Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Mar. 31, 2015 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 30-Sep-14 | |
Document Fiscal Year Focus | 2014 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | ESI | |
Entity Registrant Name | ITT EDUCATIONAL SERVICES INC | |
Entity Central Index Key | 922475 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 23,552,683 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |||
Current assets: | |||
Cash and cash equivalents | $204,227 | $215,771 | $165,581 |
Restricted cash | 5,974 | 5,636 | 4,989 |
Accounts receivable, net | 68,587 | 99,530 | 122,693 |
Private education loans | 10,339 | 7,730 | 7,598 |
Deferred income taxes | 51,053 | 77,549 | 77,343 |
Prepaid expenses and other current assets | 48,478 | 28,400 | 21,671 |
Total current assets | 388,658 | 434,616 | 399,875 |
Property and equipment, net | 155,459 | 168,509 | 174,394 |
Private education loans, excluding current portion, less allowance for loan losses of $42,931, $29,349 and $20,701 | 84,272 | 76,479 | 85,340 |
Deferred income taxes | 69,685 | 68,324 | 40,949 |
Other assets | 69,432 | 58,923 | 38,744 |
Total assets | 767,506 | 806,851 | 739,302 |
Current liabilities: | |||
Current portion of long-term debt | 50,000 | 50,000 | 0 |
Current portion of PEAKS Trust senior debt | 96,516 | 157,883 | 134,075 |
Current portion of 2009 Entity secured borrowing obligation | 20,662 | 0 | 0 |
Accounts payable | 80,479 | 58,021 | 61,468 |
Accrued compensation and benefits | 18,157 | 18,107 | 20,113 |
Other current liabilities | 27,838 | 42,136 | 57,485 |
Deferred revenue | 144,017 | 147,630 | 132,246 |
Total current liabilities | 437,669 | 473,777 | 405,387 |
Long-term debt | 0 | 0 | 60,000 |
PEAKS Trust senior debt, excluding current portion | 44,000 | 71,341 | 94,420 |
2009 Entity secured borrowing obligation, excluding current portion | 101,880 | 0 | 0 |
Other liabilities | 52,422 | 146,087 | 38,260 |
Total liabilities | 635,971 | 691,205 | 598,067 |
Shareholders' equity: | |||
Preferred stock, $.01 par value, 5,000,000 shares authorized, none issued | 0 | 0 | 0 |
Common stock, $.01 par value, 300,000,000 shares authorized, 37,068,904 issued | 371 | 371 | 371 |
Capital surplus | 196,105 | 200,040 | 197,124 |
Retained earnings | 954,753 | 940,449 | 979,830 |
Accumulated other comprehensive income (loss) | 2,432 | 3,146 | -7,715 |
Treasury stock, 13,619,729, 13,698,716 and 13,698,990 shares, at cost | -1,022,126 | -1,028,360 | -1,028,375 |
Total shareholders' equity | 131,535 | 115,646 | 141,235 |
Total liabilities and shareholders' equity | $767,506 | $806,851 | $739,302 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 |
In Thousands, except Share data, unless otherwise specified | |||
Statement of Financial Position [Abstract] | |||
Allowance for loan losses | $42,931 | $29,349 | $20,701 |
Preferred stock, par value | $0.01 | $0.01 | $0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | |||
Common stock, par value | $0.01 | $0.01 | $0.01 |
Common stock, shares authorized | 300,000,000 | 300,000,000 | 300,000,000 |
Common stock, shares issued | 37,068,904 | 37,068,904 | 37,068,904 |
Treasury stock, shares | 13,619,729 | 13,698,716 | 13,698,990 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Income Statement [Abstract] | ||||
Revenue | $242,561 | $259,617 | $718,580 | $805,138 |
Costs and expenses: | ||||
Cost of educational services | 117,539 | 120,204 | 353,930 | 367,921 |
Student services and administrative expenses | 100,440 | 96,182 | 297,225 | 296,238 |
Legal and professional fees related to certain lawsuits, investigations and accounting matters | 11,269 | 2,089 | 25,196 | 3,802 |
Loss related to loan program guarantees | 2,019 | 4,826 | 2,019 | 8,629 |
Provision for private education loan losses | 4,511 | 16,382 | 13,582 | 20,701 |
Total costs and expenses | 235,778 | 239,683 | 691,952 | 697,291 |
Operating income | 6,783 | 19,934 | 26,628 | 107,847 |
Gain (loss) on consolidation of variable interest entities | 16,631 | 0 | 16,631 | -73,248 |
Interest income | 17 | 16 | 51 | 75 |
Interest (expense) | -5,831 | -7,190 | -18,995 | -18,133 |
Income before provision for income taxes | 17,600 | 12,760 | 24,315 | 16,541 |
Provision for income taxes | 7,278 | 3,336 | 9,979 | 4,184 |
Net income | $10,322 | $9,424 | $14,336 | $12,357 |
Earnings per share: | ||||
Basic | $0.44 | $0.40 | $0.61 | $0.53 |
Diluted | $0.44 | $0.40 | $0.60 | $0.52 |
Weighted average shares outstanding: | ||||
Basic | 23,483 | 23,418 | 23,463 | 23,410 |
Diluted | 23,703 | 23,634 | 23,777 | 23,556 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $10,322 | $9,424 | $14,336 | $12,357 |
Other comprehensive income (loss), net of tax: | ||||
Net actuarial pension loss amortization, net of income tax of $0, $196, $0 and $589 | 0 | 310 | 0 | 929 |
Prior service cost (credit) amortization, net of income tax of $151, $151, $452 and $453 | -238 | -238 | -714 | -714 |
Other comprehensive income (loss), net of tax | -238 | 72 | -714 | 215 |
Comprehensive income | $10,084 | $9,496 | $13,622 | $12,572 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) (Parenthetical) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Statement of Comprehensive Income [Abstract] | ||||
Actuarial pension loss amortization, tax | $0 | $196 | $0 | $589 |
Prior service cost (credit) amortization, income tax | $151 | $151 | $452 | $453 |
CONDENSED_CONSOLIDATED_STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Cash flows from operating activities: | ||||
Net income | $10,322 | $9,424 | $14,336 | $12,357 |
Adjustments to reconcile net income to net cash flows from operating activities: | ||||
Depreciation and amortization | 5,537 | 6,173 | 18,507 | 20,816 |
Provision for doubtful accounts | 16,830 | 14,526 | 47,212 | 44,755 |
Deferred income taxes | 25,046 | -6,075 | 23,036 | -19,974 |
Stock-based compensation expense | 2,667 | 3,304 | 7,529 | 8,698 |
Settlement cost | 0 | 0 | 0 | -46,000 |
Accretion of discount on private education loans | -2,727 | -4,072 | -9,099 | -9,536 |
Accretion of discount on PEAKS Trust senior debt | 1,788 | 1,411 | 4,770 | 3,444 |
Provision for private education loan losses | 4,511 | 16,382 | 13,582 | 20,701 |
(Gain) loss on consolidation of variable interest entities | -16,631 | 0 | -16,631 | 73,248 |
Other | -250 | 257 | -678 | 622 |
Changes in operating assets and liabilities, net of acquisition: | ||||
Restricted cash | -468 | 830 | 2,400 | 192 |
Accounts receivable | -16,480 | -10,275 | -15,498 | -87,503 |
Private education loans | 4,221 | 3,434 | 12,314 | 8,013 |
Accounts payable | 4,561 | -2,542 | 22,458 | -2,127 |
Other operating assets and liabilities | -18,591 | 870 | -28,021 | -7,163 |
Deferred revenue | 12,786 | 17,769 | -4,614 | -4,240 |
Net cash flows from operating activities | 33,122 | 51,416 | 91,603 | 16,303 |
Cash flows from investing activities: | ||||
Facility expenditures | -603 | -81 | -760 | -541 |
Capital expenditures, net | -1,195 | -904 | -3,695 | -4,277 |
Acquisition of company, net of cash acquired | -153 | -6,953 | -5,186 | -6,953 |
Collateralization of letters of credit | -109 | 0 | -109 | 0 |
Proceeds from repayment of notes | 100 | 91 | 293 | 413 |
Note advances and purchases of investments | -1 | 0 | -2 | -1,241 |
Net cash flows from investing activities | -1,961 | -7,847 | -9,459 | -12,599 |
Cash flows from financing activities: | ||||
Repayment of revolving borrowings | 0 | -60,000 | 0 | -80,000 |
Repayment of PEAKS Trust senior debt | -51,706 | -537 | -92,776 | -1,198 |
Common shares tendered for taxes | -184 | -19 | -912 | -390 |
Net cash flows from financing activities | -51,890 | -60,556 | -93,688 | -81,588 |
Net change in cash and cash equivalents | -20,729 | -16,987 | -11,544 | -77,884 |
Cash and cash equivalents at beginning of period | 224,956 | 182,568 | 215,771 | 243,465 |
Cash and cash equivalents at end of period | $204,227 | $165,581 | $204,227 | $165,581 |
CONDENSED_CONSOLIDATED_STATEME4
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (unaudited) (USD $) | Total | Common Stock [Member] | Capital Surplus [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income/(Loss) [Member] | Common Stock in Treasury [Member] |
In Thousands | ||||||
Beginning Balance at Dec. 31, 2012 | $125,765 | $371 | $197,113 | $967,473 | ($7,930) | ($1,031,262) |
Beginning Balance (in shares) at Dec. 31, 2012 | 37,069 | -13,744 | ||||
Net income (loss) | 12,357 | 12,357 | ||||
Other comprehensive (loss), net of income tax | 215 | 215 | ||||
Equity award vesting | 0 | -3,277 | 3,277 | |||
Equity award vesting (in shares) | 68 | |||||
Tax benefit from equity awards | -5,410 | -5,410 | ||||
Stock-based compensation | 8,698 | 8,698 | ||||
Shares tendered for taxes | -390 | -390 | ||||
Shares tendered for taxes (in shares) | -23 | |||||
Ending Balance at Sep. 30, 2013 | 141,235 | 371 | 197,124 | 979,830 | -7,715 | -1,028,375 |
Ending Balance (in shares) at Sep. 30, 2013 | 37,069 | -13,699 | ||||
Net income (loss) | -39,381 | -39,381 | ||||
Other comprehensive (loss), net of income tax | 10,861 | 10,861 | ||||
Equity award vesting | 0 | -20 | 20 | |||
Equity award vesting (in shares) | 0 | |||||
Tax benefit from equity awards | -4 | -4 | ||||
Stock-based compensation | 2,940 | 2,940 | ||||
Shares tendered for taxes | -5 | -5 | ||||
Shares tendered for taxes (in shares) | 0 | |||||
Ending Balance at Dec. 31, 2013 | 115,646 | 371 | 200,040 | 940,449 | 3,146 | -1,028,360 |
Ending Balance (in shares) at Dec. 31, 2013 | 37,069 | -13,699 | ||||
Net income (loss) | 14,336 | 14,336 | ||||
Other comprehensive (loss), net of income tax | -714 | -714 | ||||
Equity award vesting | 0 | -7,076 | 7,076 | |||
Equity award vesting (in shares) | 120 | |||||
Tax benefit from equity awards | -4,388 | -4,388 | ||||
Stock-based compensation | 7,529 | 7,529 | ||||
Shares tendered for taxes | -912 | -912 | ||||
Shares tendered for taxes (in shares) | -42 | |||||
Issuance of shares for Directors' compensation | 38 | -32 | 70 | |||
Issuance of shares for Directors' compensation (in shares) | 1 | |||||
Ending Balance at Sep. 30, 2014 | $131,535 | $371 | $196,105 | $954,753 | $2,432 | ($1,022,126) |
Ending Balance (in shares) at Sep. 30, 2014 | 37,069 | -13,620 |
The_Company_and_Basis_of_Prese
The Company and Basis of Presentation | 9 Months Ended | |||
Sep. 30, 2014 | ||||
Accounting Policies [Abstract] | ||||
The Company and Basis of Presentation | 1 | The Company and Basis of Presentation | ||
We are a leading proprietary provider of postsecondary degree programs in the United States based on revenue and student enrollment. As of September 30, 2014, we were offering: | ||||
• | master, bachelor and associate degree programs to approximately 57,000 students at ITT Technical Institute and Daniel Webster College locations; and | |||
• | short-term information technology and business learning solutions for career advancers and other professionals. | |||
In addition, we offered one or more of our online degree programs to students who are located in all 50 states. As of September 30, 2014, we had 148 college locations (including 147 campuses and one learning site) in 39 states. In the fourth quarter of 2014, we closed three campuses and one learning site, resulting in 144 college locations as of December 31, 2014. All of our college locations are authorized by the applicable education authorities of the states in which they operate and are accredited by an accrediting commission recognized by the U.S. Department of Education (“ED”). We have provided career-oriented education programs since 1969 under the “ITT Technical Institute” name and since June 2009 under the “Daniel Webster College” name. In August 2013, we acquired all of the membership interests of Cable Holdings, LLC (“Cable Holdings”), an education company that offers short-term information technology and business learning solutions for career advancers and other professionals. In January 2014, we acquired certain assets and assumed certain liabilities of CompetenC Solutions, Inc. and Great Equalizer, Inc. CompetenC Solutions, Inc. and Great Equalizer, Inc. were education companies that operated primarily under the name of Ascolta (“Ascolta”) and offered short-term information technology and business learning solutions for career advancers and other professionals. See Note 4 – Acquisition, for additional discussion of the acquisition of the Ascolta business. Our corporate headquarters are located in Carmel, Indiana. | ||||
The accompanying unaudited condensed consolidated financial statements include the accounts of ITT Educational Services, Inc., its wholly-owned subsidiaries and, beginning on February 28, 2013 and September 30, 2014, two variable interest entities (“VIEs”) that ITT Educational Services, Inc. consolidates in its consolidated financial statements, and have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim periods and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures, including significant accounting policies, normally included in a complete presentation of financial statements prepared in accordance with those principles, rules and regulations have been omitted. All significant intercompany balances and transactions are eliminated upon consolidation. | ||||
The Condensed Consolidated Balance Sheet as of December 31, 2013 was derived from audited financial statements but, as presented in this report, may not include all disclosures required by GAAP. Arrangements where we have a variable interest in another party are evaluated in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC” or “Codification”) 810, “Consolidation” (“ASC 810”), to determine whether we are required to consolidate the other party in our consolidated financial statements. See Note 8 – Variable Interest Entities, for a further discussion of the VIEs in which we held a variable interest and the consolidation of those two VIEs in our consolidated financial statements beginning on February 28, 2013 and September 30, 2014. | ||||
In the opinion of our management, the condensed consolidated financial statements reflect all adjustments that are normal, recurring and necessary for a fair presentation of our financial condition and results of operations. The interim financial information should be read in conjunction with the audited consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K as filed with the SEC for the fiscal year ended December 31, 2013, as amended (“2013 Form 10-K”). |
Accounting_Policies
Accounting Policies | 9 Months Ended | |
Sep. 30, 2014 | ||
Accounting Policies [Abstract] | ||
Accounting Policies | 2 | Accounting Policies |
Subsequent to the disclosure of our significant accounting policies in our 2013 Form 10-K, we added the following significant accounting policy, which primarily relates to a VIE that we consolidated in our condensed consolidated financial statements in 2014. Beginning on September 30, 2014, we consolidated a VIE (the “2009 Entity”) that purchased, owns and collects private education loans (the “2009 Entity Student Loans”) made under a private education loan program for our students to help pay their cost of education that financial aid from federal, state and other sources did not cover (the “2009 Loan Program”) in our condensed consolidated financial statements (the “2009 Entity Consolidation”). See Note 8 – Variable Interest Entities, for a further discussion of the 2009 Entity Consolidation. | ||
2009 Entity Secured Borrowing Obligation. The owners of the 2009 Entity (the “2009 Entity Participants”) purchased participation interests in the 2009 Entity Student Loans from the 2009 Entity. The terms of the agreements between the 2009 Entity Participants and the 2009 Entity did not meet the requirements under ASC 860, “Transfers and Servicing” (“ASC 860”), to be considered a sale. As a result, the 2009 Entity was required to record a liability (the “2009 Entity Secured Borrowing Obligation”) on its balance sheet for the cash received from the 2009 Entity Participants. The 2009 Entity Secured Borrowing Obligation represents the estimated amount that the 2009 Entity owes to the 2009 Entity Participants related to their participation interests in the 2009 Entity Student Loans, which amount is expected to be paid to the 2009 Entity Participants by the 2009 Entity from payments received by the 2009 Entity related to the 2009 Entity Student Loans, whether from the borrower or from us under the risk sharing agreement (the “2009 RSA”) that we entered into with the 2009 Entity on February 20, 2009. | ||
In accordance with ASC 810, we included the 2009 Entity Secured Borrowing Obligation on our condensed consolidated balance sheet at its fair value as of September 30, 2014, the date of the 2009 Entity Consolidation. The difference between the estimated fair value of the 2009 Entity Secured Borrowing Obligation and the amount expected to be paid by the 2009 Entity to the 2009 Entity Participants was recorded as an accrued discount on our condensed consolidated balance sheet at the date of the 2009 Entity Consolidation. The accrued discount is being recognized in interest expense at a level rate of return over the expected life of the 2009 Entity Secured Borrowing Obligation. | ||
The expected life of the 2009 Entity Secured Borrowing Obligation is an estimate of the period of time over which payments are expected to be made by the 2009 Entity to the 2009 Entity Participants related to their participation interests in the 2009 Entity Student Loans. The period of time over which payments are expected to be made by the 2009 Entity to the 2009 Entity Participants is based on when the 2009 Entity Student Loans enter a repayment status and the period of time they remain in a repayment status. Since all of the 2009 Entity Student Loans have not entered repayment, and those loans that have entered repayment may be granted forbearances or deferments, the period of time over which payments are expected to be made to the 2009 Entity Participants is an estimate. The assumptions used to estimate the expected life of the 2009 Entity Secured Borrowing Obligation are reviewed periodically and updated accordingly, which may result in an adjustment to the expected life of the 2009 Entity Secured Borrowing Obligation and the related recognized interest expense. |
New_Accounting_Guidance
New Accounting Guidance | 9 Months Ended | ||
Sep. 30, 2014 | |||
Accounting Changes and Error Corrections [Abstract] | |||
New Accounting Guidance | 3 | New Accounting Guidance | |
In April 2015, the FASB issued Accounting Standards Update (“ASU”) No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs”, which is included in the Codification under ASC 835, “Interest” (“ASC 835”). This guidance requires that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that liability. This guidance will be effective for our interim and annual reporting periods beginning January 1, 2016, with early adoption permitted. We are assessing the impact that this guidance may have on our consolidated financial statements. | |||
In February 2015, the FASB issued ASU No. 2015-02, “Amendment to the Consolidation Analysis” (“ASU 2015-02”), which is included in the Codification under ASC 810. This guidance changes the analysis that an entity must perform to determine whether it should consolidate certain types of legal entities. This guidance will be effective for our interim and annual reporting periods beginning January 1, 2016, with early adoption permitted. We are assessing the impact that this guidance may have on our consolidated financial statements. | |||
In January 2015, the FASB issued ASU No. 2015-01, “Income Statement – Extraordinary and Unusual Items” (“ASU 2015-01”), which is included in the Codification under ASC 225, “Income Statement” (“ASC 225”). This guidance eliminates the concept of extraordinary items from GAAP. This guidance will be effective for our interim and annual reporting periods beginning January 1, 2016, with early adoption permitted. We are assessing the impact that this guidance may have on our consolidated financial statements. | |||
In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements – Going Concern” (“ASU 2014-15”), which is included in the Codification under ASC 205, “Presentation of Financial Statements” (“ASC 205”). This guidance was issued to define management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosure in certain circumstances. Under the new guidance, management is required to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued and to provide related disclosures. The guidance will be effective for our interim and annual reporting periods beginning January 1, 2017, with early adoption permitted. We are assessing the impact that this guidance may have on our consolidated financial statements. | |||
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which is included in the Codification under ASC 606, “Revenue Recognition” (“ASC 606”). This guidance requires the recognition of revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration expected in exchange for those goods or services. This guidance will become effective for our interim and annual reporting periods beginning January 1, 2017. Early adoption is not permitted. We are assessing the impact that this guidance may have on our consolidated financial statements. | |||
In April 2014, the FASB issued ASU No. 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”), which is included in the Codification under ASC 205, “Presentation of Financial Statements” (“ASC 205”). This update changes the requirements for reporting discontinued operations and clarifies when disposals of groups of assets qualify for a discontinued operations presentation under ASC 205. This guidance became effective for our interim and annual reporting periods beginning January 1, 2015. Early adoption was permitted, but only for disposals that have not been reported in financial statements previously issued. We do not expect the adoption of ASU 2014-08 to have a material impact on our consolidated financial statements. | |||
In July 2013, the FASB issued ASU No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” (“ASU 2013-11”), which is included in the Codification under ASC 740. This update provides guidance on the financial statement presentation of unrecognized tax benefits when net operating loss carryforwards, similar tax losses or tax credit carryforwards exist. This guidance became effective for our interim and annual reporting periods beginning January 1, 2014. The adoption of this guidance did not have a material impact on our consolidated financial statements. |
Acquisition
Acquisition | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Business Combinations [Abstract] | |||||||||
Acquisition | 4 | Acquisition | |||||||
On January 31, 2014, we acquired certain assets and assumed certain liabilities of CompetenC Solutions, Inc. and Great Equalizer, Inc. for approximately $5,220, of which $5,186 was paid in the nine months ended September 30, 2014 and the remaining $34 was paid by October 31, 2014. CompetenC Solutions, Inc. and Great Equalizer, Inc. were education companies that operated primarily under the name of Ascolta and offered short-term information technology and business learning solutions for career advancers and other professionals. The acquisition of the Ascolta business allowed us to expand our offerings in the short-term learning solutions market by integrating the Ascolta operations into the Center for Professional Development @ ITT Technical Institute. | |||||||||
Our condensed consolidated financial statements include the results of the Ascolta business beginning as of the acquisition date. The revenue and expenses of the Ascolta business included in our Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2014 were not significant. Our revenue, net income and earnings per share would not have been materially affected, if the revenue and expenses of the Ascolta business were presented for the three and nine months ended September 30, 2014 and 2013 as if the transaction had occurred at the beginning of the earliest period presented. The costs incurred to acquire the Ascolta business were expensed and were not significant. | |||||||||
We accounted for the acquisition of the Ascolta business in accordance with ASC 805, “Business Combinations” (“ASC 805”), which requires the use of the acquisition method of accounting for all business combinations. We considered the report of a third-party valuation firm in allocating the purchase price to identifiable net assets. The excess of the consideration paid over the estimated fair values of the identifiable net assets acquired was recognized as goodwill and is expected to be deductible for income tax purposes. The identifiable intangible assets acquired consist of customer relationships and non-compete agreements, which are being amortized over a weighted-average life of approximately five years. | |||||||||
The following table sets forth the estimated fair values allocated to the major classes of assets acquired and liabilities assumed in the Ascolta business acquisition as of the acquisition date: | |||||||||
Assets | Liabilities | ||||||||
Acquired | Assumed | ||||||||
Accounts receivable and other current assets | $ | 849 | |||||||
Furniture and equipment | 370 | ||||||||
Identifiable intangible assets | 1,670 | ||||||||
Goodwill | 3,332 | ||||||||
Other liabilities | $ | 1,001 |
Goodwill_and_Intangibles
Goodwill and Intangibles | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||
Goodwill and Intangibles | 5 | Goodwill and Intangibles | |||||||||||||||
We recognized goodwill and certain other intangible assets on our consolidated balance sheet as a result of the acquisition of: | |||||||||||||||||
• | certain assets and liabilities of CompetenC Solutions, Inc. and Great Equalizer, Inc. on January 31, 2014; | ||||||||||||||||
• | the membership interests of Cable Holdings, Inc. on August 1, 2013; and | ||||||||||||||||
• | substantially all the assets and certain liabilities of Daniel Webster College on June 10, 2009. | ||||||||||||||||
The acquired intangible assets consist of certain identifiable intangible assets that are amortized over the asset’s estimated life, and indefinite-lived intangible assets, including goodwill. Goodwill represents the excess of the consideration paid over the estimated fair value of identifiable net assets acquired. | |||||||||||||||||
The following tables set forth the carrying value of our acquired intangible assets that are included in Other assets on our Condensed Consolidated Balance Sheets as of the dates indicated: | |||||||||||||||||
As of September 30, 2014 | |||||||||||||||||
Gross | Accumulated | Net | Weighted | ||||||||||||||
Carrying | Amortization | Carrying | Average | ||||||||||||||
Value | Value | Amortization | |||||||||||||||
Period | |||||||||||||||||
(months) | |||||||||||||||||
Amortizable intangible assets: | |||||||||||||||||
Customer relationships | $ | 2,500 | $ | (453 | ) | $ | 2,047 | 60 | |||||||||
Non-compete agreements | 1,120 | (224 | ) | 896 | 60 | ||||||||||||
Training materials | 440 | (147 | ) | 293 | 42 | ||||||||||||
Accreditation | 210 | (158 | ) | 52 | 84 | ||||||||||||
$ | 4,270 | $ | (982 | ) | $ | 3,288 | |||||||||||
Indefinite-lived intangible assets: | |||||||||||||||||
Goodwill | $ | 7,247 | |||||||||||||||
Trademark | 660 | ||||||||||||||||
$ | 7,907 | ||||||||||||||||
As of September 30, 2013 | |||||||||||||||||
Gross | Accumulated | Net | Weighted | ||||||||||||||
Carrying | Amortization | Carrying | Average | ||||||||||||||
Value | Value | Amortization | |||||||||||||||
Period | |||||||||||||||||
(months) | |||||||||||||||||
Amortizable intangible assets: | |||||||||||||||||
Customer relationships | $ | 1,200 | $ | (40 | ) | $ | 1,160 | 60 | |||||||||
Non-compete agreements | 750 | (25 | ) | 725 | 60 | ||||||||||||
Training materials | 440 | (21 | ) | 419 | 42 | ||||||||||||
Accreditation | 210 | (128 | ) | 82 | 84 | ||||||||||||
$ | 2,600 | $ | (214 | ) | $ | 2,386 | |||||||||||
Indefinite-lived intangible assets: | |||||||||||||||||
Goodwill | $ | 3,958 | |||||||||||||||
Trademark | 660 | ||||||||||||||||
$ | 4,618 | ||||||||||||||||
All amortizable intangible assets are being amortized on a straight-line basis. Amortization expense for amortized intangible assets was: | |||||||||||||||||
• | $193 in the three months ended September 30, 2014; | ||||||||||||||||
• | $8 in the three months ended September 30, 2013; | ||||||||||||||||
• | $632 in the nine months ended September 30, 2014; and | ||||||||||||||||
• | $23 in the nine months ended September 30, 2013. | ||||||||||||||||
The following table sets forth our estimate of the amortization expense for our amortizable intangible assets in each of the next five fiscal years: | |||||||||||||||||
Fiscal Year Ending December 31, | Estimated | ||||||||||||||||
Amortization | |||||||||||||||||
Expense | |||||||||||||||||
2015 | $ | 880 | |||||||||||||||
2016 | 865 | ||||||||||||||||
2017 | 734 | ||||||||||||||||
2018 | 562 | ||||||||||||||||
2019 | 28 | ||||||||||||||||
$ | 3,069 | ||||||||||||||||
Indefinite-lived intangible assets include trademarks and goodwill, which are not amortized, since there are no legal, regulatory, contractual, economic or other factors that limit the useful life of those intangible assets by us. | |||||||||||||||||
Intangible assets that are not subject to amortization are required to be tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset may be impaired. We performed our annual impairment test as of October 1, 2014 and determined that certain of our indefinite-lived intangible assets were impaired, because the carrying value of those assets exceeded their estimated fair value. We believe that we may record a charge of approximately $2,000 in the fourth quarter of 2014 for the impairment of goodwill associated with the acquisitions of Cable Holdings and Ascolta. This impairment was due to a decrease in the fair value of the forecasted cash flows, primarily resulting from lower projected revenue and margins. | |||||||||||||||||
In addition to our annual impairment test, we consider certain triggering events when evaluating whether an interim impairment analysis is warranted. Among these are a significant long-term decrease in our market capitalization based on events specific to our operations. Deteriorating operating results and current period and projected future operating results that negatively differ from the operating plans used in the most recent impairment analysis (or initial allocation of purchase price) are also triggering events that could be cause for an interim impairment review. In our analysis of triggering events we also consider changes in the accreditation, regulatory or legal environment; increased competition; innovation changes and changes in the market acceptance of our educational programs and the graduates of those programs, among other factors. We concluded that no triggering event had occurred during the three and nine month periods ended September 30, 2014. |
Fair_Value
Fair Value | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||
Fair Value | 6 | Fair Value | |||||||||||||||
Fair value for financial reporting is defined as the price that would be received upon the sale of an asset or paid upon the transfer of a liability in an orderly transaction between market participants at the measurement date. The fair value measurement of our financial assets utilized assumptions categorized as observable inputs under the accounting guidance. Observable inputs are assumptions based on independent market data sources. | |||||||||||||||||
The following table sets forth information regarding the recurring fair value measurement of our financial assets as reflected on our Condensed Consolidated Balance Sheet as of September 30, 2014: | |||||||||||||||||
Fair Value Measurements at Reporting Date Using | |||||||||||||||||
Description | As of | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
September 30, | Quoted Prices in | Significant Other | Significant | ||||||||||||||
2014 | Active Markets for | Observable Inputs | Unobservable | ||||||||||||||
Identical Assets | Inputs | ||||||||||||||||
Cash equivalents: | |||||||||||||||||
Money market fund | $ | 196,171 | $ | 196,171 | $ | 0 | $ | 0 | |||||||||
Restricted cash: | |||||||||||||||||
Money market fund | 1,786 | 1,786 | 0 | 0 | |||||||||||||
Other assets: | |||||||||||||||||
Money market fund | 8,627 | 8,627 | 0 | 0 | |||||||||||||
$ | 206,584 | $ | 206,584 | $ | 0 | $ | 0 | ||||||||||
The following table sets forth information regarding the recurring fair value measurement of our financial assets as reflected on our Condensed Consolidated Balance Sheet as of September 30, 2013: | |||||||||||||||||
Fair Value Measurements at Reporting Date Using | |||||||||||||||||
Description | As of | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
September 30, | Quoted Prices in | Significant Other | Significant | ||||||||||||||
2013 | Active Markets for | Observable Inputs | Unobservable | ||||||||||||||
Identical Assets | Inputs | ||||||||||||||||
Cash equivalents: | |||||||||||||||||
Money market fund | $ | 163,981 | $ | 163,981 | $ | 0 | $ | 0 | |||||||||
Restricted cash: | |||||||||||||||||
Money market fund | 3,140 | 3,140 | 0 | 0 | |||||||||||||
Other assets: | |||||||||||||||||
Money market fund | 8,625 | 8,625 | 0 | 0 | |||||||||||||
$ | 175,746 | $ | 175,746 | $ | 0 | $ | 0 | ||||||||||
We used quoted prices in active markets for identical assets as of the measurement date to value our financial assets that were categorized as Level 1. | |||||||||||||||||
The carrying value for cash and cash equivalents, restricted cash, accounts receivable, accounts payable and other current liabilities approximate fair value, because of the immediate or short-term maturity of these financial instruments. We did not have any financial assets or liabilities recorded at estimated fair value on a non-recurring basis on our Condensed Consolidated Balance Sheet as of September 30, 2013. In accordance with ASC 810, the consolidation of the 2009 Entity was treated as an acquisition of assets and liabilities and, therefore, the assets and liabilities of the 2009 Entity were included on our Condensed Consolidated Balance Sheet as of September 30, 2014 at their estimated fair value. See Note 8 – Variable Interest Entities for a further discussion of the estimated fair value of the assets and liabilities recorded. | |||||||||||||||||
As of September 30, 2014, the aggregate carrying value of the private education loans (“PEAKS Trust Student Loans” and, together with the 2009 Entity Student Loans, the “Private Education Loans”) owned by a trust (the “PEAKS Trust”) that purchased, owns and collects private education loans made under the PEAKS Private Student Loan Program (the “PEAKS Program”) was $67,412 and the estimated fair value was approximately $79,412. As of September 30, 2013, the carrying value of the PEAKS Trust Student Loans was $92,938 and the estimated fair value was approximately $109,000. The fair value of the PEAKS Trust Student Loans was estimated using the income approach with estimated discounted expected cash flows. We utilized inputs that were unobservable in determining the estimated fair value of the PEAKS Trust Student Loans. The significant inputs used in determining the estimated fair value included the default rate, repayment rate and discount rate. Fair value measurements that utilize significant unobservable inputs are categorized as Level 3 measurements under the accounting guidance. | |||||||||||||||||
Each of the carrying value and the estimated fair value of our debt under our credit agreement was approximately $50,000 as of September 30, 2014, $50,000 as of December 31, 2013 and $60,000 as of September 30, 2013. The fair value of our debt under our credit agreement was estimated by discounting the future cash flows using current rates for similar loans with similar characteristics and remaining maturities. We utilized inputs that were observable or were principally derived from observable market data to estimate the fair value of our debt under our credit agreement. Fair value measurements that utilize significant other observable inputs are categorized as Level 2 measurements under the accounting guidance. | |||||||||||||||||
As of September 30, 2014, the carrying value of the senior debt issued by the PEAKS Trust in the initial aggregate principal amount of $300,000 (the “PEAKS Senior Debt”) was $140,516 and the estimated fair value was approximately $149,583. As of September 30, 2013, the carrying value of the PEAKS Senior Debt was $228,495 and the estimated fair value was approximately $233,000. The fair value of the PEAKS Senior Debt was estimated using the income approach with estimated discounted cash flows. We utilized inputs that were unobservable in determining the estimated fair value of the PEAKS Senior Debt. The significant input used in determining the estimated fair value was the discount rate utilized for both credit and liquidity purposes. Fair value measurements that utilize significant unobservable inputs are categorized as Level 3 measurements under the accounting guidance. | |||||||||||||||||
Financial instruments that potentially subject us to credit risk consist primarily of accounts receivable, cash equivalents and the Private Education Loans. There is no concentration of credit risk of our accounts receivable, as the total is comprised of a large number of individual balances owed by students whose credit profiles vary and who are located throughout the United States. Our cash equivalents generally consist of money market funds which invest in high-quality securities issued by various entities. The Private Education Loans consist of a large number of individual loans owed by borrowers, whose credit profiles vary and who are located throughout the United States. |
Equity_Compensation
Equity Compensation | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||
Equity Compensation | 7 | Equity Compensation | |||||||||||||||||||
The stock-based compensation expense and related income tax benefit recognized in our Condensed Consolidated Statements of Income in the periods indicated were as follows: | |||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Stock-based compensation expense | $ | 2,667 | $ | 3,304 | $ | 7,529 | $ | 8,698 | |||||||||||||
Income tax (benefit) | $ | (1,027 | ) | $ | (1,272 | ) | $ | (2,899 | ) | $ | (3,349 | ) | |||||||||
As of September 30, 2014, we estimated that pre-tax compensation expense for unvested stock-based compensation grants in the amount of approximately $12,300, net of estimated forfeitures, will be recognized in future periods. This expense will be recognized over the remaining service period applicable to the grantees which, on a weighted-average basis, is approximately 1.7 years. | |||||||||||||||||||||
The stock options granted, forfeited, exercised and expired in the period indicated were as follows: | |||||||||||||||||||||
Nine Months Ended September 30, 2014 | |||||||||||||||||||||
# of | Weighted | Aggregate | Weighted | Aggregate | |||||||||||||||||
Shares | Average | Exercise | Average | Intrinsic | |||||||||||||||||
