BRIDGEPOINT EDUCATION INC, 10-Q filed on 8/4/2014
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2014
Jul. 25, 2014
Entity Information [Line Items]
 
 
Entity Registrant Name
BRIDGEPOINT EDUCATION INC 
 
Entity Central Index Key
0001305323 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Accelerated Filer 
 
Document Type
10-Q 
 
Document Period End Date
Mar. 31, 2014 
 
Document Fiscal Year Focus
2014 
 
Document Fiscal Period Focus
Q1 
 
Amendment Flag
false 
 
Entity Common Stock, Shares Outstanding
 
45,254,701 
Condensed Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2014
Dec. 31, 2013
Current assets:
 
 
Cash and cash equivalents
$ 190,691 
$ 212,526 
Restricted cash
28,738 
36,946 
Investments
46,018 
65,901 
Accounts receivable, net
29,628 
22,953 
Student loans receivable, net
965 
1,043 
Deferred income taxes
16,699 
16,683 
Prepaid expenses and other current assets
27,864 
21,563 
Total current assets
340,603 
377,615 
Property and equipment, net
90,122 
91,425 
Investments
63,897 
41,062 
Student loans receivable, net
11,283 
11,785 
Goodwill and intangibles, net
26,637 
26,878 
Deferred income taxes
18,517 
18,507 
Other long-term assets
2,980 
2,740 
Total assets
554,039 
570,012 
Current liabilities:
 
 
Accounts payable
6,576 
5,195 
Accrued liabilities
62,224 
54,290 
Deferred revenue and student deposits
108,621 
132,791 
Total current liabilities
177,421 
192,276 
Rent liability
23,377 
23,927 
Other long-term liabilities
9,418 
9,271 
Total liabilities
210,216 
225,474 
Commitments and contingencies (see Note 12)
   
   
Preferred stock, $0.01 par value:
 
 
20,000 shares authorized; zero shares issued and outstanding at both March 31, 2014, and December 31, 2013
0 
0 
Common stock, $0.01 par value:
 
 
300,000 shares authorized; 62,719 issued and 45,162 outstanding at March 31, 2014; 62,331 issued and 44,774 outstanding at December 31, 2013
627 
623 
Additional paid-in capital
172,476 
168,829 
Retained earnings
507,777 
512,107 
Accumulated other comprehensive income
12 
48 
Treasury stock, 17,557 shares at cost at both March 31, 2014, and December 31, 2013
(337,069)
(337,069)
Total stockholders' equity
343,823 
344,538 
Total liabilities and stockholders' equity
$ 554,039 
$ 570,012 
Condensed Consolidated Balance Sheets Parenthetical (USD $)
Mar. 31, 2014
Dec. 31, 2013
Stockholders' equity:
 
 
Preferred stock, par value
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
20,000,000 
20,000,000 
Preferred stock, shares issued
0 
0 
Preferred stock, shares outstanding
0 
0 
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
300,000,000 
300,000,000 
Common stock, shares issued
62,719,000 
62,331,000 
Common stock, shares outstanding
45,162,000 
44,774,000 
Treasury stock, shares at cost
17,557,000 
17,557,000 
Condensed Consolidated Statements of Income (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Revenue
$ 157,270 
$ 212,986 
Costs and expenses:
 
 
Instructional costs and services
83,081 
97,028 
Admissions advisory and marketing
65,778 
57,543 
General and administrative
16,269 
18,739 
Total costs and expenses
165,128 
173,310 
Operating income (loss)
(7,858)
39,676 
Other income, net
367 
837 
Income (loss) before income taxes
(7,491)
40,513 
Income tax expense (benefit)
(3,161)
15,846 
Net income (loss)
$ (4,330)
$ 24,667 
Earnings (loss) per share:
 
 
Basic (in usd per share)
$ (0.10)
$ 0.46 
Diluted (in usd per share)
$ (0.10)
$ 0.45 
Weighted average number of common shares outstanding used in computing earnings per share:
 
 
Basic (in shares)
44,897 
54,129 
Diluted (in shares)
44,897 
55,001 
Condensed Consolidated Statements of Comprehensive Income (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Net income (loss)
$ (4,330)
$ 24,667 
Other comprehensive income (loss), net of tax:
 
 
Unrealized losses on investments
(36)
(49)
Comprehensive income (loss)
$ (4,366)
$ 24,618 
Condensed Consolidated Statement of Stockholders' Equity (USD $)
In Thousands, unless otherwise specified
Total
Common Stock
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive Income
Treasury Stock
Balance at Dec. 31, 2013
$ 344,538 
$ 623 
$ 168,829 
$ 512,107 
$ 48 
$ (337,069)
Balance, shares at Dec. 31, 2013
 
62,331 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Stock-based compensation
1,893 
 
1,893 
 
 
 
Exercise of stock options, shares
 
253 
 
 
 
 
Exercise of stock options
2,361 
3 
2,358 
 
 
 
Excess tax benefit of option exercises and restricted stock, net of tax shortfall
601 
 
601 
 
 
 
Stock issued under restricted stock plan, net of shares held for taxes, shares
 
135 
 
 
 
 
Stock issued under restricted stock plan, net of shares held for taxes
(1,204)
1 
(1,205)
 
 
 
Net loss
(4,330)
 
 
(4,330)
 
 
Unrealized losses on investments, net of tax
(36)
 
 
 
(36)
 
Balance at Mar. 31, 2014
$ 343,823 
$ 627 
$ 172,476 
$ 507,777 
$ 12 
$ (337,069)
Balance, shares at Mar. 31, 2014
 
62,719 
 
 
 
 
Condensed Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Cash flows from operating activities
 
 
Net income (loss)
$ (4,330)
$ 24,667 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
Provision for bad debts
7,560 
13,040 
Depreciation and amortization
6,029 
4,831 
Amortization of premium/discount
(19)
1,407 
Stock-based compensation
1,893 
3,623 
Excess tax benefit of option exercises
(793)
0 
Loss on impairment of student loans receivable
265 
0 
Loss on disposal of fixed assets
80 
0 
Changes in operating assets and liabilities:
 
 
Restricted cash
8,208 
5,900 
Accounts receivable
(14,092)
(10,229)
Prepaid expenses and other current assets
(6,297)
(5,656)
Student loans receivable
198 
(133)
Other long-term assets
(240)
124 
Accounts payable and accrued liabilities
9,526 
16,213 
Deferred revenue and student deposits
(24,084)
(33,747)
Other liabilities
(403)
1,476 
Net cash provided by (used in) operating activities
(16,499)
21,516 
Cash flows from investing activities
 
 
Capital expenditures
(3,054)
(2,994)
Purchases of investments
(23,111)
(108)
Capitalized costs for intangible assets
(1,121)
(1,369)
Sales and maturities of investments
20,000 
49,416 
Net cash provided by (used in) investing activities
(7,286)
44,945 
Cash flows from financing activities
 
 
Proceeds from exercise of stock options
2,361 
101 
Excess tax benefit of option exercises
793 
0 
Issuance of restricted stock
(1,204)
0 
Net cash provided by financing activities
1,950 
101 
Net increase (decrease) in cash and cash equivalents
(21,835)
66,562 
Cash and cash equivalents at beginning of period
212,526 
208,971 
Cash and cash equivalents at end of period
190,691 
275,533 
Supplemental disclosure of non-cash transactions:
 
 
Purchase of equipment included in accounts payable and accrued liabilities
$ 526 
$ 673 
Nature of Business
Nature of Business
Nature of Business
Bridgepoint Education, Inc. (together with its subsidiaries, the “Company”), was incorporated in 1999 and is a provider of postsecondary education services. Its wholly-owned subsidiaries, Ashford University® and University of the RockiesSM, are academic institutions that offer associate's, bachelor's, master's and doctoral programs online, as well as at their traditional campuses located in Iowa and Colorado, respectively.
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Principles of Consolidation
The condensed consolidated financial statements include the accounts of Bridgepoint Education, Inc. and its wholly-owned subsidiaries. Intercompany transactions have been eliminated in consolidation.
Unaudited Interim Financial Information
The condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements included in the Company's Annual Report on Form 10-K/A for the year ended December 31, 2013, which was filed with the Securities and Exchange Commission (“SEC”) on August 1, 2014. In the opinion of management, these financial statements include all adjustments (consisting of normal recurring adjustments) considered necessary to present a fair statement of the Company's condensed consolidated financial position, results of operations and cash flows as of and for the periods presented.
Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. The year-end condensed consolidated balance sheet data were derived from audited financial statements, but do not include all disclosures required by GAAP for complete annual financial statements.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements. Actual results could differ from those estimates.
Recent Accounting Pronouncements Not Yet Adopted
In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”, which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, “Revenue Recognition.” This literature is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The accounting guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The standard will be effective for the first interim period within fiscal years beginning after December 15, 2016, using one of two retrospective application methods. The Company is evaluating the impacts, if any, the adoption of ASU No. 2014-09 will have on its financial position or results of operations.
In June 2014, the FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (ASU 2014-12). ASU 2014-12 requires that a performance target that affects vesting and could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in ASC 718, Compensation—Stock Compensation, as it relates to such awards. ASU 2014-12 is effective for us in our first quarter of fiscal 2017, with early adoption permitted using either of two methods: (i) prospective to all awards granted or modified after the effective date; or (ii) retrospective to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter, with the cumulative effect of applying ASU 2014-12 as an adjustment to the opening retained earnings balance as of the beginning of the earliest annual period presented in the financial statements. The Company is evaluating the impacts, if any, the adoption of ASU 2014-12 will have on its financial position or results of operations.
Investments
Investments
Investments
The following tables summarize the fair value information of short and long-term investments as of March 31, 2014, and December 31, 2013, respectively (in thousands):
 
