BRIDGEPOINT EDUCATION INC, 10-K/A filed on 8/4/2014
Amended Annual Report
Document and Entity Information (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Mar. 10, 2014
Jun. 30, 2013
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-K/A 
 
 
Document Period End Date
Dec. 31, 2013 
 
 
Document Fiscal Year Focus
2013 
 
 
Document Fiscal Period Focus
FY 
 
 
Amendment Flag
true 
 
 
Amendment Description
Amended to reflect restatement for Revenue and Restricted Cash 
 
 
Entity Common Stock, Shares Outstanding
 
44,979,199 
 
Entity Well-known Seasoned Issuer
No 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Public Float
 
 
$ 224.0 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Current assets:
 
 
Cash and cash equivalents
$ 212,526 
$ 208,971 
Restricted cash
36,946 
46,994 
Investments
65,901 
136,967 
Accounts receivable, net
22,953 
54,487 
Student loans receivable, net
1,043 
556 
Deferred income taxes
16,683 
15,490 
Prepaid expenses and other current assets
21,563 
20,053 
Total current assets
377,615 
483,518 
Property and equipment, net
91,425 
95,966 
Investments
41,062 
121,738 
Student loans receivable, net
11,785 
14,416 
Goodwill and intangibles, net
26,878 
10,739 
Noncurrent deferred tax assets
18,507 
13,706 
Other long-term assets
2,740 
2,330 
Total assets
570,012 
742,413 
Current liabilities:
 
 
Accounts payable
5,195 
4,588 
Accrued liabilities
54,290 
44,640 
Deferred revenue and student deposits
132,791 
175,057 
Total current liabilities
192,276 
224,285 
Rent liability
23,927 
25,173 
Other long-term liabilities
9,271 
9,759 
Total liabilities
225,474 
259,217 
Commitments and contingencies (see Note 20)
   
   
Preferred stock, $0.01 par value:
 
 
20,000 shares authorized; zero shares issued and outstanding at both December 31, 2013, and December 31, 2012
0 
0 
Common stock, $0.01 par value:
 
 
300,000 shares authorized; 62,331 issued and 44,774 outstanding at December 31, 2013; 61,406 issued and 54,099 outstanding at December 31, 2012
623 
614 
Additional paid-in capital
168,829 
151,709 
Retained earnings
512,107 
466,224 
Accumulated other comprehensive gain
48 
222 
Treasury stock, 17,557 shares at cost at December 31, 2013, and 7,307 shares at cost at December 31, 2012
(337,069)
(135,573)
Total stockholders' equity
344,538 
483,196 
Total liabilities and stockholders' equity
$ 570,012 
$ 742,413 
Consolidated Balance Sheets Parenthetical (USD $)
Dec. 31, 2013
Dec. 31, 2012
Stockholders' equity:
 
 
Preferred stock, par value per share
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
20,000 
20,000 
Preferred stock, shares issued
0 
0 
Preferred stock, shares outstanding
0 
0 
Common stock, par value per share
$ 0.01 
$ 0.01 
Common stock, shares authorized
300,000 
300,000 
Common stock, shares issued
62,331 
61,406 
Common stock, shares outstanding
44,774 
54,099 
Treasury stock, shares at cost
17,557 
7,307 
Consolidated Statements of Income (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Revenue
$ 751,449 
$ 943,405 
$ 915,247 
Costs and expenses:
 
 
 
Instructional costs and services
370,734 
343,072 
288,882 
Admissions advisory and marketing
235,358 
339,209 
297,619 
General and administrative
76,894 
69,497 
57,793 
Total costs and expenses
682,986 
751,778 
644,294 
Operating income
68,463 
191,627 
270,953 
Other income, net
3,082 
3,531 
2,871 
Income before income taxes
71,545 
195,158 
273,824 
Income tax expense
25,662 
74,012 
102,746 
Net income
$ 45,883 
$ 121,146 
$ 171,078 
Earnings per common share:
 
 
 
Basic (in USD per share)
$ 0.85 
$ 2.29 
$ 3.27 
Diluted (in USD per share)
$ 0.83 
$ 2.17 
$ 2.99 
Weighted average number of common shares outstanding used in computing earnings per common share:
 
 
 
Basic (in shares)
53,923 
52,947 
52,291 
Diluted (in shares)
55,487 
55,946 
57,133 
Consolidated Statements of Comprehensive Income (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Net income
$ 45,883 
$ 121,146 
$ 171,078 
Other comprehensive gain (loss), net of tax:
 
 
 
Unrealized gains (losses) on investments
(174)
817 
(595)
Comprehensive income
$ 45,709 
$ 121,963 
$ 170,483 
Consolidated Statement of Stockholders' Equity (USD $)
In Thousands, unless otherwise specified
Total
Common Stock
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive Gain/(Loss)
Treasury Stock
Balance at Dec. 31, 2010
$ 233,828 
$ 558 
$ 101,463 
$ 174,000 
$ 0 
$ (42,193)
Balance, shares at Dec. 31, 2010
 
55,801 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Stock-based compensation
10,595 
 
10,595 
 
 
 
Exercise of stock options, shares
3,070 
3,070 
 
 
 
 
Exercise of stock options
4,889 
31 
4,858 
 
 
 
Excess tax benefit of option exercises and restricted stock, net of tax shortfall
19,096 
 
19,096 
 
 
 
Stock issued under employee stock purchase plan, shares
 
67 
 
 
 
 
Stock issued under employee stock purchase plan
1,330 
1 
1,329 
 
 
 
Exercise of warrants, shares
 
43 
 
 
 
 
Exercise of warrants
106 
0 
106 
 
 
 
Repurchase of common stock
(92,778)
 
 
 
 
(92,778)
Net income
171,078 
 
 
171,078 
 
 
Unrealized gains (losses) on investments, net of tax
(595)
 
 
 
(595)
 
Balance at Dec. 31, 2011
347,549 
590 
137,447 
345,078 
(595)
(134,971)
Balance, shares at Dec. 31, 2011
 
58,981 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Stock-based compensation
13,729 
 
13,729 
 
 
 
Exercise of stock options, shares
3,128 
 
 
 
 
 
Exercise of stock options, shares, net
 
2,212 
 
 
 
 
Exercise of stock options
2,257 
22 
2,235 
 
 
 
Tax withholdings related to net exercise of stock options
(10,418)
 
(10,418)
 
 
 
Excess tax benefit of option exercises and restricted stock, net of tax shortfall
8,145 
 
8,145 
 
 
 
Stock issued under employee stock purchase plan, shares
 
99 
 
 
 
 
Stock issued under employee stock purchase plan
1,340 
1 
1,339 
 
 
 
Stock issued under restricted stock plan, shares
 
33 
 
 
 
 
Stock issued under restricted stock plan
(313)
 
(313)
 
 
 
Exercise of warrants, shares
 
81 
 
 
 
 
Exercise of warrants
490 
1 
489 
 
 
 
Tax withholdings related to net exercise of warrants
(944)
 
(944)
 
 
 
Repurchase of common stock
(602)
 
 
 
 
(602)
Net income
121,146 
 
 
121,146 
 
 
Unrealized gains (losses) on investments, net of tax
817 
 
 
 
817 
 
Balance at Dec. 31, 2012
483,196 
614 
151,709 
466,224 
222 
(135,573)
Balance, shares at Dec. 31, 2012
 
61,406 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Stock-based compensation
13,934 
 
13,934 
 
 
 
Exercise of stock options, shares
1,060 
 
 
 
 
 
Exercise of stock options, shares, net
 
590 
 
 
 
 
Exercise of stock options
10,464 
6 
10,458 
 
 
 
Tax withholdings related to net exercise of stock options
(9,170)
 
(9,170)
 
 
 
Excess tax benefit of option exercises and restricted stock, net of tax shortfall
1,516 
 
1,516 
 
 
 
Stock issued under employee stock purchase plan, shares
 
116 
 
 
 
 
Stock issued under employee stock purchase plan
1,234 
1 
1,233 
 
 
 
Stock issued under restricted stock plan, shares
 
115 
 
 
 
 
Stock issued under restricted stock plan
(1,080)
1 
(1,081)
 
 
 
Exercise of warrants, shares
 
104 
 
 
 
 
Exercise of warrants
231 
1 
230 
 
 
 
Repurchase of common stock
(201,496)
 
 
 
 
(201,496)
Net income
45,883 
 
 
45,883 
 
 
Unrealized gains (losses) on investments, net of tax
(174)
 
 
 
(174)
 
Balance at Dec. 31, 2013
$ 344,538 
$ 623 
$ 168,829 
$ 512,107 
$ 48 
$ (337,069)
Balance, shares at Dec. 31, 2013
 
62,331 
 
 
 
 
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Cash flows from operating activities
 
 
 
Net income
$ 45,883 
$ 121,146 
$ 171,078 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Provision for bad debts
47,119 
52,767 
43,203 
Depreciation and amortization
21,666 
17,424 
12,743 
Amortization of premium/discount
2,624 
8,992 
3,969 
Deferred income taxes
(6,962)
(11,373)
5,601 
Stock-based compensation
13,934 
13,729 
10,595 
Excess tax benefit of option exercises
(2,590)
(10,058)
(19,096)
Loss on impairment of student loans receivable
1,998 
0 
0 
Net realized gain on sale of marketable securities
(63)
0 
0 
Loss on termination of leased space
328 
0 
0 
Loss on disposal of fixed assets
751 
1,153 
13 
Changes in operating assets and liabilities:
 
 
 
Restricted cash
10,048 
6,721 
(4,855)
Accounts receivable
(15,973)
(62,333)
(43,300)
Prepaid expenses and other current assets
(2,607)
(2,387)
(3,547)
Student loans receivable
291 
(5,742)
(6,021)
Other long-term assets
(412)
2,131 
253 
Accounts payable and accrued liabilities
13,220 
12,100 
27,509 
Deferred revenue and student deposits
(41,607)
(3,921)
11,870 
Other liabilities
(184)
8,772 
5,882 
Uncertain tax position
(1,878)
784 
57 
Net cash provided by operating activities
85,586 
149,905 
215,954 
Cash flows from investing activities
 
 
 
Capital expenditures
(14,825)
(25,296)
(34,492)
Purchases of investments
(26,759)
(179,387)
(337,084)
Restricted cash
0 
25 
0 
Capitalized costs for intangible assets
(19,563)
(5,262)
(3,521)
Sales and maturities of investments
176,343 
186,911 
167,049 
Net cash provided by (used in) investing activities
115,196 
(23,009)
(208,048)
Cash flows from financing activities
 
 
 
Proceeds from exercise of stock options
10,464 
2,257 
4,889 
Tax withholdings related to net exercise of stock options
(9,170)
(10,418)
0 
Excess tax benefit of option exercises
2,590 
10,058 
19,096 
Proceeds from the issuance of stock under employee stock purchase plan
1,234 
1,340 
1,330 
Proceeds from the exercise of warrants
231 
490 
106 
Tax withholdings related to net exercise of warrants
0 
(944)
0 
Issuance of restricted stock
(1,080)
(313)
0 
Repurchase of common stock
(201,496)
(602)
(92,778)
Net cash provided by (used in) financing activities
(197,227)
1,868 
(67,357)
Net increase (decrease) in cash and cash equivalents
3,555 
128,764 
(59,451)
Cash and cash equivalents at beginning of period
208,971 
80,207 
139,658 
Cash and cash equivalents at end of period
212,526 
208,971 
80,207 
Supplemental disclosure of cash flow information
 
 
 
Cash paid for interest
146 
130 
56 
Cash paid for income taxes
38,642 
65,075 
76,731 
Supplemental disclosure of non-cash transactions:
 
 
 
Purchase of equipment included in accounts payable and accrued liabilities
$ 136 
$ 509 
$ 2,489 
Nature of Business
Nature of Business
Nature of Business
Bridgepoint Education, Inc. (together with its subsidiaries, the “Company”), incorporated in 1999, is a provider of postsecondary education services. Its wholly-owned subsidiaries, Ashford University and University of the Rockies, are regionally accredited 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 consolidated financial statements include the accounts of Bridgepoint Education, Inc. and its wholly-owned subsidiaries. Intercompany transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements. Actual results could differ from those estimates.
Restatement/Revision of Previously Issued Consolidated Financial Statements
The Company has restated its consolidated balance sheet as of December 31, 2013, and its consolidated statement of income, consolidated statement of comprehensive income and consolidated statement of cash flow for the year ended December 31, 2013, as well as for the quarterly periods during that fiscal year. The Company has also revised its consolidated balance sheet as of December 31, 2012, and its consolidated statements of income, consolidated statements of comprehensive income and consolidated statements of cash flow for the years ended December 31, 2012 and 2011, as well as for the quarterly periods during 2012. During the reporting of the first quarter of 2014, as part of a comment letter process with the Securities and Exchange Commission (“SEC”), the Company identified misapplications of GAAP as it related to the accounting for revenue recognition and the classification of restricted cash. Specifically on the revenue recognition, the process for analyzing the collectibility assertion was not designed to reassess collectibility on a student-by-student basis throughout the period revenue was recognized by the Company's institutions. As a result, the Company identified adjustments, relating to revenue, provision for bad debts, accounts receivable, which should have been recognized during the prior periods, and restricted cash balances, which should have been presented differently during the prior periods.
The Company evaluated the cumulative impact of these items on prior periods under the guidance in ASC 250-10, relating to SEC Staff Accounting Bulletin (“SAB”) No. 99, “Materiality.” The Company also evaluated the impact of correcting these items through an adjustment to its financial statements for the three months ended March 31, 2014 and concluded, based on the guidance within ASC 250-10 relating to SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” that a restatement to its previously issued 2013 financial statements, and a revision to its previously issued 2012 and 2011 financial statements, would be necessary to reflect the impact of these corrections.
The following tables present the impact of the restatement and revisions on the previously issued financial statements. The “As Restated” column for 2013 and the “As Revised” column for 2012 reflects final adjusted balances after the related restatement or revision, as well as previously identified immaterial adjustments. The following tables are presented in thousands, except per share data:
 
As Reported
 
As Restated
 
As Reported
 
As Revised
 
 
 
 
Consolidated balance sheet data:
December 31, 2013
 
December 31, 2012
 
 
Cash and cash equivalents
$
249,472

 
$
212,526

 
$
255,965

 
$
208,971

 


 
 
Restricted cash
$
—

 
$
36,946

 
$
—

 
$
46,994

 


 
 
Accounts receivable, net
$
28,565

 
$
22,953

 
$
67,371

 
$
54,487

 


 
 
Deferred income taxes, current
$
15,232

 
$
16,683

 
$
10,936

 
$
15,490

 


 
 
Prepaid expenses and other current assets
$
21,369

 
$
21,563

 
$
19,810

 
$
20,053

 


 
 
Total current assets
$
381,582

 
$
377,615

 
$
491,605

 
$
483,518

 


 
 
Student loans receivable, net, non-current
-

 
-

 
$
15,143

 
$
14,416

 


 
 
Deferred income taxes, non-current
-

 
-

 
$
13,266

 
$
13,706

 


 
 
Total assets
$
573,979

 
$
570,012

 
$
750,787

 
$
742,413

 


 
 
Accrued liabilities
$
54,756

 
$
54,290

 
-

 
-

 
 
 
 
Total current liabilities
$
192,742

 
$
192,276

 
-

 
-

 
 
 
 
Total liabilities
$
255,940

 
$
225,474

 
-

 
-

 
 
 
 
Retained earnings
$
515,608

 
$
512,107

 
$
474,598

 
$
466,224

 


 
 
Total stockholders’ equity
$
348,039

 
$
344,538

 
$
491,570

 
$
483,196

 


 
 
Total liabilities and stockholders’ equity
$
573,979

 
$
570,012

 
$
750,787

 
$
742,413

 


 
 
 
Year to Date Period Ended
 
As Reported
 
As Restated
 
As Reported
 
As Revised
 
As Reported
 
As Revised
Consolidated statement of income data:
December 31, 2013
 
December 31, 2012
 
December 31, 2011
Revenue
$
768,623

 
$
751,449

 
$
968,171

 
$
943,405

 
$
933,349

 
$
915,247

Instructional costs and services
$
395,928

 
$
370,734

 
$
364,001

 
$
343,072

 
$
304,190

 
$
288,882

Total costs and expenses
$
708,180

 
$
682,986

 
$
772,707

 
$
751,778

 
$
659,602

 
$
644,294

Operating income
$
60,443

 
$
68,463

 
$
195,464

 
$
191,627

 
$
273,747

 
$
270,953

Other income, net
$
3,346

 
$
3,082

 
$
3,370

 
$
3,531

 
$
2,768

 
$
2,871

Income before income taxes
$
63,789

 
$
71,545

 
$
198,834

 
$
195,158

 
$
276,515

 
$
273,824

Income tax expense
$
22,779

 
$
25,662

 
$
75,413

 
$
74,012

 
$
103,751

 
$
102,746

Net income
$
41,010

 
$
45,883

 
$
123,421

 
$
121,146

 
$
172,764

 
$
171,078

Basic earnings per share
$
0.76

 
$
0.85

 
$
2.33

 
$
2.29

 
$
3.30

 
$
3.27

Diluted earnings per share
$
0.74

 
$
0.83

 
$
2.21

 
$
2.17

 
$
3.02

 
$
2.99

Consolidated statement of cash flow data:
 
 
 
 
 
 
 
 
 
 
 
Net income
$
41,010

 
$
45,883

 
$
123,421

 
$
121,146

 
$
172,764

 
$
171,078

Provision for bad debts
$
72,313

 
$
47,119

 
$
73,696

 
$
52,767

 
$
58,511

 
$
43,203

Amortization of premium/ discount
$
3,559

 
$
2,624

 
$
6,805

 
$
8,992

 
-

 
-

Deferred income taxes
$
(10,506
)
 
$
(6,962
)
 
$
(9,972
)
 
$
(11,373
)
 
$
6,606

 
$
5,601

Restricted cash
$
—

 
$
10,048

 
$
—

 
$
6,721

 
$
—

 
$
(4,855
)
Accounts receivable
$
(34,348
)
 
$
(15,973
)
 
$
(81,577
)
 
$
(62,333
)
 
$
(60,587
)
 
$
(43,300
)
Prepaid expenses and other current assets
$
(2,411
)
 
$
(2,607
)
 
$
(1,056
)
 
$
(2,387
)
 
$
(2,104
)
 
$
(3,547
)
Student loan receivable, net
-

 
-

 
$
(3,778
)
 
$
(5,742
)
 
$
(8,177
)
 
$
(6,021
)
Accounts payable and accrued liabilities
$
13,687

 
$
13,220

 
-

 
-

 
-

 
-

Deferred revenue and student deposits
-

 
-

 
$
(10,389
)
 
$
(3,921
)
 
-

 
-

Cash flows from operating activities
$
75,538

 
$
85,586

 
$
143,185

 
$
149,905

 
$
220,808

 
$
215,954


Cash and Cash Equivalents
Cash and cash equivalents is comprised of cash and other short-term highly liquid investments that are readily convertible into known amounts of cash. The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
Restricted Cash
Restricted cash primarily represents funds held for students from Title IV financial aid program funds that result in credit balances on a student’s account. Restricted cash is excluded from cash and cash equivalents on our consolidated balance sheets and statements of cash flows. Changes in restricted cash are included in cash flows from operating activities on our consolidated statements of cash flows, as these restricted funds are closely related to the Company's operational activity. Our restricted cash is primarily held in money market accounts.
Investments
As of December 31, 2013, the Company held short and long-term investments which consisted of demand notes, corporate notes and bonds and certificates of deposit. The Company's investments are denominated in U.S. dollars, investment grade and readily marketable. The Company considers as current assets those investments which will mature or are likely to be sold in less than one year.
The Company has classified its investments as either available-for-sale or held-to-maturity. Available-for-sale securities are carried at fair value as determined by quoted market prices, with unrealized gains and losses, net of tax, reported as a separate component of comprehensive income and stockholders’ equity. Held-to-maturity securities are carried at amortized cost. Amortization of premiums, accretion of discounts, interest and realized gains and losses are included in other income, net in the consolidated statement of income.
The Company regularly monitors and evaluates the realizable value of its investments. If events and circumstances indicate that a decline in the value of these assets has occurred and is other-than-temporary, the Company would record a charge to other income, net in the consolidated statement of income.
Fair Value Measurements
The Company uses the three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either observable directly or indirectly, through market corroboration, for substantially the full term of the financial instrument; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The Company's Level 2 investments are valued using readily available pricing sources which utilize market observable inputs, including the current interest rate for similar types of instruments. During the years ended December 31, 2013 and 2012, there were no transfers in or out of any fair value level of measurement.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable consists of student accounts receivable, which represent amounts due for tuition, course digital materials, technology fees and other fees from currently enrolled and former students. Students generally fund their education through grants and/or loans under various Title IV programs, tuition assistance from military and corporate employers or personal funds. Payments are due on the respective course start date and are considered past due subsequent to the respective course start date. An account is considered delinquent 120 days subsequent to the course start date.
Accounts receivable are stated at the amount management expects to collect from outstanding balances. For accounts receivable, an allowance for doubtful accounts is estimated by management and is principally based on historical collection experience as well as (i) an assessment of individual accounts receivable over a specific aging and amount, (ii) consideration of the nature of the receivable accounts and (iii) potential changes in the business or economic environment. The provision for bad debts is recorded within the instructional costs and services line in the consolidated statements of income. The Company charges off uncollectable accounts receivable when the student account is deemed uncollectable by internal collection efforts or by a third party collection agency.
Student Loans Receivable and Loan Loss Reserves
Student loans receivable consist of loans to qualified students and have a repayment period of 10 years from the date of graduation or withdrawal from the Company's institutions. The interest rate charged on student loans is a fixed rate of either 4.5% or 0.0% depending upon the repayment plan selected. If the student selects the rate of 0.0%, the student must pay $50 per month on the loan while enrolled in school and during the six months of grace period (after graduation or withdrawal) before the repayment period begins. On the 0.0% student loans, the Company imputes interest using the rate that would be used in a market transaction with similar terms. Interest income on student loans is recognized using the effective interest method and is recorded within other income, net in the consolidated statements of income. Revenue recognized related to student loans was immaterial during each of the years ended December 31, 2013, 2012 and 2011, respectively.
Student loans receivable are stated at the amount management expects to collect from outstanding balances. For tuition related student loan receivables, the Company estimates an allowance for doubtful accounts, similar to that of accounts receivable, based on (i) an assessment of individual loans receivable over a specific aging and amount, (ii) consideration of the nature of the receivable accounts, (iii) potential changes in the business or economic environment and (iv) related FICO scores and other industry metrics. The related provision for bad debts is recorded within the instructional costs and services line in the consolidated statements of income.
For non-tuition related student loans, the Company utilizes an impairment methodology. Under this methodology, management determines whether a loan would be impaired if the Company will be unable to collect all amounts due in accordance with the contractual terms of the individual loan agreement. This assessment is based on an analysis of several factors including aging history and delinquency trending, the risk characteristics, credit quality and loan performance of the specific loans, as well as current economic conditions and industry trends. Credit quality is assessed at the outset of a loan, based upon FICO score during the loan application process. The Company considers loans to be impaired when they reach a delinquency status that requires specialized collection efforts. The Company defines delinquency for loans as being for students who are no longer active, having amounts that are past due and having the last activity more than 120 days old. The Company records a loss reserve for the full book value of the impaired loans. For the year ended December 31, 2013, there was $2.0 million recorded for loan loss reserves. The loan loss reserve is maintained at a level deemed adequate by management based on a periodic analysis of the individual loans and is recorded within the instructional costs and services line in the consolidated statements of income.
Property and Equipment
Property and equipment are recognized at cost less accumulated depreciation. Depreciation is computed using the straight-line method based on estimated useful lives of the related assets as follows:
Buildings
39 years
Furniture and office equipment
3 - 7 years
Software
3 years
Vehicles
5 years

Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the estimated useful lives of the assets. Upon the retirement or disposition of property and equipment, the related cost and accumulated depreciation is removed and a gain or loss is recorded in the consolidated statements of income. Repairs and maintenance costs are expensed in the period incurred.
Leases
Leases are evaluated and classified as either operating or capital leases. Leased property and equipment meeting certain criteria are capitalized, and the present value of the related lease payments is recognized as a liability on the consolidated balance sheets. Amortization of capitalized leased assets is computed on the straight-line method over the term of the lease or the life of the related asset, whichever is shorter.
If the Company receives tenant allowances from the lessor for certain improvements made to the leased property, these allowances are capitalized as leasehold improvements and a long-term liability is established. The long-term liability is amortized on a straight-line basis over the corresponding lease term. The Company records rent expense on a straight-line basis over the initial term of a lease. The difference between the rent payment and the straight-line rent expense is recorded as either a short-term or long-term liability.
The Company recognizes liabilities for exit and disposal activities on non-cancelable lease obligations at fair value in the period the liability is incurred. For the non-cancelable lease obligations, the Company records the obligation when the contract is terminated in accordance with the contract terms. For the year ended December 31, 2013, there was $1.1 million recorded for lease exit costs.
Goodwill and Other Intangible Assets
The Company tests goodwill and indefinite-lived intangible assets for impairment annually, in the fourth quarter of each fiscal year, or more frequently if events and circumstances warrant.
The Company adopted accounting guidance which simplifies how an entity tests goodwill for impairment. The Company first assesses qualitative factors, such as deterioration in general economic conditions or negative company financial performance, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The Company's assessment of goodwill during the fourth quarter of fiscal 2013 indicated that there were no significant negative qualitative indicators, and therefore, goodwill was not impaired. There have been no impairment losses recognized by the Company for any periods presented. If negative qualitative indicators had been noted above, the Company would then need to assess the fair value of its reporting units to determine whether they were in excess of the carrying values.
To evaluate the impairment of the indefinite-lived intangible assets, the Company assessed the fair value of the assets to determine whether they were in excess of the carrying values. Determining the fair value of indefinite-lived intangible asset is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions are inherently uncertain, and can include such items as growth rates used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions, as well as determination of appropriate market comparables. The Company's assessment of indefinite-lived intangible assets during the fourth quarter of fiscal 2013 did not result in any impairment. There have been no impairment losses recognized by the Company for any periods presented.
The Company also has definite-lived intangible assets, which primarily consist of purchased intangibles and capitalized curriculum development costs. The definite-lived intangible assets are recognized at cost less accumulated amortization. Amortization is computed using the straight-line method based on estimated useful lives of the related assets.
Impairment of Long-Lived Assets
The Company assesses potential impairment to its long-lived assets when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recorded when the carrying amount of the long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Any required impairment loss is measured as the amount by which the carrying amount of a long-lived asset exceeds fair value and is recorded as a reduction in the carrying value of the related asset and an expense to operating results. During the fourth quarter of 2013, the Company recognized an impairment charge of $0.7 million to write-off certain fixed assets as part of lease exit costs.
Revenue and Deferred Revenue
The Company recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered or delivery has occurred, our fees or price is fixed or determinable, and collectibility is reasonably assured. The Company's revenue consists of tuition, technology fees, course digital materials and other miscellaneous fees. Tuition revenue is deferred and recognized on a straight-line basis over the applicable period of instruction net of scholarships and expected refunds, with the exception of an online student's first course, per degree level, at Ashford University. Effective in the fourth quarter of 2012, an online student's first course per degree level at Ashford University falls under a three-week conditional admission period in which the revenue is deferred until the student matriculates into the course.
The Company's institutions' online students generally enroll in a program that encompasses a series of five to six-week courses which are taken consecutively over the length of the program. With the exception of those students under conditional admission, the online students are billed on a payment period basis on the first day of class. The Company's institutions' campus-based students enroll in a program that encompasses a series of nine-week or 16-week courses. Campus-based students are billed at the beginning of each term. The Company assesses collectibility at the start of a student’s payment period (generally five courses for undergraduates and four courses for graduates) for the courses in that payment period.
If a student's attendance in a class precedes the receipt of cash from the student's source of funding, the Company establishes an account receivable and corresponding deferred revenue in the amount of the tuition due for that payment period. Cash received either directly from the student or from the student's source of funding reduces the balance of accounts receivable due from the student. Financial aid from sources such as the federal government's Title IV programs pertains to the online student's award year and is generally divided into two disbursement periods. As such, each disbursement period may contain funding for up to four courses. Financial aid disbursements are typically received during the online student's attendance in the first or second course. Since the majority of disbursements cover more courses than for which a student is currently enrolled, the amount received in excess effectively represents a prepayment from the online student for up to four courses. At the end of each accounting period, the deferred revenue and student deposits and related account receivable balances are reduced to present amounts attributable to the current course.
For those students under conditional admission, the student is not obligated for payment until after their conditional admission period has lapsed, so there is no required refund. For all subsequent courses, the Company records a provision for expected refunds and reduces revenue for the amount that is expected to be subsequently refunded. Provisions for expected refunds have not been material to any period presented. If a student withdraws from a program prior to a specified date, a portion of such student's tuition is refunded, subject to certain state requirements which require a pro rata refund. The Company reassess collectibility throughout the period revenue is recognized by the Company's institutions, on a student-by-student basis. The Company reassess collectibility based upon new information and changes in facts and circumstances relevant to a student's ability to pay. For example, the Company reassesses collectibility when a student drops from the institution (i.e., is no longer enrolled) and when a student attends a course that was not included in the initial assessment at the start of a student’s payment period.
The Company records technology fees, which are one-time start up fees charged to each new online student, other than military, scholarship students or certain corporate reimbursement students. Technology fee revenue is recognized ratably over the average expected enrollment of a student. Effective January 1, 2013, Ashford University eliminated the one-time technology fee charged students and replaced it with a per course charge. The per course technology fee revenue is recognized on a straight-line basis over the applicable period of instruction. Other miscellaneous fees include fees for course content and textbooks and other services, such as commencements, and are recognized upon delivery of the goods or when the related service is performed.
Workers Compensation
The Company records a gross liability for estimated workers compensation claims, incurred but not yet reported, as of each balance sheet date. The Company also records the gross insurance recoverable due for individual claim amounts.  This is recorded as an other asset and as an equal accrued liability. The stop-loss premium is determined annually, but invoiced and paid on a quarterly basis. The related insurance premiums are expensed ratably over the coverage period.
Income Taxes
The Company accounts for its income taxes using the liability method whereby deferred tax assets and liabilities are determined based on temporary differences between the bases used for financial reporting and income tax reporting purposes. Deferred income taxes are provided based on the enacted tax rates expected to be in effect at the time such temporary differences are expected to reverse. A valuation allowance is provided for deferred tax assets if it is more likely than not that the Company will not realize those tax assets through future operations.
The Company evaluates and accounts for uncertain tax positions using a two-step approach. Recognition (step one) occurs when the Company concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustained upon examination. Measurement (step two) determines the amount of benefit that is greater than 50% likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Derecognition of a tax position that was previously recognized would occur when the Company subsequently determines that a tax position no longer meets the more-likely-than-not threshold of being sustained.
Stock-Based Compensation
Stock-based compensation expense is measured at the grant date fair value of the award and is expensed over the vesting period. The Company estimates the fair value of stock options on the grant date using the Black-Scholes option pricing model. Determining the fair value of stock-based awards at the grant date under this model requires judgment, including estimating volatility, employee stock option exercise behaviors and forfeiture rates. The assumptions used in calculating the fair value of stock-based awards represent the Company's best estimates, but these estimates involve inherent uncertainties and the application of management judgment. The fair value of the Company's restricted stock units is based on the market price of its common stock on the date of grant.
The amount of stock-based compensation expense recognized during a period is based on the portion of the awards that are ultimately expected to vest. The Company estimates award forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company's equity plans require that option awards have an exercise price that equals or exceeds the closing price of the Company's common stock, as reported by the NYSE, on the date of grant.
Stock-based compensation expense for stock awards is recorded in the consolidated statement of income, net of estimated forfeitures, using the graded vesting method over the requisite service periods of the respective stock awards.
Instructional Costs and Services
Instructional costs and services consist primarily of costs related to the administration and delivery of the Company's educational programs. This expense category includes compensation for campus-based faculty and administrative personnel, costs associated with online faculty, curriculum and new program development costs, financial aid processing costs, technology license costs, bad debt expense and costs associated with other support groups that provide services directly to the students. Instructional costs and services also include an allocation of information technology, facility, depreciation and amortization costs.
Admissions Advisory and Marketing
Admissions advisory and marketing costs include compensation of personnel engaged in marketing and recruitment, as well as costs associated with purchasing leads and producing marketing materials. Such costs are generally affected by the cost of advertising media and leads, the efficiency of the Company's marketing and recruiting efforts, compensation for the Company's enrollment personnel and expenditures on advertising initiatives for new and existing academic programs. Admissions advisory and marketing costs also include an allocation of information technology, facility, depreciation and amortization costs.
Advertising costs, a subset of admissions advisory and marketing costs, consists primarily of marketing leads and other branding and promotional activities. These advertising activities are expensed as incurred, or the first time the advertising takes place, depending on the type of advertising activity. Advertising costs were $76.5 million, $103.7 million and $84.0 million for the years ended December 31, 2013, 2012 and 2011, respectively.
General and Administrative
General and administrative expenses include compensation of employees engaged in corporate management, finance, human resources, compliance and other corporate functions. General and administrative expenses also include professional services fees, travel and entertainment expenses and an allocation of information technology, facility, depreciation and amortization costs.
Earnings Per Share
Basic earnings per common share is calculated by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net income available to common stockholders by the sum of (i) the weighted average number of common shares outstanding during the period and (ii) potentially dilutive securities outstanding during the period, if the effect is dilutive. Potentially dilutive common shares consist of incremental shares of common stock issuable upon the exercise of the stock options and warrants and upon the settlement of restricted stock units.
Segment Information
The Company operates in one reportable segment as a single educational delivery operation using a core infrastructure that serves the curriculum and educational delivery needs of both its campus-based and online students regardless of geography. The Company's chief operating decision maker, its CEO and President, manages the Company's operations as a whole, and no revenue, expense or operating income information is evaluated by the chief operating decision maker on any component level.
Comprehensive Income
Comprehensive income consists of net income and other gains and losses affecting stockholders’ equity that, under GAAP, are excluded from net income. For the year ended December 31, 2013, such items consisted of unrealized gains and losses on investments.
The following table summarizes the components of other comprehensive gain (loss) and the related tax effects for the years ended December 31, 2013, 2012 and 2011 (in thousands):
 
