other equipment | Minimum | |
Estimated lives | |
Property, plant and equipment, useful life | 3 years |
Computer and other equipment | Maximum | |
Estimated lives | |
Property, plant and equipment, useful life | 5 years |
Furniture and fixtures | |
Estimated lives | |
Property, plant and equipment, useful life | 8 years |
Significant Accounting Polici47
Significant Accounting Policies (Details 3) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Depreciation and amortization | ||
Acquired publishing rights | $ 585 | $ 874 |
Acquired curriculum and technology | 532 | 1,465 |
Pre-publication costs | 8,109 | 7,715 |
Internally developed software related to product | 8,742 | 8,088 |
Total amortization included in cost of revenues | 17,968 | 18,142 |
Trade names and trademarks | 377 | 398 |
Other intangible assets | 49 | 683 |
Property, equipment and software | 2,371 | 2,325 |
Total depreciation and amortization included in operating expense | 2,797 | 3,406 |
Total depreciation and amortization | $ 20,765 | $ 21,548 |
Property, Equipment, and Soft48
Property, Equipment, and Software (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Balances of major classes of assets and accumulated depreciation and amortization | ||
Property, equipment and software at cost | $ 65,250 | $ 62,885 |
Accumulated depreciation and amortization | 43,164 | 39,378 |
Property, equipment and software, net | 22,086 | 23,507 |
Software | ||
Balances of major classes of assets and accumulated depreciation and amortization | ||
Property, equipment and software at cost | 48,910 | 47,822 |
Computer and other equipment | ||
Balances of major classes of assets and accumulated depreciation and amortization | ||
Property, equipment and software at cost | 12,173 | 11,025 |
Furniture and fixtures | ||
Balances of major classes of assets and accumulated depreciation and amortization | ||
Property, equipment and software at cost | 2,308 | 2,214 |
Leasehold improvements | ||
Balances of major classes of assets and accumulated depreciation and amortization | ||
Property, equipment and software at cost | $ 1,859 | $ 1,824 |
Goodwill and Other Intangible49
Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Changes in carrying amount of goodwill | ||||
Goodwill, gross | $ 237,424 | $ 237,424 | $ 237,424 | $ 237,424 |
Accumulated impairment loss | (193,906) | (193,906) | (189,582) | (189,582) |
Goodwill | 43,518 | 43,518 | 47,842 | 47,842 |
Impairment | (4,300) | (4,325) | 0 | |
Learning A-Z | ||||
Changes in carrying amount of goodwill | ||||
Goodwill, gross | 13,215 | 13,215 | 13,215 | 13,215 |
Goodwill | 13,215 | 13,215 | 13,215 | 13,215 |
ExploreLearning | ||||
Changes in carrying amount of goodwill | ||||
Goodwill, gross | 6,947 | 6,947 | 6,947 | 6,947 |
Goodwill | 6,947 | 6,947 | 6,947 | 6,947 |
Voyager Sopris Learning | ||||
Changes in carrying amount of goodwill | ||||
Goodwill, gross | 217,262 | 217,262 | 217,262 | 217,262 |
Accumulated impairment loss | (193,906) | (193,906) | (189,582) | (189,582) |
Goodwill | $ 23,356 | 23,356 | $ 27,680 | $ 27,680 |
Impairment | $ (4,325) |
Goodwill and Other Intangible50
Goodwill and Other Intangible Assets (Details Textual) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2017USD ($) | Dec. 31, 2017USD ($)Unit | Dec. 31, 2016USD ($)Unit | |
Business Acquisition, Contingent Consideration [Line Items] | |||
Number of Reportable Units for goodwill analysis | Unit | 4 | 4 | |
Excess of fair value over carrying value (percent) | 10.00% | 10.00% | |
Goodwill impairment | $ 4,300 | $ 4,325 | $ 0 |
Acquired intangibles | 1,150 | ||
IS3D, LLC | ExploreLearning | |||
Business Acquisition, Contingent Consideration [Line Items] | |||
Cash purchase price of acquisition | 1,100 | ||
Cash paid at close | 1,000 | ||
Amount to be paid after hold back period | $ 100 | $ 100 | |
Holdback period | 1 year | ||
Acquired Curriculum and Technology | |||
Business Acquisition, Contingent Consideration [Line Items] | |||
Acquired intangibles | $ 1,150 | ||
Acquired Curriculum and Technology | IS3D, LLC | ExploreLearning | |||
Business Acquisition, Contingent Consideration [Line Items] | |||
Acquired intangibles | $ 1,200 | ||
Useful life | 7 years |
Goodwill and Other Intangible51
Goodwill and Other Intangible Assets (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Intangible assets, gross: | ||
Total intangible assets, gross, beginning balance | $ 70,490 | $ 76,155 |
Additions | 1,150 | |
Disposals | (42,800) | (5,665) |
Total intangible assets, gross, ending balance | 28,840 | 70,490 |
Intangible assets, accumulated amortization: | ||
Total intangible assets, accumulated amortization, beginning balance | (66,489) | (68,734) |
Additions | (1,544) | (3,420) |
Disposals | 42,800 | 5,665 |
Total intangible assets, accumulated amortization, ending balance | (25,233) | (66,489) |
Intangible assets, net, beginning balance | 4,001 | 7,421 |
Additions, net | 394 | 3,420 |
Intangible assets, net, ending balance | 3,607 | 4,001 |
Publishing Rights | ||
Intangible assets, gross: | ||
Total intangible assets, gross, beginning balance | 26,200 | 26,200 |
Disposals | (26,200) | |
Total intangible assets, gross, ending balance | 0 | 26,200 |