Exercise | Price | Remaining | Value (1) | ||||||||||||||||||
Price | Contractual Term | ||||||||||||||||||||
Outstanding at beginning of period | 1,332,448 | $ | 81.77 | $ | 108,955 | ||||||||||||||||
Granted | 168,500 | $ | 27.94 | 4,708 | |||||||||||||||||
Forfeited | (10,334 | ) | $ | 30.29 | (313 | ) | |||||||||||||||
Exercised | 0 | $ | 0 | 0 | |||||||||||||||||
Expired | (322,441 | ) | $ | 70.87 | (22,853 | ) | |||||||||||||||
Outstanding at end of period | 1,168,173 | $ | 77.47 | $ | 90,497 | 2.4 | $ | 0 | |||||||||||||
Exercisable at end of period | 862,165 | $ | 93.85 | $ | 80,911 | 2 | $ | 0 | |||||||||||||
-1 | The aggregate intrinsic value of the stock options was calculated by identifying those stock options that had a lower exercise price than the closing market price of our common stock on September 30, 2014 and multiplying the difference between the closing market price of our common stock and the exercise price of each of those stock options by the number of shares subject to those stock options that were outstanding or exercisable, as applicable. Since the closing market price of our common stock on September 30, 2014 was lower than the exercise price of all outstanding stock options and exercisable stock options, the aggregate intrinsic value of the stock options was zero. | ||||||||||||||||||||
The following table sets forth information regarding the stock options granted and exercised in the periods indicated: | |||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Shares subject to stock options granted | 0 | 0 | 168,500 | 154,000 | |||||||||||||||||
Weighted average grant date fair value per share | $ | 0 | $ | 0 | $ | 12.62 | $ | 9.16 | |||||||||||||
Shares subject to stock options exercised | 0 | 0 | 0 | 0 | |||||||||||||||||
Intrinsic value of stock options exercised | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
Proceeds received from stock options exercised | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
Tax benefits realized from stock options exercised | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
The intrinsic value of a stock option is the difference between the fair market value of the stock and the option exercise price. | |||||||||||||||||||||
The fair value of each stock option grant was estimated on the date of grant using the following assumptions: | |||||||||||||||||||||
Three Months | Nine Months | ||||||||||||||||||||
Ended September 30, | Ended September 30, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Risk-free interest rates | Not applicable | Not applicable | 1.3 | % | 0.7 | % | |||||||||||||||
Expected lives (in years) | Not applicable | Not applicable | 4.7 | 4.6 | |||||||||||||||||
Volatility | Not applicable | Not applicable | 55 | % | 60 | % | |||||||||||||||
Dividend yield | Not applicable | Not applicable | None | None | |||||||||||||||||
The following table sets forth the number of restricted stock units (“RSUs”) that were granted, forfeited and vested in the period indicated: | |||||||||||||||||||||
Nine Months Ended September 30, | |||||||||||||||||||||
2014 | |||||||||||||||||||||
# of RSUs | Weighted | ||||||||||||||||||||
Average Grant | |||||||||||||||||||||
Date | |||||||||||||||||||||
Fair Value | |||||||||||||||||||||
Unvested at beginning of period | 737,844 | $ | 39.96 | ||||||||||||||||||
Granted | 402,890 | $ | 21.46 | ||||||||||||||||||
Forfeited | (156,315 | ) | $ | 31.42 | |||||||||||||||||
Vested | (119,560 | ) | $ | 61.07 | |||||||||||||||||
Unvested at end of period | 864,859 | $ | 29.97 | ||||||||||||||||||
The total fair market value of the RSUs that vested and were settled in shares of our common stock was: | |||||||||||||||||||||
• | $563 in the three months ended September 30, 2014; | ||||||||||||||||||||
• | $49 in the three months ended September 30, 2013; | ||||||||||||||||||||
• | $2,505 in the nine months ended September 30, 2014; and | ||||||||||||||||||||
• | $1,226 in the nine months ended September 30, 2013. |
Variable_Interest_Entities
Variable Interest Entities | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Text Block [Abstract] | |||||||||||||||||
Variable Interest Entities | 8 | Variable Interest Entities | |||||||||||||||
Under ASC 810, an entity that holds a variable interest in a VIE and meets certain requirements would be considered to be the primary beneficiary of the VIE and required to consolidate the VIE in its consolidated financial statements. In order to be considered the primary beneficiary of a VIE, an entity must hold a variable interest in the VIE and have both: | |||||||||||||||||
• | the power to direct the activities that most significantly impact the economic performance of the VIE; and | ||||||||||||||||
• | the right to receive benefits from, or the obligation to absorb losses of, the VIE that could be potentially significant to the VIE. | ||||||||||||||||
We hold variable interests in the PEAKS Trust as a result of: | |||||||||||||||||
• | a subordinated note issued to us by the PEAKS Trust in exchange for the portion of each private education loan disbursed to us under the PEAKS Program that we transferred to the PEAKS Trust (“Subordinated Note”); and | ||||||||||||||||
• | our guarantee of the payment of the principal and interest owed on the PEAKS Senior Debt, the administrative fees and expenses of the PEAKS Trust and a minimum required ratio of assets of the PEAKS Trust to outstanding PEAKS Senior Debt (“PEAKS Guarantee”). | ||||||||||||||||
We hold variable interests in the 2009 Entity as a result of: | |||||||||||||||||
• | the 2009 RSA; and | ||||||||||||||||
• | a revolving note owed to us by the 2009 Entity (the “Revolving Note”). | ||||||||||||||||
Primary Beneficiary Analysis. The PEAKS Trust and the 2009 Entity are VIEs as defined under ASC 810. To determine whether we are the primary beneficiary of the PEAKS Trust or the 2009 Entity, we: | |||||||||||||||||
• | assessed the risks that the VIE was designed to create and pass through to its variable interest holders; | ||||||||||||||||
• | identified the variable interests in the VIE; | ||||||||||||||||
• | identified the other variable interest holders and their involvement in the activities of the VIE; | ||||||||||||||||
• | identified the activities that most significantly impact the VIE’s economic performance; | ||||||||||||||||
• | determined whether we have the power to direct those activities; and | ||||||||||||||||
• | determined whether we have the right to receive the benefits from, or the obligation to absorb the losses of, the VIE that could potentially be significant to the VIE. | ||||||||||||||||
We determined that the activities of the PEAKS Trust and the 2009 Entity that most significantly impact the economic performance of the PEAKS Trust and the 2009 Entity involve the servicing (which includes the collection) of the PEAKS Trust Student Loans and the 2009 Entity Student Loans. To make that determination, we analyzed various possible scenarios of student loan portfolio performance to evaluate the potential economic impact on the PEAKS Trust and the 2009 Entity. In our analysis, we made what we believe are reasonable assumptions based on historical data for the following key variables: | |||||||||||||||||
• | the composition of the credit profiles of the borrowers; | ||||||||||||||||
• | the interest rates and fees charged on the loans; | ||||||||||||||||
• | the default rates and the timing of defaults associated with similar types of loans; and | ||||||||||||||||
• | the prepayment and the speed of repayment associated with similar types of loans. | ||||||||||||||||
Based on our analysis, we concluded that we became the primary beneficiary of the PEAKS Trust on February 28, 2013. This was the first date that we had the power to direct the activities of the PEAKS Trust that most significantly impact the economic performance of the PEAKS Trust, because we could have exercised our right to terminate the servicing agreement that governs the servicing activities of the PEAKS Trust Student Loans (the “PEAKS Servicing Agreement”), due to the failure of the entity that performs those servicing activities for the PEAKS Trust Student Loans on behalf of the PEAKS Trust to meet certain performance criteria specified in the PEAKS Servicing Agreement. We have not, however, exercised our right to terminate the PEAKS Servicing Agreement. As a result of our primary beneficiary conclusion, we consolidated the PEAKS Trust in our consolidated financial statements beginning on February 28, 2013 (the “PEAKS Consolidation”). Prior to February 28, 2013, the PEAKS Trust was not required to be consolidated in our consolidated financial statements, because we concluded that we were not the primary beneficiary of the PEAKS Trust prior to that time. The PEAKS Trust is discussed in more detail below. | |||||||||||||||||
Our consolidated financial statements for periods as of and after February 28, 2013 include the PEAKS Trust, because we were considered to have control over the PEAKS Trust beginning on February 28, 2013 under ASC 810, as a result of our substantive unilateral right to terminate the PEAKS Servicing Agreement. We do not, however, actively manage the operations of the PEAKS Trust, and the assets of the consolidated PEAKS Trust can only be used to satisfy the obligations of the PEAKS Trust. Our obligations under the PEAKS Guarantee remain in effect, until the PEAKS Senior Debt and the PEAKS Trust’s fees and expenses are paid in full. See Note 13 – Commitments and Contingencies, for a further discussion of the PEAKS Guarantee. | |||||||||||||||||
Based on our analysis, we concluded that we became the primary beneficiary of the 2009 Entity on September 30, 2014. This was the first date that we determined we had the power to direct the activities of the 2009 Entity that most significantly impact the economic performance of the 2009 Entity, because the entity that performs the servicing activities on behalf of the 2009 Entity (the “2009 Loan Program Servicer”) failed to meet certain performance criteria specified in the servicing agreement that governs the servicing activities of the 2009 Entity Student Loans (the “2009 Entity Servicing Agreement”) on that date. The 2009 Entity Servicing Agreement provides that in the event that the 2009 Loan Program Servicer fails to meet certain performance criteria specified in the 2009 Entity Servicing Agreement, and the 2009 Loan Program Servicer does not affect a cure of that failure during a specified cure period, we would have the right to terminate the 2009 Servicing Agreement. We determined that it was not reasonably possible that the 2009 Loan Program Servicer would be able to affect a cure during the specified cure period and, therefore, because the cure period was not substantive, we effectively had the right to terminate the 2009 Servicing Agreement as of the date that the 2009 Loan Program Servicer failed to meet the performance criteria. We have not, however, exercised our right to terminate the 2009 Entity Servicing Agreement. | |||||||||||||||||
As a result of our primary beneficiary conclusion, we consolidated the 2009 Entity in our consolidated financial statements beginning on September 30, 2014. Prior to September 30, 2014, the 2009 Entity was not required to be consolidated in our consolidated financial statements, because we concluded that we were not the primary beneficiary of the 2009 Entity. The 2009 Entity is discussed in more detail below. | |||||||||||||||||
Our consolidated financial statements for periods as of and after September 30, 2014 include the 2009 Entity, because we were considered to have control over the 2009 Entity under ASC 810, as a result of our substantive right to terminate the 2009 Entity Servicing Agreement after a cure period that was not substantive. We do not, however, actively manage the operations of the 2009 Entity, and the assets of the consolidated 2009 Entity can only be used to satisfy the obligations of the 2009 Entity. Our obligations under the 2009 RSA remain in effect, until all 2009 Entity Student Loans are paid in full. See Note 13—Commitments and Contingencies, for a further discussion of the 2009 RSA. | |||||||||||||||||
The PEAKS Trust and the 2009 Entity are not included in our consolidated income tax returns. We do not recognize income tax expense or benefit for the financial results of the PEAKS Trust or the 2009 Entity in the provision for income taxes included in our Condensed Consolidated Statements of Income, even though the PEAKS Trust and the 2009 Entity are included in our consolidated financial statements. Because the PEAKS Trust generated a loss in the three and nine months ended September 30, 2013 that we could not recognize an income tax benefit for, our effective income tax rate was affected. In the three and nine months ended September 30, 2014, the financial results of the PEAKS Trust and 2009 Entity were not significant and, therefore, did not have a significant impact on our effective income tax rate. Our deferred income tax assets as of September 30, 2014 were lower as compared to December 31, 2013, primarily due to the significant payments that we made under the PEAKS Guarantee and 2009 RSA, which are generally deductible for income tax purposes when the payments are made. | |||||||||||||||||
PEAKS Private Student Loan Program. On January 20, 2010, we entered into agreements with unrelated third parties to establish the PEAKS Program, which was a private education loan program for our students. We entered into the PEAKS Program to offer our students another source of private education loans that they could use to help pay their education costs owed to us and to supplement the limited amount of private education loans available to our students under other private education loan programs, including the 2009 Loan Program. Under the PEAKS Program, our students had access to a greater amount of private education loans, which resulted in a reduction in the amount of internal financing that we provided to our students in 2010 and 2011. No new private education loans were or will be originated under the PEAKS Program after July 2011, but immaterial amounts related to loans originated prior to that date were disbursed by the lender through March 2012. | |||||||||||||||||
Under the PEAKS Program, an unrelated lender originated private education loans to our eligible students and, subsequently, sold those loans to the PEAKS Trust. The PEAKS Trust issued the PEAKS Senior Debt to investors. The lender disbursed the proceeds of the private education loans to us for application to the students’ account balances with us that represented their unpaid education costs. We transferred a portion of the amount of each private education loan disbursed to us under the PEAKS Program to the PEAKS Trust in exchange for the Subordinated Note. | |||||||||||||||||
The Subordinated Note issued by the PEAKS Trust to us does not bear interest and matures in March 2026. Principal is due on the Subordinated Note following: | |||||||||||||||||
• | the repayment of the PEAKS Senior Debt; | ||||||||||||||||
• | the repayment of fees and expenses of the PEAKS Trust; and | ||||||||||||||||
• | the reimbursement of the amounts of any payments made by us under the PEAKS Guarantee, other than Payments on Behalf of Borrowers (as defined below). | ||||||||||||||||
The carrying value of the Subordinated Note was eliminated from our consolidated balance sheet when we consolidated the PEAKS Trust in our consolidated financial statements beginning on February 28, 2013. In the three months ended December 31, 2012, we determined it was probable that we would not collect the carrying value of the Subordinated Note and, therefore, recorded an impairment charge for the total carrying value of the Subordinated Note. | |||||||||||||||||
The PEAKS Trust utilized the proceeds from the issuance of the PEAKS Senior Debt and the Subordinated Note to purchase the private education loans made by the lender to our students. The assets of the PEAKS Trust (which include, among other assets, the PEAKS Trust Student Loans) serve as collateral for, and are intended to be the principal source of, the repayment of the PEAKS Senior Debt and the Subordinated Note. | |||||||||||||||||
Under the PEAKS Guarantee, we guarantee payment of the principal and interest owed on the PEAKS Senior Debt, the administrative fees and expenses of the PEAKS Trust and a minimum required ratio of assets of the PEAKS Trust to outstanding PEAKS Senior Debt (the “Asset/Liability Ratio”). Our guarantee obligations under the PEAKS Program remain in effect until the PEAKS Senior Debt and the PEAKS Trust’s fees and expenses are paid in full. At such time, we will be entitled to repayment of the amounts we paid under the PEAKS Guarantee (which do not include Payments on Behalf of Borrowers, as defined below), to the extent of available funds remaining in the PEAKS Trust. See Note 13 – Commitments and Contingencies, for a further discussion of our obligations to make guarantee payments pursuant to the PEAKS Guarantee. | |||||||||||||||||
Assets and Liabilities of PEAKS Trust. We concluded that we became the primary beneficiary of the PEAKS Trust on February 28, 2013 and, therefore, were required to consolidate the PEAKS Trust in our consolidated financial statements. In accordance with ASC 810, the consolidation of the PEAKS Trust was treated as an acquisition of assets and liabilities and, therefore, the assets and liabilities of the PEAKS Trust were included in our consolidated financial statements at their fair value as of February 28, 2013. The following table sets forth the fair value of the assets and liabilities of the PEAKS Trust as of February 28, 2013 that were included on our consolidated balance sheet on that date: | |||||||||||||||||
As of February 28, 2013 | |||||||||||||||||
Assets | Liabilities | ||||||||||||||||
Restricted cash | $ | 1,703 | |||||||||||||||
Current portion of PEAKS Trust student loans | 7,282 | ||||||||||||||||
PEAKS Trust student loans, excluding current portion | 104,834 | ||||||||||||||||
Current portion of PEAKS Trust senior debt | $ | 103,356 | |||||||||||||||
Other current liabilities | 471 | ||||||||||||||||
PEAKS Trust senior debt, excluding current portion | 122,740 | ||||||||||||||||
Total | $ | 113,819 | $ | 226,567 | |||||||||||||
The following table sets forth the carrying value of the assets and liabilities related to the PEAKS Program as of February 28, 2013 that we eliminated from our consolidated balance sheet when we consolidated the PEAKS Trust in our consolidated financial statements, and the line items within which those assets and liabilities were included: | |||||||||||||||||
As of February 28, 2013 | |||||||||||||||||
Assets | Liabilities | ||||||||||||||||
Other assets | $ | 6,614 | |||||||||||||||
Other current liabilities | $ | 3,060 | |||||||||||||||
Other liabilities | 43,054 | ||||||||||||||||
Total | $ | 6,614 | $ | 46,114 | |||||||||||||
The fair value of the PEAKS Trust’s liabilities exceeded the fair value of the PEAKS Trust’s assets as of February 28, 2013 by $112,748. The amount of this excess was reduced by $39,500, which represented the net amount of the carrying value of the assets and liabilities related to the PEAKS Program that had been recorded in our consolidated financial statements as of February 28, 2013 and were eliminated upon the PEAKS Consolidation. As a result, we recognized a total loss of $73,248 in our Condensed Consolidated Statement of Income for the three months ended March 31, 2013 related to the PEAKS Consolidation. | |||||||||||||||||
The following table sets forth the carrying value of assets and liabilities of the PEAKS Trust that were included on our Condensed Consolidated Balance Sheets as of the dates indicated: | |||||||||||||||||
As of | As of | As of | |||||||||||||||
September 30, | December 31, | September 30, | |||||||||||||||
2014 | 2013 | 2013 | |||||||||||||||
Assets | |||||||||||||||||
Restricted cash | $ | 1,450 | $ | 2,593 | $ | 1,237 | |||||||||||
Current portion of PEAKS Trust student loans | 6,933 | 7,730 | 7,598 | ||||||||||||||
PEAKS Trust student loans, excluding current portion, less allowance for loan losses of $42,931, $29,349 and $20,701 | 60,479 | 76,479 | 85,340 | ||||||||||||||
Total assets | $ | 68,862 | $ | 86,802 | $ | 94,175 | |||||||||||
Liabilities | |||||||||||||||||
Current portion of PEAKS Trust senior debt | $ | 96,516 | $ | 157,883 | $ | 134,075 | |||||||||||
Other current liabilities | 287 | 697 | 496 | ||||||||||||||
PEAKS Trust senior debt, excluding current portion | 44,000 | 71,341 | 94,420 | ||||||||||||||
Total liabilities | $ | 140,803 | $ | 229,921 | $ | 228,991 | |||||||||||
The assets of the PEAKS Trust can only be used to satisfy the obligations of the PEAKS Trust. Payment of the administrative fees and expenses of the PEAKS Trust and the principal and interest owed on the PEAKS Senior Debt are guaranteed by us under the PEAKS Guarantee. | |||||||||||||||||
Revenue and Expenses of PEAKS Trust. The following table sets forth the revenue and expenses of the PEAKS Trust, excluding the loss on consolidation of the PEAKS Trust, which were included in our Condensed Consolidated Statements of Income for the periods indicated: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Revenue | $ | 2,727 | $ | 4,072 | $ | 9,099 | $ | 9,536 | |||||||||
Student services and administrative expenses | 987 | 1,535 | 3,624 | 3,613 | |||||||||||||
Provision for PEAKS Trust student loan losses | 4,511 | 16,382 | 13,582 | 20,701 | |||||||||||||
Interest expense | 5,261 | 6,275 | 16,875 | 14,953 | |||||||||||||
(Loss) before provision for income taxes | $ | (8,032 | ) | $ | (20,120 | ) | $ | (24,982 | ) | $ | (29,731 | ) | |||||
The revenue of the PEAKS Trust consists of interest income on the PEAKS Trust Student Loans, which is the accretion of the accretable yield on the PEAKS Trust Student Loans. The servicing, administrative and other fees incurred by the PEAKS Trust are included in Student services and administrative expenses in our Condensed Consolidated Statements of Income. The provision for PEAKS Trust student loan losses represents the increase in the allowance for loan losses that occurred during the period. The allowance for loan losses represents the difference between the carrying value and the total present value of the expected principal and interest collections of each loan pool of the PEAKS Trust Student Loans, discounted by the loan pool’s effective interest rate as of the end of the reporting period. Interest expense of the PEAKS Trust represents interest expense on the PEAKS Senior Debt, which includes the contractual interest obligation and the accretion of the discount on the PEAKS Senior Debt. | |||||||||||||||||
Payments on Behalf of Borrowers. Beginning in the fourth quarter of 2012 and continuing through January 2014, we made payments on behalf of certain student borrowers under the PEAKS Program to the PEAKS Trust to avoid defaults by those borrowers on their PEAKS Trust Student Loans (“Payments on Behalf of Borrowers”), which defaults would have triggered much larger contractually required payments by us under the PEAKS Guarantee. At the time we made Payments on Behalf of Borrowers, we believed that those payments were contractually permitted and a form of payment to the PEAKS Trust that would satisfy obligations that were contractually required. Since that time, however, we have determined that Payments on Behalf of Borrowers are not permitted or required to support the PEAKS Trust. If we had not made Payments on Behalf of Borrowers, we would have had to make contractually required payments under the PEAKS Guarantee in greater amounts. We made Payments on Behalf of Borrowers after assessing: | |||||||||||||||||
• | the likelihood of us being contractually required to make payments under the PEAKS Guarantee in the near future; | ||||||||||||||||
• | the effect on our liquidity that would result from making payments under the PEAKS Guarantee compared to making Payments on Behalf of Borrowers; | ||||||||||||||||
• | the effect that Payments on Behalf of Borrowers may have on the funds available to the PEAKS Trust to repay the Subordinated Note to us following full payment of the PEAKS Trust’s other obligations; and | ||||||||||||||||
• | the fact that we will not be able to recover Payments on Behalf of Borrowers from the PEAKS Trust or the student borrowers on whose behalf we made those payments. | ||||||||||||||||
Payments on Behalf of Borrowers assisted in: | |||||||||||||||||
• | maintaining the Asset/Liability Ratio at the required level; and | ||||||||||||||||
• | satisfying the following month’s required payment of interest on the PEAKS Senior Debt and administrative fees and expenses of the PEAKS Trust. | ||||||||||||||||
Prior to the PEAKS Consolidation, Payments on Behalf of Borrowers were reflected on our financial statements as a reduction to our contingent liability. Following the PEAKS Consolidation, Payments on Behalf of Borrowers were not reflected on our financial statements, since those payments were intercompany transactions that were eliminated from our financial statements as a result of the PEAKS Consolidation. | |||||||||||||||||
In January 2014, we made Payments on Behalf of Borrowers of $1,832. We entered into a letter agreement, dated as of March 17, 2014, with the trustee under the PEAKS Program and the holders of the PEAKS Senior Debt (the “PEAKS Letter Agreement”), in order to resolve differing interpretations of the permissibility of the Payments on Behalf of Borrowers under the PEAKS Program documents. Pursuant to the PEAKS Letter Agreement, the trustee agreed to waive, and the holders of the PEAKS Senior Debt consented to the waiver of, any: | |||||||||||||||||
• | breach of the PEAKS Program documents caused by us making Payments on Behalf of Borrowers, including any failure to make payments under the PEAKS Guarantee as a result thereof; and | ||||||||||||||||
• | event of default under the PEAKS Program documents that may have arisen or resulted by us making Payments on Behalf of Borrowers. | ||||||||||||||||
In the PEAKS Letter Agreement, we agreed that, after the date of the PEAKS Letter Agreement, we would not make any further payments of any kind on behalf of any borrower in respect of a private education loan made under the PEAKS Program, and that any such payments in lieu of making payments to maintain the applicable required Asset/Liability Ratio would constitute a breach of the terms of the PEAKS Guarantee and an event of default under the indenture and credit agreement for the PEAKS Program. In accordance with the terms of the PEAKS Letter Agreement, we paid $40,000 on March 20, 2014, which is considered to be a payment under the PEAKS Guarantee and was applied primarily to make a mandatory prepayment of the PEAKS Senior Debt. | |||||||||||||||||
PEAKS Guarantee Payments and Payments on Behalf of Borrowers. The following table sets forth the PEAKS Guarantee payments and Payments on Behalf of Borrowers that were made in the periods indicated: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
PEAKS Guarantee | $ | 52,517 | $ | 138 | $ | 94,318 | $ | 1,377 | (1) | ||||||||
Payments on Behalf of Borrowers | 0 | 2,502 | 1,832 | 7,647 | (2) | ||||||||||||
Total | $ | 52,517 | $ | 2,640 | $ | 96,150 | $ | 9,024 | |||||||||
-1 | Of this amount, $854 was paid prior to the PEAKS Consolidation. | ||||||||||||||||
-2 | Of this amount, $532 was paid prior to the PEAKS Consolidation. | ||||||||||||||||
2009 Loan Program. On February 20, 2009, we entered into agreements with the 2009 Entity to create the 2009 Loan Program. Under the 2009 Loan Program, an unrelated lender originated private education loans to our eligible students and, subsequently, sold those loans to the 2009 Entity. The 2009 Entity purchased the private education loans from the lender utilizing funds received from its owners in exchange for participation interests in the private education loans acquired by the 2009 Entity. The lender disbursed the proceeds of the private education loans to us for application to the students’ account balances with us that represented their unpaid education costs. No new private education loans were or will be originated under the 2009 Loan Program after December 31, 2011, but immaterial amounts related to loans originated prior to that date were disbursed by the lender through June 2012. | |||||||||||||||||
In connection with the 2009 Loan Program, we entered into the 2009 RSA with the 2009 Entity. Under the 2009 RSA, we guarantee the repayment of any private education loans that are charged off above a certain percentage of the private education loans made under the 2009 Loan Program, based on the annual dollar volume. Under the 2009 RSA, we have an obligation to make the monthly payments due and unpaid on those private education loans that have been charged off above a certain percentage (“Regular Payments”). Instead of making Regular Payments, however, we may elect to discharge our obligations to make Regular Payments on specified charged-off private education loans by: | |||||||||||||||||
• | paying the then outstanding balance (plus accrued and unpaid interest) of those private education loans that have been charged off above a certain percentage and, with respect to which, an amount equal to at least ten monthly payments has been paid; or | ||||||||||||||||
• | paying the then outstanding balance (plus accrued and unpaid interest) of those private education loans that have been charged off above a certain percentage and, with respect to which, an amount equal to at least ten monthly payments has not been paid, plus any interest that would otherwise have been payable until ten monthly payments had been made, discounted at the rate of 10% per annum, | ||||||||||||||||
(collectively, “Discharge Payments”). | |||||||||||||||||
See Note 13 – Commitments and Contingencies, for a further discussion of our obligations to make guarantee payments pursuant to the 2009 RSA. | |||||||||||||||||
Assets and Liabilities of 2009 Entity. We concluded that we became the primary beneficiary of the 2009 Entity on September 30, 2014 and, therefore, were required to consolidate the 2009 Entity in our consolidated financial statements. In accordance with ASC 810, the consolidation of the 2009 Entity was treated as an acquisition of assets and liabilities and, therefore, the assets and liabilities of the 2009 Entity were included in our consolidated financial statements at their fair value as of September 30, 2014. | |||||||||||||||||
The fair value of the 2009 Entity Student Loans was estimated using the income approach with estimated discounted expected cash flows. We utilized inputs that were unobservable in determining the estimated fair value of the 2009 Entity Student Loans. The significant inputs used in determining the estimated fair value of the 2009 Entity Student Loans included the default rate, repayment rate and discount rate. The fair value of the 2009 Entity Secured Borrowing Obligation was estimated using the income approach with estimated discounted cash flows. We utilized inputs that were unobservable in determining the estimated fair value of the 2009 Entity Secured Borrowing Obligation. The significant input used in determining the estimated fair value of the 2009 Entity Secured Borrowing Obligation was the discount rate utilized for both credit and liquidity purposes. Fair value measurements that utilize significant unobservable inputs are categorized as Level 3 measurements under the accounting guidance. | |||||||||||||||||
The 2009 Entity Secured Borrowing Obligation represents the estimated amount that the 2009 Entity owes to the 2009 Entity Participants related to their participation interests in the 2009 Entity Student Loans, which amount is expected to be paid to the 2009 Entity Participants by the 2009 Entity from payments received by the 2009 Entity related to the 2009 Entity Student Loans, whether from the borrower or from us under the 2009 RSA. | |||||||||||||||||
In accordance with ASC 810, we included the 2009 Entity Secured Borrowing Obligation on our condensed consolidated balance sheet at its fair value as of September 30, 2014, the date of the 2009 Entity Consolidation. The difference between the estimated fair value of the 2009 Entity Secured Borrowing Obligation and the amount expected to be paid by the 2009 Entity to the 2009 Entity Participants was recorded as an accrued discount on our condensed consolidated balance sheet at the date of the 2009 Entity Consolidation. The accrued discount is being recognized in interest expense at a level rate of return over the expected life of the 2009 Entity Secured Borrowing Obligation. | |||||||||||||||||
The expected life of the 2009 Entity Secured Borrowing Obligation is an estimate of the period of time over which payments are expected to be made by the 2009 Entity to the 2009 Entity Participants related to their participation interests in the 2009 Entity Student Loans. The period of time over which payments are expected to be made by the 2009 Entity to the 2009 Entity Participants is based upon when the 2009 Entity Student Loans enter a repayment status and the period of time they remain in a repayment status. Since all of the 2009 Entity Student Loans have not entered repayment, and those loans that have entered a repayment status may be granted forbearances or deferments, the period of time over which payments are expected to be made to the 2009 Entity Participants is an estimate. The assumptions used to estimate the expected life of the 2009 Entity Secured Borrowing Obligation are reviewed periodically and updated accordingly, which may result in an adjustment to the expected life of the 2009 Entity Secured Borrowing Obligation and the related recognized interest expense. | |||||||||||||||||
The following table sets forth the fair value and the carrying value of the assets and liabilities of the 2009 Entity as of September 30, 2014 that were included on our Condensed Consolidated Balance Sheet on that date: | |||||||||||||||||
As of September 30, 2014 | |||||||||||||||||
Assets | Liabilities | ||||||||||||||||
Restricted cash | $ | 2,738 | |||||||||||||||
Current portion of 2009 Entity Student Loans | 3,406 | ||||||||||||||||
2009 Entity Student Loans, excluding current portion | 23,793 | ||||||||||||||||
Other assets | 199 | ||||||||||||||||
Current portion of 2009 Entity Secured Borrowing Obligation | $ | 20,662 | |||||||||||||||
Other current liabilities | 624 | ||||||||||||||||
2009 Entity Secured Borrowing Obligation, excluding current portion | 101,880 | ||||||||||||||||
Other liabilities | 1,940 | ||||||||||||||||
Total | $ | 30,136 | $ | 125,106 | |||||||||||||
The assets of the 2009 Entity can only be used to satisfy the obligations of the 2009 Entity. | |||||||||||||||||
The following table sets forth the carrying value of the assets and liabilities related to the 2009 Entity as of September 30, 2014 that we eliminated from our consolidated balance sheet when we consolidated the 2009 Entity in our consolidated financial statements, and the line items within which those assets and liabilities were included: | |||||||||||||||||
As of September 30, 2014 | |||||||||||||||||
Assets | Liabilities | ||||||||||||||||
Prepaid expenses and other current assets | $ | 3,260 | |||||||||||||||
Other current liabilities | $ | 23,887 | |||||||||||||||
Other liabilities | 90,974 | ||||||||||||||||
Total | $ | 3,260 | $ | 114,861 | |||||||||||||
Upon the 2009 Entity Consolidation, we recorded the 2009 Entity’s assets and liabilities at their fair value in our consolidated financial statements and we eliminated the carrying value of the assets and liabilities related to the 2009 Loan Program that had been recorded in our consolidated financial statements as of September 30, 2014. The fair value of the 2009 Entity’s liabilities exceeded the fair value of the 2009 Entity’s assets as of September 30, 2014 by $94,970. As of September 30, 2014, the carrying value of the liabilities related to the 2009 Loan Program that had been recorded in our consolidated financial statements exceeded the carrying value of the assets related to the 2009 Loan Program that had been recorded in our consolidated financial statements by $111,601. As a result, we recognized a total gain of $16,631 in our Condensed Consolidated Statements of Income in the three and nine months ended September 30, 2014, which represented the difference between (i) the fair value of the net liabilities of the 2009 Entity that we recorded upon the 2009 Entity Consolidation, and (ii) the carrying value of the net liabilities related to the 2009 Loan Program that had been recorded in our consolidated financial statements and were eliminated upon the 2009 Entity Consolidation, in each case, as of September 30, 2014. | |||||||||||||||||
We did not recognize any revenue or expenses of the 2009 Entity, except for the gain on consolidation of the 2009 Entity, in our Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2014, because the 2009 Entity Consolidation was effective on September 30, 2014. | |||||||||||||||||
2009 RSA – Payments, Recoveries and Offsets. Pursuant to the 2009 RSA, we are entitled to all amounts that the 2009 Entity recovers from loans in a particular loan pool made under the 2009 Loan Program that have been charged off, until all payments that we made under the 2009 RSA with respect to that loan pool have been repaid to us by the 2009 Entity. We have the right to offset payment amounts that we owe under the 2009 RSA by the amount of recoveries from charged-off loans made under the 2009 Loan Program that are owed, but have not been paid, to us. We exercised this offset right in the three and nine months ended September 30, 2014. We did not exercise this offset right in the three or nine months ended September 30, 2013. | |||||||||||||||||
The following table sets forth the payments that we made to the 2009 Entity related to our guarantee obligations under the 2009 RSA and the amount of recoveries from charged-off loans paid to us by the 2009 Entity in the periods indicated: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Regular Payments | $ | 1,809 | (1) | $ | 458 | $ | 4,556 | (1) | $ | 841 | |||||||
Discharge Payments | 0 | 0 | 0 | 0 | |||||||||||||
Recoveries from Charged-Off Loans | 0 | 0 | 0 | (103 | ) | ||||||||||||
Total | $ | 1,809 | $ | 458 | $ | 4,556 | $ | 738 | |||||||||
-1 | This amount is net of $156 of recoveries from charged-off loans owed to us that we offset against the amount we owed under the 2009 RSA. | ||||||||||||||||
The 2009 Entity did not remit to us, and we did not offset payments under the 2009 RSA for, the following amounts of recoveries from charged-off loans that were owed to us: | |||||||||||||||||
• | $0 in the three months ended September 30, 2014; | ||||||||||||||||
• | $186 in the three months ended September 30, 2013; | ||||||||||||||||
• | $475 in the nine months ended September 30, 2014; and | ||||||||||||||||
• | $413 in the nine months ended September 30, 2013. | ||||||||||||||||
