Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2014 | Oct. 31, 2014 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q/A | |
Amendment Flag | true | |
Amendment Description | Restatement of Condensed Consolidated Financial Statements ITT Educational Services, Inc. (“we,” “us” or “our”) is filing this Amendment No. 1 (“Amended Filing”) to its Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, originally filed with the United States Securities and Exchange Commission (“SEC”) on November 14, 2014 (the “Original Filing”), to amend and restate its unaudited condensed consolidated financial statements and related disclosures for the three months ended March 31, 2014. As a result of the execution of enhanced internal controls over financial reporting that were implemented as part of the remediation of material weaknesses identified in a prior period, we determined there was an error in the application of the interest method used to calculate the interest rate used in accounting for the accretion of the debt discount associated with a senior debt arrangement (the “PEAKS Senior Debt”) that resulted in the misstatement of interest expense in previously reported interim periods. Within this Amended Filing, we are restating our previously issued condensed consolidated financial statements as of and for the three months ended March 31, 2014 to reflect this adjustment to the interest rate used in the application of the interest method to the discount on the PEAKS Senior Debt in that period. The effects of the restatement on our unaudited condensed consolidated financial statements are a reduction in the amount of the debt discount, an increase in the carrying value of the PEAKS Senior Debt and an increase in interest expense. The restatement does not increase the total amount of non-cash interest expense that will be reported from the accretion of the debt discount on the PEAKS Senior Debt, but instead changes the timing of the recognition of that interest expense through the maturity date. The restatement also has no effect on our cash and cash equivalents or liquidity; cash flows from operating activities, financing activities or investing activities; or projections of our future cash payment obligations under our private education loan program guarantees. In this Amended Filing, we are restating: • our Condensed Consolidated Balance Sheet as of March 31, 2014 (unaudited); • our Condensed Consolidated Statement of Income for the three months ended March 31, 2014 (unaudited); • our Condensed Consolidated Statement of Comprehensive Income for the three months ended March 31, 2014 (unaudited); • our Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2014 (unaudited); • our Condensed Consolidated Statement of Shareholders’ Equity for the three months ended March 31, 2014 (unaudited); and • the Notes to those condensed consolidated financial statements.See Note 2 - Restatement of Previously Issued Financial Statements of the Notes to Condensed Consolidated Financial Statements for additional information. In connection with the filing of our Annual Report on Form 10-K for the year ended December 31, 2014, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as a result of material weaknesses in our internal control over financial reporting. For ease of reference, this Amended Filing amends and restates the Original Filing in its entirety. The following Items have been revised to reflect the impact of the restatement on the affected line items of our condensed consolidated financial statements: • Part I, Item 1 - Financial Statements • Part I, Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations • Part II, Item 6 - Exhibits We have also updated the signature page, the certifications of our Chief Executive Officer and Chief Financial Officer in Exhibits 31.1, 31.2, 32.1 and 32.2, and our unaudited condensed consolidated financial statements formatted in eXtensible Business Reporting Language (XBRL) in Exhibit 101. In addition, we have revised certain other Items in this Amended Filing solely to change cross-references to the numbers of the notes to our consolidated financial statements resulting from a renumbering of the notes to add a note regarding the restatement. Except as provided in this Explanatory Note, or as indicated in the applicable disclosure, this Amended Filing has not been updated to reflect other events occurring after the filing of the Original Filing and does not modify or update information and disclosures in the Original Filing affected by subsequent events. Accordingly, this Amended Filing should be read in conjunction with our filings with the SEC subsequent to the date on which we filed the Original Filing, together with any amendments to those filings. | |
Document Period End Date | Mar. 31, 2014 | |
Document Fiscal Year Focus | 2,014 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | ESI | |
Entity Registrant Name | ITT EDUCATIONAL SERVICES INC | |
Entity Central Index Key | 922,475 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 23,448,168 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 |
Current assets: | |||
Cash and cash equivalents | $ 205,035 | $ 215,771 | $ 206,638 |
Restricted cash | 4,293 | 5,636 | 6,693 |
Accounts receivable, net | 77,384 | 99,530 | 106,308 |
PEAKS Trust student loans, less allowance for loan losses of $0, $0 and $0 | 7,713 | 7,730 | 7,282 |
Deferred income taxes | 69,708 | 77,549 | 71,301 |
Prepaid expenses and other current assets | 34,686 | 28,400 | 19,189 |
Total current assets | 398,819 | 434,616 | 417,411 |
Property and equipment, net | 164,072 | 168,509 | 184,123 |
PEAKS Trust student loans, excluding current portion, less allowance for loan losses of $29,349, $29,349 and $0 | 75,619 | 76,479 | 105,007 |
Deferred income taxes | 77,508 | 68,324 | 45,024 |
Other assets | 64,314 | 58,923 | 31,721 |
Total assets | 780,332 | 806,851 | 783,286 |
Current liabilities: | |||
Current portion of long-term debt | 50,000 | 50,000 | 0 |
Current portion of PEAKS Trust senior debt | 130,692 | 157,883 | 103,356 |
Accounts payable | 67,336 | 58,021 | 63,713 |
Accrued compensation and benefits | 16,075 | 18,107 | 15,425 |
Other current liabilities | 52,268 | 42,136 | 52,185 |
Deferred revenue | 141,549 | 147,630 | 120,628 |
Total current liabilities | 457,920 | 473,777 | 355,307 |
Long-term debt | 0 | 0 | 150,000 |
PEAKS Trust senior debt, excluding current portion | 63,693 | 71,341 | 123,660 |
Other liabilities | 142,476 | 146,087 | 45,634 |
Total | 664,089 | 691,205 | 674,601 |
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 | 197,954 | 200,040 | 194,629 |
Retained earnings | 941,176 | 940,449 | 950,202 |
Accumulated other comprehensive income (loss) | 2,908 | 3,146 | (7,835) |
Treasury stock, 13,665,572, 13,698,716 and 13,706,781 shares, at cost | (1,026,166) | (1,028,360) | (1,028,682) |
Total shareholders' equity | 116,243 | 115,646 | 108,685 |
Total liabilities and shareholders' equity | $ 780,332 | $ 806,851 | $ 783,286 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 |
Statement of Financial Position [Abstract] | |||
Allowance for loan losses | $ 0 | $ 0 | $ 0 |
Allowance for loan losses | $ 29,349 | $ 29,349 | $ 0 |
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 | 13,665,572 | 13,698,716 | 13,706,781 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Income Statement [Abstract] | ||
Revenue | $ 237,923 | $ 285,062 |
Costs and expenses: | ||
Cost of educational services | 120,115 | 124,176 |
Student services and administrative expenses | 99,238 | 101,721 |
Legal and professional fees related to certain lawsuits, investigations and accounting matters | 5,547 | 1,500 |
Loss related to loan program guarantees | 0 | 3,803 |
Total costs and expenses | 224,900 | 231,200 |
Operating income | 13,023 | 53,862 |
(Loss) on consolidation of PEAKS Trust | 0 | (73,248) |
Interest income | 19 | 34 |
Interest (expense) | (11,812) | (3,574) |
Income (loss) before provision for income taxes | 1,230 | (22,926) |
Provision (benefit) for income taxes | 471 | (5,655) |
Net income (loss) | $ 759 | $ (17,271) |
Earnings (loss) per share: | ||
Basic | $ 0.03 | $ (0.74) |
Diluted | $ 0.03 | $ (0.74) |
Weighted average shares outstanding: | ||
Basic | 23,447 | 23,397 |
Diluted | 23,844 | 23,397 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 759 | $ (17,271) |
Other comprehensive income (loss), net of tax: | ||
Net actuarial pension loss amortization, net of income tax of $0 and $211 | 0 | 333 |
Prior service cost (credit) amortization, net of income tax of $151 and $151 | (238) | (238) |
Other comprehensive income (loss), net of tax | (238) | 95 |
Comprehensive income (loss) | $ 521 | $ (17,176) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Statement of Comprehensive Income [Abstract] | ||
Net actuarial pension loss amortization, income tax | $ 0 | $ 211 |
Prior service cost (credit) amortization, income tax | $ 151 | $ 151 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 759 | $ (17,271) |
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | ||
Depreciation and amortization | 6,462 | 7,292 |
Provision for doubtful accounts | 16,615 | 15,305 |
Deferred income taxes | (2,317) | (15,384) |
Stock-based compensation expense | 2,551 | 3,093 |
Settlement cost | 0 | (46,000) |
Accretion of discount on PEAKS Trust student loans | (3,133) | (1,360) |
Accretion of discount on PEAKS Trust senior debt | 6,452 | 652 |
Loss on consolidation of PEAKS Trust | 0 | 73,248 |
Other | (180) | 295 |
Changes in operating assets and liabilities, net of acquisition: | ||
Restricted cash | 1,343 | (1,512) |
Accounts receivable | 6,302 | (42,685) |
PEAKS Trust student loans | 4,010 | 1,187 |
Accounts payable | 9,315 | 409 |
Other operating assets and liabilities | (4,032) | (5,912) |
Deferred revenue | (7,229) | (15,272) |
Net cash flows from operating activities | 36,918 | (43,915) |
Cash flows from investing activities: | ||
Facility expenditures | (12) | (100) |
Capital expenditures, net | (1,498) | (1,418) |
Acquisition of company | (4,449) | 0 |
Proceeds from repayment of notes | 96 | 215 |
Note advances | 0 | (1,241) |
Net cash flows from investing activities | (5,863) | (2,544) |
Cash flows from financing activities: | ||
Proceeds from revolving borrowings | 0 | 10,000 |
Repayment of PEAKS Trust senior debt | (41,070) | 0 |
Repurchase of common stock and shares tendered for taxes | (721) | (368) |
Net cash flows from financing activities | (41,791) | 9,632 |
Net change in cash and cash equivalents | (10,736) | (36,827) |
Cash and cash equivalents at beginning of period | 215,771 | 243,465 |
Cash and cash equivalents at end of period | $ 205,035 | $ 206,638 |
CONDENSED CONSOLIDATED STATEME8
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock [Member] | Capital Surplus [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income/(Loss) [Member] | Common Stock in Treasury [Member] |
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) | (17,271) | (17,271) | ||||
Other comprehensive income, net of income tax | 95 | 95 | ||||
Equity award vesting and exercises | 0 | (2,948) | $ 2,948 | |||
Equity award vesting and exercises (in shares) | 59 | |||||
Tax benefit from equity awards | (2,629) | (2,629) | ||||
Stock-based compensation | 3,093 | 3,093 | ||||
Shares tendered for taxes | (368) | $ (368) | ||||
Shares tendered for taxes (in shares) | (22) | |||||
Ending Balance at Mar. 31, 2013 | 108,685 | $ 371 | 194,629 | 950,202 | (7,835) | $ (1,028,682) |
Ending Balance (in shares) at Mar. 31, 2013 | 37,069 | (13,707) | ||||
Net income (loss) | (9,753) | (9,753) | ||||
Other comprehensive income, net of income tax | 10,981 | 10,981 | ||||
Equity award vesting and exercises | 0 | (349) | $ 349 | |||
Equity award vesting and exercises (in shares) | 9 | |||||
Tax benefit from equity awards | (2,785) | (2,785) | ||||
Stock-based compensation | 8,545 | 8,545 | ||||
Shares tendered for taxes | (27) | $ (27) | ||||
Shares tendered for taxes (in shares) | (1) | |||||
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) | 759 | 759 | ||||
Other comprehensive income, net of income tax | (238) | (238) | ||||
Equity award vesting and exercises | 0 | (2,845) | $ 2,845 | |||
Equity award vesting and exercises (in shares) | 51 | |||||
Tax benefit from equity awards | (1,792) | (1,792) | ||||
Stock-based compensation | 2,551 | 2,551 | ||||
Shares tendered for taxes | (721) | $ (721) | ||||
Shares tendered for taxes (in shares) | (19) | |||||
Issuance of shares for Director's compensation | 38 | (32) | $ 70 | |||
Issuance of shares for Director's compensation (in shares) | 1 | |||||
Ending Balance at Mar. 31, 2014 | $ 116,243 | $ 371 | $ 197,954 | $ 941,176 | $ 2,908 | $ (1,026,166) |
Ending Balance (in shares) at Mar. 31, 2014 | 37,069 | (13,666) |
The Company and Basis of Presen
The Company and Basis of Presentation | 3 Months Ended |
Mar. 31, 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 March 31, 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 March 31, 2014, we had 149 college locations (including 147 campuses and two learning sites) in 39 states and four training facilities. As of September 30, 2014, we had eliminated all four training facilities by transferring the activities conducted at those training facilities to our college locations. 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, the PEAKS Trust, a variable interest entity (“VIE”) in which ITT Educational Services, Inc. is the primary beneficiary, 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 condensed consolidated financial statements. See Note 7 – Variable Interest Entities, for a further discussion of the VIEs in which we held a variable interest and the consolidation of the PEAKS Trust in our condensed consolidated financial statements beginning February 28, 2013. In the opinion of our management, the financial statements contain all adjustments necessary to fairly state 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 year ended December 31, 2013. |
Restatement of Previously Issue
Restatement of Previously Issued Financial Statements | 3 Months Ended |
Mar. 31, 2014 | |
Accounting Changes and Error Corrections [Abstract] | |