Intangible assets, accumulated amortization: | ||
Total intangible assets, accumulated amortization, beginning balance | (25,615) | (24,741) |
Additions | (585) | (874) |
Disposals | 26,200 | |
Total intangible assets, accumulated amortization, ending balance | 0 | (25,615) |
Trademarks | ||
Intangible assets, gross: | ||
Total intangible assets, gross, beginning balance | 5,110 | 5,110 |
Total intangible assets, gross, ending balance | 5,110 | 5,110 |
Intangible assets, accumulated amortization: | ||
Total intangible assets, accumulated amortization, beginning balance | (3,010) | (2,612) |
Additions | (378) | (398) |
Total intangible assets, accumulated amortization, ending balance | (3,388) | (3,010) |
Customer Relationships | ||
Intangible assets, gross: | ||
Total intangible assets, gross, beginning balance | 4,300 | 7,717 |
Disposals | (4,300) | (3,417) |
Total intangible assets, gross, ending balance | 0 | 4,300 |
Intangible assets, accumulated amortization: | ||
Total intangible assets, accumulated amortization, beginning balance | (4,289) | (7,127) |
Additions | (11) | (579) |
Disposals | 4,300 | 3,417 |
Total intangible assets, accumulated amortization, ending balance | 0 | (4,289) |
Acquired Curriculum and Technology | ||
Intangible assets, gross: | ||
Total intangible assets, gross, beginning balance | 22,580 | 24,828 |
Additions | 1,150 | |
Disposals | (2,248) | |
Total intangible assets, gross, ending balance | 23,730 | 22,580 |
Intangible assets, accumulated amortization: | ||
Total intangible assets, accumulated amortization, beginning balance | (21,313) | (22,096) |
Additions | (532) | (1,465) |
Disposals | 2,248 | |
Total intangible assets, accumulated amortization, ending balance | (21,845) | (21,313) |
Reseller Network | ||
Intangible assets, gross: | ||
Total intangible assets, gross, beginning balance | 12,300 | 12,300 |
Disposals | (12,300) | |
Total intangible assets, gross, ending balance | 0 | 12,300 |
Intangible assets, accumulated amortization: | ||
Total intangible assets, accumulated amortization, beginning balance | (12,262) | (12,158) |
Additions | (38) | (104) |
Disposals | 12,300 | |
Total intangible assets, accumulated amortization, ending balance | $ 0 | $ (12,262) |
Goodwill and Other Intangible52
Goodwill and Other Intangible Assets (Details 2) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Estimated aggregate amortization expense | |||
2,018 | $ 991 | ||
2,019 | 807 | ||
2,020 | 624 | ||
2,021 | 445 | ||
2,022 | 389 | ||
Thereafter | 351 | ||
Finite-Lived Intangible Assets, Net, Total | 3,607 | $ 4,001 | $ 7,421 |
Amortization Cost of Revenues | |||
Estimated aggregate amortization expense | |||
2,018 | 664 | ||
2,019 | 496 | ||
2,020 | 327 | ||
2,021 | 161 | ||
2,022 | 120 | ||
Thereafter | 116 | ||
Finite-Lived Intangible Assets, Net, Total | 1,884 | ||
Amortization Operating Expense | |||
Estimated aggregate amortization expense | |||
2,018 | 327 | ||
2,019 | 311 | ||
2,020 | 297 | ||
2,021 | 284 | ||
2,022 | 269 | ||
Thereafter | 235 | ||
Finite-Lived Intangible Assets, Net, Total | $ 1,723 |
Other Current Assets (Details)
Other Current Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Deferred costs | $ 9,246 | $ 8,650 |
Prepaid expenses | 1,762 | 1,533 |
Other current assets | 185 | 1,052 |
Other current assets | $ 11,193 | $ 11,235 |
Other Assets (Details)
Other Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Other Assets | ||
Deferred costs, less current portion | $ 1,745 | $ 1,405 |
Collateral investments | 1,134 | 1,132 |
Deferred financing costs - revolving credit facility | 530 | 711 |
Other | 303 | 272 |
Other assets | $ 3,712 | $ 3,520 |
Other Assets (Details Textual)
Other Assets (Details Textual) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Other Assets Non Current [Line Items] | ||
Collateral investments | $ 1,134 | $ 1,132 |
Certificates of Deposit | ||
Other Assets Non Current [Line Items] | ||
Collateral investments | 200 | 200 |
Money Market | ||
Other Assets Non Current [Line Items] | ||
Collateral investments | 900 | $ 900 |
Revolving Credit Facility | ||
Other Assets Non Current [Line Items] | ||
Borrowings outstanding | $ 30,000 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Accrued expenses | ||
Salaries, bonuses and benefits | $ 8,550 | $ 7,820 |
Accrued royalties | 830 | 1,006 |
Pension and post-retirement benefit plans | 950 | 967 |
Other | 1,791 | 1,927 |
Accrued expenses | 12,121 | 11,720 |
Net Income Attributable to Parent [Member] | Employee Severance [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | 1,400 | 1,100 |
Accrued Liabilities [Member] | Employee Severance [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Accrued salaries | $ 900 | $ 600 |
Other Liabilities (Details)
Other Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Long-term liabilities: | ||
Pension and post-retirement benefit plans, long-term portion | $ 8,285 | $ 8,642 |
Deferred rent | 587 | 688 |
Long-term income tax payable | 470 | 454 |
Long-term deferred compensation | 288 | 333 |
Other liabilities | $ 9,630 | $ 10,117 |
Leases (Details Textual)
Leases (Details Textual) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Leases [Abstract] | ||