We recorded the amount of recoveries from charged-off loans that were owed to us, but not paid or offset, as of September 30, 2013, in Prepaid expenses and other current assets on our Condensed Consolidated Balance Sheet. The amounts of recoveries from charged-off loans that were owed to us by the 2009 Entity, but not paid or offset, as of September 30, 2014 were not recorded on our consolidated financial statements, since those amounts were intercompany transactions that were eliminated from our financial statements as a result of the 2009 Entity Consolidation. | |||||||||||||||||
We also offset the following amounts owed by us under the 2009 RSA against amounts owed to us by the 2009 Entity under the Revolving Note, instead of making additional payments in those amounts: | |||||||||||||||||
• | $0 in the three months ended September 30, 2014; | ||||||||||||||||
• | $357 in the three months ended September 30, 2013; | ||||||||||||||||
• | $0 in the nine months ended September 30, 2014; and | ||||||||||||||||
• | $8,471 in the nine months ended September 30, 2013. | ||||||||||||||||
We recorded the amounts that we claimed as offsets against amounts owed to us under the Revolving Note in Other current liabilities on our Condensed Consolidated Balance Sheet as of September 30, 2013. The amounts that we claimed as offsets under the Revolving Note as of September 30, 2014, were not recorded on our consolidated financial statements, since those amounts were intercompany transactions that were eliminated from our financial statements as a result of the 2009 Entity Consolidation. | |||||||||||||||||
See Note 13 – Commitments and Contingencies, for a further discussion of the offsets and 2009 RSA. | |||||||||||||||||
We made advances to the 2009 Entity under the Revolving Note in years prior to 2012. We made the advances so that the 2009 Entity could use those funds primarily to provide additional funding to the 2009 Entity to purchase additional private education loans made under the 2009 Loan Program. The period of time during which we could make additional advances under the Revolving Note ended on January 1, 2014. We did not make any advances in the three or nine months ended September 30, 2013 to the 2009 Entity under the Revolving Note that we were not contractually required to make. Certain of the assets of the 2009 Entity serve as collateral for the Revolving Note. The Revolving Note bears interest, is subject to customary terms and conditions and is currently due and payable in full. The Revolving Note was eliminated from our financial statements as a result of the 2009 Entity Consolidation. | |||||||||||||||||
The amount owed to us under the Revolving Note, excluding the offsets described above, was approximately $8,200 as of September 30, 2014, December 31, 2013 and September 30, 2013. |
Private_Education_Loans
Private Education Loans | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Receivables [Abstract] | |||||||||||||||||
Private Education Loans | 9 | Private Education Loans | |||||||||||||||
We concluded that we were required to consolidate the PEAKS Trust in our consolidated financial statements beginning on February 28, 2013 and to consolidate the 2009 Entity in our consolidated financial statements beginning on September 30, 2014. See Note 8 – Variable Interest Entities, for a further discussion of the consolidation of the PEAKS Trust and 2009 Entity (the “Consolidated VIEs”). As a result, the assets and liabilities of the Consolidated VIEs were included on our Condensed Consolidated Balance Sheet as of September 30, 2014. The assets and liabilities of the PEAKS Trust were included on our Condensed Consolidated Balance Sheets as of December 31, 2013 and September 30, 2013. | |||||||||||||||||
As of September 30, 2014, the aggregate carrying amount of the Private Education Loans included under the Private education loan line items on our Condensed Consolidated Balance Sheet was $94,611. The outstanding principal balance of the Private Education Loans, including accrued interest, was approximately $226,931 as of September 30, 2014. | |||||||||||||||||
Initial Measurement. A significant number of the Private Education Loans were determined to be credit impaired upon consolidation. Loans determined to be credit impaired upon consolidation or acquisition (“Purchased Credit Impaired Loans” or “PCI Loans”), are initially measured at fair value in accordance with ASC 310-30, “Receivables – Loans and Debt Securities Acquired with Deteriorated Credit Quality” (“ASC 310-30”). A loan is considered a PCI Loan if it has evidence of deteriorated credit quality following the loan’s origination date. As a result, at the date of consolidation or acquisition, it is probable that all contractually required payments under a PCI Loan will not be collected. | |||||||||||||||||
The Private Education Loans that did not individually have evidence of deteriorated credit quality at the time of consolidation were also initially measured at fair value and are accounted for in accordance with ASC 310-30. We believe that following the guidance of ASC 310-30 by analogy with respect to those loans provides the most reasonable presentation of the value of those loans, primarily due to: | |||||||||||||||||
• | the evidence of deteriorated credit quality of a significant number of the Private Education Loans; and | ||||||||||||||||
• | the probability that all contractually required payments with respect to those loans will not be collected. | ||||||||||||||||
All of the Private Education Loans are, therefore, considered to be, and reported as, PCI Loans. | |||||||||||||||||
This accounting treatment is consistent with the American Institute of Certified Public Accountants’ (the “AICPA”) December 18, 2009 confirmation letter (the “Confirmation Letter’), in which the AICPA summarized the SEC staff’s view regarding the accounting in subsequent periods for discount accretion associated with loan receivables acquired in a business combination or asset purchase. In this letter, the AICPA states that it understands that the SEC staff will not object to an accounting policy based on contractual or expected cash flow. We believe that following ASC 310-30 by analogy with respect to the Private Education Loans that did not individually have evidence of deteriorated credit quality at the time of consolidation is an appropriate application of the accounting guidance to determine the initial measurement of the value of those loans. | |||||||||||||||||
Aggregation of Loans. PCI Loans recognized upon consolidation or acquisition in the same fiscal quarter may be aggregated into one or more pools, provided that the PCI Loans in each pool have common risk characteristics. The Private Education Loans were considered to be PCI Loans upon consolidation. As of the date of the PEAKS Consolidation or the 2009 Entity Consolidation, as applicable, we aggregated the PEAKS Trust Student Loans into 24 separate pools of loans and the 2009 Entity Student Loans into 48 separate pools of loans, based on common risk characteristics of the loans, which included: | |||||||||||||||||
• | the fiscal quarter in which the Private Education Loan was purchased by the PEAKS Trust or the 2009 Entity; and | ||||||||||||||||
• | the consumer credit score of the borrower. | ||||||||||||||||
PCI Loans that do not have evidence of deteriorated credit quality are not aggregated in the same pools with PCI Loans that have evidence of deteriorated credit quality. The same aggregation criteria, however, were used to determine those loan pools. Each loan pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. | |||||||||||||||||
Estimated Fair Value, Accretable Yield and Expected Cash Flows. The Private Education Loans were recorded at their estimated fair value upon consolidation. The estimated fair value of the PEAKS Trust Student Loans as of February 28, 2013 and the 2009 Entity Student Loans as of September 30, 2014 was determined using an expected cash flow methodology. Projected default rates and forbearances were considered in applying the estimated cash flow methodology. Prepayments of loans were not considered when estimating the expected cash flows, because, historically, few Private Education Loans have been prepaid. No allowance for loan loss was established as of the date of consolidation of the PEAKS Trust and the 2009 Entity, because all of the Private Education Loans were recorded at fair value and future credit losses are considered in the estimate of fair value. | |||||||||||||||||
The excess of any cash flows expected to be collected with respect to a loan pool of the Private Education Loans over the carrying value of the loan pool is referred to as the accretable yield. The accretable yield is not reported on our Condensed Consolidated Balance Sheet, but it is accreted and included as interest income using the effective interest method, which is at a level rate of return over the remaining estimated life of the loan pool. | |||||||||||||||||
The following table sets forth the estimated fair value, accretable yield and expected cash flows for the PEAKS Trust Student Loans and 2009 Entity Student Loans, in total and for those loans pursuant to which ASC 310-30 was applied by analogy, as of the dates indicated: | |||||||||||||||||
PEAKS Trust Student | 2009 Entity Student Loans | ||||||||||||||||
Loans | |||||||||||||||||
As of February 28, 2013 | As of September 30, 2014 | ||||||||||||||||
Total | ASC 310-30 | Total | ASC 310-30 | ||||||||||||||
Applied By | Applied By | ||||||||||||||||
Analogy | Analogy | ||||||||||||||||
Estimated fair value | $ | 112,116 | $ | 60,177 | $ | 27,199 | $ | 12,799 | |||||||||
Accretable yield | 100,953 | 58,843 | 12,498 | 5,651 | |||||||||||||
Expected cash flows | $ | 213,069 | $ | 119,020 | $ | 39,697 | $ | 18,450 | |||||||||
The following tables set forth information regarding aggregate changes in accretable yield of the loan pools of the PEAKS Trust Student Loans, in total, and for those loans pursuant to which ASC 310-30 was applied by analogy, for the periods indicated: | |||||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||||
September 30, 2014 | September 30, 2013 | ||||||||||||||||
Total | ASC 310-30 | Total | ASC 310-30 | ||||||||||||||
Applied By | Applied By | ||||||||||||||||
Analogy | Analogy | ||||||||||||||||
Balance at beginning of period | $ | 59,929 | $ | 36,444 | $ | 99,475 | $ | 60,533 | |||||||||
Accretion | (2,727 | ) | (1,602 | ) | (4,072 | ) | (2,334 | ) | |||||||||
Reclassification from nonaccretable difference and changes in expected cash flows | (2,077 | ) | (830 | ) | (16,513 | ) | (11,451 | ) | |||||||||
Balance at end of period | $ | 55,125 | $ | 34,012 | $ | 78,890 | $ | 46,748 | |||||||||
Nine Months Ended | Nine Months Ended | ||||||||||||||||
30-Sep-14 | 30-Sep-13 | ||||||||||||||||
Total | ASC 310-30 | Total | ASC 310-30 | ||||||||||||||
Applied By | Applied By | ||||||||||||||||
Analogy | Analogy | ||||||||||||||||
Balance at beginning of period | $ | 70,580 | $ | 42,274 | $ | 0 | $ | 0 | |||||||||
Additions resulting from the PEAKS Consolidation | 0 | 0 | 100,953 | 58,843 | |||||||||||||
Accretion | (9,099 | ) | (5,302 | ) | (9,536 | ) | (5,282 | ) | |||||||||
Reclassification from nonaccretable difference and changes in expected cash flows | (6,356 | ) | (2,960 | ) | (12,527 | ) | (6,813 | ) | |||||||||
Balance at end of period | $ | 55,125 | $ | 34,012 | $ | 78,890 | $ | 46,748 | |||||||||
There were no changes in the accretable yield of the loan pools of the 2009 Entity Student Loans, in total, and for those loans pursuant to which ASC 310-30 was applied by analogy, in the three or nine months ended September 30, 2014, because we did not include the 2009 Entity in our consolidated financial statements until September 30, 2014. | |||||||||||||||||
Contractually Required Payments. The excess of the contractually required payments of the Private Education Loans over the expected cash flows is referred to as the nonaccretable difference. The following table sets forth the contractually required future principal and interest payments, expected cash flows and the nonaccretable difference, in total and for those loans pursuant to which ASC 310-30 was applied by analogy, for the PEAKS Trust Student Loans and the 2009 Entity Student Loans as of the dates indicated: | |||||||||||||||||
PEAKS Trust Student | 2009 Entity Student Loans | ||||||||||||||||
Loans | |||||||||||||||||
As of February 28, 2013 | As of September 30, 2014 | ||||||||||||||||
Total | ASC 310-30 | Total | ASC 310-30 | ||||||||||||||
Applied By | Applied By | ||||||||||||||||
Analogy | Analogy | ||||||||||||||||
Contractual future principal and interest payments | $ | 487,800 | $ | 213,600 | $ | 111,159 | $ | 36,715 | |||||||||
Expected cash flows | 213,069 | 119,020 | 39,697 | 18,450 | |||||||||||||
Nonaccretable difference | $ | 274,731 | $ | 94,580 | $ | 71,462 | $ | 18,265 | |||||||||
Allowance for Private Education Loan Losses. On a quarterly basis subsequent to the PEAKS Consolidation and the 2009 Entity Consolidation, as applicable, we estimate the principal and interest expected to be collected over the remaining life of each loan pool. These estimates include assumptions regarding default rates, forbearances and other factors that reflect then-current market conditions. Prepayments of loans were not considered when estimating the expected cash flows, because, historically, few Private Education Loans have been prepaid. | |||||||||||||||||
If a decrease in the expected cash flows of a loan pool is probable and would cause the expected cash flows to be less than the expected cash flows at the end of the previous fiscal quarter, we would record the impairment as: | |||||||||||||||||
• | a provision for private education loan losses in our Condensed Consolidated Statement of Income; and | ||||||||||||||||
• | an increase in the allowance for loan losses on our Condensed Consolidated Balance Sheet. | ||||||||||||||||
The provision for private education loan losses represents the increase in the allowance for loan losses that occurred during the period. The allowance for loan losses is the difference between the carrying value and the total present value of the expected principal and interest collections of each loan pool, discounted by the loan pool’s effective interest rate at the end of the previous fiscal quarter. If a significant increase in the expected cash flows of a loan pool is probable and would cause the expected cash flows to be greater than the expected cash flows at the end of the previous fiscal quarter, we would: | |||||||||||||||||
• | first reverse any allowance for loan losses with respect to that loan pool that was previously recorded on our Condensed Consolidated Balance Sheet, up to the amount of that allowance; and | ||||||||||||||||
• | record any remaining increase prospectively as a yield adjustment over the remaining estimated lives of the loans in the loan pool. | ||||||||||||||||
The following table sets forth information regarding changes in the allowance for loan losses of the loan pools of the PEAKS Trust Student Loans in the aggregate in the period indicated: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Balance at beginning of period | $ | 38,420 | $ | 4,319 | $ | 29,349 | $ | 0 | |||||||||
Loans charged off | 0 | 0 | 0 | 0 | |||||||||||||
Recoveries from charged off loans | 0 | 0 | 0 | 0 | |||||||||||||
Provision for loan losses | 4,511 | 16,382 | 13,582 | 20,701 | |||||||||||||
Balance at end of period | $ | 42,931 | $ | 20,701 | $ | 42,931 | $ | 20,701 | |||||||||
There were no changes in the allowance for loan losses of the loan pools of the 2009 Entity Student Loans in the three or nine months ended September 30, 2014, because we did not include the 2009 Entity in our consolidated financial statements until September 30, 2014. | |||||||||||||||||
Adjustments to the interest income of a loan pool are recognized prospectively, if those adjustments are due to: | |||||||||||||||||
• | changes in variable interest rates; or | ||||||||||||||||
• | any other changes in the timing of the expected cash flows of the loan pools. | ||||||||||||||||
Loan Modifications and Charge Offs. Modifications were made to PCI Loans in the three and nine months ended September 30, 2014 and 2013 and were primarily due to forbearances granted with respect to the payment of those loans. We consider the impact of any modifications made to PCI Loans as part of our quarterly assessment of whether: | |||||||||||||||||
• | a probable and significant change in the expected cash flows of the PCI Loans has occurred; and | ||||||||||||||||
• | the loans should continue to be accounted for and reported as PCI loans. | ||||||||||||||||
In evaluating the impact of modifications made to PCI Loans on the expected cash flows of those loans, we consider the effect of any foregone interest and the potential for future default. These default estimates are used to calculate expected credit losses with respect to each loan pool. In developing these probabilities of default estimates, we considered the relationship between the credit quality characteristics of the loans in the loan pool and certain assumptions based on the performance history of the Private Education Loans and industry data related to the severity and recovery lag of defaults applicable to private education loans. Loans for which Payments on Behalf of Borrowers were made were assumed to be defaulted loans in our default estimates. | |||||||||||||||||
The charge off of a PCI Loan results in the removal of that loan from the underlying PCI Loan pool and reduces the loan pool discount. If the discount for principal losses for a particular PCI Loan pool has been fully depleted, the charge off of a PCI Loan will reduce the PCI Loan pool’s allowance for loan losses. Removal of a PCI Loan from the underlying PCI Loan Pool does not change the effective yield of the PCI Loan Pool. |
Debt
Debt | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||
Debt | 10 | Debt | |||||||||||||||
As of September 30, 2014, our Condensed Consolidated Balance Sheet included: (i) outstanding borrowings under the Amended Credit Agreement (as defined below), as described further below under “—Credit Facility,” (ii) the PEAKS Senior Debt issued by the PEAKS Trust, which was consolidated in our consolidated financial statements beginning February 28, 2013, as described further below under “—PEAKS Trust Senior Debt,” and (iii) the 2009 Entity Secured Borrowing Obligation of the 2009 Entity, which was consolidated in our consolidated financial statements beginning September 30, 2014, as described further in Note 8 – Variable Interest Entities. We repaid all amounts outstanding under the Amended Credit Agreement, and borrowed $100,000 in term loans, each effective as of December 4, 2014, as described further below under “—Term Loans.” | |||||||||||||||||
Term Loans. On December 4, 2014, we and certain of our subsidiaries entered into a Financing Agreement (the “Original Financing Agreement”) with Cerberus Business Finance, LLC (“Cerberus”), as administrative agent and collateral agent, and the lenders party thereto. Under the Financing Agreement, we borrowed $100,000 aggregate principal amount of senior secured term loans (the “Term Loans”). On December 23, 2014, we entered into Amendment No. 1 to Financing Agreement (“Amendment No. 1”), and on March 17, 2015, we entered into Amendment No. 2 to Financing Agreement (“Amendment No. 2”). The Original Financing Agreement, as amended by Amendment No. 1 and Amendment No. 2, is referred to herein as the “Financing Agreement.” | |||||||||||||||||
Amendment No. 1 made modifications to the Original Financing Agreement to extend the time by which we were required to establish certain cash management accounts. Amendment No. 2 provides: | |||||||||||||||||
• | for an amendment to the limitation on the aggregate amount of payments that we can make related to the PEAKS Program and the 2009 Loan Program in any fiscal year after 2014, modifying it from $20,000 per program in each year to $45,000 under both programs in 2015 and $35,000 under both programs in any year after 2015 that the Financing Agreement is still in effect; | ||||||||||||||||
• | that our consolidated financial statements (and related certificates) as of and for the fiscal year ended December 31, 2014 do not have to be furnished by us to the lenders until May 31, 2015; | ||||||||||||||||
• | that our consolidated financial statements (and related certificates) as of and for the fiscal quarter ended March 31, 2015 do not have to be furnished by us to the lenders until May 31, 2015; and | ||||||||||||||||
• | for an amendment to the definition of Fixed Charge Coverage Ratio (as defined in the Financing Agreement) to provide that, for purposes of calculating the Fixed Charge Coverage Ratio for any period that includes the fiscal quarter ended December 31, 2014, the amount of payments made during that fiscal quarter in respect of the PEAKS Program will be deemed to have been $5,000. | ||||||||||||||||
A portion of the proceeds of the Term Loans and other funds were used by us on December 4, 2014 to provide approximately $89,200 in cash collateral for certain letters of credit that remain outstanding for our account, which was in addition to the approximately $100 of cash collateral we had previously provided related to a letter of credit in September 2014 under the Credit Agreement, dated as of March 21, 2012 (as amended and including consents, the “Amended Credit Agreement”), among us, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, Bank of America, N.A., as syndication agent, and Wells Fargo, N.A., as documentation agent. See below for a further description of terms of the Amended Credit Agreement, including following the issuance of the Term Loans. A portion of the proceeds of the Term Loans and other funds were used by us on December 4, 2014 to repay all outstanding loans, including accrued interest and fees, owed under the Amended Credit Agreement, in the amount of approximately $50,400. All commitments of the lenders to lend additional amounts under the Amended Credit Agreement were terminated. A portion of the proceeds of the Term Loans, as well as other funds, were used for payment of fees in connection with the Financing Agreement. | |||||||||||||||||
The Term Loans will mature on December 4, 2017. The Term Loans bear interest, at our option, at: | |||||||||||||||||
• | the higher of (a) the London Interbank Offered Rate (“LIBOR”) and (b) 1.00%, plus a margin of 8.50%; or | ||||||||||||||||
• | the highest of (a) 2.00%, (b) the federal funds rate plus 0.50%, (c) LIBOR plus 1.00% and (d) the U.S. Prime Rate, plus a margin of 8.00%. | ||||||||||||||||
The outstanding principal balance under the Financing Agreement must be repaid by us in quarterly installments on the first business day of each March, June, September and December, commencing March 1, 2015 and ending on the maturity date. Each installment payment must be in an amount equal to $2,500 in each quarter of 2015, $5,000 in each quarter of 2016, and $7,500 in each quarter of 2017, provided the last such installment payment shall be in the amount necessary to repay the then outstanding principal balance in full. In addition, the Financing Agreement provides for mandatory prepayment of outstanding principal in an amount equal to 50% of Excess Cash Flow (as defined in the Financing Agreement) calculated based on our cash flows for the fiscal years ended December 31, 2015 and 2016. Any mandatory prepayment amounts due under this provision are payable with the scheduled principal payment due on the first business day of March of the following year. | |||||||||||||||||
The Financing Agreement provides that we must pay a premium on any prepayment of outstanding principal that we make during the first two years of the Financing Agreement that is not specifically required under the Excess Cash Flow mandatory prepayment provision. The premium for any such prepayment of principal is 2.0% of the amount of any prepayment we make through December 4, 2015, and 1.0% of the amount of any prepayment we make from December 5, 2015 through December 4, 2016. | |||||||||||||||||
We paid a one-time commitment fee of $3,000 in the fourth quarter of 2014 in connection with the Financing Agreement. Under the Financing Agreement, we are required to pay a quarterly administration fee to the Administrative Agent of $25, of which a ratable portion was paid by us on December 4, 2014 for the remainder of the 2014 calendar year. | |||||||||||||||||
The Term Loans are guaranteed by certain of our subsidiaries (the “Guarantors” and together with us, the “Loan Parties”) and are secured, subject to certain agreed upon exceptions, by: (i) a first-priority lien on and perfected security interest in substantially all the Loan Parties’ assets, including a pledge of the equity of the Guarantors and our other subsidiaries, (ii) a mortgage on the Loan Parties’ owned real estate, and (iii) control agreements on certain of the Loan Parties’ deposit accounts. | |||||||||||||||||
The Financing Agreement contains certain affirmative and negative covenants, including restrictions on the Loan Parties’ ability to incur debt and liens, make investments, dispose of assets, pay dividends and make prepayments on existing indebtedness, in each case subject to customary exceptions. | |||||||||||||||||
The Financing Agreement requires us to maintain compliance with a Leverage Ratio (as defined in the Financing Agreement) and a Fixed Charge Coverage Ratio (as defined in the Financing Agreement), as well as with certain educational regulatory measurements. Compliance with the Leverage Ratio and the Fixed Charge Coverage Ratio is determined on a quarterly basis, covering certain prior periods as described in the Financing Agreement. | |||||||||||||||||
The educational regulatory measurements are calculated over different time periods, based on statutory guidelines. The educational regulatory measurements are set forth in the Financing Agreement, and include the following tests: | |||||||||||||||||
• | a minimum composite score of our equity, primary reserve and net income ratios; | ||||||||||||||||
• | our institutions’ loan cohort default rates under the programs under Title IV (“Title IV Programs”) of the Higher Education Act of 1965, as amended (“HEA”); | ||||||||||||||||
• | our institutions’ compliance with the 90/10 Rule of the HEA; | ||||||||||||||||
• | our compliance with the ED’s gainful employment regulations; and | ||||||||||||||||
• | our institutions’ student retention rate. | ||||||||||||||||
The Financing Agreement contains certain events of default, including: | |||||||||||||||||
• | the failure by us to pay any amount owed under the Financing Agreement when due; | ||||||||||||||||
• | an inaccuracy in any material respect of the representations or warranties that the Loan Parties made in the Financing Agreement; | ||||||||||||||||
• | a violation of any covenant that the Loan Parties made in the Financing Agreement and the related loan documents; | ||||||||||||||||
• | a default by us under any other material indebtedness owed by us, including, without limitation, our failure to pay any amounts due under the PEAKS Guarantee or the 2009 RSA; | ||||||||||||||||
• | a change of control of us; | ||||||||||||||||
• | the invalidity of certain liens or guarantees granted or made by the Loan Parties in the Financing Agreement; | ||||||||||||||||
• | the occurrence of certain regulatory events; and | ||||||||||||||||
• | certain bankruptcy or insolvency events affecting the Loan Parties. | ||||||||||||||||
If an event of default occurs under the Financing Agreement, the lenders may declare all Term Loans then outstanding to be immediately due and payable in full. | |||||||||||||||||
Credit Facility. On March 21, 2012, we entered into a credit agreement (the “Credit Agreement”) that provided for a $325,000 senior revolving credit facility. We entered into amendments to the Credit Agreement on March 31, 2014, May 29, 2014, June 30, 2014 (the “Third Amendment”), July 30, 2014 (the “Fourth Amendment”) and September 15, 2014 (the “Fifth Amendment”). We entered into a Consent to Credit Agreement effective October 15, 2014 (the “October Consent”) and a Consent to Credit Agreement, as of November 14, 2014 (the “November Consent” and, together with the October Consent, the “Consents”). The Amended Credit Agreement had a maturity date of March 21, 2015. On December 4, 2014, we used a portion of the proceeds of the Term Loans and other funds to repay all outstanding borrowings under the Amended Credit Agreement, and all commitments of the lenders thereunder to make revolving loans, to issue or participate in new letters of credit, and to amend, renew, or extend letters of credit outstanding under the Amended Credit Agreement were terminated. | |||||||||||||||||
A portion of the initial borrowings under the Credit Agreement were used to prepay the entire outstanding indebtedness under a prior credit agreement which was terminated on March 21, 2012. In addition to the prepayment of the outstanding indebtedness under the prior credit agreement, borrowings under the Amended Credit Agreement were used for general corporate purposes. | |||||||||||||||||
Under the Amended Credit Agreement, the aggregate commitment of the lenders, effective June 30, 2014, was reduced to $135,000, and the portion of the commitments available for letters of credit was increased from $25,000 to $85,000. Certain letters of credit in an aggregate amount of approximately $2,352 previously issued by JPMorgan Chase Bank, N.A. are deemed to be letters of credit issued pursuant to the Amended Credit Agreement. We caused a letter of credit payable to the ED (“ED Letter of Credit”) in the amount of $79,708 to be issued on October 31, 2014. The letters of credit for our account that were issued under the Amended Credit Agreement remain outstanding, and a portion of the Term Loans was used to provide cash collateral for such letters of credit. | |||||||||||||||||
In addition to the participation fee required to be paid by us pursuant to the original terms of the Credit Agreement related to letters of credit, which accrues at the same rate used to determine the interest rate applicable to Eurodollar Revolving Loans (as defined in the Amended Credit Agreement), the Amended Credit Agreement provides that an additional participation fee is required to be paid by us related to the ED Letter of Credit, which accrues at a ticking fee rate on the average daily amount of the lenders’ letter of credit exposure with respect to the ED Letter of Credit. The ticking fee rate is defined as: | |||||||||||||||||
• | 0.00% per annum for the period from September 15, 2014 through and including March 21, 2015; | ||||||||||||||||
• | 1.00% per annum for the period from March 22, 2015 through and including March 21, 2016; | ||||||||||||||||
• | 2.00% per annum for the period from March 22, 2016 through and including March 21, 2017; | ||||||||||||||||
• | 3.00% per annum for the period from March 22, 2017 through and including March 21, 2018; | ||||||||||||||||
• | 4.00% per annum for the period from March 22, 2018 through and including March 21, 2019; and | ||||||||||||||||
• | 5.00% per annum for the period from March 22, 2019 through November 15, 2019. | ||||||||||||||||
The Amended Credit Agreement contained, among other things, covenants, representations and warranties and events of default customary for credit facilities. We were required to maintain compliance with a maximum Credit Agreement Leverage Ratio, a minimum fixed charge coverage ratio, a minimum liquidity amount, and several covenants related to the ED’s regulations. We were in compliance with those covenants as of September 30, 2014 after giving effect to the amendments to the Amended Credit Agreement. In addition, the amendments to the Amended Credit Agreement, taken together: | |||||||||||||||||
• | amended certain covenants to allow for the PEAKS Consolidation beginning on February 28, 2013, and for other factors; and | ||||||||||||||||
• | waived certain defaults related to our financial reporting. | ||||||||||||||||
The Amended Credit Agreement was, but effective December 4, 2014, no longer is: | |||||||||||||||||
• | secured by a pledge of the equity interests of our subsidiaries; | ||||||||||||||||
• | guaranteed by one of our subsidiaries; | ||||||||||||||||
• | secured by security interests in substantially all of our personal property and the personal property of the subsidiary guarantor; and | ||||||||||||||||
• | secured by the mortgages on 30 separate parcels of land owned by us, including all of the improvements thereto and fixtures thereon (the “Mortgaged Property”). | ||||||||||||||||
The Amended Credit Agreement provided that an event of default thereunder would occur, if, among other things, the ED imposed a delay of more than five days in our receipt of Title IV Program funds. There also would have been an event of default under the Amended Credit Agreement if, among other things, we did not engage a financial advisor acceptable to the administrative agent by a date not later than December 15, 2014. | |||||||||||||||||
In connection with the termination of the commitments and payment of loans outstanding under the Amended Credit Agreement, our obligations under all affirmative and negative covenants in the Amended Credit Agreement, including financial covenants, were released and discharged, and representations and warranties and default provisions in the Amended Credit Agreement were terminated, all effective as of December 4, 2014. | |||||||||||||||||
Under the Amended Credit Agreement, we were required to provide cash collateral (in an amount equal to 109% of the face amount of the ED Letter of Credit and 103% of the face amount of all other letters of credit) for any letter of credit issued under the Amended Credit Agreement: | |||||||||||||||||
• | after July 30, 2014, immediately upon issuance, except for the ED Letter of Credit, for which cash collateral was not required, until the earlier of December 31, 2014 or when net cash proceeds were received from certain transactions described in the next paragraph; and | ||||||||||||||||
• | before July 30, 2014, by the earlier of December 31, 2014 or when net cash proceeds were received from certain transactions described in the next paragraph. | ||||||||||||||||
Under the Amended Credit Agreement, in the event that any net cash proceeds were received by us or a material subsidiary of ours in connection with any sale, transfer, lease or other disposition of the Mortgaged Property, including in connection with any sale and leaseback transaction, any mortgage financing or similar transaction with respect to the Mortgaged Property or the incurrence by us of indebtedness that was not permitted under the Amended Credit Agreement, those net cash proceeds would: | |||||||||||||||||
• | first, have been delivered to the administrative agent in order to cash collateralize all then outstanding letters of credit under the Amended Credit Agreement, until such time as the administrative agent held cash collateral equal to 109% of the face amount of the ED Letter of Credit and 103% of the face amount of all other letters of credit; and | ||||||||||||||||
• | second, have been used to repay outstanding borrowings under the Amended Credit Agreement, which repayments would have been accompanied by a corresponding pro rata reduction of the commitment of each lender under the Amended Credit Agreement. | ||||||||||||||||
As required, in 2014 we utilized a portion of the proceeds from the Term Loans, as well as other funds, to provide total cash collateral for the outstanding letters of credit in the amount of approximately $89,300. The cash collateral may be released partially to us from time to time upon cancellation, termination, expiration or reduction of the face amount of any of the outstanding letters of credit, provided that the remaining cash collateral is not less than 103% of the amount available to be drawn under the letters of credit then remaining outstanding, except the ED Letter of Credit, for which the cash collateral must be not less than 109% of the amount available to be drawn. | |||||||||||||||||
Prior to December 4, 2014, the Amended Credit Agreement also imposed additional restrictions on us, including, without limitation: | |||||||||||||||||
• | the exception to the limitation on asset dispositions not otherwise permitted under the Amended Credit Agreement is reduced from $75,000 in the aggregate during the term of the Amended Credit Agreement to $5,000 in the aggregate during the period from July 30, 2014 through the remaining term of the Amended Credit Agreement, and all of those asset dispositions must have been for fair market value and an adequate cash purchase consideration, as reasonably determined by the administrative agent, provided that those limitations did not apply to an asset disposition of the Mortgaged Property, if that asset disposition generated net cash proceeds of at least 75% of the appraised value of that Mortgaged Property; | ||||||||||||||||
• | in addition to the existing limitation on sale and leaseback transactions that the net cash proceeds received therefrom could not exceed $125,000 in the aggregate during the term of the Amended Credit Agreement, any sale and leaseback transaction must have been for fair market value and an adequate cash purchase consideration, as reasonably determined by the administrative agent, provided that any sale and leaseback transaction of the Mortgaged Property would have been deemed to be for fair market value and an adequate cash purchase consideration, if it generated net cash proceeds of at least 75% of the appraised value of that Mortgaged Property; | ||||||||||||||||
• | the permitted indebtedness consisting of secured indebtedness at any time outstanding (and not otherwise permitted by the Amended Credit Agreement) was reduced from $25,000 to $5,000 in aggregate principal amount; and | ||||||||||||||||
• | permitted liens to secure indebtedness, obligations and/or liabilities at any one time outstanding (which liens were not otherwise permitted by the Amended Credit Agreement) could not secure debt in excess of $5,000 in aggregate principal amount, reduced from the original $25,000. | ||||||||||||||||
As of September 30, 2014, the outstanding borrowings under the Amended Credit Agreement totaled $50,000. Borrowings under the Amended Credit Agreement bore interest, at our option, at LIBOR plus an applicable margin or at an alternative base rate, as defined under the Amended Credit Agreement, plus an applicable margin. The applicable margin for borrowings under the Amended Credit Agreement was determined based on the ratio of our total Indebtedness (as defined in the Amended Credit Agreement and which primarily included outstanding borrowings, recorded contingent liabilities related to our guarantee obligations, letters of credit and surety bonds) to EBITDA (as defined in the Amended Credit Agreement) (the “Credit Agreement Leverage Ratio”) as of the end of each fiscal quarter. We also paid a commitment fee on the amount of the unutilized commitments under the Amended Credit Agreement. The amount of the commitment fee was determined based on the Credit Agreement Leverage Ratio as of the end of each quarter. The commitment fee under the Amended Credit Agreement was 0.40% as of September 30, 2014. | |||||||||||||||||