Restatement of Previously Issued Financial Statements | 2. Restatement of Previously Issued Financial Statements Subsequent to the Original Filing, we determined there was an error in the application of the interest method used to calculate the interest rate used in accounting for the accretion of the debt discount associated with our PEAKS Senior Debt. In our Original Filing, we accreted the debt discount associated with the PEAKS Senior Debt using the interest method based on the amounts and timing of the repayments that we estimated at the time that the PEAKS Senior Debt was initially included in our consolidated financial statements. We subsequently determined that the interest method should take into consideration actual repayments and updated projections for future repayments on the PEAKS Senior Debt to determine the interest rate used to calculate the amount of the debt discount recognized as interest expense in each period. As a result, we have restated the previously-issued unaudited condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for each of the fiscal quarters ended March 31, 2014, June 30, 2014, September 30, 2014, March 31, 2015, June 30, 2015 and September 30, 2015, and our audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2014, and that those previously-issued financial statements should no longer be relied upon. Our restated condensed consolidated financial statements as of and for the three months ended March 31, 2014 included in this Amended Filing reflect the correction of this error. A reconciliation of previously reported amounts to the restated amounts is set forth in the tables below. The following table sets forth the effect of the restatement on the affected line items in our Condensed Consolidated Balance Sheet as of March 31, 2014: As of March 31, 2014 As Previously Interest As Condensed Consolidated Balance Sheet Data: Deferred income taxes $ 75,607 $ 1,901 $ 77,508 Total assets 778,431 1,901 780,332 Other current liabilities 52,415 (147 ) 52,268 Total current liabilities 458,067 (147 ) 457,920 PEAKS Trust senior debt, excluding current portion 58,782 4,911 63,693 Total liabilities 659,325 4,764 664,089 Retained earnings 944,039 (2,863 ) 941,176 Total shareholders’ equity 119,106 (2,863 ) 116,243 Total liabilities and shareholders’ equity 778,431 1,901 780,332 The following table sets forth the effect of the restatement on the affected line items in our Condensed Consolidated Statement of Income for the three months ended March 31, 2014: Three Months Ended March 31, 2014 As Interest As Condensed Consolidated Statement of Income Data: Revenue $ 237,923 $ 0 $ 237,923 Costs and expenses: Cost of educational services 120,115 0 120,115 Student services and administrative expenses 99,238 0 99,238 Legal and professional fees related to certain lawsuits, investigations and accounting matters 5,547 0 5,547 Loss related to loan program guarantees 0 0 0 Total costs and expenses 224,900 0 224,900 Operating income 13,023 0 13,023 Interest income 19 0 19 Interest (expense) (6,901 ) (4,911 ) (11,812 ) Income before provision for income taxes 6,141 (4,911 ) 1,230 Provision for income taxes 2,519 (2,048 ) 471 Net income $ 3,622 $ (2,863 ) $ 759 Earnings per share: Basic $ 0.15 $ (0.12 ) $ 0.03 Diluted $ 0.15 $ (0.12 ) $ 0.03 Weighted average shares outstanding: Basic 23,447 0 23,447 Diluted 23,844 0 23,844 The following table sets forth the effect of the restatement on the affected line items in our Condensed Consolidated Statement of Comprehensive Income for the three months ended March 31, 2014: Three Months Ended March 31, 2014 As Interest Adjustment As Condensed Consolidated Statement of Comprehensive Income Data: Net income $ 3,622 $ (2,863 ) $ 759 Comprehensive income 3,384 (2,863 ) 521 The following table sets forth the effect of the restatement on the affected line items in our Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2014: Three Months Ended March 31, 2014 As Previously Interest Adjustment As Condensed Consolidated Statement of Cash Flows Data: Net income $ 3,622 $ (2,863 ) $ 759 Deferred income taxes (416 ) (1,901 ) (2,317 ) Accretion of discount on PEAKS Trust senior debt 1,541 4,911 6,452 Other operating assets and liabilities (3,885 ) (147 ) (4,032 ) Net cash flows from operating activities 36,918 0 36,918 The following table sets forth the effect of the restatement on the affected line items in our Condensed Consolidated Statement of Shareholders’ Equity for the three months ended March 31, 2014: Three Months Ended March 31, 2014 As Interest Adjustment As Condensed Consolidated Statement of Shareholders’ Equity Data – Retained Earnings: Net income $ 3,622 $ (2,863 ) $ 759 Balance as of March 31, 2014 944,039 (2,863 ) 941,176 |
New Accounting Guidance
New Accounting Guidance | 3 Months Ended |
Mar. 31, 2014 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Guidance | 3. New Accounting Guidance In August 2014, the FASB issued Accounting Standards Update (“ASU”) No. 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. We have not completed our evaluation of the impact that this guidance may have on our consolidated financial statements. In May 2014, the FASB issued ASU No. 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. We have not completed our evaluation of the impact that this guidance may have on our condensed consolidated financial statements. In April 2014, the FASB issued ASU No. 2014-08, which is included in the Codification under 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 will become effective for our interim and annual reporting periods beginning January 1, 2015, and will be applied to any transactions that meet those requirements beginning January 1, 2015. In July 2013, the FASB issued ASU No. 2013-11, which is included in the Codification under ASC 740, “Income Taxes” (“ASC 740”). This update provides guidance on the 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 condensed consolidated financial statements. |
Acquisition
Acquisition | 3 Months Ended |
Mar. 31, 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 $5,186, of which $4,449 was paid in the three months ended March 31, 2014 and the remaining $737 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 (the “CPD”). Our condensed consolidated financial statements include the results of the Ascolta business from the acquisition date. The revenue and expenses of the Ascolta business included in our Condensed Consolidated Statement of Income for the three months ended March 31, 2014 were not material. 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 months ended March 31, 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 material. 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 estimated aggregate amortization expense in each of the next five succeeding fiscal years is not material. 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 Accounts receivable and other current assets $ 849 Furniture and equipment 370 Identifiable intangible assets 1,670 Goodwill 3,332 Other liabilities $ 1,035 |
Fair Value
Fair Value | 3 Months Ended |
Mar. 31, 2014 | |
Fair Value Disclosures [Abstract] | |
Fair Value | 5. 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 March 31, 2014: Fair Value Measurements at Reporting Date Using (Level 1) (Level 2) (Level 3) Description As of Quoted Prices in Active Markets for Significant Other Significant Cash equivalents: Money market fund $ 204,967 $ 204,967 $ 0 $ 0 Restricted cash: Money market fund 2,042 2,042 0 0 Other assets: Money market fund 8,626 8,626 0 0 $ 215,635 $ 215,635 $ 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 March 31, 2013: Fair Value Measurements at Reporting Date Using (Level 1) (Level 2) (Level 3) Description As of March 31, 2013 Quoted Prices in Significant Other Significant Cash equivalents: Money market fund $ 204,838 $ 204,838 $ 0 $ 0 Restricted cash: Money market fund 3,374 3,374 0 0 Other assets: Money market fund 8,623 8,623 0 0 $ 216,835 $ 216,835 $ 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 in our Consolidated Balance Sheets as of March 31, 2014 or 2013. As of March 31, 2014, the carrying value of the private education loans (“PEAKS Trust Student 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 $83,332 and the fair value was approximately $101,949. As of March 31, 2013, each of the carrying value and estimated fair value of the PEAKS Trust Student Loans was approximately $112,289. 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 the notes receivable and other receivables included in Prepaid expenses and other current assets or Other assets on our Condensed Consolidated Balance Sheet was approximately $2,500 as of March 31, 2014, $2,500 as of December 31, 2013 and $2,200 as of March 31, 2013. We estimated the fair value of the notes receivable and other receivables by discounting the future cash flows using current rates for similar arrangements. The assumptions used in this estimate are considered unobservable inputs. 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 March 31, 2014, $50,000 as of December 31, 2013 and $150,000 as of March 31, 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 March 31, 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 $194,385 and the estimated fair value was approximately $199,316. As of March 31, 2013, the carrying value of the PEAKS Senior Debt was $227,016 and the estimated fair value was approximately $226,100. 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. |
Equity Compensation
Equity Compensation | 3 Months Ended |
Mar. 31, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Equity Compensation | 6. 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 March 31, 2014 2013 Stock-based compensation expense $ 2,551 $ 3,093 Income tax (benefit) $ (982 ) $ (1,191 ) We did not capitalize any stock-based compensation cost in the three months ended March 31, 2014 or 2013. As of March 31, 2014, we estimated that pre-tax compensation expense for unvested stock-based compensation grants in the amount of approximately $18,000, 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 2.0 years. The stock options granted, forfeited, exercised and expired in the period indicated were as follows: Three Months Ended March 31, 2014 # of Shares Weighted Aggregate Weighted Aggregate (1) 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 (180,239 ) $ 66.13 (11,919 ) Outstanding at end of period 1,310,375 $ 77.40 $ 101,431 2.7 $ 1,522 Exercisable at end of period 954,536 $ 95.21 $ 90,882 2.3 $ 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 March 31, 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. The following table sets forth information regarding the stock options granted and exercised in the periods indicated: Three Months Ended March 31, 2014 2013 Shares subject to stock options granted 168,500 0 Weighted average grant date fair value per share $ 12.62 $ 0 Shares subject to stock options exercised 0 0 Intrinsic value of stock options exercised $ 0 $ 0 Proceeds received from stock options exercised $ 0 $ 0 Tax benefits realized from stock options exercised $ 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 Ended March 31, 2014 2013 Risk-free interest rates 1.32 % Not applicable Expected lives (in years) 4.7 Not applicable Volatility 55 % Not applicable Dividend yield None Not applicable The following table sets forth the number of restricted stock units (“RSUs”) that were granted, forfeited and vested in the period indicated: Three Months Ended March 31, 2014 # of RSUs Weighted Fair Value Unvested at beginning of period 737,844 $ 39.96 Granted 271,636 $ 27.97 Forfeited (54,946 ) $ 35.64 Vested (51,303 ) $ 71.02 Unvested at end of period 903,231 $ 34.85 The total fair market value of the RSUs that vested and were settled in shares of our common stock was $1,924 in the three months ended March 31, 2014 and $1,003 in the three months ended March 31, 2013. |
Variable Interest Entities
Variable Interest Entities | 3 Months Ended |
Mar. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Variable Interest Entities | 7. 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 an unaffiliated entity (the “2009 Entity”) as a result of: • a risk sharing agreement (the “2009 RSA”) that we entered into with the 2009 Entity on February 20, 2009 in connection with other agreements to create a program that made private education loans available to our students to help pay the students’ cost of education that financial aid from federal, state and other sources did not cover (the “2009 Loan Program”); and • a revolving note owed to us by the 2009 Entity (the “Revolving Note”). 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 loans owned by the 2009 Entity. 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 “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. The PEAKS Trust is a tax-exempt entity and, therefore, is not included in our consolidated income tax returns. We do not recognize income tax expense or benefit for the PEAKS Trust in the provision for income taxes included in our Consolidated Statements of Income, even though the PEAKS Trust is included in our consolidated financial statements. As a result, our effective income tax rate as a percentage of income is affected. 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 12 – Contingencies. Based on our analysis, we also concluded that we were not the primary beneficiary of the 2009 Entity as of March 31, 2014, because we did not have the power to direct the servicing activities on the private education loans owned by the 2009 Entity. As a result, we are not required under ASC 810 to consolidate the 2009 Entity in our condensed consolidated financial statements as of and for the three months ended March 31, 2014. Our conclusion that we were not the primary beneficiary of the 2009 Entity did not change from the prior reporting period. Therefore, there was no effect on our condensed consolidated financial statements arising from our conclusion that we were not the primary beneficiary of the 2009 Entity. The 2009 Entity is discussed in more detail below. We may become the primary beneficiary of the 2009 Entity, if the entity that performs the servicing activities for the 2009 Entity (the “2009 Loan Program Servicer”) fails to meet certain performance criteria specified in the servicing agreement that governs the servicing activities of the private education loans made under the 2009 Loan Program (the “2009 Servicing Agreement”). If the 2009 Loan Program Servicer fails to meet those performance criteria, we have the right to terminate the 2009 Servicing Agreement and, therefore, would be considered to have the power to direct the activities of the 2009 Entity that most significantly impact the economic performance of the 2009 Entity. If that occurs, we would be required to consolidate the 2009 Entity in our consolidated financial statements. As of March 31, 2014, we believed that the performance criteria specified in the 2009 Servicing Agreement were met and, therefore, we did not have the right to terminate the 2009 Servicing Agreement. Based on preliminary loan performance data as of September 30, 2014 that we have received regarding the private education loans made under the 2009 Loan Program, however, we believe that, as of September 30, 2014, the 2009 Loan Program Servicer may not have met the performance criteria specified in the 2009 Servicing Agreement. As a result, it appears likely that the 2009 Loan Program Servicer either has failed, or within the foreseeable future will fail, to meet the performance criteria in the 2009 Servicing Agreement. Once that occurs, following a cure period and assuming that no cure occurs, we will have the right to terminate the 2009 Servicing Agreement. As a result of that right, we will be required to consolidate the 2009 Entity into our consolidated financial statements. We believe that our right to terminate the 2009 Servicing Agreement will become operative in late 2014 or early 2015. PEAKS Trust. The Subordinated Note issued by the PEAKS Trust to us does not bear interest and was recorded net of an unamortized discount based on an imputed interest rate of 9.0% prior to the Consolidation. The maturity date of the Subordinated Note is in March 2026. 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. 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. 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 PEAKS Trust student loans, less allowance for loan losses of $0 7,282 PEAKS Trust student loans, excluding current portion, less allowance for loan losses of $0 104,834 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 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 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 March 31, 2014 2013 Assets Restricted cash $ 1,640 $ 2,600 PEAKS Trust student loans, less allowance for loan losses of $0 and $0 7,713 7,282 PEAKS Trust student loans, excluding current portion, less allowance for loan losses of $29,349 and $0 75,619 105,007 Total assets $ 84,972 $ 114,889 Liabilities Current portion of PEAKS Trust senior debt $ 130,692 $ 103,356 Other current liabilities 449 519 PEAKS Trust senior debt, excluding current portion 63,693 123,660 Total liabilities $ 194,834 $ 227,535 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. The following table sets forth the revenue and expenses of the PEAKS Trust, excluding the loss on consolidation of the PEAKS Trust, that were included in our Condensed Consolidated Statements of Income for the periods indicated: Three Months Ended March 31, 2014 2013 Revenue $ 3,133 $ 1,360 Student services and administrative expenses 1,416 519 Interest expense 11,017 2,422 (Loss) before provision for income taxes $ (9,300 ) $ (1,581 ) 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. 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. 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 ratio of assets of the PEAKS Trust to outstanding PEAKS Senior Debt at the required level (the “Asset/Liability Ratio”); 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 Consolidation, Payments on Behalf of Borrowers were reflected on our financial statements as a reduction to our contingent liability accrual. Following the 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 Consolidation. 