Certain facilities and equipment lease by the company for production, selling and administrative purposes | 8 years | |
Operating rent expense | $ 2.5 | $ 2.2 |
Leases (Details)
Leases (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Future minimum payments under all remaining non-cancelable operating leases | |
2,018 | $ 2,593 |
2,019 | 2,763 |
2,020 | 2,837 |
2,021 | 1,240 |
2,022 | 36 |
Thereafter | 0 |
Total minimum lease payments | $ 9,469 |
Fair Value of Financial Instr60
Fair Value of Financial Instruments (Details Textual) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | $ 8,493 | $ 4,930 | $ 8,645 |
Restricted assets | 2,300 | 3,300 | |
Collateral investments | 1,134 | 1,132 | |
Long-term debt | 47,799 | 74,480 | |
Senior Secured Credit Facility Term Loans Due December 10, 2020, Net | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Long-term debt | $ 47,800 | $ 74,500 |
Fair Value of Financial Instr61
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Assets and liabilities measured at fair value on a recurring basis | ||
Restricted assets | $ 2,300 | $ 3,300 |
Collateral investments | 1,134 | 1,132 |
Money Market | ||
Assets and liabilities measured at fair value on a recurring basis | ||
Collateral investments | 900 | 900 |
Certificate of Deposit | ||
Assets and liabilities measured at fair value on a recurring basis | ||
Collateral investments | 200 | 200 |
Fair value recurring | Money Market | ||
Assets and liabilities measured at fair value on a recurring basis | ||
Restricted assets | 2,254 | 3,266 |
Collateral investments | 908 | 906 |
Fair value recurring | Certificate of Deposit | ||
Assets and liabilities measured at fair value on a recurring basis | ||
Collateral investments | 226 | 226 |
Fair value recurring | Quoted Prices in Active Markets for Identical Asset (Level 1) | Money Market | ||
Assets and liabilities measured at fair value on a recurring basis | ||
Restricted assets | 2,254 | 3,266 |
Collateral investments | 908 | 906 |
Fair value recurring | Quoted Prices in Active Markets for Identical Asset (Level 1) | Certificate of Deposit | ||
Assets and liabilities measured at fair value on a recurring basis | ||
Collateral investments | $ 226 | $ 226 |
Fair Value of Financial Instr62
Fair Value of Financial Instruments (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Fair Value Non-recurring | ||
Assets and liabilities measured at fair value on a non-recurring basis | ||
Goodwill | $ 43,518 | $ 47,842 |
Property, equipment and software, net | 22,086 | 23,507 |
Pre-publication costs, net | 17,758 | 17,397 |
Fair Value Non-recurring | Curriculum and Technology | ||
Assets and liabilities measured at fair value on a non-recurring basis | ||
Other intangible assets, net | 3,607 | 4,001 |
Fair Value Non-recurring | Significant Unobservable Inputs (Level 3) | ||
Assets and liabilities measured at fair value on a non-recurring basis | ||
Goodwill | 43,518 | 47,842 |
Property, equipment and software, net | 22,086 | 23,507 |
Pre-publication costs, net | 17,758 | 17,397 |
Fair Value Non-recurring | Significant Unobservable Inputs (Level 3) | Curriculum and Technology | ||
Assets and liabilities measured at fair value on a non-recurring basis | ||
Other intangible assets, net | 3,607 | $ 4,001 |
Goodwill | ||
Assets and liabilities measured at fair value on a non-recurring basis | ||
Total gains (losses) | $ (4,325) |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Summary Long-term debt | ||
Less: Unamortized discount | $ (380,000) | $ (923,000) |
Less: Unamortized deferred financing costs | (321,000) | (747,000) |
Total debt | 47,799,000 | 74,480,000 |
Current portion of long-term debt | 5,958,000 | 7,350,000 |
Long-term debt | 41,841,000 | 67,130,000 |
Senior Secured Credit Facility Term Loans Due December 10, 2020 | ||
Summary Long-term debt | ||
Long term debt, gross | 48,500,000 | 76,150,000 |
Total debt | $ 48,500,000 | |
Debt instrument, maturity date | Dec. 10, 2020 | |
Revolving Credit Facility | ||
Summary Long-term debt | ||
Long-term Line of Credit | $ 30,000,000 | |
Senior Secured Credit Facility | ||
Summary Long-term debt | ||
Less: Unamortized discount | (400,000) | |
Less: Unamortized deferred financing costs | $ (900,000) | (1,500,000) |
Debt instrument, maturity date | Dec. 10, 2020 | |
Senior Secured Credit Facility | Revolving Credit Facility | ||
Summary Long-term debt | ||
Less: Unamortized deferred financing costs | $ (500,000) | $ (700,000) |
Long-term Line of Credit | $ 0 |
Long-Term Debt (Details Textual
Long-Term Debt (Details Textual) - USD ($) | 1 Months Ended | 2 Months Ended | 11 Months Ended | 12 Months Ended | |||
Feb. 29, 2016 | Dec. 31, 2016 | Oct. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 10, 2015 | |
Debt Instrument [Line Items] | |||||||
Unamortized discount | $ 923,000 | $ 380,000 | $ 923,000 | ||||
Unamortized deferred financing costs | 747,000 | 321,000 | 747,000 | ||||
Voluntary prepayment of debt | 27,650,000 | 28,850,000 | |||||
Loss on extinguishment of debt | $ 360,000 | 698,000 | |||||
Senior Secured Credit Facility Term Loans Due December 10, 2020 | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, maturity date | Dec. 10, 2020 | ||||||