As of March 31, 2014
 
Level 1
 
Level 2
 
Level 3
 
Total
Demand notes
$
—

 
$
890

 
$
—

 
$
890

Corporate notes and bonds
—

 
24,070

 
—

 
24,070

U.S. government and agency securities
—

 
14,955

 
—

 
14,955

Certificates of deposit
—

 
70,000

 
—

 
70,000

Total
$
—

 
$
109,915

 
$
—

 
$
109,915

 
As of December 31, 2013
 
Level 1
 
Level 2
 
Level 3
 
Total
Demand notes
$
—

 
$
719

 
$
—

 
$
719

Corporate notes and bonds
—

 
16,244

 
—

 
16,244

Certificates of deposit
—

 
90,000

 
—

 
90,000

Total
$
—

 
$
106,963

 
$
—

 
$
106,963


The tables above include amounts related to investments classified as other investments, such as certificates of deposit, which are carried at amortized cost. The amortized cost of such investments approximated fair value at each balance sheet date. The assumptions used in these fair value estimates are considered as other observable inputs and are therefore categorized as Level 2 measurements under the accounting guidance.
The Company records the changes in unrealized gains and losses on its investments arising during the period in other comprehensive income. For the three months ended March 31, 2014 and 2013, the Company recorded net unrealized losses of $36,000 and $49,000, respectively, in other comprehensive income, which were net of tax effect of $26,000 and $30,000, respectively.
Accounts Receivable
Accounts Receivable
Accounts Receivable
Accounts receivable, net, consist of the following (in thousands):
 
As of
March 31, 2014
 
As of
December 31, 2013
Accounts receivable
$
60,389

 
$
49,854

Less allowance for doubtful accounts
(30,761
)
 
(26,901
)
Accounts receivable, net
$
29,628

 
$
22,953


As of March 31, 2014 and December 31, 2013, there was an immaterial amount included within net accounts receivable with a payment due date of greater than one year.
The following table presents the changes in the allowance for doubtful accounts for the periods indicated (in thousands):
 
Beginning
Balance
 
Charged to
Expense
 
Deductions(1)
 
Ending
Balance
Allowance for doubtful accounts receivable:
 
 
 
 
 
 
 
For the three months ended March 31, 2014
$
(26,901
)
 
$
7,440

 
$
(3,580
)
 
$
(30,761
)
For the three months ended March 31, 2013
(31,466
)
 
13,020

 
$
(9,838
)
 
(34,648
)
(1)
Deductions represent accounts written off, net of recoveries.
Student Loan Receivables
Student Loan Receivables
Student Loan Receivables
Student loan receivables, net, consist of the following (in thousands):
Short-term:
As of
March 31, 2014
 
As of
December 31, 2013
   Student loans receivable (non-tuition related)
$
670

 
$
587

   Student loans receivable (tuition related)
487

 
621

   Current student loans receivable
1,157

 
1,208

Less allowance for doubtful accounts
(192
)
 
(165
)
Student loans receivable, net
$
965

 
$
1,043

Long-term:
As of
March 31, 2014
 
As of
December 31, 2013
   Student loans receivable (non-tuition related)
$
6,940

 
$
7,347

   Student loans receivable (tuition related)
6,415

 
6,417

   Non-current student loans receivable
13,355

 
13,764

Less allowance for doubtful accounts
(2,072
)
 
(1,979
)
Student loans receivable, net
$
11,283

 
$
11,785


Student loans receivable is presented net of any related discount, and the balances approximated fair value at each balance sheet date. The Company estimated the fair value of the student loans receivable by discounting the future cash flows using current rates for similar arrangements. The assumptions used in this estimate are considered unobservable inputs and are therefore categorized as Level 3 measurements under accounting guidance.
Revenue recognized related to student loans was immaterial during each of the three months ended March 31, 2014 and March 31, 2013, respectively. The following table presents the changes in the allowance for doubtful accounts for the periods indicated (in thousands):
 
Beginning
Balance
 
Charged to
Expense
 
Deductions(1)
 
Ending
Balance
Allowance for student loans receivable (tuition related):
 
 
 
 
 
 
 
For the three months ended March 31, 2014
$
(2,144
)
 
$
120

 
$
—

 
$
(2,264
)
For the three months ended March 31, 2013
(1,895
)
 
20

 
—

 
(1,915
)
(1)
Deductions represent accounts written off, net of recoveries.
For the non-tuition related student loans receivable, the Company monitors the credit quality using credit scores, aging history and delinquency trending. The loan reserve methodology is reviewed on a quarterly basis. Delinquency is the main factor of determining if a loan is impaired. If a loan were determined to be impaired, interest would no longer accrue. For the three months ended March 31, 2014, there was $0.3 million of loans that were impaired, and as of March 31, 2014, $2.3 million of loans had been placed on non-accrual status.
As of March 31, 2014, the delinquency status of gross student loans receivable was as follows (in thousands):
Less than 120 days
$
16,582

From 120 - 269 days
1,392

Greater than 270 days
2,087

Total gross student loans receivable
20,061

Less: Amounts reserved or impaired
(4,528
)
Less: Discount on student loans receivable
(3,285
)
Total student loans receivable, net
$
12,248

Other Significant Balance Sheet Accounts
Other Significant Balance Sheet Accounts
Other Significant Balance Sheet Accounts
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following (in thousands):
 
As of
March 31, 2014
 
As of
December 31, 2013
Prepaid expenses
$
10,873

 
$
10,814

Prepaid licenses
4,892

 
5,833

Prepaid income taxes
8,057

 
195

Prepaid insurance
897

 
1,131

Interest receivable
229

 
86

Insurance recoverable
2,395

 
2,814

Other current assets
521

 
690

Total prepaid expenses and other current assets
$
27,864

 
$
21,563


Property and Equipment, Net
Property and equipment, net, consist of the following (in thousands):
 
As of
March 31, 2014
 
As of
December 31, 2013
Land
$
7,091

 
$
7,091

Buildings and building improvements
28,916

 
28,916

Furniture and office equipment
87,004

 
84,852

Software
11,155

 
10,075

Leasehold improvements
24,405

 
24,360

Vehicles
147

 
147

Total property and equipment
158,718

 
155,441

Less accumulated depreciation and amortization
(68,596
)
 
(64,016
)
Total property and equipment, net
$
90,122

 
$
91,425


Goodwill and Intangibles, Net
Goodwill and intangibles, net, consist of the following (in thousands):
 
March 31, 2014
Definite-lived intangible assets:
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Capitalized curriculum costs
$
15,660

 
$
(6,086
)
 
$
9,574

Purchased intangible assets
15,857

 
(1,361
)
 
14,496

     Total definite-lived intangible assets
$
31,517

 
$
(7,447
)
 
$
24,070

Goodwill and indefinite-lived intangibles
 
 
 
 
2,567

Total goodwill and intangibles, net
 
 
 
 
$
26,637

 
 
 
 
 
 
 
December 31, 2013
Definite-lived intangible assets:
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Capitalized curriculum costs
$
14,540

 
$
(5,035
)
 
$
9,505

Purchased intangible assets
15,857

 
(1,051
)
 
14,806

     Total definite-lived intangible assets
$
30,397

 
$
(6,086
)
 
$
24,311

Goodwill and indefinite-lived intangibles
 
 
 
 
2,567

Total goodwill and intangibles, net
 
 
 
 
$
26,878


For the three months ended March 31, 2014 and March 31, 2013, amortization expense was $1.4 million and $0.6 million, respectively.
The following table summarizes the estimated remaining amortization expense as of each fiscal year ended below (in thousands):
Year Ended December 31,
 
 
2014
$
4,030

2015
4,280

2016
2,526

2017
1,269

2018
1,232

Thereafter
10,733

Total future amortization expense
$
24,070


Accrued Liabilities
Accrued liabilities consist of the following (in thousands):
 
As of
March 31, 2014
 
As of
December 31, 2013
Accrued salaries and wages
$
14,904

 
$
12,790

Accrued bonus
2,332

 
2,277

Accrued vacation
10,194

 
9,696

Accrued litigation and fees
8,000

 
8,000

Accrued expenses
20,817

 
15,079

Rent liability
2,390

 
2,446

Worker's compensation liability
3,587

 
4,002

Total accrued liabilities
$
62,224

 
$
54,290


Deferred Revenue and Student Deposits
Deferred revenue and student deposits consist of the following (in thousands):
 