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 March 31, 2014 2013 PEAKS Guarantee $ 40,713 $ 1,239 (1) Payments on Behalf of Borrowers 1,832 1,855 (2) Total $ 42,545 $ 3,094 (1) Of this amount, $854 was paid prior to the Consolidation. (2) Of this amount, $532 was paid prior to the Consolidation. In January 2014, we made Payments on Behalf of Borrowers of $1,832. In March 2014, 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 “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 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 Letter Agreement, we agreed, after the date of the Letter Agreement, not to make any further payments of any kind on behalf of any borrower in respect of a private education loan made under the PEAKS Program. In accordance with the terms of the 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. 2009 Entity. 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: • pay 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 • pay 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”). We determined that the ability to make Discharge Payments as of March 31, 2014 did not give us the power to direct the activities that most significantly impacted the economic performance of the 2009 Entity and, therefore, did not change our conclusion that we were not the primary beneficiary of the 2009 Entity. 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 did not, however, exercise this offset right in the three months ended March 31, 2014 or 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 March 31, 2014 2013 Regular Payments $ 1,158 $ 306 Discharge Payments 0 0 Recoveries from Charged-Off Loans 0 (103 ) Total $ 1,158 $ 203 In the three months ended March 31, 2014, the 2009 Entity did not remit to us $219 of recoveries from charged-off loans that were owed to us. In the three months ended March 31, 2013, the 2009 Entity did not remit to us $54 of recoveries from charged-off loans that were owed to us. We recorded all of the amounts owed to us from the 2009 Entity for recoveries from charged-off loans in Prepaid expenses and other current assets on our Condensed Consolidated Balance Sheet as of March 31, 2014 and 2013. In the three months ended March 31, 2013, we offset $538 owed by us under the 2009 RSA against amounts owed to us by the 2009 Entity under the Revolving Note, instead of making additional Regular Payments in that amount. See Note 12 – Contingencies, for a further discussion of the offset and 2009 RSA. We recorded all of the amounts claimed as offsets in Other current liabilities on our Condensed Consolidated Balance Sheet as of March 31, 2013. We determined that claiming an offset against the Revolving Note for Regular Payments did not give us the power to direct the activities that most significantly impacted the economic performance of the 2009 Entity. In addition, we have made advances to the 2009 Entity under the Revolving Note. We did not make any advances in the three months ended March 31, 2014 or 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 advances under the Revolving Note were primarily used by the 2009 Entity to purchase additional private education loans under the 2009 Loan Program that otherwise may not have been originated. The period of time during which we could make additional advances under the Revolving Note ended on January 1, 2014. The amount owed to us under the Revolving Note, excluding the offsets described above, was approximately $8,200 as of March 31, 2014, $8,200 as of December 31, 2013 and $7,600 as of March 31, 2013. |
PEAKS Trust Student Loans
PEAKS Trust Student Loans | 3 Months Ended |
Mar. 31, 2014 | |
Receivables [Abstract] | |
PEAKS Trust Student Loans | 8. PEAKS Trust Student Loans We concluded that we were required to consolidate the PEAKS Trust in our consolidated financial statements beginning on February 28, 2013. See Note 7 – Variable Interest Entities, for a further discussion of the Consolidation. As a result, the assets and liabilities of the PEAKS Trust were included on our Condensed Consolidated Balance Sheets as of March 31, 2014, December 31, 2013 and March 31, 2013. The PEAKS Trust Student Loans are included in the line items related to the PEAKS Trust Student Loans on our Condensed Consolidated Balance Sheet. A significant number of the PEAKS Trust Student 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 PEAKS Trust Student 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 PEAKS Trust Student Loans; and • the probability that all contractually required payments with respect to those loans will not be collected. All of the PEAKS Trust Student 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 PEAKS Trust Student 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. 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 PEAKS Trust Student Loans were considered to be PCI Loans upon consolidation and were aggregated into 24 separate pools of loans, based on common risk characteristics of the loans, which included: • the fiscal quarter in which the PEAKS Trust Student Loan was originated; 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. Upon the Consolidation on February 28, 2013, the PEAKS Trust Student Loans were recorded at their estimated fair value. The estimated fair value of the PEAKS Trust Student Loans as of February 28, 2013 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 PEAKS Trust Student Loans have been prepaid. No allowance for loan loss was established as of February 28, 2013, because all of the PEAKS Trust Student Loans were recorded at fair value and future credit losses are considered in the estimate of fair value. The following table sets forth the estimated fair value, accretable yield and expected cash flows for the PEAKS Trust Student Loans, in total and for those loans pursuant to which ASC 310-30 was applied by analogy, as of the date indicated: As of February 28, 2013 Total ASC 310-30 Applied By Analogy Estimated fair value $ 112,116 $ 60,177 Accretable yield $ 100,953 $ 58,843 Expected cash flows $ 213,069 $ 119,020 The excess of any cash flows expected to be collected with respect to a loan pool of the PEAKS Trust Student 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 contractually required future principal and interest payments for all PEAKS Trust Student Loans outstanding at February 28, 2013 totaled approximately $487,800. The contractually required future principal and interest payments for the PEAKS Trust Student Loans outstanding at February 28, 2013 pursuant to which ASC 310-30 was applied by analogy totaled approximately $213,600. The excess of the contractually required payments of the PEAKS Trust Student Loans over the expected cash flows is referred to as the nonaccretable difference. As of February 28, 2013, the nonaccretable difference was approximately $274,700 for all outstanding PEAKS Trust Student Loans and approximately $94,600 for those outstanding PEAKS Trust Student Loans pursuant to which ASC 310-30 was applied by analogy. On a quarterly basis subsequent to February 28, 2013, 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 PEAKS Trust Student 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 PEAKS Trust student 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 or benefit for PEAKS Trust student loan losses represents the increase or decrease 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 March 31, 2014 2013 Balance at beginning of period $ 29,349 $ 0 Loans charged off 0 0 Recoveries from charged off loans 0 0 Provision (benefit) for loan losses 0 0 Balance at end of period $ 29,349 $ 0 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. Modifications were made to PCI Loans in the three months ended March 31, 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 PEAKS Trust Student 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. As of March 31, 2014, the outstanding principal balance of the PEAKS Trust Student Loans, including accrued interest, was approximately $263,960. The carrying amount of the PEAKS Trust Student Loans included under the line items related to the PEAKS Trust Student Loans on our Condensed Consolidated Balance Sheet was $83,332 as March 31, 2014. The following table sets 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 period indicated: Three Months Ended March 31, 2014 Three Months Ended March 31, 2013 Total ASC 310-30 Total ASC 310-30 Balance at beginning of period $ 70,580 $ 42,274 $ 0 $ 0 Additions resulting from the Consolidation 0 0 100,953 58,843 Accretion (3,133 ) (1,803 ) (1,360 ) (732 ) Reclassification from nonaccretable difference and changes in expected cash flows 5,904 4,153 0 0 Balance at end of period $ 73,351 $ 44,624 $ 99,593 $ 58,111 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2014 | |
Debt Disclosure [Abstract] | |
Debt | 9. Debt Credit Facility . A portion of the 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 are being used for general corporate purposes. Under the Amended Credit Agreement, the aggregate commitment of the lenders, effective June 30, 2014, is reduced to $135,000, and the portion of the commitments available for letters of credit is 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. See Note 12 – Contingencies, for a further discussion of the ED Letter of Credit. In addition, the commitments of the lenders under the Amended Credit Agreement will be reduced to the extent that borrowings are repaid by us using proceeds from certain types of transactions, as described further below. As of March 31, 2014, the outstanding borrowings under the Amended Credit Agreement totaled $50,000. Borrowings under the Amended Credit Agreement bear interest, at our option, at the London Interbank Offered Rate (“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 is determined based on the ratio of our total Indebtedness (as defined in the Amended Credit Agreement and which primarily includes 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 “Leverage Ratio”) as of the end of each fiscal quarter. We also pay a commitment fee on the amount of the unutilized commitments under the Amended Credit Agreement. The amount of the commitment fee is determined based on the Leverage Ratio as of the end of each quarter. The effective interest rate on our borrowings was approximately: • 4.90% per annum in the three months ended March 31, 2014; and • 3.20% per annum in the three months ended March 31, 2013. The commitment fee under the Amended Credit Agreement was 0.40% as of March 31, 2014. 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 or the Credit Agreement, as applicable, in the periods indicated: Three Months Ended March 31, 2014 2013 Interest expense and fees $ 656 $ 1,013 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 Higher Education Act of 1965, as amended (“HEA”), including the violation of any agreement entered into by our institutions with the ED regarding the administration of programs under Title IV of the HEA (“Title IV Programs”). 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 Fifth Amendment 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 contains, among other things, covenants, representations and warranties and events of default customary for credit facilities. We are required to maintain compliance with a maximum 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 March 31, 2014 after giving effect to the amendments to the Amended Credit Agreement. The Third Amendment provides that we are not required to satisfy a maximum Leverage Ratio or a minimum fixed charge coverage ratio as of March 31, 2014. In addition, among other things, the Third Amendment, the Fourth Amendment, the Fifth Amendment and the Consents, taken together: • provide that our condensed consolidated financial statements (and related certificates) as of and for the fiscal quarter ended March 31, 2014, do not have to be furnished by us to the lenders until November 15, 2014; • provide that our condensed consolidated financial statements (and related certificates) as of and for the fiscal quarter ended June 30, 2014, do not have to be furnished by us to the lenders until November 21, 2014; • provide that our condensed consolidated financial statements (and related certificates) as of and for the fiscal quarter ended September 30, 2014, do not have to be furnished by us to the lenders until December 15, 2014; • amend certain covenants to allow for the Consolidation beginning on February 28, 2013, and for other factors; and • waive certain defaults related to our financial reporting. The Amended Credit Agreement: • is secured by a pledge of the equity interests of our subsidiaries; • is guaranteed by one of our subsidiaries; • is secured by security interests in substantially all of our personal property and the personal property of the subsidiary guarantor; and • is 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 Fourth Amendment provides that an event of default under the Amended Credit Agreement will occur, if, among other things, the ED imposes a delay of more than five days in our receipt of Title IV Program funds. The Fifth Amendment provides that an event of default under the Amended Credit Agreement will occur if, among other things, we do not engage a financial advisor acceptable to the administrative agent before November 15, 2014 (or another date not later than December 15, 2014, if acceptable to the administrative agent). The administrative agent has extended the date by which we must engage a financial advisor to December 5, 2014. Based on our discussions with the administrative agent, we understand that the financial advisor would be retained to assist us in our ongoing efforts to identify and secure alternative financing. Under the Amended Credit Agreement, we are 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 is not required, until the earlier of December 31, 2014 or when net cash proceeds are 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 are received from certain transactions described in the next paragraph. All amounts posted as cash collateral for letters of credit will be treated as cash for purposes of determining our compliance with the minimum liquidity covenant of the Amended Credit Agreement. Under the Fourth Amendment and the Fifth Amendment, in the event that any net cash proceeds are 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 is not permitted under the Amended Credit Agreement, those net cash proceeds will: • first, be 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 holds 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, be used to repay outstanding borrowings under the Amended Credit Agreement, which repayments will be accompanied by a corresponding pro rata reduction of the commitment of each lender under the Amended Credit Agreement. The Fourth Amendment also implements 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 be for fair market value and an adequate cash purchase consideration, as reasonably determined by the administrative agent, provided that those limitations do not apply to an asset disposition of the Mortgaged Property, if that asset disposition generates 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 may not exceed $125,000 in the aggregate during the term of the Amended Credit Agreement, any sale and leaseback transaction must be 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 will be deemed to be for fair market value and an adequate cash purchase consideration, if it generates 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) is 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 are not otherwise permitted by the Amended Credit Agreement) may not secure debt in excess of $5,000 in aggregate principal amount, reduced from the original $25,000. If any collateral is sold in a transaction permitted under the Amended Credit Agreement or is financed by indebtedness permitted under the Amended Credit Agreement, the administrative agent will release the mortgage on, or other security interest in, that collateral. If we are not in compliance with one or more covenants and are unable to obtain a waiver of our noncompliance or an amendment to the Amended Credit Agreement that would allow us to be in compliance with those covenants or otherwise not be in default under the Amended Credit Agreement, the lenders would have various remedies, including: • the lending commitments under the Amended Credit Agreement may be terminated; • our ability to request the issuance of letters of credit and to obtain amendments, extensions or renewals of letters of credit already issued under the Amended Credit Agreement may be terminated; • all then outstanding borrowings and other amounts owed under the Amended Credit Agreement may be declared immediately due and payable; and • we could be 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 our obligations with respect to outstanding letters of credit, if that cash collateral has not already been posted. In the event that we or our subsidiary guarantor do not pay in full, upon demand, all of our outstanding borrowings and other amounts owed under the Amended Credit Agreement or we, or our subsidiary guarantor, do not provide, upon demand, the cash collateral for our letter of credit obligations, the lenders would be entitled to recourse against the collateral security, including the Mortgaged Property, that we and our subsidiary guarantor have provided, in order to obtain payment of amounts we owe or are required to provide as cash collateral. PEAKS Trust Senior Debt . • 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 Amended Credit Agreement. 