Debt outstanding | 76,150,000 | $ 48,500,000 | 76,150,000 | ||||
Senior Secured Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Debt issued | $ 135,000,000 | ||||||
Debt instrument, maturity date | Dec. 10, 2020 | ||||||
Fees paid to lenders | $ 1,900,000 | ||||||
Unamortized discount | 400,000 | ||||||
Debt issuance costs | 2,300,000 | ||||||
Unamortized deferred financing costs | $ 1,500,000 | 900,000 | 1,500,000 | ||||
Voluntary prepayment of debt | 20,600,000 | 25,000,000 | |||||
Loss on extinguishment of debt | 400,000 | 700,000 | |||||
Write off of unamortized deferred financing costs and debt discount | 300,000 | ||||||
Write off of debt discount | 400,000 | ||||||
Senior Secured Credit Facility | Veronis Suhler Stevenson | |||||||
Debt Instrument [Line Items] | |||||||
Fees paid to lenders | $ 1,400,000 | ||||||
Senior Secured Credit Facility | LIBOR loans | |||||||
Debt Instrument [Line Items] | |||||||
Percentage of floor on variable interest rate | 1.00% | ||||||
Senior Secured Credit Facility | Term Loan A | |||||||
Debt Instrument [Line Items] | |||||||
Debt issued | 70,000,000 | ||||||
Debt outstanding | $ 48,500,000 | ||||||
Debt Instrument, Interest Rate, Effective Percentage | 5.44% | ||||||
Senior Secured Credit Facility | Term Loan A | LIBOR loans | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, interest rate, applicable margin | 3.75% | ||||||
Senior Secured Credit Facility | Term Loan A | Base Rate loans | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, interest rate, applicable margin | 2.75% | ||||||
Senior Secured Credit Facility | Term Loan B | |||||||
Debt Instrument [Line Items] | |||||||
Debt issued | $ 35,000,000 | ||||||
Debt outstanding | $ 0 | ||||||
Senior Secured Credit Facility | Term Loan B | LIBOR loans | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, interest rate, applicable margin | 5.25% | ||||||
Senior Secured Credit Facility | Term Loan B | Base Rate loans | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, interest rate, applicable margin | 4.25% | ||||||
Senior Secured Credit Facility | Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Debt issued | $ 30,000,000 | ||||||
Line of credit facility, remaining borrowing capacity | $ 29,800,000 | ||||||
Interest rate applied | 4.75% | 5.50% | |||||
Unused line fee | 0.50% | ||||||
Unamortized deferred financing costs | $ 700,000 | $ 500,000 | 700,000 | ||||
Senior Secured Credit Facility | Revolving Credit Facility | LIBOR loans | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, interest rate, applicable margin | 4.50% | ||||||
Senior Secured Credit Facility | Revolving Credit Facility | Base Rate loans | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, interest rate, applicable margin | 3.50% | ||||||
Senior Secured Credit Facility | Term Loan A and Term Loan B | |||||||
Debt Instrument [Line Items] | |||||||
Unamortized deferred financing costs | $ 700,000 | $ 300,000 | $ 700,000 | ||||
Interest Rate Cap | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate cap agreement amount | $ 100,000 | ||||||
Term of interest rate cap agreement | 3 years | ||||||
Threshold percentage above 3-month LIBOR that triggers payments under the interest rate cap agreement (percent) | 2.50% | ||||||
Forecast | Senior Secured Credit Facility Term Loans Due December 10, 2020 | |||||||
Debt Instrument [Line Items] | |||||||
Credit agreement, excess cash flow payment | $ 300,000 |
Long-Term Debt (Details 1)
Long-Term Debt (Details 1) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Schedule of Annual Principal Payments on Long-Term Debt | ||
Total debt | $ 47,799 | $ 74,480 |
Senior Secured Credit Facility | ||
Schedule of Annual Principal Payments on Long-Term Debt | ||
2,018 | 5,706 | |
2,019 | 7,132 | |
2,020 | 35,662 | |
2,021 | 0 | |
2,022 | 0 | |
Thereafter | 0 | |
Total debt | $ 48,500 |
Profit-Sharing, Pension, and 66
Profit-Sharing, Pension, and Other Postretirement Benefit Plans (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Defined Benefit Plan Disclosure [Line Items] | ||
401(k) discretionary contributions | $ 0 | $ 0 |
Measurement date for pension plan | Dec. 31, 2017 | |
Recognized net actuarial (gain) loss | $ 255 | (690) |
Component of net pension cost (Income) | 91 | 149 |
Component of net pension cost (Income) in next year | 100 | |
Payments expected to be paid under U.S. retirement plan for fiscal 2018 | 961 | |
Expected payments under U.S. Defined Benefit Plan for fiscal 2017 | 1,000 | |
Expected payments under Retirement Benefit Plan for fiscal 2017 | $ 11 | |
401k Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Matching employee compensation contribution | 6.00% | |
Matching employee compensation contributions, percent of match | 50.00% | |
Discretionary contributions exceeding performance targets | 3.00% | |
401(k) matching contribution expense | $ 1,400 | 1,300 |
Replacement Benefit Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
RBP accrued liability | 300 | 300 |
Current portion of the RBP liability | 11 | 21 |
Long-term portion of the RBP liability | $ 300 | $ 300 |
Profit-Sharing, Pension, and 67
Profit-Sharing, Pension, and Other Postretirement Benefit Plans (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Retirement Benefits [Abstract] | ||