As of
March 31, 2014
 
As of
December 31, 2013
Deferred revenue
$
30,262

 
$
29,279

Student deposits
78,359

 
103,512

Total deferred revenue and student deposits
$
108,621

 
$
132,791

Credit Facilities
Credit Facilities
Credit Facilities
On April 13, 2012, the Company entered into a $50 million revolving line of credit (“Facility”) pursuant to an Amended and Restated Revolving Credit Agreement (“Revolving Credit Agreement”) with the lenders signatory thereto and Comerica, as administrative agent for the lenders. The Revolving Credit Agreement amended, restated and superseded any prior loan documents. At the Company's option, the Company may increase the size of the Facility up to $100 million, in certain minimum increments, subject to the terms and conditions of the Revolving Credit Agreement. Additionally, the Company may request swing-line advances under the Facility up to $3 million in the aggregate.
Under the Revolving Credit Agreement and the documents executed in connection therewith (collectively, the “Facility Loan Documents”), the lenders have agreed to make loans to the Company and issue letters of credit on the Company's behalf, subject to specific terms and conditions. The Facility has a term of three years and matures on April 13, 2015. Interest and fees accruing under the Facility are payable quarterly in arrears and principal is payable at maturity. The Company may terminate the Facility upon five days notice, without premium or penalty, other than customary breakage fees.
For any advance under the Facility, interest will accrue at either the “Base Rate” or the “Eurodollar-based Rate,” at the Company's option. The Base Rate means, for any day, 0.5% plus the greatest of: (1) the prime rate for such day, (2) the Federal Funds Effective Rate in effect on such day, plus 1.0%, and (3) the daily adjusting LIBOR rate, plus 1.0%. The Eurodollar-based Rate means, for any day, 1.5% plus the quotient of (1) the LIBOR Rate, divided by (2) a percentage equal to 100% minus the maximum rate on such date at which Comerica is required to maintain reserves on “Eurocurrency Liabilities” as defined in Regulation D of the Board of Governors of the Federal Reserve System. For any advance under the swing line, interest will accrue at either the Base Rate or, if made available to the Company by the swing line lender, at the lender's option, a different rate quoted by such lender. For any letter of credit issued on the Company's behalf under the Facility, the Company is required to pay a fee of 1.50% of the undrawn amount of such letter of credit plus a letter of credit facing fee. The Company is also required to pay a facility fee of 0.25% of the aggregate commitment then in effect under the Facility, whether used or unused.
The Facility Loan Documents contain other customary affirmative, negative and financial maintenance covenants, representations and warranties, events of default, and remedies upon an event of default, including the acceleration of debt and the right to foreclose on the collateral securing the Facility.
As security for the performance of the Company's obligations under the Facility Loan Documents, the Company granted the lenders a first priority security interest in substantially all of the Company's assets, including its real property which has a book value of $7.1 million as of March 31, 2014.
The Company was in compliance with all financial covenants in the Facility Loan Documents as of March 31, 2014. As of March 31, 2014, and up to the date of filing, the Company had no borrowings outstanding under the Facility. As of March 31, 2014, the Company used the availability under the line of credit to issue letters of credit aggregating $3.5 million.
Surety Bond Facility
As part of its normal business operations, the Company is required to provide surety bonds in certain states in which the Company does business. In May 2009, the Company entered into a surety bond facility with an insurance company to provide such bonds when applicable. As of March 31, 2014, the total available surety bond facility was $12.0 million and the Company had issued surety bonds totaling $6.9 million.
Earnings Per Share
Earnings Per Share
Earnings Per Share
Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share is calculated by dividing net income by the sum of (i) the weighted average number of common shares outstanding for the period and (ii) potentially dilutive securities outstanding during the period, if the effect is dilutive.
Potentially dilutive common shares for the three months ended March 31, 2014 and March 31, 2013, consisted of incremental shares of common stock issuable upon the exercise of options and upon the settlement of restricted stock units. However, as there was a net loss for the three months ended March 31, 2014, the potentially dilutive common shares are not included in the calculation of diluted weighted average number of common shares outstanding.
The following table sets forth the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data):
 
Three Months Ended March 31,
 
2014
 
2013
Numerator:
 
 
 
Net income (loss)
$
(4,330
)
 
$
24,667

Denominator:
 
 
 
Weighted average number of common shares outstanding
44,897

 
54,129

Effect of dilutive options and restricted stock units
—

 
778

Effect of dilutive warrants
—

 
94

Diluted weighted average number of common shares outstanding
44,897

 
55,001

Earnings (loss) per share:
 
 
 
Basic earnings (loss) per share
$
(0.10
)
 
$
0.46

Diluted earnings (loss) per share
$
(0.10
)
 
$
0.45


For the periods indicated below, the computation of dilutive common shares outstanding excludes certain options and restricted stock units to purchase shares of common stock because their effect was anti-dilutive.
 