The effective interest rate on our borrowings under the Amended Credit Agreement was approximately: | |||||||||||||||||
• | 3.40% per annum in the three months ended September 30, 2014; | ||||||||||||||||
• | 4.10% per annum in the three months ended September 30, 2013; | ||||||||||||||||
• | 4.40% per annum in the nine months ended September 30, 2014; and | ||||||||||||||||
• | 3.40% per annum in the nine months ended September 30, 2013. | ||||||||||||||||
The following table sets forth the total amount of interest expense and fees (including the commitment fee) that we recognized on our borrowings under the Amended Credit Agreement, in the periods indicated: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Interest expense and fees | $ | 431 | $ | 776 | $ | 1,703 | $ | 2,762 | |||||||||
PEAKS Trust Senior Debt. In January 2010, the PEAKS Trust issued the PEAKS Senior Debt in the aggregate principal amount of $300,000 to investors. Beginning on February 28, 2013, the PEAKS Trust was consolidated in our consolidated financial statements. See Note 8 – Variable Interest Entities, for a further discussion of the PEAKS Consolidation. The PEAKS Senior Debt was recorded on our consolidated balance sheet as of February 28, 2013 at its estimated fair value on that date, which was approximately $226,096. The outstanding principal balance of the PEAKS Senior Debt as of February 28, 2013 was approximately $257,533. The $31,437 difference between the estimated fair value and the outstanding principal balance of the PEAKS Senior Debt as of February 28, 2013 was recorded as an accrued discount on our consolidated balance sheet and is being recognized as Interest expense in our Condensed Consolidated Statements of Income using an effective interest rate method over the term of the PEAKS Senior Debt. As of September 30, 2014, the outstanding principal balance of the PEAKS Senior Debt was approximately $162,811 and the carrying value was $140,516. We recorded $96,516 as a current liability as of September 30, 2014, which represented our estimate of the amount of the carrying value that was expected to be due in the 12 months immediately following September 30, 2014. | |||||||||||||||||
The PEAKS Senior Debt matures in January 2020 and bears interest at a variable rate based on the LIBOR, plus a 550 basis point margin. The minimum LIBOR rate applied to the PEAKS Senior Debt cannot be less than 2.00%. There are no scheduled principal repayment requirements for the PEAKS Senior Debt prior to the January 2020 maturity date. Under the terms of the PEAKS Program documents, however, amounts received on a monthly basis by the PEAKS Trust that exceed the fees and expenses of the PEAKS Trust then due and the interest then due on the PEAKS Senior Debt are to be paid to reduce the outstanding principal balance of the PEAKS Senior Debt. The assets of the PEAKS Trust (which include, among other assets, the PEAKS Trust Student Loans) serve as collateral for, and are intended to be the principal source of, the repayment of the PEAKS Senior Debt. Payment of the PEAKS Senior Debt may be accelerated by the indenture trustee of the PEAKS Trust or by the holders of the PEAKS Senior Debt in response to certain events of default under the indenture under the PEAKS Program (the “PEAKS Indenture”), including, among other things: | |||||||||||||||||
• | a payment default by the PEAKS Trust; | ||||||||||||||||
• | a default in the performance or observation of the PEAKS Trust’s covenants, agreements or conditions under the PEAKS Indenture; | ||||||||||||||||
• | a breach of our obligations under the PEAKS Guarantee; and | ||||||||||||||||
• | certain bankruptcy events with respect to the PEAKS Trust or us. | ||||||||||||||||
An acceleration of the payment of the PEAKS Senior Debt would result in an acceleration of our obligation to pay the full amount of the PEAKS Senior Debt pursuant to the terms of the PEAKS Guarantee, if the PEAKS Trust was not able to make that payment (and we believe that it is unlikely that the PEAKS Trust would be able to make that payment). The acceleration of our obligation to pay the full amount of the PEAKS Senior Debt, and/or our inability to make that payment, could also result in cross-defaults under the Financing Agreement. | |||||||||||||||||
The following table sets forth the total amount of interest expense and discount accretion that we recognized on the PEAKS Senior Debt in the periods indicated: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Interest expense | $ | 5,261 | $ | 6,275 | $ | 16,875 | $ | 14,953 | |||||||||
Discount accretion | $ | 1,788 | $ | 1,411 | $ | 4,770 | $ | 3,444 | |||||||||
The effective interest rate on the PEAKS Senior Debt was approximately: | |||||||||||||||||
• | 10.30% per annum in the three months ended September 30, 2014; | ||||||||||||||||
• | 9.60% per annum in the three months ended September 30, 2013; | ||||||||||||||||
• | 10.00% per annum in the nine months ended September 30, 2014; and | ||||||||||||||||
• | 10.00% per annum in the nine months ended September 30, 2013. | ||||||||||||||||
Asset/Liability Ratio. The PEAKS Trust must maintain a minimum required Asset/Liability Ratio. The minimum required Asset/Liability Ratio is 1.05/1.00. The applicable required Asset/Liability Ratio as of each monthly measurement date, however, is based on our compliance, as of the prior quarterly measurement date, with certain metrics specified in the PEAKS Program documents, including maximum leverage ratios and minimum liquidity amounts. If we are not in compliance with those metrics as of the end of a fiscal quarter, the required Asset/Liability Ratio increases to 1.40/1.00, until the monthly measurement date following the end of a succeeding quarter at which we are in compliance with those metrics. As a result of the PEAKS Consolidation and other factors, we were not in compliance with those metrics as of September 30, 2014 or December 31, 2014. For purposes of computing the Asset/Liability Ratio, as of September 30, 2014, the amount of the assets of the PEAKS Trust was $160,857 and the amount of the liabilities was $162,811. | |||||||||||||||||
If the amount of the assets of the PEAKS Trust does not equal or exceed the outstanding PEAKS Senior Debt by the applicable required Asset/Liability Ratio on a monthly measurement date, we are required to make a payment under the PEAKS Guarantee in an amount that would reduce the outstanding principal balance of the PEAKS Senior Debt to the extent necessary to cause the ratio of the assets of the PEAKS Trust to the resulting outstanding PEAKS Senior Debt to equal or exceed the applicable required Asset/Liability Ratio. | |||||||||||||||||
As a consequence of the restatement of our unaudited condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2013, June 30, 2013 and September 30, 2013, certain quarterly reports that we were required to deliver to the indenture trustee of the PEAKS Trust under the PEAKS Guarantee were inaccurate. We delivered corrected quarterly reports to the indenture trustee on October 9, 2014. If we had delivered accurate quarterly reports or, with respect to periods in 2014 through September 30, 2014, delivered quarterly reports to the indenture trustee of the PEAKS Trust, we believe that the indenture trustee would have made payment demands beginning in April 2013, requiring us to make additional payments under the PEAKS Guarantee totaling approximately $60,340, in the aggregate, in order to maintain an Asset/Liability Ratio of 1.40/1.00. On October 9, 2014, we made a payment under the PEAKS Guarantee of $50,000, which payment, along with other payments that we made to the PEAKS Trust in the third quarter of 2014, included amounts that would have become due between April 2013 and September 2014, had we delivered accurate quarterly reports. The delivery of inaccurate quarterly reports constituted a breach of the PEAKS Guarantee and an event of default under the PEAKS Indenture. In the event of a default under the PEAKS Indenture, the payment of the entire amount of the PEAKS Senior Debt could be accelerated, which would trigger our obligation to pay the full amount of the PEAKS Senior Debt pursuant to our obligations under the PEAKS Guarantee, additional remedies could be sought against us and there could be a cross-default under the Financing Agreement, any of which would have a material adverse effect on our results of operations, financial condition and cash flows. We believe that the delivery of the corrected quarterly reports and the payments we made under the PEAKS Guarantee through October 9, 2014 satisfied our obligations under the PEAKS Guarantee with respect to these matters and cured the breach of the PEAKS Guarantee and event of default under the PEAKS Indenture. We cannot predict, however, whether the holders of the PEAKS Senior Debt will assert other breaches of the PEAKS Guarantee by us or that any breach of the PEAKS Guarantee or event of default under the PEAKS Indenture was not properly cured. | |||||||||||||||||
In order to cause the PEAKS Trust to maintain the applicable required Asset/Liability Ratio, we made payments of approximately $156,600 in the year ended December 31, 2014 under the PEAKS Guarantee that were applied by the PEAKS Trust to reduce the amount of the PEAKS Senior Debt. That amount included the: | |||||||||||||||||
• | $40,000 that we paid in March 2014 pursuant to the PEAKS Letter Agreement, which was applied primarily to make a mandatory prepayment of the PEAKS Senior Debt (see Note 8 – Variable Interest Entities, for a further discussion of the PEAKS Letter Agreement); | ||||||||||||||||
• | payments totaling approximately $51,700 that we made from July 2014 through September 2014 to satisfy our obligations under the PEAKS Guarantee with respect to the increased minimum required Asset/Liability Ratio in prior periods; and | ||||||||||||||||
• | payments totaling approximately $64,900 that we made from October 2014 through December 2014 to satisfy our obligations under the PEAKS Guarantee with respect to the increased minimum required Asset/Liability Ratio in the current and prior periods. | ||||||||||||||||
As a result of those payments, the outstanding principal balance of the PEAKS Senior Debt was $96,918 as of December 31, 2014. We also made additional payments under the PEAKS Guarantee in the year ended December 31, 2014 that were not related to maintaining the required Asset/Liability Ratio. See Note 13 – Commitments and Contingencies, for a further discussion of the payments made under the PEAKS Program in the year ended December 31, 2014. |
Earnings_Per_Common_Share
Earnings Per Common Share | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||
Earnings Per Common Share | 11 | Earnings Per Common Share | |||||||||||||||
Earnings per common share for all periods have been calculated in conformity with ASC 260, “Earnings Per Share.” This data is based on historical net income and the weighted average number of shares of our common stock outstanding during each period as set forth in the following table: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(In thousands) | |||||||||||||||||
Shares: | |||||||||||||||||
Weighted average number of shares of common stock outstanding | 23,483 | 23,418 | 23,463 | 23,410 | |||||||||||||
Shares assumed issued (less shares assumed purchased for treasury) for stock-based compensation | 220 | 216 | 314 | 146 | |||||||||||||
Outstanding shares for diluted earnings per share calculation | 23,703 | 23,634 | 23,777 | 23,556 | |||||||||||||
A total of approximately 1.4 million shares in the three months ended September 30, 2014 and 1.3 million shares in the nine months ended September 30, 2014 were excluded from the calculation of our diluted earnings per common share, because the effect was anti-dilutive. We excluded from the calculation of our diluted earnings per common share approximately 1.2 million shares in the three months ended September 30, 2013 and 1.5 million shares in the nine months ended September 30, 2013, because the effect was anti-dilutive. |
Employee_Pension_Benefits
Employee Pension Benefits | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||
Employee Pension Benefits | 12 | Employee Pension Benefits | |||||||||||||||
The following table sets forth the components of net periodic pension benefit of the ESI Pension Plan and ESI Excess Pension Plan in the periods indicated: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Interest cost | $ | 506 | $ | 439 | $ | 1,518 | $ | 1,316 | |||||||||
Expected return on assets | (1,311 | ) | (1,087 | ) | (3,935 | ) | (3,260 | ) | |||||||||
Recognized net actuarial loss | 0 | 506 | 0 | 1,518 | |||||||||||||
Amortization of prior service (credit) | (389 | ) | (389 | ) | (1,166 | ) | (1,167 | ) | |||||||||
Net periodic pension (benefit) | $ | (1,194 | ) | $ | (531 | ) | $ | (3,583 | ) | $ | (1,593 | ) | |||||
The benefit accruals under the ESI Pension Plan and ESI Excess Pension Plan were frozen effective March 31, 2006. As a result, no service cost has been included in the net periodic pension benefit. | |||||||||||||||||
We did not make any contributions to the ESI Pension Plan or the ESI Excess Pension Plan in the three or nine months ended September 30, 2014 or 2013. We do not expect to make any material contributions to the ESI Pension Plan or the ESI Excess Pension Plan in 2014. | |||||||||||||||||
The following table sets forth the changes in the components of Accumulated other comprehensive income on our Condensed Consolidated Balance Sheet in the nine months ended September 30, 2014: | |||||||||||||||||
Defined Benefit Pension Items | |||||||||||||||||
Accumulated | Income | Accumulated | |||||||||||||||
Other | Tax | Other | |||||||||||||||
Comprehensive | Benefit | Comprehensive | |||||||||||||||
Income | (Expense) | Income Net of | |||||||||||||||
Income Tax | |||||||||||||||||
Balance at January 1, 2014 | $ | 5,032 | $ | (1,886 | ) | $ | 3,146 | ||||||||||
Amortization of: | |||||||||||||||||
Prior service costs (credits) | (1,166 | ) | 452 | (714 | ) | ||||||||||||
Balance at September 30, 2014 | $ | 3,866 | $ | (1,434 | ) | $ | 2,432 | ||||||||||
The reclassification of prior service costs or credits from Accumulated other comprehensive income are included in the computation of net periodic pension benefit. Net periodic pension benefit was included in compensation expense in Cost of educational services and Student services and administrative expenses in our Condensed Consolidated Statements of Income in the three and nine months ended September 30, 2014. |
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||
Commitments and Contingencies | 13 | Commitments and Contingencies | |||||||||||||||
As part of our normal operations, one of our insurers issues surety bonds for us that are required by various education authorities that regulate us. We are obligated to reimburse our insurer for any of those surety bonds that are paid by the insurer. As of September 30, 2014, the total face amount of those surety bonds was approximately $19,500. As of September 30, 2014, we also had caused approximately $2,352 of letters of credit to be issued to our workers’ compensation insurers and one of our state regulatory agencies. | |||||||||||||||||
Our institutions’ failure to submit their 2013 audited consolidated financial statements and the 2013 compliance audits of their administration of the Title IV Programs in which they participate (“Compliance Audits”) to the ED by the due date resulted in sanctions imposed by the ED on our institutions that included, among other things, our institutions having to submit a letter of credit payable to the ED. We caused the ED Letter of Credit in the amount of $79,708 to be issued on October 31, 2014. The term of the ED Letter of Credit ends on November 4, 2019. As of December 31, 2014, the total amount of the outstanding letters of credit that we have caused to be issued was $82,060. | |||||||||||||||||
The ED Letter of Credit provides that the ED may draw on the ED Letter of Credit upon certification by the ED that the drafted funds will be used for one or more of the following purposes: | |||||||||||||||||
• | to pay refunds of institutional or non-institutional charges owed to or on behalf of current or former students of our institutions, whether our institutions remain open or have closed; | ||||||||||||||||
• | to provide for the “teach-out” of students enrolled at the time of closure of our institutions; and | ||||||||||||||||
• | to pay any liabilities owing to the ED arising from acts or omissions by our institutions, on or before the expiration of the ED Letter of Credit, in violation of requirements set forth in the HEA, including the violation of any agreement entered into by our institutions with the ED regarding the administration of Title IV Programs. | ||||||||||||||||
Claims and contingencies that we are subject to include those related to litigation, government investigations, business transactions, guarantee arrangements, tax matters and employee-related matters, among others. We record a liability for claims and contingencies, if it is probable that a loss will result and the amount of the loss can be reasonably estimated. Although we believe that our estimates related to any claims and contingencies are reasonable, we cannot make any assurances with regard to the accuracy of our estimates, and actual results could differ materially. | |||||||||||||||||
The following table sets forth the components of our recorded liability related to our claims and contingencies and where the amounts were included on our Condensed Consolidated Balance Sheets as of the dates indicated: | |||||||||||||||||
As of | As of | As of | |||||||||||||||
September 30, | December 31, | September 30, | |||||||||||||||
2014 | 2013 | 2013 | |||||||||||||||
2009 RSA | $ | 0 | $ | 116,923 | $ | 36,535 | |||||||||||
Other | 14,494 | 8,957 | 8,325 | ||||||||||||||
Total | $ | 14,494 | $ | 125,880 | $ | 44,860 | |||||||||||
Other current liabilities | $ | 14,494 | $ | 25,893 | $ | 44,472 | |||||||||||
Other liabilities | 0 | 99,987 | 388 | ||||||||||||||
Total | $ | 14,494 | $ | 125,880 | $ | 44,860 | |||||||||||
Other current liabilities primarily represented our estimate of the loss that we believed we would realize during the 12-month period following the dates indicated. The amounts included in Other liabilities primarily related to our estimated contingent liability for the 2009 RSA as of December 31, 2013 and September 30, 2013 (prior to the 2009 Entity Consolidation), and represented our estimate of the loss that we believed we would realize after the 12-month period following the dates indicated and over a period that could exceed ten years. See below for a discussion of the method by which we determined the amount of the contingent liability that we recorded related to our guarantee obligations under the 2009 RSA prior to the 2009 Entity Consolidation. | |||||||||||||||||
The following table sets forth the activity with respect to our recorded liability related to our claims and contingencies in the periods indicated: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Balance at beginning of period | $ | 126,074 | $ | 38,725 | $ | 125,880 | $ | 126,978 | |||||||||
Increases (decreases) from: | |||||||||||||||||
Additional accruals: | |||||||||||||||||
2009 RSA | 2,019 | 4,826 | 2,019 | 8,629 | |||||||||||||
Other | 11,603 | 5,484 | 27,816 | 12,415 | |||||||||||||
Payments, other, net of recoveries owed of $0, $186, $475, and $413 (1) | (8,532 | ) | (3,717 | ) | (21,804 | ) | (8,924 | ) | |||||||||
Payments under the 2009 RSA, net of recoveries of $0, $0, $0 and $103 (2) | (1,809 | ) | (458 | ) | (4,556 | ) | (738 | ) | |||||||||
Payments under PEAKS Guarantee, net of estimated recoveries of $0, $80, $0 and $803 | (52,517 | ) | (58 | ) | (94,318 | ) | (574 | ) | |||||||||
Payments on Behalf of Borrowers | 0 | (2,502 | ) | (1,832 | ) | (7,647 | ) | ||||||||||
Settlement payment – 2007 RSA | 0 | 0 | 0 | (46,000 | ) | ||||||||||||
Elimination of PEAKS Trust intercompany transactions (3) | 52,517 | 2,560 | 96,150 | 6,835 | |||||||||||||
Elimination of PEAKS Guarantee accrual (4) | 0 | 0 | 0 | (46,114 | ) | ||||||||||||
Elimination of 2009 RSA accrual (5) | (114,861 | ) | 0 | (114,861 | ) | 0 | |||||||||||
Balance at end of period | $ | 14,494 | $ | 44,860 | $ | 14,494 | $ | 44,860 | |||||||||
-1 | Consists of payments for legal and other contingencies, net of recoveries from charged-off loans made under the 2009 Loan Program that were owed, but had not been remitted, to us. | ||||||||||||||||
-2 | Consists of payments made under the 2009 RSA, net of recoveries from charged-off 2009 Entity Student Loans that we received. | ||||||||||||||||
-3 | We consolidated the PEAKS Trust in our consolidated financial statements as of February 28, 2013 and, as a result, we eliminated from our consolidated financial statements the amount of payments under the PEAKS Guarantee and Payments on Behalf of Borrowers that we made following the PEAKS Consolidation. See Note 8 – Variable Interest Entities, for a further discussion of the PEAKS Consolidation. | ||||||||||||||||
-4 | As a result of the PEAKS Consolidation, in the nine months ended September 30, 2013, we eliminated from our consolidated financial statements the contingent liability related to the PEAKS Guarantee that we had previously recorded. | ||||||||||||||||
-5 | As a result of the 2009 Entity Consolidation, in the three and nine months ended September 30, 2014, we eliminated from our consolidated financial statements the contingent liability related to the 2009 RSA that we had previously recorded. | ||||||||||||||||
We had guaranteed the repayment of private education loans made by a lender to our students in 2007 and early 2008 (the “2007 RSA”) that the lender charged off above a certain percentage of the total dollar volume of private education loans made under the 2007 RSA. In January 2013, we paid $46,000 in a settlement to absolve us from any further obligations with respect to our guarantee obligations under the 2007 RSA, which amount is included in the Settlement payment – 2007 RSA line item in the nine months ended September 30, 2013 in the table above. | |||||||||||||||||
Prior to the 2009 Entity Consolidation, in order to determine the amount of the contingent liability to record related to our guarantee obligations under the 2009 RSA, we utilized estimates of, among other things, the projected repayment performance of the private education loans made under the 2009 Loan Program, which projections involved numerous assumptions. We consulted with third-party consumer credit consulting firms in developing certain repayment assumptions. Based on those projections and other factors, we estimated the amount of payments that we expected to make and the amounts that we expected to be repaid to us. | |||||||||||||||||
In connection with determining the amount of the contingent liability to record related to our guarantee obligations under the 2009 RSA, prior to the 2009 Entity Consolidation, we also considered the payment options available to us under the 2009 Loan Program, including our ability to make Discharge Payments under the 2009 RSA. To the extent that we projected that we would have sufficient funds available to make Discharge Payments under the 2009 RSA, we incorporated an assumption that we would make Discharge Payments into our estimate of the amount of payments that we expected to make when determining the contingent liability. If we did not believe that we would have sufficient funds available to make Discharge Payments, we assumed that we would make Regular Payments to satisfy our obligations under the 2009 RSA. We discounted the amount of those expected future monthly Regular Payments at a risk-free rate of interest. Making Discharge Payments results in us paying a lesser amount than we otherwise would have been required to pay under our guarantee obligations in future periods under the 2009 RSA and, therefore, results in an estimated contingent liability amount that is less than if we had assumed that we would make Regular Payments in future periods. | |||||||||||||||||
Under the 2009 RSA, we are entitled to all amounts that the 2009 Entity recovers from loans in a particular loan pool made under the 2009 Loan Program that have been charged off, until all payments that we made under the 2009 RSA with respect to that loan pool have been repaid to us by the 2009 Entity. We discounted the amounts of recoveries that we expected would be repaid to us under the 2009 RSA at a risk-free rate of interest. The difference between the amount of the discounted guarantee payments that we expected to make and the discounted amount that we expected would be repaid to us under the 2009 RSA is recorded as the amount of our estimated contingent liability related to our guarantee obligations under the 2009 RSA, prior to the 2009 Entity Consolidation. | |||||||||||||||||
In connection with estimating our recorded liability for claims and contingencies as of September 30, 2014, December 31, 2013 and September 30, 2013, we considered whether additional losses for claims and contingencies were reasonably possible, could be estimated and might be material to our financial condition, results of operations or cash flows. As with any estimate, as facts and circumstances change, the recorded liability and estimated range of reasonably possible losses could change significantly. With respect to legal proceedings, we determined that we cannot provide an estimate of the possible losses, or the range of possible losses, in excess of the amount, if any, accrued, for various reasons, including but not limited to some or all of the following: | |||||||||||||||||
• | there are significant factual issues to be resolved; | ||||||||||||||||
• | there are novel or unsettled legal issues presented; | ||||||||||||||||
• | the proceedings are in the early stages; | ||||||||||||||||
• | there is uncertainty as to the likelihood of a class being certified or decertified or the ultimate size and scope of the class; | ||||||||||||||||
• | there is uncertainty as to the outcome of pending appeals or motions; and | ||||||||||||||||
• | in many cases, the plaintiffs have not specified damages in their complaint or in court filings. | ||||||||||||||||
We may resolve certain federal and state income tax matters presently under examination within the 12 months immediately following the date of this filing. As of September 30, 2014, we estimated that it was reasonably possible that unrecognized tax benefits, excluding interest and penalties, could decrease in an amount ranging from $0 to $7,100 in the 12 months immediately following the date of this filing due to the resolution of those matters. | |||||||||||||||||
We have presented legal and professional fees related to certain lawsuits, investigations and accounting matters as a separate line item in our Condensed Consolidated Statements of Income. The amounts included in this line item represent expenses for various lawsuits, investigations and accounting matters that we believe are not representative of those normally incurred in the ordinary course of business. Certain of those lawsuits and investigations are described in detail, below. The expenses for the accounting matters included in this line item relate primarily to services identified as relating to accounting for, and the audit work performed in connection with, the consolidation of the PEAKS Trust and the restatement of our 2013 quarterly consolidated financial statements. | |||||||||||||||||
Guarantees. | |||||||||||||||||
PEAKS Guarantee and Purchase Obligations. Under the PEAKS Guarantee, we guarantee payment of the principal and interest owed on the PEAKS Senior Debt, the administrative fees and expenses of the PEAKS Trust and a minimum required Asset/Liability Ratio. The PEAKS Guarantee contains, among other things, representations and warranties and events of default that we believe are customary for guarantees of this type. In addition, under the PEAKS Program, some or all of the holders of the PEAKS Senior Debt could require us to purchase their PEAKS Senior Debt, if the law is changed to reduce the maximum allowable percentage of our annual revenue derived from Title IV Program funds from 90% to 75% or less. At this time, we believe that the likelihood of such a change in the law is remote. Our guarantee and purchase obligations under the PEAKS Program remain in effect until the PEAKS Senior Debt and the PEAKS Trust’s fees and expenses are paid in full. At such time, we will be entitled to repayment of the amount of any payments we made under the PEAKS Guarantee (which do not include Payments on Behalf of Borrowers) to the extent that funds are remaining in the PEAKS Trust. The PEAKS Senior Debt matures in January 2020 and, therefore, we do not expect to begin receiving any repayment of amounts that we previously paid under the PEAKS Guarantee until February 2020. | |||||||||||||||||
We concluded that we were required to consolidate the PEAKS Trust in our consolidated financial statements beginning on February 28, 2013. See Note 8 – Variable Interest Entities, for a further discussion of the PEAKS Consolidation. As a result, the assets and liabilities of the PEAKS Trust have been included on, and all intercompany transactions have been eliminated from, our Condensed Consolidated Balance Sheets as of September 30, 2014, December 31, 2013 and September 30, 2013. While we no longer record a contingent liability for the PEAKS Guarantee on our Condensed Consolidated Balance Sheet beginning on February 28, 2013, our obligations under the PEAKS Guarantee remain in effect. | |||||||||||||||||
PEAKS Program Payments in 2014. In the year ended December 31, 2014, we made payments related to the PEAKS Program of approximately $161,100. Included in this amount were: | |||||||||||||||||
• | the $40,000 payment we made in March 2014 pursuant to the PEAKS Letter Agreement, which is considered to be a payment under the PEAKS Guarantee; | ||||||||||||||||
• | the payments totaling approximately $51,700 that we made from July 2014 through September 2014 to satisfy our obligation under the PEAKS Guarantee with respect to the increased minimum required Asset/Liability Ratio in prior periods; | ||||||||||||||||
• | payments totaling approximately $64,900 that we made from October 2014 through December 2014 to satisfy our obligations under the PEAKS Guarantee with respect to the increased minimum required Asset/Liability Ratio in current and prior periods; | ||||||||||||||||
• | payments totaling approximately $2,700 that we made from March 2014 through September 2014 to satisfy our obligations under the PEAKS Guarantee with respect to interest owed on the PEAKS Senior Debt and administrative fees and expenses of the PEAKS Trust; and | ||||||||||||||||
• | Payments on Behalf of Borrowers of approximately $1,800 that we made in January 2014. | ||||||||||||||||
See also “—PEAKS Program and 2009 RSA Payments in Certain Periods.” for additional information regarding certain payments we have made in 2013 and 2014 related to the PEAKS Program. | |||||||||||||||||
Projected PEAKS Guarantee Payments. We believe that it is probable that we will make additional payments under the PEAKS Guarantee and estimate that those payments may be approximately $27,700 in 2015, $4,800 in 2016 and $16,400 in 2020. The vast majority of these payments are expected to reduce the outstanding principal balance of the PEAKS Senior Debt, which would result in an outstanding principal balance of the PEAKS Senior Debt of approximately $62,000 as of December 31, 2015 and $0 as of January 31, 2020. See Note 10 – Debt, for a further discussion of the PEAKS Senior Debt. After the PEAKS Senior Debt matures in January 2020, the PEAKS Trust will continue to collect on PEAKS Trust Student Loans that remain in repayment and collect recoveries on PEAKS Trust Student Loans that have been charged off. The only obligation of the PEAKS Trust, at that time, will be the payment of the fees and expenses of the PEAKS Trust. As a result, we believe that, after that time, we may recover from the PEAKS Trust, in the aggregate, approximately $47,000 of the amount that we have paid or will pay under the PEAKS Guarantee. See below for information regarding the assumptions on which those estimates are based. | |||||||||||||||||
The estimated amount and timing of future payments and recoveries with respect to the PEAKS Guarantee discussed above and elsewhere in this report are only estimates, are based on numerous assumptions and are subject to change. As with any estimate, as facts and circumstances change, the estimated amounts and timing could change. We made a number of assumptions in preparing the estimates, which assumptions may not be correct. The assumptions included, among other things, the following: | |||||||||||||||||
• | the repayment performance of the PEAKS Trust Student Loans, the proceeds from which will be used to repay the PEAKS Senior Debt and to pay the fees and expenses of the PEAKS Trust, and the performance of which also affects the Asset/Liability Ratio; | ||||||||||||||||
• | the fact that those loans will consist of a large number of loans of individually immaterial amounts; | ||||||||||||||||
• | the fact that the interest rate on the PEAKS Senior Debt is a variable rate based on the LIBOR plus a margin; and | ||||||||||||||||
• | the amount of fees and expenses of the PEAKS Trust, much of which is based on the principal balance of the PEAKS Trust Student Loans. | ||||||||||||||||
2009 RSA. On February 20, 2009 we entered into the 2009 RSA in connection with the 2009 Loan Program. Under the 2009 RSA, we guarantee the repayment of the principal amount (including capitalized origination fees) and accrued interest payable on any private education loans made under the 2009 Loan Program that are charged off above a certain percentage of the private education loans made under the 2009 Loan Program, based on the annual dollar volume. The total initial principal amount of private education loans that the 2009 Entity purchased under the 2009 Loan Program was approximately $141,000. No new private education loans were or will be originated under the 2009 Loan Program after December 31, 2011, but immaterial amounts related to loans originated prior to that date were disbursed by the lender through June 2012. Our obligations under the 2009 RSA will remain in effect, until all private education loans made under the 2009 Loan Program are paid in full. The standard repayment term for a private education loan made under the 2009 Loan Program is ten years, with repayment generally beginning six months after a student graduates or three months after a student withdraws or is terminated from his or her program of study. | |||||||||||||||||
Pursuant to the 2009 RSA, we are required to maintain collateral to secure our guarantee obligation in an amount equal to a percentage of the outstanding balance of the private education loans disbursed to our students under the 2009 Loan Program. As of September 30, 2014, December 31, 2013 and September 30, 2013, the total collateral maintained in a restricted bank account was approximately $8,600. This amount was included in Other assets on our Condensed Consolidated Balance Sheets as of each of those dates. The 2009 RSA also requires that we comply with certain covenants, including that we maintain certain financial ratios which are measured on a quarterly basis and that we deliver compliance certificates on a quarterly basis setting forth the status of our compliance with those financial ratios. If we are not in compliance with those covenants at the end of each fiscal quarter, we are required to increase the amount of collateral maintained in the restricted bank account to a predetermined amount, until the end of a succeeding quarter at which we are in compliance with those covenants. The predetermined amount is based on the percentage of the aggregate principal balance of the private education loans made under the 2009 Loan Program that exceeds a certain percentage as of the end of each fiscal quarter. | |||||||||||||||||
Under the 2009 RSA, we have the right to elect to make Discharge Payments with respect to private education loans made under the 2009 Loan Program that have been charged off. The effect of a making a Discharge Payment related to a private education loan is to reduce the aggregate amount that we may have to pay under our guarantee obligations with respect to that loan. We have claimed as an offset against amounts owed to us under the Revolving Note amounts that would have the effect of discharging our obligations with respect to certain charged off loans under the 2009 RSA. In addition, in the three months ended December 31, 2013, we made Discharge Payments to the 2009 Entity. Making Discharge Payments results in us paying amounts to the 2009 Entity in advance of when a guarantee payment would be due, which would negatively impact our liquidity in a particular period, but may result in us paying a lesser amount than we otherwise would have been required to pay under our guarantee obligation in future periods under the 2009 RSA. See Note 8 – Variable Interest Entities, for a further discussion of Discharge Payments. | |||||||||||||||||
We concluded that we were required to consolidate the 2009 Entity in our consolidated financial statements beginning on September 30, 2014. See Note 8 – Variable Interest Entities, for a further discussion of the 2009 Entity Consolidation. As a result, the assets and liabilities of the 2009 Entity have been included on, and all intercompany transactions have been eliminated from, our Condensed Consolidated Balance Sheet as of September 30, 2014. While we no longer record a contingent liability for the 2009 RSA on our Condensed Consolidated Balance Sheet beginning September 30, 2014, our obligations under the 2009 RSA remain in effect. | |||||||||||||||||
2009 RSA Payments in 2014. In the year ended December 31, 2014, we made payments under the 2009 RSA of approximately $9,139. Reflected in this amount were: | |||||||||||||||||
• | Regular Payments of $7,028; | ||||||||||||||||
• | a Discharge Payment of $2,577 that we made pursuant to the Fourth Amendment to 2009 RSA (as defined below); and | ||||||||||||||||
• | $466 in recoveries from charged-off loans that were owed to us from the 2009 Entity and that we applied to reduce the amount payable by us to the 2009 Entity pursuant to our offset right. | ||||||||||||||||