December 31, 2013
 
Before-Tax Amount
 
Tax Effect
 
Net-of-Tax Amount
Unrealized losses on investments
$
(280
)
 
$
106

 
$
(174
)
 
 
 
 
 
 
 
December 31, 2012
 
Before-Tax Amount
 
Tax Effect
 
Net-of-Tax Amount
Unrealized gains on investments
$
1,300

 
$
(483
)
 
$
817

 
 
 
 
 
 
 
December 31, 2011
 
Before-Tax Amount
 
Tax Effect
 
Net-of-Tax Amount
Unrealized losses on investments
$
(946
)
 
$
351

 
(595
)

The Company reclassed $63 thousand out of other comprehensive income for the year ended December 31, 2013, relating to the net realized gain on the sale of securities.
Recently Adopted Accounting Pronouncements
In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-11, “Incomes Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” ASU 2013-11 addresses the diversity in practice regarding financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The guidance requires an unrecognized tax benefit, or a portion of, to be presented in the financial statements as a reduction to the related deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. To the extent the net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date to settle any additional income taxes that would result from the disallowance of a tax position. The unrecognized tax benefit should be presented in the financial statements as a liability and not as a reduction of the related deferred tax asset. The amendments in this standard are effective for reporting periods beginning after December 15, 2013, with early adoption permitted. The Company adopted ASU 2013-11, effective January 1, 2014, and does not believe that such adoption will have a material effect on its consolidated financial statements.
Investments
Investments
Investments
The following table summarizes the fair value information of short and long-term investments as of December 31, 2013 and 2012, respectively (in thousands):
 
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

 
December 31, 2012
 
Level 1
 
Level 2
 
Level 3
 
Total
Demand notes
$
—

 
$
415

 
$
—

 
$
415

Corporate notes and bonds
—

 
148,801

 
—

 
148,801

Certificates of deposit
—

 
109,489

 
—

 
109,489

Total
$
—

 
$
258,705

 
$
—

 
$
258,705


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 balances of such other investments were $90.0 million and $109.5 million as of December 31, 2013, and December 31, 2012, respectively.
The following table summarizes the differences between amortized cost and fair value of short and long-term investments as of December 31, 2013 and 2012, respectively (in thousands):
 
December 31, 2013
 
 
 
 
 
Gross unrealized
 
 
 
Maturities in Years
 
Amortized Cost
 
Gain
 
Loss
 
Fair Value
Short-term
 
 
 
 
 
 
 
 
 
Demand notes
1 year or less
 
$
719

 
$
—

 
$
—

 
$
719

Corporate notes and bonds
1 year or less
 
5,132

 
50

 
—

 
5,182

Certificates of deposit
1 year or less
 
60,000

 
—

 
—

 
60,000

Long-term
 
 
 
 
 
 
 
 
 
Corporate notes and bonds
3 years or less
 
11,037

 
25

 
—

 
11,062

Certificates of deposit
3 years or less
 
30,000

 
—

 
—

 
30,000

Total
 
 
$
106,888

 
$
75

 
$
—

 
$
106,963

 
December 31, 2012
 
 
 
 
 
Gross unrealized
 
 
 
Maturities in Years
 
Amortized Cost
 
Gain
 
Loss
 
Fair Value
Short-term
 
 
 
 
 
 
 
 
 
Demand notes
1 year or less
 
$
415

 
$
—

 
$
—

 
$
415

Corporate notes and bonds
1 year or less
 
126,806

 
282

 
(25
)
 
127,063

Certificate of deposit
1 year or less
 
9,489

 
—

 
—

 
9,489

Long-term
 
 
 
 
 
 
 
 
 
Corporate notes and bonds
3 years or less
 
21,641

 
117

 
(20
)
 
21,738

Certificate of deposit
3 years or less
 
100,000

 
—

 
—

 
100,000

Total
 
 
$
258,351

 
$
399

 
$
(45
)
 
$
258,705


As of December 31, 2013, there were no investments that were in an unrealized loss position for either less than, or greater than, 12 months. There was no impairment considered other-than-temporary as it is more likely than not the Company will hold the securities until maturity or a recovery of the cost basis. The Company accumulates unrealized gains and losses on the available-for-sale debt securities, net of tax, in accumulated other comprehensive gain (loss) in the stockholders’ equity section of the Company's balance sheets. As of December 31, 2012, six of the Company's investments were in an unrealized loss position for less than 12 months. There were no investments that were in an unrealized loss position for greater than 12 months.
Accounts Receivable
Receivables
Accounts Receivable
Accounts receivable, net, consist of the following (in thousands):
 
As of December 31,
 
2013
 
2012
 
(As restated)
 
 
Accounts receivable
$
49,854

 
$
85,953

Less allowance for doubtful accounts
26,901

 
31,466

Accounts receivable, net
$
22,953

 
$
54,487


There are an immaterial amount of accounts receivable at each balance sheet date with a payment due date of greater than one year.
The following table presents the changes in the allowance for doubtful accounts for accounts receivable for the periods indicated (in thousands):
 
Beginning
Balance
 
Charged to
Expense
 
Deductions(1)
 
Ending
Balance
Allowance for doubtful accounts receivable:
 
 
 
 
 
 
 
For the year ended December 31, 2013
$
31,466

 
$
46,851

 
$
(51,416
)
 
$
26,901

For the year ended December 31, 2012
24,688

 
52,794

 
(46,016
)
 
31,466

For the year ended December 31, 2011
19,783

 
42,077

 
(37,172
)
 
24,688

(1)
Deductions represent accounts written off, net of recoveries.
Student Loan Receivables
Student loans receivable, net, consist of the following (in thousands):
 
As of December 31,
Short-term:
2013
 
2012
   Student loans receivable (non-tuition related)
$
587

 
$
428

   Student loans receivable (tuition related)
621

 
167

   Current student loans receivable
1,208

 
595

Less allowance for doubtful accounts
165

 
39

Student loans receivable, net
$
1,043

 
$
556

 
 
 
 
 
As of December 31,
Long-term:
2013
 
2012
   Student loans receivable (non-tuition related)
$
7,347

 
$
8,101

   Student loans receivable (tuition related)
6,417

 
8,171

   Non-current student loans receivable
13,764

 
16,272

Less allowance for doubtful accounts
1,979

 
1,856

Student loans receivable, net
$
11,785

 
$
14,416


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 the accounting guidance.
The following table presents the changes in the allowance for doubtful accounts for student loans receivable (tuition related) for the periods indicated (in thousands):
 
Beginning
Balance
 
Charged to
Expense
 
Deductions(1)
 
Ending
Balance
Allowance for doubtful student loans receivable:
 
 
 
 
 
 
 
For the year ended December 31, 2013
$
1,895

 
$
268

 
$
(19
)
 
$
2,144

For the year ended December 31, 2012
2,070

 
(27
)
 
(148
)
 
1,895

For the year ended December 31, 2011
930

 
1,126

 
14

 
2,070

(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 in determining if a loan is impaired. If a loan were determined to be impaired, interest would no longer accrue. For the year ended December 31, 2013 there was $2.0 million of loans that were impaired, and for the years ended December 31, 2012 and 2011, respectively, no loans were impaired. As of December 31, 2013, an immaterial amount of loans had been placed on non-accrual status.
As of December 31, 2013, the delinquency status of gross student loans receivable was as follows (in thousands):
Less than 120 days
$
16,998

From 120 - 269 days
1,238

Greater than 270 days
2,132

Total gross student loans receivable
20,368

Less: Amounts reserved or impaired
(4,143
)
Less: Discount on student loans receivable
(3,397
)
Total student loans receivable, net
$
12,828

Student Loan Receivables
Student Loan Receivables
Accounts Receivable
Accounts receivable, net, consist of the following (in thousands):
 
As of December 31,
 
2013
 
2012
 
(As restated)
 
 
Accounts receivable
$
49,854

 
$
85,953

Less allowance for doubtful accounts
26,901

 
31,466

Accounts receivable, net
$
22,953

 
$
54,487


There are an immaterial amount of accounts receivable at each balance sheet date with a payment due date of greater than one year.
The following table presents the changes in the allowance for doubtful accounts for accounts receivable for the periods indicated (in thousands):
 
Beginning
Balance
 
Charged to
Expense
 
Deductions(1)
 
Ending
Balance
Allowance for doubtful accounts receivable:
 
 
 
 
 
 
 
For the year ended December 31, 2013
$
31,466

 
$
46,851

 
$
(51,416
)
 
$
26,901

For the year ended December 31, 2012
24,688

 
52,794

 
(46,016
)
 
31,466

For the year ended December 31, 2011
19,783

 
42,077

 
(37,172
)
 
24,688

(1)
Deductions represent accounts written off, net of recoveries.
Student Loan Receivables
Student loans receivable, net, consist of the following (in thousands):
 
As of December 31,
Short-term:
2013
 
2012
   Student loans receivable (non-tuition related)
$
587

 
$
428

   Student loans receivable (tuition related)
621

 
167

   Current student loans receivable
1,208

 
595

Less allowance for doubtful accounts
165

 
39

Student loans receivable, net
$
1,043

 
$
556

 
 
 
 
 
As of December 31,
Long-term:
2013
 
2012
   Student loans receivable (non-tuition related)
$
7,347

 
$
8,101

   Student loans receivable (tuition related)
6,417

 
8,171

   Non-current student loans receivable
13,764

 
16,272

Less allowance for doubtful accounts
1,979

 
1,856

Student loans receivable, net
$
11,785

 
$
14,416


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 the accounting guidance.
The following table presents the changes in the allowance for doubtful accounts for student loans receivable (tuition related) for the periods indicated (in thousands):
 
Beginning
Balance
 
Charged to
Expense
 
Deductions(1)
 
Ending
Balance
Allowance for doubtful student loans receivable:
 
 
 
 
 
 
 
For the year ended December 31, 2013
$
1,895

 
$
268

 
$
(19
)
 
$
2,144

For the year ended December 31, 2012
2,070

 
(27
)
 
(148
)
 
1,895

For the year ended December 31, 2011
930

 
1,126

 
14

 
2,070

(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 in determining if a loan is impaired. If a loan were determined to be impaired, interest would no longer accrue. For the year ended December 31, 2013 there was $2.0 million of loans that were impaired, and for the years ended December 31, 2012 and 2011, respectively, no loans were impaired. As of December 31, 2013, an immaterial amount of loans had been placed on non-accrual status.
As of December 31, 2013, the delinquency status of gross student loans receivable was as follows (in thousands):
Less than 120 days
$
16,998

From 120 - 269 days
1,238

Greater than 270 days
2,132

Total gross student loans receivable
20,368

Less: Amounts reserved or impaired
(4,143
)
Less: Discount on student loans receivable
(3,397
)
Total student loans receivable, net
$
12,828

Prepaid Expense and Other Current Assets
Prepaid Expenses and Other Current Assets
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following (in thousands):
 
As of December 31,
 
2013
 
2012
 
(As restated)
 
 
Prepaid expenses
$
10,814

 
$
9,367

Prepaid licenses
5,833

 
5,864

Prepaid income taxes
195

 
—

Prepaid insurance
1,131

 
1,134

Interest receivable
86

 
2,221

Other current assets
3,504

 
1,467

Total prepaid expenses and other current assets
$
21,563

 
$
20,053

Property and Equipment, Net
Property and Equipment, Net
Property and Equipment, Net
Property and equipment, net, consist of the following (in thousands):
 
As of December 31,
 
2013
 
2012
Land
$
7,091

 
$
7,091

Buildings
28,916

 
25,430

Furniture and office equipment
84,852

 
79,656

Software
10,075

 
6,053

Leasehold improvements
24,360

 
23,756

Vehicles
147

 
147

Total property and equipment
155,441

 
142,133

Less accumulated depreciation and amortization
(64,016
)
 
(46,167
)
Total property and equipment, net
$
91,425

 
$
95,966


Depreciation and amortization expense associated with property and equipment totaled $18.2 million, $15.9 million and $12.1 million for the years ended December 31, 2013, 2012 and 2011, respectively.
Goodwill and Intangibles, Net
Goodwill and Intangibles, Net
Goodwill and Intangibles, Net
Goodwill and intangibles, net, consist of the following (in thousands):
 
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

 
 
 
 
 
 
 
December 31, 2012
Definite-lived intangible assets:
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Capitalized curriculum costs
$
9,977

 
$
(1,823
)
 
$
8,154

Purchased intangible assets
857

 
(839
)
 
18

     Total definite-lived intangible assets
$
10,834

 
$
(2,662
)
 
$
8,172

Goodwill and indefinite-lived intangibles
 
 
 
 
2,567

Total goodwill and intangibles, net
 
 
 
 
$
10,739


In addition to capitalized curriculum development costs in 2013, on October 31, 2013, the Company entered into an agreement (the “Forbes Agreement”) to license certain trademarks and print and online content, as well as other intellectual property, for use in Ashford University's bachelor’s and master’s business programs. The Forbes Agreement has an initial 12-year term, with an option to renew. During the fourth quarter of 2013, the Company made a payment of $15 million as an intangible asset as of December 31, 2013 which will be amortized over the life of the agreement. Additionally, the Company will pay royalties beginning 2014, based on a percentage of annual revenues attributable to Ashford University’s business-related programs, subject to a $2.5 million annual minimum. The Company does not plan to capitalize any future costs to renew or extend the term of the acquired intangible assets.

For the years ended December 31, 2013, 2012, and 2011, amortization expense was $3.4 million, $1.6 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
$
5,143

2015
3,995

2016
2,234

2017
1,232

2018
1,232

Thereafter
10,475

Total future amortization expense
$
24,311

Accrued Liabilities
Accrued Liabilities
Accrued Liabilities
Accrued liabilities consist of the following (in thousands):
 
As of December 31,
 
2013
 
2012
 
(As restated)
 
 
Accrued salaries and wages
$
12,790

 
$
11,585

Accrued bonus
2,277

 
1,603

Accrued vacation
9,696

 
8,993

Accrued litigation and fees
8,000

 
—

Accrued expenses
19,081

 
15,924

Rent liability
2,446

 
—

Accrued income taxes payable
—

 
6,535

Total accrued liabilities
$
54,290

 
$
44,640


There was a reduction in force during the second quarter of 2013 to help better align personnel resources with the impact of previously announced institutional initiatives regarding enrollments. We recognized $5.9 million of severance costs for wages and benefits during the second quarter for this reduction in force. The total severance amount was charged as $4.8 million to instructional costs and services, $0.3 million to admissions advisory and marketing expenses, and $0.8 million to general and administrative expenses. These costs were fully paid during the third quarter of 2013 from existing cash on hand.
Deferred Revenue and Student Deposits
Deferred Revenue and Student Deposits
Deferred Revenue and Student Deposits
Deferred revenue and student deposits consist of the following (in thousands):
 
As of December 31,
 
2013
 
2012
Deferred revenue
$
29,279

 
$
44,967

Student deposits
103,512

 
130,090

Total deferred revenue and student deposits
$
132,791

 
$
175,057

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 Bank (“Comerica”), as administrative agent for the lenders. 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 the terms and conditions of the Facility Loan Documents. 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 the Agent 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 New 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. The Company was in compliance with all financial covenants in the Loan Documents as of December 31, 2013 and 2012.
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 is worth $7.1 million as of December 31, 2013.
As of December 31, 2013, and up through the date of filing, the Company had no borrowings outstanding under the line of credit. As of December 31, 2013, the Company used the availability under the line of credit to issue letters of credit aggregating $5.8 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. As of December 31, 2013, the Company's total available surety bond facility was $12.0 million and the surety had issued bonds under the facility totaling $6.5 million on the Company's behalf.
Lease Obligations
Lease Obligations
Lease Obligations
Operating leases
The Company leases certain office facilities and office equipment under non-cancelable lease arrangements that expire at various dates through 2023. The office leases contain certain renewal options. Rent expense under non-cancelable operating lease arrangements is accounted for on a straight-line basis and totaled $37.1 million, $36.8 million and $31.7 million for the years ended December 31, 2013, 2012 and 2011, respectively.
The following table summarizes the future minimum rental payments under non-cancelable operating lease arrangements in effect at December 31, 2013 (in thousands):
Year Ended December 31,
 
 
2014
$
36,962

2015
37,226

2016
37,293

2017
37,363

2018
34,072

Thereafter
41,722

Total minimum payments
$
224,638

Earnings Per Share
Earnings Per Share
Earnings Per Share
Basic earnings per common share is calculated by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period.
Diluted earnings per common share is calculated by dividing net income available to common stockholders 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 securities for the periods presented may include incremental shares of common stock issuable upon the exercise of options and warrants and upon the settlement of restricted stock units.
The following table sets forth the computation of basic and diluted earnings per common share for the periods indicated (in thousands, except per share data):
 
Year Ended December 31,
 
2013
 
2012
 
2011
 
(As restated)
 
 
 
 
Numerator:
 
 
 
 
 
Net income
$
45,883

 
$
121,146

 
$
171,078

Denominator:
 
 
 
 
 
Weighted average number of common shares outstanding
53,923

 
52,947

 
52,291

Effect of dilutive options and restricted stock units
1,482

 
2,762

 
4,572

Effect of dilutive warrants
82

 
237

 
270

Diluted weighted average number of common shares outstanding
55,487

 
55,946

 
57,133

Earnings per common share:
 
 
 
 
 
Basic earnings per common share
$
0.85

 
$
2.29

 
$
3.27

Diluted earnings per common share
0.83

 
2.17

 
2.99


For the periods indicated, the computation of dilutive common shares outstanding excludes certain stock options to purchase shares of common stock for the periods indicated because their effect was anti-dilutive.
 
Year Ended December 31,
(in thousands)
2013
 
2012
 
2011
Options
3,004

 
2,524

 
1,332

Restricted stock units
3

 
—

 
—

Stock-Based Compensation
Stock-Based Compensation
Stock-Based Compensation
Stock Options
The Company grants stock options from its 2009 Stock Incentive Plan (“2009 Plan”). The compensation committee of the Company's board of directors, or the full board of directors, determines eligibility, vesting schedules and exercise prices for awards granted under the 2009 Plan. Options granted under the 2009 Plan typically have a maximum contractual term of 10 years, subject to continuing service to the Company. Options are generally granted with a four-year vesting requirement, under which the option holder must continue providing service to the Company at each vesting period. All options granted in 2013, 2012 and 2011, were awarded pursuant to the 2009 Plan. Under the 2009 Plan, the number of authorized shares is subject to automatic increase, without the need for further approval by the Company's board of directors and stockholders each January 1, through and including January 1, 2019, pursuant to a formula contained in the plan.
Before the adoption of the 2009 Plan, the Company awarded options pursuant to the Company's Amended and Restated 2005 Stock Incentive Plan (“2005 Plan”). Effective upon the closing of the Company's initial public offering, the 2005 Plan was terminated and no further options may be issued under that plan, provided that all options then outstanding under the 2005 Plan will continue to remain outstanding pursuant to the terms of the 2005 Plan and applicable award agreements.
The following table presents a summary of the stock option activity in 2013, 2012 and 2011 (in thousands, except for exercise prices and contractual terms):
 
Options
Outstanding
 
Weighted-
Average
Exercise
Price
 
Weighted-
Average
Remaining
Contractual
Term
(in years)
 
Aggregate
Intrinsic Value
December 31, 2010
10,195

 
$
4.76

 
5.47
 
$
147,545

Granted
1,294

 
17.41

 
 
 
 
Exercised
(3,070
)
 
1.59

 
 
 
 
Forfeitures and expired
(139
)
 
17.65

 
 
 
 
December 31, 2011
8,280

 
7.70

 
5.90
 
127,308

Granted
1,595

 
22.59

 
 
 
 
Exercised
(3,128
)
 
0.72

 
 
 
 
Forfeitures and expired
(335
)
 
19.79

 
 
 
 
December 31, 2012
6,412

 
14.17

 
7.21
 
$
9,010

Granted
483

 
10.23

 
 
 
 
Exercised
(1,060
)
 
9.87

 
 
 
 
Forfeitures and expired
(345
)
 
20.65

 
 
 
 
December 31, 2013
5,490

 
$
14.25

 
6.52
 
$
28,769

Vested and expected to vest at December 31, 2013
5,435

 
$
14.22

 
6.50
 
$
28,588

Exercisable at December 31, 2013
3,809

 
$
12.82

 
5.80
 
$
23,827


The Company has reserved 10.0 million shares of common stock for issuance upon the exercise of stock options and settlement of restricted stock units (“RSUs”) (including outstanding stock awards) under the Company's equity incentive plans as of December 31, 2013. Shares issued from option exercises and settlements of RSUs are drawn from the authorized but unissued shares of common stock. During the year ended December 31, 2013, there were 1.1 million stock options exercised with an intrinsic value of $9.4 million. The actual tax benefit realized from these exercises was $2.1 million. The Company also recognized a tax benefit shortfall of $0.6 million related to stock options exercised at values lower than the related compensation expense, and $0.5 million related to stock options that expired unexercised during the year. During the year ended December 31, 2012, there were 3.1 million stock options exercised, with an intrinsic value of $45.2 million. The actual tax benefit realized from these exercises was $10.1 million. The Company also recognized a tax benefit shortfall of $1.5 million related to stock options exercised at values lower than the related compensation expense, and $0.2 million related to stock options that expired unexercised during the year. During the year ended December 31, 2011, there were 3.1 million stock options exercised, with an intrinsic value of $58.4 million. The actual tax benefit realized from these exercises was $19.1 million.
During the year ended December 31, 2013 and 2012, approximately 137,000 and 53,000 stock options expired.
The fair value of each option award granted during the years ended December 31, 2013, 2012 and 2011, was estimated on the date of grant using the Black-Scholes option pricing model. The Company's determination of the fair value of share-based awards is affected by the Company's common stock price as well as assumptions regarding a number of complex and subjective variables. Below is a summary of the assumptions used for the options granted in the years indicated:
 
2013
 
2012
 
2011
Weighted average exercise price per share
$
10.23

 
$
22.59

 
$
17.41

Risk-free interest rate
1.0
%
 
1.2
%
 
2.5
%
Expected dividend yield
—

 
—

 
—

Expected volatility
58.9
%
 
54.6
%
 
52.7
%
Expected life (in years)
5.85

 
5.67

 
6.12

Forfeiture rate
5.0
%
 
4.0
%
 
4.0
%
Weighted average grant date fair value per share
$
5.48

 
$
11.26

 
$
9.07


The risk-free interest rate is based on the currently available rate on a U.S. Treasury zero-coupon issue with a remaining term equal to the expected term of the option converted into a continuously compounded rate. The dividend yield reflects the fact that the Company has never declared or paid any cash dividends on its common stock and does not currently anticipate paying cash dividends in the future. The volatility of the Company's common stock is based upon a blended rate of the Company's historical volatility and that of publicly-traded securities of a peer group of comparable companies in the Company's industry. The peer group volatility supplements the Company's historical volatility in order to calculate a volatility that approximates the expected term used in the Black-Scholes option pricing model. In evaluating comparability, the Company considered factors such as industry, stage of life cycle and size. The Company now has enough historical option exercise information to be able to accurately compute an expected term for use as an assumption in the Black-Scholes option pricing model, and as such, its computation of expected term was calculated using its own historical data.
The Company recorded $13.9 million, $13.7 million and $10.6 million of compensation expense related to equity awards for the years ended December 31, 2013, 2012 and 2011, respectively. The related income tax benefit was $5.2 million, $5.1 million and $3.9 million for the years ended December 31, 2013, 2012 and 2011, respectively.
As of December 31, 2013, 2012 and 2011, there was $5.6 million, $12.9 million and $10.6 million, respectively, of unrecognized compensation costs related to unvested options.
The Company records stock-based compensation expense over the vesting term using the graded-vesting method. At December 31, 2013, the unrecognized compensation costs of stock options are expected to be recognized over a weighted average period of 1.1 years.
Restricted Stock Units
In 2011, the Company began granting RSUs under the 2009 Plan. The Company now primarily grants RSUs to its employees. Each RSU represents a future issuance of one share of common stock contingent upon the recipient's continued service to the Company through the vesting date. Upon the vesting date, RSUs are automatically settled for shares of the Company's common stock unless the applicable award agreement provides for delayed settlement. If, prior to the vesting date, the employee's status as a full-time employee is terminated, then the RSU is automatically canceled on the employment termination date. The fair value of an RSU is calculated based on the market value of the common stock on the grant date and is amortized over the applicable vesting period using the graded-vesting method.
A summary of the Company’s RSU activity and related information is as follows:
 
Restricted Stock Units
 
Weighted Average
Grant Date
Fair Value
Balance at December 31, 2010
—

 
$
—

Awarded
56,855

 
23.97

Vested
—

 
—

Canceled
—

 
—

Balance at December 31, 2011
56,855

 
23.97

Awarded
362,199

 
9.72

Vested
(56,855
)
 
23.97

Canceled
—

 
—

Balance at December 31, 2012
362,199

 
9.72

Awarded
1,016,035

 
10.50

Vested
(181,104
)
 
9.72

Canceled
(98,613
)
 
10.39

Balance at December 31, 2013
1,098,517

 
$
10.38


As of December 31, 2013 and 2012, there was $6.5 million and $2.6 million, respectively, of unrecognized compensation costs related to unvested RSUs. The unrecognized compensation costs of RSUs are expected to be recognized over a weighted average period of 1.6 years.
During the year ended December 31, 2013, 181,104 RSU's vested and were released with a market value of $3.0 million. The actual tax benefit realized from these RSU's released was $0.5 million. During the year ended December 31, 2012, 56,855 RSU's vested and were released with a market value of $0.8 million. The Company recognized a tax benefit shortfall of $0.2 million related to restricted stock vesting at values lower than the related compensation expense. No RSUs vested during the year ended December 31, 2011. There were not any RSUs granted prior to 2011.
Warrants
Warrants
Warrants
The Company had issued warrants to purchase common stock to various employees, consultants, licensors and lenders. Each warrant represented the right to purchase one share of common stock. No warrants were issued during the years ended December 31, 2013, 2012 and 2011. During the years ended December 31, 2013, 2012 and 2011, approximately 104,000, 174,000 and 43,000 warrants to purchase shares of common stock were exercised, respectively. As of December 31, 2013, all outstanding warrants were expired.
The following table summarizes information with respect to all warrants outstanding as of December 31, 2012 (in thousands, except exercise prices):
Exercise Price
 