Three Months Ended March 31,
(in thousands)
2014
 
2013
Options
2,792

 
5,478

Restricted stock units
350

 
—

Stock-Based Compensation
Stock-Based Compensation
Stock-Based Compensation
The Company recorded $1.9 million and $3.6 million of stock-based compensation expense for the three months ended March 31, 2014 and 2013, respectively. The related income tax benefit was $0.7 million and $1.4 million for the three months ended March 31, 2014 and 2013, respectively.
There were 0.7 million restricted stock units (“RSUs”) granted during the three months ended March 31, 2014 at a grant date fair value of $14.50. During the three months ended March 31, 2014, approximately 0.2 million RSUs vested.
The Company granted options to purchase 0.4 million shares of common stock during the three months ended March 31, 2014. During the three months ended March 31, 2014, options to purchase 0.3 million shares of common stock were exercised.
As of March 31, 2014, there was unrecognized compensation cost of $21.9 million related to the combined unvested options and RSUs.
Income Taxes
Income Taxes
Income Taxes
The Company's current estimated annual effective income tax rate that has been applied to normal, recurring operations for the three months ended March 31, 2014, was 41.7%. The Company's actual effective income tax rate was 42.2% for the three months ended March 31, 2014. The actual effective rate for the three months ended March 31, 2014 differed from the Company's estimated annual effective tax rate due to the impact of discrete items on the Company's income before the provision for income taxes, particularly interest accrued on unrecognized tax benefits offset by an adjustment to the value of the Company's net deferred tax assets related to the state law changes that went into effect in 2014.
At both March 31, 2014, and December 31, 2013, the Company had $7.4 million of gross unrecognized tax benefits, respectively, of which $4.8 million, respectively, would impact the effective income tax rate if recognized.
The Company is subject to U.S. federal income tax and multiple state tax jurisdictions. The 2002 through 2013 tax years remain open to examination by major taxing jurisdictions to which the Company is subject.
The Company's continuing practice is to recognize interest and penalties related to uncertain tax positions in income tax expense. Accrued interest and penalties related to uncertain tax positions as of March 31, 2014 and as of December 31, 2013, was $1.8 million and $1.7 million, respectively.
The California Franchise Tax Board commenced an audit of the Company's 2008 and 2009 California income tax returns in October 2011. The Company does not expect any significant adjustments to amounts already reserved.
It is reasonably possible that the amount of the unrecognized tax benefit will change during the next 12 months, however the Company does not expect the potential change to have a material effect on the results of operations or financial position in the next year.
Regulatory
Regulatory
Regulatory
The Company is subject to extensive regulation by federal and state governmental agencies and accrediting bodies. In particular, the Higher Education Act of 1965, as amended (the “Higher Education Act”), and the regulations promulgated thereunder by the U.S. Department of Education (the “Department”) subject the Company to significant regulatory scrutiny on the basis of numerous standards that institutions of higher education must satisfy in order to participate in the various federal student financial assistance programs under Title IV of the Higher Education Act.
Ashford University is regionally accredited by WASC Senior College and University Commission (“WASC”) and University of the Rockies is regionally accredited by the Higher Learning Commission of the North Central Association of Colleges and Schools (“HLC”).
WASC Grant of Initial Accreditation of Ashford University
On July 10, 2013, WASC granted Initial Accreditation to Ashford University for five years, until July 15, 2018. In December 2013, Ashford University effected its transition to WASC accreditation and designated its San Diego, California facilities as its main campus and its Clinton, Iowa campus as an additional location. As part of a continuing WASC monitoring process, Ashford University will host a visiting team from WASC in a special visit in spring 2015. Beginning in 2014, WASC will institute “Mid-Cycle Reviews” of its accredited institutions near the midpoint of their periods of accreditation, as required by the Department. The purpose of the Mid-Cycle Review is to identify problems with an institution’s or program’s continued compliance with agency standards while taking into account institutional or program strengths and stability. The Mid-Cycle Review report will focus particularly on student achievement, including indicators of educational effectiveness, retention and graduation data.
Licensure by California BPPE
To be eligible to participate in Title IV programs, an institution must be legally authorized to offer its educational programs by the states in which it is physically located. Effective July 1, 2011, the Department established new requirements to determine if an institution is considered to be legally authorized by a state. In connection with its transition to WASC accreditation, Ashford University designated its San Diego, California facilities as its main campus for Title IV purposes. WASC-accredited institutions operating in California are not required to obtain approval from the State of California, Department of Consumer Affairs, Bureau for Private Postsecondary Education (“BPPE”), in order to operate in the state. However, under the Department’s state authorization rule, an institution must be approved or licensed on a basis other than accreditation in instances in which it is not established by name as an educational institution by a state through a charter, statute, constitutional provision, or other action issued by an appropriate state agency or entity. On May 21, 2013, the Department published a notice stating that it would provide an extension of the effective date of the state authorization rule until July 1, 2014 to qualifying institutions that obtain from a state an explanation of how the extension of time would permit the state to comply with the regulations. The California Department of Consumer Affairs has issued a letter explaining the need for an extension. As it is uncertain how the Department will interpret the state authorization rule or the applicability of the extension of time, Ashford University submitted an Application for Approval to Operate an Accredited Institution to BPPE on September 10, 2013.
In April 2014, the application was granted, and the university was approved by BPPE to operate in California until July 15, 2018. As a result, Ashford University is no longer exempt from certain laws and regulations applicable to private, post-secondary educational institutions. These laws and regulations entail certain California reporting requirements, including but not limited to, graduation, employment and licensing data, certain changes of ownership and control, faculty and programs, and student refund policies, as well as the triggering of other state and federal student employment data reporting and disclosure requirements.
Negotiated Rulemaking
The Department held Program Integrity and Improvement negotiated rulemaking sessions in February, March and April, 2014, that focused on topics including, but not limited to, cash management of Title IV program funds, state authorization for programs offering distance or correspondence education, credit and clock hour conversions, the retaking of coursework, and the definition of “adverse credit” for PLUS borrowers. This rulemaking committee plans to conclude its work May 19 and 20, 2014.
The Department held negotiated rulemaking committee sessions to prepare proposed rulemaking regulations that would establish standards for programs that prepare students for gainful employment in a recognized occupation in four sessions between September and December 2013. The committee did not reach consensus on the content of the proposed regulations, and, as a result, the Department published proposed regulations on March 14, 2014 for comment by the public for a sixty-day period.
Three negotiated rulemaking sessions between January and March of 2014 resulted in draft regulations to enact changes to the Clery Act required by the enactment of the Violence Against Women Act (“VAWA”). While the final regulations will likely not be implemented prior to July 1, 2015, the Department notified institutions in an Electronic Announcement in May 2013 that until the regulations go into effect, it expects institutions to make a good faith effort to comply with the statutory requirements. Among other things, VAWA requires institutions to compile statistics for certain crimes reported to campus security authorities or local police agencies. Under the statute, an institution must include the new required information in its Annual Security Report issued no later than October 1, 2014.
We cannot predict the scope and content of the regulations that may emerge from these or other rulemaking activities that the Department initiates. Compliance with additional regulations, or with modifications to existing regulations, and/or regulatory scrutiny that results in the Company’s institutions being allegedly out of compliance with these regulations, including but not limited to those concerning state authorization and distance education, and gainful employment, could result in direct and indirect costs of compliance, fines, liabilities, sanctions or lawsuits, which could have a material adverse effect on enrollments, revenues, financial condition, cash flows and results of operations.
Commitments and Contingencies
Commitments and Contingencies
Commitments and Contingencies
From time to time, the Company is a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. When the Company becomes aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. In accordance with authoritative guidance, the Company records loss contingencies in its financial statements only for matters in which losses are probable and can be reasonably estimated. Where a range of loss can be reasonably estimated with no best estimate in the range, the Company records the minimum estimated liability. If the loss is not probable or the amount of the loss cannot be reasonably estimated, the Company discloses the nature of the specific claim if the likelihood of a potential loss is reasonably possible and the amount involved is material. The Company continuously assesses the potential liability related to the Company’s pending litigation and revises its estimates when additional information becomes available. Below is a list of material legal proceedings to which the Company or its subsidiaries is a party.
Compliance Audit by the Department's Office of the Inspector General (“OIG”)
In January 2011, Ashford University received a final audit report from the OIG regarding the compliance audit commenced in May 2008 and covering the period July 1, 2006 through June 30, 2007. The audit covered Ashford University's administration of Title IV program funds, including compliance with regulations governing institutional and student eligibility, awards and disbursements of Title IV program funds, verification of awards and returns of unearned funds during that period, and its compensation of financial aid and recruiting personnel during the period May 10, 2005 through June 30, 2009.
The final audit report contained audit findings, in each case for the period July 1, 2006 through June 30, 2007, which are applicable to award year 2006-2007. Each finding was accompanied by one or more recommendations to the Department's Office of Federal Student Aid (the “FSA”). Ashford University provided the FSA a detailed response to OIG’s final audit report in February 2011. In June 2011, in connection with two of the six findings, the FSA requested that Ashford University conduct a file review of the return to Title IV fund calculations for all Title IV recipients who withdrew from distance education programs during the 2006-2007 award year. The institution cooperated with the request and supplied the information within the time frame required. If the FSA were to determine to assess a monetary liability or commence other administrative action, Ashford University would have an opportunity to contest the assessment or proposed action through administrative proceedings, with the right to seek review of any final administrative action in the federal courts.
The outcome of this audit is uncertain at this point because of the many questions of fact and law that may arise. At present, the Company cannot reasonably estimate a range of loss for this action based on the information available to the Company. Accordingly, the Company has not accrued any liability associated with this matter.
Iowa Attorney General Civil Investigation of Ashford University
In February 2011, Ashford University received from the Attorney General of the State of Iowa (“Iowa Attorney General”) a Civil Investigative Demand and Notice of Intent to Proceed (“CID”) relating to the Iowa Attorney General’s investigation of whether certain of the university's business practices comply with Iowa consumer laws. Pursuant to the CID, the Iowa Attorney General has requested documents and detailed information for the time period January 1, 2008 to present. On numerous occasions, representatives from the Company and Ashford University met with the Iowa Attorney General to discuss the status of the investigation and the Iowa Attorney General’s allegations against the Company which had been communicated to the Company in June 2013. As a result of these meetings, on May 15, 2014, the Iowa Attorney General, the Company and Ashford University entered into an Assurance of Voluntary Compliance (“AVC”) in full resolution of the CID and the Iowa Attorney General’s allegations. The AVC, in which the Company and Ashford University do not admit any liability, contains several components including injunctive relief, nonmonetary remedies and a payment of $7.25 million to the Iowa Attorney General to be used for restitution to Iowa consumers, costs and fees. The AVC also provides for the appointment of a settlement administrator for a period of three years to review the Company’s and Ashford University’s compliance with the terms of the AVC. In December 2013, the Company previously accrued $9.0 million related to this matter split between both current and long-term liabilities, which continues to represent its best estimate of the restitution, cost of non-monetary remedies and future legal costs related to the AVC.
New York Attorney General Investigation of Bridgepoint Education, Inc.
In May 2011, the Company received from the Attorney General of the State of New York (“NY Attorney General”) a Subpoena relating to the NY Attorney General's investigation of whether the Company and its academic institutions have complied with certain New York state consumer protection, securities and finance laws. Pursuant to the Subpoena, the NY Attorney General has requested from the Company and its academic institutions documents and detailed information for the time period March 17, 2005 to present. The Company is cooperating with the investigation and cannot predict the eventual scope, duration or outcome of the investigation at this time.
North Carolina Attorney General Investigation of Ashford University
In September 2011, Ashford University received from the Attorney General of the State of North Carolina (“NC Attorney General”) an Investigative Demand relating to the NC Attorney General's investigation of whether the university's business practices complied with North Carolina consumer protection laws. Pursuant to the Investigative Demand, the NC Attorney General has requested from Ashford University documents and detailed information for the time period January 1, 2008 to present. Ashford University is cooperating with the investigation and cannot predict the eventual scope, duration or outcome of the investigation at this time.
California Attorney General Investigation of For-Profit Educational Institutions
In January 2013, the Company received from the Attorney General of the State of California (“CA Attorney General”) an Investigative Subpoena relating to the CA Attorney General’s investigation of for-profit educational institutions. Pursuant to the Investigative Subpoena, the CA Attorney General has requested documents and detailed information for the time period March 1, 2009 to present. On July 24, 2013, the CA Attorney General filed a petition to enforce certain categories of the Subpoena related to recorded calls and electronic marketing data. On September 25, 2013, we reached an agreement with the CA Attorney General to produce certain categories of the documents requested in the petition and stipulated to continue the hearing on the petition to enforce from October 3, 2013 to January 9, 2014. On January 13, 2014 and June 19, 2014, the Company received additional Investigative Subpoenas from the CA Attorney General each requesting additional documents and information for the time period March 1, 2009 through the current date. The Company cannot predict the eventual scope, duration or outcome of the investigation at this time. As a result, the Company cannot reasonably estimate a range of loss for this action and accordingly has not accrued any liability associated with this action.
Securities Class Action
On July 13, 2012, a securities class action complaint was filed in the U.S. District Court for the Southern District of California by Donald K. Franke naming the Company, Andrew Clark, Daniel Devine and Jane McAuliffe as defendants for allegedly making false and materially misleading statements regarding the Company’s business and financial results, specifically the concealment of accreditation problems at Ashford University. The complaint asserts a putative class period stemming from May 3, 2011 to July 6, 2012. A substantially similar complaint was also filed in the same court by Luke Sacharczyk on July 17, 2012 making similar allegations against the Company, Andrew Clark and Daniel Devine. The Sacharczyk complaint asserts a putative class period stemming from May 3, 2011 to July 12, 2012. Finally, on July 26, 2012, another purported securities class action complaint was filed in the same court by David Stein against the same defendants based upon the same general set of allegations and class period. The complaints allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and seek unspecified monetary relief, interest, and attorneys’ fees.