In the year ended December 31, 2014, the 2009 Entity did not remit to us $475 of recoveries from charged-off loans that were owed to us. See also “—PEAKS Program and 2009 RSA Payments in Certain Periods,” for additional information regarding certain payments we have made in 2013 and 2014 related to the 2009 Entity Program. | |||||||||||||||||
2009 RSA Amendments. As a consequence of the restatement of our unaudited condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2013, June 30, 2013 and September 30, 2013, certain quarterly compliance certificates that we were required to deliver to the 2009 Entity under the 2009 RSA were inaccurate. Those inaccuracies did not affect our compliance with the financial ratio covenants in the 2009 RSA as of March 31, 2013. We were not, however, in compliance with certain financial ratio covenants in the 2009 RSA as of June 30, 2013 or subsequent fiscal quarter measurement dates through September 30, 2014. Further, due to our failure to timely file our 2013 Form 10-K and our Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2014, June 30, 2014 and September 30, 2014, we did not timely deliver the required compliance certificates under the 2009 RSA with respect to those periods. As a result of our noncompliance with certain financial ratio covenants as of June 30, 2013 and subsequent fiscal quarter measurement dates through September 30, 2014, the amount of collateral required to be maintained in the restricted bank account would have been increased by approximately $2,600. On November 6, 2014, we entered into a Fourth Amendment to the 2009 RSA with the 2009 Entity (the “Fourth Amendment to 2009 RSA”). The Fourth Amendment to 2009 RSA provides that we are not required to comply with certain financial ratio covenants under the 2009 RSA that we otherwise would not have been in compliance with from June 30, 2013 through September 30, 2014 and that we did not expect to be in compliance with as of December 31, 2014. In lieu of an increase in the required collateral under the 2009 RSA, we made a payment of $2,577 to the 2009 Entity on November 12, 2014, pursuant to the Fourth Amendment to 2009 RSA, which payment was considered a Discharge Payment under the 2009 RSA. | |||||||||||||||||
On March 17, 2015, we entered into a Fifth Amendment to the 2009 RSA with the 2009 Entity (the “Fifth Amendment to 2009 RSA”). The Fifth Amendment to 2009 RSA provides that we are not required to comply with certain financial ratio covenants under the 2009 RSA that we otherwise would not have been in compliance with from June 30, 2013 through: (i) March 31, 2015 related to our debt service ratio, and (ii) December 31, 2015 related to our current ratio. Additionally, the Fifth Amendment to 2009 RSA provides that for any fiscal quarter end in which the 2009 Entity (or its owned or managed assets) are consolidated into our financial statements that the financial covenant and persistence percentage provisions and the corresponding compliance certificate requirements will be based on our relevant quarterly and annual reports that we file with the SEC, but excluding the effects of any such consolidation. Further, any financial statements for periods ending prior to March 17, 2015 that we are required to deliver to the 2009 Entity, but have not been delivered as of that date, must be delivered to the 2009 Entity on or before May 31, 2015. In lieu of an increase in the required collateral under the 2009 RSA, we made a payment of $2,709 to the 2009 Entity on March 19, 2015 pursuant to the Fifth Amendment to 2009 RSA, which payment was considered a Discharge Payment under the 2009 RSA. | |||||||||||||||||
Projected 2009 RSA Payments. We believe that it is probable that we will make additional payments under the 2009 RSA. We are entitled to all amounts that the 2009 Entity recovers from loans in a particular loan pool made under the 2009 Loan Program that have been charged off, until all payments that we made under the 2009 RSA with respect to that loan pool have been repaid to us by the 2009 Entity. Pursuant to the 2009 RSA, we have the right to offset amounts that we owe under the 2009 RSA by the amount of recoveries from charged-off loans made under the 2009 Loan Program that are owed, but have not been paid, to us. The following table sets forth, in the periods indicated, our projections of the estimated amounts of Regular Payments and Discharge Payments that we expect to pay (or that we expect will be owed by us, which amounts could be reduced prior to payment thereof by the amount of recoveries from charged-off loans owed to us as described in the immediately preceding sentence) and the estimated amounts of recoveries from charged-off loans that we expect to be paid to us by the 2009 Entity (or that we may utilize to offset a portion of the amounts of Regular Payments or Discharge Payments owed by us): | |||||||||||||||||
Year | Estimated | Estimated | Estimated | Estimated | |||||||||||||
Regular | Discharge | Total | Recoveries | ||||||||||||||
Payments | Payments | Payments | |||||||||||||||
2015 | $ | 13,400 | $ | 2,709 | (1) | $ | 16,109 | $ | (1,240 | ) | |||||||
2016 | 15,835 | 0 | 15,835 | (1,240 | ) | ||||||||||||
2017 | 16,631 | 0 | 16,631 | (1,240 | ) | ||||||||||||
2018 and later | 0 | 72,509 | 72,509 | (380 | ) | ||||||||||||
Total | $ | 45,866 | $ | 75,218 | $ | 121,084 | $ | (4,100 | ) | ||||||||
-1 | Represents the Discharge Payment of $2,709 that we made on March 19, 2015 pursuant to the terms of the Fifth Amendment to 2009 RSA. | ||||||||||||||||
We believe that the vast majority of the $72,509 of estimated payments projected to be paid after 2017 will be made by us in 2018. The estimated future payment amounts and timing related to the 2009 RSA assume, among other factors, that we do not make any Discharge Payments in 2015, 2016 or 2017 (other than the Discharge Payment made in March 2015 pursuant to the terms of the Fifth Amendment to 2009 RSA) and do make Discharge Payments to the fullest extent possible in 2018 and later years. If we do not make the Discharge Payments as assumed in 2018 and later years, we estimate that we would make approximately $100,100 of Regular Payments in 2018 through 2027. Of this amount, approximately $16,500 to $17,000 would be paid annually in each of 2018 through 2022, and approximately $16,300, in the aggregate, would be paid in 2023 through 2027. | |||||||||||||||||
The estimated amount and timing of future payments and recoveries with respect to the 2009 RSA discussed above are only estimates, are based on numerous assumptions and are subject to change. As with any estimate, as facts and circumstances change, the estimated amounts and timing could change. We made a number of assumptions in preparing the estimates, which assumptions may not be correct. The assumptions included, among other things, the following: | |||||||||||||||||
• | the repayment performance of the private education loans made under the 2009 Loan Program; | ||||||||||||||||
• | the timing and rate at which those private education loans will be paid; | ||||||||||||||||
• | the changes in the variable interest rates applicable to those private education; | ||||||||||||||||
• | the amounts and timing of collections in the future on those private education loans that have been charged off; and | ||||||||||||||||
• | our ability to utilize the available options for payment of our obligations under the 2009 RSA. | ||||||||||||||||
PEAKS Program and 2009 RSA Payments in Certain Periods. The following table sets forth the approximate aggregate amount of guarantee payments, Discharge Payments and Payments on Behalf of Borrowers that were made related to the PEAKS Program and 2009 RSA and the amount of recoveries from charged-off loans paid to us by the 2009 Entity, in the periods indicated: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
Type of Payment (Receipt) | 2014 | 2013 | 2014 | 2013 | |||||||||||||
Guarantee: | |||||||||||||||||
PEAKS Program | $ | 52,517 | $ | 138 | $ | 94,318 | $ | 1,377 | (1) | ||||||||
2009 RSA Regular Payments | 1,809 | (2) | 458 | 4,556 | (2) | 841 | |||||||||||
2009 RSA Discharge Payments | 0 | 0 | 0 | 0 | |||||||||||||
Payments on Behalf of Borrowers | 0 | 2,502 | 1,832 | 7,647 | (3) | ||||||||||||
2009 RSA-Recoveries from Charged-Off Loans | 0 | 0 | 0 | (103 | ) | ||||||||||||
Total | $ | 54,326 | $ | 3,098 | $ | 100,706 | $ | 9,762 | |||||||||
-1 | Of this amount, $854 was paid prior to the PEAKS Consolidation. | ||||||||||||||||
-2 | This amount is net of $156 of recoveries from charged-off loans owed to us that we offset against the amount we owed under the 2009 RSA. | ||||||||||||||||
-3 | Of this amount, $532 was paid prior to the PEAKS Consolidation. | ||||||||||||||||
The 2009 Entity did not remit to us, and we did not offset payments under the 2009 RSA for, the following amounts of recoveries from charged-off loans that were owed to us: | |||||||||||||||||
• | $0 in the three months ended September 30, 2014; | ||||||||||||||||
• | $186 in the three months ended September 30, 2013; | ||||||||||||||||
• | $475 in the nine months ended September 30, 2014; and | ||||||||||||||||
• | $413 in the nine months ended September 30, 2013. | ||||||||||||||||
We recorded the amount of recoveries from charged-off loans that were owed to us, but not paid or offset, as of September 30, 2013, in Prepaid expenses and other current assets on our Condensed Consolidated Balance Sheet. The amounts of recoveries from charged-off loans that were owed to us by the 2009 Entity, but not paid or offset, as of September 30, 2014 were not recorded on our consolidated financial statements, since those amounts were intercompany transactions that were eliminated from our financial statements as a result of the 2009 Entity Consolidation | |||||||||||||||||
We also offset the following amounts owed by us under the 2009 RSA against amounts owed to us by the 2009 Entity under the Revolving Note, instead of making additional payments in those amounts: | |||||||||||||||||
• | $0 in the three months ended September 30, 2014; | ||||||||||||||||
• | $357 in the three months ended September 30, 2013; | ||||||||||||||||
• | $0 in the nine months ended September 30, 2014; and | ||||||||||||||||
• | $8,471 in the nine months ended September 30, 2013. | ||||||||||||||||
We recorded all of the amounts that we claimed as offsets against amounts owed to us under the Revolving Note in Other current liabilities on our Condensed Consolidated Balance Sheet as of September 30, 2013. The amounts that we claimed as offsets under the Revolving Note as of September 30, 2014, were not recorded on our consolidated financial statements, since those amounts were intercompany transactions that were eliminated from our financial statements as a result of the 2009 Entity Consolidation. | |||||||||||||||||
In the first quarter of 2013, we notified the 2009 Entity that: | |||||||||||||||||
• | we had determined that the 2009 Entity was in default of its obligations to us under the loan and security agreement pursuant to which the Revolving Note was issued (the “2009 Loan Agreement”); | ||||||||||||||||
• | as a result of that default, all amounts under the Revolving Note were immediately due and payable; and | ||||||||||||||||
• | we would not make payments under the 2009 RSA, until we received credit for the full amount due us under the Revolving Note, based on the provisions of the 2009 Loan Agreement and the 2009 RSA that allow us to set off amounts owed by us under the 2009 RSA against amounts owed to us by the 2009 Entity under the Revolving Note. | ||||||||||||||||
At that time, the outstanding amount of the Revolving Note due to us was approximately $8,200, representing principal and accrued interest. In response to our notification, the 2009 Entity: | |||||||||||||||||
• | denied that it had defaulted under the 2009 Loan Agreement and, therefore, our ability to accelerate the payment of the Revolving Note; and | ||||||||||||||||
• | refused our demand to immediately pay the Revolving Note in full. | ||||||||||||||||
As a consequence, over the period from February 2013 through August 2013, we offset our then current payment obligations under the 2009 RSA and the amount of Discharge Payments we elected to make during that period against all of the 2009 Entity’s obligations owed to us under the Revolving Note (the “Offset”). | |||||||||||||||||
We understand that the 2009 Entity’s position is that the Offset was improper, because: | |||||||||||||||||
• | it has not defaulted under the 2009 Loan Agreement; and | ||||||||||||||||
• | even if it had defaulted under the 2009 Loan Agreement, the assets of the 2009 Entity against which we could offset or exercise our other remedies, were limited. | ||||||||||||||||
We further understand the 2009 Entity’s position to be that, because the Offset was improper, we are in default under the 2009 RSA. In April 2013, the 2009 Entity notified us that it had taken control of the restricted account containing the cash collateral that we deposited to secure our obligations under the 2009 RSA (the “Collateral”). At that time, the amount of funds in that account was approximately $8,600. To our knowledge, the 2009 Entity has taken no further action related to the Collateral. We believe that our good faith exercise of our right of offset provided for in the 2009 Loan Agreement and the 2009 RSA does not constitute an event of default under the 2009 RSA, and that the 2009 Entity’s seizure of control of the restricted account containing the Collateral constitutes an additional default by the 2009 Entity. We cannot assure you, however, that the Offset will ultimately be determined to have been proper. In the event of a default by us under the 2009 RSA related to the Offset, we may be required to pay to the 2009 Entity approximately $8,600, representing the amount of the Offset, net of approximately $1,049 of recoveries from charged-off loans that are owed, but have not been paid, to us. If, instead, the 2009 Entity was to withdraw Collateral in that amount from the restricted bank account, we would be required to deposit that amount of cash in the account to maintain the required level of Collateral. | |||||||||||||||||
Assessment of Guarantee Contingent Liability. At the end of each reporting period, prior to the 2009 Entity Consolidation, we assessed whether we should recognize a contingent liability related to our guarantee obligations under the 2009 RSA and, if so, in what amount. The contingent liability was calculated by estimating the amount and timing of projected future payments that we expected to make under the 2009 RSA and the projected future amounts that we expected to be repaid to us by the 2009 Entity from recoveries of charged-off loans and the timing of those repayments. As with any estimate, as facts and circumstances changed, the recorded liability changed. | |||||||||||||||||
In order to estimate the amount of the contingent liability, we made certain assumptions with respect to the performance of the 2009 Entity Student Loans over the life of those loans. The life of a 2009 Entity Student Loan may be in excess of ten years from the date of disbursement. Therefore, our estimates were based on assumptions for periods in excess of ten years, and those assumptions included, among other things, the following: | |||||||||||||||||
• | the repayment performance of the 2009 Entity Student Loans, which includes both payments on non-defaulted loans and recoveries from defaulted, or charged-off, loans; | ||||||||||||||||
• | the timing and rate at which the 2009 Entity Student Loans will be paid; | ||||||||||||||||
• | the changes in the variable interest rates applicable to the 2009 Entity Student Loans; | ||||||||||||||||
• | the amounts and timing of collections that will be collected in the future on 2009 Entity Student Loans that have defaulted; and | ||||||||||||||||
• | our ability to utilize the available options for payment of our obligations under the 2009 RSA. | ||||||||||||||||
Because the amount of the contingent liability takes into consideration the projected repayment performance of the 2009 Entity Student Loans that could extend for ten or more years, and the repayment performance data develops over a period that is several years from the date the loans were originated, we continually refined our assumptions based on new data and information. We consulted with third-party consumer credit consulting firms in determining certain repayment performance assumptions. | |||||||||||||||||
The projected future payments that we expected to make under the 2009 RSA were based on a methodology to forecast future default rates and amounts, which methodology utilized the historical amount of 2009 Entity Student Loans that had defaulted. The historical default experience by itself, however, may not be indicative of the future default performance of the 2009 Entity Student Loans. Therefore, we made certain assumptions regarding the expected future default performance of the loans. In estimating the projected future amounts that we expected to be repaid to us by the 2009 Entity from recoveries from charged-off loans, we considered the actual collections on defaulted loans made under the 2009 Loan Program, as well as other factors. As the 2009 Entity Student Loans matured, additional data related to the repayment performance of the loans and other information regarding the loans became available to us that we utilized to estimate the related contingent liability. The assumptions used for our projections of future payments and recoveries have changed significantly over time as actual repayment performance became known, which resulted in changes to the estimated contingent liability. | |||||||||||||||||
We also considered our ability to utilize Discharge Payments for payment of our obligations under the 2009 RSA in our estimates of the contingent liability. Making Discharge Payments results in an estimated contingent liability amount that is less than if we had assumed we would make Regular Payments in future periods. As circumstances and our future cash flow projections changed over time, we adjusted our assumptions related to our ability to make Discharge Payments, which resulted in an increase in our estimated contingent liability amount in certain periods. | |||||||||||||||||
In addition, in certain prior reporting periods, there were disruptions in the servicing of a portion of the 2009 Entity Student Loans, as well as indications that servicing activities were not being performed as required by the applicable servicing agreement, which we believe had a negative impact on the repayment performance of those loans. We cannot predict with any certainty whether other servicing disruptions or other servicing issues will occur in the future. | |||||||||||||||||
Litigation. We are subject to various litigation in the ordinary course of our business. We cannot assure you of the ultimate outcome of any litigation involving us. Although we believe that our estimates related to any litigation are reasonable, deviations from our estimates could produce a materially different result. Any litigation alleging violations of education or consumer protection laws and/or regulations, misrepresentation, fraud or deceptive practices may also subject our affected campuses to additional regulatory scrutiny. The following is a description of pending litigation that falls outside the scope of litigation incidental to the ordinary course of our business. | |||||||||||||||||
On December 22, 2008, we were served with a qui tam action that was filed on July 3, 2007 in the United States District Court for the Southern District of Indiana by a former employee (“relator”) on behalf of herself and the federal government under the following caption: United States of America ex rel. Debra Leveski v. ITT Educational Services, Inc. (the “Leveski Litigation”). We were served with the Leveski Litigation after the U.S. Department of Justice declined to intervene in the litigation. On June 3, 2008, the relator filed an amended complaint in the Leveski Litigation. On September 23, 2009, the court dismissed the Leveski Litigation without prejudice and gave the relator an opportunity to replead her complaint. On October 8, 2009, the relator filed a second amended complaint. In the second amended complaint, the relator alleges that we violated the False Claims Act, 31 U.S.C. § 3729, et seq., and the HEA by compensating our sales representatives and financial aid administrators with commissions, bonuses or other incentive payments based directly or indirectly on success in securing enrollments or federal financial aid. The relator alleges that all of our revenue derived from the federal student financial aid programs from July 3, 2001 through July 3, 2007 was generated as a result of our violating the HEA. The relator seeks various forms of recovery on behalf of herself and the federal government, including: | |||||||||||||||||
• | treble the amount of unspecified funds paid to us for federal student grants; | ||||||||||||||||
• | treble the amount of unspecified default payments, special allowance payments and interest received by lenders with respect to federal student loans received by our students; | ||||||||||||||||
• | all civil penalties allowed by law; and | ||||||||||||||||
• | attorney’s fees and costs. | ||||||||||||||||
A qui tam action is a civil lawsuit brought by one or more individuals (a qui tam “relator”) on behalf of the federal or state government for an alleged submission to the government of a false claim for payment. A qui tam action is always filed under seal and remains under seal, until the government decides whether to intervene in the litigation. Whenever a relator files a qui tam action, the government typically initiates an investigation in order to determine whether to intervene in the litigation. If the government intervenes, it has primary control over the litigation. If the government declines to intervene, the relator may pursue the litigation on behalf of the government. If the government or the relator is successful in the litigation, the relator receives a portion of the government’s recovery. | |||||||||||||||||
On August 8, 2011, the district court granted our motion to dismiss all of the relator’s claims in the Leveski Litigation for lack of subject-matter jurisdiction and issued a judgment for us. On February 16, 2012, the relator in the Leveski Litigation filed a Notice of Appeal with the 7th Circuit Court of Appeals regarding the final judgment entered by the district court dismissing all claims against us. On March 26, 2012, the district court in the Leveski Litigation awarded us approximately $395 in sanctions against the relator’s attorneys for filing a frivolous lawsuit. Relator’s attorneys also appealed this award to the 7th Circuit Court of Appeals. On July 8, 2013, the 7th Circuit Court of Appeals reversed the district court’s dismissal of the Leveski Litigation for lack of subject-matter jurisdiction and the award of sanctions against relator’s attorneys. In addition, the 7th Circuit Court of Appeals remanded the Leveski Litigation back to the district court for further proceedings. | |||||||||||||||||
We have defended, and intend to continue to defend, ourselves vigorously against the allegations made in the complaint. | |||||||||||||||||
On March 11, 2013, a complaint in a securities class action lawsuit was filed against us and two of our current executive officers in the United States District Court for the Southern District of New York under the following caption: William Koetsch, Individually and on Behalf of All Others Similarly Situated v. ITT Educational Services, Inc., et al. (the “Koetsch Litigation”). On April 17, 2013, a complaint in a securities class action lawsuit was filed against us and two of our current executive officers in the United States District Court for the Southern District of New York under the following caption: Massachusetts Laborers’ Annuity Fund, Individually and on Behalf of All Others Similarly Situated v. ITT Educational Services, Inc., et al (the “MLAF Litigation”). On July 25, 2013, the court consolidated the Koetsch Litigation and MLAF Litigation under the following caption: In re ITT Educational Services, Inc. Securities Litigation (the “New York Securities Litigation”), and named the Plumbers and Pipefitters National Pension Fund and Metropolitan Water Reclamation District Retirement Fund as the lead plaintiffs. On October 7, 2013, an amended complaint was filed in the New York Securities Litigation, and on January 15, 2014, a second amended complaint was filed in the New York Securities Litigation. The second amended complaint alleges, among other things, that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (“the Exchange Act”) and Rule 10b-5 promulgated thereunder by: | |||||||||||||||||
• | our failure to properly account for the 2007 RSA, 2009 RSA and PEAKS Program; | ||||||||||||||||
• | employing devices, schemes and artifices to defraud; | ||||||||||||||||
• | making untrue statements of material facts, or omitting material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; | ||||||||||||||||
• | making the above statements intentionally or with reckless disregard for the truth; | ||||||||||||||||
• | engaging in acts, practices, and a course of business that operated as a fraud or deceit upon lead plaintiffs and others similarly situated in connection with their purchases of our common stock; | ||||||||||||||||
• | deceiving the investing public, including lead plaintiffs and the purported class, regarding, among other things, our artificially inflated statements of financial strength and understated liabilities; and | ||||||||||||||||
• | causing our common stock to trade at artificially inflated prices and causing the plaintiff and other putative class members to purchase our common stock at inflated prices. | ||||||||||||||||
The putative class period in this action is from April 24, 2008 through February 25, 2013. The plaintiffs seek, among other things, the designation of this action as a class action, an award of unspecified compensatory damages, interest, costs and expenses, including counsel fees and expert fees, and such equitable/injunctive and other relief as the court deems appropriate. On July 22, 2014, the district court denied most of our motion to dismiss all of the plaintiffs’ claims for failure to state a claim for which relief can be granted. On August 5, 2014, we filed our answer to the second amended complaint denying all of the plaintiffs’ claims and the parties are currently engaged in discovery. Plaintiffs filed their motion for class certification on March 27, 2015. All of the defendants have defended, and intend to continue to defend, themselves vigorously against the allegations made in the second amended complaint. | |||||||||||||||||
On September 30, 2014, a complaint in a securities class action lawsuit was filed against us and two of our current executive officers in the United States District Court for the Southern District of Indiana under the following caption: David Banes, on Behalf of Himself and All Others Similarly Situated v. Kevin M. Modany, et al. (the “Banes Litigation”). On October 3, 2014, October 9, 2014 and November 25, 2014, three similar complaints were filed against us and two of our current executive officers in the United States District Court for the Southern District of Indiana under the following captions: Babulal Tarapara, Individually and on Behalf of All Others Similarly Situated v. ITT Educational Services, Inc. et al. (the “Tarapara Litigation”), Kumud Jindal, Individually and on Behalf of All Others Similarly Situated v. Kevin Modany, et al. (the “Jindal Litigation”) and Kristopher Hennen, Individually and on Behalf of All Others Similarly Situated v. ITT Educational Services, Inc. et al. (the “Hennen Litigation”). On November 17, 2014, the Tarapara Litigation and the Jindal Litigation were consolidated into the Banes Litigation. On January 21, 2015, the Hennen Litigation was consolidated into that consolidated action (the “Indiana Securities Litigation”). | |||||||||||||||||
The complaints in the Indiana Securities Litigation allege, among other things, that the defendants violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder by knowingly or recklessly making false and/or misleading statements and failing to disclose material adverse facts about our business, operations, prospects and financial results. In particular, the complaints allege that: | |||||||||||||||||
• | our financial statements contained errors related to the accounting of the PEAKS Trust and PEAKS Program; | ||||||||||||||||
• | we misled investors regarding the integrity of our financial reporting, including the reporting of the PEAKS Trust; | ||||||||||||||||
• | we improperly failed to consolidate the PEAKS Trust in our consolidated financial statements; | ||||||||||||||||
• | we lacked adequate internal controls over financial reporting; | ||||||||||||||||
• | our financial statements were overstated; | ||||||||||||||||
• | our financial statements were materially false and misleading at all relevant times; | ||||||||||||||||
• | we engaged in acts, transactions, practices and courses of business which operated as a fraud and deceit upon the plaintiff and the purported class; | ||||||||||||||||
• | we employed devices, schemes and artifices to defraud in connection with the purchase and sale of our common stock; and | ||||||||||||||||
• | we artificially inflated and maintained the market price of our common stock, causing the plaintiff and other putative class members to purchase our common stock at artificially inflated prices. | ||||||||||||||||
The putative class period in the Banes Litigation and the Jindal Litigation is from April 26, 2013 through September 19, 2014. The putative class period in the Tarapara Litigation and the Hennen Litigation is from February 26, 2013 through September 18, 2014. The plaintiffs in the Indiana Securities Litigation seek, among other things, the designation of the action as a class action, an award of unspecified compensatory damages, interest, attorneys’ fees, expert fees and other costs, and such other relief as the court deems proper. On December 1, 2014, motions were filed in the Indiana Securities Litigation for the appointment of lead plaintiff and lead counsel. On March 16, 2015, the court appointed a lead plaintiff and lead counsel. Subsequently, the caption for the Indiana Securities Litigation was changed to the following: In re ITT Educational Services, Inc. Securities Litigation (Indiana). All of the defendants have defended, and intend to continue to defend, themselves vigorously against the allegations made in the Indiana Securities Litigation. | |||||||||||||||||
On May 8, 2013, a complaint in a shareholder derivative lawsuit was filed against three of our current executive officers and all but one of our current Directors in the United States District Court for the Southern District of New York under the following caption: Sasha Wilfred, Derivatively on Behalf of Nominal Defendant ITT Educational Services, Inc. v. Kevin M. Modany, et al. (the “Wilfred Litigation”). On August 6, 2013, the parties agreed to stay the Wilfred Litigation until the New York Securities Litigation was dismissed with prejudice or the defendants filed an answer in the New York Securities Litigation. On September 8, 2014, the district court approved the parties’ agreement for an additional stay of the Wilfred Litigation, until the earlier of a final disposition of the New York Securities Litigation or 30 days after written notice terminating the stay was provided by any of the parties in the Wilfred Litigation to all other parties. On October 15, 2014, the plaintiff terminated the stay. Following plaintiff’s termination of the stipulated stay, an amended complaint was filed on November 17, 2014 that alleges, among other things, that the defendants violated state law, including breaching their fiduciary duties to us, grossly mismanaging us, wasting our corporate assets and being unjustly enriched, by: | |||||||||||||||||
• | causing or allowing us to disseminate to our shareholders materially misleading and inaccurate information relating to a series of risk-sharing agreements through SEC filings, press releases, conference calls, and other public statements and disclosures; | ||||||||||||||||
• | willfully ignoring obvious and pervasive problems with our internal controls and practices and procedures, and failing to make a good faith effort to correct these problems or prevent their recurrence; | ||||||||||||||||
• | violating and breaching fiduciary duties of care, loyalty, reasonable inquiry, oversight, good faith and supervision; | ||||||||||||||||
• | causing or allowing us to misrepresent material facts regarding our financial position and business prospects; and | ||||||||||||||||
• | abandoning their responsibilities and duties with regard to prudently managing our businesses in a manner imposed upon them by law. | ||||||||||||||||
The amended complaint also refers to certain subsequent events, including the agreement that we entered into with Mr. Modany, dated August 4, 2014, setting forth terms of Mr. Modany’s resignation (the “Modany Letter Agreement”), the CFPB complaint against us, our submission of a letter of credit to the ED, and our receipt of a Wells Notice from the SEC. | |||||||||||||||||
The amended complaint seeks: | |||||||||||||||||
• | unspecified damages; | ||||||||||||||||
• | restitution; | ||||||||||||||||
• | disgorgement of all profits, benefits and other compensation obtained by the individual defendants; | ||||||||||||||||
• | an order directing us to take all necessary actions to reform and improve our corporate governance and internal procedures; and | ||||||||||||||||
• | costs and disbursements, including attorneys’, accountants’ and experts’ fees, costs and expenses. | ||||||||||||||||
On January 5, 2015, the defendants moved to dismiss or stay the Wilfred Litigation. | |||||||||||||||||
On May 27, 2014, a complaint in a shareholder derivative lawsuit was filed against three of our current executive officers, all but one of our current Directors and one former Director in the United States District Court for the District of Delaware under the following caption: Janice Nottenkamper, Derivatively on Behalf of Nominal Defendant ITT Educational Services, Inc. v. Kevin M. Modany, et al. (the “Nottenkamper Litigation”). On November 14, 2014, an amended complaint was filed in the Nottenkamper Litigation. The amended complaint alleges, among other things, that the defendants breached their fiduciary duties to us, were unjustly enriched, abused their control of us and grossly mismanaged us by: | |||||||||||||||||
• | causing or allowing us to disseminate to our shareholders materially misleading and inaccurate information relating to a series of risk-sharing agreements through SEC filings, press releases, conference calls, and other public statements and disclosures; | ||||||||||||||||
• | causing or allowing us to misrepresent material facts regarding student financing; | ||||||||||||||||
• | willfully ignoring obvious and pervasive problems with our internal controls and practices and procedures, and failing to make a good faith effort to correct these problems or prevent their recurrence; | ||||||||||||||||
• | violating and breaching fiduciary duties of care, loyalty, good faith, diligence and candor; | ||||||||||||||||
• | causing or allowing us to misrepresent material facts regarding our financial position and business prospects; and | ||||||||||||||||
• | abandoning and abdicating their responsibilities and duties with regard to prudently managing our businesses in a manner imposed upon them by law; and | ||||||||||||||||
• | permitting Mr. Modany to resign as our Chief Executive Officer and allowing us to enter into the Modany Letter Agreement setting forth the terms of Mr. Modany’s resignation. | ||||||||||||||||
The amended complaint seeks: | |||||||||||||||||
• | unspecified damages; | ||||||||||||||||
• | restitution; | ||||||||||||||||
• | disgorgement of all profits, benefits and other compensation obtained by the individual defendants; | ||||||||||||||||
• | an order directing us to take all necessary actions to reform and improve our corporate governance and internal procedures; and | ||||||||||||||||
• | costs and disbursements, including attorneys’, accountants’ and experts’ fees, costs and expenses. | ||||||||||||||||
On April 29, 2015, the District Court transferred the Nottenkamper Litigation to the United States District Court for the Southern District of New York. | |||||||||||||||||
On December 23, 2014, a complaint in a shareholder derivative lawsuit was filed against three of our current executive officers and all but three of our current Directors in the United States District Court for the Southern District of Indiana under the following caption: Michelle Lawrence, Derivatively on Behalf of Nominal Defendant ITT Educational Services, Inc. v. Kevin M. Modany, et al. (the “Lawrence Litigation”). The complaint alleges among that the individual defendants breached their fiduciary duties to us, abused their control, grossly mismanaged us and were unjustly enriched by: | |||||||||||||||||
• | participating in misrepresentation of our business operations; | ||||||||||||||||
• | failing to correct our public statements; | ||||||||||||||||
• | failing to oversee our business and internal controls; | ||||||||||||||||
• | causing us to issue false and misleading statements of material fact in our consolidated financial statements in our quarterly reports; | ||||||||||||||||
• | subjecting us to multiple federal securities fraud class action lawsuits; | ||||||||||||||||
• | causing us to restate our consolidated financial statements in our quarterly reports; and | ||||||||||||||||
• | causing us to receive a Wells Notice from the SEC. | ||||||||||||||||
The complaint seeks: | |||||||||||||||||
• | unspecified damages, | ||||||||||||||||
• | restitution | ||||||||||||||||
• | disgorgement of all profits, benefits and other compensation obtained by the individual defendants; | ||||||||||||||||
• | an order directing us to take all necessary actions to reform and improve our corporate governance and internal procedure, including taking action to strengthen the Board’s supervision of operations, procedures for greater shareholder input and for effective oversight of compliance; and | ||||||||||||||||
• | costs and disbursements, including attorneys’ and experts’ fees, costs and expenses. | ||||||||||||||||
On March 11, 2015, the district court approved the parties’ agreement to stay the Lawrence Litigation, until the earlier of 30 days after written notice of termination has been provided by any party or the Indiana Securities Litigation is dismissed with prejudice or an answer in the Indiana Securities Litigation is filed. | |||||||||||||||||
Although the Wilfred Litigation, Nottenkamper Litigation and Lawrence Litigation are each brought nominally on behalf of us, we expect to incur defense costs and other expenses in connection with those actions. | |||||||||||||||||