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 Consolidation and other factors, we were not in compliance with those metrics as of March 31, 2014. We do not expect to be in compliance with those metrics prior to December 31, 2014. 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. See Note 12 – Contingencies, for a further discussion of the PEAKS Guarantee. 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 June 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 recent months, 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 Amended Credit 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. We estimate that we have made, and will make, payments under the PEAKS Guarantee of approximately $158,800 in the year ending December 31, 2014 to cause the PEAKS Trust to maintain the applicable required Asset/Liability Ratio. That estimated amount includes the: • $40,000 that we paid in March 2014 pursuant to the Letter Agreement, which was applied primarily to make a mandatory prepayment of the PEAKS Senior Debt (see Note 7 – Variable Interest Entities of the Notes to Consolidated Financial Statements, for a further discussion of the 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 • $50,000 that we paid in October 2014, as described in the immediately preceding paragraph. As of March 31, 2014, the outstanding principal balance of the PEAKS Senior Debt was approximately $214,516 and the carrying value was $194,385. We recorded $130,692 as a current liability as of March 31, 2014, which represented our estimate of the amount of the carrying value that would have been due in the 12 months following March 31, 2014 after giving consideration to the effects of the restatement, as described above. 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 $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 will be recognized as Interest expense in our Condensed Consolidated Statements of Income using the interest method over the term of the PEAKS Senior Debt. The effective interest rate on the PEAKS Senior Debt was approximately 19.20% per annum in the three months ended March 31, 2014 and approximately 12.40% per annum in the three months ended March 31, 2013. We recognized interest expense on the PEAKS Senior Debt of: • $11,017 in the three months ended March 31, 2014, which included $6,452 of discount accretion; and • $2,422 in the three months ended March 31, 2013, which included $652 of discount accretion. |
Earnings (Loss) Per Common Shar
Earnings (Loss) Per Common Share | 3 Months Ended |
Mar. 31, 2014 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Common Share | 10. Earnings (Loss) Per Common Share Earnings (loss) 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 (loss) 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 March 31, 2014 2013 (In thousands) Shares: Weighted average number of shares of common stock outstanding 23,447 23,397 Shares assumed issued (less shares assumed purchased for treasury) for stock-based compensation 397 Not applicable Outstanding shares for diluted earnings (loss) per share calculation 23,844 23,397 A total of approximately 1,162,000 shares in the three months ended March 31, 2014 and approximately 1,598,000 shares in the three months ended March 31, 2013 were excluded from the calculation of our diluted earnings (loss) per common share because the effect was anti-dilutive. |
Employee Pension Benefits
Employee Pension Benefits | 3 Months Ended |
Mar. 31, 2014 | |
Compensation and Retirement Disclosure [Abstract] | |
Employee Pension Benefits | 11. 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 March 31, 2014 2013 Interest cost $ 506 $ 452 Expected return on assets (1,312 ) (1,097 ) Recognized net actuarial loss 0 544 Amortization of prior service (credit) (389 ) (389 ) Net periodic pension benefit (income) $ (1,195 ) $ (490 ) 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 months ended March 31, 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 loss on our Condensed Consolidated Balance Sheet in the three months ended March 31, 2014: Defined Benefit Pension Items Accumulated Other Comprehensive Income (Loss) Income Tax Benefit (Expense) Accumulated Other Comprehensive Income (Loss) Net of Income Tax Balance at January 1, 2014 $ 5,032 $ (1,886 ) $ 3,146 Amortization of: Prior service costs (credits) (389 ) 151 (238 ) Balance at March 31, 2014 $ 4,643 $ (1,735 ) $ 2,908 The reclassification of prior service costs or credits from Accumulated other comprehensive income are included in the computation of net periodic pension income. Net periodic pension income 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 months ended March 31, 2014. |
Contingencies
Contingencies | 3 Months Ended |
Mar. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | 12. 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 March 31, 2014, the total face amount of those surety bonds was approximately $20,500. As of March 31, 2014, we also had caused approximately $2,246 of letters of credit to be issued to our workers’ compensation insurers. We caused the ED Letter of Credit in the amount of $79,708 to be issued on October 31, 2014. We also caused a letter of credit in the amount of $106 to be issued and submitted to one of our state regulatory agencies in September 2014. As of October 31, 2014, the total amount of the outstanding letters of credit that we have caused to be issued was $82,060. We are also subject to various claims and contingencies, including those related to litigation, government investigations, business transactions, guarantee arrangements and employee-related matters, among others. We record a liability for those 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 March 31, 2014 As of December 31, 2013 As of March 31, 2013 2009 RSA $ 115,930 $ 116,923 $ 31,832 Other 13,585 8,957 6,816 Total $ 129,515 $ 125,880 $ 38,648 Other current liabilities $ 32,409 $ 25,893 $ 35,573 Other liabilities 97,106 99,987 3,075 Total $ 129,515 $ 125,880 $ 38,648 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. As of March 31, 2014, amounts in Other current liabilities included approximately $8,500 that we claimed as an offset against amounts owed to us under the Revolving Note. See “— Guarantees,” 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 March 31, 2014 2013 Balance at beginning of period $ 125,880 $ 126,978 Increases (decreases) from: Additional accruals: 2009 RSA 0 3,803 Other 8,764 4,313 Payments, other (1) (3,971 ) (2,743 ) Payments, net of recoveries of $0 and $103 (2) (1,158 ) (203 ) Payments under PEAKS Guarantee, net of estimated recoveries of $0 and $723 (40,713 ) (516 ) Payments on Behalf of Borrowers (1,832 ) (1,855 ) Settlement payment - 2007 RSA 0 (46,000 ) Elimination of intercompany transactions (3) 42,545 985 Elimination of PEAKS Guarantee accrual (4) 0 (46,114 ) Balance at end of period $ 129,515 $ 38,648 (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, net of recoveries, under the 2009 RSA. (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 Consolidation. See Note 7 – Variable Interest Entities, for a further discussion of the Consolidation. (4) As a result of the Consolidation, in the three months ended March 31, 2013, we eliminated from our consolidated financial statements the contingent liability related to the PEAKS Guarantee 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 three months ended March 31, 2013 in the table above. In order to determine the amount of the contingent liability to record related to our guarantee obligations under the 2009 RSA, we utilize estimates of, among other things, the projected repayment performance of the private education loans made under the 2009 Loan Program, which projections involve numerous assumptions. Based on those projections and other factors, we estimate the amount of payments that we expect to make and the amounts that we expect to be repaid to us. 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. In connection with determining the amount of the contingent liability to record related to our guarantee obligations under the 2009 RSA, we also consider 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 project that we will have sufficient funds available to make Discharge Payments under the 2009 RSA, we incorporate an assumption that we will make Discharge Payments into our estimate of the amount of payments that we expect to make when determining the contingent liability. If we do not believe that we will have sufficient funds available to make Discharge Payments, we assume that we will make Regular Payments to satisfy our obligations under the 2009 RSA. We discount the amount of those expected future monthly Regular Payments at a risk-free rate of interest. Making Discharge Payments may result 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. We discount the amounts that we expect will be repaid to us under the 2009 RSA to reflect a risk-free rate of interest. The difference between the amount of the guarantee payments that we expect to make and the discounted amount that we expect will be repaid to us under the 2009 RSA is included in our estimate of the amount of our contingent liability related to our guarantee obligations under the 2009 RSA. In connection with estimating our recorded liability for claims and contingencies as of March 31, 2014, December 31, 2013 and March 31, 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. In order to estimate the possible range of losses under the 2009 RSA, we made certain assumptions with respect to the performance of the private education loans made under the 2009 Loan Program over the life of those loans. The life of a private education loan made under the 2009 Loan Program may be in excess of ten years from the date of disbursement. Therefore, our estimate of the possible range of losses under the 2009 RSA was based on assumptions for periods in excess of ten years, and those 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 the private education loans; • the amounts and timing of collections in the future on those private education loans that have defaulted; and • our ability to utilize the available options for payment of our obligations under the 2009 RSA. We consulted with third-party consumer credit consulting firms in arriving at our assumptions and estimates. The assumptions have changed, and may continue to change, significantly over time as actual results become known, which would affect our estimated range of possible losses related to the 2009 RSA. With respect to our guarantee obligations under the 2009 RSA, we believe that it is reasonably possible that we may incur losses in an estimated range of $10,000 less than to $28,000 greater than the liability recorded as of March 31, 2014 for the 2009 RSA. 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. Litigation . 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. et seq • 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 7 th th th th 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 caption: William Koetsch, Individually and on Behalf of All Others Similarly Situated v. ITT Educational Services, Inc., et al. Massachusetts Laborers’ Annuity Fund, Individually and on Behalf of All Others Similarly Situated v. ITT Educational Services, Inc., et al (the “MLAF Litigation”). In re ITT Educational Services, Inc. Securities Litigation • 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. 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 caption: David Banes, Individually and on Behalf of All Others Similarly Situated v. Kevin M. Modany, et al. • misleading investors regarding the integrity of our financial reporting, including the reporting of the PEAKS Trust; • knowingly or recklessly making materially false and/or misleading statements and/or failing to disclose material adverse facts about our business operations and prospects, including that: • our financial statements contained errors related to the accounting of the PEAKS Trust and the PEAKS Program; and • we lacked adequate internal controls over financial reporting; • knowingly or recklessly engaging in acts, transactions, practices and courses of business that operated as a fraud or deceit upon the plaintiff and the purported class; • employing devices, schemes and artifices to defraud in connection with the purchase and sale of our common stock; • deceiving the investing public, including the plaintiff and the purported class; and • artificially inflating and maintaining the market price of our common stock and causing the plaintiff and other putative class members to purchase our common stock at artificially inflated prices. The putative class period in this action is from April 26, 2013 through September 19, 2014. The plaintiff seeks, among other things, the designation of this action as a class action, an award of unspecified damages, interest, costs and expenses, including counsel fees and expert fees, and such other relief as the court deems proper. All of the defendants have defended, and intend to continue to defend, themselves vigorously against the allegations made in the complaint. On October 3, 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 caption: Babulal Tarapara, Individually and on Behalf of All Others Similarly Situated v. ITT Educational Services, Inc., et al. • we failed to consolidate the PEAKS Trust in our consolidated financial statements; • our consolidated financial statements contained errors related to the accounting of the PEAKS Trust and PEAKS Program; • we improperly accounted for our guarantee obligations under the PEAKS Guarantee; • our financial results were overstated; • we lacked adequate internal and financial controls; • our consolidated financial statements were materially false and misleading at all relevant times; • 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; • we deceived the investing public, including the plaintiff and the purported class; and • we employed devices, schemes and artifices to defraud in connection with the purchase and sale of our common stock. The putative class period in this action is from February 26, 2013 through September 18, 2014. The plaintiff seeks, among other things: • the designation of this action as a class action; • an award of unspecified compensatory damages, including interest; • an award of reasonable costs and expenses, including counsel fees and expert fees; and • such other relief as the court deems proper. All of the defendants have defended, and intend to continue to defend, themselves vigorously against the allegations made in the complaint. On October 9, 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 caption: Kumud Jindal, Individually and on Behalf of All Others Similarly Situated v. Kevin M. Modany, et al. • our financial statements contained errors related to the accounting of the PEAKS Trust and PEAKS Program; • we lacked adequate internal controls over financial reporting; • 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 this action is from April 26, 2013 through September 19, 2014. The plaintiff seeks, among other things, the designation of this action as a class action, an award of unspecified damages, interest, attorneys’ fees, expert fees and other costs, and such other relief as the court deems proper. All of the defendants have defended, and intend to continue to defend, themselves vigorously against the allegations made in the complaint. On November 7, 2014, the parties in the Banes Litigation, Tarapara Litigation and Jindal Litigation filed a stipulation to consolidate the Tarapara Litigation and Jindal Litigation into the Banes Litigation. On May 8, 2013, a complaint in a shareholder derivative lawsuit was filed against two 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. • 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 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 August 6, 2013, the parties agreed to stay the Wilfred Litigation, until the Securities Litigation was dismissed with prejudice or the defendants filed an answer in the 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 Securities Litigation; or • 30 days after written notice terminating the stay has been provided by any of the parties in the Wilfred Litigation to all other parties. On October 15, 2014, the plaintiff gave the requisite notice terminating the additional stay. On May 27, 2014, a complaint in a shareholder derivative lawsuit was filed against two 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. • our exposure under guarantees entered into with third-party lenders to obtain financing for our students; • increases in our bad debt expense caused by increases in student loan defaults; • our reserves associated with our obligations under third-party private education loan programs and internal student financing; • the unwillingness of third-party lenders to provide private education loans to our students; and • our pushing students into high-cost private loans that were likely to default. As a result of this conduct, the complaint alleges 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; • 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. 