On October 22, 2012, the Sacharczyk and Stein actions were consolidated with the Franke action and the Court appointed the City of Atlanta General Employees Pension Fund and the Teamsters Local 677 Health Services & Insurance Plan as lead plaintiffs. A consolidated complaint was filed on December 21, 2012 and the Company filed a motion to dismiss on February 19, 2013. On September 13, 2013, the Court granted the motion to dismiss with leave to amend for alleged misrepresentations relating to Ashford University’s quality of education, the WASC accreditation process, and the Company’s financial forecasts. The Court denied the motion to dismiss for alleged misrepresentations concerning Ashford University’s persistence rates. The plaintiff did not file an amended complaint by the October 31, 2013 deadline and therefore the case is now proceeding to discovery.
The outcome of this legal proceeding is uncertain at this point because of the many questions of fact and law that may arise. At present, the Company cannot reasonably estimate a range of loss for this action based on the information available to the Company. Accordingly, the Company has not accrued any liability associated with this action.
Shareholder Derivative Actions
In re Bridgepoint, Inc. Shareholder Derivative Action
On July 24, 2012, a shareholder derivative complaint was filed in California Superior Court by Alonzo Martinez. In the complaint, the plaintiff asserts a derivative claim on the Company's behalf against certain of its current and former officers and directors. The complaint is entitled Martinez v. Clark, et al., and generally alleges that the individual defendants breached their fiduciary duties of candor, good faith and loyalty, wasted corporate assets and were unjustly enriched. The complaint seeks unspecified monetary relief and disgorgement on behalf of the Company, as well as other equitable relief and attorneys' fees. On September 28, 2012, a substantially similar shareholder derivative complaint was filed in California Superior Court by David Adolph-Laroche. In the complaint, the plaintiff asserts a derivative claim on the Company's behalf against certain of its current and former officers and directors. The complaint is entitled Adolph-Laroche v. Clark, et al., and generally alleges that the individual defendants breached their fiduciary duties of candor, good faith and loyalty, wasted corporate assets and were unjustly enriched.
On October 11, 2012, the Adolph-Laroche action was consolidated with the Martinez action and the case is now entitled In re Bridgepoint, Inc. Shareholder Derivative Action. A consolidated complaint was filed on December 18, 2012 and the defendants filed a motion to stay the case while the underlying securities class action is pending. The motion was granted by the Court on April 11, 2013. A status conference was held on October 10, 2013, during which the Court ordered the stay continued for the duration of discovery in the securities class action, but permitted the plaintiff to receive copies of any discovery responses served in the underlying securities class action.
Cannon v. Clark, et al.
On November 1, 2013, a shareholder derivative complaint was filed in the U.S. District Court for the Southern District of California by James Cannon. In the complaint, the plaintiff asserts a derivative claim on the Company's behalf against certain of its current officers and directors. The complaint is entitled Cannon v. Clark, et al. and is substantially similar to the previously filed California State Court derivative action now entitled In re Bridgepoint, Inc. Shareholder Derivative Action. In the complaint, plaintiff generally alleges that the individual defendants breached their fiduciary duties of candor, good faith and loyalty, wasted corporate assets and were unjustly enriched. The complaint seeks unspecified monetary relief and disgorgement on behalf of the Company, as well as other equitable relief and attorneys' fees. Pursuant to a stipulation among the parties, on January 6, 2014, the Court ordered the case stayed during discovery in the underlying securities class action, but permitted the plaintiff to receive copies of any discovery responses served in the underlying securities class action.
Di Giovanni v. Clark, et al., and Craig-Johnston v. Clark, et al.
On December 9, 2013, two nearly identical shareholder derivative complaints were filed in the United States District Court for the Southern District of California. The complaints assert derivative claims on our behalf against the members of our board of directors as well as against Warburg Pincus & Co., Warburg Pincus LLC, Warburg Pincus Partners LLC, and Warburg Pincus Private Equity VIII, L.P. The two lawsuits are captioned Di Giovanni v. Clark, et al., and Craig-Johnston v. Clark, et al. The complaints allege that all of the defendants breached their fiduciary duties and were unjustly enriched and that the individual defendants wasted corporate assets in connection with the tender offer commenced by the Company on November 13, 2013. The lawsuits seek unspecified monetary relief and disgorgement, as well as other equitable relief and attorneys’ fees. On February 28, 2014, the defendants filed motions to dismiss, which are currently pending with the Court.
Klein v. Clark, et al.
On January 9, 2014, a shareholder derivative complaint was filed in the Superior Court of the State of California in San Diego. The complaint asserts derivative claims on our behalf against the members of our board of directors as well as against Warburg Pincus & Co., Warburg Pincus LLC, Warburg Pincus Partners LLC, and Warburg Pincus Private Equity VIII, L.P. The lawsuit is captioned Klein v. Clark, et al. The complaint alleges that all of the defendants breached their fiduciary duties and were unjustly enriched and that the individual defendants wasted corporate assets in connection with the tender offer commenced by the Company on November 13, 2013. The lawsuit seeks unspecified monetary relief and disgorgement, as well as other equitable relief and attorneys’ fees. On March 21, 2014, the Court granted the parties' stipulation to stay the case until the motions to dismiss in the related Federal derivative action are decided.
Guzman v. Bridgepoint Education, Inc.
In January 2011, Betty Guzman filed a class action lawsuit against the Company, Ashford University and University of the Rockies in the U.S. District Court for the Southern District of California. The complaint is entitled Guzman v. Bridgepoint Education, Inc., et al., and alleges that the defendants engaged in misrepresentation and other unlawful behavior in their efforts to recruit and retain students. The complaint asserts a putative class period of March 1, 2005 through the present. In March 2011, the defendants filed a motion to dismiss the complaint, which was granted by the Court with leave to amend in October 2011.
In January 2012, the plaintiff filed a first amended complaint asserting similar claims and the same class period, and the defendants filed another motion to dismiss. In May 2012, the Court granted University of the Rockies’ motion to dismiss and granted in part and denied in part the motion to dismiss filed by the Company and Ashford University. The Court also granted the plaintiff leave to file a second amended complaint. In August 2012, the plaintiff filed a second amended complaint asserting similar claims and the same class period. The second amended complaint seeks unspecified monetary relief, disgorgement of all profits, various other equitable relief, and attorneys’ fees. The defendants filed a motion to strike portions of the second amended complaint, which was granted in part and denied in part. On March 14, 2013, the Company filed a motion to deny class certification for students enrolled on or after May 2007 when Ashford University adopted a binding arbitration policy. On August 23, 2013, the Court denied the motion finding that although “some” absent class members in this case may have signed an enforceable arbitration agreement, this does not demonstrate an overbroad or unascertainable class that forecloses certification at this stage of the proceedings. On September 23, 2013, the Court entered an order bifurcating discovery and permitting only class certification discovery to take place until the plaintiff’s motion for class certification, which was filed on April 30, 2014, is decided.
The outcome of this legal proceeding is uncertain at this point because of the many questions of fact and law that may arise. At present, the Company cannot reasonably estimate a range of loss for this action based on the information available to the Company. Accordingly, the Company has not accrued any liability associated with this action.
Qui Tam Complaints
In December 2012, the Company received notice that the U.S. Department of Justice had declined to intervene in a qui tam complaint filed in the U.S. District Court for the Southern District of California by Ryan Ferguson and Mark T. Pacheco under the Federal False Claims Act on March 10, 2011 and unsealed on December 26, 2012. The case is entitled United States of America, ex rel., Ryan Ferguson and Mark T. Pacheco v. Bridgepoint Education, Inc., Ashford University and University of the Rockies. The qui tam complaint alleges, among other things, that since March 10, 2005, the Company caused its institutions, Ashford University and University of the Rockies, to violate the Federal False Claims Act by falsely certifying to the U.S. Department of Education that the institutions were in compliance with various regulations governing the Title IV programs, including those that require compliance with federal rules regarding the payment of incentive compensation to enrollment personnel, student disclosures, and misrepresentation in connection with the institutions' participation in the Title IV programs. The complaint seeks significant damages, penalties and other relief. On April 30, 2013, the relators petitioned the Court for voluntary dismissal of the complaint without prejudice. The U.S. Department of Justice filed a notice stipulating to the dismissal and the Court granted the dismissal on June 12, 2013.
In January 2013, the Company received notice that the U.S. Department of Justice had declined to intervene in a qui tam complaint filed in the U.S. District Court for the Southern District of California by James Carter and Roger Lengyel under the Federal False Claims Act on July 2, 2010 and unsealed on January 2, 2013. The case is entitled United States of America, ex rel., James Carter and Roger Lengyel v. Bridgepoint Education, Inc., Ashford University. The qui tam complaint alleges, among other things, that since March 2005, the Company and Ashford University have violated the Federal False Claims Act by falsely certifying to the U.S. Department of Education that Ashford University was in compliance with federal rules regarding the payment of incentive compensation to enrollment personnel in connection with the institution's participation in Title IV programs. Pursuant to a stipulation between the parties, the relators filed an amended complaint on May 10, 2013. The amended complaint is substantially similar to the original complaint and seeks significant damages, penalties and other relief. On January 8, 2014, the Court denied the Company's motion to dismiss and the case is proceeding to discovery.
The outcome of this legal proceeding is uncertain at this point because of the many questions of fact and law that may arise. At present, the Company cannot reasonably estimate a range of loss for this action based on the information available to the Company. Accordingly, the Company has not accrued any liability associated with this action.
Subsequent Events
Subsequent Events
Subsequent Events
In April 2014, BPPE approved Ashford University’s Application for Approval to Operate an Accredited Institution, and the university was granted approval by BPPE to operate in California until July 15, 2018. For additional information, see Note 11, “Regulatory - Licensure by California BPPE.”
On May 15, 2014, the Iowa Attorney General, Bridgepoint Education, Inc. and Ashford University entered into an Assurance of Voluntary Compliance in full resolution of the Iowa Attorney General’s allegations and Civil Investigative Demand and Notice of Intent to Proceed. For additional information, see Note 12, “Commitments and Contingencies - Iowa Attorney General Civil Investigation of Ashford University.”
On June 19, 2014, the Company received a third Investigative Subpoena from the CA Attorney General requesting additional documents and information for the time period March 1, 2009 through the current date. For additional information, see Note 12, “Commitments and Contingencies - California Attorney General Investigation of For-Profit Educational Institutions.”
On July 21, 2014, the Company and Ashford University received from the Attorney General of the State of Massachusetts (“MA Attorney General”) a Civil Investigative Demand relating to the Attorney General's investigation of for-profit educational institutions and whether the university's business practices complied with Massachusetts consumer protection laws.  Pursuant to the Investigative Demand, the MA Attorney General has requested from the Company and Ashford University documents and information for the time period January 1, 2006, to present.  The Company and the university are evaluating the Investigative Demand and intend to comply with the MA Attorney General's request.
On July 22, 2014, the Company received from the U.S. Securities & Exchange Commission (“SEC”) a subpoena relating to certain of the Company’s accounting practices, including revenue recognition, receivables and other matters relating to the Company’s previously disclosed intention to restate its financial statements for fiscal year ended December 31, 2013 and revise its financial statements for the years ended December 31, 2011 and 2012, and the prior revision of the Company’s financial statements for fiscal year ended December 31, 2012. Pursuant to the subpoena, the SEC has requested from the Company documents and detailed information for the time period January 1, 2009, to present. The Company is evaluating the subpoena and intends to fully cooperate in the investigation.
On July 31, 2014, the Company and Ashford University received notification from the U.S. Department of Education that the Department intends to conduct an ordinary course program review of Ashford University’s administration of federal student financial aid (Title IV) programs in which the university participates. The review, which is scheduled to commence August 25, 2014, initially will cover federal financial aid years 2012-2013 and 2013-2014, as well as compliance with the Jeanne Clery Disclosure of Campus Security Policy and Campus Crime Statistics Act, the Drug-Free Schools and Communities Act and related.
Summary of Significant Accounting Policies (Policies)
Principles of Consolidation 
Principles of Consolidation
The condensed consolidated financial statements include the accounts of Bridgepoint Education, Inc. and its wholly-owned subsidiaries. Intercompany transactions have been eliminated in consolidation.
Unaudited Interim Financial Information 
Unaudited Interim Financial Information
The condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements included in the Company's Annual Report on Form 10-K/A for the year ended December 31, 2013, which was filed with the Securities and Exchange Commission (“SEC”) on August 1, 2014. In the opinion of management, these financial statements include all adjustments (consisting of normal recurring adjustments) considered necessary to present a fair statement of the Company's condensed consolidated financial position, results of operations and cash flows as of and for the periods presented.
Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. The year-end condensed consolidated balance sheet data were derived from audited financial statements, but do not include all disclosures required by GAAP for complete annual financial statements.
Use of Estimates 
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements. Actual results could differ from those estimates.
Recently Adopted Accounting Pronouncements 
Recent Accounting Pronouncements Not Yet Adopted
In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”, which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, “Revenue Recognition.” This literature is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The accounting guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The standard will be effective for the first interim period within fiscal years beginning after December 15, 2016, using one of two retrospective application methods. The Company is evaluating the impacts, if any, the adoption of ASU No. 2014-09 will have on its financial position or results of operations.
In June 2014, the FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (ASU 2014-12). ASU 2014-12 requires that a performance target that affects vesting and could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in ASC 718, Compensation—Stock Compensation, as it relates to such awards. ASU 2014-12 is effective for us in our first quarter of fiscal 2017, with early adoption permitted using either of two methods: (i) prospective to all awards granted or modified after the effective date; or (ii) retrospective to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter, with the cumulative effect of applying ASU 2014-12 as an adjustment to the opening retained earnings balance as of the beginning of the earliest annual period presented in the financial statements. The Company is evaluating the impacts, if any, the adoption of ASU 2014-12 will have on its financial position or results of operations.
Summary of Significant Accounting Policies (Tables)
Revision of Previously Issued Financial Statements
Investments (Tables)
Fair Value Information of Short and Long-term Investments
The following tables summarize the fair value information of short and long-term investments as of March 31, 2014, and December 31, 2013, respectively (in thousands):
 