Interest cost | $ 342 | $ 392 |
Recognized net actuarial (gain) loss | 255 | (690) |
Total recognized in net pension cost and other comprehensive income | $ 597 | $ (298) |
Profit-Sharing, Pension, and 68
Profit-Sharing, Pension, and Other Postretirement Benefit Plans (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Change in Benefit Obligation: | ||
Benefit obligation, beginning of period | $ 9,609 | $ 10,996 |
Service cost | 0 | 0 |
Interest cost | 342 | 392 |
Actuarial loss (gain) | 255 | (690) |
Benefits paid | (972) | (1,089) |
Benefit obligation, end of period | 9,235 | 9,609 |
Change in Plan Assets: | ||
Fair value, beginning of period | 0 | 0 |
Company contributions | 972 | 1,089 |
Benefits paid | (972) | (1,089) |
Fair value, end of period | 0 | 0 |
Unfunded status | (9,235) | (9,609) |
Accrued benefit cost | (9,235) | (9,609) |
Amounts recognized in the Consolidated Balance Sheets | ||
Current accrued benefit liability | (950) | (967) |
Non-current accrued benefit liability | (8,285) | (8,642) |
Net amount recognized | $ (9,235) | $ (9,609) |
Profit-Sharing, Pension, and 69
Profit-Sharing, Pension, and Other Postretirement Benefit Plans (Details 2) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Recognized component of net pension cost | ||
Discount rate | 3.40% | 3.75% |
Profit-Sharing, Pension, and 70
Profit-Sharing, Pension, and Other Postretirement Benefit Plans (Details 3) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Projected benefit obligation and accumulated benefit obligation of pension plan | |||
Projected benefit obligation | $ 9,235 | $ 9,609 | $ 10,996 |
Accumulated benefit obligation | $ 9,235 | $ 9,609 |
Profit-Sharing, Pension, and 71
Profit-Sharing, Pension, and Other Postretirement Benefit Plans (Details 4) $ in Thousands | Dec. 31, 2017USD ($) |
Gross benefit payment obligations | |
2,018 | $ 961 |
2,019 | 918 |
2,020 | 919 |
2,021 | 832 |
2,022 | 788 |
2023 - 2027 | $ 3,240 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) (Details Textual) - $ / shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2009 | |
Stockholders Equity [Line Items] | |||
Common stock, shares authorized (shares) | 150,000,000 | 150,000,000 | |
Common stock, par value (in USD per share) | $ 0.001 | $ 0.001 | |
Common stock, shares issued (shares) | 53,332,560 | 52,738,000 | |
Common stock, shares outstanding (shares) | 46,800,371 | 46,206,000 | |
Common stock, additional shares (shares) | 5,000,000 | ||
Percentage of outstanding shares of common stock related to preemptive right | 25.00% | ||
Preferred stock, shares authorized (shares) | 15,000,000 | 15,000,000 | |
Preferred stock, par value (in USD per share) | $ 0.001 | $ 0.001 | |
Preferred stock, shares issued (shares) | 0 | 0 | |
Preferred stock, shares outstanding (shares) | 0 | 0 | |
2009 Equity Incentive Plan | |||
Stockholders Equity [Line Items] | |||
Common stock, additional shares (shares) | 3,527,569 |
Stock-Based Compensation and 73
Stock-Based Compensation and Expense (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2009 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Common stock, additional shares (shares) | 5,000,000 | ||
Stock option vesting period | 4 years | ||
Term of stock options | 10 years | ||
Weighted average grant date fair value of options granted (USD per share) | $ 3.22 | $ 2.81 | |
Aggregate intrinsic value of stock options exercised | $ 2,100,000 | $ 1,600,000 | |
Stock options vested (shares) | 412,024 | 735,945 | |
Total fair value of options vested | $ 900,000 | $ 900,000 | |
Unamortized compensation cost | $ 1,800,000 | ||
Compensation related cost expected to be recognized, weighted average period | 2 years 8 months 12 days | ||
Restricted stock awards outstanding (shares) | 0 | ||
Total income tax expense recognized for book purposes | $ 0 | $ 0 |
Stock-Based Compensation and 74
Stock-Based Compensation and Expense (Details) $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($)$ / sharesshares | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Options Beginning Balance (shares) | shares | 2,655,581 |
Options, Granted (shares) | shares | 455,000 |
Options, Exercised (shares) | shares | (598,206) |
Options, Cancelled/Forfeited (shares) | shares | (130,066) |
Options Outstanding Ending Balance (shares) | shares | 2,382,309 |
Options, Exercisable at December 31, 2017 (shares) | shares | 1,624,891 |
Options, Vested and Expected to Vest at December 31, 2017 (shares) | shares | 2,282,309 |
Weighted Average Exercise Price, Beginning Balance (USD per share) | $ / shares | $ 2.39 |
Weighted Average Exercise Price, Granted (USD per share) | $ / shares | 5.60 |
Weighted Average Exercise Price, Exercised (USD per share) | $ / shares | 2.03 |
Weighted Average Exercise Price, Cancelled/Forfeited (USD per share) | $ / shares | 3.91 |
Weighted Average Exercise Price, Ending Balance (USD per share) | $ / shares | 3.02 |
Weighted Average Exercise Price, Exercisable at December 31, 2017 (USD per share) | $ / shares | 2.14 |
Weighted Average Exercise Price, Vested and Expected to Vest at December 31, 2017 (USD per share) | $ / shares | $ 2.87 |
Average Remaining Contractual Term, Outstanding | 5 years 9 months 18 days |