December 31,
2012
$1.125
41

$2.250
55

$2.835
—

$2.925
19

$9.000
3

Total
118

Stock Repurchase Program
Stock Repurchase Program
Stock Repurchase Programs
The Company's Board of Directors has authorized us to repurchase outstanding shares of our common stock from time to time in the open market through block trades or otherwise depending on market conditions and other considerations, pursuant to the applicable Securities and Exchange Commission Rules. The Company's policy is to retain these repurchased shares as treasury shares and not to retire them. The amount and timing of future share repurchases, if any, will be made as market and business conditions warrant.
In July 2010, the Company's board of directors authorized the repurchase of up to $60.0 million of the Company's outstanding shares of common stock over the following 12 months (the “2010 Repurchase Program”), and in May 2011, the Company's board of directors authorized the repurchase of up to an additional $75.0 million of the Company's outstanding shares of common stock over the following 12 months (the “2011 Repurchase Program”). Both of these repurchase programs were authorized with the intention of creating additional value for stockholders. Under the repurchase programs, the Company was authorized to purchase shares from time to time in the open market, through block trades or otherwise. The Company repurchased a total of 7.3 million shares at a weighted average cost of $18.62, for a total cost of $135.0 million.
On April 30, 2012, the Company's board of directors authorized the repurchase of up to an additional $75.0 million of the Company's outstanding shares of common stock over the following 12 months. The repurchase program was authorized with the intention of creating additional value for stockholders. Under the repurchase program, the Company is authorized to purchase shares from time to time in the open market, through block trades or otherwise. As of December 31, 2013, the Company had completed this authorized repurchase program, and no shares were repurchased under this program.
In December 2012, we repurchased 0.1 million shares of our common stock from certain senior executives in the amount of $0.6 million. The repurchase was approved by our board of directors following its approval and recommendation by the compensation committee and the audit committee. The shares were repurchased at a price equal to the closing price of our common stock on the New York Stock Exchange on the day the repurchase was approved by our board of directors. No shares were sold into the market in connection with the share repurchase. The repurchase related to tax withholding requirements on stock options exercised and are not part of the repurchase programs described above.
On November 10, 2013, a special committee of our board of directors approved a plan to purchase up to 10,250,000 shares of our common stock through a tender offer. The tender offer commenced on November 13, 2013 and expired on December 11, 2013. On December 18, 2013, we repurchased shares of our common stock through the tender offer at a price of $19.50 per share. The tender offer was oversubscribed, resulting in the purchase of 10.2 million shares, including 0.2 million shares underlying previously unexercised stock options, for a total cost of $199.9 million, exclusive of fees. The repurchased shares were added to treasury stock.
Income Taxes
Income Taxes
Income Taxes
The Company uses the asset and liability method to account for taxes. Under this method, deferred income tax assets and liabilities result from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements that will result in tax and deductions in future years.
The components of income tax expense are as follows (in thousands):
 
Year Ended December 31,
 
2013
 
2012
 
2011
 
(As restated)
 
 
 
 
Current:
 
 
 
 
 
Federal
$
29,456

 
$
77,720

 
$
88,513

State
3,168

 
7,665

 
8,632

 
32,624

 
85,385

 
97,145

Deferred:
 
 
 
 
 
Federal
(5,952
)
 
(10,470
)
 
6,089

State
(1,010
)
 
(903
)
 
(488
)
 
(6,962
)
 
(11,373
)
 
5,601

Total
$
25,662

 
$
74,012

 
$
102,746


Deferred tax assets and liabilities are comprised of the following (in thousands):
 
As of December 31,
 
2013
 
2012
 
(As restated)
 
 
Deferred tax assets:
 
 
 
Net operating loss
$
235

 
$
258

Fixed assets
214

 
233

Bad debt
463

 
1,632

Vacation accrual
2,762

 
2,815

Stock-based compensation
15,341

 
13,299

Deferred rent
9,944

 
9,404

State tax
2,310

 
2,541

Bonus accrual
849

 
599

Unearned interest
1,281

 
1,081

Accrued expenses
4,377

 
196

Revenue reserves
8,992

 
10,681

Total deferred tax assets
46,768

 
42,739

Valuation allowance
—

 
—

Net deferred tax assets
46,768

 
42,739

Deferred tax liabilities:
 
 
 
Fixed assets and intangibles
(11,550
)
 
(13,411
)
Unrealized gain on investments
(28
)
 
(132
)
Total deferred tax liabilities
(11,578
)
 
(13,543
)
Total net deferred tax assets
$
35,190

 
$
29,196


The current year change in net deferred tax assets of $6.0 million is comprised of net deferred expense of $7.0 million recorded through income tax expense, offset by the $1.1 million tax benefit shortfall recorded to additional paid in capital, net of the $0.1 million tax effect of unrealized loss on investments recorded through other comprehensive income.
Deferred taxes are reflected in the balance sheet as follows (in thousands):
 
As of December 31,
 
2013
 
2012
 
(As restated)
 
 
Current deferred tax assets
$
16,683

 
$
15,490

Current deferred tax liabilities
—

 
—

Noncurrent deferred tax assets
18,507

 
13,706

Noncurrent deferred tax liabilities
—

 
—

Total
$
35,190

 
$
29,196


The Company periodically assesses the likelihood that it will be able to recover its deferred tax assets. The Company considers all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible profits. Based on the Company's history of earnings, the Company concluded that it is more likely than not that the Company will fully utilize the deferred tax assets. Accordingly, the Company has not provided any valuation allowance against the deferred tax assets.
At December 31, 2013, the Company had federal net operating loss carry forwards of $0.7 million, which are available to offset future taxable income. The federal net operating loss carry forwards will begin to expire in 2022. Pursuant to Internal Code Section 382, use of the net operating loss carryforwards may be limited if a cumulative change in ownership of more than 50% occurs within a three-year period. The Company has performed a Section 382 analysis and has determined that there is no material effect on the net operating loss carryforwards.
A reconciliation of the income tax expense computed using the U.S. federal statutory tax rate of 35% and the Company's provision for income taxes follows (in thousands):
 
Year Ended December 31,
 
2013
 
2012
 
2011
 
(As restated)
 
 
 
 
Computed expected federal tax expense
$
25,041

35.0
 %
 
$
68,305

35.0
%
 
$
95,839

35.0
 %
State taxes, net of federal benefit
1,351

1.9

 
4,586

2.4

 
5,370

2.0

Permanent differences
917

1.3

 
1,074

0.5

 
1,601

0.6

Uncertain tax positions
(1,647
)
(2.3
)
 
31

—

 
(192
)
(0.1
)
Other
—

—

 
16

—

 
128

—

Income tax expense
$
25,662

35.9
 %
 
$
74,012

37.9
%
 
$
102,746

37.5
 %

The Company evaluates and accounts for uncertain tax positions using a two-step approach. Recognition (step one) occurs when the Company concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustained upon examination. Measurement (step two) determines the amount of benefit that is greater than 50% likely to be realized upon ultimate settlement with the taxing authority that has full knowledge of all relevant information. Derecognition of a tax position that was previously recognized would occur when the Company subsequently determines that a tax position no longer meets the more-likely-than-not threshold of being sustained.
The accrual for uncertain tax positions can result in a difference between the estimated benefit recorded in the Company's financial statements and the benefit taken or expected to be taken in the Company's income tax returns. This difference is generally referred to as an “unrecognized tax benefit.”
The Company has analyzed filing positions in all of the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
Unrecognized tax benefits at December 31, 2011
$
8,070

Gross increases-tax positions in prior period
965

Gross decreases-tax positions in prior period
—

Gross increases-current period tax positions
231

Settlements
—

Lapse of statute of limitations
—

Unrecognized tax benefits at December 31, 2012
9,266

Gross increases-tax positions in prior period
—

Gross decreases-tax positions in prior period
(5
)
Gross increases-current period tax positions
100

Settlements
—

Lapse of statute of limitations
(1,974
)
Unrecognized tax benefits at December 31, 2013
$
7,387


Included in the amount of unrecognized tax benefits at both December 31, 2013 and 2012 is $4.8 million and $6.6 million, respectively, of tax benefits that, if recognized, would affect the Company's effective tax rate. Also included in the balance of unrecognized tax benefits at both December 31, 2013 and 2012 is $2.6 million and $2.7 million, respectively, of tax benefits that, if recognized, would result in adjustments to other tax accounts, primarily deferred tax assets.
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. At both December 31, 2013 and 2012, the Company had approximately $1.7 million respectively, of accrued interest, before any tax benefit, related to uncertain tax positions.
The tax years 2002-2013 are open to examination by major taxing jurisdictions to which the Company is subject. The California Franchise Tax Board is auditing the Company's 2008 and 2009 California income tax returns. The Company does not expect any significant adjustments resulting from this audit. It is reasonably possible that the total 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.
The Company's continuing practice is to recognize interest and penalties related to income tax matters in income tax expense.
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 the Accrediting Commission for Senior Colleges and Universities of the Western Association of Schools and Colleges (“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. This WASC action permitted Ashford University to designate WASC as its accreditor of record for purposes of eligibility to participate in the Title IV programs following approval by the Department, the university's withdrawal from HLC and the transfer of relevant records to WASC. Ashford University formally submitted its request for such approvals to the Department on July 17, 2013.On November 4, 2013, the Department notified Ashford University that the Department would approve the university’s change in accreditor, recognizing WASC as Ashford University’s accreditor, along with the renewal of certification for continued participation in the Title IV, HEA programs. On December 13, 2013, the 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, the university will host 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. 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 will focus particularly on student achievement, including indications of educational effectiveness, retention and graduation data.
Application for 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, or BPPE, in order to operate in the state. 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, the university submitted an Application for Approval to Operate an Accredited Institution to BPPE on September 10, 2013. If BPPE approves the university’s application, the university will no longer be 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.
Request for information from Ashford University by Iowa College Student Aid Commission
On September 22, 2012, the Iowa College Student Aid Commission requested that Ashford University provide the commission with certain information and documentation related to, among other matters, the denial of Ashford University's application for WASC accreditation, the university's compliance with HLC criteria and policies, a teach-out plan in the event that Ashford University is unsuccessful in obtaining WASC accreditation and is sanctioned by HLC, and information relating to admissions employees, receipt of financial aid, availability of books, credit balance authorizations, and academic and financial support and advisement services to students. The commission requested that Ashford University provide the requested information by November 12, 2012 and make an in-person presentation during the commission's meeting on November 16, 2012. The university made the presentation and has notified the commission of its successful accreditation by WASC.
Negotiated Rulemaking
The Department held public hearings in May and June 2013 inviting the submission of topics for consideration in a series of rulemaking efforts to achieve a long-term agenda in higher education focused on access, affordability, academic quality and completion. Recent hearings have focused on topics including, but not limited to, cash management of Title IV program funds, state authorization for programs offering distance or correspondence education, gainful employment, credit and clock hour conversions, changes made to the Clery Act by the Violence Against Women Act of 2013 (P.L. 113-4), and the definition of “adverse credit” for PLUS borrowers.
In June 2013, the Department announced its intention to establish a negotiated rulemaking committee to prepare proposed regulations that would establish standards for programs that prepare students for gainful employment in a recognized occupation. The committee met for three sessions between September and December 2013, but did not reach consensus on the content of the proposed regulations. On March 14, 2014, the Department published proposed regulations for comment by the public for a sixty day period.
In January 2014, the Department held the first of three negotiated rulemaking sessions to implement the changes to the Clery Act required by the enactment of the Violence Against Women Act, or VAWA. Two other sessions are scheduled for February 2014 and March-April 2014. 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.
In February 2014, the Department held the first of three negotiation sessions related to various new program integrity initiatives, including the potential reintroduction of the Distance Education Rule (34 C.F.R. § 600.9(c)) that was vacated by a federal court in 2011. The February sessions produced no substantive outcomes, but sessions in March 2014 plan to address the Department’s draft of a proposed regulation on distance education that could materially impact our business.
Additional topics to be considered at March and April sessions are expected to include, but may not be limited to, the following: cash management of Title IV funds, including the use of debit cards and the handling of Title IV credit balances; state authorization for foreign locations; clock to credit hour conversion; the definition of “adverse credit” for borrowers in the Federal Direct PLUS Loan Program; and the application of the repeat coursework provisions to graduate and undergraduate programs.
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, 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.
The “90/10” Rule
Under the Higher Education Act, a for-profit institution loses its eligibility to participate in Title IV programs if the institution derives more than 90% of its revenues (calculated in accordance with applicable Department regulations) from Title IV program funds for two consecutive fiscal years. This rule is commonly referred to as the “90/10 rule.” Any institution that violates the 90/10 rule for two consecutive fiscal years becomes ineligible to participate in Title IV programs for at least two fiscal years. In addition, an institution whose rate exceeds 90% for any single year will be placed on provisional certification and may be subject to other enforcement measures.
For the years ended December 31, 2013, 2012 and 2011, Ashford University derived 85.6%, 86.4% and 86.8%, respectively, and University of the Rockies derived 87.6%, 87.3% and 85.0%, respectively, of their respective revenues (calculated in accordance with applicable Department regulations) from students whose source of funding is through Title IV funds.
Cohort Default Rate
For each federal fiscal year, the Department calculates a rate of student defaults over a two-year measuring period for each educational institution which is known as a “cohort default rate.” An institution may lose its eligibility to participate in the Direct Loan and Pell programs if, for each of the three most recent federal fiscal years for which information is available, 25% or more of its students who became subject to a repayment obligation in that federal fiscal year defaulted on such obligation by the end of the following federal fiscal year. In addition, an institution may lose its eligibility to participate in the Direct Loan program if its cohort default rate exceeds 40% in the most recent federal fiscal year for which default rates have been calculated by the Department. Ashford University's two-year cohort default rates for the 2011, 2010 and 2009 federal fiscal years, were 10.1%, 10.2%, and 15.3%, respectively. The two-year cohort default rates for University of the Rockies for the 2011, 2010 and 2009 federal fiscal years, were 4.8%, 4.0% and 3.3%, respectively.
The August 2008 reauthorization of the Higher Education Act included significant revisions to the requirements concerning cohort default rates. Under the revised law, the period for which students' defaults on their loans are included in the calculation of an institution's cohort default rate was extended by one additional year, which is expected to increase the cohort default rates for most institutions. That change was effective with the calculation of institutions' cohort default rates for the federal fiscal year ending September 30, 2009, which rates were calculated and issued by the Department in September 2012. The Department will not impose sanctions based on rates calculated under this new methodology until three consecutive years of rates have been calculated, which is expected to occur in 2014. Until that time, the Department will continue to calculate rates under the old calculation method and impose sanctions based on those rates. The revised law also increases the threshold for ending an institution's participation in the relevant Title IV programs from 25% to 30%, effective for final three-year cohort default rates published on or after the 2012 federal fiscal year. The revised law changes the threshold for placement on provisional certification to 30% for two of the three most recent fiscal years for which the Department has published official three-year cohort default rates. Ashford University's three-year cohort default rates for the 2010 and 2009 federal fiscal years, were 16.3% and 19.8%, respectively. The three-year cohort default rates for University of the Rockies for the 2010 and 2009 federal fiscal years, were 8.0% and 3.3%, respectively.
Return of Title IV Funds
An institution participating in Title IV programs must correctly calculate the amount of unearned Title IV program funds that have been disbursed to students who withdraw from their educational programs before completion and must return those unearned funds in a timely manner, generally within 45 days of the date the school determines that the student has withdrawn. Under Department regulations, failure to make timely returns of Title IV program funds for 5% or more of students sampled on the institution's annual compliance audit in either of its two most recently completed fiscal years can result in the institution having to post a letter of credit in an amount equal to 25% of its required Title IV returns during its most recently completed fiscal year. If unearned funds are not properly calculated and returned in a timely manner, an institution is also subject to monetary liabilities or an action to impose a fine or to limit, suspend or terminate its participation in Title IV programs. For the years ended December 31, 2013 and 2012, the Company's institutions did not exceed the 5% threshold for late refunds sampled.
Financial Responsibility
The Department calculates an institution's composite score for financial responsibility based on its (i) equity ratio, which measures the institution's capital resources, ability to borrow and financial viability; (ii) primary reserve ratio, which measures the institution's ability to support current operations from expendable resources; and (iii) net income ratio, which measures the institution's ability to operate at a profit. An institution that does not meet the Department's minimum composite score may demonstrate its financial responsibility by posting a letter of credit in favor of the Department and possibly accepting other conditions on its participation in the Title IV programs.
For the fiscal year ended December 31, 2012, the consolidated composite score calculated was 3.0, satisfying the composite score requirement of the Department's financial responsibility test, which institutions must satisfy in order to participate in Title IV programs. We expect the consolidated composite score to be 3.0 for the year ended December 31, 2013. However, the consolidated calculation is subject to determination by the Department once it receives and reviews our audited financial statements for the year ended December 31, 2013.
Retirement Plans
Retirement Plans
Retirement Plans
The Company maintains an employee savings plan that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under the savings plan, participating employees may contribute a portion of their pre-tax earnings up to the Internal Revenue Service annual contribution limit. Additionally, the Company may elect to make matching contributions into the savings plan in its sole discretion. The Company's total expense related to the 401(k) plan was $3.3 million, $3.3 million and $2.2 million for the years ended December 31, 2013, 2012 and 2011, respectively.
Commitments and Contingencies
Commitments and Contingencies
Commitments and Contingencies
Litigation
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 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 June 24, 2013, October 25, 2013, and February 10, 2014, 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 several weeks prior to the June 24th meeting. During these meetings, the Iowa Attorney General and Ashford University also discussed the general framework of a potential resolution of the Iowa Attorney General’s allegations, which involves several components including injunctive relief, nonmonetary remedies and restitution. Ashford University is cooperating with the investigation and continuing to discuss the potential resolution of the Iowa Attorney General’s allegations. Accordingly, the Company estimates that a reasonable range of loss for this matter is between $6.2 million and $9.5 million. The Company has accrued $9.0 million, which represents its best estimate of a potential resolution, including restitution, the cost of non-monetary remedies and future legal costs.
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, the Company received a second Investigative Subpoena from the CA Attorney General 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.
Stevens v. Bridgepoint Education, Inc.
In February 2011, the Company received a copy of a complaint filed as a class action lawsuit naming the Company, Ashford University, LLC, and certain employees as defendants. The complaint was filed in the Superior Court of the State of California in San Diego and was captioned Stevens v. Bridgepoint Education, Inc. The complaint generally alleged that the plaintiffs and similarly situated employees were improperly denied certain wage and hour protections under California law.
In April 2011, the Company received a copy of a complaint filed as a class action lawsuit naming the Company and Ashford University, LLC, as defendants. The complaint was filed in the Superior Court of the State of California in San Diego, and was captioned Moore v. Ashford University, LLC. The complaint generally alleged that the plaintiff and similarly situated employees were improperly denied certain wage and hour protections under California law.
In May 2011, the Company received a copy of a complaint filed as a class action lawsuit naming the Company as a defendant. The complaint was filed in the Superior Court of the State of California in San Diego on May 6, 2011, and was captioned Sanchez v. Bridgepoint Education, Inc. The complaint generally alleged that the plaintiff and similarly situated employees were improperly denied certain wage and hour protections under California law.
In October 2011, the above named cases were consolidated because they involved common questions of fact and law, with Stevens v. Bridgepoint Education, Inc. designated as the lead case.
In April 2012, the Company entered into a settlement agreement with the plaintiffs of the above named cases to settle the claims on a class-wide basis. Under the terms of the settlement agreement, the Company agreed to pay an amount to settle the plaintiffs' claims, plus any related payroll taxes. The Company accrued a $10.8 million expense in connection with the settlement agreement during the year ending December 31, 2012. On August 24, 2012, the Court granted final approval of the class action settlement and entered a final judgment in accordance with the terms of the settlement agreement. This settlement was paid out prior to December 31, 2012.
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.
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.
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 is due to be filed on or before 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.
Employee Class Actions
On October 24, 2012, a class action complaint was filed in California Superior Court by former employee Marla Montano naming the Company and Ashford University as defendants. The case is entitled Marla Montano v. Bridgepoint Education and Ashford University. The complaint asserts a putative class consisting of former employees who were terminated in January 2012 and July 2012 as a result of a mass layoff, relocation or termination and alleges that the defendants failed to comply with the notice and payment provisions of the California WARN Act. A substantially similar complaint, entitled Dilts v. Bridgepoint Education and Ashford University, was also filed in the same court on the same day by Austin Dilts making similar allegations and asserting the same putative class. The complaints seek back pay, the cost of benefits, penalties and interest on behalf of the putative class members, as well as other equitable relief and attorneys' fees.
On January 25, 2013, the Company filed motions to compel binding arbitration with the Court, which were granted on May 20, 2013. The parties subsequently agreed to settle all of the claims for an immaterial amount and as a result the cases are now concluded.
Concentration of Risk
Concentration of Risk
Concentration of Risk
Concentration of Revenue
In 2013, Ashford University derived 85.6% and University of the Rockies derived 87.6% of their respective revenues (in each case calculated on a cash basis in accordance with applicable Department regulations) from students whose source of funding is through Title IV programs. See Note 18, “Regulatory-The “90/10” Rule.” Title IV programs are subject to political and budgetary considerations and are subject to extensive and complex regulations. The Company's administration of these programs is periodically reviewed by various regulatory agencies. Any regulatory violation could be the basis for the initiation of potentially adverse actions including a suspension, limitation, or termination proceeding, which could have a material adverse effect on the Company's enrollments, revenues and results of operations.
Students obtain access to federal student financial aid through a Department prescribed application and eligibility certification process. Student financial aid funds are generally made available to students at prescribed intervals throughout their expected length of study. Students typically apply the funds received from the federal financial aid programs first to pay their tuition and fees. Any remaining funds are distributed directly to the student.
Concentration of Credit Risk
The Company maintains its cash and cash equivalents accounts in financial institutions. Accounts at these institutions are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. The Company performs ongoing evaluations of these institutions to limit its concentrations risk exposure.
Concentration of Sources of Supply
The Company is dependent on a third party provider for its online platform, which includes a learning management system, which stores, manages and delivers course content, enables assignment uploading, provides interactive communication between students and faculty and supplies online assessment tools. The partial or complete loss of this source may have an adverse effect on enrollments, revenues and results of operations.
Quarterly Results of Operations (Unaudited)
Quarterly Results of Operations (Unaudited)
Quarterly Results of Operations (Unaudited)
The following tables set forth unaudited results of operations and certain operating results for each quarter during 2013 and 2012. The Company believes that the information reflects all adjustments necessary to present fairly the information below. Basic and diluted earnings per common share are computed independently for each of the quarters presented. Therefore, the sum of quarterly basic and diluted per common share information may not equal annual basic and diluted earnings per common share.
 
First
Quarter (as Restated)
 
Second
Quarter (as Restated)
 
Third
Quarter (as Restated)
 
Fourth
Quarter (as Restated)
 
(In thousands, except per share data)
2013
 
 
 
 
 
 
 
Revenue
$
212,986

 
$
193,470

 
$
182,768

 
$
162,225

Operating income (loss)
39,676

 
19,133

 
19,524

 
(9,870
)
Net income (loss)
24,667

 
12,114

 
14,211

 
(5,109
)
Earnings (loss) per common share:
 
 
 
 
 
 
 
Basic
$
0.46

 
$
0.22

 
$
0.26

 
$
(0.10
)
Diluted
0.45

 
0.22

 
0.25

 
(0.10
)
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
 
(In thousands, except per share data)
2012
 
 
 
 
 
 
 
Revenue
$
241,433

 
$
249,534

 
$
245,917

 
$
206,521

Operating income
44,875

 
67,874

 
47,647

 
31,231

Net income
28,434

 
42,708

 
30,179

 
19,825

Earnings per common share:
 
 
 
 
 
 
 
Basic
$
0.55

 
$
0.81

 
$
0.57

 
$
0.37

Diluted
0.51

 
0.76

 
0.54

 
0.36


The Company has restated its consolidated balance sheet as of December 31, 2013, and its consolidated statement of income, consolidated statement of comprehensive income and consolidated statement of cash flow for the year ended December 31, 2013, as well as for the quarterly periods during that fiscal year. The Company has also revised its consolidated balance sheet as of December 31, 2012, and its consolidated statements of income, consolidated statements of comprehensive income and consolidated statements of cash flow for the years ended December 31, 2012 and 2011, as well as for the quarterly periods during 2012. During the reporting of the first quarter of 2014, the Company identified misapplications of GAAP as it related to the accounting for revenue recognition and the classification of restricted cash. Specifically on the revenue recognition, the process for analyzing the collectibility assertion was not designed to reassess collectibility on a student-by-student basis throughout the period revenue was recognized by the Company's institutions. As a result, the Company identified adjustments, relating to revenue, provision for bad debts, accounts receivable, which should have been recognized during the prior periods, and restricted cash balances, which should have been presented differently during the prior periods.
The following tables present the impact of the corrections on the previously reported unaudited consolidated quarterly financial information for each of the quarters in the fiscal years ended December 31, 2013 and 2012. The “As Reported” column in the tables below reflects balances previously reported by the Company in its quarterly reports on Form 10-Q or annual report on Form 10-K for fiscal year 2013, which include revised 2012 balances. The “As Reclassified” column shows the impact of immaterial reclassifications made by the Company to reflect changes in presentation retrospectively, including (i) the reclassification of amortization for capitalized curriculum costs from general and administrative costs to instructional costs and services on its consolidated statements of income and (ii) the reclassification of current net student loans receivable to its own line item on the consolidated balance sheets. The “As Restated” column for 2013 and the “As Revised” column for 2012 reflects final adjusted balances after the related restatement or revision, as well as previously identified immaterial adjustments.
The following tables for fiscal year 2013 are presented in thousands, except per share data:
 
As Reported
As Reclassified
As Restated
 
As Reported
As Reclassified
As Restated
Consolidated balance sheet data:
March 31, 2013
 
June 30, 2013
Cash and cash equivalents
$
316,267

-

$
275,533

 
$
363,121

-

$
322,578

Restricted cash
$
—

-

$
41,094

 
$
—

-

$
40,543

Accounts receivable, net
$
69,352

$
68,472

$
51,835

 
$
60,502

$
58,895

$
43,393

Student loans receivable, net, current
$
—

$
880

$
880

 
$
—

$
1,607

$
1,607

Deferred income taxes, current
$
10,970

-

$
15,524

 
$
11,020

-

$
15,573

Prepaid expenses and other current assets
$
21,445

-

$
25,245

 
$
20,294

-

$
23,891

Total current assets
$
530,232

-

$
521,949

 
$
541,747

-

$
534,395

Student loans receivable, net, non-current
$
14,524

-

$
13,788

 
-

-

-

Deferred income taxes, non-current
$
13,262

-

$
13,701

 
$
13,306

-

$
13,746

Total assets
$
763,100

-

$
754,520

 
$
761,992

-

$
755,080

Accrued liabilities
$
56,707

-

$
58,801

 
$
45,089

-

$
48,336

Deferred revenue and student deposits
-

-

-

 
$
135,865

-

$
134,634

Total current liabilities
$
204,577

-

$
206,671

 
$
188,315

-

$
190,331

Total liabilities
$
240,985

-

$
243,079

 
$
225,222

-

$
227,238

Retained earnings
$
501,565

-

$
490,891

 
$
511,933

-

$
503,005

Total stockholders’ equity
$
522,115

-

$
511,441

 
$
536,770

-

$
527,842

Total liabilities and stockholders’ equity
$
763,100

-

$
754,520

 
$
761,992

-

$
755,080

 
As Reported
As Reclassified
As Restated
 
As Reported
As Reclassified
As Restated
Consolidated balance sheet data:
September 30, 2013
 
December 31, 2013
Cash and cash equivalents
$
431,762

-

$
392,299

 
$
249,472

-
$
212,526

Restricted cash
$
—

-

$
39,463

 
$
—

-
$
36,946

Accounts receivable, net
$
51,123

$
49,441

$
41,842

 
$
28,565

-
$
22,953

Student loans receivable, net, current
$
—

$
1,682

$
1,682

 
-

-
-

Deferred income taxes, current
$
11,033

-

$
15,586

 
$
15,232

-
$
16,683

Prepaid expenses and other current assets
$
16,057

-

$
19,072

 
$
21,369

-
$
21,563

Total current assets
$
545,196

-

$
545,165

 
$
381,582

-
$
377,615

Deferred income taxes, non-current
$
13,284

-

$
13,724

 
-

-
-

Total assets
$
765,190

-

$
765,599

 
$
573,979

-
$
570,012

Accrued liabilities
$
43,567

-

$
48,828

 
$
54,756

-
$
54,290

Total current liabilities
$
179,336

-

$
184,597

 
$
192,742

-
$
192,276

Total liabilities
$
214,375

-

$
219,636

 
$
225,940

-
$
225,474

Retained earnings
$
522,068

-

$
517,216

 
$
515,608

-
$
512,107

Total stockholders’ equity
$
550,815

-

$
545,963

 
$
348,039

-
$
344,538

Total liabilities and stockholders’ equity
$
765,190

-

$
765,599

 
$
573,979

-
$
570,012

 
As Reported
As Reclassified
As Restated
 
As Reported
As Reclassified
As Restated
 
Three Months Ended
Consolidated statement of income data:
March 31, 2013
 
June 30, 2013
Revenue
$
221,984

-

$
212,986

 
$
197,574

-

$
193,470

Instructional costs and services
$
101,646

$
102,282

$
97,028

 
$
106,045

$
106,812

$
99,603

General and administrative
$
19,375

$
18,739

$
18,739

 
$
17,919

$
17,152

$
17,152

Total costs and expenses
$
178,564

-

$
173,310

 
$
181,546

-

$
174,337

Operating income
$
43,420

-

$
39,676

 
$
16,028

-

$
19,133

Other income, net
$
818

-

$
837

 
$
1,031

-

$
748

Income before income taxes
$
44,238

-

$
40,513

 
$
17,059

-

$
19,881

Income tax expense
$
17,271

-

$
15,846

 
$
6,691

-

$
7,767

Net income
$
26,967

-

$
24,667

 
$
10,368

-

$
12,114

Basic earnings per share
$
0.50

-

$
0.46

 
$
0.19

-

$
0.22

Diluted earnings per share
$
0.49

-

$
0.45

 
$
0.19

-

$
0.22

 
As Reported
As Reclassified
As Restated
 
As Reported
As Reclassified
As Restated
 
Three Months Ended
Consolidated statement of income data:
September 30, 2013
 
December 31, 2013
Revenue
$
185,612

-

$
182,768

 
$
163,453

-
$
162,225

Instructional costs and services
$
92,204

$
93,079

$
83,562

 
$
93,755

-
$
90,541

General and administrative
$
16,050

$
15,175

$
15,175

 
-

-
-

Total costs and expenses
$
172,761

-

$
163,244

 
$
175,309

-
$
172,095

Operating income (loss)
$
12,851

-

$
19,524

 
$
(11,856
)
-
$
(9,870
)
Income (loss) before income taxes
$
13,638

-

$
20,310

 
$
(11,146
)
-
$
(9,159
)
Income tax expense (benefit)
$
3,503

-

$
6,099

 
$
(4,686
)
-
$
(4,050
)
Net income (loss)
$
10,135

-

$
14,211

 
$
(6,460
)
-
$
(5,109
)
Basic earnings (loss) per share
$
0.19

-

$
0.26

 
$
(0.12
)
-
$
(0.10
)
Diluted earnings (loss) per share
$
0.18

-

$
0.25

 
$
(0.12
)
-
$
(0.10
)
 