As of March 31, 2014
 
Level 1
 
Level 2
 
Level 3
 
Total
Demand notes
$
—

 
$
890

 
$
—

 
$
890

Corporate notes and bonds
—

 
24,070

 
—

 
24,070

U.S. government and agency securities
—

 
14,955

 
—

 
14,955

Certificates of deposit
—

 
70,000

 
—

 
70,000

Total
$
—

 
$
109,915

 
$
—

 
$
109,915

 
As of December 31, 2013
 
Level 1
 
Level 2
 
Level 3
 
Total
Demand notes
$
—

 
$
719

 
$
—

 
$
719

Corporate notes and bonds
—

 
16,244

 
—

 
16,244

Certificates of deposit
—

 
90,000

 
—

 
90,000

Total
$
—

 
$
106,963

 
$
—

 
$
106,963

Accounts Receivable (Tables) (Allowance for Doubtful Accounts, Current)
Schedule of Accounts Receivable, Net 
Accounts receivable, net, consist of the following (in thousands):
 
As of
March 31, 2014
 
As of
December 31, 2013
Accounts receivable
$
60,389

 
$
49,854

Less allowance for doubtful accounts
(30,761
)
 
(26,901
)
Accounts receivable, net
$
29,628

 
$
22,953

Changes in Allowance for Doubtful Accounts, Accounts Receivable 
The following table presents the changes in the allowance for doubtful accounts for the periods indicated (in thousands):
 
Beginning
Balance
 
Charged to
Expense
 
Deductions(1)
 
Ending
Balance
Allowance for doubtful accounts receivable:
 
 
 
 
 
 
 
For the three months ended March 31, 2014
$
(26,901
)
 
$
7,440

 
$
(3,580
)
 
$
(30,761
)
For the three months ended March 31, 2013
(31,466
)
 
13,020

 
$
(9,838
)
 
(34,648
)
(1)
Deductions represent accounts written off, net of recoveries.
Student Loan Receivables (Tables)
Delinquency Status of Gross Student Loans Receivable 
As of March 31, 2014, the delinquency status of gross student loans receivable was as follows (in thousands):
Less than 120 days
$
16,582

From 120 - 269 days
1,392

Greater than 270 days
2,087

Total gross student loans receivable
20,061

Less: Amounts reserved or impaired
(4,528
)
Less: Discount on student loans receivable
(3,285
)
Total student loans receivable, net
$
12,248

Schedule of Student Loans Receivable, Net 
Student loan receivables, net, consist of the following (in thousands):
Short-term:
As of
March 31, 2014
 
As of
December 31, 2013
   Student loans receivable (non-tuition related)
$
670

 
$
587

   Student loans receivable (tuition related)
487

 
621

   Current student loans receivable
1,157

 
1,208

Less allowance for doubtful accounts
(192
)
 
(165
)
Student loans receivable, net
$
965

 
$
1,043

Long-term:
As of
March 31, 2014
 
As of
December 31, 2013
   Student loans receivable (non-tuition related)
$
6,940

 
$
7,347

   Student loans receivable (tuition related)
6,415

 
6,417

   Non-current student loans receivable
13,355

 
13,764

Less allowance for doubtful accounts
(2,072
)
 
(1,979
)
Student loans receivable, net
$
11,283

 
$
11,785

Changes in Allowance for Doubtful Accounts, Student Loans Receivable 
The following table presents the changes in the allowance for doubtful accounts for the periods indicated (in thousands):
 
Beginning
Balance
 
Charged to
Expense
 
Deductions(1)
 
Ending
Balance
Allowance for student loans receivable (tuition related):
 
 
 
 
 
 
 
For the three months ended March 31, 2014
$
(2,144
)
 
$
120

 
$
—

 
$
(2,264
)
For the three months ended March 31, 2013
(1,895
)
 
20

 
—

 
(1,915
)
(1)
Deductions represent accounts written off, net of recoveries.
Other Significant Balance Sheet Accounts (Tables)
Prepaid Expenses and Other Current Assets 
Prepaid expenses and other current assets consist of the following (in thousands):
 
As of
March 31, 2014
 
As of
December 31, 2013
Prepaid expenses
$
10,873

 
$
10,814

Prepaid licenses
4,892

 
5,833

Prepaid income taxes
8,057

 
195

Prepaid insurance
897

 
1,131

Interest receivable
229

 
86

Insurance recoverable
2,395

 
2,814

Other current assets
521

 
690

Total prepaid expenses and other current assets
$
27,864

 
$
21,563

Property and Equipment, Net 
Property and equipment, net, consist of the following (in thousands):
 