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 procedures; and • costs and disbursements, including attorneys’, accountants’ and experts’ fees, costs and expenses. Although the Wilfred Litigation and Nottenkamper 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. • 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 On April 28, 2014, we filed a motion to dismiss the CFPB Litigation for, among other reasons, lack of jurisdiction and failure to state a claim upon which relief can be granted. We have defended, and intend to continue to defend, ourselves vigorously against the 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. • 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. • 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, Securities Litigation, Banes Litigation, Tarapara Litigation, Jindal Litigation, Wilfred Litigation, Nottenkamper 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. The current officers named in the Securities Litigation, Banes Litigation, Tarapara Litigation, Jindal Litigation, Wilfred Litigation and Nottenkamper Litigation include Daniel M. Fitzpatrick and Kevin M. Modany. 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. 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, we received subpoenas and/or CIDs from the Attorneys General of Arkansas, Arizona, Colorado, Connecticut, Hawaii, Idaho, Iowa, Kentucky, 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 |
Risks and Uncertainties
Risks and Uncertainties | 3 Months Ended |
Mar. 31, 2014 | |
Text Block [Abstract] | |
Risks and Uncertainties | 13. 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, including, but not limited to, the following: • The Consolidation and other factors, among other things: • have caused violations by us of covenants under the Amended Credit Agreement, for which we have 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 9 – Debt and Note 12 – Contingencies, for additional information. • We believe that we will be required to consolidate the 2009 Entity into our consolidated financial statements in the foreseeable future, which could impact our compliance with: • covenants under the Amended Credit 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 7 – Variable Interest Entities, for additional information. • Our institutions’ failure to submit their 2013 audited consolidated financial statements and 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 have caused the letter of credit to be issued and 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 9 – Debt, for additional information. • We caused the ED Letter of Credit to be issued on October 31, 2014. The term of the letter of credit ends on November 4, 2019. With respect to any letter of credit issued under the Amended Credit Agreement, we are 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. Based on the amount of the ED Letter of Credit and other letters of credit outstanding as of the date of this filing, the amount of the cash collateral that we will have to provide is approximately $89,300. The cash collateral may be provided from available funds. See Note 9 – Debt, for additional information. • We are subject to various claims and contingencies, including those related to litigation, government investigations, business transactions, guarantee arrangements and employee-related matters, among others. We cannot provide an estimate of the possible losses, or range of possible losses, in excess of the amounts, if any, accrued with respect to those matters. See the subsections entitled “Litigation” and “Government Investigations” in Note 12 - Contingencies, for a further discussion of certain litigation and government investigations to which we are subject. • The significant guarantee obligations that we have under the PEAKS Guarantee and 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 $163,239 in 2014 and approximately $9,813 in 2015. 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 of approximately $8,610 in 2014 and $14,251 in 2015. The Discharge Payment made under the Fourth Amendment to 2009 RSA is not included in the amount of payments that were estimated, as of March 31, 2014, to be made in 2014. See Note 9 – Debt and Note 12 – Contingencies, for a further discussion of the PEAKS Guarantee and 2009 RSA (collectively, the “RSAs”), estimated payment amounts and contingent liabilities. • As of March 31, 2014, the outstanding borrowings under the Amended Credit Agreement totaled $50,000 and were classified as a current liability. If we are not in compliance with one or more covenants and are unable to obtain a waiver of our noncompliance or an amendment to the Amended Credit Agreement that would allow us to be in compliance with those covenants or otherwise not be in default under the Amended Credit Agreement, the lenders would have various remedies, including: • the lending commitments under the Amended Credit Agreement may be terminated; • our ability to request the issuance of letters of credit and obtain amendments, extensions or renewals of letters of credit already issued under the Amended Credit Agreement may be terminated; • all then outstanding borrowings and other amounts owed under the Amended Credit Agreement may be declared immediately due and payable; and • we could be 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 our obligations with respect to outstanding letters of credit, if that cash collateral has not already been posted. In the event that we or our subsidiary guarantor do not pay in full, upon demand, all of our outstanding borrowings and other amounts owed under the Amended Credit Agreement or we, or our subsidiary guarantor, do not provide, upon demand, the cash collateral for our letter of credit obligations, the lenders would be entitled to recourse against the collateral security, including the Mortgaged Property, that we and our subsidiary guarantor have provided, in order to obtain payment of amounts we owe or are required to provide as cash collateral. • We incurred a net loss in the year December 31, 2013 and we had negative working capital as of December 31, 2013 and March 31, 2014, primarily due to the impact of the Consolidation and the loss that we recorded related to our guarantee obligations under the 2009 RSA. Based on our current projections, we believe that cash generated from operations will be sufficient for us to satisfy our RSA payments, letters of credit cash collateralization, working capital, loan repayment 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, provide cash collateral for letters of credit, construct facilities or repay loans will not have a material adverse effect on our expansion plans, planned capital expenditures, ability to meet any applicable regulatory financial responsibility standards 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. |
Restatement of Previously Iss22
Restatement of Previously Issued Financial Statements (Tables) | 3 Months Ended |
Mar. 31, 2014 | |
Accounting Changes and Error Corrections [Abstract] | |
Effect of Restatement on Affected Line Items in Financial Statements | The following table sets forth the effect of the restatement on the affected line items in our Condensed Consolidated Balance Sheet as of March 31, 2014: As of March 31, 2014 As Previously Interest As Condensed Consolidated Balance Sheet Data: Deferred income taxes $ 75,607 $ 1,901 $ 77,508 Total assets 778,431 1,901 780,332 Other current liabilities 52,415 (147 ) 52,268 Total current liabilities 458,067 (147 ) 457,920 PEAKS Trust senior debt, excluding current portion 58,782 4,911 63,693 Total liabilities 659,325 4,764 664,089 Retained earnings 944,039 (2,863 ) 941,176 Total shareholders’ equity 119,106 (2,863 ) 116,243 Total liabilities and shareholders’ equity 778,431 1,901 780,332 The following table sets forth the effect of the restatement on the affected line items in our Condensed Consolidated Statement of Income for the three months ended March 31, 2014: Three Months Ended March 31, 2014 As Interest As Condensed Consolidated Statement of Income Data: Revenue $ 237,923 $ 0 $ 237,923 Costs and expenses: Cost of educational services 120,115 0 120,115 Student services and administrative expenses 99,238 0 99,238 Legal and professional fees related to certain lawsuits, investigations and accounting matters 5,547 0 5,547 Loss related to loan program guarantees 0 0 0 Total costs and expenses 224,900 0 224,900 Operating income 13,023 0 13,023 Interest income 19 0 19 Interest (expense) (6,901 ) (4,911 ) (11,812 ) Income before provision for income taxes 6,141 (4,911 ) 1,230 Provision for income taxes 2,519 (2,048 ) 471 Net income $ 3,622 $ (2,863 ) $ 759 Earnings per share: Basic $ 0.15 $ (0.12 ) $ 0.03 Diluted $ 0.15 $ (0.12 ) $ 0.03 Weighted average shares outstanding: Basic 23,447 0 23,447 Diluted 23,844 0 23,844 The following table sets forth the effect of the restatement on the affected line items in our Condensed Consolidated Statement of Comprehensive Income for the three months ended March 31, 2014: Three Months Ended March 31, 2014 As Interest Adjustment As Condensed Consolidated Statement of Comprehensive Income Data: Net income $ 3,622 $ (2,863 ) $ 759 Comprehensive income 3,384 (2,863 ) 521 The following table sets forth the effect of the restatement on the affected line items in our Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2014: Three Months Ended March 31, 2014 As Previously Interest Adjustment As Condensed Consolidated Statement of Cash Flows Data: Net income $ 3,622 $ (2,863 ) $ 759 Deferred income taxes (416 ) (1,901 ) (2,317 ) Accretion of discount on PEAKS Trust senior debt 1,541 4,911 6,452 Other operating assets and liabilities (3,885 ) (147 ) (4,032 ) Net cash flows from operating activities 36,918 0 36,918 The following table sets forth the effect of the restatement on the affected line items in our Condensed Consolidated Statement of Shareholders’ Equity for the three months ended March 31, 2014: Three Months Ended March 31, 2014 As Interest Adjustment As Condensed Consolidated Statement of Shareholders’ Equity Data – Retained Earnings: Net income $ 3,622 $ (2,863 ) $ 759 Balance as of March 31, 2014 944,039 (2,863 ) 941,176 |
Acquisition (Tables)
Acquisition (Tables) | 3 Months Ended |
Mar. 31, 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 Accounts receivable and other current assets $ 849 Furniture and equipment 370 Identifiable intangible assets 1,670 Goodwill 3,332 Other liabilities $ 1,035 |
Fair Value (Tables)
Fair Value (Tables) | 3 Months Ended |
Mar. 31, 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 March 31, 2014: Fair Value Measurements at Reporting Date Using (Level 1) (Level 2) (Level 3) Description As of Quoted Prices in Active Markets for Significant Other Significant Cash equivalents: Money market fund $ 204,967 $ 204,967 $ 0 $ 0 Restricted cash: Money market fund 2,042 2,042 0 0 Other assets: Money market fund 8,626 8,626 0 0 $ 215,635 $ 215,635 $ 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 March 31, 2013: Fair Value Measurements at Reporting Date Using (Level 1) (Level 2) (Level 3) Description As of March 31, 2013 Quoted Prices in Significant Other Significant Cash equivalents: Money market fund $ 204,838 $ 204,838 $ 0 $ 0 Restricted cash: Money market fund 3,374 3,374 0 0 Other assets: Money market fund 8,623 8,623 0 0 $ 216,835 $ 216,835 $ 0 $ 0 |
Equity Compensation (Tables)
Equity Compensation (Tables) | 3 Months Ended |
Mar. 31, 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 March 31, 2014 2013 Stock-based compensation expense $ 2,551 $ 3,093 Income tax (benefit) $ (982 ) $ (1,191 ) |
Stock Options Granted, Forfeited, Exercised and Expired | The stock options granted, forfeited, exercised and expired in the period indicated were as follows: Three Months Ended March 31, 2014 # of Shares Weighted Aggregate Weighted Aggregate (1) 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 (180,239 ) $ 66.13 (11,919 ) Outstanding at end of period 1,310,375 $ 77.40 $ 101,431 2.7 $ 1,522 Exercisable at end of period 954,536 $ 95.21 $ 90,882 2.3 $ 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 March 31, 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. |
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 March 31, 2014 2013 Shares subject to stock options granted 168,500 0 Weighted average grant date fair value per share $ 12.62 $ 0 Shares subject to stock options exercised 0 0 Intrinsic value of stock options exercised $ 0 $ 0 Proceeds received from stock options exercised $ 0 $ 0 Tax benefits realized from stock options exercised $ 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 Ended March 31, 2014 2013 Risk-free interest rates 1.32 % Not applicable Expected lives (in years) 4.7 Not applicable Volatility 55 % Not applicable Dividend yield None Not applicable |
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: Three Months Ended March 31, 2014 # of RSUs Weighted Fair Value Unvested at beginning of period 737,844 $ 39.96 Granted 271,636 $ 27.97 Forfeited (54,946 ) $ 35.64 Vested (51,303 ) $ 71.02 Unvested at end of period 903,231 $ 34.85 |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 3 Months Ended |
Mar. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Carrying Value of Assets and Liabilities of PEAKS Trust | 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 PEAKS Trust student loans, less allowance for loan losses of $0 7,282 PEAKS Trust student loans, excluding current portion, less allowance for loan losses of $0 104,834 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 March 31, 2014 2013 Assets Restricted cash $ 1,640 $ 2,600 PEAKS Trust student loans, less allowance for loan losses of $0 and $0 7,713 7,282 PEAKS Trust student loans, excluding current portion, less allowance for loan losses of $29,349 and $0 75,619 105,007 Total assets $ 84,972 $ 114,889 Liabilities Current portion of PEAKS Trust senior debt $ 130,692 $ 103,356 Other current liabilities 449 519 PEAKS Trust senior debt, excluding current portion 63,693 123,660 Total liabilities $ 194,834 $ 227,535 |
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 |
Schedule of 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, that were included in our Condensed Consolidated Statements of Income for the periods indicated: Three Months Ended March 31, 2014 2013 Revenue $ 3,133 $ 1,360 Student services and administrative expenses 1,416 519 Interest expense 11,017 2,422 (Loss) before provision for income taxes $ (9,300 ) $ (1,581 ) |