As Reported
As Reclassified
As Restated
 
As Reported
As Reclassified
As Restated
 
Year to Date Period Ended
Consolidated statement of income data:
March 31, 2013
 
June 30, 2013
Revenue
$
221,984

-

$
212,986

 
$
419,558

-

$
406,456

Instructional costs and services
$
101,646

$
102,282

$
97,028

 
$
207,691

$
209,094

$
196,631

General and administrative
$
19,375

$
18,739

$
18,739

 
$
37,294

$
35,891

$
35,891

Total costs and expenses
$
178,564

-

$
173,310

 
$
360,110

-

$
347,647

Operating income
$
43,420

-

$
39,676

 
$
59,448

-

$
58,809

Other income, net
$
818

-

$
837

 
$
1,849

-

$
1,585

Income before income taxes
$
44,238

-

$
40,513

 
$
61,297

-

$
60,394

Income tax expense
$
17,271

-

$
15,846

 
$
23,962

-

$
23,613

Net income
$
26,967

-

$
24,667

 
$
37,335

-

$
36,781

Basic earnings per share
$
0.50

-

$
0.46

 
$
0.69

-

$
0.68

Diluted earnings per share
$
0.49

-

$
0.45

 
$
0.67

-

$
0.66

Consolidated statement of cash flow data:
 
 
 
 
 
 
 
Net income
$
26,967

-

$
24,667

 
$
37,335

-

$
36,781

Provision for bad debts
$
18,294

-

$
13,040

 
$
36,865

-

$
24,403

Amortization of premium/ discount
$
1,005

-

$
1,407

 
$
3,100

-

$
2,165

Restricted cash
$
—

-

$
5,900

 
$
—

-

$
6,451

Accounts receivable
$
(19,381
)
-

$
(10,229
)
 
$
(28,744
)
-

$
(13,222
)
Prepaid expenses and other current assets
$
(1,635
)
-

$
(5,656
)
 
$
(96
)
-

$
(4,110
)
Student loan receivable
$
281

-

$
(133
)
 
-

-

-

Accounts payable and accrued liabilities
$
14,119

-

$
16,213

 
$
2,153

-

$
5,400

Deferred revenue and student deposits
$
(34,088
)
-

$
(33,747
)
 
$
(39,192
)
-

$
(39,996
)
Cash flows from operating activities
$
15,616

-

$
21,516

 
$
32,273

-

$
38,724

 
As Reported
As Reclassified
As Restated
 
As Reported
As Reclassified
As Restated
 
Year to Date Period Ended
Consolidated statement of income data:
September 30, 2013
 
December 31, 2013
Revenue
$
605,170

-

$
589,224

 
$
768,623

-
$
751,449

Instructional costs and services
$
299,895

$
302,173

$
280,193

 
$
395,928

-
$
370,734

General and administrative
$
53,344

$
51,066

$
51,066

 
-

-
-

Total costs and expenses
$
532,871

-

$
510,891

 
$
708,180

-
$
682,986

Operating income
$
72,299

-

$
78,333

 
$
60,443

-
$
68,463

Other income, net
$
2,636

-

$
2,371

 
$
3,346

-
$
3,082

Income before income taxes
$
74,935

-

$
80,704

 
$
63,789

-
$
71,545

Income tax expense
$
27,465

-

$
29,712

 
$
22,779

-
$
25,662

Net income
$
47,470

-

$
50,992

 
$
41,010

-
$
45,883

Basic earnings per share
$
0.88

-

$
0.94

 
$
0.76

-
$
0.85

Diluted earnings per share
$
0.85

-

$
0.91

 
$
0.74

-
$
0.83

Consolidated statement of cash flow data:
 
 
 
 
 
 
 
Net income
$
47,470

-

$
50,992

 
$
41,010

-
$
45,883

Provision for bad debts
$
53,649

-

$
31,670

 
$
72,313

-
$
47,119

Amortization of premium/discount
$
3,596

-

$
2,662

 
$
3,559

-
$
2,624

Deferred income taxes
-

-

-

 
$
(10,506
)
-
$
(6,962
)
Restricted cash
$
—

-

$
7,531

 
$
—

-
$
10,048

Accounts receivable
$
(36,056
)
-

$
(18,826
)
 
$
(34,348
)
-
$
(15,973
)
Prepaid expenses and other current assets
$
3,395

-

$
(155
)
 
$
(2,411
)
-
$
(2,607
)
Accounts payable and accrued liabilities
$
3,699

-

$
8,960

 
$
13,687

-
$
13,220

Deferred revenue and student deposits
$
(48,610
)
-

$
(48,160
)
 
-

-
-

Cash flows from operating activities
$
54,277

-

$
61,808

 
$
75,538

-
$
85,586

The following tables for fiscal year 2012 are presented in thousands, except per share data:
 
As Reported
As Reclassified
As Revised
 
As Reported
As Reclassified
As Revised
Consolidated balance sheet data:
March 31, 2012
 
June 30, 2012
Cash and cash equivalents
$
162,148

-

$
103,405

 
$
180,425

-

$
123,901

Restricted cash
$
25

-

$
58,768

 
$
—

-

$
56,524

Accounts receivable, net
$
91,129

$
90,708

$
75,846

 
$
91,139

$
90,620

$
74,826

Student loan receivables, net, current
$
—

$
421

$
421

 
$
—

$
519

$
519

Deferred income taxes, current
$
5,441

-

$
8,235

 
$
5,442

-

$
8,235

Prepaid expenses and other current assets
$
17,864

-

$
18,367

 
22,966

-

25,105

Total current assets
$
441,169

-

$
429,604

 
$
459,764

-

$
448,902

Student loan receivables, net, non-current
$
12,065

-

$
11,035

 
$
14,998

-

$
14,232

Deferred income taxes, non-current
$
10,805

-

$
11,604

 
$
10,810

-

$
11,608

Total assets
$
682,447

-

$
670,651

 
$
723,119

-

$
712,289

Accrued liabilities
$
66,755

-

$
64,595

 
$
54,650

-

$
54,006

Total current liabilities
$
260,575

-

$
258,415

 
$
248,012

-

$
247,368

Total liabilities
$
289,296

-

$
287,136

 
$
279,333

-

$
278,689

Retained earnings
$
383,148

-

$
373,512

 
$
426,406

-

$
416,220

Total stockholders’ equity
$
393,151

-

$
383,515

 
$
443,786

-

$
433,600

Total liabilities and stockholders’ equity
$
682,447

-

$
670,651

 
$
723,119

-

$
712,289

 
As Reported
As Reclassified
As Revised
 
As Reported
As Reclassified
As Revised
Consolidated balance sheet data:
September 30, 2012
 
December 31, 2012
Cash and cash equivalents
$
181,577

-

$
131,501

 
$
255,965

-
$
208,971

Restricted cash
$
—

-

$
50,076

 
$
—

-
$
46,994

Accounts receivable, net
$
99,919

$
99,386

$
84,178

 
$
67,371

-
$
54,487

Student loan receivables, net, current
$
—

$
533

$
533

 
-

-
-

Deferred income taxes, current
$
5,313

-

$
8,106

 
$
10,936

-
$
15,490

Prepaid expenses and other current assets
$
22,722

-

$
22,944

 
$
19,810

-
$
20,053

Total current assets
$
452,515

-

$
440,322

 
$
491,605

-
$
483,518

Student loan receivables, net, non-current
$
14,992

-

$
14,291

 
$
15,143

-
$
14,416

Deferred income taxes, non-current
$
10,752

-

$
11,550

 
$
13,266

-
$
13,706

Total assets
$
736,099

-

$
724,003

 
$
750,787

-
$
742,413

Accrued liabilities
$
52,313

-

$
50,044

 
-

-
-

Total current liabilities
$
231,925

-

$
229,656

 
-

-
-

Total liabilities
$
265,565

-

$
263,296

 
-

-
-

Retained earnings
$
456,226

-

$
446,399

 
$
474,598

-
$
466,224

Total stockholders’ equity
$
470,534

-

$
460,707

 
$
491,570

-
$
483,196

Total liabilities and stockholders’ equity
$
736,099

-

$
724,003

 
$
750,787

-
$
742,413

 
As Reported
As Reclassified
As Revised
 
As Reported
As Reclassified
As Revised
 
Three Months Ended
Consolidated statement of income data:
March 31, 2012
 
June 30, 2012
Revenue
$
250,437

-

$
241,433

 
$
256,302

-

$
249,534

Instructional costs and services
$
84,224

$
84,453

$
81,202

 
$
85,279

$
85,579

$
79,719

General and administrative
$
25,542

$
25,314

$
25,314

 
$
15,047

$
14,747

$
14,747

Total costs and expenses
$
199,808

-

$
196,558

 
$
187,520

-

$
181,660

Operating income
$
50,629

-

$
44,875

 
$
68,782

-

$
67,874

Other income, net
$
683

-

$
740

 
$
854

-

$
883

Income before income taxes
$
51,312

-

$
45,615

 
$
69,636

-

$
68,757

Income tax expense
$
19,341

-

$
17,181

 
$
26,378

-

$
26,049

Net income
$
31,971

-

$
28,434

 
$
43,258

-

$
42,708

Basic earnings per share
$
0.61

-

$
0.55

 
$
0.82

-

$
0.81

Diluted earnings per share
$
0.57

-

$
0.51

 
$
0.77

-

$
0.76

 
As Reported
As Reclassified
As Revised
 
As Reported
As Reclassified
As Revised
 
Three Months Ended
Consolidated statement of income data:
September 30, 2012
 
December 31, 2012
Revenue
$
252,076

-

$
245,917

 
$
209,356

-

$
206,521

Instructional costs and services
$
90,986

$
91,362

$
84,666

 
$
102,034

$
102,607

$
97,485

General and administrative
$
17,247

$
16,870

$
16,870

 
$
13,139

$
12,566

$
12,566

Total costs and expenses
$
204,967

-

$
198,270

 
$
180,412

-

$
175,290

Operating income
$
47,109

-

$
47,647

 
$
28,944

-

$
31,231

Other income, net
$
955

-

$
996

 
$
878

-

$
912

Income before income taxes
$
48,064

-

$
48,643

 
$
29,822

-

$
32,143

Income tax expense
$
18,244

-

$
18,464

 
$
11,450

-

$
12,318

Net income
$
29,820

-

$
30,179

 
$
18,372

-

$
19,825

Basic earnings per share
$
0.56

-

$
0.57

 
$
0.34

-

$
0.37

Diluted earnings per share
$
0.53

-

$
0.54

 
$
0.33

-

$
0.36

 
As Reported
As Reclassified
As Revised
 
As Reported
As Reclassified
As Revised
 
Year to Date Period Ended
Consolidated statement of income data:
March 31, 2012
 
June 30, 2012
Revenue
$
250,437

-

$
241,433

 
$
506,739

-

$
490,967

Instructional costs and services
$
84,224

$
84,453

$
81,202

 
$
169,503

$
170,032

$
160,921

General and administrative
$
25,542

$
25,314

$
25,314

 
$
40,589

$
40,061

$
40,061

Total costs and expenses
$
199,808

-

$
196,558

 
$
387,328

-

$
378,218

Operating income
$
50,629

-

$
44,875

 
$
119,411

-

$
112,749

Other income, net
$
683

-

$
740

 
$
1,537

-

$
1,623

Income before income taxes
$
51,312

-

$
45,615

 
$
120,948

-

$
114,372

Income tax expense
$
19,341

-

$
17,181

 
$
45,719

-

$
43,230

Net income
$
31,971

-

$
28,434

 
$
75,229

-

$
71,142

Basic earnings per share
$
0.61

-

$
0.55

 
$
1.44

-

$
1.36

Diluted earnings per share
$
0.57

-

$
0.51

 
$
1.34

-

$
1.27

Consolidated statement of cash flow data:
 
 
 
 
 
 
 
Net income
$
31,971

-

$
28,434

 
$
75,229

-

$
71,142

Provision for bad debts
$
16,669

-

$
13,418

 
$
33,401

-

$
24,289

Amortization of premium/discount
$
1,754

-

$
2,125

 
$
3,594

 
$
4,470

Restricted cash
$
—

-

$
(5,028
)
 
$
—

-

$
(2,809
)
Accounts receivable
$
(46,053
)
-

$
(37,153
)
 
$
(62,501
)
-

$
(46,772
)
Prepaid expenses and other current assets
$
(459
)
-

$
32

 
$
(5,084
)
-

$
(6,806
)
Student loans receivable
$
(2,399
)
 
$
(3,214
)
 
$
(5,626
)
 
$
(6,666
)
Accounts payable and accrued liabilities
$
26,851

-

$
24,691

 
$
18,492

-

$
17,847

Cash flows from operating activities
$
40,350

-

$
35,321

 
$
76,806

-

$
73,996

 
As Reported
As Reclassified
As Revised
 
As Reported
As Reclassified
As Revised
 
Year to Date Period Ended
Consolidated statement of income data:
September 30, 2012
 
December 31, 2012
Revenue
$
758,815

-

$
736,884

 
$
968,171

-
$
943,405

Instructional costs and services
$
260,489

$
261,394

$
245,587

 
$
364,001

-
$
343,072

General and administrative
$
57,836

$
56,931

$
56,931

 
-

-
-

Total costs and expenses
$
592,295

-

$
576,488

 
$
772,707

-
$
751,778

Operating income
$
166,520

-

$
160,396

 
$
195,464

-
$
191,627

Other income, net
$
2,492

-

$
2,619

 
$
3,370

-
$
3,531

Income before income taxes
$
169,012

-

$
163,015

 
$
198,834

-
$
195,158

Income tax expense
$
63,963

-

$
61,694

 
$
75,413

-
$
74,012

Net income
$
105,049

-

$
101,321

 
$
123,421

-
$
121,146

Basic earnings per share
$
2.00

-

$
1.93

 
$
2.33

-
$
2.29

Diluted earnings per share
$
1.87

-

$
1.81

 
$
2.21

-
$
2.17

Consolidated statement of cash flow data:
 
 
 
 
 
 
 
Net income
$
105,049

-

$
101,321

 
$
123,421

-
$
121,146

Provision for bad debts
$
52,418

-

$
36,610

 
$
73,696

-
$
52,767

Deferred income taxes
-

-

-

 
$
(9,972
)
-
$
(11,373
)
Amortization of premium/discount
$
5,384

 
$
6,922

 
$
6,805

 
$
8,992

Restricted cash
$
—

-

$
3,639

 
$
—

-
$
6,721

Accounts receivable
$
(90,188
)
-

$
(68,357
)
 
$
(81,577
)
-
$
(62,333
)
Prepaid expenses and other current assets
$
(3,982
)
-

$
(4,548
)
 
$
(1,056
)
-
$
(2,387
)
Student loans receivable
$
(5,730
)
 
$
(6,729
)
 
$
(3,778
)
 
$
(5,742
)
Accounts payable and accrued liabilities
$
19,363

-

$
17,094

 
-

-
-

Deferred revenue and student deposits
-

-

-

 
$
(10,389
)
-
$
(3,921
)
Cash flows from operating activities
$
93,588

-

$
97,226

 
$
143,185

-
$
149,905

Subsequent Events
Subsequent Events
Subsequent Events
On February 10, 2014, 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. During this meeting, the Iowa Attorney General and Ashford University discussed the general framework of a potential resolution of the Iowa Attorney General’s allegations. For additional information, see Note 20, “Commitments and Contingencies - Iowa Attorney General Civil Investigation of Ashford University.”
Summary of Significant Accounting Policies (Policies)
Principles of Consolidation 
Principles of Consolidation
The consolidated financial statements include the accounts of Bridgepoint Education, Inc. and its wholly-owned subsidiaries. Intercompany transactions have been eliminated in consolidation.
Use of Estimates 
Use of Estimates
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements. Actual results could differ from those estimates.
Cash and Cash Equivalents 
Cash and Cash Equivalents
Cash and cash equivalents is comprised of cash and other short-term highly liquid investments that are readily convertible into known amounts of cash. The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
Restricted Cash 
Restricted Cash
Restricted cash primarily represents funds held for students from Title IV financial aid program funds that result in credit balances on a student’s account. Restricted cash is excluded from cash and cash equivalents on our consolidated balance sheets and statements of cash flows. Changes in restricted cash are included in cash flows from operating activities on our consolidated statements of cash flows, as these restricted funds are closely related to the Company's operational activity. Our restricted cash is primarily held in money market accounts.
Investments 
Investments
As of December 31, 2013, the Company held short and long-term investments which consisted of demand notes, corporate notes and bonds and certificates of deposit. The Company's investments are denominated in U.S. dollars, investment grade and readily marketable. The Company considers as current assets those investments which will mature or are likely to be sold in less than one year.
The Company has classified its investments as either available-for-sale or held-to-maturity. Available-for-sale securities are carried at fair value as determined by quoted market prices, with unrealized gains and losses, net of tax, reported as a separate component of comprehensive income and stockholders’ equity. Held-to-maturity securities are carried at amortized cost. Amortization of premiums, accretion of discounts, interest and realized gains and losses are included in other income, net in the consolidated statement of income.
The Company regularly monitors and evaluates the realizable value of its investments. If events and circumstances indicate that a decline in the value of these assets has occurred and is other-than-temporary, the Company would record a charge to other income, net in the consolidated statement of income.
Fair Value Measurements 
Fair Value Measurements
The Company uses the three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either observable directly or indirectly, through market corroboration, for substantially the full term of the financial instrument; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The Company's Level 2 investments are valued using readily available pricing sources which utilize market observable inputs, including the current interest rate for similar types of instruments. During the years ended December 31, 2013 and 2012, there were no transfers in or out of any fair value level of measurement.
Receivables and Allowance for Doubtful Accounts 
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable consists of student accounts receivable, which represent amounts due for tuition, course digital materials, technology fees and other fees from currently enrolled and former students. Students generally fund their education through grants and/or loans under various Title IV programs, tuition assistance from military and corporate employers or personal funds. Payments are due on the respective course start date and are considered past due subsequent to the respective course start date. An account is considered delinquent 120 days subsequent to the course start date.
Accounts receivable are stated at the amount management expects to collect from outstanding balances. For accounts receivable, an allowance for doubtful accounts is estimated by management and is principally based on historical collection experience as well as (i) an assessment of individual accounts receivable over a specific aging and amount, (ii) consideration of the nature of the receivable accounts and (iii) potential changes in the business or economic environment. The provision for bad debts is recorded within the instructional costs and services line in the consolidated statements of income. The Company charges off uncollectable accounts receivable when the student account is deemed uncollectable by internal collection efforts or by a third party collection agency.
Student Loans Receivable and Loan Loss Reserves
Student loans receivable consist of loans to qualified students and have a repayment period of 10 years from the date of graduation or withdrawal from the Company's institutions. The interest rate charged on student loans is a fixed rate of either 4.5% or 0.0% depending upon the repayment plan selected. If the student selects the rate of 0.0%, the student must pay $50 per month on the loan while enrolled in school and during the six months of grace period (after graduation or withdrawal) before the repayment period begins. On the 0.0% student loans, the Company imputes interest using the rate that would be used in a market transaction with similar terms. Interest income on student loans is recognized using the effective interest method and is recorded within other income, net in the consolidated statements of income. Revenue recognized related to student loans was immaterial during each of the years ended December 31, 2013, 2012 and 2011, respectively.
Student loans receivable are stated at the amount management expects to collect from outstanding balances. For tuition related student loan receivables, the Company estimates an allowance for doubtful accounts, similar to that of accounts receivable, based on (i) an assessment of individual loans receivable over a specific aging and amount, (ii) consideration of the nature of the receivable accounts, (iii) potential changes in the business or economic environment and (iv) related FICO scores and other industry metrics. The related provision for bad debts is recorded within the instructional costs and services line in the consolidated statements of income.
For non-tuition related student loans, the Company utilizes an impairment methodology. Under this methodology, management determines whether a loan would be impaired if the Company will be unable to collect all amounts due in accordance with the contractual terms of the individual loan agreement. This assessment is based on an analysis of several factors including aging history and delinquency trending, the risk characteristics, credit quality and loan performance of the specific loans, as well as current economic conditions and industry trends. Credit quality is assessed at the outset of a loan, based upon FICO score during the loan application process. The Company considers loans to be impaired when they reach a delinquency status that requires specialized collection efforts. The Company defines delinquency for loans as being for students who are no longer active, having amounts that are past due and having the last activity more than 120 days old. The Company records a loss reserve for the full book value of the impaired loans. For the year ended December 31, 2013, there was $2.0 million recorded for loan loss reserves. The loan loss reserve is maintained at a level deemed adequate by management based on a periodic analysis of the individual loans and is recorded within the instructional costs and services line in the consolidated statements of income.
Property and Equipment 
Property and Equipment
Property and equipment are recognized at cost less accumulated depreciation. Depreciation is computed using the straight-line method based on estimated useful lives of the related assets as follows:
Buildings
39 years
Furniture and office equipment
3 - 7 years
Software
3 years
Vehicles
5 years

Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the estimated useful lives of the assets. Upon the retirement or disposition of property and equipment, the related cost and accumulated depreciation is removed and a gain or loss is recorded in the consolidated statements of income. Repairs and maintenance costs are expensed in the period incurred.
Leases 
Leases
Leases are evaluated and classified as either operating or capital leases. Leased property and equipment meeting certain criteria are capitalized, and the present value of the related lease payments is recognized as a liability on the consolidated balance sheets. Amortization of capitalized leased assets is computed on the straight-line method over the term of the lease or the life of the related asset, whichever is shorter.
If the Company receives tenant allowances from the lessor for certain improvements made to the leased property, these allowances are capitalized as leasehold improvements and a long-term liability is established. The long-term liability is amortized on a straight-line basis over the corresponding lease term. The Company records rent expense on a straight-line basis over the initial term of a lease. The difference between the rent payment and the straight-line rent expense is recorded as either a short-term or long-term liability.
The Company recognizes liabilities for exit and disposal activities on non-cancelable lease obligations at fair value in the period the liability is incurred. For the non-cancelable lease obligations, the Company records the obligation when the contract is terminated in accordance with the contract terms.
Goodwill and Other Intangible Assets 
Goodwill and Other Intangible Assets
The Company tests goodwill and indefinite-lived intangible assets for impairment annually, in the fourth quarter of each fiscal year, or more frequently if events and circumstances warrant.
The Company adopted accounting guidance which simplifies how an entity tests goodwill for impairment. The Company first assesses qualitative factors, such as deterioration in general economic conditions or negative company financial performance, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The Company's assessment of goodwill during the fourth quarter of fiscal 2013 indicated that there were no significant negative qualitative indicators, and therefore, goodwill was not impaired. There have been no impairment losses recognized by the Company for any periods presented. If negative qualitative indicators had been noted above, the Company would then need to assess the fair value of its reporting units to determine whether they were in excess of the carrying values.
To evaluate the impairment of the indefinite-lived intangible assets, the Company assessed the fair value of the assets to determine whether they were in excess of the carrying values. Determining the fair value of indefinite-lived intangible asset is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions are inherently uncertain, and can include such items as growth rates used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions, as well as determination of appropriate market comparables. The Company's assessment of indefinite-lived intangible assets during the fourth quarter of fiscal 2013 did not result in any impairment. There have been no impairment losses recognized by the Company for any periods presented.
The Company also has definite-lived intangible assets, which primarily consist of purchased intangibles and capitalized curriculum development costs. The definite-lived intangible assets are recognized at cost less accumulated amortization. Amortization is computed using the straight-line method based on estimated useful lives of the related assets
Impairment of Long-Lived Assets 
Impairment of Long-Lived Assets
The Company assesses potential impairment to its long-lived assets when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recorded when the carrying amount of the long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Any required impairment loss is measured as the amount by which the carrying amount of a long-lived asset exceeds fair value and is recorded as a reduction in the carrying value of the related asset and an expense to operating results. During the fourth quarter of 2013, the Company recognized an impairment charge of $0.7 million to write-off certain fixed assets as part of lease exit costs.
Revenue and Deferred Revenue 
Revenue and Deferred Revenue
The Company recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered or delivery has occurred, our fees or price is fixed or determinable, and collectibility is reasonably assured. The Company's revenue consists of tuition, technology fees, course digital materials and other miscellaneous fees. Tuition revenue is deferred and recognized on a straight-line basis over the applicable period of instruction net of scholarships and expected refunds, with the exception of an online student's first course, per degree level, at Ashford University. Effective in the fourth quarter of 2012, an online student's first course per degree level at Ashford University falls under a three-week conditional admission period in which the revenue is deferred until the student matriculates into the course.
The Company's institutions' online students generally enroll in a program that encompasses a series of five to six-week courses which are taken consecutively over the length of the program. With the exception of those students under conditional admission, the online students are billed on a payment period basis on the first day of class. The Company's institutions' campus-based students enroll in a program that encompasses a series of nine-week or 16-week courses. Campus-based students are billed at the beginning of each term. The Company assesses collectibility at the start of a student’s payment period (generally five courses for undergraduates and four courses for graduates) for the courses in that payment period.
If a student's attendance in a class precedes the receipt of cash from the student's source of funding, the Company establishes an account receivable and corresponding deferred revenue in the amount of the tuition due for that payment period. Cash received either directly from the student or from the student's source of funding reduces the balance of accounts receivable due from the student. Financial aid from sources such as the federal government's Title IV programs pertains to the online student's award year and is generally divided into two disbursement periods. As such, each disbursement period may contain funding for up to four courses. Financial aid disbursements are typically received during the online student's attendance in the first or second course. Since the majority of disbursements cover more courses than for which a student is currently enrolled, the amount received in excess effectively represents a prepayment from the online student for up to four courses. At the end of each accounting period, the deferred revenue and student deposits and related account receivable balances are reduced to present amounts attributable to the current course.
For those students under conditional admission, the student is not obligated for payment until after their conditional admission period has lapsed, so there is no required refund. For all subsequent courses, the Company records a provision for expected refunds and reduces revenue for the amount that is expected to be subsequently refunded. Provisions for expected refunds have not been material to any period presented. If a student withdraws from a program prior to a specified date, a portion of such student's tuition is refunded, subject to certain state requirements which require a pro rata refund. The Company reassess collectibility throughout the period revenue is recognized by the Company's institutions, on a student-by-student basis. The Company reassess collectibility based upon new information and changes in facts and circumstances relevant to a student's ability to pay. For example, the Company reassesses collectibility when a student drops from the institution (i.e., is no longer enrolled) and when a student attends a course that was not included in the initial assessment at the start of a student’s payment period.
The Company records technology fees, which are one-time start up fees charged to each new online student, other than military, scholarship students or certain corporate reimbursement students. Technology fee revenue is recognized ratably over the average expected enrollment of a student. Effective January 1, 2013, Ashford University eliminated the one-time technology fee charged students and replaced it with a per course charge. The per course technology fee revenue is recognized on a straight-line basis over the applicable period of instruction. Other miscellaneous fees include fees for course content and textbooks and other services, such as commencements, and are recognized upon delivery of the goods or when the related service is performed.
Workers Compensation 
Workers Compensation
The Company records a gross liability for estimated workers compensation claims, incurred but not yet reported, as of each balance sheet date. The Company also records the gross insurance recoverable due for individual claim amounts.  This is recorded as an other asset and as an equal accrued liability. The stop-loss premium is determined annually, but invoiced and paid on a quarterly basis. The related insurance premiums are expensed ratably over the coverage period.
Income Taxes 
Income Taxes
The Company accounts for its income taxes using the liability method whereby deferred tax assets and liabilities are determined based on temporary differences between the bases used for financial reporting and income tax reporting purposes. Deferred income taxes are provided based on the enacted tax rates expected to be in effect at the time such temporary differences are expected to reverse. A valuation allowance is provided for deferred tax assets if it is more likely than not that the Company will not realize those tax assets through future operations.
The Company evaluates and accounts for uncertain tax positions using a two-step approach. Recognition (step one) occurs when the Company concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustained upon examination. Measurement (step two) determines the amount of benefit that is greater than 50% likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Derecognition of a tax position that was previously recognized would occur when the Company subsequently determines that a tax position no longer meets the more-likely-than-not threshold of being sustained.
Stock-Based Compensation 
Stock-Based Compensation
Stock-based compensation expense is measured at the grant date fair value of the award and is expensed over the vesting period. The Company estimates the fair value of stock options on the grant date using the Black-Scholes option pricing model. Determining the fair value of stock-based awards at the grant date under this model requires judgment, including estimating volatility, employee stock option exercise behaviors and forfeiture rates. The assumptions used in calculating the fair value of stock-based awards represent the Company's best estimates, but these estimates involve inherent uncertainties and the application of management judgment. The fair value of the Company's restricted stock units is based on the market price of its common stock on the date of grant.
The amount of stock-based compensation expense recognized during a period is based on the portion of the awards that are ultimately expected to vest. The Company estimates award forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company's equity plans require that option awards have an exercise price that equals or exceeds the closing price of the Company's common stock, as reported by the NYSE, on the date of grant.
Stock-based compensation expense for stock awards is recorded in the consolidated statement of income, net of estimated forfeitures, using the graded vesting method over the requisite service periods of the respective stock awards.
Instructional Costs and Services 
Instructional Costs and Services
Instructional costs and services consist primarily of costs related to the administration and delivery of the Company's educational programs. This expense category includes compensation for campus-based faculty and administrative personnel, costs associated with online faculty, curriculum and new program development costs, financial aid processing costs, technology license costs, bad debt expense and costs associated with other support groups that provide services directly to the students. Instructional costs and services also include an allocation of information technology, facility, depreciation and amortization costs.
Admissions Advisory and Marketing 
Admissions Advisory and Marketing
Admissions advisory and marketing costs include compensation of personnel engaged in marketing and recruitment, as well as costs associated with purchasing leads and producing marketing materials. Such costs are generally affected by the cost of advertising media and leads, the efficiency of the Company's marketing and recruiting efforts, compensation for the Company's enrollment personnel and expenditures on advertising initiatives for new and existing academic programs. Admissions advisory and marketing costs also include an allocation of information technology, facility, depreciation and amortization costs.
Advertising costs, a subset of admissions advisory and marketing costs, consists primarily of marketing leads and other branding and promotional activities. These advertising activities are expensed as incurred, or the first time the advertising takes place, depending on the type of advertising activity.
General and Administrative 
General and Administrative
General and administrative expenses include compensation of employees engaged in corporate management, finance, human resources, compliance and other corporate functions. General and administrative expenses also include professional services fees, travel and entertainment expenses and an allocation of information technology, facility, depreciation and amortization costs.
Earnings Per Share 
Earnings Per Share
Basic earnings per common share is calculated by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net income available to common stockholders by the sum of (i) the weighted average number of common shares outstanding during the period and (ii) potentially dilutive securities outstanding during the period, if the effect is dilutive. Potentially dilutive common shares consist of incremental shares of common stock issuable upon the exercise of the stock options and warrants and upon the settlement of restricted stock units.
Segment Information 
Segment Information
The Company operates in one reportable segment as a single educational delivery operation using a core infrastructure that serves the curriculum and educational delivery needs of both its campus-based and online students regardless of geography. The Company's chief operating decision maker, its CEO and President, manages the Company's operations as a whole, and no revenue, expense or operating income information is evaluated by the chief operating decision maker on any component level.
Comprehensive Income 
Comprehensive Income
Comprehensive income consists of net income and other gains and losses affecting stockholders’ equity that, under GAAP, are excluded from net income. For the year ended December 31, 2013, such items consisted of unrealized gains and losses on investments.
The following table summarizes the components of other comprehensive gain (loss) and the related tax effects for the years ended December 31, 2013, 2012 and 2011 (in thousands):
 