As of
March 31, 2014
 
As of
December 31, 2013
Land
$
7,091

 
$
7,091

Buildings and building improvements
28,916

 
28,916

Furniture and office equipment
87,004

 
84,852

Software
11,155

 
10,075

Leasehold improvements
24,405

 
24,360

Vehicles
147

 
147

Total property and equipment
158,718

 
155,441

Less accumulated depreciation and amortization
(68,596
)
 
(64,016
)
Total property and equipment, net
$
90,122

 
$
91,425

Goodwill and Intangibles, Net 
Goodwill and intangibles, net, consist of the following (in thousands):
 
March 31, 2014
Definite-lived intangible assets:
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Capitalized curriculum costs
$
15,660

 
$
(6,086
)
 
$
9,574

Purchased intangible assets
15,857

 
(1,361
)
 
14,496

     Total definite-lived intangible assets
$
31,517

 
$
(7,447
)
 
$
24,070

Goodwill and indefinite-lived intangibles
 
 
 
 
2,567

Total goodwill and intangibles, net
 
 
 
 
$
26,637

 
 
 
 
 
 
 
December 31, 2013
Definite-lived intangible assets:
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Capitalized curriculum costs
$
14,540

 
$
(5,035
)
 
$
9,505

Purchased intangible assets
15,857

 
(1,051
)
 
14,806

     Total definite-lived intangible assets
$
30,397

 
$
(6,086
)
 
$
24,311

Goodwill and indefinite-lived intangibles
 
 
 
 
2,567

Total goodwill and intangibles, net
 
 
 
 
$
26,878

Intangibles, Estimated Remaining Amortization Expense 
The following table summarizes the estimated remaining amortization expense as of each fiscal year ended below (in thousands):
Year Ended December 31,
 
 
2014
$
4,030

2015
4,280

2016
2,526

2017
1,269

2018
1,232

Thereafter
10,733

Total future amortization expense
$
24,070

Accrued Liabilities 
Accrued liabilities consist of the following (in thousands):
 
As of
March 31, 2014
 
As of
December 31, 2013
Accrued salaries and wages
$
14,904

 
$
12,790

Accrued bonus
2,332

 
2,277

Accrued vacation
10,194

 
9,696

Accrued litigation and fees
8,000

 
8,000

Accrued expenses
20,817

 
15,079

Rent liability
2,390

 
2,446

Worker's compensation liability
3,587

 
4,002

Total accrued liabilities
$
62,224

 
$
54,290

Deferred Revenue and Student Deposits 
Deferred revenue and student deposits consist of the following (in thousands):
 
As of
March 31, 2014
 
As of
December 31, 2013
Deferred revenue
$
30,262

 
$
29,279

Student deposits
78,359

 
103,512

Total deferred revenue and student deposits
$
108,621

 
$
132,791

Earnings Per Share (Tables)
Computation of Basic and Diluted Earnings Per Common Share 
The following table sets forth the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data):
 
Three Months Ended March 31,
 
2014
 
2013
Numerator:
 
 
 
Net income (loss)
$
(4,330
)
 
$
24,667

Denominator:
 
 
 
Weighted average number of common shares outstanding
44,897

 
54,129

Effect of dilutive options and restricted stock units
—

 
778

Effect of dilutive warrants
—

 
94

Diluted weighted average number of common shares outstanding
44,897

 
55,001

Earnings (loss) per share:
 
 
 
Basic earnings (loss) per share
$
(0.10
)
 
$
0.46

Diluted earnings (loss) per share
$
(0.10
)
 
$
0.45

Antidilutive Securities 
For the periods indicated below, the computation of dilutive common shares outstanding excludes certain options and restricted stock units to purchase shares of common stock because their effect was anti-dilutive.
 
Three Months Ended March 31,
(in thousands)
2014
 
2013
Options
2,792

 
5,478

Restricted stock units
350

 
—

Summary of Significant Accounting Policies (Restatement) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Dec. 31, 2013
Dec. 31, 2012
Statement of Financial Position [Abstract]
 
 
 
 
Cash and cash equivalents
$ 190,691 
$ 275,533 
$ 212,526 
$ 208,971 
Restricted cash
28,738 
 
36,946 
 
Accounts receivable, net
29,628 
 
22,953 
 
Student loans receivable, net, current
965 
 
1,043 
 
Prepaid expenses and other current assets
27,864 
 
21,563 
 
Total current assets
340,603 
 
377,615 
 
Student loans receivable, net
11,283 
 
11,785 
 
Total assets
554,039 
 
570,012 
 
Accrued liabilities
62,224 
 
54,290 
 
Total current liabilities
177,421 
 
192,276 
 
Total liabilities
210,216 
 
225,474 
 
Retained earnings
507,777 
 
512,107 
 
Total stockholders’ equity
343,823 
 
344,538 
 
Total liabilities and stockholders' equity
554,039 
 
570,012 
 
Income Statement [Abstract]
 
 
 
 
Revenue
157,270 
212,986 
 
 
Instructional costs and services
83,081 
97,028 
 
 
General and administrative
16,269 
18,739 
 
 
Total costs and expenses
165,128 
173,310 
 
 
Operating income (loss)
(7,858)
39,676 
 
 
Income (loss) before income taxes
(7,491)
40,513 
 
 
Income tax expense
(3,161)
15,846 
 
 
Net income (loss)
(4,330)
24,667 
 
 
Basic earnings (loss) per share (in usd per share)
$ (0.10)
$ 0.46 
 
 
Diluted earnings (loss) per share (in usd per share)
$ (0.10)
$ 0.45 
 
 
Statement of Cash Flows [Abstract]
 
 
 
 
Provision for bad debts
7,560 
13,040 
 
 
Amortization of premium/discount
(19)
1,407 
 
 
Accounts receivable
(14,092)
(10,229)
 
 
Prepaid expenses and other current assets
(6,297)
(5,656)
 
 
Student loans receivable
198 
(133)
 
 
Accounts payable and accrued liabilities
9,526 
16,213 
 
 
Deferred revenue and student deposits
(24,084)
(33,747)
 
 
Cash flows from operating activities
$ (16,499)
$ 21,516 
 
 
Investments (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
$ 109,915 
 
$ 106,963 
Unrealized gains (losses) on investments
(36)
(49)
 
Unrealized gains (losses) on investments, tax effect
(26)
(30)
 
Level 1
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
0 
 
0 
Level 2
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
109,915 
 
106,963 
Level 3
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
0 
 
0 
Demand Notes
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
890 
 
719 
Demand Notes |
Level 1
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
0 
 
0 
Demand Notes |
Level 2
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
890 
 
719 
Demand Notes |
Level 3
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
0 
 
0 
Corporate Notes and Bonds
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
24,070 
 
16,244 
Corporate Notes and Bonds |
Level 1
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
0 
 
0 
Corporate Notes and Bonds |
Level 2
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
24,070 
 
16,244 
Corporate Notes and Bonds |
Level 3
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
0 
 
0 
U.S. Government and Agency Securities
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
14,955 
 
 
U.S. Government and Agency Securities |
Level 1
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
0 
 
 
U.S. Government and Agency Securities |
Level 2
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
14,955 
 
 
U.S. Government and Agency Securities |
Level 3
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
0 
 
 
Certificates of Deposit
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
70,000 
 
90,000 
Certificates of Deposit |
Level 1
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
0 
 
0 
Certificates of Deposit |
Level 2
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
70,000 
 
90,000 
Certificates of Deposit |
Level 3
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
$ 0 
 
$ 0 
Accounts Receivable (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2014
Dec. 31, 2013
Receivables [Abstract]
 
 
Accounts receivable
$ 60,389 
$ 49,854 
Less allowance for doubtful accounts
(30,761)
(26,901)
Accounts receivable, net
$ 29,628 
$ 22,953 
Accounts Receivable (Change in Allowance) (Details) (Allowance for Doubtful Accounts, Current, USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Allowance for Doubtful Accounts, Current
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
Beginning Balance
$ (26,901)
$ (31,466)
Charged to Expense
7,440 
13,020 
Deductions(1)
(3,580)
(9,838)
Ending Balance
$ (30,761)
$ (34,648)
Student Loan Receivables (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2014
Dec. 31, 2013
Financing Receivable, Allowance for Credit Losses [Line Items]
 
 
Student loans receivable, short-term
$ 1,157 
$ 1,208 
Less allowance for doubtful accounts, short-term
(192)
(165)
Student loans receivable, net, short-term
965 
1,043 
Student loans receivable, long-term
13,355 
13,764 
Less allowance for doubtful accounts, long-term
(2,072)
(1,979)
Student loans receivable, net, long-term
11,283 
11,785 
Student Loans Receivable (Non-tuition Related)
 
 
Financing Receivable, Allowance for Credit Losses [Line Items]
 
 
Student loans receivable, short-term
670 
587 
Student loans receivable, long-term
6,940 
7,347 
Student Loans Receivable (Tuition Related)
 
 
Financing Receivable, Allowance for Credit Losses [Line Items]
 