On May 18, 2012, we received a Civil Investigative Demand (the “Original CID”) from the U.S. Consumer Financial Protection Bureau (the “CFPB”). In September 2013, the CFPB withdrew the Original CID, and we received a new Civil Investigative Demand (the “New CID”) from the CFPB. Both the Original CID and the New CID provided that the purpose of the CFPB’s investigation was, in part, “to determine whether for-profit post-secondary companies, student loan origination and servicing providers, or other unnamed persons have engaged or are engaging in unlawful acts or practices relating to the advertising, marketing, or origination of private student loans.” Both the Original CID and the New CID contained broad requests for oral testimony, production of documents and written reports related to private education loans made to our students, internal financing provided to our students and certain other aspects of our business. We provided documentation and other information to the CFPB, while preserving our rights to object to its inquiry. | |||||||||||||||||
On February 26, 2014, the CFPB filed a complaint against us in the United States District Court for the Southern District of Indiana under the following caption: Consumer Financial Protection Bureau v. ITT Educational Services, Inc. (the “CFPB Litigation”). The complaint claimed, among other things, that we violated: | |||||||||||||||||
• | Section 1036(a)(1) of the Consumer Financial Protection Act of 2010 (the “CFPA”), 12 U.S.C. § 5536(a)(1), which prohibits unfair, deceptive and abusive acts and practices, from July 21, 2011 through December 2011, by: | ||||||||||||||||
• | subjecting consumers to undue influence or coercing them into taking out private education loans through a variety of unfair acts and practices designed to interfere with the consumers’ ability to make informed, uncoerced choices; | ||||||||||||||||
• | taking unreasonable advantage of consumers’ inability to protect their interest in selecting or using the private education loans; and | ||||||||||||||||
• | taking unreasonable advantage of consumers’ reasonable reliance on us to act in the consumers’ interests; and | ||||||||||||||||
• | the Truth in Lending Act, 15 U.S.C. §§ 1601 et seq., and Regulation Z thereunder, 12 C.F.R. Part 1026, which require certain disclosures to be made in writing to consumers in connection with the extension of consumer credit, since March 2009, by failing to disclose a discount that constituted a finance charge. | ||||||||||||||||
We filed a motion to dismiss the CFPB Litigation on several grounds. On March 6, 2015, the court issued an order denying our motion in part and granting it in part, including dismissing the CFPB’s claim under the Truth in Lending Act. On April 8, 2015, we filed a notice of appeal to the United States Court for the Seventh Circuit from the order on the motion to dismiss. We have defended, and intend to continue to defend, ourselves vigorously against the remaining allegations made in the complaint. | |||||||||||||||||
On February 27, 2014, the New Mexico Attorney General filed a complaint against us in the District Court of New Mexico under the following caption: State of New Mexico, ex rel. Gary K King, Attorney General v. ITT Educational Services, Inc., et al. (the “New Mexico Litigation”). On April 4, 2014, we removed the New Mexico Litigation to the U.S. District Court for the District of New Mexico. In April 2014, the Attorney General filed a motion to remand the New Mexico Litigation to the District Court of New Mexico. The complaint alleges, among other things, that we engaged in a pattern and practice of exploiting New Mexico consumers by using deceptive, unfair, unconscionable and unlawful business practices in the marketing, sale, provision and financing of education goods and services in violation of New Mexico’s Unfair Practices Act. In particular, the complaint contains allegations that: | |||||||||||||||||
• | we misrepresented matters related to our nursing education program, including, without limitation, its programmatic accreditation status, the transferability of credits earned in the program and the curriculum of the program; | ||||||||||||||||
• | we misrepresented the terms of the financial aid available to students and the cost of our programs; | ||||||||||||||||
• | we engaged in unfair or deceptive trade practices; | ||||||||||||||||
• | we failed to issue refunds; and | ||||||||||||||||
• | our form enrollment agreement contained unenforceable and unconscionable provisions. | ||||||||||||||||
The complaint seeks: | |||||||||||||||||
• | an order declaring portions of our enrollment agreement illusory, unconscionable and unenforceable; | ||||||||||||||||
• | preliminary and permanent injunctive relief; | ||||||||||||||||
• | disgorgement of unjust enrichment amounts; | ||||||||||||||||
• | unspecified civil penalty amounts; | ||||||||||||||||
• | restitution; and | ||||||||||||||||
• | reasonable costs, including investigative costs. | ||||||||||||||||
We have defended, and intend to continue to defend, ourselves vigorously against the allegations made in the complaint. | |||||||||||||||||
On December 17, 2013, a complaint was filed against us in a purported class action in the Superior Court of the State of California for the County of Los Angeles under the following caption: La Sondra Gallien, an individual, James Rayonez, an individual, Giovanni Chilin, an individual, on behalf of themselves and on behalf of all persons similarly situated v. ITT Educational Services, Inc., et al. (the “Gallien Litigation”). The plaintiffs filed an amended complaint on February 13, 2014. The amended complaint alleges, among other things, that under California law, we: | |||||||||||||||||
• | failed to pay wages owed; | ||||||||||||||||
• | failed to pay overtime compensation; | ||||||||||||||||
• | failed to provide meal and rest periods; | ||||||||||||||||
• | failed to provide itemized employee wage statements; | ||||||||||||||||
• | engaged in unlawful business practices; and | ||||||||||||||||
• | are liable for civil penalties under the California Private Attorney General Act. | ||||||||||||||||
The purported class includes recruiting representatives employed by us during the period of December 17, 2009 through December 17, 2013. The amended complaint seeks: | |||||||||||||||||
• | compensatory damages, including lost wages and other losses; | ||||||||||||||||
• | general damages; | ||||||||||||||||
• | pay for missed meal and rest periods; | ||||||||||||||||
• | restitution; | ||||||||||||||||
• | liquidated damages; | ||||||||||||||||
• | statutory penalties; | ||||||||||||||||
• | interest; | ||||||||||||||||
• | attorneys’ fees, cost and expenses; | ||||||||||||||||
• | civil and statutory penalties; | ||||||||||||||||
• | injunctive relief; and | ||||||||||||||||
• | such other and further relief as the court may deem equitable and appropriate. | ||||||||||||||||
We have defended, and intend to continue to defend, ourselves vigorously against the allegations made in the amended complaint. | |||||||||||||||||
There can be no assurance that the ultimate outcome of the Leveski Litigation, New York Securities Litigation, Indiana Securities Litigation, Wilfred Litigation, Nottenkamper Litigation, Lawrence Litigation, CFPB Litigation, New Mexico Litigation, Gallien Litigation or other actions (including other actions under federal or state securities laws) will not have a material adverse effect on our financial condition, results of operations or cash flows. | |||||||||||||||||
Kevin M. Modany and Daniel M. Fitzpatrick are named in the New York Securities Litigation, Indiana Securities Litigation, Wilfred Litigation, Nottenkamper Litigation and Lawrence Litigation. John E. Dean is also named in the Wilfred Litigation, Nottenkamper Litigation and Lawrence Litigation. | |||||||||||||||||
Certain of our current and former officers and Directors are or may become a party in the actions described above and/or are or may become subject to government investigations. Our By-laws and Restated Certificate of Incorporation obligate us to indemnify our officers and Directors to the fullest extent permitted by Delaware law, provided that their conduct complied with certain requirements. We are obligated to advance defense costs to our officers and Directors, subject to the individual’s obligation to repay such amount if it is ultimately determined that the individual was not entitled to indemnification. In addition, our indemnity obligation can, under certain circumstances, include indemnifiable judgments, penalties, fines and amounts paid in settlement in connection with those actions and investigations. | |||||||||||||||||
Government Investigations. We are subject to investigations and claims of non-compliance with regulatory standards and other actions brought by regulatory agencies. The more significant pending investigations, claims and actions are described below. If the results of any investigations, claims and/or actions are unfavorable to us, we may be required to pay money damages or be subject to fines, penalties, injunctions, operational limitations, loss of eligibility to participate in federal or state financial aid programs, debarments, additional oversight and reporting, or other civil and criminal sanctions. Those sanctions could have a material adverse effect on our financial condition, results of operations and cash flows. | |||||||||||||||||
On October 30, 2012, we received a Civil Investigative Demand (“CID”) from the Massachusetts Office of the Attorney General (“MAG”). The MAG’s CID provides that the MAG is investigating allegations that we may have violated Massachusetts General Laws, Chapter 93A, Section 2(a) by “engaging in unfair or deceptive practices in connection with marketing and advertising job placement and student outcomes, the recruitment of students, and the financing of education.” The MAG’s CID contains broad requests for production of documents related to our students in Massachusetts, including the financial aid available to those students, our recruitment of those students, the career services that we offer to those students, our marketing and advertising, the retention and graduation rates of those students and many other aspects of our business. We are cooperating with the MAG in its investigation, and we have provided documentation, communications and other information to the MAG in response to the CID. We believe that our acts and practices relating to our students in Massachusetts are lawful. There can be no assurance, however, that the ultimate outcome of the MAG investigation will not have a material adverse effect on our financial condition, results of operations and/or cash flows. | |||||||||||||||||
In January, February, April and May 2014, and in February and March 2015, we received subpoenas and/or CIDs from the Attorneys General of Arkansas, Arizona, Colorado, Connecticut, Hawaii, Idaho, Iowa, Kentucky, Maryland, Minnesota, Missouri, Nebraska, North Carolina, Oregon, Pennsylvania, Tennessee and Washington under the authority of each state’s consumer protection statutes. The Attorney General of the Commonwealth of Kentucky has informed us that it will serve as the point of contact for the multistate group to respond to questions relating to the subpoenas and CIDs. The subpoenas and CIDs contain broad requests for information and the production of documents related to our students and practices, including marketing and advertising, recruitment, financial aid, academic advising, career services, admissions, programs, licensure exam pass rates, accreditation, student retention, graduation rates and job placement rates, as well as many other aspects of our business. We believe that several other companies in the proprietary postsecondary education sector have received similar subpoenas and CIDs. We are cooperating with the Attorneys General of the states involved. The ultimate outcome of the state Attorneys General investigation, however, could have a material adverse effect on our financial condition, results of operations and/or cash flows. | |||||||||||||||||
On February 8, 2013, we received the first of many subpoenas from the SEC. In a letter accompanying each of the subpoenas, the SEC states that it is conducting an investigation of us. The SEC’s subpoenas requested the production of documents and communications that, among other things, relate to our actions, disclosures, and accounting associated with the 2009 Loan Program and PEAKS Program, including: | |||||||||||||||||
• | agreements that we entered into with the 2009 Entity to create the 2009 Loan Program, including, without limitation, the 2009 RSA; | ||||||||||||||||
• | agreements that we entered into to create the PEAKS Program; | ||||||||||||||||
• | certain accounting-related documents associated with the 2009 Loan Program, the PEAKS Program and internal student financing; and | ||||||||||||||||
• | our board of directors-related materials associated with the 2009 Loan Program, the PEAKS Program and internal student financing. | ||||||||||||||||
We have provided the information requested, including testimony of senior employees. On August 7, 2014, we received a “Wells Notice” from the Staff of the SEC notifying us that the Staff had made a preliminary determination to recommend that the SEC file an enforcement action against us. According to the Staff, the enforcement action would allege violations of Sections 10(b), 13(a) and 13(b)(2) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-11, 13a-13 and 13a-15 under the Exchange Act. The proposed action relates primarily to certain disclosures and accounting surrounding the PEAKS Program and 2009 Loan Program. On October 23, 2014, our Chief Executive Officer and Chief Financial Officer received similar Wells Notices. The Wells Notices said that the Staff’s recommendation may: | |||||||||||||||||
• | involve a civil injunctive action, public administrative proceeding and/or cease-and-desist proceeding; and | ||||||||||||||||
• | seek remedies that include an injunction, a cease-and-desist order and monetary relief, including civil monetary penalties. | ||||||||||||||||
A Wells Notice is neither a formal allegation nor a finding of wrongdoing. Instead, it is a preliminary determination by the Staff to recommend that the SEC file a civil enforcement action or administrative proceeding against the recipient. Under the SEC’s procedures, a recipient of a Wells Notice has an opportunity to respond in the form of a Wells submission that seeks to persuade the SEC that such an action should not be brought. We have made submissions to the Staff in response to the Wells Notice we received that set forth why the factual record does not support the enforcement action recommended by the Staff and explained that any perceived shortcomings were acts taken in good faith. Our Chief Executive Officer and Chief Financial Officer each have made similar submissions. All of the recipients of the Wells Notices intend to defend themselves vigorously. | |||||||||||||||||
We cannot predict the outcome of any legal action or whether the matters will result in any settlement. We cannot assure you that the ultimate outcome of the SEC investigation, any legal action by the SEC or any settlement will not have a material adverse effect on our financial condition, results of operations and/or cash flows. |
Risks_and_Uncertainties
Risks and Uncertainties | 9 Months Ended | |||
Sep. 30, 2014 | ||||
Text Block [Abstract] | ||||
Risks and Uncertainties | 14 | Risks and Uncertainties | ||
Many of the amounts of assets, liabilities, revenue and expenses reported in our condensed consolidated financial statements are based on estimates and assumptions that affect the amounts reported. We are subject to risks and uncertainties that could affect amounts reported in our consolidated financial statements in future periods. Our future performance, results of operations, financial condition, cash flows, liquidity, capital resources, ability to meet our obligations and ability to comply with covenants, metrics and regulatory requirements are subject to significant risks and uncertainties that could cause actual results to be materially different from our estimated results. Those significant risks and uncertainties include, but are not limited to, the following: | ||||
• | The PEAKS Consolidation and other factors, among other things: | |||
• | have resulted in violations by us of covenants under the Amended Credit Agreement, for which we obtained waivers and amendments relating to those violations; | |||
• | have negatively impacted our compliance with: | |||
• | the ED’s financial responsibility measurements, primarily our institutions’ composite score; and | |||
• | our compliance with the financial requirements of certain state education and professional licensing authorities (“SAs”); and | |||
• | have negatively impacted the financial metrics to which we are subject under the PEAKS Program and 2009 RSA. | |||
See Note 10 – Debt and Note 13 – Commitments and Contingencies, for additional information. | ||||
• | The 2009 Entity Consolidation, which could negatively impact our compliance with: | |||
• | covenants under the Financing Agreement; | |||
• | the ED’s financial responsibility measurements, primarily our institutions’ composite score; | |||
• | the financial requirements of certain SAs; and | |||
• | the financial metrics to which we are subject under the PEAKS Program and 2009 RSA. | |||
See Note 8 – Variable Interest Entities, for additional information. | ||||
• | Our institutions’ failure to submit their 2013 audited consolidated financial statements and 2013 Compliance Audits to the ED by the due date resulted in sanctions imposed by the ED on our institutions that include, among other things, our institutions having to submit a letter of credit payable to the ED, being placed on heightened cash monitoring (“HCM”) and being provisionally certified. We caused the ED Letter of Credit to be issued on October 31, 2014. The term of the ED Letter of Credit ends on November 4, 2019. We have implemented procedures to address HCM, which requirements are not expected to significantly impact the timing of our receipt of Title IV Program funds. See Note 10 – Debt, for additional information. | |||
• | As required, we provided cash collateral in the amount of approximately $89,300 for the letters of credit outstanding for our account. The funds held as cash collateral are not available for use by us, and could be paid to the issuing bank for the letters of credit if the letters of credit are drawn upon. The funds held as cash collateral will remain subject to such restriction and potential use until the cancellation, termination, expiration or reduction of the face amount of the outstanding letters of credit. The remaining amount of cash collateral at any time may not be less than 103% of the amount available to be drawn under the letters of credit then remaining outstanding, except the ED Letter of Credit, for which the cash collateral must be not less than 109% of the amount available to be drawn. See Note 10 – Debt, for additional information. | |||
• | We are subject to various claims and contingencies, including those related to litigation, government investigations, business transactions, guarantee arrangements, tax matters and employee-related matters, among others. See Note 13 – Commitments and Contingencies, for a further discussion of certain litigation and government investigations to which we are subject. | |||
• | We have significant guarantee obligations under the PEAKS Guarantee and 2009 RSA. In 2014, we made payments of approximately $159,300 under the PEAKS Guarantee, $1,832 of Payments on Behalf of Borrowers and approximately $9,139, net of $466 of recoveries owed to us that we offset against amounts that we owed to the 2009 Entity, related to the 2009 RSA. Based on various assumptions, including the historical and projected performance and collection of the PEAKS Trust Student Loans, we believe that we will make payments under the PEAKS Guarantee of approximately $27,700 in 2015 and approximately $4,800 in 2016. In addition, based on various assumptions, including the historical and projected performance and collections of the private education loans under the 2009 Loan Program, we believe that we will make payments under the 2009 RSA, net of recoveries, of approximately $14,900 in 2015 and $14,600 in 2016. See Note 10 – Debt and Note 13 – Commitments and Contingencies, for a further discussion of the PEAKS Guarantee and 2009 RSA (collectively, the “RSAs”), estimated payment amounts and contingent liabilities. | |||
• | As of September 30, 2014, the outstanding borrowings under the Amended Credit Agreement totaled $50,000 and were classified as a current liability. We repaid all outstanding borrowings under the Amended Credit Agreement on December 4, 2014. | |||
• | On December 4, 2014, we borrowed $100,000 aggregate principal amount of senior secured Term Loans. The proceeds of the Term Loans, along with other funds, were used to provide the cash collateral for outstanding letters of credit, to repay all outstanding borrowings under the Amended Credit Agreement and to pay fees in connection with the Financing Agreement. As a result, no portion of the proceeds of the Term Loans is available for working capital or other uses. Further, the funds held as cash collateral are not available for use by us to fund our operations. | |||
• | We incurred a net loss in the year December 31, 2013 and we had negative working capital as of December 31, 2013, primarily due to the impact of the PEAKS Consolidation and the loss that we recorded related to our guarantee obligations under the 2009 RSA. As of September 30, 2014, we had negative working capital, primarily due to the Consolidations. | |||
Based on our current projections, we believe that cash generated from operations will be sufficient for us to satisfy our RSA payments, working capital, loan payment and capital expenditure requirements over the 12-month period following the date that this report was filed with the SEC. We also believe that any reduction in cash and cash equivalents that may result from their use to make payments under the RSAs or make payments on loans will not have a material adverse effect on our planned capital expenditures, ability to meet any applicable regulatory financial responsibility standards, ability to satisfy the financial covenants under the Financing Agreement or ability to conduct normal operations over the 12-month period following the date that this report was filed with the SEC. Accordingly, our condensed consolidated financial statements contained in this report were prepared on the basis that we will continue to operate as a going concern. There can be no assurance, however, that the ultimate outcome of those events, whether individually or in the aggregate, will not have a material adverse effect on our financial condition, results of operations or cash flows. |
Accounting_Policies_Policies
Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | |
2009 Entity Secured Borrowing Obligation | 2009 Entity Secured Borrowing Obligation. The owners of the 2009 Entity (the “2009 Entity Participants”) purchased participation interests in the 2009 Entity Student Loans from the 2009 Entity. The terms of the agreements between the 2009 Entity Participants and the 2009 Entity did not meet the requirements under ASC 860, “Transfers and Servicing” (“ASC 860”), to be considered a sale. As a result, the 2009 Entity was required to record a liability (the “2009 Entity Secured Borrowing Obligation”) on its balance sheet for the cash received from the 2009 Entity Participants. The 2009 Entity Secured Borrowing Obligation represents the estimated amount that the 2009 Entity owes to the 2009 Entity Participants related to their participation interests in the 2009 Entity Student Loans, which amount is expected to be paid to the 2009 Entity Participants by the 2009 Entity from payments received by the 2009 Entity related to the 2009 Entity Student Loans, whether from the borrower or from us under the risk sharing agreement (the “2009 RSA”) that we entered into with the 2009 Entity on February 20, 2009. |
In accordance with ASC 810, we included the 2009 Entity Secured Borrowing Obligation on our condensed consolidated balance sheet at its fair value as of September 30, 2014, the date of the 2009 Entity Consolidation. The difference between the estimated fair value of the 2009 Entity Secured Borrowing Obligation and the amount expected to be paid by the 2009 Entity to the 2009 Entity Participants was recorded as an accrued discount on our condensed consolidated balance sheet at the date of the 2009 Entity Consolidation. The accrued discount is being recognized in interest expense at a level rate of return over the expected life of the 2009 Entity Secured Borrowing Obligation. | |
The expected life of the 2009 Entity Secured Borrowing Obligation is an estimate of the period of time over which payments are expected to be made by the 2009 Entity to the 2009 Entity Participants related to their participation interests in the 2009 Entity Student Loans. The period of time over which payments are expected to be made by the 2009 Entity to the 2009 Entity Participants is based on when the 2009 Entity Student Loans enter a repayment status and the period of time they remain in a repayment status. Since all of the 2009 Entity Student Loans have not entered repayment, and those loans that have entered repayment may be granted forbearances or deferments, the period of time over which payments are expected to be made to the 2009 Entity Participants is an estimate. The assumptions used to estimate the expected life of the 2009 Entity Secured Borrowing Obligation are reviewed periodically and updated accordingly, which may result in an adjustment to the expected life of the 2009 Entity Secured Borrowing Obligation and the related recognized interest expense. |
Acquisition_Tables
Acquisition (Tables) (Ascolta [Member]) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Ascolta [Member] | |||||||||
Summary of Estimated Fair Values Allocated to Major Classes of Assets Acquired and Liabilities Assumed | The following table sets forth the estimated fair values allocated to the major classes of assets acquired and liabilities assumed in the Ascolta business acquisition as of the acquisition date: | ||||||||
Assets | Liabilities | ||||||||
Acquired | Assumed | ||||||||
Accounts receivable and other current assets | $ | 849 | |||||||
Furniture and equipment | 370 | ||||||||
Identifiable intangible assets | 1,670 | ||||||||
Goodwill | 3,332 | ||||||||
Other liabilities | $ | 1,001 |
Goodwill_and_Intangibles_Table
Goodwill and Intangibles (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||
Schedule of Carrying Value of Acquired Intangible Assets | The following tables set forth the carrying value of our acquired intangible assets that are included in Other assets on our Condensed Consolidated Balance Sheets as of the dates indicated: | ||||||||||||||||
As of September 30, 2014 | |||||||||||||||||
Gross | Accumulated | Net | Weighted | ||||||||||||||
Carrying | Amortization | Carrying | Average | ||||||||||||||
Value | Value | Amortization | |||||||||||||||
Period | |||||||||||||||||
(months) | |||||||||||||||||
Amortizable intangible assets: | |||||||||||||||||
Customer relationships | $ | 2,500 | $ | (453 | ) | $ | 2,047 | 60 | |||||||||
Non-compete agreements | 1,120 | (224 | ) | 896 | 60 | ||||||||||||
Training materials | 440 | (147 | ) | 293 | 42 | ||||||||||||
Accreditation | 210 | (158 | ) | 52 | 84 | ||||||||||||
$ | 4,270 | $ | (982 | ) | $ | 3,288 | |||||||||||
Indefinite-lived intangible assets: | |||||||||||||||||
Goodwill | $ | 7,247 | |||||||||||||||
Trademark | 660 | ||||||||||||||||
$ | 7,907 | ||||||||||||||||
As of September 30, 2013 | |||||||||||||||||
Gross | Accumulated | Net | Weighted | ||||||||||||||
Carrying | Amortization | Carrying | Average | ||||||||||||||
Value | Value | Amortization | |||||||||||||||
Period | |||||||||||||||||
(months) | |||||||||||||||||
Amortizable intangible assets: | |||||||||||||||||
Customer relationships | $ | 1,200 | $ | (40 | ) | $ | 1,160 | 60 | |||||||||
Non-compete agreements | 750 | (25 | ) | 725 | 60 | ||||||||||||
Training materials | 440 | (21 | ) | 419 | 42 | ||||||||||||
Accreditation | 210 | (128 | ) | 82 | 84 | ||||||||||||
$ | 2,600 | $ | (214 | ) | $ | 2,386 | |||||||||||
Indefinite-lived intangible assets: | |||||||||||||||||
Goodwill | $ | 3,958 | |||||||||||||||
Trademark | 660 | ||||||||||||||||
$ | 4,618 | ||||||||||||||||
Estimated Amortization Expense of Intangible Assets | The following table sets forth our estimate of the amortization expense for our amortizable intangible assets in each of the next five fiscal years: | ||||||||||||||||
Fiscal Year Ending December 31, | Estimated | ||||||||||||||||
Amortization | |||||||||||||||||
Expense | |||||||||||||||||
2015 | $ | 880 | |||||||||||||||
2016 | 865 | ||||||||||||||||
2017 | 734 | ||||||||||||||||
2018 | 562 | ||||||||||||||||
2019 | 28 | ||||||||||||||||
$ | 3,069 | ||||||||||||||||
Fair_Value_Tables
Fair Value (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||
Fair Value Measurement of Financial Assets | The following table sets forth information regarding the recurring fair value measurement of our financial assets as reflected on our Condensed Consolidated Balance Sheet as of September 30, 2014: | ||||||||||||||||
Fair Value Measurements at Reporting Date Using | |||||||||||||||||
Description | As of | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
September 30, | Quoted Prices in | Significant Other | Significant | ||||||||||||||
2014 | Active Markets for | Observable Inputs | Unobservable | ||||||||||||||
Identical Assets | Inputs | ||||||||||||||||
Cash equivalents: | |||||||||||||||||
Money market fund | $ | 196,171 | $ | 196,171 | $ | 0 | $ | 0 | |||||||||
Restricted cash: | |||||||||||||||||
Money market fund | 1,786 | 1,786 | 0 | 0 | |||||||||||||
Other assets: | |||||||||||||||||
Money market fund | 8,627 | 8,627 | 0 | 0 | |||||||||||||
$ | 206,584 | $ | 206,584 | $ | 0 | $ | 0 | ||||||||||
The following table sets forth information regarding the recurring fair value measurement of our financial assets as reflected on our Condensed Consolidated Balance Sheet as of September 30, 2013: | |||||||||||||||||
Fair Value Measurements at Reporting Date Using | |||||||||||||||||
Description | As of | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
September 30, | Quoted Prices in | Significant Other | Significant | ||||||||||||||
2013 | Active Markets for | Observable Inputs | Unobservable | ||||||||||||||
Identical Assets | Inputs | ||||||||||||||||
Cash equivalents: | |||||||||||||||||
Money market fund | $ | 163,981 | $ | 163,981 | $ | 0 | $ | 0 | |||||||||
Restricted cash: | |||||||||||||||||
Money market fund | 3,140 | 3,140 | 0 | 0 | |||||||||||||
Other assets: | |||||||||||||||||
Money market fund | 8,625 | 8,625 | 0 | 0 | |||||||||||||
$ | 175,746 | $ | 175,746 | $ | 0 | $ | 0 | ||||||||||
Equity_Compensation_Tables
Equity Compensation (Tables) | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||
Stock-Based Compensation Expense and Related Income Tax Benefit | The stock-based compensation expense and related income tax benefit recognized in our Condensed Consolidated Statements of Income in the periods indicated were as follows: | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Stock-based compensation expense | $ | 2,667 | $ | 3,304 | $ | 7,529 | $ | 8,698 | |||||||||||||
Income tax (benefit) | $ | (1,027 | ) | $ | (1,272 | ) | $ | (2,899 | ) | $ | (3,349 | ) | |||||||||
Stock Options Granted, Forfeited, Exercised and Expired | The stock options granted, forfeited, exercised and expired in the period indicated were as follows: | ||||||||||||||||||||
Nine Months Ended September 30, 2014 | |||||||||||||||||||||
# of | Weighted | Aggregate | Weighted | Aggregate | |||||||||||||||||
Shares | Average | Exercise | Average | Intrinsic | |||||||||||||||||
Exercise | Price | Remaining | Value (1) | ||||||||||||||||||
Price | Contractual Term | ||||||||||||||||||||
Outstanding at beginning of period | 1,332,448 | $ | 81.77 | $ | 108,955 | ||||||||||||||||
Granted | 168,500 | $ | 27.94 | 4,708 | |||||||||||||||||
Forfeited | (10,334 | ) | $ | 30.29 | (313 | ) | |||||||||||||||
Exercised | 0 | $ | 0 | 0 | |||||||||||||||||
Expired | (322,441 | ) | $ | 70.87 | (22,853 | ) | |||||||||||||||
Outstanding at end of period | 1,168,173 | $ | 77.47 | $ | 90,497 | 2.4 | $ | 0 | |||||||||||||
Exercisable at end of period | 862,165 | $ | 93.85 | $ | 80,911 | 2 | $ | 0 | |||||||||||||
-1 | The aggregate intrinsic value of the stock options was calculated by identifying those stock options that had a lower exercise price than the closing market price of our common stock on September 30, 2014 and multiplying the difference between the closing market price of our common stock and the exercise price of each of those stock options by the number of shares subject to those stock options that were outstanding or exercisable, as applicable. Since the closing market price of our common stock on September 30, 2014 was lower than the exercise price of all outstanding stock options and exercisable stock options, the aggregate intrinsic value of the stock options was zero. | ||||||||||||||||||||
Stock Options Granted and Exercised | The following table sets forth information regarding the stock options granted and exercised in the periods indicated: | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Shares subject to stock options granted | 0 | 0 | 168,500 | 154,000 | |||||||||||||||||
Weighted average grant date fair value per share | $ | 0 | $ | 0 | $ | 12.62 | $ | 9.16 | |||||||||||||
Shares subject to stock options exercised | 0 | 0 | 0 | 0 | |||||||||||||||||
Intrinsic value of stock options exercised | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
Proceeds received from stock options exercised | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
Tax benefits realized from stock options exercised | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||
Assumptions used to Estimate Grant Date Fair Value of Stock Options | The fair value of each stock option grant was estimated on the date of grant using the following assumptions: | ||||||||||||||||||||
Three Months | Nine Months | ||||||||||||||||||||
Ended September 30, | Ended September 30, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Risk-free interest rates | Not applicable | Not applicable | 1.3 | % | 0.7 | % | |||||||||||||||
Expected lives (in years) | Not applicable | Not applicable | 4.7 | 4.6 | |||||||||||||||||
Volatility | Not applicable | Not applicable | 55 | % | 60 | % | |||||||||||||||
Dividend yield | Not applicable | Not applicable | None | None | |||||||||||||||||
Number of Restricted Stock Units (RSUs) Granted, Forfeited and Vested | The following table sets forth the number of restricted stock units (“RSUs”) that were granted, forfeited and vested in the period indicated: | ||||||||||||||||||||
Nine Months Ended September 30, | |||||||||||||||||||||
2014 | |||||||||||||||||||||
# of RSUs | Weighted | ||||||||||||||||||||
Average Grant | |||||||||||||||||||||
Date | |||||||||||||||||||||
Fair Value | |||||||||||||||||||||
Unvested at beginning of period | 737,844 | $ | 39.96 | ||||||||||||||||||
Granted | 402,890 | $ | 21.46 | ||||||||||||||||||
Forfeited | (156,315 | ) | $ | 31.42 | |||||||||||||||||
Vested | (119,560 | ) | $ | 61.07 | |||||||||||||||||
Unvested at end of period | 864,859 | $ | 29.97 | ||||||||||||||||||
Variable_Interest_Entities_Tab
Variable Interest Entities (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Schedule of Revenue and Expenses of PEAKS Trust | Revenue and Expenses of PEAKS Trust. The following table sets forth the revenue and expenses of the PEAKS Trust, excluding the loss on consolidation of the PEAKS Trust, which were included in our Condensed Consolidated Statements of Income for the periods indicated: | ||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Revenue | $ | 2,727 | $ | 4,072 | $ | 9,099 | $ | 9,536 | |||||||||
Student services and administrative expenses | 987 | 1,535 | 3,624 | 3,613 | |||||||||||||
Provision for PEAKS Trust student loan losses | 4,511 | 16,382 | 13,582 | 20,701 | |||||||||||||
Interest expense | 5,261 | 6,275 | 16,875 | 14,953 | |||||||||||||
(Loss) before provision for income taxes | $ | (8,032 | ) | $ | (20,120 | ) | $ | (24,982 | ) | $ | (29,731 | ) | |||||
Aggregate Amount of Guarantee and Other Payments | |||||||||||||||||
PEAKS Guarantee Payments and Payments on Behalf of Borrowers. The following table sets forth the PEAKS Guarantee payments and Payments on Behalf of Borrowers that were made in the periods indicated: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
PEAKS Guarantee | $ | 52,517 | $ | 138 | $ | 94,318 | $ | 1,377 | (1) | ||||||||
Payments on Behalf of Borrowers | 0 | 2,502 | 1,832 | 7,647 | (2) | ||||||||||||
Total | $ | 52,517 | $ | 2,640 | $ | 96,150 | $ | 9,024 | |||||||||
-1 | Of this amount, $854 was paid prior to the PEAKS Consolidation. | ||||||||||||||||
-2 | Of this amount, $532 was paid prior to the PEAKS Consolidation. | ||||||||||||||||
Schedule of Payments Made to Entity Related to Guarantee Obligations | The following table sets forth the payments that we made to the 2009 Entity related to our guarantee obligations under the 2009 RSA and the amount of recoveries from charged-off loans paid to us by the 2009 Entity in the periods indicated: | ||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Regular Payments | $ | 1,809 | (1) | $ | 458 | $ | 4,556 | (1) | $ | 841 | |||||||
Discharge Payments | 0 | 0 | 0 | 0 | |||||||||||||
Recoveries from Charged-Off Loans | 0 | 0 | 0 | (103 | ) | ||||||||||||
Total | $ | 1,809 | $ | 458 | $ | 4,556 | $ | 738 | |||||||||
-1 | This amount is net of $156 of recoveries from charged-off loans owed to us that we offset against the amount we owed under the 2009 RSA. | ||||||||||||||||
PEAKS Trust [Member] | |||||||||||||||||
Schedule of Fair Value and Carrying Value of Assets and Liabilities | The following table sets forth the fair value of the assets and liabilities of the PEAKS Trust as of February 28, 2013 that were included on our consolidated balance sheet on that date: | ||||||||||||||||
As of February 28, 2013 | |||||||||||||||||
Assets | Liabilities | ||||||||||||||||
Restricted cash | $ | 1,703 | |||||||||||||||
Current portion of PEAKS Trust student loans | 7,282 | ||||||||||||||||
PEAKS Trust student loans, excluding current portion | 104,834 | ||||||||||||||||
Current portion of PEAKS Trust senior debt | $ | 103,356 | |||||||||||||||
Other current liabilities | 471 | ||||||||||||||||
PEAKS Trust senior debt, excluding current portion | 122,740 | ||||||||||||||||
Total | $ | 113,819 | $ | 226,567 | |||||||||||||
The following table sets forth the carrying value of assets and liabilities of the PEAKS Trust that were included on our Condensed Consolidated Balance Sheets as of the dates indicated: | |||||||||||||||||