December 31, 2013
 
Before-Tax Amount
 
Tax Effect
 
Net-of-Tax Amount
Unrealized losses on investments
$
(280
)
 
$
106

 
$
(174
)
 
 
 
 
 
 
 
December 31, 2012
 
Before-Tax Amount
 
Tax Effect
 
Net-of-Tax Amount
Unrealized gains on investments
$
1,300

 
$
(483
)
 
$
817

 
 
 
 
 
 
 
December 31, 2011
 
Before-Tax Amount
 
Tax Effect
 
Net-of-Tax Amount
Unrealized losses on investments
$
(946
)
 
$
351

 
(595
)
Recently Adopted Accounting Pronouncements 
Recently Adopted Accounting Pronouncements
In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-11, “Incomes Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” ASU 2013-11 addresses the diversity in practice regarding financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The guidance requires an unrecognized tax benefit, or a portion of, to be presented in the financial statements as a reduction to the related deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. To the extent the net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date to settle any additional income taxes that would result from the disallowance of a tax position. The unrecognized tax benefit should be presented in the financial statements as a liability and not as a reduction of the related deferred tax asset. The amendments in this standard are effective for reporting periods beginning after December 15, 2013, with early adoption permitted. The Company adopted ASU 2013-11, effective January 1, 2014, and does not believe that such adoption will have a material effect on its consolidated financial statements.
Summary of Significant Accounting Policies (Tables)
Restatement/Revision of Previously Issued Consolidated Financial Statements 
The following tables present the impact of the restatement and revisions on the previously issued financial statements. The “As Restated” column for 2013 and the “As Revised” column for 2012 reflects final adjusted balances after the related restatement or revision, as well as previously identified immaterial adjustments. The following tables are presented in thousands, except per share data:
 
As Reported
 
As Restated
 
As Reported
 
As Revised
 
 
 
 
Consolidated balance sheet data:
December 31, 2013
 
December 31, 2012
 
 
Cash and cash equivalents
$
249,472

 
$
212,526

 
$
255,965

 
$
208,971

 


 
 
Restricted cash
$
—

 
$
36,946

 
$
—

 
$
46,994

 


 
 
Accounts receivable, net
$
28,565

 
$
22,953

 
$
67,371

 
$
54,487

 


 
 
Deferred income taxes, current
$
15,232

 
$
16,683

 
$
10,936

 
$
15,490

 


 
 
Prepaid expenses and other current assets
$
21,369

 
$
21,563

 
$
19,810

 
$
20,053

 


 
 
Total current assets
$
381,582

 
$
377,615

 
$
491,605

 
$
483,518

 


 
 
Student loans receivable, net, non-current
-

 
-

 
$
15,143

 
$
14,416

 


 
 
Deferred income taxes, non-current
-

 
-

 
$
13,266

 
$
13,706

 


 
 
Total assets
$
573,979

 
$
570,012

 
$
750,787

 
$
742,413

 


 
 
Accrued liabilities
$
54,756

 
$
54,290

 
-

 
-

 
 
 
 
Total current liabilities
$
192,742

 
$
192,276

 
-

 
-

 
 
 
 
Total liabilities
$
255,940

 
$
225,474

 
-

 
-

 
 
 
 
Retained earnings
$
515,608

 
$
512,107

 
$
474,598

 
$
466,224

 


 
 
Total stockholders’ equity
$
348,039

 
$
344,538

 
$
491,570

 
$
483,196

 


 
 
Total liabilities and stockholders’ equity
$
573,979

 
$
570,012

 
$
750,787

 
$
742,413

 


 
 
 
Year to Date Period Ended
 
As Reported
 
As Restated
 
As Reported
 
As Revised
 
As Reported
 
As Revised
Consolidated statement of income data:
December 31, 2013
 
December 31, 2012
 
December 31, 2011
Revenue
$
768,623

 
$
751,449

 
$
968,171

 
$
943,405

 
$
933,349

 
$
915,247

Instructional costs and services
$
395,928

 
$
370,734

 
$
364,001

 
$
343,072

 
$
304,190

 
$
288,882

Total costs and expenses
$
708,180

 
$
682,986

 
$
772,707

 
$
751,778

 
$
659,602

 
$
644,294

Operating income
$
60,443

 
$
68,463

 
$
195,464

 
$
191,627

 
$
273,747

 
$
270,953

Other income, net
$
3,346

 
$
3,082

 
$
3,370

 
$
3,531

 
$
2,768

 
$
2,871

Income before income taxes
$
63,789

 
$
71,545

 
$
198,834

 
$
195,158

 
$
276,515

 
$
273,824

Income tax expense
$
22,779

 
$
25,662

 
$
75,413

 
$
74,012

 
$
103,751

 
$
102,746

Net income
$
41,010

 
$
45,883

 
$
123,421

 
$
121,146

 
$
172,764

 
$
171,078

Basic earnings per share
$
0.76

 
$
0.85

 
$
2.33

 
$
2.29

 
$
3.30

 
$
3.27

Diluted earnings per share
$
0.74

 
$
0.83

 
$
2.21

 
$
2.17

 
$
3.02

 
$
2.99

Consolidated statement of cash flow data:
 
 
 
 
 
 
 
 
 
 
 
Net income
$
41,010

 
$
45,883

 
$
123,421

 
$
121,146

 
$
172,764

 
$
171,078

Provision for bad debts
$
72,313

 
$
47,119

 
$
73,696

 
$
52,767

 
$
58,511

 
$
43,203

Amortization of premium/ discount
$
3,559

 
$
2,624

 
$
6,805

 
$
8,992

 
-

 
-

Deferred income taxes
$
(10,506
)
 
$
(6,962
)
 
$
(9,972
)
 
$
(11,373
)
 
$
6,606

 
$
5,601

Restricted cash
$
—

 
$
10,048

 
$
—

 
$
6,721

 
$
—

 
$
(4,855
)
Accounts receivable
$
(34,348
)
 
$
(15,973
)
 
$
(81,577
)
 
$
(62,333
)
 
$
(60,587
)
 
$
(43,300
)
Prepaid expenses and other current assets
$
(2,411
)
 
$
(2,607
)
 
$
(1,056
)
 
$
(2,387
)
 
$
(2,104
)
 
$
(3,547
)
Student loan receivable, net
-

 
-

 
$
(3,778
)
 
$
(5,742
)
 
$
(8,177
)
 
$
(6,021
)
Accounts payable and accrued liabilities
$
13,687

 
$
13,220

 
-

 
-

 
-

 
-

Deferred revenue and student deposits
-

 
-

 
$
(10,389
)
 
$
(3,921
)
 
-

 
-

Cash flows from operating activities
$
75,538

 
$
85,586

 
$
143,185

 
$
149,905

 
$
220,808

 
$
215,954

The following tables for fiscal year 2013 are presented in thousands, except per share data:
 
As Reported
As Reclassified
As Restated
 
As Reported
As Reclassified
As Restated
Consolidated balance sheet data:
March 31, 2013
 
June 30, 2013
Cash and cash equivalents
$
316,267

-

$
275,533

 
$
363,121

-

$
322,578

Restricted cash
$
—

-

$
41,094

 
$
—

-

$
40,543

Accounts receivable, net
$
69,352

$
68,472

$
51,835

 
$
60,502

$
58,895

$
43,393

Student loans receivable, net, current
$
—

$
880

$
880

 
$
—

$
1,607

$
1,607

Deferred income taxes, current
$
10,970

-

$
15,524

 
$
11,020

-

$
15,573

Prepaid expenses and other current assets
$
21,445

-

$
25,245

 
$
20,294

-

$
23,891

Total current assets
$
530,232

-

$
521,949

 
$
541,747

-

$
534,395

Student loans receivable, net, non-current
$
14,524

-

$
13,788

 
-

-

-

Deferred income taxes, non-current
$
13,262

-

$
13,701

 
$
13,306

-

$
13,746

Total assets
$
763,100

-

$
754,520

 
$
761,992

-

$
755,080

Accrued liabilities
$
56,707

-

$
58,801

 
$
45,089

-

$
48,336

Deferred revenue and student deposits
-

-

-

 
$
135,865

-

$
134,634

Total current liabilities
$
204,577

-

$
206,671

 
$
188,315

-

$
190,331

Total liabilities
$
240,985

-

$
243,079

 
$
225,222

-

$
227,238

Retained earnings
$
501,565

-

$
490,891

 
$
511,933

-

$
503,005

Total stockholders’ equity
$
522,115

-

$
511,441

 
$
536,770

-

$
527,842

Total liabilities and stockholders’ equity
$
763,100

-

$
754,520

 
$
761,992

-

$
755,080

 
As Reported
As Reclassified
As Restated
 
As Reported
As Reclassified
As Restated
Consolidated balance sheet data:
September 30, 2013
 
December 31, 2013
Cash and cash equivalents
$
431,762

-

$
392,299

 
$
249,472

-
$
212,526

Restricted cash
$
—

-

$
39,463

 
$
—

-
$
36,946

Accounts receivable, net
$
51,123

$
49,441

$
41,842

 
$
28,565

-
$
22,953

Student loans receivable, net, current
$
—

$
1,682

$
1,682

 
-

-
-

Deferred income taxes, current
$
11,033

-

$
15,586

 
$
15,232

-
$
16,683

Prepaid expenses and other current assets
$
16,057

-

$
19,072

 
$
21,369

-
$
21,563

Total current assets
$
545,196

-

$
545,165

 
$
381,582

-
$
377,615

Deferred income taxes, non-current
$
13,284

-

$
13,724

 
-

-
-

Total assets
$
765,190

-

$
765,599

 
$
573,979

-
$
570,012

Accrued liabilities
$
43,567

-

$
48,828

 
$
54,756

-
$
54,290

Total current liabilities
$
179,336

-

$
184,597

 
$
192,742

-
$
192,276

Total liabilities
$
214,375

-

$
219,636

 
$
225,940

-
$
225,474

Retained earnings
$
522,068

-

$
517,216

 
$
515,608

-
$
512,107

Total stockholders’ equity
$
550,815

-

$
545,963

 
$
348,039

-
$
344,538

Total liabilities and stockholders’ equity
$
765,190

-

$
765,599

 
$
573,979

-
$
570,012

 
As Reported
As Reclassified
As Restated
 
As Reported
As Reclassified
As Restated
 
Three Months Ended
Consolidated statement of income data:
March 31, 2013
 
June 30, 2013
Revenue
$
221,984

-

$
212,986

 
$
197,574

-

$
193,470

Instructional costs and services
$
101,646

$
102,282

$
97,028

 
$
106,045

$
106,812

$
99,603

General and administrative
$
19,375

$
18,739

$
18,739

 
$
17,919

$
17,152

$
17,152

Total costs and expenses
$
178,564

-

$
173,310

 
$
181,546

-

$
174,337

Operating income
$
43,420

-

$
39,676

 
$
16,028

-

$
19,133

Other income, net
$
818

-

$
837

 
$
1,031

-

$
748

Income before income taxes
$
44,238

-

$
40,513

 
$
17,059

-

$
19,881

Income tax expense
$
17,271

-

$
15,846

 
$
6,691

-

$
7,767

Net income
$
26,967

-

$
24,667

 
$
10,368

-

$
12,114

Basic earnings per share
$
0.50

-

$
0.46

 
$
0.19

-

$
0.22

Diluted earnings per share
$
0.49

-

$
0.45

 
$
0.19

-

$
0.22

 
As Reported
As Reclassified
As Restated
 
As Reported
As Reclassified
As Restated
 
Three Months Ended
Consolidated statement of income data:
September 30, 2013
 
December 31, 2013
Revenue
$
185,612

-

$
182,768

 
$
163,453

-
$
162,225

Instructional costs and services
$
92,204

$
93,079

$
83,562

 
$
93,755

-
$
90,541

General and administrative
$
16,050

$
15,175

$
15,175

 
-

-
-

Total costs and expenses
$
172,761

-

$
163,244

 
$
175,309

-
$
172,095

Operating income (loss)
$
12,851

-

$
19,524

 
$
(11,856
)
-
$
(9,870
)
Income (loss) before income taxes
$
13,638

-

$
20,310

 
$
(11,146
)
-
$
(9,159
)
Income tax expense (benefit)
$
3,503

-

$
6,099

 
$
(4,686
)
-
$
(4,050
)
Net income (loss)
$
10,135

-

$
14,211

 
$
(6,460
)
-
$
(5,109
)
Basic earnings (loss) per share
$
0.19

-

$
0.26

 
$
(0.12
)
-
$
(0.10
)
Diluted earnings (loss) per share
$
0.18

-

$
0.25

 
$
(0.12
)
-
$
(0.10
)
 
As Reported
As Reclassified
As Restated
 
As Reported
As Reclassified
As Restated
 
Year to Date Period Ended
Consolidated statement of income data:
March 31, 2013
 
June 30, 2013
Revenue
$
221,984

-

$
212,986

 
$
419,558

-

$
406,456

Instructional costs and services
$
101,646

$
102,282

$
97,028

 
$
207,691

$
209,094

$
196,631

General and administrative
$
19,375

$
18,739

$
18,739

 
$
37,294

$
35,891

$
35,891

Total costs and expenses
$
178,564

-

$
173,310

 
$
360,110

-

$
347,647

Operating income
$
43,420

-

$
39,676

 
$
59,448

-

$
58,809

Other income, net
$
818

-

$
837

 
$
1,849

-

$
1,585

Income before income taxes
$
44,238

-

$
40,513

 
$
61,297

-

$
60,394

Income tax expense
$
17,271

-

$
15,846

 
$
23,962

-

$
23,613

Net income
$
26,967

-

$
24,667

 
$
37,335

-

$
36,781

Basic earnings per share
$
0.50

-

$
0.46

 
$
0.69

-

$
0.68

Diluted earnings per share
$
0.49

-

$
0.45

 
$
0.67

-

$
0.66

Consolidated statement of cash flow data:
 
 
 
 
 
 
 
Net income
$
26,967

-

$
24,667

 
$
37,335

-

$
36,781

Provision for bad debts
$
18,294

-

$
13,040

 
$
36,865

-

$
24,403

Amortization of premium/ discount
$
1,005

-

$
1,407

 
$
3,100

-

$
2,165

Restricted cash
$
—

-

$
5,900

 
$
—

-

$
6,451

Accounts receivable
$
(19,381
)
-

$
(10,229
)
 
$
(28,744
)
-

$
(13,222
)
Prepaid expenses and other current assets
$
(1,635
)
-

$
(5,656
)
 
$
(96
)
-

$
(4,110
)
Student loan receivable
$
281

-

$
(133
)
 
-

-

-

Accounts payable and accrued liabilities
$
14,119

-

$
16,213

 
$
2,153

-

$
5,400

Deferred revenue and student deposits
$
(34,088
)
-

$
(33,747
)
 
$
(39,192
)
-

$
(39,996
)
Cash flows from operating activities
$
15,616

-

$
21,516

 
$
32,273

-

$
38,724

 
As Reported
As Reclassified
As Restated
 
As Reported
As Reclassified
As Restated
 
Year to Date Period Ended
Consolidated statement of income data:
September 30, 2013
 
December 31, 2013
Revenue
$
605,170

-

$
589,224

 
$
768,623

-
$
751,449

Instructional costs and services
$
299,895

$
302,173

$
280,193

 
$
395,928

-
$
370,734

General and administrative
$
53,344

$
51,066

$
51,066

 
-

-
-

Total costs and expenses
$
532,871

-

$
510,891

 
$
708,180

-
$
682,986

Operating income
$
72,299

-

$
78,333

 
$
60,443

-
$
68,463

Other income, net
$
2,636

-

$
2,371

 
$
3,346

-
$
3,082

Income before income taxes
$
74,935

-

$
80,704

 
$
63,789

-
$
71,545

Income tax expense
$
27,465

-

$
29,712

 
$
22,779

-
$
25,662

Net income
$
47,470

-

$
50,992

 
$
41,010

-
$
45,883

Basic earnings per share
$
0.88

-

$
0.94

 
$
0.76

-
$
0.85

Diluted earnings per share
$
0.85

-

$
0.91

 
$
0.74

-
$
0.83

Consolidated statement of cash flow data:
 
 
 
 
 
 
 
Net income
$
47,470

-

$
50,992

 
$
41,010

-
$
45,883

Provision for bad debts
$
53,649

-

$
31,670

 
$
72,313

-
$
47,119

Amortization of premium/discount
$
3,596

-

$
2,662

 
$
3,559

-
$
2,624

Deferred income taxes
-

-

-

 
$
(10,506
)
-
$
(6,962
)
Restricted cash
$
—

-

$
7,531

 
$
—

-
$
10,048

Accounts receivable
$
(36,056
)
-

$
(18,826
)
 
$
(34,348
)
-
$
(15,973
)
Prepaid expenses and other current assets
$
3,395

-

$
(155
)
 
$
(2,411
)
-
$
(2,607
)
Accounts payable and accrued liabilities
$
3,699

-

$
8,960

 
$
13,687

-
$
13,220

Deferred revenue and student deposits
$
(48,610
)
-

$
(48,160
)
 
-

-
-

Cash flows from operating activities
$
54,277

-

$
61,808

 
$
75,538

-
$
85,586

The following tables for fiscal year 2012 are presented in thousands, except per share data:
 
As Reported
As Reclassified
As Revised
 
As Reported
As Reclassified
As Revised
Consolidated balance sheet data:
March 31, 2012
 
June 30, 2012
Cash and cash equivalents
$
162,148

-

$
103,405

 
$
180,425

-

$
123,901

Restricted cash
$
25

-

$
58,768

 
$
—

-

$
56,524

Accounts receivable, net
$
91,129

$
90,708

$
75,846

 
$
91,139

$
90,620

$
74,826

Student loan receivables, net, current
$
—

$
421

$
421

 
$
—

$
519

$
519

Deferred income taxes, current
$
5,441

-

$
8,235

 
$
5,442

-

$
8,235

Prepaid expenses and other current assets
$
17,864

-

$
18,367

 
22,966

-

25,105

Total current assets
$
441,169

-

$
429,604

 
$
459,764

-

$
448,902

Student loan receivables, net, non-current
$
12,065

-

$
11,035

 
$
14,998

-

$
14,232

Deferred income taxes, non-current
$
10,805

-

$
11,604

 
$
10,810

-

$
11,608

Total assets
$
682,447

-

$
670,651

 
$
723,119

-

$
712,289

Accrued liabilities
$
66,755

-

$
64,595

 
$
54,650

-

$
54,006

Total current liabilities
$
260,575

-

$
258,415

 
$
248,012

-

$
247,368

Total liabilities
$
289,296

-

$
287,136

 
$
279,333

-

$
278,689

Retained earnings
$
383,148

-

$
373,512

 
$
426,406

-

$
416,220

Total stockholders’ equity
$
393,151

-

$
383,515

 
$
443,786

-

$
433,600

Total liabilities and stockholders’ equity
$
682,447

-

$
670,651

 
$
723,119

-

$
712,289

 
As Reported
As Reclassified
As Revised
 
As Reported
As Reclassified
As Revised
Consolidated balance sheet data:
September 30, 2012
 
December 31, 2012
Cash and cash equivalents
$
181,577

-

$
131,501

 
$
255,965

-
$
208,971

Restricted cash
$
—

-

$
50,076

 
$
—

-
$
46,994

Accounts receivable, net
$
99,919

$
99,386

$
84,178

 
$
67,371

-
$
54,487

Student loan receivables, net, current
$
—

$
533

$
533

 
-

-
-

Deferred income taxes, current
$
5,313

-

$
8,106

 
$
10,936

-
$
15,490

Prepaid expenses and other current assets
$
22,722

-

$
22,944

 
$
19,810

-
$
20,053

Total current assets
$
452,515

-

$
440,322

 
$
491,605

-
$
483,518

Student loan receivables, net, non-current
$
14,992

-

$
14,291

 
$
15,143

-
$
14,416

Deferred income taxes, non-current
$
10,752

-

$
11,550

 
$
13,266

-
$
13,706

Total assets
$
736,099

-

$
724,003

 
$
750,787

-
$
742,413

Accrued liabilities
$
52,313

-

$
50,044

 
-

-
-

Total current liabilities
$
231,925

-

$
229,656

 
-

-
-

Total liabilities
$
265,565

-

$
263,296

 
-

-
-

Retained earnings
$
456,226

-

$
446,399

 
$
474,598

-
$
466,224

Total stockholders’ equity
$
470,534

-

$
460,707

 
$
491,570

-
$
483,196

Total liabilities and stockholders’ equity
$
736,099

-

$
724,003

 
$
750,787

-
$
742,413

 
As Reported
As Reclassified
As Revised
 
As Reported
As Reclassified
As Revised
 
Three Months Ended
Consolidated statement of income data:
March 31, 2012
 
June 30, 2012
Revenue
$
250,437

-

$
241,433

 
$
256,302

-

$
249,534

Instructional costs and services
$
84,224

$
84,453

$
81,202

 
$
85,279

$
85,579

$
79,719

General and administrative
$
25,542

$
25,314

$
25,314

 
$
15,047

$
14,747

$
14,747

Total costs and expenses
$
199,808

-

$
196,558

 
$
187,520

-

$
181,660

Operating income
$
50,629

-

$
44,875

 
$
68,782

-

$
67,874

Other income, net
$
683

-

$
740

 
$
854

-

$
883

Income before income taxes
$
51,312

-

$
45,615

 
$
69,636

-

$
68,757

Income tax expense
$
19,341

-

$
17,181

 
$
26,378

-

$
26,049

Net income
$
31,971

-

$
28,434

 
$
43,258

-

$
42,708

Basic earnings per share
$
0.61

-

$
0.55

 
$
0.82

-

$
0.81

Diluted earnings per share
$
0.57

-

$
0.51

 
$
0.77

-

$
0.76

 
As Reported
As Reclassified
As Revised
 
As Reported
As Reclassified
As Revised
 
Three Months Ended
Consolidated statement of income data:
September 30, 2012
 
December 31, 2012
Revenue
$
252,076

-

$
245,917

 
$
209,356

-

$
206,521

Instructional costs and services
$
90,986

$
91,362

$
84,666

 
$
102,034

$
102,607

$
97,485

General and administrative
$
17,247

$
16,870

$
16,870

 
$
13,139

$
12,566

$
12,566

Total costs and expenses
$
204,967

-

$
198,270

 
$
180,412

-

$
175,290

Operating income
$
47,109

-

$
47,647

 
$
28,944

-

$
31,231

Other income, net
$
955

-

$
996

 
$
878

-

$
912

Income before income taxes
$
48,064

-

$
48,643

 
$
29,822

-

$
32,143

Income tax expense
$
18,244

-

$
18,464

 
$
11,450

-

$
12,318

Net income
$
29,820

-

$
30,179

 
$
18,372

-

$
19,825

Basic earnings per share
$
0.56

-

$
0.57

 
$
0.34

-

$
0.37

Diluted earnings per share
$
0.53

-

$
0.54

 
$
0.33

-

$
0.36

 
As Reported
As Reclassified
As Revised
 
As Reported
As Reclassified
As Revised
 
Year to Date Period Ended
Consolidated statement of income data:
March 31, 2012
 
June 30, 2012
Revenue
$
250,437

-

$
241,433

 
$
506,739

-

$
490,967

Instructional costs and services
$
84,224

$
84,453

$
81,202

 
$
169,503

$
170,032

$
160,921

General and administrative
$
25,542

$
25,314

$
25,314

 
$
40,589

$
40,061

$
40,061

Total costs and expenses
$
199,808

-

$
196,558

 
$
387,328

-

$
378,218

Operating income
$
50,629

-

$
44,875

 
$
119,411

-

$
112,749

Other income, net
$
683

-

$
740

 
$
1,537

-

$
1,623

Income before income taxes
$
51,312

-

$
45,615

 
$
120,948

-

$
114,372

Income tax expense
$
19,341

-

$
17,181

 
$
45,719

-

$
43,230

Net income
$
31,971

-

$
28,434

 
$
75,229

-

$
71,142

Basic earnings per share
$
0.61

-

$
0.55

 
$
1.44

-

$
1.36

Diluted earnings per share
$
0.57

-

$
0.51

 
$
1.34

-

$
1.27

Consolidated statement of cash flow data:
 
 
 
 
 
 
 
Net income
$
31,971

-

$
28,434

 
$
75,229

-

$
71,142

Provision for bad debts
$
16,669

-

$
13,418

 
$
33,401

-

$
24,289

Amortization of premium/discount
$
1,754

-

$
2,125

 
$
3,594

 
$
4,470

Restricted cash
$
—

-

$
(5,028
)
 
$
—

-

$
(2,809
)
Accounts receivable
$
(46,053
)
-

$
(37,153
)
 
$
(62,501
)
-

$
(46,772
)
Prepaid expenses and other current assets
$
(459
)
-

$
32

 
$
(5,084
)
-

$
(6,806
)
Student loans receivable
$
(2,399
)
 
$
(3,214
)
 
$
(5,626
)
 
$
(6,666
)
Accounts payable and accrued liabilities
$
26,851

-

$
24,691

 
$
18,492

-

$
17,847

Cash flows from operating activities
$
40,350

-

$
35,321

 
$
76,806

-

$
73,996

 
As Reported
As Reclassified
As Revised
 
As Reported
As Reclassified
As Revised
 
Year to Date Period Ended
Consolidated statement of income data:
September 30, 2012
 
December 31, 2012
Revenue
$
758,815

-

$
736,884

 
$
968,171

-
$
943,405

Instructional costs and services
$
260,489

$
261,394

$
245,587

 
$
364,001

-
$
343,072

General and administrative
$
57,836

$
56,931

$
56,931

 
-

-
-

Total costs and expenses
$
592,295

-

$
576,488

 
$
772,707

-
$
751,778

Operating income
$
166,520

-

$
160,396

 
$
195,464

-
$
191,627

Other income, net
$
2,492

-

$
2,619

 
$
3,370

-
$
3,531

Income before income taxes
$
169,012

-

$
163,015

 
$
198,834

-
$
195,158

Income tax expense
$
63,963

-

$
61,694

 
$
75,413

-
$
74,012

Net income
$
105,049

-

$
101,321

 
$
123,421

-
$
121,146

Basic earnings per share
$
2.00

-

$
1.93

 
$
2.33

-
$
2.29

Diluted earnings per share
$
1.87

-

$
1.81

 
$
2.21

-
$
2.17

Consolidated statement of cash flow data:
 
 
 
 
 
 
 
Net income
$
105,049

-

$
101,321

 
$
123,421

-
$
121,146

Provision for bad debts
$
52,418

-

$
36,610

 
$
73,696

-
$
52,767

Deferred income taxes
-

-

-

 
$
(9,972
)
-
$
(11,373
)
Amortization of premium/discount
$
5,384

 
$
6,922

 
$
6,805

 
$
8,992

Restricted cash
$
—

-

$
3,639

 
$
—

-
$
6,721

Accounts receivable
$
(90,188
)
-

$
(68,357
)
 
$
(81,577
)
-
$
(62,333
)
Prepaid expenses and other current assets
$
(3,982
)
-

$
(4,548
)
 
$
(1,056
)
-
$
(2,387
)
Student loans receivable
$
(5,730
)
 
$
(6,729
)
 
$
(3,778
)
 
$
(5,742
)
Accounts payable and accrued liabilities
$
19,363

-

$
17,094

 
-

-
-

Deferred revenue and student deposits
-

-

-

 
$
(10,389
)
-
$
(3,921
)
Cash flows from operating activities
$
93,588

-

$
97,226

 
$
143,185

-
$
149,905

Property and Equipment 
Property and equipment are recognized at cost less accumulated depreciation. Depreciation is computed using the straight-line method based on estimated useful lives of the related assets as follows:
Buildings
39 years
Furniture and office equipment
3 - 7 years
Software
3 years
Vehicles
5 years
Property and equipment, net, consist of the following (in thousands):
 
As of December 31,
 
2013
 
2012
Land
$
7,091

 
$
7,091

Buildings
28,916

 
25,430

Furniture and office equipment
84,852

 
79,656

Software
10,075

 
6,053

Leasehold improvements
24,360

 
23,756

Vehicles
147

 
147

Total property and equipment
155,441

 
142,133

Less accumulated depreciation and amortization
(64,016
)
 
(46,167
)
Total property and equipment, net
$
91,425

 
$
95,966

Components of Other Comprehensive Loss and the Related Tax Effects 
The following table summarizes the components of other comprehensive gain (loss) and the related tax effects for the years ended December 31, 2013, 2012 and 2011 (in thousands):
 
December 31, 2013
 
Before-Tax Amount
 
Tax Effect
 
Net-of-Tax Amount
Unrealized losses on investments
$
(280
)
 
$
106

 
$
(174
)
 
 
 
 
 
 
 
December 31, 2012
 
Before-Tax Amount
 
Tax Effect
 
Net-of-Tax Amount
Unrealized gains on investments
$
1,300

 
$
(483
)
 
$
817

 
 
 
 
 
 
 
December 31, 2011
 
Before-Tax Amount
 
Tax Effect
 
Net-of-Tax Amount
Unrealized losses on investments
$
(946
)
 
$
351

 
(595
)
Investments (Tables)
Fair Value Information of Short and Long-term Investments 
The following table summarizes the fair value information of short and long-term investments as of December 31, 2013 and 2012, respectively (in thousands):
 
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

 
December 31, 2012
 
Level 1
 
Level 2
 
Level 3
 
Total
Demand notes
$
—

 
$
415

 
$
—

 
$
415

Corporate notes and bonds
—

 
148,801

 
—

 
148,801

Certificates of deposit
—

 
109,489

 
—

 
109,489

Total
$
—

 
$
258,705

 
$
—

 
$
258,705

Schedule of Difference Between Amortized Cost and Fair Value 
The following table summarizes the differences between amortized cost and fair value of short and long-term investments as of December 31, 2013 and 2012, respectively (in thousands):
 
December 31, 2013
 
 
 
 
 
Gross unrealized
 
 
 