Aggregate Amount of Guarantee and Other Payments | 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 March 31, 2014 2013 PEAKS Guarantee $ 40,713 $ 1,239 (1) Payments on Behalf of Borrowers 1,832 1,855 (2) Total $ 42,545 $ 3,094 (1) Of this amount, $854 was paid prior to the Consolidation. (2) Of this amount, $532 was paid prior to the 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 March 31, 2014 2013 Regular Payments $ 1,158 $ 306 Discharge Payments 0 0 Recoveries from Charged-Off Loans 0 (103 ) Total $ 1,158 $ 203 |
PEAKS Trust Student Loans (Tabl
PEAKS Trust Student Loans (Tables) | 3 Months Ended |
Mar. 31, 2014 | |
Receivables [Abstract] | |
Schedule of Estimated Fair Value, Accretable Yield and Expected Cash Flows for PEAKS Trust Student Loans | The following table sets forth the estimated fair value, accretable yield and expected cash flows for the PEAKS Trust Student Loans, in total and for those loans pursuant to which ASC 310-30 was applied by analogy, as of the date indicated: As of February 28, 2013 Total ASC 310-30 Applied By Analogy Estimated fair value $ 112,116 $ 60,177 Accretable yield $ 100,953 $ 58,843 Expected cash flows $ 213,069 $ 119,020 |
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 March 31, 2014 2013 Balance at beginning of period $ 29,349 $ 0 Loans charged off 0 0 Recoveries from charged off loans 0 0 Provision (benefit) for loan losses 0 0 Balance at end of period $ 29,349 $ 0 |
Schedule of Information Regarding Aggregate Changes in Accretable Yield | The following table sets 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 period indicated: Three Months Ended March 31, 2014 Three Months Ended March 31, 2013 Total ASC 310-30 Total ASC 310-30 Balance at beginning of period $ 70,580 $ 42,274 $ 0 $ 0 Additions resulting from the Consolidation 0 0 100,953 58,843 Accretion (3,133 ) (1,803 ) (1,360 ) (732 ) Reclassification from nonaccretable difference and changes in expected cash flows 5,904 4,153 0 0 Balance at end of period $ 73,351 $ 44,624 $ 99,593 $ 58,111 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2014 | |
Debt Disclosure [Abstract] | |
Total 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 or the Credit Agreement, as applicable, in the periods indicated: Three Months Ended March 31, 2014 2013 Interest expense and fees $ 656 $ 1,013 |
Earnings (Loss) Per Common Sh29
Earnings (Loss) Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2014 | |
Earnings Per Share [Abstract] | |
Historical Net Income (Loss) and Weighted Average Number of Shares of Common Stock Outstanding | This data is based on historical net income (loss) 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 March 31, 2014 2013 (In thousands) Shares: Weighted average number of shares of common stock outstanding 23,447 23,397 Shares assumed issued (less shares assumed purchased for treasury) for stock-based compensation 397 Not applicable Outstanding shares for diluted earnings (loss) per share calculation 23,844 23,397 |
Employee Pension Benefits (Tabl
Employee Pension Benefits (Tables) | 3 Months Ended |
Mar. 31, 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 March 31, 2014 2013 Interest cost $ 506 $ 452 Expected return on assets (1,312 ) (1,097 ) Recognized net actuarial loss 0 544 Amortization of prior service (credit) (389 ) (389 ) Net periodic pension benefit (income) $ (1,195 ) $ (490 ) |
Schedule of Changes in Components of Accumulated Other Comprehensive Loss | The following table sets forth the changes in the components of Accumulated other comprehensive loss on our Condensed Consolidated Balance Sheet in the three months ended March 31, 2014: Defined Benefit Pension Items Accumulated Other Comprehensive Income (Loss) Income Tax Benefit (Expense) Accumulated Other Comprehensive Income (Loss) Net of Income Tax Balance at January 1, 2014 $ 5,032 $ (1,886 ) $ 3,146 Amortization of: Prior service costs (credits) (389 ) 151 (238 ) Balance at March 31, 2014 $ 4,643 $ (1,735 ) $ 2,908 |
Contingencies (Tables)
Contingencies (Tables) | 3 Months Ended |
Mar. 31, 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 March 31, 2014 As of December 31, 2013 As of March 31, 2013 2009 RSA $ 115,930 $ 116,923 $ 31,832 Other 13,585 8,957 6,816 Total $ 129,515 $ 125,880 $ 38,648 Other current liabilities $ 32,409 $ 25,893 $ 35,573 Other liabilities 97,106 99,987 3,075 Total $ 129,515 $ 125,880 $ 38,648 |
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 March 31, 2014 2013 Balance at beginning of period $ 125,880 $ 126,978 Increases (decreases) from: Additional accruals: 2009 RSA 0 3,803 Other 8,764 4,313 Payments, other (1) (3,971 ) (2,743 ) Payments, net of recoveries of $0 and $103 (2) (1,158 ) (203 ) Payments under PEAKS Guarantee, net of estimated recoveries of $0 and $723 (40,713 ) (516 ) Payments on Behalf of Borrowers (1,832 ) (1,855 ) Settlement payment - 2007 RSA 0 (46,000 ) Elimination of intercompany transactions (3) 42,545 985 Elimination of PEAKS Guarantee accrual (4) 0 (46,114 ) Balance at end of period $ 129,515 $ 38,648 (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, net of recoveries, under the 2009 RSA. (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 Consolidation. See Note 7 – Variable Interest Entities, for a further discussion of the Consolidation. (4) As a result of the Consolidation, in the three months ended March 31, 2013, we eliminated from our consolidated financial statements the contingent liability related to the PEAKS Guarantee that we had previously recorded. |
Estimated Amounts of Regular, Discharge Payments Expected to Pay and Estimated Recoveries from Charged-off Loans | The following table sets forth, in the periods indicated, our projections as of March 31, 2014 of the estimated amounts of Regular Payments and Discharge Payments that we expected to pay (or that we expected 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 expected 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 2014 (1) $ 7,452 $ 0 (2) $ 7,452 $ (791 ) 2015 14,251 0 14,251 (1,200 ) 2016 16,060 0 16,060 (1,200 ) 2017 16,333 0 16,333 (1,200 ) 2018 and later 0 75,194 75,194 (300 ) Total $ 54,096 $ 75,194 (2) $ 129,290 $ (4,691 ) (1) Estimated payments and recoveries between April 1, 2014 and December 31, 2014. (2) The Discharge Payment that we made on November 12, 2014 pursuant to the terms of the Fourth Amendment to 2009 RSA (as defined below) is not included, because the amounts in this table represent our projections as of March 31, 2014. |
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 Type of Payment (Receipt) 2014 2013 Guarantee: PEAKS Program $ 40,713 $ 1,239 (1) 2009 RSA Regular Payments 1,158 306 2009 RSA Discharge Payments 0 0 Payments on Behalf of Borrowers 1,832 1,855 (2) 2009 RSA-Recoveries from Charged-Off Loans 0 (103 ) Total $ 43,703 $ 3,297 (1) Of this amount, $854 was paid prior to the Consolidation. (2) Of this amount, $532 was paid prior to the Consolidation. |
The Company and Basis of Pres32
The Company and Basis of Presentation - Additional Information (Detail) | 3 Months Ended | |
Mar. 31, 2014StateFacilityLocationAttendant | Sep. 30, 2014Facility | |
Business And Summary Of Significant Accounting Policies [Line Items] | ||
Number of students in degree programs | Attendant | 57,000 | |
Number of training facilities | Facility | 4 | |
Number of states where online programs are offered | State | 50 | |
Number of locations | 149 | |
Number of campuses | 147 | |
Number of learning sites | 2 | |
Number of states | State | 39 | |
Subsequent Event [Member] | ||
Business And Summary Of Significant Accounting Policies [Line Items] | ||
Number of training facilities eliminated | Facility | 4 |
Summary of Table Sets Forth the
Summary of Table Sets Forth the Effect of Restatement on Affected Line Items in Condensed Consolidated Balance Sheet (Detail) - USD ($) $ in Thousands | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 | Feb. 28, 2013 | Dec. 31, 2012 |
Condensed Consolidated Balance Sheet Data: | |||||
Deferred income taxes | $ 77,508 | $ 68,324 | $ 45,024 | ||
Total assets | 780,332 | 806,851 | 783,286 | $ 6,614 | |
Other current liabilities | 52,268 | 42,136 | 52,185 | 3,060 | |
Total current liabilities | 457,920 | 473,777 | 355,307 | ||
PEAKS Trust senior debt, excluding current portion | 63,693 | 71,341 | 123,660 | ||
Total | 664,089 | 691,205 | 674,601 | $ 46,114 | |
Retained earnings | 941,176 | 940,449 | 950,202 | ||
Total shareholders' equity | 116,243 | 115,646 | 108,685 | $ 125,765 | |
Total liabilities and shareholders' equity | 780,332 | $ 806,851 | $ 783,286 | ||
As Previously Reported [Member] | |||||
Condensed Consolidated Balance Sheet Data: | |||||
Deferred income taxes | 75,607 | ||||
Total assets | 778,431 | ||||
Other current liabilities | 52,415 | ||||
Total current liabilities | 458,067 | ||||
PEAKS Trust senior debt, excluding current portion | 58,782 | ||||
Total | 659,325 | ||||
Retained earnings | 944,039 | ||||
Total shareholders' equity | 119,106 | ||||
Total liabilities and shareholders' equity | 778,431 | ||||
Interest Method Adjustment [Member] | |||||
Condensed Consolidated Balance Sheet Data: | |||||
Deferred income taxes | 1,901 | ||||
Total assets | 1,901 | ||||
Other current liabilities | (147) | ||||
Total current liabilities | (147) | ||||
PEAKS Trust senior debt, excluding current portion | 4,911 | ||||
Total | 4,764 | ||||
Retained earnings | (2,863) | ||||
Total shareholders' equity | (2,863) | ||||
Total liabilities and shareholders' equity | $ 1,901 |
Summary of Table Sets Forth t34
Summary of Table Sets Forth the Effect of Restatement on Affected Line Items in Condensed Consolidated Statement of Income (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
Condensed Consolidated Statement of Income Data: | |||
Revenue | $ 237,923 | $ 285,062 | |
Costs and expenses: | |||
Cost of educational services | 120,115 | 124,176 | |
Student services and administrative expenses | 99,238 | 101,721 | |
Legal and professional fees related to certain lawsuits, investigations and accounting matters | 5,547 | 1,500 | |
Loss related to loan program guarantees | 0 | ||
Total costs and expenses | 224,900 | 231,200 | |
Operating income | 13,023 | 53,862 | |
Interest income | 19 | 34 | |
Interest (expense) | (11,812) | (3,574) | |
Income (loss) before provision for income taxes | 1,230 | (22,926) | |
Provision for income taxes | 471 | (5,655) | |
Net income | $ 759 | $ (17,271) | $ (9,753) |
Earnings per share: | |||
Basic | $ 0.03 | $ (0.74) | |
Diluted | $ 0.03 | $ (0.74) | |
Weighted average shares outstanding: | |||
Basic | 23,447 | 23,397 | |
Diluted | 23,844 | 23,397 | |
As Previously Reported [Member] | |||
Condensed Consolidated Statement of Income Data: | |||
Revenue | $ 237,923 | ||
Costs and expenses: | |||
Cost of educational services | 120,115 | ||
Student services and administrative expenses | 99,238 | ||
Legal and professional fees related to certain lawsuits, investigations and accounting matters | 5,547 | ||
Loss related to loan program guarantees | 0 | ||
Total costs and expenses | 224,900 | ||
Operating income | 13,023 | ||
Interest income | 19 | ||
Interest (expense) | (6,901) | ||
Income (loss) before provision for income taxes | 6,141 | ||
Provision for income taxes | 2,519 | ||
Net income | $ 3,622 | ||
Earnings per share: | |||
Basic | $ 0.15 | ||
Diluted | $ 0.15 | ||
Weighted average shares outstanding: | |||
Basic | 23,447 | ||
Diluted | 23,844 | ||
Interest Method Adjustment [Member] | |||
Condensed Consolidated Statement of Income Data: | |||
Revenue | $ 0 | ||
Costs and expenses: | |||
Cost of educational services | 0 | ||
Student services and administrative expenses | 0 | ||
Legal and professional fees related to certain lawsuits, investigations and accounting matters | 0 | ||
Loss related to loan program guarantees | 0 | ||
Total costs and expenses | 0 | ||
Operating income | 0 | ||
Interest income | 0 | ||
Interest (expense) | (4,911) | ||
Income (loss) before provision for income taxes | (4,911) | ||
Provision for income taxes | (2,048) | ||
Net income | $ (2,863) | ||
Earnings per share: | |||
Basic | $ (0.12) | ||
Diluted | $ (0.12) | ||
Weighted average shares outstanding: | |||
Basic | 0 | ||
Diluted | 0 |
Summary of Table Sets Forth t35
Summary of Table Sets Forth the Effect of Restatement on Affected Line Items in Condensed Consolidated Statement of Comprehensive Income (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
Condensed Consolidated Statement of Comprehensive Income Data: | |||
Net income | $ 759 | $ (17,271) | $ (9,753) |
Comprehensive income | 521 | $ (17,176) | |
As Previously Reported [Member] | |||
Condensed Consolidated Statement of Comprehensive Income Data: | |||
Net income | 3,622 | ||
Comprehensive income | 3,384 | ||
Interest Method Adjustment [Member] | |||
Condensed Consolidated Statement of Comprehensive Income Data: | |||
Net income | (2,863) | ||
Comprehensive income | $ (2,863) |
Summary of Table Sets Forth t36
Summary of Table Sets Forth the Effect of Restatement on Affected Line Items in Condensed Consolidated Statement of Cash Flows (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
Condensed Consolidated Statement of Cash Flows Data: | |||
Net income | $ 759 | $ (17,271) | $ (9,753) |
Deferred income taxes | (2,317) | (15,384) | |
Accretion of discount on PEAKS Trust senior debt | 6,452 | 652 | |
Other operating assets and liabilities | (4,032) | (5,912) | |
Net cash flows from operating activities | 36,918 | $ (43,915) | |
As Previously Reported [Member] | |||
Condensed Consolidated Statement of Cash Flows Data: | |||
Net income | 3,622 | ||
Deferred income taxes | (416) | ||
Accretion of discount on PEAKS Trust senior debt | 1,541 | ||
Other operating assets and liabilities | (3,885) | ||
Net cash flows from operating activities | 36,918 | ||
Interest Method Adjustment [Member] | |||
Condensed Consolidated Statement of Cash Flows Data: | |||
Net income | (2,863) | ||
Deferred income taxes | (1,901) | ||
Accretion of discount on PEAKS Trust senior debt | 4,911 | ||
Other operating assets and liabilities | (147) | ||
Net cash flows from operating activities | $ 0 |
Summary of Table Sets Forth t37
Summary of Table Sets Forth the Effect of Restatement on Affected Line Items In Condensed Consolidated Statement of Shareholders' Equity (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
Condensed Consolidated Statement of Shareholders' Equity Data - Retained Earnings | |||
Net income | $ 759 | $ (17,271) | $ (9,753) |
Ending Balance | 116,243 | 108,685 | 115,646 |
Retained Earnings [Member] | |||
Condensed Consolidated Statement of Shareholders' Equity Data - Retained Earnings | |||
Net income | 759 | (17,271) | (9,753) |
Ending Balance | 941,176 | $ 950,202 | $ 940,449 |
As Previously Reported [Member] | |||
Condensed Consolidated Statement of Shareholders' Equity Data - Retained Earnings | |||
Net income | 3,622 | ||
Ending Balance | 119,106 | ||
As Previously Reported [Member] | Retained Earnings [Member] | |||
Condensed Consolidated Statement of Shareholders' Equity Data - Retained Earnings | |||
Net income | 3,622 | ||
Ending Balance | 944,039 | ||
Interest Method Adjustment [Member] | |||
Condensed Consolidated Statement of Shareholders' Equity Data - Retained Earnings | |||
Net income | (2,863) | ||
Ending Balance | (2,863) | ||
Interest Method Adjustment [Member] | Retained Earnings [Member] | |||
Condensed Consolidated Statement of Shareholders' Equity Data - Retained Earnings | |||
Net income | (2,863) | ||
Ending Balance | $ (2,863) |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Detail) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |
Oct. 31, 2014 | Mar. 31, 2014 | Jan. 31, 2014 | |
Business Acquisition [Line Items] | |||
Business acquired assets and liabilities | $ 5,186 | ||
Consideration paid | $ 4,449 | ||
Subsequent Event [Member] | |||
Business Acquisition [Line Items] | |||
Consideration paid | $ 737 | ||
Ascolta [Member] | |||
Business Acquisition [Line Items] | |||
Identifiable intangible assets weighted-average life | 5 years |
Acquisitions - Summary of Estim
Acquisitions - Summary of Estimated Fair Values Allocated to Major Classes of Assets Acquired and Liabilities Assumed (Detail) - Ascolta [Member] $ in Thousands | Mar. 31, 2014USD ($) |
Assets Acquired [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] | |
Business Acquisition [Line Items] | |
Other liabilities | $ 1,035 |
Fair Value - Fair Value Measure