As of | As of | As of | |||||||||||||||
September 30, | December 31, | September 30, | |||||||||||||||
2014 | 2013 | 2013 | |||||||||||||||
Assets | |||||||||||||||||
Restricted cash | $ | 1,450 | $ | 2,593 | $ | 1,237 | |||||||||||
Current portion of PEAKS Trust student loans | 6,933 | 7,730 | 7,598 | ||||||||||||||
PEAKS Trust student loans, excluding current portion, less allowance for loan losses of $42,931, $29,349 and $20,701 | 60,479 | 76,479 | 85,340 | ||||||||||||||
Total assets | $ | 68,862 | $ | 86,802 | $ | 94,175 | |||||||||||
Liabilities | |||||||||||||||||
Current portion of PEAKS Trust senior debt | $ | 96,516 | $ | 157,883 | $ | 134,075 | |||||||||||
Other current liabilities | 287 | 697 | 496 | ||||||||||||||
PEAKS Trust senior debt, excluding current portion | 44,000 | 71,341 | 94,420 | ||||||||||||||
Total liabilities | $ | 140,803 | $ | 229,921 | $ | 228,991 | |||||||||||
Schedule of Carrying Value of Assets and Liabilities Eliminated from Financial Statement | The following table sets forth the carrying value of the assets and liabilities related to the PEAKS Program as of February 28, 2013 that we eliminated from our consolidated balance sheet when we consolidated the PEAKS Trust in our consolidated financial statements, and the line items within which those assets and liabilities were included: | ||||||||||||||||
As of February 28, 2013 | |||||||||||||||||
Assets | Liabilities | ||||||||||||||||
Other assets | $ | 6,614 | |||||||||||||||
Other current liabilities | $ | 3,060 | |||||||||||||||
Other liabilities | 43,054 | ||||||||||||||||
Total | $ | 6,614 | $ | 46,114 | |||||||||||||
2009 Entity [Member] | |||||||||||||||||
Schedule of Fair Value and Carrying Value of Assets and Liabilities | The following table sets forth the fair value and the carrying value of the assets and liabilities of the 2009 Entity as of September 30, 2014 that were included on our Condensed Consolidated Balance Sheet on that date: | ||||||||||||||||
As of September 30, 2014 | |||||||||||||||||
Assets | Liabilities | ||||||||||||||||
Restricted cash | $ | 2,738 | |||||||||||||||
Current portion of 2009 Entity Student Loans | 3,406 | ||||||||||||||||
2009 Entity Student Loans, excluding current portion | 23,793 | ||||||||||||||||
Other assets | 199 | ||||||||||||||||
Current portion of 2009 Entity Secured Borrowing Obligation | $ | 20,662 | |||||||||||||||
Other current liabilities | 624 | ||||||||||||||||
2009 Entity Secured Borrowing Obligation, excluding current portion | 101,880 | ||||||||||||||||
Other liabilities | 1,940 | ||||||||||||||||
Total | $ | 30,136 | $ | 125,106 | |||||||||||||
Schedule of Carrying Value of Assets and Liabilities Eliminated from Financial Statement | The following table sets forth the carrying value of the assets and liabilities related to the 2009 Entity as of September 30, 2014 that we eliminated from our consolidated balance sheet when we consolidated the 2009 Entity in our consolidated financial statements, and the line items within which those assets and liabilities were included: | ||||||||||||||||
As of September 30, 2014 | |||||||||||||||||
Assets | Liabilities | ||||||||||||||||
Prepaid expenses and other current assets | $ | 3,260 | |||||||||||||||
Other current liabilities | $ | 23,887 | |||||||||||||||
Other liabilities | 90,974 | ||||||||||||||||
Total | $ | 3,260 | $ | 114,861 | |||||||||||||
Private_Education_Loans_Tables
Private Education Loans (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Receivables [Abstract] | |||||||||||||||||
Schedule of Estimated Fair Value, Accretable Yield and Expected Cash Flows for PEAKS Trust Student Loans and 2009 Entity Student Loans | The following table sets forth the estimated fair value, accretable yield and expected cash flows for the PEAKS Trust Student Loans and 2009 Entity Student Loans, in total and for those loans pursuant to which ASC 310-30 was applied by analogy, as of the dates indicated: | ||||||||||||||||
PEAKS Trust Student | 2009 Entity Student Loans | ||||||||||||||||
Loans | |||||||||||||||||
As of February 28, 2013 | As of September 30, 2014 | ||||||||||||||||
Total | ASC 310-30 | Total | ASC 310-30 | ||||||||||||||
Applied By | Applied By | ||||||||||||||||
Analogy | Analogy | ||||||||||||||||
Estimated fair value | $ | 112,116 | $ | 60,177 | $ | 27,199 | $ | 12,799 | |||||||||
Accretable yield | 100,953 | 58,843 | 12,498 | 5,651 | |||||||||||||
Expected cash flows | $ | 213,069 | $ | 119,020 | $ | 39,697 | $ | 18,450 | |||||||||
Schedule of Information Regarding Aggregate Changes in Accretable Yield | The following tables set forth information regarding aggregate changes in accretable yield of the loan pools of the PEAKS Trust Student Loans, in total, and for those loans pursuant to which ASC 310-30 was applied by analogy, for the periods indicated: | ||||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||||
September 30, 2014 | September 30, 2013 | ||||||||||||||||
Total | ASC 310-30 | Total | ASC 310-30 | ||||||||||||||
Applied By | Applied By | ||||||||||||||||
Analogy | Analogy | ||||||||||||||||
Balance at beginning of period | $ | 59,929 | $ | 36,444 | $ | 99,475 | $ | 60,533 | |||||||||
Accretion | (2,727 | ) | (1,602 | ) | (4,072 | ) | (2,334 | ) | |||||||||
Reclassification from nonaccretable difference and changes in expected cash flows | (2,077 | ) | (830 | ) | (16,513 | ) | (11,451 | ) | |||||||||
Balance at end of period | $ | 55,125 | $ | 34,012 | $ | 78,890 | $ | 46,748 | |||||||||
Nine Months Ended | Nine Months Ended | ||||||||||||||||
30-Sep-14 | 30-Sep-13 | ||||||||||||||||
Total | ASC 310-30 | Total | ASC 310-30 | ||||||||||||||
Applied By | Applied By | ||||||||||||||||
Analogy | Analogy | ||||||||||||||||
Balance at beginning of period | $ | 70,580 | $ | 42,274 | $ | 0 | $ | 0 | |||||||||
Additions resulting from the PEAKS Consolidation | 0 | 0 | 100,953 | 58,843 | |||||||||||||
Accretion | (9,099 | ) | (5,302 | ) | (9,536 | ) | (5,282 | ) | |||||||||
Reclassification from nonaccretable difference and changes in expected cash flows | (6,356 | ) | (2,960 | ) | (12,527 | ) | (6,813 | ) | |||||||||
Balance at end of period | $ | 55,125 | $ | 34,012 | $ | 78,890 | $ | 46,748 | |||||||||
Schedule of Contractually Required Future Principal and Interest Payments, Expected Cash Flows and Nonaccretable Difference | The following table sets forth the contractually required future principal and interest payments, expected cash flows and the nonaccretable difference, in total and for those loans pursuant to which ASC 310-30 was applied by analogy, for the PEAKS Trust Student Loans and the 2009 Entity Student Loans as of the dates indicated: | ||||||||||||||||
PEAKS Trust Student | 2009 Entity Student Loans | ||||||||||||||||
Loans | |||||||||||||||||
As of February 28, 2013 | As of September 30, 2014 | ||||||||||||||||
Total | ASC 310-30 | Total | ASC 310-30 | ||||||||||||||
Applied By | Applied By | ||||||||||||||||
Analogy | Analogy | ||||||||||||||||
Contractual future principal and interest payments | $ | 487,800 | $ | 213,600 | $ | 111,159 | $ | 36,715 | |||||||||
Expected cash flows | 213,069 | 119,020 | 39,697 | 18,450 | |||||||||||||
Nonaccretable difference | $ | 274,731 | $ | 94,580 | $ | 71,462 | $ | 18,265 | |||||||||
Schedule of Information Regarding Changes in Allowance for Loan Losses | The following table sets forth information regarding changes in the allowance for loan losses of the loan pools of the PEAKS Trust Student Loans in the aggregate in the period indicated: | ||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Balance at beginning of period | $ | 38,420 | $ | 4,319 | $ | 29,349 | $ | 0 | |||||||||
Loans charged off | 0 | 0 | 0 | 0 | |||||||||||||
Recoveries from charged off loans | 0 | 0 | 0 | 0 | |||||||||||||
Provision for loan losses | 4,511 | 16,382 | 13,582 | 20,701 | |||||||||||||
Balance at end of period | $ | 42,931 | $ | 20,701 | $ | 42,931 | $ | 20,701 | |||||||||
Debt_Tables
Debt (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||
Total Amount of Interest Expense and Fees Recognized on Borrowing under New Credit Agreement | The following table sets forth the total amount of interest expense and fees (including the commitment fee) that we recognized on our borrowings under the Amended Credit Agreement, in the periods indicated: | ||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Interest expense and fees | $ | 431 | $ | 776 | $ | 1,703 | $ | 2,762 | |||||||||
Total Amount of Interest Expense and Discount Accretion on PEAKS Senior Debt | The following table sets forth the total amount of interest expense and discount accretion that we recognized on the PEAKS Senior Debt in the periods indicated: | ||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Interest expense | $ | 5,261 | $ | 6,275 | $ | 16,875 | $ | 14,953 | |||||||||
Discount accretion | $ | 1,788 | $ | 1,411 | $ | 4,770 | $ | 3,444 |
Earnings_Per_Common_Share_Tabl
Earnings Per Common Share (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||
Historical Net Income and Weighted Average Number of Shares of Common Stock Outstanding | This data is based on historical net income and the weighted average number of shares of our common stock outstanding during each period as set forth in the following table: | ||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(In thousands) | |||||||||||||||||
Shares: | |||||||||||||||||
Weighted average number of shares of common stock outstanding | 23,483 | 23,418 | 23,463 | 23,410 | |||||||||||||
Shares assumed issued (less shares assumed purchased for treasury) for stock-based compensation | 220 | 216 | 314 | 146 | |||||||||||||
Outstanding shares for diluted earnings per share calculation | 23,703 | 23,634 | 23,777 | 23,556 | |||||||||||||
Employee_Pension_Benefits_Tabl
Employee Pension Benefits (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||
Components of Net Periodic Pension Benefit of Pension Plan and Excess Pension Plan | The following table sets forth the components of net periodic pension benefit of the ESI Pension Plan and ESI Excess Pension Plan in the periods indicated: | ||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Interest cost | $ | 506 | $ | 439 | $ | 1,518 | $ | 1,316 | |||||||||
Expected return on assets | (1,311 | ) | (1,087 | ) | (3,935 | ) | (3,260 | ) | |||||||||
Recognized net actuarial loss | 0 | 506 | 0 | 1,518 | |||||||||||||
Amortization of prior service (credit) | (389 | ) | (389 | ) | (1,166 | ) | (1,167 | ) | |||||||||
Net periodic pension (benefit) | $ | (1,194 | ) | $ | (531 | ) | $ | (3,583 | ) | $ | (1,593 | ) | |||||
Schedule of Changes in Components of Accumulated Other Comprehensive Loss | The following table sets forth the changes in the components of Accumulated other comprehensive income on our Condensed Consolidated Balance Sheet in the nine months ended September 30, 2014: | ||||||||||||||||
Defined Benefit Pension Items | |||||||||||||||||
Accumulated | Income | Accumulated | |||||||||||||||
Other | Tax | Other | |||||||||||||||
Comprehensive | Benefit | Comprehensive | |||||||||||||||
Income | (Expense) | Income Net of | |||||||||||||||
Income Tax | |||||||||||||||||
Balance at January 1, 2014 | $ | 5,032 | $ | (1,886 | ) | $ | 3,146 | ||||||||||
Amortization of: | |||||||||||||||||
Prior service costs (credits) | (1,166 | ) | 452 | (714 | ) | ||||||||||||
Balance at September 30, 2014 | $ | 3,866 | $ | (1,434 | ) | $ | 2,432 | ||||||||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||
Components of Recorded Liability Related to Claims and Contingencies | The following table sets forth the components of our recorded liability related to our claims and contingencies and where the amounts were included on our Condensed Consolidated Balance Sheets as of the dates indicated: | ||||||||||||||||
As of | As of | As of | |||||||||||||||
September 30, | December 31, | September 30, | |||||||||||||||
2014 | 2013 | 2013 | |||||||||||||||
2009 RSA | $ | 0 | $ | 116,923 | $ | 36,535 | |||||||||||
Other | 14,494 | 8,957 | 8,325 | ||||||||||||||
Total | $ | 14,494 | $ | 125,880 | $ | 44,860 | |||||||||||
Other current liabilities | $ | 14,494 | $ | 25,893 | $ | 44,472 | |||||||||||
Other liabilities | 0 | 99,987 | 388 | ||||||||||||||
Total | $ | 14,494 | $ | 125,880 | $ | 44,860 | |||||||||||
Activity with Respect to Claims and Contingencies | The following table sets forth the activity with respect to our recorded liability related to our claims and contingencies in the periods indicated: | ||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Balance at beginning of period | $ | 126,074 | $ | 38,725 | $ | 125,880 | $ | 126,978 | |||||||||
Increases (decreases) from: | |||||||||||||||||
Additional accruals: | |||||||||||||||||
2009 RSA | 2,019 | 4,826 | 2,019 | 8,629 | |||||||||||||
Other | 11,603 | 5,484 | 27,816 | 12,415 | |||||||||||||
Payments, other, net of recoveries owed of $0, $186, $475, and $413 (1) | (8,532 | ) | (3,717 | ) | (21,804 | ) | (8,924 | ) | |||||||||
Payments under the 2009 RSA, net of recoveries of $0, $0, $0 and $103 (2) | (1,809 | ) | (458 | ) | (4,556 | ) | (738 | ) | |||||||||
Payments under PEAKS Guarantee, net of estimated recoveries of $0, $80, $0 and $803 | (52,517 | ) | (58 | ) | (94,318 | ) | (574 | ) | |||||||||
Payments on Behalf of Borrowers | 0 | (2,502 | ) | (1,832 | ) | (7,647 | ) | ||||||||||
Settlement payment – 2007 RSA | 0 | 0 | 0 | (46,000 | ) | ||||||||||||
Elimination of PEAKS Trust intercompany transactions (3) | 52,517 | 2,560 | 96,150 | 6,835 | |||||||||||||
Elimination of PEAKS Guarantee accrual (4) | 0 | 0 | 0 | (46,114 | ) | ||||||||||||
Elimination of 2009 RSA accrual (5) | (114,861 | ) | 0 | (114,861 | ) | 0 | |||||||||||
Balance at end of period | $ | 14,494 | $ | 44,860 | $ | 14,494 | $ | 44,860 | |||||||||
-1 | Consists of payments for legal and other contingencies, net of recoveries from charged-off loans made under the 2009 Loan Program that were owed, but had not been remitted, to us. | ||||||||||||||||
-2 | Consists of payments made under the 2009 RSA, net of recoveries from charged-off 2009 Entity Student Loans that we received. | ||||||||||||||||
-3 | We consolidated the PEAKS Trust in our consolidated financial statements as of February 28, 2013 and, as a result, we eliminated from our consolidated financial statements the amount of payments under the PEAKS Guarantee and Payments on Behalf of Borrowers that we made following the PEAKS Consolidation. See Note 8 – Variable Interest Entities, for a further discussion of the PEAKS Consolidation. | ||||||||||||||||
-4 | As a result of the PEAKS Consolidation, in the nine months ended September 30, 2013, we eliminated from our consolidated financial statements the contingent liability related to the PEAKS Guarantee that we had previously recorded. | ||||||||||||||||
-5 | As a result of the 2009 Entity Consolidation, in the three and nine months ended September 30, 2014, we eliminated from our consolidated financial statements the contingent liability related to the 2009 RSA that we had previously recorded. | ||||||||||||||||
Estimated Amounts of Regular, Discharge Payments Expect to Pay and Estimated Recoveries from Charged-off Loans | The following table sets forth, in the periods indicated, our projections of the estimated amounts of Regular Payments and Discharge Payments that we expect to pay (or that we expect will be owed by us, which amounts could be reduced prior to payment thereof by the amount of recoveries from charged-off loans owed to us as described in the immediately preceding sentence) and the estimated amounts of recoveries from charged-off loans that we expect to be paid to us by the 2009 Entity (or that we may utilize to offset a portion of the amounts of Regular Payments or Discharge Payments owed by us): | ||||||||||||||||
Year | Estimated | Estimated | Estimated | Estimated | |||||||||||||
Regular | Discharge | Total | Recoveries | ||||||||||||||
Payments | Payments | Payments | |||||||||||||||
2015 | $ | 13,400 | $ | 2,709 | (1) | $ | 16,109 | $ | (1,240 | ) | |||||||
2016 | 15,835 | 0 | 15,835 | (1,240 | ) | ||||||||||||
2017 | 16,631 | 0 | 16,631 | (1,240 | ) | ||||||||||||
2018 and later | 0 | 72,509 | 72,509 | (380 | ) | ||||||||||||
Total | $ | 45,866 | $ | 75,218 | $ | 121,084 | $ | (4,100 | ) | ||||||||
-1 | Represents the Discharge Payment of $2,709 that we made on March 19, 2015 pursuant to the terms of the Fifth Amendment to 2009 RSA. | ||||||||||||||||
Aggregate Amount of Guarantee Payments, Discharge Payments and Payments on Behalf of Borrowers | The following table sets forth the approximate aggregate amount of guarantee payments, Discharge Payments and Payments on Behalf of Borrowers that were made related to the PEAKS Program and 2009 RSA and the amount of recoveries from charged-off loans paid to us by the 2009 Entity, in the periods indicated: | ||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
Type of Payment (Receipt) | 2014 | 2013 | 2014 | 2013 | |||||||||||||
Guarantee: | |||||||||||||||||
PEAKS Program | $ | 52,517 | $ | 138 | $ | 94,318 | $ | 1,377 | (1) | ||||||||
2009 RSA Regular Payments | 1,809 | (2) | 458 | 4,556 | (2) | 841 | |||||||||||
2009 RSA Discharge Payments | 0 | 0 | 0 | 0 | |||||||||||||
Payments on Behalf of Borrowers | 0 | 2,502 | 1,832 | 7,647 | (3) | ||||||||||||
2009 RSA-Recoveries from Charged-Off Loans | 0 | 0 | 0 | (103 | ) | ||||||||||||
Total | $ | 54,326 | $ | 3,098 | $ | 100,706 | $ | 9,762 | |||||||||
-1 | Of this amount, $854 was paid prior to the PEAKS Consolidation. | ||||||||||||||||
-2 | This amount is net of $156 of recoveries from charged-off loans owed to us that we offset against the amount we owed under the 2009 RSA. | ||||||||||||||||
-3 | Of this amount, $532 was paid prior to the PEAKS Consolidation. |
The_Company_and_Basis_of_Prese1
The Company and Basis of Presentation - Additional Information (Detail) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Dec. 31, 2014 | |
Location | Location | |
State | ||
Attendant | ||
Entity | ||
Business And Basis Of Presentation [Line Items] | ||
Number of students in degree programs | 57,000 | |
Number of states where online programs are offered | 50 | |
Number of locations | 148 | |
Number of campuses | 147 | |
Number of learning sites | 1 | |
Number of states | 39 | |
Number of variable interest entities | 2 | |
Subsequent Event [Member] | ||
Business And Basis Of Presentation [Line Items] | ||
Number of locations | 144 | |
Number of campuses closed | 3 | |
Number of learning sites closed | 1 |
Acquisition_Additional_Informa
Acquisition - Additional Information (Detail) (USD $) | 9 Months Ended | 0 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Oct. 31, 2014 | Jan. 31, 2014 |
Business Acquisition [Line Items] | |||
Business acquired assets and liabilities | $5,220 | ||
Consideration paid | 5,186 | ||
Subsequent Event [Member] | |||
Business Acquisition [Line Items] | |||
Consideration paid | $34 | ||
Ascolta [Member] | |||
Business Acquisition [Line Items] | |||
Identifiable intangible assets weighted-average life | 5 years |
Acquisition_Summary_of_Estimat
Acquisition - Summary of Estimated Fair Values Allocated to Major Classes of Assets Acquired and Liabilities Assumed (Detail) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
In Thousands, unless otherwise specified | ||
Business Acquisition [Line Items] | ||
Goodwill | $7,247 | $3,958 |
Assets Acquired [Member] | Ascolta [Member] | ||
Business Acquisition [Line Items] | ||
Accounts receivable and other current assets | 849 | |
Furniture and equipment | 370 | |
Identifiable intangible assets | 1,670 | |
Goodwill | 3,332 | |
Liabilities Assumed [Member] | Ascolta [Member] | ||
Business Acquisition [Line Items] | ||
Other liabilities | $1,001 |
Goodwill_and_Intangibles_Sched
Goodwill and Intangibles - Schedule of Carrying Value of Acquired Intangible Assets (Detail) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Schedule Of Finite And Indefinite Lived Intangible Assets [Line Items] | ||
Amortizable intangible assets, Gross Carrying Value | $4,270 | $2,600 |
Amortizable intangible assets, Accumulated Amortization | -982 | -214 |
Amortizable intangible assets, Net Carrying Value | 3,288 | 2,386 |
Indefinite-lived intangible assets, Goodwill | 7,247 | 3,958 |
Indefinite-lived intangible assets | 7,907 | 4,618 |
Customer Relationships [Member] | ||
Schedule Of Finite And Indefinite Lived Intangible Assets [Line Items] | ||
Amortizable intangible assets, Gross Carrying Value | 2,500 | 1,200 |
Amortizable intangible assets, Accumulated Amortization | -453 | -40 |
Amortizable intangible assets, Net Carrying Value | 2,047 | 1,160 |
Amortizable intangible assets, Weighted Average Amortization Period | 60 months | 60 months |
Non-compete Agreements [Member] | ||
Schedule Of Finite And Indefinite Lived Intangible Assets [Line Items] | ||
Amortizable intangible assets, Gross Carrying Value | 1,120 | 750 |
Amortizable intangible assets, Accumulated Amortization | -224 | -25 |
Amortizable intangible assets, Net Carrying Value | 896 | 725 |
Amortizable intangible assets, Weighted Average Amortization Period | 60 months | 60 months |
Training Materials [Member] | ||
Schedule Of Finite And Indefinite Lived Intangible Assets [Line Items] | ||
Amortizable intangible assets, Gross Carrying Value | 440 | 440 |
Amortizable intangible assets, Accumulated Amortization | -147 | -21 |
Amortizable intangible assets, Net Carrying Value | 293 | 419 |
Amortizable intangible assets, Weighted Average Amortization Period | 42 months | 42 months |
Accreditation [Member] | ||
Schedule Of Finite And Indefinite Lived Intangible Assets [Line Items] | ||
Amortizable intangible assets, Gross Carrying Value | 210 | 210 |
Amortizable intangible assets, Accumulated Amortization | -158 | -128 |
Amortizable intangible assets, Net Carrying Value | 52 | 82 |
Amortizable intangible assets, Weighted Average Amortization Period | 84 months | 84 months |
Trademark [Member] | ||
Schedule Of Finite And Indefinite Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets, Trademark | $660 | $660 |
Goodwill_and_Intangibles_Addit
Goodwill and Intangibles - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 3 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2014 |
Goodwill And Intangible Assets [Line Items] | |||||
Amortization expense for amortized intangible assets | $193 | $8 | $632 | $23 | |
Subsequent Event [Member] | |||||
Goodwill And Intangible Assets [Line Items] | |||||
Goodwill impairment charge | $2,000 |
Goodwill_and_Intangibles_Estim
Goodwill and Intangibles - Estimated Amortization Expense of Intangible Assets (Detail) (USD $) | Sep. 30, 2014 |
In Thousands, unless otherwise specified | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2015 | $880 |
2016 | 865 |
2017 | 734 |
2018 | 562 |
2019 | 28 |
Total | $3,069 |
Fair_Value_Fair_Value_Measurem
Fair Value - Fair Value Measurement of Financial Assets (Detail) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
In Thousands, unless otherwise specified | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value disclosure | $206,584 | $175,746 |
Money Market Funds [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 196,171 | 163,981 |
Restricted cash | 1,786 | 3,140 |
Other assets | 8,627 | 8,625 |
(Level 1) Quoted Prices in Active Markets for Identical Assets [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value disclosure | 206,584 | 175,746 |
(Level 1) Quoted Prices in Active Markets for Identical Assets [Member] | Money Market Funds [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 196,171 | 163,981 |
Restricted cash | 1,786 | 3,140 |
Other assets | 8,627 | 8,625 |
(Level 2) Significant Other Observable Inputs [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value disclosure | 0 | 0 |
(Level 2) Significant Other Observable Inputs [Member] | Money Market Funds [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 0 | 0 |
Restricted cash | 0 | 0 |
Other assets | 0 | 0 |
(Level 3) Significant Unobservable Inputs [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value disclosure | 0 | 0 |
(Level 3) Significant Unobservable Inputs [Member] | Money Market Funds [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 0 | 0 |
Restricted cash | 0 | 0 |
Other assets | $0 | $0 |
Fair_Value_Additional_Informat
Fair Value - Additional Information (Detail) (USD $) | Feb. 28, 2013 | Sep. 30, 2014 | Jan. 31, 2010 | Dec. 31, 2013 | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |||||
PEAKS Trust Student Loans [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
The estimated fair value | $112,116 | ||||
PEAKS Senior Debt [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Aggregate principal amount of debt | 300,000 | ||||
Carrying value senior debt | 140,516 | ||||
(Level 2) Significant Other Observable Inputs [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Estimated fair value of debt | 50,000 | 50,000 | 60,000 | ||
Carrying value of debt | 50,000 | 50,000 | 60,000 | ||
(Level 3) Significant Unobservable Inputs [Member] | PEAKS Trust Student Loans [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
The estimated fair value | 79,412 | 109,000 | |||
Carrying value of the PEAKS Trust Student Loans | 67,412 | 92,938 | |||
(Level 3) Significant Unobservable Inputs [Member] | PEAKS Senior Debt [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Aggregate principal amount of debt | 300,000 | ||||
Carrying value senior debt | 140,516 | 228,495 | |||
Estimated fair value senior debt | $149,583 | $233,000 |
Equity_Compensation_StockBased
Equity Compensation - Stock-Based Compensation Expense and Related Income Tax Benefit (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Stock-based compensation expense | $2,667 | $3,304 | $7,529 | $8,698 |
Income tax (benefit) | ($1,027) | ($1,272) | ($2,899) | ($3,349) |
Equity_Compensation_Additional
Equity Compensation - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Pre-tax compensation expense for unvested stock-based compensation grants | $12,300 | $12,300 | ||
Service period applicable to the grantees on a weighted-average basis, years | 1 year 8 months 12 days | |||
RSUs vested and settled in shares of common stock, amount | $563 | $49 | $2,505 | $1,226 |
Equity_Compensation_Stock_Opti
Equity Compensation - Stock Options Granted, Forfeited, Exercised and Expired (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Number of shares | ||||
Number of Shares, Outstanding at beginning of period | 1,332,448 | |||
Number of Shares, Granted | 0 | 0 | 168,500 | 154,000 |
Number of Shares, Forfeited | -10,334 | |||
Number of Shares, Exercised | 0 | 0 | 0 | 0 |
Number of Shares, Expired | -322,441 | |||
Number of Shares, Outstanding at end of period | 1,168,173 | 1,168,173 | ||
Number of Shares, Exercisable at end of period | 862,165 | 862,165 | ||
Weighted Average Exercise Price | ||||
Weighted Average Exercise Price, Outstanding at beginning of period | $81.77 | |||
Weighted Average Exercise Price, Granted | $27.94 | |||
Weighted Average Exercise Price, Forfeited | $30.29 | |||
Weighted Average Exercise Price, Exercised | $0 | |||
Weighted Average Exercise Price, Expired | $70.87 | |||
Weighted Average Exercise Price, Outstanding at end of period | $77.47 | $77.47 | ||
Weighted Average Exercise Price, Exercisable at end of period | $93.85 | $93.85 | ||
Aggregate Exercise Price | ||||
Aggregate Exercise Price, Outstanding at beginning of period | $108,955 | |||
Aggregate Exercise Price, Granted | 4,708 | |||
Aggregate Exercise Price, Forfeited | -313 | |||
Aggregate Exercise Price, Exercised | 0 | |||
Aggregate Exercise Price, Expired | -22,853 | |||
Aggregate Exercise Price, Outstanding at end of period | 90,497 | 90,497 | ||
Aggregate Exercise Price, Exercisable at end of period | 80,911 | 80,911 | ||
Weighted Average Remaining Contractual Term | ||||
Weighted Average Remaining Contractual Term, Outstanding at end of period, years | 2 years 4 months 24 days | |||
Weighted Average Remaining Contractual Term, Exercisable at end of period, years | 2 years | |||
Aggregate Intrinsic Value | ||||
Aggregate Intrinsic Value, Outstanding at end of period | 0 | 0 | ||
Aggregate Intrinsic Value, Exercisable at end of period | $0 | $0 |
Equity_Compensation_Stock_Opti1
Equity Compensation - Stock Options Granted, Forfeited, Exercised and Expired (Parenthetical) (Detail) (USD $) | Sep. 30, 2014 |
In Thousands, unless otherwise specified | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Aggregate Intrinsic Value, Outstanding at end of period | $0 |
Aggregate Intrinsic Value, Exercisable at end of period | $0 |
Equity_Compensation_Stock_Opti2
Equity Compensation - Stock Options Granted and Exercised (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Shares subject to stock options granted | 0 | 0 | 168,500 | 154,000 |
Weighted average grant date fair value per share | $0 | $0 | $12.62 | $9.16 |
Shares subject to stock options exercised | 0 | 0 | 0 | 0 |
Intrinsic value of stock options exercised | $0 | $0 | $0 | $0 |
Proceeds received from stock options exercised | 0 | 0 | 0 | 0 |
Tax benefits realized from stock options exercised | $0 | $0 | $0 | $0 |
Equity_Compensation_Assumption
Equity Compensation - Assumptions used to Estimate Grant Date Fair Value of Stock options (Detail) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Risk-free interest rates | 1.30% | 0.70% | ||
Expected lives (in years) | 4 years 8 months 12 days | 4 years 7 months 6 days | ||
Volatility | 55.00% | 60.00% | ||
Dividend yield |
Equity_Compensation_Number_of_
Equity Compensation - Number of Restricted Stock Units (RSUs) Granted, Forfeited and Vested (Detail) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Number of RSUs | |
Number of RSUs, Unvested at beginning of period | 737,844 |
Number of RSUs, Granted | 402,890 |
Number of RSUs, Forfeited | -156,315 |
Number of RSUs, Vested | -119,560 |
Number of RSUs, Unvested at end of period | 864,859 |
Weighted Average Grant Date Fair Value | |
Weighted Average Grant Date Fair Value, Unvested at beginning of period | $39.96 |
Weighted Average Grant Date Fair Value, Granted | $21.46 |
Weighted Average Grant Date Fair Value, Forfeited | $31.42 |
Weighted Average Grant Date Fair Value, Vested | $61.07 |
Weighted Average Grant Date Fair Value, Unvested at end of period | $29.97 |
Variable_Interest_Entities_Add
Variable Interest Entities - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 1 Months Ended | 3 Months Ended | 0 Months Ended | ||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Jan. 31, 2014 | Mar. 31, 2013 | Mar. 20, 2014 | Dec. 31, 2013 | Feb. 28, 2013 | |
Variable Interest Entity [Line Items] | |||||||||
Subordinated Note, maturity date | 2026-03 | ||||||||
Gain (loss) on consolidation | $16,631,000 | $0 | $16,631,000 | ($73,248,000) | |||||
Payments on Behalf of Borrowers | 0 | 2,502,000 | 1,832,000 | 7,647,000 | |||||
Amount offset against 2009 Entity under the Revolving Note | 0 | 357,000 | 0 | 8,471,000 | |||||
Advances to 2009 Entity | 0 | 0 | |||||||
Revolving note, amount owned to company | 8,200,000 | 8,200,000 | 8,200,000 | 8,200,000 | 8,200,000 | ||||
2009 Entity [Member] | |||||||||
Variable Interest Entity [Line Items] | |||||||||
Gain (loss) on consolidation | 16,631,000 | 16,631,000 | |||||||
Number of monthly payments | 10 | ||||||||
Discount rate | 10.00% | ||||||||
Revenue or expenses on consolidation of income | 0 | 0 | |||||||
Recoveries from charged-off loans | 0 | 186,000 | 475,000 | 413,000 | |||||
Amount offset against 2009 Entity under the Revolving Note | 0 | 357,000 | 0 | 8,471,000 | |||||
2009 Entity [Member] | Fair Value [Member] | |||||||||
Variable Interest Entity [Line Items] | |||||||||
Amount of liabilities exceeded assets | 94,970,000 | 94,970,000 | |||||||
2009 Entity [Member] | Carrying Value [Member] | |||||||||
Variable Interest Entity [Line Items] | |||||||||
Amount of liabilities exceeded assets | 111,601,000 | 111,601,000 | |||||||
PEAKS Trust [Member] | |||||||||
Variable Interest Entity [Line Items] | |||||||||
Reduction in excess of increase in fair value of liabilities over assets | 39,500,000 | ||||||||
Gain (loss) on consolidation | -73,248,000 | ||||||||
Payments on Behalf of Borrowers | 1,832,000 | ||||||||
PEAKS Trust [Member] | 2014 Payment [Member] | |||||||||
Variable Interest Entity [Line Items] | |||||||||
Prepayment of Senior debt | 40,000,000 | ||||||||
PEAKS Trust [Member] | Fair Value [Member] | |||||||||
Variable Interest Entity [Line Items] | |||||||||
Amount of liabilities exceeded assets | $112,748,000 |
Variable_Interest_Entities_Sch
Variable Interest Entities - Schedule of Carrying Value of Assets and Liabilities of PEAKS Trust (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Feb. 28, 2013 |
In Thousands, unless otherwise specified | ||||
Variable Interest Entity [Line Items] | ||||
Restricted cash | $5,974 | $5,636 | $4,989 | |
Current portion of PEAKS Trust student loans | 10,339 | 7,730 | 7,598 | |
PEAKS Trust student loans, excluding current portion | 84,272 | 76,479 | 85,340 | |
Total assets | 767,506 | 806,851 | 739,302 | |
Current portion of PEAKS Trust senior debt | 96,516 | 157,883 | 134,075 | |
Other current liabilities | 27,838 | 42,136 | 57,485 | |
PEAKS Trust senior debt, excluding current portion | 44,000 | 71,341 | 94,420 | |
Total liabilities | 635,971 | 691,205 | 598,067 | |
PEAKS Trust [Member] | ||||
Variable Interest Entity [Line Items] | ||||
Restricted cash | 1,450 | 2,593 | 1,237 | 1,703 |
Current portion of PEAKS Trust student loans | 6,933 | 7,730 | 7,598 | 7,282 |
PEAKS Trust student loans, excluding current portion | 60,479 | 76,479 | 85,340 | 104,834 |
Total assets | 68,862 | 86,802 | 94,175 | 113,819 |
Current portion of PEAKS Trust senior debt | 96,516 | 157,883 | 134,075 | 103,356 |
Other current liabilities | 287 | 697 | 496 | 471 |
PEAKS Trust senior debt, excluding current portion | 44,000 | 71,341 | 94,420 | 122,740 |
Total liabilities | $140,803 | $229,921 | $228,991 | $226,567 |
Variable_Interest_Entities_Sch1
Variable Interest Entities - Schedule of Carrying Value of Assets and Liabilities Eliminated from Financial Statement (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Feb. 28, 2013 |
In Thousands, unless otherwise specified | ||||
Variable Interest Entity [Line Items] | ||||
Total assets | ($767,506) | ($806,851) | ($739,302) | |
Other current liabilities | -27,838 | -42,136 | -57,485 | |
Total | -635,971 | -691,205 | -598,067 | |
PEAKS Trust [Member] | ||||
Variable Interest Entity [Line Items] | ||||
Total assets | -68,862 | -86,802 | -94,175 | -113,819 |
Other current liabilities | -287 | -697 | -496 | -471 |
Total | -140,803 | -229,921 | -228,991 | -226,567 |
PEAKS Trust [Member] | Consolidation, Eliminations [Member] | ||||
Variable Interest Entity [Line Items] | ||||
Other assets | 6,614 | |||
Total assets | 6,614 | |||
Other current liabilities | 3,060 | |||
Other liabilities | 43,054 | |||
Total | $46,114 |
Variable_Interest_Entities_Sch2
Variable Interest Entities - Schedule of Carrying Value of Assets and Liabilities of PEAKS Trust (Parenthetical) (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |||
Variable Interest Entity [Line Items] | |||
Allowance for loan losses | $42,931 | $29,349 | $20,701 |
PEAKS Trust [Member] | |||
Variable Interest Entity [Line Items] | |||
Allowance for loan losses | $42,931 | $29,349 | $20,701 |
Variable_Interest_Entities_Sch3
Variable Interest Entities - Schedule of Revenue and Expenses of PEAKS Trust (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Variable Interest Entity [Line Items] | ||||
Student services and administrative expenses | $100,440 | $96,182 | $297,225 | $296,238 |
Provision for PEAKS Trust student loan losses | 4,511 | 16,382 | 13,582 | 20,701 |
Interest expense | 5,831 | 7,190 | 18,995 | 18,133 |
Income before provision for income taxes | 17,600 | 12,760 | 24,315 | 16,541 |
PEAKS Trust [Member] | ||||
Variable Interest Entity [Line Items] | ||||
Revenue | 2,727 | 4,072 | 9,099 | 9,536 |
Student services and administrative expenses | 987 | 1,535 | 3,624 | 3,613 |
Provision for PEAKS Trust student loan losses | 4,511 | 16,382 | 13,582 | 20,701 |
Interest expense | 5,261 | 6,275 | 16,875 | 14,953 |
Income before provision for income taxes | ($8,032) | ($20,120) | ($24,982) | ($29,731) |
Variable_Interest_Entities_Gua
Variable Interest Entities - Guarantee and Other Payments Related to PEAKS Program (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Variable Interest Entity [Line Items] | ||||
Payments on Behalf of Borrowers | $0 | $2,502 | $1,832 | $7,647 |
PEAKS Program [Member] | ||||
Variable Interest Entity [Line Items] | ||||
PEAKS Guarantee | 52,517 | 138 | 94,318 | 1,377 |
Payments on Behalf of Borrowers | 0 | 2,502 | 1,832 | 7,647 |
Total | $52,517 | $2,640 | $96,150 | $9,024 |
Variable_Interest_Entities_Gua1
Variable Interest Entities - Guarantee and Other Payments Related to PEAKS Program (Parenthetical) (Detail) (PEAKS Program [Member], USD $) | 1 Months Ended | 9 Months Ended |
In Thousands, unless otherwise specified | Feb. 28, 2013 | Sep. 30, 2013 |
PEAKS Program [Member] | ||
Variable Interest Entity [Line Items] | ||
Guarantee payments paid to prior consolidation | $854 | $854 |
Payments on behalf of borrowers prior to consolidation | $532 | $532 |
Variable_Interest_Entities_Sch4
Variable Interest Entities - Schedule of Fair Value and Carrying Value of Assets and Liabilities of the 2009 Entity (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |||
Variable Interest Entity [Line Items] | |||
Restricted cash | $5,974 | $5,636 | $4,989 |
Current portion of 2009 Entity Student Loans | 10,339 | 7,730 | 7,598 |
2009 Entity Student Loans, excluding current portion | 84,272 | 76,479 | 85,340 |
Total assets | 767,506 | 806,851 | 739,302 |
Current portion of 2009 Entity secured borrowing obligation | 20,662 | 0 | 0 |
Other current liabilities | 27,838 | 42,136 | 57,485 |
2009 Entity secured borrowing obligation, excluding current portion | 101,880 | 0 | 0 |
Total liabilities | 635,971 | 691,205 | 598,067 |
2009 Entity [Member] | |||
Variable Interest Entity [Line Items] | |||
Restricted cash | 2,738 | ||
Current portion of 2009 Entity Student Loans | 3,406 | ||
2009 Entity Student Loans, excluding current portion | 23,793 | ||
Other assets | 199 | ||
Total assets | 30,136 | ||
Current portion of 2009 Entity secured borrowing obligation | 20,662 | ||
Other current liabilities | 624 | ||
2009 Entity secured borrowing obligation, excluding current portion | 101,880 | ||
Other liabilities | 1,940 | ||
Total liabilities | $125,106 |
Variable_Interest_Entities_Sch5
Variable Interest Entities - Schedule of Carrying Value of the Assets and Liabilities Eliminated from Financial Statement Related to the 2009 Entity (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |||
Variable Interest Entity [Line Items] | |||
Prepaid expenses and other current assets | ($48,478) | ($28,400) | ($21,671) |
Total assets | -767,506 | -806,851 | -739,302 |
Other current liabilities | -27,838 | -42,136 | -57,485 |
Total liabilities | -635,971 | -691,205 | -598,067 |
2009 Entity [Member] | |||