 
Student loans receivable, short-term
487 
621 
Student loans receivable, long-term
$ 6,415 
$ 6,417 
Student Loan Receivables (Change in Allowance) (Details) (Allowance for Notes Receivable, USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Allowance for Notes Receivable
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
Beginning Balance
$ (2,144)
$ (1,895)
Charged to Expense
120 
20 
Deductions(1)
0 
0 
Ending Balance
$ (2,264)
$ (1,915)
Student Loan Receivables (Delinquency Status) (Details) (USD $)
3 Months Ended
Mar. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
Amounts recorded for loan loss reserves
$ 300,000 
Loans placed on non-accrual status
2,300,000 
Allowance for Notes Receivable
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
Less than 120 days
16,582,000 
From 120 - 269 days
1,392,000 
Greater than 270 days
2,087,000 
Total gross student loans receivable
20,061,000 
Less: Amounts reserved or impaired
(4,528,000)
Less: Discount on student loans receivable
(3,285,000)
Total student loans receivable, net
$ 12,248,000 
Other Significant Balance Sheet Accounts (Prepaid Expenses and Other Current Assets) (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2014
Dec. 31, 2013
Prepaid Expense and Other Assets, Current [Abstract]
 
 
Prepaid expenses
$ 10,873 
$ 10,814 
Prepaid licenses
4,892 
5,833 
Prepaid income taxes
8,057 
195 
Prepaid insurance
897 
1,131 
Interest receivable
229 
86 
Insurance recoverable
2,395 
2,814 
Other current assets
521 
690 
Total prepaid expenses and other current assets
$ 27,864 
$ 21,563 
Other Significant Balance Sheet Accounts (Property and Equipment, Net) (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2014
Dec. 31, 2013
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
$ 158,718 
$ 155,441 
Less accumulated depreciation and amortization
(68,596)
(64,016)
Total property and equipment, net
90,122 
91,425 
Land
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
7,091 
7,091 
Buildings and building improvements
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
28,916 
28,916 
Furniture and office equipment
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
87,004 
84,852 
Software
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
11,155 
10,075 
Leasehold improvements
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
24,405 
24,360 
Vehicles
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
$ 147 
$ 147 
Other Significant Balance Sheet Accounts (Goodwill and Intangibles, Net) (Details) (USD $)
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Dec. 31, 2013
Goodwill and Intangibles [Line Items]
 
 
 
Amortization expense
$ 1,400,000 
$ 600,000 
 
Goodwill and Intangibles, Net
 
 
 
Definite-lived intangible assets, gross carrying amount
31,517,000 
 
30,397,000 
Definite-lived intangible assets, accumulated amortization
(7,447,000)
 
(6,086,000)
Definite-lived intangible assets, net carrying amount
24,070,000 
 
24,311,000 
Goodwill and indefinite-lived intangibles
2,567,000 
 
2,567,000 
Total goodwill and intangibles, net
26,637,000 
 
26,878,000 
Future Amortization Expense
 
 
 
2014
4,030,000 
 
 
2015
4,280,000 
 
 
2016
2,526,000 
 
 
2017
1,269,000 
 
 
2018
1,232,000 
 
 
Thereafter
10,733,000 
 
 
Total future amortization expense
24,070,000 
 
 
Capitalized Curriculum Costs
 
 
 
Goodwill and Intangibles, Net
 
 
 
Definite-lived intangible assets, gross carrying amount
15,660,000 
 
14,540,000 
Definite-lived intangible assets, accumulated amortization
(6,086,000)
 
(5,035,000)
Definite-lived intangible assets, net carrying amount
9,574,000 
 
9,505,000 
Purchased Intangible Assets
 
 
 
Goodwill and Intangibles, Net
 
 
 
Definite-lived intangible assets, gross carrying amount
15,857,000 
 
15,857,000 
Definite-lived intangible assets, accumulated amortization
(1,361,000)
 
(1,051,000)
Definite-lived intangible assets, net carrying amount
$ 14,496,000 
 
$ 14,806,000 
Other Significant Balance Sheet Accounts (Accrued Liabilities) (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2014
Dec. 31, 2013
Significant Balance Sheet Accounts [Abstract]
 
 
Accrued salaries and wages
$ 14,904 
$ 12,790 
Accrued bonus
2,332 
2,277 
Accrued vacation
10,194 
9,696 
Accrued litigation and fees
8,000 
8,000 
Accrued expenses
20,817 
15,079 
Rent liability
2,390 
2,446 
Worker's compensation liability
3,587 
4,002 
Total accrued liabilities
$ 62,224 
$ 54,290 
Other Significant Balance Sheet Accounts (Deferred Revenue) (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2014
Dec. 31, 2013
Deferred Revenue [Abstract]
 
 
Deferred revenue
$ 30,262 
$ 29,279 
Student deposits
78,359 
103,512 
Total deferred revenue and student deposits
$ 108,621 
$ 132,791 
Credit Facilities (Details) (USD $)
0 Months Ended 3 Months Ended 0 Months Ended
Mar. 31, 2014
Dec. 31, 2013
Apr. 13, 2012
April 2012 Credit Facility
Mar. 31, 2014
April 2012 Credit Facility
Apr. 13, 2012
Base Rate
April 2012 Credit Facility
Apr. 13, 2012
Eurodollar-based Rate
April 2012 Credit Facility
Apr. 13, 2012
Federal Funds Effective Rate
Base Rate
April 2012 Credit Facility
Apr. 13, 2012
Daily Adjusting LIBOR
Base Rate
April 2012 Credit Facility
Mar. 31, 2014
Land
Dec. 31, 2013
Land
Aug. 1, 2014
Subsequent Event
April 2012 Credit Facility
Line of Credit Facility [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revolving line of credit, current borrowing capacity
 
 
$ 50,000,000 
 
 
 
 
 
 
 
 
Revolving line of credit, maximum borrowing capacity
 
 
100,000,000 
 
 
 
 
 
 
 
 
Revolving line of credit, maximum swing-line advances
 
 
3,000,000 
 
 
 
 
 
 
 
 
Revolving line of credit, term
 
 
3 years 
 
 
 
 
 
 
 
 
Revolving line of credit, notice required for termination
 
 
 
5 days 
 
 
 
 
 
 
 
Revolving line of credit, fixed portion of interest rate
 
 
 
 
0.50% 
1.50% 
 
 
 
 
 
Revolving line of credit, variable portion of interest rate, addition to reference rate
 
 
 
 
 
 
1.00% 
1.00% 
 
 
 
Commitment fee, percentage on undrawn amount of letter of credit
 
 
1.50% 
 
 
 
 
 
 
 
 
Revolving line of credit, facility fee, percentage
 
 
0.25% 
 
 
 
 
 
 
 
 
Property and equipment, gross
158,718,000 
155,441,000 
 
 
 
 
 
 
7,091,000 
7,091,000 
 
Revolving line of credit, amount outstanding
0 
 
 
 
 
 
 
 
 
 
0 
Revolving line of credit, letters of credit outstanding
 
 
 
3,500,000 
 
 
 
 
 
 
 
Surety Bond Facility [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Surety bond facility, available amount
12,000,000 
 
 
 
 
 
 
 
 
 
 
Surety bond facility, issued amount
$ 6,900,000 
 
 
 
 
 
 
 
 
 
 
Earnings Per Share (Basic and Diluted Earnings Per Share) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Numerator:
 
 
Net income (loss)
$ (4,330)
$ 24,667 
Denominator:
 
 
Weighted average number of common shares outstanding (in shares)
44,897 
54,129 
Effect of dilutive options and restricted stock units (in shares)
0 
778 
Effect of dilutive warrants (in shares)
0 
94 
Diluted weighted average number of common shares outstanding (in shares)
44,897 
55,001 
Earnings (loss) per share:
 
 
Basic (in usd per share)
$ (0.10)
$ 0.46 
Diluted (in usd per share)
$ (0.10)
$ 0.45 
Earnings Per Share (Anti-dilutive Securities) (Details)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Options
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
Antidilutive securities excluded from computation of dilutive common shares outstanding
2,792 
5,478 
Restricted stock units
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
Antidilutive securities excluded from computation of dilutive common shares outstanding
350 
0 
Stock-Based Compensation (Details) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Stock-based compensation expense
$ 1.9 
$ 3.6 
Income tax benefit of stock-based compensation expense
0.7 
1.4 
Stock options granted in period
400,000 
 
Restricted Stock Units
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
RSU's granted during the period
700,000 
 
RSUs granted during period, grant date fair value
$ 14.50 
 
RSUs vested and released during period
200,000 
 
Options
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Stock options exercised
300,000 
 
Unrecognized compensation cost related to unvested options and RSUs
$ 21.9 
 
Income Taxes (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Dec. 31, 2013
Income Tax Disclosure [Abstract]
 
 
Estimated annual effective tax rate
41.70% 
 
Effective income tax rate
42.20% 
 
Gross unrecognized tax benefits
$ 7.4 
$ 7.4 
Gross unrecognized tax benefits that would impact effective tax rate if recognized
4.8 
4.8 
Accrued interest and penalties related to uncertain tax positions
$ 1.8 
$ 1.7 
Commitments and Contingencies (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Loss Contingencies [Line Items]
 
Estimated litigation liability
$ 9.00 
Payment for Restitution, Costs and Fees
 
Loss Contingencies [Line Items]
 
Estimated litigation liability
$ 7.25