Fair Value - Fair Value Measurement of Financial Assets (Detail) - USD ($) $ in Thousands | Mar. 31, 2014 | Mar. 31, 2013 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Financial assets fair value disclosure | $ 215,635 | $ 216,835 |
Money Market Funds [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents | 204,967 | 204,838 |
Restricted cash | 2,042 | 3,374 |
Other assets | 8,626 | 8,623 |
(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 | 215,635 | 216,835 |
(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 | 204,967 | 204,838 |
Restricted cash | 2,042 | 3,374 |
Other assets | 8,626 | 8,623 |
(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 Informa
Fair Value - Additional Information (Detail) - USD ($) $ in Thousands | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 | Feb. 28, 2013 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Carrying value of notes receivable | $ 2,500 | $ 2,500 | $ 2,200 | |
Carrying value of debt | 50,000 | |||
PEAKS Trust [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
The estimated fair value of the private education loans | $ 112,116 | |||
Loans, carrying amount | 83,332 | 112,289 | ||
(Level 3) Significant Unobservable Inputs [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value of notes receivable | 2,500 | 2,500 | 2,200 | |
(Level 3) Significant Unobservable Inputs [Member] | PEAKS Trust [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
The estimated fair value of the private education loans | 101,949 | 112,289 | ||
(Level 3) Significant Unobservable Inputs [Member] | PEAKS Senior Debt [Member] | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Carrying value senior debt | 194,385 | 227,016 | ||
Estimated fair value senior debt | 199,316 | 226,100 | ||
Senior debt in the aggregate principal amount | 300,000 | |||
(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 | 150,000 | |
Carrying value of debt | $ 50,000 | $ 50,000 | $ 150,000 |
Equity Compensation - Stock-Bas
Equity Compensation - Stock-Based Compensation Expense and Related Income Tax Benefit (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Stock-based compensation expense | $ 2,551 | $ 3,093 |
Income tax (benefit) | $ (982) | $ (1,191) |
Equity Compensation - Additiona
Equity Compensation - Additional Information (Detail) - USD ($) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Capitalization of stock-based compensation cost | $ 0 | $ 0 |
Pre-tax compensation expense for unvested stock-based compensation grants | $ 18,000,000 | |
Service period applicable to the grantees on a weighted-average basis, years | 2 years | |
RSUs vested and settled in shares of common stock, amount | $ 1,924,000 | $ 1,003,000 |
Equity Compensation - Stock Opt
Equity Compensation - Stock Options Granted, Forfeited, Exercised and Expired (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | ||
Number of shares | |||
Number of Shares, Outstanding at beginning of period | 1,332,448 | ||
Number of Shares, Granted | 168,500 | 0 | |
Number of Shares, Forfeited | (10,334) | ||
Number of Shares, Exercised | 0 | 0 | |
Number of Shares, Expired | (180,239) | ||
Number of Shares, Outstanding at end of period | 1,310,375 | ||
Number of Shares, Exercisable at end of period | 954,536 | ||
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 | 66.13 | ||
Weighted Average Exercise Price, Outstanding at end of period | 77.40 | ||
Weighted Average Exercise Price, Exercisable at end of period | $ 95.21 | ||
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 | (11,919) | ||
Aggregate Exercise Price, Outstanding at end of period | 101,431 | ||
Aggregate Exercise Price, Exercisable at end of period | $ 90,882 | ||
Weighted Average Remaining Contractual Term | |||
Weighted Average Remaining Contractual Term, Outstanding at end of period, years | 2 years 8 months 12 days | ||
Weighted Average Remaining Contractual Term, Exercisable at end of period, years | 2 years 3 months 18 days | ||
Aggregate Intrinsic Value | |||
Aggregate Intrinsic Value, Outstanding at end of period | [1] | $ 1,522 | |
Aggregate Intrinsic Value, Exercisable at end of period | [1] | $ 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 March 31, 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. |
Equity Compensation - Stock O45
Equity Compensation - Stock Options Granted and Exercised (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Shares subject to stock options granted | 168,500 | 0 |
Weighted average grant date fair value per share | $ 12.62 | $ 0 |
Shares subject to stock options exercised | 0 | 0 |
Intrinsic value of stock options exercised | $ 0 | $ 0 |
Proceeds received from stock options exercised | 0 | 0 |
Tax benefits realized from stock options exercised | $ 0 | $ 0 |
Equity Compensation - Assumptio
Equity Compensation - Assumptions used to Estimate Grant Date Fair Value of Stock options (Detail) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Risk-free interest rates | 1.32% | |
Expected lives (in years) | 4 years 8 months 12 days | |
Volatility | 55.00% | |
Dividend yield |
Equity Compensation - Number of
Equity Compensation - Number of Restricted Stock Units (RSUs) Granted, Forfeited and Vested (Detail) | 3 Months Ended |
Mar. 31, 2014$ / sharesshares | |
Number of RSUs | |
Number of RSUs, Unvested at beginning of period | shares | 737,844 |
Number of RSUs, Granted | shares | 271,636 |
Number of RSUs, Forfeited | shares | (54,946) |
Number of RSUs, Vested | shares | (51,303) |
Number of RSUs, Unvested at end of period | shares | 903,231 |
Weighted Average Grant Date Fair Value | |
Weighted Average Grant Date Fair Value, Unvested at beginning of period | $ / shares | $ 39.96 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | 27.97 |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | 35.64 |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 71.02 |
Weighted Average Grant Date Fair Value, Unvested at end of period | $ / shares | $ 34.85 |
Variable Interest Entities - Ad
Variable Interest Entities - Additional Information (Detail) | 1 Months Ended | 3 Months Ended | |||
Jan. 31, 2014USD ($) | Mar. 31, 2014USD ($)Installment | Mar. 31, 2013USD ($) | Dec. 31, 2013USD ($) | Feb. 28, 2013USD ($) | |
Variable Interest Entity [Line Items] | |||||
Imputed interest rate | 9.00% | ||||
Subordinated Note, maturity date | 2026-03 | ||||
Loss on consolidation of PEAKS Trust | $ 0 | $ (73,248,000) | |||
Payments on Behalf of Borrowers | 1,832,000 | 1,855,000 | |||
Recoveries from charged-off loans | 0 | 103,000 | |||
Advances to 2009 Entity | 0 | 0 | |||
Revolving note, amount owned to company | $ 8,200,000 | 7,600,000 | $ 8,200,000 | ||
2009 RSA [Member] | |||||
Variable Interest Entity [Line Items] | |||||
Number of monthly payments | Installment | 10 | ||||
Discount rate | 10.00% | ||||
Recoveries from charged-off loans | $ 0 | 103,000 | |||
PEAKS Trust [Member] | |||||
Variable Interest Entity [Line Items] | |||||
Amount of liabilities exceeding fair value assets | $ 112,748,000 | ||||
Reduction in excess of increase in fair value of liabilities over assets. | $ 39,500,000 | ||||
Loss on consolidation of PEAKS Trust | 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 | ||||
Nonaffiliated Entity [Member] | |||||
Variable Interest Entity [Line Items] | |||||
Recoveries from charged-off loans | $ 219,000 | 54,000 | |||
Amount offset against 2009 Entity under the Revolving Note | 538,000 | ||||
Nonaffiliated Entity [Member] | 2009 RSA [Member] | |||||
Variable Interest Entity [Line Items] | |||||
Amount offset against 2009 Entity under the Revolving Note | $ 538,000 |
Variable Interest Entities - Sc
Variable Interest Entities - Schedule of Carrying Value of Assets and Liabilities of PEAKS Trust (Detail) - USD ($) $ in Thousands | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 | Feb. 28, 2013 |
Variable Interest Entity [Line Items] | ||||
Restricted cash | $ 4,293 | $ 5,636 | $ 6,693 | |
PEAKS Trust student loans, less allowance for loan losses of $0 | 7,713 | 7,730 | 7,282 | |
PEAKS Trust student loans, excluding current portion, less allowance for loan losses of $0 | 75,619 | 76,479 | 105,007 | |
Total assets | 780,332 | 806,851 | 783,286 | $ 6,614 |
Current portion of PEAKS Trust senior debt | 130,692 | 157,883 | 103,356 | |
Other current liabilities | 52,268 | 42,136 | 52,185 | 3,060 |
PEAKS Trust senior debt, excluding current portion | 63,693 | 71,341 | 123,660 | |
Total | 664,089 | $ 691,205 | 674,601 | 46,114 |
PEAKS Trust [Member] | ||||
Variable Interest Entity [Line Items] | ||||
Restricted cash | 1,640 | 2,600 | 1,703 | |
PEAKS Trust student loans, less allowance for loan losses of $0 | 7,713 | 7,282 | 7,282 | |
PEAKS Trust student loans, excluding current portion, less allowance for loan losses of $0 | 75,619 | 105,007 | 104,834 | |
Total assets | 84,972 | 114,889 | 113,819 | |
Current portion of PEAKS Trust senior debt | 130,692 | 103,356 | 103,356 | |
Other current liabilities | 449 | 519 | 471 | |
PEAKS Trust senior debt, excluding current portion | 63,693 | 123,660 | 122,740 | |
Total | $ 194,834 | $ 227,535 | $ 226,567 |
Variable Interest Entities - 50
Variable Interest Entities - Schedule of Carrying Value of Assets and Liabilities of PEAKS Trust (Parenthetical) (Detail) - USD ($) $ in Thousands | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 | Feb. 28, 2013 |
Variable Interest Entity [Line Items] | ||||
Allowance for loan losses | $ 0 | $ 0 | $ 0 | $ 0 |
Allowance for loan losses | 29,349 | $ 29,349 | 0 | |
PEAKS Trust [Member] | ||||
Variable Interest Entity [Line Items] | ||||
Allowance for loan losses | 0 | 0 | 0 | |
Allowance for loan losses | $ 29,349 | $ 0 | $ 0 |
Variable Interest Entities - 51
Variable Interest Entities - Schedule of Carrying Value of Assets and Liabilities Eliminated from Financial Statement (Detail) - USD ($) $ in Thousands | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 | Feb. 28, 2013 |
Assets and Liabilities Eliminated upon Consolidation [Abstract] | ||||
Other assets | $ 6,614 | |||
Total assets | $ 780,332 | $ 806,851 | $ 783,286 | 6,614 |
Other current liabilities | 52,268 | 42,136 | 52,185 | 3,060 |
Other liabilities | 43,054 | |||
Total | $ 664,089 | $ 691,205 | $ 674,601 | $ 46,114 |
Variable Interest Entities - 52
Variable Interest Entities - Schedule of Revenue and Expenses of PEAKS Trust (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Variable Interest Entity [Line Items] | ||
Student services and administrative expenses | $ 99,238 | $ 101,721 |
Interest expense | 11,812 | 3,574 |
Income (loss) before provision for income taxes | 1,230 | (22,926) |
PEAKS Trust [Member] | ||
Variable Interest Entity [Line Items] | ||
Revenue | 3,133 | 1,360 |
Student services and administrative expenses | 1,416 | 519 |
Interest expense | 11,017 | 2,422 |
Income (loss) before provision for income taxes | $ (9,300) | $ (1,581) |
Variable Interest Entities - Gu
Variable Interest Entities - Guarantee and Other Payments Related to PEAKS Program (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | ||
Variable Interest Entity [Line Items] | |||
Payments on Behalf of Borrowers | $ 1,832 | $ 1,855 | |
PEAKS Program [Member] | |||
Variable Interest Entity [Line Items] | |||
PEAKS Guarantee | 40,713 | 1,239 | [1] |
Payments on Behalf of Borrowers | 1,832 | 1,855 | [2] |
Total | $ 42,545 | $ 3,094 | |
[1] | Of this amount, $854 was paid prior to the Consolidation. | ||
[2] | Of this amount, $532 was paid prior to the Consolidation. |
Variable Interest Entities - 54
Variable Interest Entities - Guarantee and Other Payments Related to PEAKS Program (Parenthetical) (Detail) - PEAKS Program [Member] $ in Thousands | 3 Months Ended |
Mar. 31, 2013USD ($) | |
Variable Interest Entity [Line Items] | |
Guarantee payments paid to prior consolidation | $ 854 |
Payments on behalf of borrowers prior to consolidation | $ 532 |
Variable Interest Entities - 55
Variable Interest Entities - Schedule of Payments Made to Entity Related to Guarantee Obligations (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Variable Interest Entity [Line Items] | ||
Recoveries from Charged-Off Loans | $ 0 | $ (103) |
2009 RSA [Member] | ||
Variable Interest Entity [Line Items] | ||
Regular Payments | 1,158 | 306 |
Discharge Payments | 0 | 0 |
Recoveries from Charged-Off Loans | 0 | (103) |
Net guarantee obligation payments | $ 1,158 | $ 203 |
PEAKS Trust Student Loans - Add
PEAKS Trust Student Loans - Additional Information (Detail) - USD ($) $ in Thousands | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 | Feb. 28, 2013 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Allowance for loan losses | $ 0 | $ 0 | $ 0 | $ 0 |
PEAKS Trust [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Allowance for loan losses | 0 | 0 | 0 | |
Future payments on loans | 487,800 | |||
Non accretable difference | 274,700 | |||
Loans, outstanding amount | 263,960 | |||
Loans, carrying amount | $ 83,332 | $ 112,289 | ||
Analogy [Member] | PEAKS Trust [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Future payments on loans | 213,600 | |||
Non accretable difference | $ 94,600 |
PEAKS Trust Student Loans - Sch
PEAKS Trust Student Loans - Schedule of Estimated Fair Value, Accretable Yield and Expected Cash Flows for PEAKS Trust Student Loans (Detail) - PEAKS Trust [Member] $ in Thousands | Feb. 28, 2013USD ($) |
Acquired Impaired Loans Rollforward [Line Items] | |
Estimated fair value | $ 112,116 |
Accretable yield | 100,953 |
Expected cash flows | 213,069 |
Analogy [Member] | |
Acquired Impaired Loans Rollforward [Line Items] | |
Estimated fair value | 60,177 |
Accretable yield | 58,843 |
Expected cash flows | $ 119,020 |
PEAKS Trust Student Loans - S58
PEAKS Trust Student Loans - Schedule of Information Regarding Changes in Allowance for Loan Losses (Detail) - PEAKS Trust [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Balance at beginning of period | $ 29,349 | $ 0 |
Loans charged off | 0 | 0 |
Recoveries from charged off loans | 0 | 0 |
Provision (benefit) for loan losses | 0 | 0 |
Balance at end of period | $ 29,349 | $ 0 |
PEAKS Trust Student Loans - S59
PEAKS Trust Student Loans - Schedule of Information Regarding Aggregate Changes in Accretable Yield (Detail) - PEAKS Trust [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Balance at beginning of period | $ 70,580 | $ 0 |
Additions resulting from the Consolidation | 0 | 100,953 |
Accretion | (3,133) | (1,360) |
Reclassification from nonaccretable difference and changes in expected cash flows | 5,904 | 0 |
Balance at end of period | 73,351 | 99,593 |
Analogy [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Balance at beginning of period | 42,274 | 0 |
Additions resulting from the Consolidation | 0 | 58,843 |
Accretion | (1,803) | (732) |
Reclassification from nonaccretable difference and changes in expected cash flows | 4,153 | 0 |
Balance at end of period | $ 44,624 | $ 58,111 |
Debt - Additional Information (
Debt - Additional Information (Detail) $ in Thousands | Oct. 09, 2014USD ($) | Mar. 31, 2014USD ($) | Feb. 28, 2013USD ($) | Sep. 30, 2014USD ($) | Mar. 31, 2014USD ($)Land | Mar. 31, 2013USD ($) | Dec. 31, 2014USD ($) | Oct. 31, 2014USD ($) | Sep. 15, 2014 | Jun. 30, 2014USD ($) | Dec. 31, 2013USD ($) | Mar. 21, 2012USD ($) | Jan. 31, 2010USD ($) |
Line of Credit Facility [Line Items] | |||||||||||||
Outstanding borrowing under Amended Credit Agreement | $ 50,000 | $ 50,000 | |||||||||||
Effective interest rate on borrowings | 4.90% | 3.20% | |||||||||||
Commitment fee under the New Credit Agreement | 0.40% | ||||||||||||
Number of mortgages parcels of land owned | Land | 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% | |||||||||||
Current liability | $ 130,692 | $ 130,692 | $ 103,356 | $ 157,883 | |||||||||
Interest Expense | $ 656 | $ 1,013 | |||||||||||
Letter Agreement [Member] | |||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||
Amount of guarantee payment | 40,000 | ||||||||||||
PEAKS Guarantee [Member] | |||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||
Required Asset/Liability ratio | 1.40 | ||||||||||||
Amount of guarantee payment | $ 60,340 | ||||||||||||
Minimum [Member] | |||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||
Required Asset/Liability ratio | 1.05 | ||||||||||||
Maximum [Member] | |||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||
Required Asset/Liability ratio | 1.40 | ||||||||||||