Variable Interest Entity [Line Items] | |||
Total assets | -30,136 | ||
Other current liabilities | -624 | ||
Other liabilities | -1,940 | ||
Total liabilities | -125,106 | ||
Consolidation, Eliminations [Member] | 2009 Entity [Member] | |||
Variable Interest Entity [Line Items] | |||
Prepaid expenses and other current assets | 3,260 | ||
Total assets | 3,260 | ||
Other current liabilities | 23,887 | ||
Other liabilities | 90,974 | ||
Total liabilities | $114,861 |
Variable_Interest_Entities_Sch6
Variable Interest Entities - Schedule of Payments Made to Entity Related to Guarantee Obligations (Detail) (2009 RSA [Member], USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
2009 RSA [Member] | ||||
Variable Interest Entity [Line Items] | ||||
Regular Payments | $1,809 | $458 | $4,556 | $841 |
Discharge Payments | 0 | 0 | 0 | 0 |
Recoveries from Charged-Off Loans | 0 | 0 | 0 | -103 |
Net guarantee obligation payments | $1,809 | $458 | $4,556 | $738 |
Variable_Interest_Entities_Sch7
Variable Interest Entities - Schedule of Payments Made to Entity Related to Guarantee Obligations (Parenthetical) (Detail) (2009 RSA [Member], USD $) | 3 Months Ended | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2014 |
2009 RSA [Member] | ||
Variable Interest Entity [Line Items] | ||
Recoveries from charged-off loans owed related to regular payments obligation | $156 | $156 |
Private_Education_Loans_Additi
Private Education Loans - Additional Information (Detail) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Feb. 28, 2013 |
Pool_Loan | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans, outstanding amount | 226,931 | |
Allowance for loan losses | 0 | |
Private Education Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans, carrying amount | 94,611 | |
PEAKS Trust Student Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of separate pools of loans | 24 | |
2009 Entity Student Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of separate pools of loans | 48 |
Private_Education_Loans_Schedu
Private Education Loans - Schedule of Estimated Fair Value, Accretable Yield and Expected Cash Flows (Detail) (USD $) | Feb. 28, 2013 | Sep. 30, 2014 |
In Thousands, unless otherwise specified | ||
PEAKS Trust Student Loans [Member] | ||
Acquired Impaired Loans Rollforward [Line Items] | ||
Estimated fair value | $112,116 | |
Accretable yield | 100,953 | |
Expected cash flows | 213,069 | |
PEAKS Trust Student Loans [Member] | Analogy [Member] | ||
Acquired Impaired Loans Rollforward [Line Items] | ||
Estimated fair value | 60,177 | |
Accretable yield | 58,843 | |
Expected cash flows | 119,020 | |
2009 Entity Student Loans [Member] | ||
Acquired Impaired Loans Rollforward [Line Items] | ||
Estimated fair value | 27,199 | |
Accretable yield | 12,498 | |
Expected cash flows | 39,697 | |
2009 Entity Student Loans [Member] | Analogy [Member] | ||
Acquired Impaired Loans Rollforward [Line Items] | ||
Estimated fair value | 12,799 | |
Accretable yield | 5,651 | |
Expected cash flows | $18,450 |
Private_Education_Loans_Schedu1
Private Education Loans - Schedule of Information Regarding Aggregate Changes in Accretable Yield (Detail) (PEAKS Trust Student Loans [Member], USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Balance at beginning of period | $59,929 | $99,475 | $70,580 | $0 |
Additions resulting from the PEAKS Consolidation | 0 | 100,953 | ||
Accretion | -2,727 | -4,072 | -9,099 | -9,536 |
Reclassification from nonaccretable difference and changes in expected cash flows | -2,077 | -16,513 | -6,356 | -12,527 |
Balance at end of period | 55,125 | 78,890 | 55,125 | 78,890 |
Analogy [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Balance at beginning of period | 36,444 | 60,533 | 42,274 | 0 |
Additions resulting from the PEAKS Consolidation | 0 | 58,843 | ||
Accretion | -1,602 | -2,334 | -5,302 | -5,282 |
Reclassification from nonaccretable difference and changes in expected cash flows | -830 | -11,451 | -2,960 | -6,813 |
Balance at end of period | $34,012 | $46,748 | $34,012 | $46,748 |
Private_Education_Loans_Schedu2
Private Education Loans - Schedule of Contractually Required Future Principal and Interest Payments, Expected Cash Flows and Nonaccretable Difference (Detail) (USD $) | Feb. 28, 2013 | Sep. 30, 2014 |
In Thousands, unless otherwise specified | ||
PEAKS Trust Student Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Contractual future principal and interest payments | $487,800 | |
Expected cash flows | 213,069 | |
Nonaccretable difference | 274,731 | |
PEAKS Trust Student Loans [Member] | Analogy [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Contractual future principal and interest payments | 213,600 | |
Expected cash flows | 119,020 | |
Nonaccretable difference | 94,580 | |
2009 Entity Student Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Contractual future principal and interest payments | 111,159 | |
Expected cash flows | 39,697 | |
Nonaccretable difference | 71,462 | |
2009 Entity Student Loans [Member] | Analogy [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Contractual future principal and interest payments | 36,715 | |
Expected cash flows | 18,450 | |
Nonaccretable difference | $18,265 |
Private_Education_Loans_Schedu3
Private Education Loans - Schedule of Information Regarding Changes in Allowance for Loan Losses (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Provision for loan losses | $4,511 | $16,382 | $13,582 | $20,701 |
PEAKS Trust Student Loans [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Balance at beginning of period | 38,420 | 4,319 | 29,349 | 0 |
Loans charged off | 0 | 0 | 0 | 0 |
Recoveries from charged off loans | 0 | 0 | 0 | 0 |
Provision for loan losses | 4,511 | 16,382 | 13,582 | 20,701 |
Balance at end of period | $42,931 | $20,701 | $42,931 | $20,701 |
Debt_Term_Loans_Additional_Inf
Debt - Term Loans - Additional Information (Detail) (USD $) | 9 Months Ended | 0 Months Ended | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Mar. 17, 2015 | Dec. 04, 2014 | Dec. 31, 2014 |
Debt Instrument [Line Items] | ||||
Cash collateral for outstanding letters of credit | $89,300 | |||
Percentage of outstanding principal amount in excess of cash flow | 50.00% | |||
Period of prepayment of outstanding principal on Financing Agreement that requires premium payment | 2 years | |||
Term Loan [Member] | ||||
Debt Instrument [Line Items] | ||||
Cash collateral for outstanding letters of credit | 100 | |||
Debt instrument maturity date | 4-Dec-17 | |||
Administrative fee | 25 | |||
Term Loan [Member] | Period Until December 4, 2015 [Member] | ||||
Debt Instrument [Line Items] | ||||
Percentage of debt instrument prepayment premium | 2.00% | |||
Term Loan [Member] | Period from December 5, 2015 through December 4, 2016 [Member] | ||||
Debt Instrument [Line Items] | ||||
Percentage of debt instrument prepayment premium | 1.00% | |||
Term Loan [Member] | 2015 [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument installment amount | 2,500 | |||
Term Loan [Member] | 2016 [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument installment amount | 5,000 | |||
Term Loan [Member] | 2017 [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument installment amount | 7,500 | |||
Term Loan [Member] | First Quarter [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument repayment date | 1-Mar-15 | |||
Term Loan [Member] | First Quarter [Member] | 2015 [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument installment amount | 2,500 | |||
Term Loan [Member] | First Quarter [Member] | 2016 [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument installment amount | 5,000 | |||
Term Loan [Member] | First Quarter [Member] | 2017 [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument installment amount | 7,500 | |||
Term Loan [Member] | Second Quarter [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument repayment date | 1-Jun-15 | |||
Term Loan [Member] | Second Quarter [Member] | 2015 [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument installment amount | 2,500 | |||
Term Loan [Member] | Second Quarter [Member] | 2016 [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument installment amount | 5,000 | |||
Term Loan [Member] | Second Quarter [Member] | 2017 [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument installment amount | 7,500 | |||
Term Loan [Member] | Third Quarter [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument repayment date | 1-Sep-15 | |||
Term Loan [Member] | Third Quarter [Member] | 2015 [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument installment amount | 2,500 | |||
Term Loan [Member] | Third Quarter [Member] | 2016 [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument installment amount | 5,000 | |||
Term Loan [Member] | Third Quarter [Member] | 2017 [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument installment amount | 7,500 | |||
Term Loan [Member] | Fourth Quarter [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument repayment date | 1-Dec-15 | |||
Term Loan [Member] | Fourth Quarter [Member] | 2015 [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument installment amount | 2,500 | |||
Term Loan [Member] | Fourth Quarter [Member] | 2016 [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument installment amount | 5,000 | |||
Term Loan [Member] | Fourth Quarter [Member] | 2017 [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument installment amount | 7,500 | |||
Option One [Member] | ||||
Debt Instrument [Line Items] | ||||
Variable rate basis | LIBOR | |||
Base rate percentage | 1.00% | |||
Option One [Member] | Base Rate [Member] | ||||
Debt Instrument [Line Items] | ||||
Variable rate, margin percentage | 8.50% | |||
Option Two [Member] | ||||
Debt Instrument [Line Items] | ||||
Base rate percentage | 2.00% | |||
Option Two [Member] | Federal Fund Rate [Member] | ||||
Debt Instrument [Line Items] | ||||
Variable rate, margin percentage | 0.50% | |||
Option Two [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||
Debt Instrument [Line Items] | ||||
Variable rate, margin percentage | 1.00% | |||
Option Two [Member] | Prime Rate [Member] | ||||
Debt Instrument [Line Items] | ||||
Variable rate, margin percentage | 8.00% | |||
Subsequent Event [Member] | ||||
Debt Instrument [Line Items] | ||||
Limitation on payment for fiscal year after 2014 | 20,000 | |||
Limitation on payment for fiscal year 2015 | 45,000 | |||
Limitation on payment for fiscal year after 2015 | 35,000 | |||
Aggregate amount of payments related to PEAKS program | 5,000 | |||
Subsequent Event [Member] | Term Loan [Member] | ||||
Debt Instrument [Line Items] | ||||
Aggregate principal amount | 100,000 | |||
Cash collateral for outstanding letters of credit | 89,200 | |||
Repayment of outstanding loans, including accrued interest and fees | 50,400 | |||
Commitment fee | $3,000 |
Debt_Credit_Facility_Additiona
Debt - Credit Facility - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Oct. 31, 2014 | Mar. 21, 2012 | Jun. 30, 2014 | |
Land | |||||||
Line of Credit Facility [Line Items] | |||||||
Cash collateral for outstanding letters of credit | $89,300,000 | $89,300,000 | |||||
Minimum [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Percentage of cash collateral amount equal to face amount of ED Letter of Credit | 109.00% | 109.00% | |||||
Percentage of cash collateral amount equal to face amount | 103.00% | 103.00% | |||||
Line of Credit [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Number of mortgages parcels of land owned | 30 | ||||||
Percentage of cash collateral amount equal to face amount of ED Letter of Credit | 109.00% | 109.00% | |||||
Percentage of cash collateral amount equal to face amount | 103.00% | 103.00% | |||||
Cash collateral for outstanding letters of credit | 89,300,000 | 89,300,000 | |||||
Effective interest rate on borrowings | 3.40% | 4.10% | 4.40% | 3.40% | |||
Commitment fee under the New Credit Agreement | 0.40% | ||||||
Line of Credit [Member] | Scenario Forecast [Member] | For the period from September 15, 2014 through and including March 21, 2015 [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Ticking fee rate | 0.00% | ||||||
Line of Credit [Member] | Scenario Forecast [Member] | For the period from March 22, 2015 through and including March 21, 2016 [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Ticking fee rate | 1.00% | ||||||
Line of Credit [Member] | Scenario Forecast [Member] | For the period from March 22, 2016 through and including March 21, 2017 [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Ticking fee rate | 2.00% | ||||||
Line of Credit [Member] | Scenario Forecast [Member] | For the period from March 22, 2017 through and including March 21, 2018 [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Ticking fee rate | 3.00% | ||||||
Line of Credit [Member] | Scenario Forecast [Member] | For the period from March 22, 2018 through and including March 21, 2019 [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Ticking fee rate | 4.00% | ||||||
Line of Credit [Member] | Scenario Forecast [Member] | For the period from March 22, 2019 through November 15, 2019 [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Ticking fee rate | 5.00% | ||||||
Line of Credit [Member] | Fourth Amendment [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Amended Credit Agreement before reduction | 75,000,000 | 75,000,000 | |||||
Amended Credit Agreement after reduction | 5,000,000 | ||||||
Secured indebtedness before reduction | 25,000,000 | ||||||
Secured indebtedness after reduction | 5,000,000 | 5,000,000 | |||||
Line of Credit [Member] | Minimum [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Percentage of cash collateral amount equal to face amount of ED Letter of Credit | 109.00% | 109.00% | |||||
Percentage of cash collateral amount equal to face amount | 103.00% | 103.00% | |||||
Line of Credit [Member] | Minimum [Member] | Fourth Amendment [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Percentage of net cash proceeds from Mortgaged Property | 75.00% | ||||||
Subsequent Event [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Letter of credit payable | 79,708,000 | ||||||
Subsequent Event [Member] | Line of Credit [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Letter of credit payable | 79,708,000 | ||||||
Credit Agreement [Member] | Revolving Credit Facility [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Maximum borrowing capacity | 325,000,000 | ||||||
Revolving credit facility, maturity date | 21-Mar-15 | ||||||
Credit Agreement [Member] | Line of Credit [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Letter of credit agreement borrowing capacity | 25,000,000 | ||||||
Amended Credit Agreement [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Outstanding borrowing under Amended Credit Agreement | 50,000,000 | 50,000,000 | |||||
Amended Credit Agreement [Member] | Line of Credit [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Revised maximum borrowing capacity | 135,000,000 | ||||||
Letter of credit agreement borrowing capacity | 85,000,000 | ||||||
Amended Credit Agreement [Member] | Line of Credit [Member] | Maximum [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Net cash proceeds received | 125,000,000 | ||||||
Amended Credit Agreement [Member] | Line of Credit [Member] | Previously Issued by J P Morgan Chase Bank [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Letter of credit agreement borrowing capacity | $2,352,000 | $2,352,000 |
Debt_Total_Amount_of_Interest_
Debt - Total Amount of Interest Expense and Fees Recognized on Borrowing under New Credit Agreement (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Debt Disclosure [Abstract] | ||||
Interest expense and fees | $431 | $776 | $1,703 | $2,762 |
Debt_PEAKS_Trust_Senior_Debt_A
Debt - PEAKS Trust Senior Debt - Additional Information (Detail) (USD $) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 1 Months Ended | 6 Months Ended | 1 Months Ended | 12 Months Ended | 0 Months Ended | 3 Months Ended | ||||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Feb. 28, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Mar. 31, 2014 | Apr. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Oct. 09, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Jan. 31, 2010 |
Debt Instrument [Line Items] | |||||||||||||||
Current liability | $96,516 | $96,516 | 134,075 | $96,516 | 134,075 | $96,516 | $157,883 | ||||||||
PEAKS Trust [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Current liability | 96,516 | 103,356 | 96,516 | 134,075 | 96,516 | 134,075 | 96,516 | 157,883 | |||||||
PEAKS Senior Debt [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Aggregate principal amount of debt | 300,000 | ||||||||||||||
Estimated fair value of senior debt | 226,096 | ||||||||||||||
Outstanding balance | 162,811 | 257,533 | 162,811 | 162,811 | 162,811 | ||||||||||
Difference in Estimated Fair Value and Outstanding Principal Amount | 31,437 | ||||||||||||||
Carrying value senior debt | 140,516 | 140,516 | 140,516 | 140,516 | |||||||||||
Current liability | 96,516 | 96,516 | 96,516 | 96,516 | |||||||||||
Debt instrument maturity date | 31-Jan-20 | ||||||||||||||
Variable rate percentage | 5.50% | ||||||||||||||
Effective Interest Rate | 10.30% | 9.60% | 10.00% | 10.00% | |||||||||||
Payments under PEAK Guarantee with respect to Asset/Liability Ratio | 51,700 | ||||||||||||||
PEAKS Senior Debt [Member] | Minimum [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Minimum LIBOR rate applied | 2.00% | 2.00% | 2.00% | 2.00% | |||||||||||
Required Asset/Liability ratio | 1.05 | ||||||||||||||
PEAKS Senior Debt [Member] | Maximum [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Required Asset/Liability ratio | 1.4 | ||||||||||||||
Letter Agreement [Member] | PEAKS Senior Debt [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Payments under PEAK Guarantee | 40,000 | ||||||||||||||
PEAKS Guarantee [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Required Asset/Liability ratio | 1.4 | ||||||||||||||
Payments under PEAK Guarantee with respect to Asset/Liability Ratio | 51,700 | 60,340 | |||||||||||||
Payments under PEAK Guarantee | 159,300 | 2,700 | |||||||||||||
PEAKS Guarantee [Member] | Letter Agreement [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Payments under PEAK Guarantee | 40,000 | ||||||||||||||
Subsequent Event [Member] | PEAKS Senior Debt [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Outstanding balance | 96,918 | 96,918 | 96,918 | ||||||||||||
Payments under PEAK Guarantee with respect to Asset/Liability Ratio | 64,900 | 156,600 | |||||||||||||
Subsequent Event [Member] | PEAKS Guarantee [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Payments under PEAK Guarantee with respect to Asset/Liability Ratio | 50,000 | 64,900 | |||||||||||||
Payments under PEAK Guarantee | 161,100 | ||||||||||||||
Assets Liabilities Ratio [Member] | PEAKS Senior Debt [Member] | PEAKS Trust [Member] | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Amount of assets for computation of Asset/Liability ratio | 160,857 | 160,857 | 160,857 | 160,857 | |||||||||||
Amount of liabilities for computation of Asset/Liability ratio | $162,811 | $162,811 | $162,811 | $162,811 |
Debt_Total_Amount_of_Interest_1
Debt - Total Amount of Interest Expense and Discount Accretion on PEAKS Senior Debt (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Debt Instrument [Line Items] | ||||
Interest expense | $5,831 | $7,190 | $18,995 | $18,133 |
PEAKS Senior Debt [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest expense | 5,261 | 6,275 | 16,875 | 14,953 |
Discount accretion | $1,788 | $1,411 | $4,770 | $3,444 |
Earnings_Per_Common_Share_Hist
Earnings Per Common Share - Historical Net Income and Weighted Average Number of Shares of Common Stock Outstanding (Detail) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Earnings Per Share [Abstract] | ||||
Weighted average number of shares of common stock outstanding | 23,483 | 23,418 | 23,463 | 23,410 |
Shares assumed issued (less shares assumed purchased for treasury) for stock-based compensation | 220 | 216 | 314 | 146 |
Outstanding shares for diluted earnings per share calculation | 23,703 | 23,634 | 23,777 | 23,556 |
Earnings_Per_Common_Share_Addi
Earnings Per Common Share - Additional Information (Detail) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Earnings Per Share [Abstract] | ||||
Shares excluded from calculation of diluted earnings per share | 1.4 | 1.2 | 1.3 | 1.5 |
Employee_Pension_Benefits_Comp
Employee Pension Benefits - Components of Net Periodic Pension Benefit of Pension Plan and Excess Pension Plan (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Compensation and Retirement Disclosure [Abstract] | ||||
Interest cost | $506 | $439 | $1,518 | $1,316 |
Expected return on assets | -1,311 | -1,087 | -3,935 | -3,260 |
Recognized net actuarial loss | 0 | 506 | 0 | 1,518 |
Amortization of prior service (credit) | -389 | -389 | -1,166 | -1,167 |
Net periodic pension (benefit) | ($1,194) | ($531) | ($3,583) | ($1,593) |
Employee_Pension_Benefits_Addi
Employee Pension Benefits - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost included in net periodic pension benefit | $0 | |||
ESI Pension Plan [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Contributions to pension plans | 0 | 0 | 0 | 0 |
ESI Excess Pension Plan [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Contributions to pension plans | $0 | $0 | $0 | $0 |
Employee_Pension_Benefits_Sche
Employee Pension Benefits - Schedule of Changes in Components of Accumulated Other Comprehensive Loss (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Compensation and Retirement Disclosure [Abstract] | ||||
Accumulated Other Comprehensive Income Before Tax - Beginning Balance | $5,032 | |||
Amortization of Prior service costs (credits)- Before Tax | -1,166 | |||
Accumulated Other Comprehensive Income Before Tax - Ending Balance | 3,866 | 3,866 | ||
Income Tax Benefit (Expense) - Beginning Balance | -1,886 | |||
Amortization of Prior service costs (credits)- Tax Effect | 452 | |||
Income Tax Benefit (Expense) - Ending Balance | -1,434 | -1,434 | ||
Accumulated Other Comprehensive Income Net of Income Tax - Beginning Balance | 3,146 | |||
Amortization of Prior service costs (credits)- Net of Income Tax | -238 | -238 | -714 | -714 |
Accumulated Other Comprehensive Income Net of Income Tax - Ending Balance | $2,432 | $2,432 |
Commitments_and_Contingencies_1
Commitments and Contingencies - Additional Information (Detail) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | 1 Months Ended | 6 Months Ended | 1 Months Ended | 12 Months Ended | 0 Months Ended | 3 Months Ended | 1 Months Ended | 0 Months Ended | ||||||||||
In Thousands, unless otherwise specified | Jan. 31, 2013 | Mar. 26, 2012 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Jan. 31, 2014 | Sep. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2014 | Oct. 09, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Nov. 12, 2014 | Mar. 19, 2015 | Dec. 31, 2013 | Apr. 30, 2013 | Feb. 28, 2013 | Oct. 31, 2014 |
Loss Contingencies [Line Items] | |||||||||||||||||||||
Face amount of surety bonds | $19,500 | $19,500 | $19,500 | $19,500 | |||||||||||||||||
Letter of credit payable | 2,352 | 2,352 | 2,352 | 2,352 | |||||||||||||||||
Letter of credit termination date | 4-Nov-19 | ||||||||||||||||||||
Payment under settlement agreement | 46,000 | ||||||||||||||||||||
Payments on Behalf of Borrowers | 0 | 2,502 | 1,832 | 7,647 | |||||||||||||||||
Collateral maintained with bank for education loan | 8,600 | 8,600 | 8,600 | 8,600 | 8,600 | 8,600 | 8,600 | 8,600 | |||||||||||||
Increase in collateral maintained in restricted bank account | 2,600 | ||||||||||||||||||||
Additional payments expected in 2018 | 72,509 | 72,509 | 72,509 | 72,509 | |||||||||||||||||
Estimated regular payment made | 45,866 | ||||||||||||||||||||
Offset amounts relating to guarantee obligations | 0 | 357 | 0 | 8,471 | |||||||||||||||||
Life of private education loan made under 2009 Loan Program | 10 years | ||||||||||||||||||||
Litigation settlement amount | 395 | ||||||||||||||||||||
Revolving Note [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Credit facility outstanding, amount | 8,200 | 8,200 | 8,200 | 8,200 | |||||||||||||||||
Payable in 2018 through 2027 [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Estimated regular payment made | 100,100 | ||||||||||||||||||||
Payable 2023 through 2027 [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Estimated regular payment made | 16,300 | ||||||||||||||||||||
Education Loan Under 2009 Loan Program [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Principal amount for private education loans | 141,000 | 141,000 | 141,000 | 141,000 | |||||||||||||||||
2009 RSA [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Net guarantee obligation payments | 1,809 | 458 | 4,556 | 738 | |||||||||||||||||
Regular Payments | 1,809 | 458 | 4,556 | 841 | |||||||||||||||||
Discharge Payments | 0 | 0 | 0 | 0 | |||||||||||||||||
Recoveries from charged-off loans | 0 | 0 | 0 | 103 | |||||||||||||||||
PEAKS Guarantee [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Payments under PEAK Guarantee | 159,300 | 2,700 | |||||||||||||||||||
Payments under PEAK Guarantee with respect to Asset/Liability Ratio | 51,700 | 60,340 | |||||||||||||||||||
Payments on Behalf of Borrowers | 1,832 | 1,800 | |||||||||||||||||||
Future recovery of PEAKS guarantee payments | 47,000 | 47,000 | 47,000 | 47,000 | |||||||||||||||||
PEAKS Guarantee [Member] | Year 2015 [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Payments under PEAK Guarantee | 27,700 | ||||||||||||||||||||
PEAKS Guarantee [Member] | Year 2020 [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Payments under PEAK Guarantee | 16,400 | ||||||||||||||||||||
PEAKS Guarantee [Member] | Year 2016 [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Payments under PEAK Guarantee | 4,800 | ||||||||||||||||||||
PEAKS Guarantee [Member] | Letter Agreement [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Payments under PEAK Guarantee | 40,000 | ||||||||||||||||||||
PEAKS Senior Debt [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Payments under PEAK Guarantee with respect to Asset/Liability Ratio | 51,700 | ||||||||||||||||||||
Outstanding balance | 162,811 | 162,811 | 162,811 | 162,811 | 257,533 | ||||||||||||||||
PEAKS Senior Debt [Member] | Letter Agreement [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Payments under PEAK Guarantee | 40,000 | ||||||||||||||||||||
PEAKS Senior Debt [Member] | PEAKS Guarantee [Member] | Year 2015 [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Outstanding balance | 62,000 | 62,000 | 62,000 | 62,000 | |||||||||||||||||
PEAKS Senior Debt [Member] | PEAKS Guarantee [Member] | Year 2020 [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Outstanding balance | 0 | 0 | 0 | 0 | |||||||||||||||||
2009 Entity [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Recoveries from charged-off loans | 0 | 186 | 475 | 413 | |||||||||||||||||
Offset amounts relating to guarantee obligations | 0 | 357 | 0 | 8,471 | |||||||||||||||||
Amount of offset to repay | 8,600 | ||||||||||||||||||||
Recoveries from charged-off loans | 1,049 | ||||||||||||||||||||
Minimum [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Decrease in unrecognized tax benefit due to resolution of tax matters | 0 | ||||||||||||||||||||
Minimum [Member] | Payable 2018 through 2022 [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Estimated regular payment made | 16,500 | ||||||||||||||||||||
Maximum [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Decrease in unrecognized tax benefit due to resolution of tax matters | 7,100 | ||||||||||||||||||||
Maximum [Member] | Payable 2018 through 2022 [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Estimated regular payment made | 17,000 | ||||||||||||||||||||
Subsequent Event [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Letter of credit payable | 79,708 | ||||||||||||||||||||
Subsequent Event [Member] | 2009 RSA [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Net guarantee obligation payments | 9,139 | ||||||||||||||||||||
Regular Payments | 7,028 | ||||||||||||||||||||
Recoveries from charged-off loans | 466 | ||||||||||||||||||||
Subsequent Event [Member] | PEAKS Guarantee [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Payments under PEAK Guarantee | 161,100 | ||||||||||||||||||||
Payments under PEAK Guarantee with respect to Asset/Liability Ratio | 50,000 | 64,900 | |||||||||||||||||||
Subsequent Event [Member] | PEAKS Senior Debt [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Payments under PEAK Guarantee with respect to Asset/Liability Ratio | 156,600 | 64,900 | |||||||||||||||||||
Outstanding balance | 96,918 | 96,918 | 96,918 | ||||||||||||||||||
Subsequent Event [Member] | Fourth Amendment [Member] | 2009 RSA [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Discharge Payments | 2,577 | 2,577 | |||||||||||||||||||
Subsequent Event [Member] | Fifth Amendment [Member] | 2009 RSA [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Discharge Payments | 2,709 | ||||||||||||||||||||
Subsequent Event [Member] | 2009 Entity [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Recoveries from charged-off loans | 475 | ||||||||||||||||||||
Subsequent Event [Member] | Maximum [Member] | |||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||
Letter of credit payable | $82,060 | $82,060 | $82,060 |
Commitments_and_Contingencies_2
Commitments and Contingencies - Components of Recorded Liability Related to Claims and Contingencies (Detail) (USD $) | Sep. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||||||
Schedule of Claims and Contingencies [Line Items] | ||||||
Total | $14,494 | $126,074 | $125,880 | $44,860 | $38,725 | $126,978 |
Other current liabilities | 14,494 | 25,893 | 44,472 | |||
Other liabilities | 0 | 99,987 | 388 | |||
Total | 14,494 | 126,074 | 125,880 | 44,860 | 38,725 | 126,978 |
2009 RSA [Member] | ||||||
Schedule of Claims and Contingencies [Line Items] | ||||||
Total | 0 | 116,923 | 36,535 | |||
Total | 0 | 116,923 | 36,535 | |||
Other claims and contingencies [Member] | ||||||
Schedule of Claims and Contingencies [Line Items] | ||||||
Total | 14,494 | 8,957 | 8,325 | |||
Total | $14,494 | $8,957 | $8,325 |
Commitments_and_Contingencies_3
Commitments and Contingencies - Activity With Respect to Claims and Contingencies (Detail) (USD $) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Jan. 31, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Schedule of Claims and Contingencies [Line Items] | |||||
Claims and contingencies, Balance at beginning of period | $125,880 | $126,074 | $38,725 | $125,880 | $126,978 |
Payments on Behalf of Borrowers | 0 | -2,502 | -1,832 | -7,647 | |
Claims and contingencies, Balance at end of period | 14,494 | 44,860 | 14,494 | 44,860 | |
PEAKS Trust [Member] | |||||
Schedule of Claims and Contingencies [Line Items] | |||||
Payments on Behalf of Borrowers | -1,832 | ||||
Elimination of intercompany transactions | 52,517 | 2,560 | 96,150 | 6,835 | |
2009 RSA [Member] | |||||
Schedule of Claims and Contingencies [Line Items] | |||||
Claims and contingencies, Balance at beginning of period | 116,923 | 116,923 | |||
Additional accruals | 2,019 | 4,826 | 2,019 | 8,629 | |
Payments, net | -1,809 | -458 | -4,556 | -738 | |
Elimination of intercompany transactions | -114,861 | 0 | -114,861 | 0 | |
Claims and contingencies, Balance at end of period | 0 | 36,535 | 0 | 36,535 | |
Other claims and contingencies [Member] | |||||
Schedule of Claims and Contingencies [Line Items] | |||||
Claims and contingencies, Balance at beginning of period | 8,957 | 8,957 | |||
Additional accruals | 11,603 | 5,484 | 27,816 | 12,415 | |
Payments, net | -8,532 | -3,717 | -21,804 | -8,924 | |
Claims and contingencies, Balance at end of period | 14,494 | 8,325 | 14,494 | 8,325 | |
PEAKS Program Guarantee [Member] | |||||
Schedule of Claims and Contingencies [Line Items] | |||||
Payments, net | -52,517 | -58 | -94,318 | -574 | |
Elimination of intercompany transactions | 0 | 0 | 0 | -46,114 | |
2007 RSA [Member] | |||||
Schedule of Claims and Contingencies [Line Items] | |||||
Payments, net | $0 | $0 | $0 | ($46,000) |
Commitments_and_Contingencies_4
Commitments and Contingencies - Activity With Respect to Claims and Contingencies (Parenthetical) (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
2009 RSA [Member] | ||||
Schedule of Claims and Contingencies [Line Items] | ||||
Payment recoveries | $0 | $0 | $0 | $103 |
Other claims and contingencies [Member] | ||||
Schedule of Claims and Contingencies [Line Items] | ||||
Payment recoveries | 0 | 186 | 475 | 413 |
PEAKS Program Guarantee [Member] | ||||
Schedule of Claims and Contingencies [Line Items] | ||||
Estimated recoveries | $0 | $80 | $0 | $803 |
Commitments_and_Contingencies_5
Commitments and Contingencies - Estimated Amounts of Regular, Discharge Payments Expect to Pay and Estimated Recoveries from Charged-off Loans (Detail) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 |
Summary Of Projections Of Estimated Payments And Recoveries [Line Items] | |
Estimated Regular Payments | $45,866 |
Estimated Discharge Payments | 75,218 |
Estimated Total Payments | 121,084 |
Estimated Recoveries | -4,100 |
2015 [Member] | |
Summary Of Projections Of Estimated Payments And Recoveries [Line Items] | |
Estimated Regular Payments | 13,400 |
Estimated Discharge Payments | 2,709 |
Estimated Total Payments | 16,109 |
Estimated Recoveries | -1,240 |
2016 [Member] | |
Summary Of Projections Of Estimated Payments And Recoveries [Line Items] | |
Estimated Regular Payments | 15,835 |
Estimated Discharge Payments | 0 |
Estimated Total Payments | 15,835 |
Estimated Recoveries | -1,240 |
2017 [Member] | |
Summary Of Projections Of Estimated Payments And Recoveries [Line Items] | |
Estimated Regular Payments | 16,631 |
Estimated Discharge Payments | 0 |
Estimated Total Payments | 16,631 |
Estimated Recoveries | -1,240 |
2018 and Later [Member] | |
Summary Of Projections Of Estimated Payments And Recoveries [Line Items] | |
Estimated Regular Payments | 0 |
Estimated Discharge Payments | 72,509 |
Estimated Total Payments | 72,509 |
Estimated Recoveries | ($380) |
Commitments_and_Contingencies_6
Commitments and Contingencies - Estimated Amounts of Regular, Discharge Payments Expect to Pay and Estimated Recoveries from Charged-off Loans (Parenthetical) (Detail) (2009 RSA [Member], USD $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Mar. 19, 2015 |
Summary Of Projections Of Estimated Payments And Recoveries [Line Items] | |||||
Discharge Payments | $0 | $0 | $0 | $0 | |
Subsequent Event [Member] | Fifth Amendment [Member] | |||||
Summary Of Projections Of Estimated Payments And Recoveries [Line Items] | |||||
Discharge Payments | $2,709 |
Commitments_and_Contingencies_7
Commitments and Contingencies - Aggregate Amount of Guarantee Payments, Discharge Payments and Payments on Behalf of Borrowers (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Schedule of Claims and Contingencies [Line Items] | ||||
Payments on Behalf of Borrowers | $0 | $2,502 | $1,832 | $7,647 |
Total | 54,326 | 3,098 | 100,706 | 9,762 |
PEAKS Program [Member] | ||||
Schedule of Claims and Contingencies [Line Items] | ||||
PEAKS Guarantee | 52,517 | 138 | 94,318 | 1,377 |
Payments on Behalf of Borrowers | 0 | 2,502 | 1,832 | 7,647 |
2009 RSA [Member] | ||||
Schedule of Claims and Contingencies [Line Items] | ||||
Regular Payments | 1,809 | 458 | 4,556 | 841 |
Discharge Payments | 0 | 0 | 0 | 0 |
Recoveries from Charged-Off Loans | $0 | $0 | $0 | ($103) |
Commitments_and_Contingencies_8
Commitments and Contingencies - Aggregate Amount of Guarantee Payments, Discharge Payments and Payments on Behalf of Borrowers (Parenthetical) (Detail) (USD $) | 1 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended |
In Thousands, unless otherwise specified | Feb. 28, 2013 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 |
PEAKS Program [Member] | ||||
Schedule of Claims and Contingencies [Line Items] | ||||
Guarantee payments paid to prior consolidation | $854 | $854 | ||
Payments on behalf of borrowers prior to consolidation | 532 | 532 | ||
2009 RSA [Member] | ||||
Schedule of Claims and Contingencies [Line Items] | ||||
Recoveries from charged-off loans owed related to regular payments obligation | $156 | $156 |
Risks_and_Uncertainties_Additi
Risks and Uncertainties - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 1 Months Ended | 6 Months Ended | 12 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Jan. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2014 | Dec. 04, 2014 |
Unusual Risk or Uncertainty [Line Items] | ||||||||
Letter of credit termination date | 4-Nov-19 | |||||||
Cash collateral to be provided for letter of credit as of the filing date | $89,300 | $89,300 | $89,300 | |||||
Payments on Behalf of Borrowers | 0 | 2,502 | 1,832 | 7,647 | ||||
Minimum [Member] | ||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||
Cash collateral, percentage | 103.00% | 103.00% | 103.00% | |||||
Percentage of cash collateral amount equal to face amount | 109.00% | 109.00% | 109.00% | |||||
PEAKS Guarantee [Member] | ||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||
Payments under PEAK Guarantee | 159,300 | 2,700 | ||||||
Payments on Behalf of Borrowers | 1,832 | 1,800 | ||||||
2009 RSA [Member] | ||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||
Net guarantee obligation payments | 1,809 | 458 | 4,556 | 738 | ||||
Subsequent Event [Member] | PEAKS Guarantee [Member] | ||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||
Payments under PEAK Guarantee | 161,100 | |||||||
Subsequent Event [Member] | 2009 RSA [Member] | ||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||
Net guarantee obligation payments | 9,139 | |||||||
Recoveries from charged-off loans | 466 | |||||||
Amended Credit Agreement [Member] | ||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||
Outstanding borrowing under Amended Credit Agreement | 50,000 | 50,000 | 50,000 | |||||
Term Loan [Member] | ||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||
Cash collateral to be provided for letter of credit as of the filing date | 100 | 100 | 100 | |||||
Term Loan [Member] | Subsequent Event [Member] | ||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||
Aggregate principal amount | 100,000 | |||||||
2015 [Member] | PEAKS Guarantee [Member] | Scenario Forecast [Member] | ||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||
Payments under PEAKS guarantee | 27,700 | |||||||
2015 [Member] | 2009 RSA [Member] | Scenario Forecast [Member] | ||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||
Payments under Loan Program | 14,900 | |||||||
2016 [Member] | PEAKS Guarantee [Member] | Scenario Forecast [Member] | ||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||
Payments under PEAKS guarantee | 4,800 | |||||||
2016 [Member] | 2009 RSA [Member] | Scenario Forecast [Member] | ||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||
Payments under Loan Program | $14,600 |