Maturities in Years
 
Amortized Cost
 
Gain
 
Loss
 
Fair Value
Short-term
 
 
 
 
 
 
 
 
 
Demand notes
1 year or less
 
$
719

 
$
—

 
$
—

 
$
719

Corporate notes and bonds
1 year or less
 
5,132

 
50

 
—

 
5,182

Certificates of deposit
1 year or less
 
60,000

 
—

 
—

 
60,000

Long-term
 
 
 
 
 
 
 
 
 
Corporate notes and bonds
3 years or less
 
11,037

 
25

 
—

 
11,062

Certificates of deposit
3 years or less
 
30,000

 
—

 
—

 
30,000

Total
 
 
$
106,888

 
$
75

 
$
—

 
$
106,963

 
December 31, 2012
 
 
 
 
 
Gross unrealized
 
 
 
Maturities in Years
 
Amortized Cost
 
Gain
 
Loss
 
Fair Value
Short-term
 
 
 
 
 
 
 
 
 
Demand notes
1 year or less
 
$
415

 
$
—

 
$
—

 
$
415

Corporate notes and bonds
1 year or less
 
126,806

 
282

 
(25
)
 
127,063

Certificate of deposit
1 year or less
 
9,489

 
—

 
—

 
9,489

Long-term
 
 
 
 
 
 
 
 
 
Corporate notes and bonds
3 years or less
 
21,641

 
117

 
(20
)
 
21,738

Certificate of deposit
3 years or less
 
100,000

 
—

 
—

 
100,000

Total
 
 
$
258,351

 
$
399

 
$
(45
)
 
$
258,705

Accounts Receivable (Tables)
Accounts Receivable 
Accounts receivable, net, consist of the following (in thousands):
 
As of December 31,
 
2013
 
2012
 
(As restated)
 
 
Accounts receivable
$
49,854

 
$
85,953

Less allowance for doubtful accounts
26,901

 
31,466

Accounts receivable, net
$
22,953

 
$
54,487

Student loans receivable, net, consist of the following (in thousands):
 
As of December 31,
Short-term:
2013
 
2012
   Student loans receivable (non-tuition related)
$
587

 
$
428

   Student loans receivable (tuition related)
621

 
167

   Current student loans receivable
1,208

 
595

Less allowance for doubtful accounts
165

 
39

Student loans receivable, net
$
1,043

 
$
556

 
 
 
 
 
As of December 31,
Long-term:
2013
 
2012
   Student loans receivable (non-tuition related)
$
7,347

 
$
8,101

   Student loans receivable (tuition related)
6,417

 
8,171

   Non-current student loans receivable
13,764

 
16,272

Less allowance for doubtful accounts
1,979

 
1,856

Student loans receivable, net
$
11,785

 
$
14,416

Changes in the Allowance for Doubtful Accounts 
The following table presents the changes in the allowance for doubtful accounts for accounts receivable for the periods indicated (in thousands):
 
Beginning
Balance
 
Charged to
Expense
 
Deductions(1)
 
Ending
Balance
Allowance for doubtful accounts receivable:
 
 
 
 
 
 
 
For the year ended December 31, 2013
$
31,466

 
$
46,851

 
$
(51,416
)
 
$
26,901

For the year ended December 31, 2012
24,688

 
52,794

 
(46,016
)
 
31,466

For the year ended December 31, 2011
19,783

 
42,077

 
(37,172
)
 
24,688

(1)
Deductions represent accounts written off, net of recoveries.
The following table presents the changes in the allowance for doubtful accounts for student loans receivable (tuition related) for the periods indicated (in thousands):
 
Beginning
Balance
 
Charged to
Expense
 
Deductions(1)
 
Ending
Balance
Allowance for doubtful student loans receivable:
 
 
 
 
 
 
 
For the year ended December 31, 2013
$
1,895

 
$
268

 
$
(19
)
 
$
2,144

For the year ended December 31, 2012
2,070

 
(27
)
 
(148
)
 
1,895

For the year ended December 31, 2011
930

 
1,126

 
14

 
2,070

(1)
Deductions represent accounts written off, net of recoveries.
Student Loan Receivables (Tables)
Student Loans Receivables, Net 
Accounts receivable, net, consist of the following (in thousands):
 
As of December 31,
 
2013
 
2012
 
(As restated)
 
 
Accounts receivable
$
49,854

 
$
85,953

Less allowance for doubtful accounts
26,901

 
31,466

Accounts receivable, net
$
22,953

 
$
54,487

Student loans receivable, net, consist of the following (in thousands):
 
As of December 31,
Short-term:
2013
 
2012
   Student loans receivable (non-tuition related)
$
587

 
$
428

   Student loans receivable (tuition related)
621

 
167

   Current student loans receivable
1,208

 
595

Less allowance for doubtful accounts
165

 
39

Student loans receivable, net
$
1,043

 
$
556

 
 
 
 
 
As of December 31,
Long-term:
2013
 
2012
   Student loans receivable (non-tuition related)
$
7,347

 
$
8,101

   Student loans receivable (tuition related)
6,417

 
8,171

   Non-current student loans receivable
13,764

 
16,272

Less allowance for doubtful accounts
1,979

 
1,856

Student loans receivable, net
$
11,785

 
$
14,416

Changes in the Allowance for Doubtful Accounts 
The following table presents the changes in the allowance for doubtful accounts for accounts receivable for the periods indicated (in thousands):
 
Beginning
Balance
 
Charged to
Expense
 
Deductions(1)
 
Ending
Balance
Allowance for doubtful accounts receivable:
 
 
 
 
 
 
 
For the year ended December 31, 2013
$
31,466

 
$
46,851

 
$
(51,416
)
 
$
26,901

For the year ended December 31, 2012
24,688

 
52,794

 
(46,016
)
 
31,466

For the year ended December 31, 2011
19,783

 
42,077

 
(37,172
)
 
24,688

(1)
Deductions represent accounts written off, net of recoveries.
The following table presents the changes in the allowance for doubtful accounts for student loans receivable (tuition related) for the periods indicated (in thousands):
 
Beginning
Balance
 
Charged to
Expense
 
Deductions(1)
 
Ending
Balance
Allowance for doubtful student loans receivable:
 
 
 
 
 
 
 
For the year ended December 31, 2013
$
1,895

 
$
268

 
$
(19
)
 
$
2,144

For the year ended December 31, 2012
2,070

 
(27
)
 
(148
)
 
1,895

For the year ended December 31, 2011
930

 
1,126

 
14

 
2,070

(1)
Deductions represent accounts written off, net of recoveries.
Delinquency Status of Gross Student Loans Receivable 
As of December 31, 2013, the delinquency status of gross student loans receivable was as follows (in thousands):
Less than 120 days
$
16,998

From 120 - 269 days
1,238

Greater than 270 days
2,132

Total gross student loans receivable
20,368

Less: Amounts reserved or impaired
(4,143
)
Less: Discount on student loans receivable
(3,397
)
Total student loans receivable, net
$
12,828

Prepaid Expense and Other Current Assets (Tables)
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following (in thousands):
 
As of December 31,
 
2013
 
2012
 
(As restated)
 
 
Prepaid expenses
$
10,814

 
$
9,367

Prepaid licenses
5,833

 
5,864

Prepaid income taxes
195

 
—

Prepaid insurance
1,131

 
1,134

Interest receivable
86

 
2,221

Other current assets
3,504

 
1,467

Total prepaid expenses and other current assets
$
21,563

 
$
20,053

Property and Equipment, Net (Tables)
Property and Equipment
Property and equipment are recognized at cost less accumulated depreciation. Depreciation is computed using the straight-line method based on estimated useful lives of the related assets as follows:
Buildings
39 years
Furniture and office equipment
3 - 7 years
Software
3 years
Vehicles
5 years
Property and equipment, net, consist of the following (in thousands):
 
As of December 31,
 
2013
 
2012
Land
$
7,091

 
$
7,091

Buildings
28,916

 
25,430

Furniture and office equipment
84,852

 
79,656

Software
10,075

 
6,053

Leasehold improvements
24,360

 
23,756

Vehicles
147

 
147

Total property and equipment
155,441

 
142,133

Less accumulated depreciation and amortization
(64,016
)
 
(46,167
)
Total property and equipment, net
$
91,425

 
$
95,966

Goodwill and Intangibles, Net (Tables)
Goodwill and Intangibles, Net 
Goodwill and intangibles, net, consist of the following (in thousands):
 
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

 
 
 
 
 
 
 
December 31, 2012
Definite-lived intangible assets:
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Capitalized curriculum costs
$
9,977

 
$
(1,823
)
 
$
8,154

Purchased intangible assets
857

 
(839
)
 
18

     Total definite-lived intangible assets
$
10,834

 
$
(2,662
)
 
$
8,172

Goodwill and indefinite-lived intangibles
 
 
 
 
2,567

Total goodwill and intangibles, net
 
 
 
 
$
10,739

Summary of 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
$
5,143

2015
3,995

2016
2,234

2017
1,232

2018
1,232

Thereafter
10,475

Total future amortization expense
$
24,311

Accrued Liabilities (Tables)
Accrued Liabilities
Accrued liabilities consist of the following (in thousands):
 
As of December 31,
 
2013
 
2012
 
(As restated)
 
 
Accrued salaries and wages
$
12,790

 
$
11,585

Accrued bonus
2,277

 
1,603

Accrued vacation
9,696

 
8,993

Accrued litigation and fees
8,000

 
—

Accrued expenses
19,081

 
15,924

Rent liability
2,446

 
—

Accrued income taxes payable
—

 
6,535

Total accrued liabilities
$
54,290

 
$
44,640

Deferred Revenue and Student Deposits (Tables)
Deferred Revenue and Student Deposits
Deferred revenue and student deposits consist of the following (in thousands):
 
As of December 31,
 
2013
 
2012
Deferred revenue
$
29,279

 
$
44,967

Student deposits
103,512

 
130,090

Total deferred revenue and student deposits
$
132,791

 
$
175,057

Lease Obligations (Tables)
Future Minimum Rental Payments Under Non-Cancelable Operating Leases
The following table summarizes the future minimum rental payments under non-cancelable operating lease arrangements in effect at December 31, 2013 (in thousands):
Year Ended December 31,
 
 
2014
$
36,962

2015
37,226

2016
37,293

2017
37,363

2018
34,072

Thereafter
41,722

Total minimum payments
$
224,638

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 common share for the periods indicated (in thousands, except per share data):
 
Year Ended December 31,
 
2013
 
2012
 
2011
 
(As restated)
 
 
 
 
Numerator:
 
 
 
 
 
Net income
$
45,883

 
$
121,146

 
$
171,078

Denominator:
 
 
 
 
 
Weighted average number of common shares outstanding
53,923

 
52,947

 
52,291

Effect of dilutive options and restricted stock units
1,482

 
2,762

 
4,572

Effect of dilutive warrants
82

 
237

 
270

Diluted weighted average number of common shares outstanding
55,487

 
55,946

 
57,133

Earnings per common share:
 
 
 
 
 
Basic earnings per common share
$
0.85

 
$
2.29

 
$
3.27

Diluted earnings per common share
0.83

 
2.17

 
2.99

Antidilutive Securities 
For the periods indicated, the computation of dilutive common shares outstanding excludes certain stock options to purchase shares of common stock for the periods indicated because their effect was anti-dilutive.
 
Year Ended December 31,
(in thousands)
2013
 
2012
 
2011
Options
3,004

 
2,524

 
1,332

Restricted stock units
3

 
—

 
—

Stock-Based Compensation (Tables)
Summary of Stock Option Activity 
The following table presents a summary of the stock option activity in 2013, 2012 and 2011 (in thousands, except for exercise prices and contractual terms):
 
Options
Outstanding
 
Weighted-
Average
Exercise
Price
 
Weighted-
Average
Remaining
Contractual
Term
(in years)
 
Aggregate
Intrinsic Value
December 31, 2010
10,195

 
$
4.76

 
5.47
 
$
147,545

Granted
1,294

 
17.41

 
 
 
 
Exercised
(3,070
)
 
1.59

 
 
 
 
Forfeitures and expired
(139
)
 
17.65

 
 
 
 
December 31, 2011
8,280

 
7.70

 
5.90
 
127,308

Granted
1,595

 
22.59

 
 
 
 
Exercised
(3,128
)
 
0.72

 
 
 
 
Forfeitures and expired
(335
)
 
19.79

 
 
 
 
December 31, 2012
6,412

 
14.17

 
7.21
 
$
9,010

Granted
483

 
10.23

 
 
 
 
Exercised
(1,060
)
 
9.87

 
 
 
 
Forfeitures and expired
(345
)
 
20.65

 
 
 
 
December 31, 2013
5,490

 
$
14.25

 
6.52
 
$
28,769

Vested and expected to vest at December 31, 2013
5,435

 
$
14.22

 
6.50
 
$
28,588

Exercisable at December 31, 2013
3,809

 
$
12.82

 
5.80
 
$
23,827

Summary of Assumptions Used for Options Granted 
Below is a summary of the assumptions used for the options granted in the years indicated:
 
2013
 
2012
 
2011
Weighted average exercise price per share
$
10.23

 
$
22.59

 
$
17.41

Risk-free interest rate
1.0
%
 
1.2
%
 
2.5
%
Expected dividend yield
—

 
—

 
—

Expected volatility
58.9
%
 
54.6
%
 
52.7
%
Expected life (in years)
5.85

 
5.67

 
6.12

Forfeiture rate
5.0
%
 
4.0
%
 
4.0
%
Weighted average grant date fair value per share
$
5.48

 
$
11.26

 
$
9.07

Summary of Restricted Stock Units Activity 
A summary of the Company’s RSU activity and related information is as follows:
 
Restricted Stock Units
 
Weighted Average
Grant Date
Fair Value
Balance at December 31, 2010
—

 
$
—

Awarded
56,855

 
23.97

Vested
—

 
—

Canceled
—

 
—

Balance at December 31, 2011
56,855

 
23.97

Awarded
362,199

 
9.72

Vested
(56,855
)
 
23.97

Canceled
—

 
—

Balance at December 31, 2012
362,199

 
9.72

Awarded
1,016,035

 
10.50

Vested
(181,104
)
 
9.72

Canceled
(98,613
)
 
10.39

Balance at December 31, 2013
1,098,517

 
$
10.38

Warrants (Tables)
Schedule of Warrants Outstanding
The following table summarizes information with respect to all warrants outstanding as of December 31, 2012 (in thousands, except exercise prices):
Exercise Price
 
December 31,
2012
$1.125
41

$2.250
55

$2.835
—

$2.925
19

$9.000
3

Total
118

Income Taxes (Tables)
Components of Income Tax Expense 
The components of income tax expense are as follows (in thousands):
 
Year Ended December 31,
 
2013
 
2012
 
2011
 
(As restated)
 
 
 
 
Current:
 
 
 
 
 
Federal
$
29,456

 
$
77,720

 
$
88,513

State
3,168

 
7,665

 
8,632

 
32,624

 
85,385

 
97,145

Deferred:
 
 
 
 
 
Federal
(5,952
)
 
(10,470
)
 
6,089

State
(1,010
)
 
(903
)
 
(488
)
 
(6,962
)
 
(11,373
)
 
5,601

Total
$
25,662

 
$
74,012

 
$
102,746

Schedule of Deferred Tax Assets and Liabilities 
Deferred tax assets and liabilities are comprised of the following (in thousands):
 
As of December 31,
 
2013
 
2012
 
(As restated)
 
 
Deferred tax assets:
 
 
 
Net operating loss
$
235

 
$
258

Fixed assets
214

 
233

Bad debt
463

 
1,632

Vacation accrual
2,762

 
2,815

Stock-based compensation
15,341

 
13,299

Deferred rent
9,944

 
9,404

State tax
2,310

 
2,541

Bonus accrual
849

 
599

Unearned interest
1,281

 
1,081

Accrued expenses
4,377

 
196

Revenue reserves
8,992

 
10,681

Total deferred tax assets
46,768

 
42,739

Valuation allowance
—

 
—

Net deferred tax assets
46,768

 
42,739

Deferred tax liabilities:
 
 
 
Fixed assets and intangibles
(11,550
)
 
(13,411
)
Unrealized gain on investments
(28
)
 
(132
)
Total deferred tax liabilities
(11,578
)
 
(13,543
)
Total net deferred tax assets
$
35,190

 
$
29,196

Deferred taxes are reflected in the balance sheet as follows (in thousands):
 
As of December 31,
 
2013
 
2012
 
(As restated)
 
 
Current deferred tax assets
$
16,683

 
$
15,490

Current deferred tax liabilities
—

 
—

Noncurrent deferred tax assets
18,507

 
13,706

Noncurrent deferred tax liabilities
—

 
—

Total
$
35,190

 
$
29,196

Schedule of Income Tax Rate Reconciliation 
A reconciliation of the income tax expense computed using the U.S. federal statutory tax rate of 35% and the Company's provision for income taxes follows (in thousands):
 
Year Ended December 31,
 
2013
 
2012
 
2011
 
(As restated)
 
 
 
 
Computed expected federal tax expense
$
25,041

35.0
 %
 
$
68,305

35.0
%
 
$
95,839

35.0
 %
State taxes, net of federal benefit
1,351

1.9

 
4,586

2.4

 
5,370

2.0

Permanent differences
917

1.3

 
1,074

0.5

 
1,601

0.6

Uncertain tax positions
(1,647
)
(2.3
)
 
31

—

 
(192
)
(0.1
)
Other
—

—

 
16

—

 
128

—

Income tax expense
$
25,662

35.9
 %
 
$
74,012

37.9
%
 
$
102,746

37.5
 %
Summary of Unrecognized Tax Benefits 
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
Unrecognized tax benefits at December 31, 2011
$
8,070

Gross increases-tax positions in prior period
965

Gross decreases-tax positions in prior period
—

Gross increases-current period tax positions
231

Settlements
—

Lapse of statute of limitations
—

Unrecognized tax benefits at December 31, 2012
9,266

Gross increases-tax positions in prior period
—

Gross decreases-tax positions in prior period
(5
)
Gross increases-current period tax positions
100

Settlements
—

Lapse of statute of limitations
(1,974
)
Unrecognized tax benefits at December 31, 2013
$
7,387

Quarterly Results of Operations (Unaudited) (Tables)
Schedule of Quarterly Financial Information 
The following tables set forth unaudited results of operations and certain operating results for each quarter during 2013 and 2012. The Company believes that the information reflects all adjustments necessary to present fairly the information below. Basic and diluted earnings per common share are computed independently for each of the quarters presented. Therefore, the sum of quarterly basic and diluted per common share information may not equal annual basic and diluted earnings per common share.
 
First
Quarter (as Restated)
 
Second
Quarter (as Restated)
 
Third
Quarter (as Restated)
 
Fourth
Quarter (as Restated)
 
(In thousands, except per share data)
2013
 
 
 
 
 
 
 
Revenue
$
212,986

 
$
193,470

 
$
182,768

 
$
162,225

Operating income (loss)
39,676

 
19,133

 
19,524

 
(9,870
)
Net income (loss)
24,667

 
12,114

 
14,211

 
(5,109
)
Earnings (loss) per common share:
 
 
 
 
 
 
 
Basic
$
0.46

 
$
0.22

 
$
0.26

 
$
(0.10
)
Diluted
0.45

 
0.22

 
0.25

 
(0.10
)
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
 
(In thousands, except per share data)
2012
 
 
 
 
 
 
 
Revenue
$
241,433

 
$
249,534

 
$
245,917

 
$
206,521

Operating income
44,875

 
67,874

 
47,647

 
31,231

Net income
28,434

 
42,708

 
30,179

 
19,825

Earnings per common share:
 
 
 
 
 
 
 
Basic
$
0.55

 
$
0.81

 
$
0.57

 
$
0.37

Diluted
0.51

 
0.76

 
0.54

 
0.36

Restatement/Revision of Previously Issued Consolidated Financial Statements 
The following tables present the impact of the restatement and revisions on the previously issued financial statements. The “As Restated” column for 2013 and the “As Revised” column for 2012 reflects final adjusted balances after the related restatement or revision, as well as previously identified immaterial adjustments. The following tables are presented in thousands, except per share data:
 
As Reported
 
As Restated
 
As Reported
 
As Revised
 
 
 
 
Consolidated balance sheet data:
December 31, 2013
 
December 31, 2012
 
 
Cash and cash equivalents
$
249,472

 
$
212,526

 
$
255,965

 
$
208,971

 


 
 
Restricted cash
$
—

 
$
36,946

 
$
—

 
$
46,994

 


 
 
Accounts receivable, net
$
28,565

 
$
22,953

 
$
67,371

 
$
54,487

 


 
 
Deferred income taxes, current
$
15,232

 
$
16,683

 
$
10,936

 
$
15,490

 


 
 
Prepaid expenses and other current assets
$
21,369

 
$
21,563

 
$
19,810

 
$
20,053

 


 
 
Total current assets
$
381,582

 
$
377,615

 
$
491,605

 
$
483,518

 


 
 
Student loans receivable, net, non-current
-

 
-

 
$
15,143

 
$
14,416

 


 
 
Deferred income taxes, non-current
-

 
-

 
$
13,266

 
$
13,706

 


 
 
Total assets
$
573,979

 
$
570,012

 
$
750,787

 
$
742,413

 


 
 
Accrued liabilities
$
54,756

 
$
54,290

 
-

 
-

 
 
 
 
Total current liabilities
$
192,742

 
$
192,276

 
-

 
-

 
 
 
 
Total liabilities
$
255,940

 
$
225,474

 
-

 
-

 
 
 
 
Retained earnings
$
515,608

 
$
512,107

 
$
474,598

 
$
466,224

 


 
 
Total stockholders’ equity
$
348,039

 
$
344,538

 
$
491,570

 
$
483,196

 


 
 
Total liabilities and stockholders’ equity
$
573,979

 
$
570,012

 
$
750,787

 
$
742,413

 


 
 
 
Year to Date Period Ended
 
As Reported
 
As Restated
 
As Reported
 
As Revised
 
As Reported
 
As Revised
Consolidated statement of income data:
December 31, 2013
 
December 31, 2012
 
December 31, 2011
Revenue
$
768,623

 
$
751,449

 
$
968,171

 
$
943,405

 
$
933,349

 
$
915,247

Instructional costs and services
$
395,928

 
$
370,734

 
$
364,001

 
$
343,072

 
$
304,190

 
$
288,882

Total costs and expenses
$
708,180

 
$
682,986

 
$
772,707

 
$
751,778

 
$
659,602

 
$
644,294

Operating income
$
60,443

 
$
68,463

 
$
195,464

 
$
191,627

 
$
273,747

 
$
270,953

Other income, net
$
3,346

 
$
3,082

 
$
3,370

 
$
3,531

 
$
2,768

 
$
2,871

Income before income taxes
$
63,789

 
$
71,545

 
$
198,834

 
$
195,158

 
$
276,515

 
$
273,824

Income tax expense
$
22,779

 
$
25,662

 
$
75,413

 
$
74,012

 
$
103,751

 
$
102,746

Net income
$
41,010

 
$
45,883

 
$
123,421

 
$
121,146

 
$
172,764

 
$
171,078

Basic earnings per share
$
0.76

 
$
0.85

 
$
2.33

 
$
2.29

 
$
3.30

 
$
3.27

Diluted earnings per share
$
0.74

 
$
0.83

 
$
2.21

 
$
2.17

 
$
3.02

 
$
2.99

Consolidated statement of cash flow data:
 
 
 
 
 
 
 
 
 
 
 
Net income
$
41,010

 
$
45,883

 
$
123,421

 
$
121,146

 
$
172,764

 
$
171,078

Provision for bad debts
$
72,313

 
$
47,119

 
$
73,696

 
$
52,767

 
$
58,511

 
$
43,203

Amortization of premium/ discount
$
3,559

 
$
2,624

 
$
6,805

 
$
8,992

 
-

 
-

Deferred income taxes
$
(10,506
)
 
$
(6,962
)
 
$
(9,972
)
 
$
(11,373
)
 
$
6,606

 
$
5,601

Restricted cash
$
—

 
$
10,048

 
$
—

 
$
6,721

 
$
—

 
$
(4,855
)
Accounts receivable
$
(34,348
)
 
$
(15,973
)
 
$
(81,577
)
 
$
(62,333
)
 
$
(60,587
)
 
$
(43,300
)
Prepaid expenses and other current assets
$
(2,411
)
 
$
(2,607
)
 
$
(1,056
)
 
$
(2,387
)
 
$
(2,104
)
 
$
(3,547
)
Student loan receivable, net
-

 
-

 
$
(3,778
)
 
$
(5,742
)
 
$
(8,177
)
 
$
(6,021
)
Accounts payable and accrued liabilities
$
13,687

 
$
13,220

 
-

 
-

 
-

 
-

Deferred revenue and student deposits
-

 
-

 
$
(10,389
)
 
$
(3,921
)
 
-

 
-

Cash flows from operating activities
$
75,538

 
$
85,586

 
$
143,185

 
$
149,905

 
$
220,808

 
$
215,954

The following tables for fiscal year 2013 are presented in thousands, except per share data:
 
As Reported
As Reclassified
As Restated
 
As Reported
As Reclassified
As Restated
Consolidated balance sheet data:
March 31, 2013
 
June 30, 2013
Cash and cash equivalents
$
316,267

-

$
275,533

 
$
363,121

-

$
322,578

Restricted cash
$
—

-

$
41,094

 
$
—

-

$
40,543

Accounts receivable, net
$
69,352

$
68,472

$
51,835

 
$
60,502

$
58,895

$
43,393

Student loans receivable, net, current
$
—

$
880

$
880

 
$
—

$
1,607

$
1,607

Deferred income taxes, current
$
10,970

-

$
15,524

 
$
11,020

-

$
15,573

Prepaid expenses and other current assets
$
21,445

-

$
25,245

 
$
20,294

-

$
23,891

Total current assets
$
530,232

-

$
521,949

 
$
541,747

-

$
534,395

Student loans receivable, net, non-current
$
14,524

-

$
13,788

 
-

-

-

Deferred income taxes, non-current
$
13,262

-

$
13,701

 
$
13,306

-

$
13,746

Total assets
$
763,100

-

$
754,520

 
$
761,992

-

$
755,080

Accrued liabilities
$
56,707

-

$
58,801

 
$
45,089

-

$
48,336

Deferred revenue and student deposits
-

-

-

 
$
135,865

-

$
134,634

Total current liabilities
$
204,577

-

$
206,671

 
$
188,315

-

$
190,331

Total liabilities
$
240,985

-

$
243,079

 
$
225,222

-

$
227,238

Retained earnings
$
501,565

-

$
490,891

 
$
511,933

-

$
503,005

Total stockholders’ equity
$
522,115

-

$
511,441

 
$
536,770

-

$
527,842

Total liabilities and stockholders’ equity
$
763,100

-

$
754,520

 
$
761,992

-

$
755,080

 
As Reported
As Reclassified
As Restated
 
As Reported
As Reclassified
As Restated
Consolidated balance sheet data:
September 30, 2013
 
December 31, 2013
Cash and cash equivalents
$
431,762

-

$
392,299

 
$
249,472

-
$
212,526

Restricted cash
$
—

-

$
39,463

 
$
—

-
$
36,946

Accounts receivable, net
$
51,123

$
49,441

$
41,842

 
$
28,565

-
$
22,953

Student loans receivable, net, current
$
—

$
1,682

$
1,682

 
-

-
-

Deferred income taxes, current
$
11,033

-

$
15,586

 
$
15,232

-
$
16,683

Prepaid expenses and other current assets
$
16,057

-

$
19,072

 
$
21,369

-
$
21,563

Total current assets
$
545,196

-

$
545,165

 
$
381,582

-
$
377,615

Deferred income taxes, non-current
$
13,284

-

$
13,724

 
-

-
-

Total assets
$
765,190

-

$
765,599

 
$
573,979

-
$
570,012

Accrued liabilities
$
43,567

-

$
48,828

 
$
54,756

-
$
54,290

Total current liabilities
$
179,336

-

$
184,597

 
$
192,742

-
$
192,276

Total liabilities
$
214,375

-

$
219,636

 
$
225,940

-
$
225,474

Retained earnings
$
522,068

-

$
517,216

 
$
515,608

-
$
512,107

Total stockholders’ equity
$
550,815

-

$
545,963

 
$
348,039

-
$
344,538

Total liabilities and stockholders’ equity
$
765,190

-

$
765,599

 
$
573,979

-
$
570,012

 
As Reported
As Reclassified
As Restated
 
As Reported
As Reclassified
As Restated
 
Three Months Ended
Consolidated statement of income data:
March 31, 2013
 
June 30, 2013
Revenue
$
221,984

-

$
212,986

 
$
197,574

-

$
193,470

Instructional costs and services
$
101,646

$
102,282

$
97,028

 
$
106,045

$
106,812

$
99,603

General and administrative
$
19,375

$
18,739

$
18,739

 
$
17,919

$
17,152

$
17,152

Total costs and expenses
$
178,564

-

$
173,310

 
$
181,546

-

$
174,337

Operating income
$
43,420

-

$
39,676

 
$
16,028

-

$
19,133

Other income, net
$
818

-

$
837

 
$
1,031

-

$
748

Income before income taxes
$
44,238

-

$
40,513

 
$
17,059

-

$
19,881

Income tax expense
$
17,271

-

$
15,846

 
$
6,691

-

$
7,767

Net income
$
26,967

-

$
24,667

 
$
10,368

-

$
12,114

Basic earnings per share
$
0.50

-

$
0.46

 
$
0.19

-

$
0.22

Diluted earnings per share
$
0.49

-

$
0.45

 
$
0.19

-

$
0.22

 
As Reported
As Reclassified
As Restated
 
As Reported
As Reclassified
As Restated
 
Three Months Ended
Consolidated statement of income data:
September 30, 2013
 
December 31, 2013
Revenue
$
185,612

-

$
182,768

 
$
163,453

-
$
162,225

Instructional costs and services
$
92,204

$
93,079

$
83,562

 
$
93,755

-
$
90,541

General and administrative
$
16,050

$
15,175

$
15,175

 
-

-
-

Total costs and expenses
$
172,761

-

$
163,244

 
$
175,309

-
$
172,095

Operating income (loss)
$
12,851

-

$
19,524

 
$
(11,856
)
-
$
(9,870
)
Income (loss) before income taxes
$
13,638

-

$
20,310

 
$
(11,146
)
-
$
(9,159
)
Income tax expense (benefit)
$
3,503

-

$
6,099

 
$
(4,686
)
-
$
(4,050
)
Net income (loss)
$
10,135

-

$
14,211

 
$
(6,460
)
-
$
(5,109
)
Basic earnings (loss) per share
$
0.19

-

$
0.26

 
$
(0.12
)
-
$
(0.10
)
Diluted earnings (loss) per share
$
0.18

-

$
0.25

 
$
(0.12
)
-
$
(0.10
)
 