Credit Agreement [Member] | |||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||
Maximum borrowing capacity | $ 325,000 | ||||||||||||
Revolving credit facility, maturity date | Mar. 21, 2015 | ||||||||||||
Outstanding borrowing under Amended Credit Agreement | $ 50,000 | $ 50,000 | |||||||||||
Amended Credit Agreement [Member] | Maximum [Member] | |||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||
Net cash proceeds from sale leaseback | $ 125,000 | ||||||||||||
PEAKS Senior Debt [Member] | |||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||
Aggregate principal amount of debt | $ 300,000 | ||||||||||||
Debt instrument maturity date | Jan. 31, 2020 | ||||||||||||
Variable rate percentage | 5.50% | ||||||||||||
Minimum LIBOR rate applied | 2.00% | 2.00% | |||||||||||
Aggregate Principal Amount | $ 214,516 | $ 257,533 | $ 214,516 | ||||||||||
Carrying value senior debt | 194,385 | 194,385 | |||||||||||
Current liability | $ 130,692 | $ 130,692 | |||||||||||
Estimated fair value of senior debt | 226,096 | ||||||||||||
Difference in Estimated Fair Value and Outstanding Principal Amount | $ 31,437 | ||||||||||||
Effective Interest Rate | 19.20% | 19.20% | 12.40% | ||||||||||
Interest Expense | $ 11,017 | $ 2,422 | |||||||||||
Amortization of discount | 6,452 | $ 652 | |||||||||||
Fourth Amendment [Member] | |||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||
Amended Credit Agreement before reduction | $ 75,000 | 75,000 | |||||||||||
Amended Credit Agreement after reduction | 5,000 | ||||||||||||
Secured indebtedness before reduction | 25,000 | ||||||||||||
Secured indebtedness after reduction | $ 5,000 | $ 5,000 | |||||||||||
Fourth Amendment [Member] | Minimum [Member] | |||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||
Percentage of net cash proceeds from Mortgaged Property | 75.00% | ||||||||||||
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% | ||||||||||||
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% | ||||||||||||
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% | ||||||||||||
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% | ||||||||||||
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% | ||||||||||||
For the period from March 22, 2019 through November 15, 2019 [Member] | |||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||
Ticking fee rate | 5.00% | ||||||||||||
Subsequent Event [Member] | |||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||
Letter of credit agreement borrowing capacity | $ 25,000 | ||||||||||||
Letter of credit payable | $ 106 | $ 79,708 | |||||||||||
Percentage of cash collateral amount equal to face amount of ED Letter of Credit | 109.00% | ||||||||||||
Percentage of cash collateral amount equal to face amount | 103.00% | ||||||||||||
Amount of guarantee payment | $ 51,700 | ||||||||||||
Subsequent Event [Member] | PEAKS Guarantee [Member] | |||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||
Amount of guarantee payment | $ 50,000 | $ 158,800 | |||||||||||
Subsequent Event [Member] | Previously Issued by J P Morgan Chase Bank [Member] | |||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||
Letter of credit agreement borrowing capacity | 2,352 | ||||||||||||
Subsequent Event [Member] | Maximum [Member] | |||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||
Letter of credit payable | $ 82,060 | ||||||||||||
Subsequent Event [Member] | Amended Credit Agreement [Member] | |||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||
Revised maximum borrowing capacity | 135,000 | ||||||||||||
Letter of credit agreement borrowing capacity | $ 85,000 |
Debt - Total Interest Expense a
Debt - Total Interest Expense and Fees Recognized on Borrowing under New Credit Agreement (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Debt Disclosure [Abstract] | ||
Interest expense and fees | $ 656 | $ 1,013 |
Earnings (Loss) Per Common Sh62
Earnings (Loss) Per Common Share - Historical Net Income (Loss) and Weighted Average Number of Shares of Common Stock Outstanding (Detail) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Earnings Per Share [Abstract] | ||
Weighted average number of shares of common stock outstanding | 23,447 | 23,397 |
Shares assumed issued (less shares assumed purchased for treasury) for stock-based compensation | 397 | |
Outstanding shares for diluted earnings (loss) per share calculation | 23,844 | 23,397 |
Earnings (Loss) Per Common Sh63
Earnings (Loss) Per Common Share - Additional Information (Detail) - shares | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Earnings Per Share [Abstract] | ||
Shares excluded from calculation of diluted earnings (loss) per share | 1,162,000 | 1,598,000 |
Employee Pension Benefits - Com
Employee Pension Benefits - Components of Net Periodic Pension Benefit of Pension Plan and Excess Pension Plan (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Compensation and Retirement Disclosure [Abstract] | ||
Interest cost | $ 506 | $ 452 |
Expected return on assets | (1,312) | (1,097) |
Recognized net actuarial loss | 0 | 544 |
Amortization of prior service (credit) | (389) | (389) |
Net periodic pension benefit (income) | $ (1,195) | $ (490) |
Employee Pension Benefits - Add
Employee Pension Benefits - Additional Information (Detail) - USD ($) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 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 |
ESI Excess Pension Plan [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Contributions to pension plans | $ 0 | $ 0 |
Employee Pension Benefits - Sch
Employee Pension Benefits - Schedule of Changes in Components of Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Compensation and Retirement Disclosure [Abstract] | ||
Accumulated Other Comprehensive Income (Loss) Before Tax - Beginning Balance | $ 5,032 | |
Amortization of Prior service costs (credits)- Before Tax | (389) | |
Accumulated Other Comprehensive Income (Loss) Before Tax - Ending Balance | 4,643 | |
Income Tax Benefit (Expense) - Beginning Balance | (1,886) | |
Amortization of Prior service costs (credits)- Tax Effect | 151 | |
Income Tax Benefit (Expense) - Ending Balance | (1,735) | |
Accumulated Other Comprehensive Income (Loss) Net of Income Tax - Beginning Balance | 3,146 | |
Amortization of Prior service costs (credits)- Net of Income Tax | (238) | $ (238) |
Accumulated Other Comprehensive Income (Loss) Net of Income Tax - Ending Balance | $ 2,908 |
Contingencies - Additional Info
Contingencies - Additional Information (Detail) - USD ($) $ in Thousands | Nov. 12, 2014 | Mar. 26, 2012 | Jan. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Oct. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Apr. 30, 2013 |
Loss Contingencies [Line Items] | |||||||||
Face amount of surety bonds | $ 20,500 | ||||||||
Letters of credit issued | 2,246 | ||||||||
Payment under settlement agreement | $ 46,000 | $ 0 | $ 46,000 | ||||||
Life of private education loan made under RSAs | 10 years | ||||||||
Range of possible losses less than amount accrued | $ 10,000 | ||||||||
Range of possible losses greater than portion accrued | 28,000 | ||||||||
Litigation settlement amount | $ 395 | ||||||||
Additional payments expected in 2018 | 75,194 | ||||||||
Estimated regular payment made | 54,096 | ||||||||
Discount on guarantee regular payments and recoveries | 8,674 | ||||||||
Collateral maintained with bank for education loan | 8,600 | 8,600 | $ 8,600 | $ 8,600 | |||||
Increase in collateral maintained in restricted bank account | 2,600 | ||||||||
Recoveries from charged-off loans | 219 | 54 | |||||||
Payable in 2018 through 2027 [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Estimated regular payment made | 97,400 | ||||||||
Payable 2023 through 2027 [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Estimated regular payment made | 16,600 | ||||||||
Nonaffiliated Entity [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Recoveries from charged-off loans | 800 | ||||||||
Offset amounts relating to guarantee obligations | $ 538 | ||||||||
Amount of offset to repay | 8,600 | ||||||||
Education Loan Under 2009 Loan Program [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Principal amount for private education loans | 141,000 | ||||||||
Maximum [Member] | Payable 2018 through 2022 [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Estimated regular payment made | 16,400 | ||||||||
Minimum [Member] | Payable 2018 through 2022 [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Estimated regular payment made | 15,100 | ||||||||
Scenario, Forecast [Member] | Fourth Amendment [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Discharge Payments | $ 2,577 | ||||||||
Revolving Note [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Amount included in Other current liabilities offset against receivable under Revolving Note | 8,500 | ||||||||
Credit facility outstanding, amount | $ 8,200 | ||||||||
Subsequent Event [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Letter of credit payable | $ 79,708 | $ 106 | |||||||
Subsequent Event [Member] | Maximum [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Letter of credit payable | $ 82,060 |
Contingencies - Components of R
Contingencies - Components of Recorded Liability Related to Claims and Contingencies (Detail) - USD ($) $ in Thousands | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 | Dec. 31, 2012 |
Schedule of Claims and Contingencies [Line Items] | ||||
Other current liabilities | $ 32,409 | $ 25,893 | $ 35,573 | |
Other liabilities | 97,106 | 99,987 | 3,075 | |
Total | 129,515 | 125,880 | 38,648 | $ 126,978 |
2009 RSA [Member] | ||||
Schedule of Claims and Contingencies [Line Items] | ||||
Total | 115,930 | 116,923 | 31,832 | |
Other claims and contingencies [Member] | ||||
Schedule of Claims and Contingencies [Line Items] | ||||
Total | $ 13,585 | $ 8,957 | $ 6,816 |
Contingencies - Activity With R
Contingencies - Activity With Respect to Claims and Contingencies (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | ||
Schedule of Claims and Contingencies [Line Items] | |||
Claims and contingencies, Balance at beginning of period | $ 125,880 | $ 126,978 | |
Payments on Behalf of Borrowers | (1,832) | (1,855) | |
Elimination of intercompany transactions | [1] | 42,545 | 985 |
Additional accruals | [2] | 0 | (46,114) |
Claims and contingencies, Balance at end of period | 129,515 | 38,648 | |
Payments, net | [3] | (1,158) | (203) |
2009 RSA [Member] | |||
Schedule of Claims and Contingencies [Line Items] | |||
Claims and contingencies, Balance at beginning of period | 116,923 | ||
Additional accruals | 0 | 3,803 | |
Claims and contingencies, Balance at end of period | 115,930 | 31,832 | |
Other claims and contingencies [Member] | |||
Schedule of Claims and Contingencies [Line Items] | |||
Claims and contingencies, Balance at beginning of period | 8,957 | ||
Additional accruals | 8,764 | 4,313 | |
Claims and contingencies, Balance at end of period | 13,585 | 6,816 | |
Payments, net | [4] | (3,971) | (2,743) |
PEAKS Program Guarantee [Member] | |||
Schedule of Claims and Contingencies [Line Items] | |||
Payments, net | (40,713) | (516) | |
2007 RSA [Member] | |||
Schedule of Claims and Contingencies [Line Items] | |||
Payments, net | $ 0 | $ (46,000) | |
[1] | 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 Consolidation. See Note 7 - Variable Interest Entities, for a further discussion of the Consolidation. | ||
[2] | As a result of the Consolidation, in the three months ended March 31, 2013, we eliminated from our consolidated financial statements the contingent liability related to the PEAKS Guarantee that we had previously recorded. | ||
[3] | Consists of payments, net of recoveries, under the 2009 RSA. | ||
[4] | 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. |
Contingencies - Activity With70
Contingencies - Activity With Respect to Claims and Contingencies (Parenthetical) (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Schedule of Claims and Contingencies [Line Items] | ||
Payment recoveries | $ 0 | $ 103 |
PEAKS Program Guarantee [Member] | ||
Schedule of Claims and Contingencies [Line Items] | ||
Estimated recoveries | $ 0 | $ 723 |
Contingencies - Estimated Amoun
Contingencies - Estimated Amounts of Regular, Discharge Payments Expected to Pay and Estimated Recoveries from Charged-off Loans (Detail) $ in Thousands | 3 Months Ended |
Mar. 31, 2014USD ($) | |
Summary Of Projections Of Estimated Payments And Recoveries [Line Items] | |
Estimated Regular Payments | $ 54,096 |
Estimated Discharge Payments | 75,194 |
Estimated Total Payments | 129,290 |
Estimated Recoveries | (4,691) |
2014 [Member] | |
Summary Of Projections Of Estimated Payments And Recoveries [Line Items] | |
Estimated Regular Payments | 7,452 |
Estimated Discharge Payments | 0 |
Estimated Total Payments | 7,452 |
Estimated Recoveries | (791) |
2015 [Member] | |
Summary Of Projections Of Estimated Payments And Recoveries [Line Items] | |
Estimated Regular Payments | 14,251 |
Estimated Discharge Payments | 0 |
Estimated Total Payments | 14,251 |
Estimated Recoveries | (1,200) |
2016 [Member] | |
Summary Of Projections Of Estimated Payments And Recoveries [Line Items] | |
Estimated Regular Payments | 16,060 |
Estimated Discharge Payments | 0 |
Estimated Total Payments | 16,060 |
Estimated Recoveries | (1,200) |
2017 [Member] | |
Summary Of Projections Of Estimated Payments And Recoveries [Line Items] | |
Estimated Regular Payments | 16,333 |
Estimated Discharge Payments | 0 |
Estimated Total Payments | 16,333 |
Estimated Recoveries | (1,200) |
2018 and later [Member] | |
Summary Of Projections Of Estimated Payments And Recoveries [Line Items] | |
Estimated Regular Payments | 0 |
Estimated Discharge Payments | 75,194 |
Estimated Total Payments | 75,194 |
Estimated Recoveries | $ (300) |
Contingencies - Aggregate Amoun
Contingencies - Aggregate Amount of Guarantee Payments, Discharge Payments and Payments on Behalf of Borrowers (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | ||
Schedule of Claims and Contingencies [Line Items] | |||
Payments on Behalf of Borrowers | $ 1,832 | $ 1,855 | |
Recoveries from Charged-Off Loans | 0 | (103) | |
PEAKS Program [Member] | |||
Schedule of Claims and Contingencies [Line Items] | |||
PEAKS Guarantee | 40,713 | 1,239 | [1] |
Payments on Behalf of Borrowers | 1,832 | 1,855 | [2] |
Total | 42,545 | 3,094 | |
2009 RSA [Member] | |||
Schedule of Claims and Contingencies [Line Items] | |||
Regular Payments | 1,158 | 306 | |
Discharge Payments | 0 | 0 | |
Recoveries from Charged-Off Loans | 0 | (103) | |
Total | $ 43,703 | $ 3,297 | |
[1] | Of this amount, $854 was paid prior to the Consolidation. | ||
[2] | Of this amount, $532 was paid prior to the Consolidation. |
Contingencies - Aggregate Amo73
Contingencies - Aggregate Amount of Guarantee Payments, Discharge Payments and Payments on Behalf of Borrowers (Parenthetical) (Detail) - PEAKS Program [Member] $ in Thousands | 3 Months Ended |
Mar. 31, 2013USD ($) | |
Schedule of Claims and Contingencies [Line Items] | |
Guarantee payments paid to prior consolidation | $ 854 |
Payments on behalf of borrowers prior to consolidation | $ 532 |
Risks and Uncertainties - Addit
Risks and Uncertainties - Additional Information (Detail) $ in Thousands | 3 Months Ended |
Mar. 31, 2014USD ($) | |
Unusual Risk or Uncertainty [Line Items] | |
Percentage of cash collateral amount equal to face amount | 103.00% |
Percentage of cash collateral amount equal to face amount of ED Letter of Credit | 109.00% |
Cash collateral to be provided for letter of credit as of the filing date | $ 89,300 |
Letter of credit termination date | Nov. 4, 2019 |
Outstanding borrowing under Amended Credit Agreement | $ 50,000 |
Credit Agreement [Member] | |
Unusual Risk or Uncertainty [Line Items] | |
Outstanding borrowing under Amended Credit Agreement | 50,000 |
Two Thousand Fourteen [Member] | PEAKS Guarantee [Member] | |
Unusual Risk or Uncertainty [Line Items] | |
Payments under PEAKS guarantee | 163,239 |
Two Thousand Fourteen [Member] | 2009 RSA [Member] | |
Unusual Risk or Uncertainty [Line Items] | |
Payments under Laon Program | 8,610 |
2015 [Member] | PEAKS Guarantee [Member] | |
Unusual Risk or Uncertainty [Line Items] | |
Payments under PEAKS guarantee | 9,813 |
2015 [Member] | 2009 RSA [Member] | |
Unusual Risk or Uncertainty [Line Items] | |
Payments under Laon Program | $ 14,251 |