Average Remaining Contractual Term, Exercisable at December 31, 2017 | 4 years 6 months |
Average Remaining Contractual Term, Vested and Expected to Vest at December 31,2017 | 5 years 8 months 12 days |
Aggregate Intrinsic Value, Outstanding Balance | $ | $ 6,483 |
Aggregate Intrinsic Value, Exercisable at December 31, 2017 | $ | 5,756 |
Aggregate Intrinsic Value, Vested and Expected to Vest at December 31, 2017 | $ | $ 6,483 |
Stock-Based Compensation and 75
Stock-Based Compensation and Expense (Details 1) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Black-Scholes option-pricing assumptions used to estimate fair value of stock awards | ||
Expected stock volatility | 59.90% | 64.00% |
Expected years until exercise | 6 years 3 months | 6 years 3 months |
Dividend yield | 0.00% | 0.00% |
Minimum | ||
Black-Scholes option-pricing assumptions used to estimate fair value of stock awards | ||
Risk-free interest rate | 2.07% | 1.26% |
Maximum | ||
Black-Scholes option-pricing assumptions used to estimate fair value of stock awards | ||
Risk-free interest rate | 2.12% | 1.57% |
Stock-Based Compensation and 76
Stock-Based Compensation and Expense (Details 3) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Stock-based compensation and expense | $ 865 | $ 928 |
Cost of Revenues | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Stock-based compensation and expense | 55 | 59 |
Research and Development Expense | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Stock-based compensation and expense | 158 | 171 |
Sales and Marketing Expense | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Stock-based compensation and expense | 207 | 206 |
General and Administrative Expense | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Stock-based compensation and expense | $ 445 | $ 492 |
Stock-Based Compensation and 77
Stock-Based Compensation and Expense (Details 4) shares in Thousands | Dec. 31, 2017$ / sharesshares |
Securities authorized for issuance under equity compensation plans | |
Number of securities to be issued upon exercise of outstanding options and rights (shares) | 2,382 |
Weighted average exercise price of outstanding options and rights (USD per share) | $ / shares | $ 3.02 |
Number of securities remaining available for future issuance under equity incentive plan (shares) | 1,145 |
Equity Compensation Plans Approved by Security Holders | |
Securities authorized for issuance under equity compensation plans | |
Number of securities to be issued upon exercise of outstanding options and rights (shares) | 2,382 |
Weighted average exercise price of outstanding options and rights (USD per share) | $ / shares | $ 3.02 |
Number of securities remaining available for future issuance under equity incentive plan (shares) | 1,145 |
Equity Compensation Plans not Approved by Security Holders | |
Securities authorized for issuance under equity compensation plans | |
Number of securities to be issued upon exercise of outstanding options and rights (shares) | 0 |
Weighted average exercise price of outstanding options and rights (USD per share) | $ / shares | $ 0 |
Number of securities remaining available for future issuance under equity incentive plan (shares) | 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Current income tax expense: | ||||||||||
United States federal | $ 326 | $ 126 | ||||||||
Foreign | 87 | 34 | ||||||||
State and local | 903 | 105 | ||||||||
Total current income tax expense | 1,316 | 265 | ||||||||
Deferred income tax expense: | ||||||||||
United States federal | (27,719) | 0 | ||||||||
State and local | (2,895) | 28 | ||||||||
Total deferred income tax expense | (30,614) | 28 | ||||||||
Income tax (benefit) expense | $ (30,171) | $ 399 | $ 334 | $ 140 | $ 87 | $ 173 | $ 111 | $ (78) | $ (29,298) | $ 293 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation of income tax expense and the domestic federal statutory income tax benefit | ||||||||||
Income tax expense at U.S. federal statutory rate | $ 5,515 | $ 3,753 | ||||||||
Increase (reduction) from: | ||||||||||
State taxes (net of federal benefit) | (2,269) | 133 | ||||||||
Change in valuation allowance | (52,501) | (3,779) | ||||||||
Change in federal statutory tax rate | 14,497 | 0 | ||||||||
Amortization of goodwill | (621) | (621) | ||||||||
Goodwill impairment | 1,514 | 0 | ||||||||
Stock compensation | (1,000) | 0 | ||||||||
Adjustments to federal deferred tax assets | 5,290 | 0 | ||||||||
Non-deductible expenses | 163 | 148 | ||||||||
Other | 114 | 659 | ||||||||
Income tax (benefit) expense | $ (30,171) | $ 399 | $ 334 | $ 140 | $ 87 | $ 173 | $ 111 | $ (78) | $ (29,298) | $ 293 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets attributable to: | ||
Net operating loss carryforwards | $ 14,473 | $ 29,660 |
Tax credit carryforwards | 7,858 | 7,622 |
Reserves | 2,550 | 3,810 |
Inventory | 4,126 | 2,931 |
Deferred revenue | 3,571 | 4,388 |
Intangibles | 0 | 5,848 |
Other | 2,378 | 2,073 |
Total gross deferred tax assets | 34,956 | 56,332 |
Valuation allowance | (1,297) | (53,798) |
Net deferred tax assets | 33,659 | 2,534 |
Deferred tax liabilities attributable to: | ||
Intangibles | (1,332) | (2,370) |