As Reported
As Reclassified
As Restated
 
As Reported
As Reclassified
As Restated
 
Year to Date Period Ended
Consolidated statement of income data:
March 31, 2013
 
June 30, 2013
Revenue
$
221,984

-

$
212,986

 
$
419,558

-

$
406,456

Instructional costs and services
$
101,646

$
102,282

$
97,028

 
$
207,691

$
209,094

$
196,631

General and administrative
$
19,375

$
18,739

$
18,739

 
$
37,294

$
35,891

$
35,891

Total costs and expenses
$
178,564

-

$
173,310

 
$
360,110

-

$
347,647

Operating income
$
43,420

-

$
39,676

 
$
59,448

-

$
58,809

Other income, net
$
818

-

$
837

 
$
1,849

-

$
1,585

Income before income taxes
$
44,238

-

$
40,513

 
$
61,297

-

$
60,394

Income tax expense
$
17,271

-

$
15,846

 
$
23,962

-

$
23,613

Net income
$
26,967

-

$
24,667

 
$
37,335

-

$
36,781

Basic earnings per share
$
0.50

-

$
0.46

 
$
0.69

-

$
0.68

Diluted earnings per share
$
0.49

-

$
0.45

 
$
0.67

-

$
0.66

Consolidated statement of cash flow data:
 
 
 
 
 
 
 
Net income
$
26,967

-

$
24,667

 
$
37,335

-

$
36,781

Provision for bad debts
$
18,294

-

$
13,040

 
$
36,865

-

$
24,403

Amortization of premium/ discount
$
1,005

-

$
1,407

 
$
3,100

-

$
2,165

Restricted cash
$
—

-

$
5,900

 
$
—

-

$
6,451

Accounts receivable
$
(19,381
)
-

$
(10,229
)
 
$
(28,744
)
-

$
(13,222
)
Prepaid expenses and other current assets
$
(1,635
)
-

$
(5,656
)
 
$
(96
)
-

$
(4,110
)
Student loan receivable
$
281

-

$
(133
)
 
-

-

-

Accounts payable and accrued liabilities
$
14,119

-

$
16,213

 
$
2,153

-

$
5,400

Deferred revenue and student deposits
$
(34,088
)
-

$
(33,747
)
 
$
(39,192
)
-

$
(39,996
)
Cash flows from operating activities
$
15,616

-

$
21,516

 
$
32,273

-

$
38,724

 
As Reported
As Reclassified
As Restated
 
As Reported
As Reclassified
As Restated
 
Year to Date Period Ended
Consolidated statement of income data:
September 30, 2013
 
December 31, 2013
Revenue
$
605,170

-

$
589,224

 
$
768,623

-
$
751,449

Instructional costs and services
$
299,895

$
302,173

$
280,193

 
$
395,928

-
$
370,734

General and administrative
$
53,344

$
51,066

$
51,066

 
-

-
-

Total costs and expenses
$
532,871

-

$
510,891

 
$
708,180

-
$
682,986

Operating income
$
72,299

-

$
78,333

 
$
60,443

-
$
68,463

Other income, net
$
2,636

-

$
2,371

 
$
3,346

-
$
3,082

Income before income taxes
$
74,935

-

$
80,704

 
$
63,789

-
$
71,545

Income tax expense
$
27,465

-

$
29,712

 
$
22,779

-
$
25,662

Net income
$
47,470

-

$
50,992

 
$
41,010

-
$
45,883

Basic earnings per share
$
0.88

-

$
0.94

 
$
0.76

-
$
0.85

Diluted earnings per share
$
0.85

-

$
0.91

 
$
0.74

-
$
0.83

Consolidated statement of cash flow data:
 
 
 
 
 
 
 
Net income
$
47,470

-

$
50,992

 
$
41,010

-
$
45,883

Provision for bad debts
$
53,649

-

$
31,670

 
$
72,313

-
$
47,119

Amortization of premium/discount
$
3,596

-

$
2,662

 
$
3,559

-
$
2,624

Deferred income taxes
-

-

-

 
$
(10,506
)
-
$
(6,962
)
Restricted cash
$
—

-

$
7,531

 
$
—

-
$
10,048

Accounts receivable
$
(36,056
)
-

$
(18,826
)
 
$
(34,348
)
-
$
(15,973
)
Prepaid expenses and other current assets
$
3,395

-

$
(155
)
 
$
(2,411
)
-
$
(2,607
)
Accounts payable and accrued liabilities
$
3,699

-

$
8,960

 
$
13,687

-
$
13,220

Deferred revenue and student deposits
$
(48,610
)
-

$
(48,160
)
 
-

-
-

Cash flows from operating activities
$
54,277

-

$
61,808

 
$
75,538

-
$
85,586

The following tables for fiscal year 2012 are presented in thousands, except per share data:
 
As Reported
As Reclassified
As Revised
 
As Reported
As Reclassified
As Revised
Consolidated balance sheet data:
March 31, 2012
 
June 30, 2012
Cash and cash equivalents
$
162,148

-

$
103,405

 
$
180,425

-

$
123,901

Restricted cash
$
25

-

$
58,768

 
$
—

-

$
56,524

Accounts receivable, net
$
91,129

$
90,708

$
75,846

 
$
91,139

$
90,620

$
74,826

Student loan receivables, net, current
$
—

$
421

$
421

 
$
—

$
519

$
519

Deferred income taxes, current
$
5,441

-

$
8,235

 
$
5,442

-

$
8,235

Prepaid expenses and other current assets
$
17,864

-

$
18,367

 
22,966

-

25,105

Total current assets
$
441,169

-

$
429,604

 
$
459,764

-

$
448,902

Student loan receivables, net, non-current
$
12,065

-

$
11,035

 
$
14,998

-

$
14,232

Deferred income taxes, non-current
$
10,805

-

$
11,604

 
$
10,810

-

$
11,608

Total assets
$
682,447

-

$
670,651

 
$
723,119

-

$
712,289

Accrued liabilities
$
66,755

-

$
64,595

 
$
54,650

-

$
54,006

Total current liabilities
$
260,575

-

$
258,415

 
$
248,012

-

$
247,368

Total liabilities
$
289,296

-

$
287,136

 
$
279,333

-

$
278,689

Retained earnings
$
383,148

-

$
373,512

 
$
426,406

-

$
416,220

Total stockholders’ equity
$
393,151

-

$
383,515

 
$
443,786

-

$
433,600

Total liabilities and stockholders’ equity
$
682,447

-

$
670,651

 
$
723,119

-

$
712,289

 
As Reported
As Reclassified
As Revised
 
As Reported
As Reclassified
As Revised
Consolidated balance sheet data:
September 30, 2012
 
December 31, 2012
Cash and cash equivalents
$
181,577

-

$
131,501

 
$
255,965

-
$
208,971

Restricted cash
$
—

-

$
50,076

 
$
—

-
$
46,994

Accounts receivable, net
$
99,919

$
99,386

$
84,178

 
$
67,371

-
$
54,487

Student loan receivables, net, current
$
—

$
533

$
533

 
-

-
-

Deferred income taxes, current
$
5,313

-

$
8,106

 
$
10,936

-
$
15,490

Prepaid expenses and other current assets
$
22,722

-

$
22,944

 
$
19,810

-
$
20,053

Total current assets
$
452,515

-

$
440,322

 
$
491,605

-
$
483,518

Student loan receivables, net, non-current
$
14,992

-

$
14,291

 
$
15,143

-
$
14,416

Deferred income taxes, non-current
$
10,752

-

$
11,550

 
$
13,266

-
$
13,706

Total assets
$
736,099

-

$
724,003

 
$
750,787

-
$
742,413

Accrued liabilities
$
52,313

-

$
50,044

 
-

-
-

Total current liabilities
$
231,925

-

$
229,656

 
-

-
-

Total liabilities
$
265,565

-

$
263,296

 
-

-
-

Retained earnings
$
456,226

-

$
446,399

 
$
474,598

-
$
466,224

Total stockholders’ equity
$
470,534

-

$
460,707

 
$
491,570

-
$
483,196

Total liabilities and stockholders’ equity
$
736,099

-

$
724,003

 
$
750,787

-
$
742,413

 
As Reported
As Reclassified
As Revised
 
As Reported
As Reclassified
As Revised
 
Three Months Ended
Consolidated statement of income data:
March 31, 2012
 
June 30, 2012
Revenue
$
250,437

-

$
241,433

 
$
256,302

-

$
249,534

Instructional costs and services
$
84,224

$
84,453

$
81,202

 
$
85,279

$
85,579

$
79,719

General and administrative
$
25,542

$
25,314

$
25,314

 
$
15,047

$
14,747

$
14,747

Total costs and expenses
$
199,808

-

$
196,558

 
$
187,520

-

$
181,660

Operating income
$
50,629

-

$
44,875

 
$
68,782

-

$
67,874

Other income, net
$
683

-

$
740

 
$
854

-

$
883

Income before income taxes
$
51,312

-

$
45,615

 
$
69,636

-

$
68,757

Income tax expense
$
19,341

-

$
17,181

 
$
26,378

-

$
26,049

Net income
$
31,971

-

$
28,434

 
$
43,258

-

$
42,708

Basic earnings per share
$
0.61

-

$
0.55

 
$
0.82

-

$
0.81

Diluted earnings per share
$
0.57

-

$
0.51

 
$
0.77

-

$
0.76

 
As Reported
As Reclassified
As Revised
 
As Reported
As Reclassified
As Revised
 
Three Months Ended
Consolidated statement of income data:
September 30, 2012
 
December 31, 2012
Revenue
$
252,076

-

$
245,917

 
$
209,356

-

$
206,521

Instructional costs and services
$
90,986

$
91,362

$
84,666

 
$
102,034

$
102,607

$
97,485

General and administrative
$
17,247

$
16,870

$
16,870

 
$
13,139

$
12,566

$
12,566

Total costs and expenses
$
204,967

-

$
198,270

 
$
180,412

-

$
175,290

Operating income
$
47,109

-

$
47,647

 
$
28,944

-

$
31,231

Other income, net
$
955

-

$
996

 
$
878

-

$
912

Income before income taxes
$
48,064

-

$
48,643

 
$
29,822

-

$
32,143

Income tax expense
$
18,244

-

$
18,464

 
$
11,450

-

$
12,318

Net income
$
29,820

-

$
30,179

 
$
18,372

-

$
19,825

Basic earnings per share
$
0.56

-

$
0.57

 
$
0.34

-

$
0.37

Diluted earnings per share
$
0.53

-

$
0.54

 
$
0.33

-

$
0.36

 
As Reported
As Reclassified
As Revised
 
As Reported
As Reclassified
As Revised
 
Year to Date Period Ended
Consolidated statement of income data:
March 31, 2012
 
June 30, 2012
Revenue
$
250,437

-

$
241,433

 
$
506,739

-

$
490,967

Instructional costs and services
$
84,224

$
84,453

$
81,202

 
$
169,503

$
170,032

$
160,921

General and administrative
$
25,542

$
25,314

$
25,314

 
$
40,589

$
40,061

$
40,061

Total costs and expenses
$
199,808

-

$
196,558

 
$
387,328

-

$
378,218

Operating income
$
50,629

-

$
44,875

 
$
119,411

-

$
112,749

Other income, net
$
683

-

$
740

 
$
1,537

-

$
1,623

Income before income taxes
$
51,312

-

$
45,615

 
$
120,948

-

$
114,372

Income tax expense
$
19,341

-

$
17,181

 
$
45,719

-

$
43,230

Net income
$
31,971

-

$
28,434

 
$
75,229

-

$
71,142

Basic earnings per share
$
0.61

-

$
0.55

 
$
1.44

-

$
1.36

Diluted earnings per share
$
0.57

-

$
0.51

 
$
1.34

-

$
1.27

Consolidated statement of cash flow data:
 
 
 
 
 
 
 
Net income
$
31,971

-

$
28,434

 
$
75,229

-

$
71,142

Provision for bad debts
$
16,669

-

$
13,418

 
$
33,401

-

$
24,289

Amortization of premium/discount
$
1,754

-

$
2,125

 
$
3,594

 
$
4,470

Restricted cash
$
—

-

$
(5,028
)
 
$
—

-

$
(2,809
)
Accounts receivable
$
(46,053
)
-

$
(37,153
)
 
$
(62,501
)
-

$
(46,772
)
Prepaid expenses and other current assets
$
(459
)
-

$
32

 
$
(5,084
)
-

$
(6,806
)
Student loans receivable
$
(2,399
)
 
$
(3,214
)
 
$
(5,626
)
 
$
(6,666
)
Accounts payable and accrued liabilities
$
26,851

-

$
24,691

 
$
18,492

-

$
17,847

Cash flows from operating activities
$
40,350

-

$
35,321

 
$
76,806

-

$
73,996

 
As Reported
As Reclassified
As Revised
 
As Reported
As Reclassified
As Revised
 
Year to Date Period Ended
Consolidated statement of income data:
September 30, 2012
 
December 31, 2012
Revenue
$
758,815

-

$
736,884

 
$
968,171

-
$
943,405

Instructional costs and services
$
260,489

$
261,394

$
245,587

 
$
364,001

-
$
343,072

General and administrative
$
57,836

$
56,931

$
56,931

 
-

-
-

Total costs and expenses
$
592,295

-

$
576,488

 
$
772,707

-
$
751,778

Operating income
$
166,520

-

$
160,396

 
$
195,464

-
$
191,627

Other income, net
$
2,492

-

$
2,619

 
$
3,370

-
$
3,531

Income before income taxes
$
169,012

-

$
163,015

 
$
198,834

-
$
195,158

Income tax expense
$
63,963

-

$
61,694

 
$
75,413

-
$
74,012

Net income
$
105,049

-

$
101,321

 
$
123,421

-
$
121,146

Basic earnings per share
$
2.00

-

$
1.93

 
$
2.33

-
$
2.29

Diluted earnings per share
$
1.87

-

$
1.81

 
$
2.21

-
$
2.17

Consolidated statement of cash flow data:
 
 
 
 
 
 
 
Net income
$
105,049

-

$
101,321

 
$
123,421

-
$
121,146

Provision for bad debts
$
52,418

-

$
36,610

 
$
73,696

-
$
52,767

Deferred income taxes
-

-

-

 
$
(9,972
)
-
$
(11,373
)
Amortization of premium/discount
$
5,384

 
$
6,922

 
$
6,805

 
$
8,992

Restricted cash
$
—

-

$
3,639

 
$
—

-
$
6,721

Accounts receivable
$
(90,188
)
-

$
(68,357
)
 
$
(81,577
)
-
$
(62,333
)
Prepaid expenses and other current assets
$
(3,982
)
-

$
(4,548
)
 
$
(1,056
)
-
$
(2,387
)
Student loans receivable
$
(5,730
)
 
$
(6,729
)
 
$
(3,778
)
 
$
(5,742
)
Accounts payable and accrued liabilities
$
19,363

-

$
17,094

 
-

-
-

Deferred revenue and student deposits
-

-

-

 
$
(10,389
)
-
$
(3,921
)
Cash flows from operating activities
$
93,588

-

$
97,226

 
$
143,185

-
$
149,905

Summary of Significant Accounting Policies (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
segment
Dec. 31, 2012
Dec. 31, 2011
Accounting Policies [Abstract]
 
 
 
Advertising costs
$ 76.5 
$ 103.7 
$ 84.0 
Number of reportable segments
1 
 
 
Summary of Significant Accounting Policies (Receivables) (Details) (USD $)
12 Months Ended 3 Months Ended 12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2013
Repayment Plan One
Mar. 31, 2013
Repayment Plan Two
Dec. 31, 2013
Repayment Plan Two
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
 
 
 
 
Student loans receivable, repayment term following graduation or withdrawal
10 years 
 
 
 
 
 
Student loans receivable, interest rate
 
 
 
4.50% 
 
0.00% 
Student loans receivable, monthly payment during school and grace period
 
 
 
 
$ 50 
 
Student loans receivable, grace period following graduation or withdrawal
6 months 
 
 
 
 
 
Loss on impairment of student loans receivable
$ 1,998,000 
$ 0 
$ 0 
 
 
 
Summary of Significant Accounting Policies (Property and Equipment) (Details)
12 Months Ended
Dec. 31, 2013
Buildings
 
Property, Plant and Equipment [Line Items]
 
Property and equipment, estimated useful lives
39 years 
Furniture and Office Equipment |
Minimum
 
Property, Plant and Equipment [Line Items]
 
Property and equipment, estimated useful lives
3 years 
Furniture and Office Equipment |
Maximum
 
Property, Plant and Equipment [Line Items]
 
Property and equipment, estimated useful lives
7 years 
Software
 
Property, Plant and Equipment [Line Items]
 
Property and equipment, estimated useful lives
3 years 
Vehicles
 
Property, Plant and Equipment [Line Items]
 
Property and equipment, estimated useful lives
5 years 
Summary of Significant Accounting Policies (Revenue and Deferred Revenue) (Details)
12 Months Ended
Dec. 31, 2013
disbursement
Deferred Revenue Arrangement [Line Items]
 
Conditional admission period
21 days 
Number of disbursement periods for financial aid
2 
Online
 
Deferred Revenue Arrangement [Line Items]
 
Length of educational course, short
35 days 
Length of educational course, long
42 days 
Campus-based
 
Deferred Revenue Arrangement [Line Items]
 
Length of educational course, short
63 days 
Length of educational course, long
112 days 
Maximum
 
Deferred Revenue Arrangement [Line Items]
 
Number of courses covered by each disbursement
4 
Summary of Significant Accounting Policies (Comprehensive Loss) (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Accounting Policies [Abstract]
 
 
 
Unrealized losses on investments, before-tax amount
$ (280)
$ 1,300 
$ (946)
Unrealized losses on investments, tax benefit
106 
(483)
351 
Unrealized losses on investments, net-of-tax amount
(174)
817 
(595)
Net realized gain on sale of securities
$ 63 
$ 0 
$ 0 
Summary of Significant Accounting Policies (Leases) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Accounting Policies [Abstract]
 
Lease exit costs
$ 1.1 
Summary of Significant Accounting Policies (Impairment) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Accounting Policies [Abstract]
 
Impairment charge to write off certain fixed assets as part of lease exit costs
$ 0.7 
Summary of Significant Accounting Policies (Revision) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended 9 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Jun. 30, 2013
Jun. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Consolidated balance sheet data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$ 212,526 
$ 392,299 
$ 322,578 
$ 275,533 
$ 208,971 
$ 131,501 
$ 123,901 
$ 103,405 
$ 322,578 
$ 123,901 
$ 392,299 
$ 131,501 
$ 212,526 
$ 208,971 
$ 80,207 
$ 139,658 
Restricted cash
36,946 
39,463 
40,543 
41,094 
46,994 
50,076 
56,524 
58,768 
40,543 
56,524 
39,463 
50,076 
36,946 
46,994 
 
 
Accounts receivable, net
22,953 
41,842 
43,393 
51,835 
54,487 
84,178 
74,826 
75,846 
43,393 
74,826 
41,842 
84,178 
22,953 
54,487 
 
 
Current deferred tax assets
16,683 
15,586 
15,573 
15,524 
15,490 
8,106 
8,235 
8,235 
15,573 
8,235 
15,586 
8,106 
16,683 
15,490 
 
 
Prepaid expenses and other current assets
21,563 
19,072 
23,891 
25,245 
20,053 
22,944 
25,105 
18,367 
23,891 
25,105 
19,072 
22,944 
21,563 
20,053 
 
 
Total current assets
377,615 
545,165 
534,395 
521,949 
483,518 
440,322 
448,902 
429,604 
534,395 
448,902 
545,165 
440,322 
377,615 
483,518 
 
 
Student loans receivable, net
11,785 
 
 
13,788 
14,416 
14,291 
14,232 
11,035 
 
14,232 
 
14,291 
11,785 
14,416 
 
 
Noncurrent deferred tax assets
18,507 
13,724 
13,746 
13,701 
13,706 
11,550 
11,608 
11,604 
13,746 
11,608 
13,724 
11,550 
18,507 
13,706 
 
 
Total assets
570,012 
765,599 
755,080 
754,520 
742,413 
724,003 
712,289 
670,651 
755,080 
712,289 
765,599 
724,003 
570,012 
742,413 
 
 
Accrued liabilities
54,290 
48,828 
48,336 
58,801 
44,640 
50,044 
54,006 
64,595 
48,336 
54,006 
48,828 
50,044 
54,290 
44,640 
 
 
Total current liabilities
192,276 
184,597 
190,331 
206,671 
224,285 
229,656 
247,368 
258,415 
190,331 
247,368 
184,597 
229,656 
192,276 
224,285 
 
 
Total liabilities
225,474 
219,636 
227,238 
243,079 
259,217 
263,296 
278,689 
287,136 
227,238 
278,689 
219,636 
263,296 
225,474 
259,217 
 
 
Retained earnings
512,107 
517,216 
503,005 
490,891 
466,224 
446,399 
416,220 
373,512 
503,005 
416,220 
517,216 
446,399 
512,107 
466,224 
 
 
Total stockholders’ equity
344,538 
545,963 
527,842 
511,441 
483,196 
460,707 
433,600 
383,515 
527,842 
433,600 
545,963 
460,707 
344,538 
483,196 
347,549 
233,828 
Total liabilities and stockholders’ equity
570,012 
765,599 
755,080 
754,520 
742,413 
724,003 
712,289 
670,651 
755,080 
712,289 
765,599 
724,003 
570,012 
742,413 
 
 
Consolidated statement of income data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
162,225 
182,768 
193,470 
212,986 
206,521 
245,917 
249,534 
241,433 
406,456 
490,967 
589,224 
736,884 
751,449 
943,405 
915,247 
 
Instructional costs and services
90,541 
83,562 
99,603 
97,028 
97,485 
84,666 
79,719 
81,202 
196,631 
160,921 
280,193 
245,587 
370,734 
343,072 
288,882 
 
Total costs and expenses
172,095 
163,244 
174,337 
173,310 
175,290 
198,270 
181,660 
196,558 
347,647 
378,218 
510,891 
576,488 
682,986 
751,778 
644,294 
 
Operating income (loss)
(9,870)
19,524 
19,133 
39,676 
31,231 
47,647 
67,874 
44,875 
58,809 
112,749 
78,333 
160,396 
68,463 
191,627 
270,953 
 
Other income, net
 
 
748 
837 
912 
996 
883 
740 
1,585 
1,623 
2,371 
2,619 
3,082 
3,531 
2,871 
 
Income before income taxes
(9,159)
20,310 
19,881 
40,513 
32,143 
48,643 
68,757 
45,615 
60,394 
114,372 
80,704 
163,015 
71,545 
195,158 
273,824 
 
Income tax expense
(4,050)
6,099 
7,767 
15,846 
12,318 
18,464 
26,049 
17,181 
23,613 
43,230 
29,712 
61,694 
25,662 
74,012 
102,746 
 
Net income
(5,109)
14,211 
12,114 
24,667 
19,825 
30,179 
42,708 
28,434 
36,781 
71,142 
50,992 
101,321 
45,883 
121,146 
171,078 
 
Basic earnings (loss) per share (in USD per share)
$ (0.10)
$ 0.26 
$ 0.22 
$ 0.46 
$ 0.37 
$ 0.57 
$ 0.81 
$ 0.55 
$ 0.68 
$ 1.36 
$ 0.94 
$ 1.93 
$ 0.85 
$ 2.29 
$ 3.27 
 
Diluted earnings (loss) per share (in USD per share)
$ (0.10)
$ 0.25 
$ 0.22 
$ 0.45 
$ 0.36 
$ 0.54 
$ 0.76 
$ 0.51 
$ 0.66 
$ 1.27 
$ 0.91 
$ 1.81 
$ 0.83 
$ 2.17 
$ 2.99 
 
Consolidated statement of cash flow data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for bad debts
 
 
 
13,040 
 
 
 
13,418 
24,403 
24,289 
31,670 
36,610 
47,119 
52,767 
43,203 
 
Amortization of premium/discount
 
 
 
1,407 
 
 
 
2,125 
2,165 
4,470 
2,662 
6,922 
2,624 
8,992 
3,969 
 
Accounts receivable
 
 
 
(10,229)
 
 
 
(37,153)
(13,222)
(46,772)
(18,826)
(68,357)
(15,973)
(62,333)
(43,300)
 
Deferred income taxes
 
 
 
 
 
 
 
 
 
 
 
 
(6,962)
(11,373)
5,601 
 
Prepaid expenses and other current assets
 
 
 
(5,656)
 
 
 
32 
(4,110)
(6,806)
(155)
(4,548)
(2,607)
(2,387)
(3,547)
 
Student loans receivable
 
 
 
(133)
 
 
 
(3,214)
 
(6,666)
 
(6,729)
291 
(5,742)
(6,021)
 
Restricted cash
 
 
 
5,900 
 
 
 
(5,028)
6,451 
(2,809)
7,531 
3,639 
10,048 
6,721 
(4,855)
 
Accounts payable and accrued liabilities
 
 
 
16,213 
 
 
 
24,691 
5,400 
17,847 
8,960 
17,094 
13,220 
12,100 
27,509 
 
Deferred revenue and student deposits
 
 
 
(33,747)
 
 
 
 
(39,996)
 
(48,160)
 
(41,607)
(3,921)
11,870 
 
Cash flows from operating activities
 
 
 
21,516 
 
 
 
35,321 
38,724 
73,996 
61,808 
97,226 
85,586 
149,905 
215,954 
 
As Reported
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated balance sheet data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
249,472 
 
 
 
255,965 
 
 
 
 
 
 
 
249,472 
255,965 
 
 
Restricted cash
0 
 
 
 
0 
 
 
 
 
 
 
 
0 
0 
 
 
Accounts receivable, net
28,565 
 
 
 
67,371 
 
 
 
 
 
 
 
28,565 
67,371 
 
 
Current deferred tax assets
15,232 
 
 
 
10,936 
 
 
 
 
 
 
 
15,232 
10,936 
 
 
Prepaid expenses and other current assets
21,369 
 
 
 
19,810 
 
 
 
 
 
 
 
21,369 
19,810 
 
 
Total current assets
381,582 
 
 
 
491,605 
 
 
 
 
 
 
 
381,582 
491,605 
 
 
Student loans receivable, net
 
 
 
 
15,143 
 
 
 
 
 
 
 
 
15,143 
 
 
Noncurrent deferred tax assets
 
 
 
 
13,266 
 
 
 
 
 
 
 
 
13,266 
 
 
Total assets
573,979 
 
 
 
750,787 
 
 
 
 
 
 
 
573,979 
750,787 
 
 
Accrued liabilities
54,756 
 
 
 
 
 
 
 
 
 
 
 
54,756 
 
 
 
Total current liabilities
192,742 
 
 
 
 
 
 
 
 
 
 
 
192,742 
 
 
 
Total liabilities
255,940 
 
 
 
 
 
 
 
 
 
 
 
255,940 
 
 
 
Retained earnings
515,608 
 
 
 
474,598 
 
 
 
 
 
 
 
515,608 
474,598 
 
 
Total stockholders’ equity
348,039 
 
 
 
491,570 
 
 
 
 
 
 
 
348,039 
491,570 
 
 
Total liabilities and stockholders’ equity
573,979 
 
 
 
750,787 
 
 
 
 
 
 
 
573,979 
750,787 
 
 
Consolidated statement of income data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
768,623 
968,171 
933,349 
 
Instructional costs and services
 
 
 
 
 
 
 
 
 
 
 
 
395,928 
364,001 
304,190 
 
Total costs and expenses
 
 
 
 
 
 
 
 
 
 
 
 
708,180 
772,707 
659,602 
 
Operating income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
60,443 
195,464 
273,747 
 
Other income, net
 
 
 
 
 
 
 
 
 
 
 
 
3,346 
3,370 
2,768 
 
Income before income taxes
 
 
 
 
 
 
 
 
 
 
 
 
63,789 
198,834 
276,515 
 
Income tax expense
 
 
 
 
 
 
 
 
 
 
 
 
22,779 
75,413 
103,751 
 
Net income
 
 
 
 
 
 
 
 
 
 
 
 
41,010 
123,421 
172,764 
 
Basic earnings (loss) per share (in USD per share)
 
 
 
 
 
 
 
 
 
 
 
 
$ 0.76 
$ 2.33 
$ 3.30 
 
Diluted earnings (loss) per share (in USD per share)
 
 
 
 
 
 
 
 
 
 
 
 
$ 0.74 
$ 2.21 
$ 3.02 
 
Consolidated statement of cash flow data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for bad debts
 
 
 
 
 
 
 
 
 
 
 
 
72,313 
73,696 
58,511 
 
Amortization of premium/discount
 
 
 
 
 
 
 
 
 
 
 
 
3,559 
6,805 
 
 
Accounts receivable
 
 
 
 
 
 
 
 
 
 
 
 
(34,348)
(81,577)
(60,587)
 
Deferred income taxes
 
 
 
 
 
 
 
 
 
 
 
 
(10,506)
(9,972)
6,606 
 
Prepaid expenses and other current assets
 
 
 
 
 
 
 
 
 
 
 
 
(2,411)
(1,056)
(2,104)
 
Student loans receivable
 
 
 
 
 
 
 
 
 
 
 
 
 
(3,778)
(8,177)
 
Restricted cash
 
 
 
 
 
 
 
 
 
 
 
 
0 
0 
0 
 
Accounts payable and accrued liabilities
 
 
 
 
 
 
 
 
 
 
 
 
13,687 
 
 
 
Deferred revenue and student deposits
 
 
 
 
 
 
 
 
 
 
 
 
 
(10,389)
 
 
Cash flows from operating activities
 
 
 
 
 
 
 
 
 
 
 
 
$ 75,538 
$ 143,185 
$ 220,808 
 
Investments (Fair Value Information) (Details) (USD $)
Dec. 31, 2013
Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities
$ 106,963,000 
$ 258,705,000 
Other investments and securities, at cost
90,000,000 
109,500,000 
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
106,963,000 
258,705,000 
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
719,000 
415,000 
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
719,000 
415,000 
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
16,244,000 
148,801,000 
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
16,244,000 
148,801,000 
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 
Certificates of Deposit
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities
90,000,000 
109,489,000 
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
90,000,000 
109,489,000 
Certificates of Deposit |
Level 3
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities
$ 0 
$ 0 
Investments (Differences Between Amortized Cost and Fair Value of Investments) (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
$ 106,888 
$ 258,351 
Gross unrealized gain
75 
399 
Gross unrealized loss
0 
(45)
Fair value
106,963 
258,705 
Number of investments in an unrealized loss position for less than 12 months
0 
6 
Number of investments in an unrealized loss position for greater than 12 months
0 
0 
Demand Notes
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
719 
415 
Gross unrealized gain
0 
0 
Gross unrealized loss
0 
0 
Fair value
719 
415 
Corporate Notes and Bonds, Short-term
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
5,132 
126,806 
Gross unrealized gain
50 
282 
Gross unrealized loss
0 
(25)
Fair value
5,182 
127,063 
Certificates of Deposit, Short-term
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
60,000 
9,489 
Gross unrealized gain
0 
0 
Gross unrealized loss
0 
0 
Fair value
60,000 
9,489 
Corporate Notes and Bonds, Long-term
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
11,037 
21,641 
Gross unrealized gain
25 
117 
Gross unrealized loss
0 
(20)
Fair value
11,062 
21,738 
Certificates of Deposit, Long-term
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
30,000 
100,000 
Gross unrealized gain
0 
0 
Gross unrealized loss
0 
0 
Fair value
$ 30,000 
$ 100,000 
Certificates of Deposit, Long-term |
Maximum
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Maturities in years
3 years 
3 years 
Accounts Receivable (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Receivables [Abstract]
 