Fixed assets | (1,649) | (164) |
Other | (64) | 0 |
Deferred Tax Assets, Net | $ 30,614 | $ 0 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Release of valuation allowance related to deferred tax assets | $ 43,200,000 | |
Charge to income tax expense for remeasured deferred tax balances | 14,497,000 | $ 0 |
Change in valuation allowance | 52,501,000 | 3,779,000 |
Valuation allowance allocated to reduce goodwill | 0 | |
Income taxes paid, net of tax refunds | 1,136,000 | $ 822,000 |
Unrecognized tax benefits that would affect effective tax rate | 300,000 | |
Company recognized penalties | 0 | |
Unrecognized tax benefits, penalties | 100,000 | |
Liability for interest (gross) related to UTB | $ 100,000 |
Income Taxes (Details 4)
Income Taxes (Details 4) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Tax credits: | |
Tax Credit Carryforward, Amount | $ 10,238 |
Minimum Tax Credit | |
Tax credits: | |
Tax Credit Carryforward, Amount | $ 7,771 |
Expiration date of Minimum tax credit carryforward | Carry forward indefinitely |
Other Tax Credits | |
Tax credits: | |
Tax Credit Carryforward, Amount | $ 2,467 |
Expiration year of other tax credit carryforward, beginning | 2,017 |
Expiration year of other tax credit carryforward, ending | 2,021 |
Domestic Tax Authority | |
State net operating loss carryforward (net): | |
Net operating loss | $ 63,629 |
Federal capital losses | $ 3,785 |
Expiration year of operating loss carryforwards | 2,028 |
Expiration year of capital loss carryforwards | 2,019 |
State and Local Jurisdiction | |
State net operating loss carryforward (net): | |
Net operating loss | $ 22,560 |
Expiration year of operating loss carryforwards, beginning | 2,017 |
Expiration year of operating loss carryforwards, ending | 2,035 |
VLCY | Domestic Tax Authority | |
State net operating loss carryforward (net): | |
Net operating loss | $ 20,500 |
Income Taxes (Details 5)
Income Taxes (Details 5) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation of change in UTB balance | ||
Unrecognized tax benefit, beginning of period | $ 5,936 | $ 6,236 |
Increases for tax positions in prior periods | 46 | 0 |
Decreases for effectively settled tax positions | 0 | (300) |
Decreases for expiration of the statute of limitations | (3,351) | 0 |
Unrecognized tax benefit, end of period | $ 2,631 | $ 5,936 |
Commitments and Contingencies (
Commitments and Contingencies (Details Textual) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Commitments And Contingencies [Line Items] | ||
Letters of credit outstanding | $ 400 | |
Certificate of deposit | 200 | |
Collateral investments | 1,134 | $ 1,132 |
Money Market | ||
Commitments And Contingencies [Line Items] | ||
Collateral investments | $ 900 | $ 900 |
Related Party Transactions (Det
Related Party Transactions (Details Textual) - USD ($) | 1 Months Ended | 12 Months Ended | |
Dec. 31, 2009 | Dec. 31, 2017 | Dec. 31, 2016 | |
Board of Directors Chairman | |||
Related Party Transaction [Line Items] | |||
Chairman's compensation | $ 300,000 | ||
Veronis Suhler Stevenson | |||
Related Party Transaction [Line Items] | |||
Percentage of outstanding common stock held by the company's majority shareholder | 69.00% | ||
Percentage of fees equal to debt or equity financing | 1.00% | ||
Percentage of fees equal to enterprise value of entities acquired or disposed | 1.00% | ||
Percentage of minimum beneficial interest | 10.00% | ||
Annual retainer fees | $ 70,000 | ||
Total Fees paid to VSS related to services of directors | 200,000 | $ 200,000 | |
Veronis Suhler Stevenson | Mr. Stevenson and Mr. Bainbridge | |||
Related Party Transaction [Line Items] | |||
Annual retainer fees | $ 65,000 | ||
Stockholders Agreement | |||
Related Party Transaction [Line Items] | |||
Percentage outstanding shares common stock | 25.00% | ||
Tax Credit Co. | Veronis Suhler Stevenson | |||
Related Party Transaction [Line Items] | |||
Total Fees paid to VSS related to services of directors | $ 300,000 |
Segment Reporting (Details Text
Segment Reporting (Details Textual) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2017USD ($)segmentCustomer | Dec. 31, 2016USD ($)Customer | |
Segment Reporting Information [Line Items] | ||||||||||
Total revenues percentage | 9.00% | 8.00% | 9.00% | 8.00% | ||||||
Number of customers accounts for more than 10% of consolidated net revenues | 0 | 0 | ||||||||
Number of customers accounts for more than 10% of consolidated Account receivable | 0 | 1 | ||||||||
Number of reportable business segments | segment | 3 | |||||||||
Net revenue of selling product line | $ | $ 38,329 | $ 43,523 | $ 40,362 | $ 35,970 | $ 37,487 | $ 42,113 | $ 39,084 | $ 33,674 | $ 158,184 | $ 152,358 |
Canada | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Total revenues percentage | 4.00% | 4.00% | 4.00% | 4.00% | ||||||
Customer Concentration Risk | Accounts Receivable | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Concentration risk percentage | 11.00% |
Segment Reporting (Details 1)
Segment Reporting (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue, operating expenses and income (loss) from operations | ||||||||||
Product revenues | $ 155,344 | $ 148,558 | ||||||||
Service revenues | 2,840 | 3,800 | ||||||||
Total net revenues | $ 38,329 | $ 43,523 | $ 40,362 | $ 35,970 | $ 37,487 | $ 42,113 | $ 39,084 | $ 33,674 | 158,184 | 152,358 |
Cost of product revenues | 25,954 | 27,761 | ||||||||
Cost of service revenues | 1,612 | 2,361 | ||||||||
Amortization expense | 17,968 | 18,142 | ||||||||
Total cost of revenues | 45,534 | 48,264 | ||||||||
Other operating expenses | 84,566 | 82,077 | ||||||||
Depreciation and amortization expense | 2,797 | 3,406 | ||||||||
Goodwill impairment | 4,300 | 4,325 | 0 | |||||||
Total costs and expenses | 137,222 | 133,747 | ||||||||
Income before interest, other expense and income taxes | 20,962 | 18,611 | ||||||||
Net interest expense | (4,845) | (7,190) | ||||||||
Loss on extinguishment of debt | (360) | (698) | ||||||||
Income tax benefit (expense) | 30,171 | (399) | (334) | (140) | (87) | (173) | (111) | 78 | 29,298 | (293) |
Net income | $ 30,256 | $ 6,477 | $ 5,792 | $ 2,530 | $ 2,940 | $ 3,828 | $ 3,764 | $ (102) | 45,055 | 10,430 |
Expenditures for property, equipment, software and pre-publication costs | 18,160 | 20,054 | ||||||||
Voyager Sopris Learning Segment | ||||||||||
Revenue, operating expenses and income (loss) from operations | ||||||||||
Goodwill impairment | 4,325 | |||||||||
Operating Segments | Learning A-Z Segment | ||||||||||
Revenue, operating expenses and income (loss) from operations | ||||||||||
Product revenues | 75,148 | 66,049 | ||||||||
Total net revenues | 75,148 | 66,049 | ||||||||
Cost of product revenues | 3,641 | 2,576 | ||||||||
Total cost of revenues | 3,641 | 2,576 | ||||||||
Other operating expenses | 32,723 | 29,794 | ||||||||
Total costs and expenses | 36,364 | 32,370 | ||||||||
Income before interest, other expense and income taxes | 38,784 | 33,679 | ||||||||
Net income | 38,784 | 33,679 | ||||||||
Expenditures for property, equipment, software and pre-publication costs | 8,847 | 8,519 | ||||||||
Operating Segments | ExploreLearning | ||||||||||
Revenue, operating expenses and income (loss) from operations | ||||||||||
Product revenues | 27,857 | 23,739 | ||||||||
Service revenues | 0 | |||||||||
Total net revenues | 27,857 | 23,739 | ||||||||
Cost of product revenues | 3,741 | 3,606 | ||||||||
Total cost of revenues | 3,741 | 3,606 | ||||||||
Other operating expenses | 13,415 | 11,498 | ||||||||
Total costs and expenses | 17,156 | 15,104 | ||||||||
Income before interest, other expense and income taxes | 10,701 | 8,635 | ||||||||
Net income | 10,701 | 8,635 | ||||||||
Expenditures for property, equipment, software and pre-publication costs | 3,515 | 2,846 | ||||||||
Operating Segments | Voyager Sopris Learning Segment | ||||||||||
Revenue, operating expenses and income (loss) from operations | ||||||||||
Product revenues | 52,339 | 58,770 | ||||||||
Service revenues | 2,840 | 3,800 | ||||||||
Total net revenues | 55,179 | 62,570 | ||||||||
Cost of product revenues | 18,572 | 21,579 | ||||||||
Cost of service revenues | 1,612 | 2,361 | ||||||||
Total cost of revenues | 20,184 | 23,940 | ||||||||
Other operating expenses | 24,142 | 26,085 | ||||||||
Total costs and expenses | 44,326 | 50,025 | ||||||||
Income before interest, other expense and income taxes | 10,853 | 12,545 | ||||||||
Net income | 10,853 | 12,545 | ||||||||
Expenditures for property, equipment, software and pre-publication costs | 5,274 | 7,988 | ||||||||
Other | ||||||||||
Revenue, operating expenses and income (loss) from operations | ||||||||||
Amortization expense | 17,968 | 18,142 | ||||||||
Total cost of revenues | 17,968 | 18,142 | ||||||||
Other operating expenses | 14,286 | 14,700 | ||||||||
Depreciation and amortization expense | 2,797 | 3,406 | ||||||||
Goodwill impairment | 4,325 | |||||||||
Total costs and expenses | 39,376 | 36,248 | ||||||||
Income before interest, other expense and income taxes | (39,376) | (36,248) | ||||||||
Net interest expense | (4,845) | (7,190) | ||||||||
Loss on extinguishment of debt | (360) | (698) | ||||||||
Income tax benefit (expense) | 29,298 | (293) | ||||||||
Net income | (15,283) | (44,429) | ||||||||
Expenditures for property, equipment, software and pre-publication costs | $ 524 | $ 701 |
Interim Financial Information88
Interim Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | ||||||||||
Net revenues | $ 38,329 | $ 43,523 | $ 40,362 | $ 35,970 | $ 37,487 | $ 42,113 | $ 39,084 | $ 33,674 | $ 158,184 | $ 152,358 |
Cost of revenues | 6,238 | 7,928 | 7,215 | 6,185 | 6,507 | 8,876 | 7,732 | 7,007 | 27,566 | 30,122 |
Other operating expenses | 30,635 | 27,448 | 25,685 | 25,888 | 25,663 | 27,360 | 25,519 | 25,083 | 109,656 | 103,625 |
Income (loss) before income taxes | 85 | 6,876 | 6,126 | 2,670 | 3,027 | 4,001 | 3,875 | (180) | 15,757 | 10,723 |
Income tax (expense) benefit | 30,171 | (399) | (334) | (140) | (87) | (173) | (111) | 78 | 29,298 | (293) |
Net income (loss) | $ 30,256 | $ 6,477 | $ 5,792 | $ 2,530 | $ 2,940 | $ 3,828 | $ 3,764 | $ (102) | $ 45,055 | $ 10,430 |
Basic income (loss) per share (in USD per share) | $ 0.65 | $ 0.14 | $ 0.13 | $ 0.05 | $ 0.06 | $ 0.08 | $ 0.08 | $ 0 | $ 0.97 | $ 0.23 |
Diluted income (loss) per share (in USD per share) | $ 0.63 | $ 0.14 | $ 0.12 | $ 0.05 | $ 0.05 | $ 0.08 | $ 0.08 | $ 0 | $ 0.95 | $ 0.22 |