 
 
 
 
 
 
 
Accounts receivable
$ 49,854 
 
 
 
$ 85,953 
 
 
 
Less allowance for doubtful accounts
26,901 
 
 
 
31,466 
 
 
 
Accounts receivable
$ 22,953 
$ 41,842 
$ 43,393 
$ 51,835 
$ 54,487 
$ 84,178 
$ 74,826 
$ 75,846 
Accounts Receivable (Valuation Accounts) (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
 
Less allowance for doubtful accounts
$ 26,901 
$ 31,466 
 
Allowance for Doubtful Accounts Receivable
 
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
 
Beginning Balance
31,466 
24,688 
19,783 
Charged to Expense
46,851 
52,794 
42,077 
Deductions(1)
(51,416)1
(46,016)1
(37,172)1
Ending Balance
$ 26,901 
$ 31,466 
$ 24,688 
Student Loan Receivables (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
 
 
 
 
 
 
 
Current student loans receivable
$ 1,208 
$ 595 
 
 
 
 
 
 
 
Less allowance for doubtful accounts
165 
39 
 
 
 
 
 
 
 
Student loans receivable, net
1,043 
556 
 
1,682 
1,607 
880 
533 
519 
421 
Noncurrent student loans receivable
13,764 
16,272 
 
 
 
 
 
 
 
Less allowance for doubtful accounts
1,979 
1,856 
 
 
 
 
 
 
 
Student loans receivable, net
11,785 
14,416 
 
 
 
13,788 
14,291 
14,232 
11,035 
Impaired student loans
1,998 
0 
0 
 
 
 
 
 
 
Non-tuition Related
 
 
 
 
 
 
 
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
 
 
 
 
 
 
 
Current student loans receivable
587 
428 
 
 
 
 
 
 
 
Noncurrent student loans receivable
7,347 
8,101 
 
 
 
 
 
 
 
Tuition Related
 
 
 
 
 
 
 
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
 
 
 
 
 
 
 
Current student loans receivable
621 
167 
 
 
 
 
 
 
 
Noncurrent student loans receivable
$ 6,417 
$ 8,171 
 
 
 
 
 
 
 
Student Loan Receivables (Allowance for Doubtful Accounts) (Details) (Allowance for Doubtful Student Loans Receivable, USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Allowance for Doubtful Student Loans Receivable
 
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
 
Beginning Balance
$ 1,895 
$ 2,070 
$ 930 
Charged to Expense
268 
(27)
1,126 
Deductions(1)
(19)1
(148)1
14 1
Ending Balance
$ 2,144 
$ 1,895 
$ 2,070 
Student Loan Receivables (Delinquency Status) (Details) (Allowance for Doubtful Student Loans Receivable, USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Allowance for Doubtful Student Loans Receivable
 
Financing Receivable, Recorded Investment, Past Due [Line Items]
 
Less than 120 days
$ 16,998 
From 120 - 269 days
1,238 
Greater than 270 days
2,132 
Total gross student loans receivable
20,368 
Less: Amounts reserved or impaired
(4,143)
Less: Discount on student loans receivable
(3,397)
Total student loans receivable, net
$ 12,828 
Prepaid Expense and Other Current Assets (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
 
 
 
 
 
 
 
 
Prepaid expenses
$ 10,814 
 
 
 
$ 9,367 
 
 
 
Prepaid licenses
5,833 
 
 
 
5,864 
 
 
 
Prepaid income taxes
195 
 
 
 
0 
 
 
 
Prepaid insurance
1,131 
 
 
 
1,134 
 
 
 
Interest receivable
86 
 
 
 
2,221 
 
 
 
Other current assets
3,504 
 
 
 
1,467 
 
 
 
Total prepaid expenses and other current assets
$ 21,563 
$ 19,072 
$ 23,891 
$ 25,245 
$ 20,053 
$ 22,944 
$ 25,105 
$ 18,367 
Property and Equipment, Net (Details) (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Property, Plant and Equipment [Line Items]
 
 
 
Property and equipment, gross
$ 155,441,000 
$ 142,133,000 
 
Less accumulated depreciation and amortization
(64,016,000)
(46,167,000)
 
Total property and equipment, net
91,425,000 
95,966,000 
 
Depreciation and amortization associated with property and equipment, including assets under capital lease
18,200,000 
15,900,000 
12,100,000 
Land
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property and equipment, gross
7,091,000 
7,091,000 
 
Buildings
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property and equipment, gross
28,916,000 
25,430,000 
 
Furniture and Office Equipment
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property and equipment, gross
84,852,000 
79,656,000 
 
Software
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property and equipment, gross
10,075,000 
6,053,000 
 
Leasehold Improvements
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property and equipment, gross
24,360,000 
23,756,000 
 
Vehicles
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property and equipment, gross
$ 147,000 
$ 147,000 
 
Goodwill and Intangibles, Net (Details) (USD $)
12 Months Ended 0 Months Ended 3 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2013
Capitalized Curriculum Costs [Member]
Dec. 31, 2012
Capitalized Curriculum Costs [Member]
Oct. 31, 2013
Purchased Intangible Assets [Member]
Dec. 31, 2013
Purchased Intangible Assets [Member]
Dec. 31, 2012
Purchased Intangible Assets [Member]
Goodwill and Intangibles, Net:
 
 
 
 
 
 
 
 
Gross carrying amount
$ 30,397,000 
$ 10,834,000 
 
$ 14,540,000 
$ 9,977,000 
 
$ 15,857,000 
$ 857,000 
Accumulated amortization
(6,086,000)
(2,662,000)
 
(5,035,000)
(1,823,000)
 
(1,051,000)
(839,000)
Net carrying amount
24,311,000 
8,172,000 
 
9,505,000 
8,154,000 
 
14,806,000 
18,000 
Goodwill and indefinite-lived intangibles
2,567,000 
2,567,000 
 
 
 
 
 
 
Total goodwill and intangibles, net
26,878,000 
10,739,000 
 
 
 
 
 
 
Amortization expense
3,400,000 
1,600,000 
600,000 
 
 
 
 
 
Licensing Agreement:
 
 
 
 
 
 
 
 
Initial term of Forbes Agreement
 
 
 
 
 
12 years 
 
 
Upfront payment for Forbes Agreement
 
 
 
 
 
 
15,000,000 
 
Future minimum annual royalty payments due
 
 
 
 
 
 
2,500,000.0 
 
Estimated Remaining Amortization Expense as of Each Fiscal Year:
 
 
 
 
 
 
 
 
2014
5,143,000 
 
 
 
 
 
 
 
2015
3,995,000 
 
 
 
 
 
 
 
2016
2,234,000 
 
 
 
 
 
 
 
2017
1,232,000 
 
 
 
 
 
 
 
2018
1,232,000 
 
 
 
 
 
 
 
Thereafter
10,475,000 
 
 
 
 
 
 
 
Total future amortization expense
$ 24,311,000 
 
 
 
 
 
 
 
Accrued Liabilities (Narrative) (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Payables and Accruals [Abstract]
 
 
 
 
 
 
 
 
Accrued salaries and wages
$ 12,790 
 
 
 
$ 11,585 
 
 
 
Accrued bonus
2,277 
 
 
 
1,603 
 
 
 
Accrued vacation
9,696 
 
 
 
8,993 
 
 
 
Estimated Litigation Liability, Current
8,000 
 
 
 
0 
 
 
 
Accrued expenses
19,081 
 
 
 
15,924 
 
 
 
Rent liability
2,446 
 
 
 
0 
 
 
 
Accrued income taxes payable
0 
 
 
 
6,535 
 
 
 
Accrued liabilities
$ 54,290 
$ 48,828 
$ 48,336 
$ 58,801 
$ 44,640 
$ 50,044 
$ 54,006 
$ 64,595 
Accrued Liabilities (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Jun. 30, 2013
Restructuring Cost and Reserve [Line Items]
 
Severance costs
$ 5.9 
Instructional Costs and Services
 
Restructuring Cost and Reserve [Line Items]
 
Severance costs
4.8 
Admissions Advisory and Marketing
 
Restructuring Cost and Reserve [Line Items]
 
Severance costs
0.3 
General and Administrative
 
Restructuring Cost and Reserve [Line Items]
 
Severance costs
$ 0.8 
Deferred Revenue and Student Deposits (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Deferred Revenue Disclosure [Abstract]
 
 
Deferred revenue
$ 29,279 
$ 44,967 
Student deposits
103,512 
130,090 
Total deferred revenue and student deposits
$ 132,791 
$ 175,057 
Credit Facilities (Details) (USD $)
0 Months Ended 12 Months Ended
Apr. 13, 2012
Dec. 31, 2013
Line of Credit Facility [Line Items]
 
 
Pledged Assets Separately Reported, Real Estate Pledged as Collateral, at Fair Value
 
$ 7,100,000 
Revolving line of credit, amount outstanding
 
0 
Surety Bond Facility [Abstract]
 
 
Surety bond facility, available amount
 
12,000,000 
Surety bond facility, issued amount
 
6,500,000 
January 2010 Credit Facility
 
 
Line of Credit Facility [Line Items]
 
 
Revolving line of credit, amount outstanding
 
5,800,000 
April 2012 Credit Facility
 
 
Line of Credit Facility [Line Items]
 
 
Revolving line of credit, maximum borrowing capacity
100,000,000 
 
Revolving line of credit, current borrowing capacity
50,000,000 
 
Revolving line of credit, maximum swing-line advances
$ 3,000,000 
 
Revolving line of credit, term
three years 
 
Revolving line of credit, notice required for termination
 
5 days 
Commitment fee, percentage on undrawn amount of letter of credit
1.50% 
 
Revolving line of credit, facility fee, percentage
0.25% 
 
Base Rate |
April 2012 Credit Facility
 
 
Line of Credit Facility [Line Items]
 
 
Revolving line of credit, fixed portion of interest rate
0.50% 
 
Eurodollar-based Rate |
April 2012 Credit Facility
 
 
Line of Credit Facility [Line Items]
 
 
Revolving line of credit, fixed portion of interest rate
1.50% 
 
Federal Funds Rate |
Base Rate |
April 2012 Credit Facility
 
 
Line of Credit Facility [Line Items]
 
 
Revolving line of credit, variable portion of interest rate, addition to reference rate
1.00% 
 
Daily Adjusting LIBOR |
Base Rate |
April 2012 Credit Facility
 
 
Line of Credit Facility [Line Items]
 
 
Revolving line of credit, variable portion of interest rate, addition to reference rate
1.00% 
 
Lease Obligations (Details) (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Leases [Abstract]
 
 
 
Rent expense under non-cancelable operating lease arrangements
$ 37,100,000 
$ 36,800,000 
$ 31,700,000 
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
 
 
 
2014
36,962,000 
 
 
2015
37,226,000 
 
 
2016
37,293,000 
 
 
2017
37,363,000 
 
 
2018
34,072,000 
 
 
Thereafter
41,722,000 
 
 
Total minimum payments
$ 224,638,000 
 
 
Earnings Per Share (Basic and Diluted) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended 9 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Jun. 30, 2013
Jun. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Numerator:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
$ (5,109)
$ 14,211 
$ 12,114 
$ 24,667 
$ 19,825 
$ 30,179 
$ 42,708 
$ 28,434 
$ 36,781 
$ 71,142 
$ 50,992 
$ 101,321 
$ 45,883 
$ 121,146 
$ 171,078 
Denominator:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding (in shares)
 
 
 
 
 
 
 
 
 
 
 
 
53,923 
52,947 
52,291 
Effect of dilutive options and restricted stock units (in shares)
 
 
 
 
 
 
 
 
 
 
 
 
1,482 
2,762 
4,572 
Effect of dilutive warrants (in shares)
 
 
 
 
 
 
 
 
 
 
 
 
82 
237 
270 
Diluted weighted average number of common shares outstanding (in shares)
 
 
 
 
 
 
 
 
 
 
 
 
55,487 
55,946 
57,133 
Earnings per share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings (loss) per share (in USD per share)
$ (0.10)
$ 0.26 
$ 0.22 
$ 0.46 
$ 0.37 
$ 0.57 
$ 0.81 
$ 0.55 
$ 0.68 
$ 1.36 
$ 0.94 
$ 1.93 
$ 0.85 
$ 2.29 
$ 3.27 
Diluted earnings (loss) per share (in USD per share)
$ (0.10)
$ 0.25 
$ 0.22 
$ 0.45 
$ 0.36 
$ 0.54 
$ 0.76 
$ 0.51 
$ 0.66 
$ 1.27 
$ 0.91 
$ 1.81 
$ 0.83 
$ 2.17 
$ 2.99 
Earnings Per Share (Anti-Dilutive Securities) (Details)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Stock Options
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
Anti-dilutive securities
3,004 
2,524 
1,332 
Restricted Stock Units (RSUs)
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
Anti-dilutive securities
3 
0 
0 
Stock-Based Compensation (Narrative) (Details) (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Number of common shares reserved for issuance upon exercise of stock options and settlement of RSUs
10,000,000 
 
 
Exercise of stock options, shares
1,060,000 
3,128,000 
3,070,000 
Intrinsic value of exercised options
$ 9,400,000 
$ 45,200,000 
$ 58,400,000 
Excess tax benefit of option exercises
2,590,000 
10,058,000 
19,096,000 
Tax benefit realized from exercise of stock options
2,100,000 
10,100,000 
19,100,000 
Tax benefit shortfall related to share-based compensation activity
600,000 
1,500,000 
 
Option expirations in period
137,000 
53,000 
 
Stock-based compensation expense
13,900,000 
13,700,000 
10,600,000 
Income tax benefit of stock-based compensation expense
5,200,000 
5,100,000 
3,900,000 
Shares of common stock represented by each RSU
1 
 
 
Stock Options
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Award expiration period
10 years 
 
 
Award vesting period
4 years 
 
 
Unrecognized compensation cost
5,600,000 
12,900,000 
10,600,000 
Unrecognized compensation cost, period for recognition
1 year 1 month 3 days 
 
 
Restricted Stock Units (RSUs)
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Unrecognized compensation cost
$ 6,500,000 
$ 2,600,000 
 
Unrecognized compensation cost, period for recognition
1 year 7 months 
 
 
Number vested and released in period
181,104 
56,855 
0 
Stock-Based Compensation (Stock Option Activity) (Details) (USD $)
Share data in Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
 
 
 
 
Employee Service Share-based Compensation, Tax Benefit Realized from Exercise of Stock Options
$ 500,000 
$ 200,000 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
 
 
 
 
Balance, beginning of period
6,412 
8,280 
10,195 
 
Granted
483 
1,595 
1,294 
 
Exercised
(1,060)
(3,128)
(3,070)
 
Forfeitures and expired
(345)
(335)
(139)
 
Balance, end of period
5,490 
6,412 
8,280 
10,195 
Vested and expected to vest at December 31, 2013
5,435 
 
 
 
Exercisable at December 31, 2013
3,809 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
 
 
 
 
Balance, beginning of period, weighted-average exercise price (in USD per share)
$ 14.17 
$ 7.70 
$ 4.76 
 
Granted, weighted-average exercise price (in USD per share)
$ 10.23 
$ 22.59 
$ 17.41 
 
Exercised, weighted-average exercise price (in USD per share)
$ 9.87 
$ 0.72 
$ 1.59 
 
Forfeitures, weighted-average exercise price (in USD per share)
$ 20.65 
$ 19.79 
$ 17.65 
 
Balance, end of period, weighted-average exercise price (in USD per share)
$ 14.25 
$ 14.17 
$ 7.70 
$ 4.76 
Vested and expected to vest at December 31, 2013
$ 14.22 
 
 
 
Exercisable at December 31, 2013
$ 12.82 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
 
 
 
 
Balance, weighted-average remaining contractual term
6 years 6 months 7 days 
7 years 2 months 14 days 
5 years 10 months 24 days 
5 years 5 months 19 days 
Vested and expected to vest at December 31, 2012, weighted-average remaining contractual term
6 years 6 months 
 
 
 
Exercisable at December 31, 2012, weighted-average remaining contractual term
5 years 9 months 18 days 
 
 
 
Balance, aggregate intrinsic value
28,769,000 
9,010,000 
127,308,000 
147,545,000 
Vested and expected to vest at December 31, 2012, aggregate intrinsic value
28,588,000 
 
 
 
Exercisable at December 31, 2012, aggregate intrinsic value
$ 23,827,000 
 
 
 
Stock-Based Compensation (Option Valuation Assumptions) (Details)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Weighted average exercise price per share (in USD per share)
$ 10.23 
$ 22.59 
$ 17.41 
Weighted average grant date fair value per share (in USD per share)
$ 5.48 
$ 11.26 
$ 9.07 
Stock Options
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Risk-free interest rate
1.00% 
1.20% 
2.50% 
Expected dividend yield
0.00% 
0.00% 
0.00% 
Expected volatility
58.90% 
54.60% 
52.70% 
Expected life (in years)
5 years 10 months 6 days 
5 years 8 months 1 day 
6 years 1 month 13 days 
Forfeiture rate
5.00% 
4.00% 
4.00% 
Stock-Based Compensation (Restricted Stock Unit Activity) (Details) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
 
 
 
Employee Service Share-based Compensation, Tax benefit (Shortfall) Realized from Exercise of Restricted Stock Units
$ 0.5 
$ (0.2)
 
Employee Service Share-based Compensation, Tax Shortfall Realized from Exercise of Stock Options
(0.5)
(0.2)
 
Restricted Stock Units (RSUs)
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
 
 
 
Balance, beginning of period
362,199 
56,855 
0 
Awarded
1,016,035 
362,199 
56,855 
Vested and released
(181,104)
(56,855)
0 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Fair Value
$ 3.0 
$ 0.8 
 
Canceled
(98,613)
0 
0 
Balance, end of period
1,098,517 
362,199 
56,855 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
 
 
 
Balance, beginning of period, weighted average grant date fair value (in USD per share)
$ 9.72 
$ 23.97 
$ 0 
Awarded, weighted average grant date fair value (in USD per share)
$ 10.50 
$ 9.72 
$ 23.97 
Vested and released, weighted average grant date fair value (in USD per share)
$ 9.72 
$ 23.97 
$ 0 
Canceled, weighted average grant date fair value (in USD per share)
$ 10.39 
$ 0 
$ 0 
Balance, end of period, weighted average grant date fair value (in USD per share)
$ 10.38 
$ 9.72 
$ 23.97 
Warrants (Details)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Class of Warrant or Right [Line Items]
 
 
 
Warrant purchase rights
1 
 
 
Warrants exercised during period
104,000 
174,000 
43,000 
Warrants outstanding
 
118,000 
 
$1.125 Exercise Price
 
 
 
Class of Warrant or Right [Line Items]
 
 
 
Warrants outstanding
 
41,000 
 
Exercise price of warrants
1.125 
 
 
$2.250 Exercise Price
 
 
 
Class of Warrant or Right [Line Items]
 
 
 
Warrants outstanding
 
55,000 
 
Exercise price of warrants
2.250 
 
 
$2.835 Exercise Price
 
 
 
Class of Warrant or Right [Line Items]
 
 
 
Warrants outstanding
 
0 
 
Exercise price of warrants
2.835 
 
 
$2.925 Exercise Price
 
 
 
Class of Warrant or Right [Line Items]
 
 
 
Warrants outstanding
 
19,000 
 
Exercise price of warrants
2.925 
 
 
$9.000 Exercise Price
 
 
 
Class of Warrant or Right [Line Items]
 
 
 
Warrants outstanding
 
3,000 
 
Exercise price of warrants
9.000 
 
 
Stock Repurchase Program (Details) (USD $)
3 Months Ended 12 Months Ended 18 Months Ended 1 Months Ended 0 Months Ended 3 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2011
Dec. 18, 2013
Jul. 31, 2010
2010 Repurchase Program
May 31, 2011
2011 Repurchase Program
Apr. 30, 2012
2012 Repurchase Program
Nov. 10, 2013
Tender Offer Repurchase Program 2013 [Member] [Domain]
Dec. 31, 2013
Stock Options
Equity, Class of Treasury Stock [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Stock repurchase program, authorized amount
 
 
 
 
 
 
 
$ 60,000,000 
$ 75,000,000 
$ 75,000,000 
 
 
Stock repurchase program, period in force
 
 
 
 
 
 
 
12 months 
12 months 
12 months 
 
 
Shares repurchased
10,200,000 
 
 
100,000 
 
7,300,000 
 
 
 
 
 
200,000 
Shares repurchased, weighted average cost per share
 
 
 
 
 
$ 18.62 
 
 
 
 
 
 
Shares repurchased, total cost
 
 
201,496,000 
602,000 
92,778,000 
135,000,000 
 
 
 
 
 
 
Repurchase of common stock
$ 199,900,000 
$ 600,000 
$ 201,496,000 
$ 602,000 
$ 92,778,000 
 
 
 
 
 
 
 
Stock Repurchase Program, Number of Shares Authorized to be Repurchased
 
 
 
 
 
 
 
 
 
 
10,250,000 
 
Share Price
 
 
 
 
 
 
$ 19.50 
 
 
 
 
 
Income Taxes (Narrative) (Details) (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Income Tax Disclosure [Abstract]
 
 
 
Change in net deferred tax assets
$ 6,000,000 
 
 
Change in net deferred tax expense
7,000,000 
 
 
Tax benefit shortfall recorded to additional paid in capital
1,100,000 
 
 
Tax effect of unrealized gain on investments
100,000 
 
 
Effective income tax rate
35.90% 
37.90% 
37.50% 
Gross unrecognized tax benefits
7,387,000 
9,266,000 
8,070,000 
Gross unrecognized tax benefits that would impact effective tax rate if recognized
4,800,000 
6,600,000 
 
Unrecognized tax benefits that would result in adjustments to other tax accounts
2,600,000 
2,700,000 
 
Accrued interest and penalties related to uncertain tax positions
$ 1,700,000 
$ 1,700,000 
 
Income Taxes (Components of Income Tax Expense) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended 9 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Jun. 30, 2013
Jun. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Current:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal
 
 
 
 
 
 
 
 
 
 
 
 
$ 29,456 
$ 77,720 
$ 88,513 
State
 
 
 
 
 
 
 
 
 
 
 
 
3,168 
7,665 
8,632 
Current income tax expense (benefit)
 
 
 
 
 
 
 
 
 
 
 
 
32,624 
85,385 
97,145 
Deferred:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal
 
 
 
 
 
 
 
 
 
 
 
 
(5,952)
(10,470)
6,089 
State
 
 
 
 
 
 
 
 
 
 
 
 
(1,010)
(903)
(488)
Deferred income tax expense (benefit)
 
 
 
 
 
 
 
 
 
 
 
 
(6,962)
(11,373)
5,601 
Total
$ (4,050)
$ 6,099 
$ 7,767 
$ 15,846 
$ 12,318 
$ 18,464 
$ 26,049 
$ 17,181 
$ 23,613 
$ 43,230 
$ 29,712 
$ 61,694 
$ 25,662 
$ 74,012 
$ 102,746 
Income Taxes (Deferred Tax Assets and Liabilities) (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Deferred tax assets:
 
 
Net operating loss
$ 235 
$ 258 
Fixed assets
214 
233 
Bad debt
463 
1,632 
Vacation accrual
2,762 
2,815 
Stock-based compensation
15,341 
13,299 
Deferred rent
9,944 
9,404 
State tax
2,310 
2,541 
Bonus accrual
849 
599 
Unearned interest
1,281 
1,081 
Accrued expenses
4,377 
196 
Revenue reserves
8,992 
10,681 
Total deferred tax assets
46,768 
42,739 
Valuation allowance
0 
0 
Net deferred tax assets
46,768 
42,739 
Deferred tax liabilities:
 
 
Fixed assets and intangibles
(11,550)
(13,411)
Unrealized gain on investments
(28)
(132)
Total deferred tax liabilities
(11,578)
(13,543)
Total net deferred tax assets
$ 35,190 
$ 29,196 
Income Taxes (Balance Sheet Location of Deferred Tax Assets and Liabilities) (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Income Tax Disclosure [Abstract]
 
 
 
 
 
 
 
 
Current deferred tax assets
$ 16,683 
$ 15,586 
$ 15,573 
$ 15,524 
$ 15,490 
$ 8,106 
$ 8,235 
$ 8,235 
Current deferred tax liabilities
0 
 
 
 
0 
 
 
 
Noncurrent deferred tax assets
18,507 
13,724 
13,746 
13,701 
13,706 
11,550 
11,608 
11,604 
Noncurrent deferred tax liabilities
0 
 
 
 
0 
 
 
 
Total net deferred tax assets
$ 35,190 
 
 
 
$ 29,196 
 
 
 
Income Taxes (Operating Loss Carryforwards) (Details) (Internal Revenue Service (IRS) [Member], USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Internal Revenue Service (IRS) [Member]
 
Operating Loss Carryforwards [Line Items]
 
Net operating loss carryforwards
$ 0.7 
Income Taxes (Income Tax Reconciliation) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended 9 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Jun. 30, 2013
Jun. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Income Tax Reconciliation, Amount:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Computed expected federal tax expense
 
 
 
 
 
 
 
 
 
 
 
 
$ 25,041 
$ 68,305 
$ 95,839 
State taxes, net of federal benefit
 
 
 
 
 
 
 
 
 
 
 
 
1,351 
4,586 
5,370 
Permanent differences
 
 
 
 
 
 
 
 
 
 
 
 
917 
1,074 
1,601 
Uncertain tax positions
 
 
 
 
 
 
 
 
 
 
 
 
(1,647)
31 
(192)
Other
 
 
 
 
 
 
 
 
 
 
 
 
0 
16 
128 
Total
$ (4,050)
$ 6,099 
$ 7,767 
$ 15,846 
$ 12,318 
$ 18,464 
$ 26,049 
$ 17,181 
$ 23,613 
$ 43,230 
$ 29,712 
$ 61,694 
$ 25,662 
$ 74,012 
$ 102,746 
Income Tax Reconciliation, Percent:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Computed expected federal tax expense
 
 
 
 
 
 
 
 
 
 
 
 
35.00% 
35.00% 
35.00% 
State taxes, net of federal benefit
 
 
 
 
 
 
 
 
 
 
 
 
1.90% 
2.40% 
2.00% 
Permanent differences
 
 
 
 
 
 
 
 
 
 
 
 
1.30% 
0.50% 
0.60% 
Uncertain tax positions
 
 
 
 
 
 
 
 
 
 
 
 
(2.30%)
0.00% 
(0.10%)
Other
 
 
 
 
 
 
 
 
 
 
 
 
0.00% 
0.00% 
0.00% 
Income tax expense
 
 
 
 
 
 
 
 
 
 
 
 
35.90% 
37.90% 
37.50% 
Income Taxes (Unrecognized Tax Benefits) (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
 
 
Unrecognized tax benefits, beginning of period
$ 9,266 
$ 8,070 
Gross increases-tax positions in prior period
0 
965 
Gross decreases-tax positions in prior period
(5)
0 
Gross increases-current period tax positions
100 
231 
Settlements
0 
0 
Lapse of statute of limitations
(1,974)
0 
Unrecognized tax benefits, end of period
$ 7,387 
$ 9,266 
Regulatory (Details)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Sep. 30, 2011
Sep. 30, 2010
Sep. 30, 2009
The 90-10 Rule:
 
 
 
 
 
 
Title IV eligibility, maximum allowable percentage of revenue from Title IV programs over two consecutive years
90.00% 
 
 
 
 
 
Title IV eligibility, minimum term of ineligibility once noncompliant
2 years 
 
 
 
 
 
Title IV eligibility, maximum allowable percentage of revenue from Title IV programs in any single year
90.00% 
 
 
 
 
 
Return of Title IV Funds:
 
 
 
 
 
 
Deadline for return of unearned funds after student withdrawal
45 days 
 
 
 
 
 
Unearned Title IV funds, trigger for letter of credit requirement, noncompliance of return of funds, maximum allowable percentage in either of last two annual audits
5.00% 
 
 
 
 
 
Unearned Title IV funds, noncompliance of return of funds, required letter of credit as percentage of required returns
25.00% 
 
 
 
 
 
Unearned Title IV funds, actual percentage of noncompliance with return of funds requirement (less than 5%)
5.00% 
5.00% 
 
 
 
 
Ashford University
 
 
 
 
 
 
The 90-10 Rule:
 
 
 
 
 
 
Actual percentage of revenue from Title IV programs
85.60% 
86.40% 
86.80% 
 
 
 
Accreditation, Regulatory Compliance, Cohort Default Rate
 
 
 
10.10% 
10.20% 
15.30% 
Return of Title IV Funds:
 
 
 
 
 
 
Composite score
 
3.0 
 
 
 
 
Estimated composite score
3.0 
 
 
 
 
 
University of the Rockies
 
 
 
 
 
 
The 90-10 Rule:
 
 
 
 
 
 
Actual percentage of revenue from Title IV programs
87.60% 
87.30% 
85.00% 
 
 
 
Accreditation, Regulatory Compliance, Cohort Default Rate
 
 
 
4.80% 
4.00% 
3.30% 
Return of Title IV Funds:
 
 
 
 
 
 
Composite score
 
3.0 
 
 
 
 
Estimated composite score
3.0 
 
 
 
 
 
Three-year cohort default rate [Member] |
Ashford University
 
 
 
 
 
 
The 90-10 Rule:
 
 
 
 
 
 
Accreditation, Regulatory Compliance, Cohort Default Rate
 
 
 
 
16.30% 
19.80% 
Three-year cohort default rate [Member] |
University of the Rockies
 
 
 
 
 
 
The 90-10 Rule:
 
 
 
 
 
 
Accreditation, Regulatory Compliance, Cohort Default Rate
 
 
 
 
8.00% 
3.30% 
Retirement Plans (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Compensation and Retirement Disclosure [Abstract]
 
 
 
Expense related to 401(k) plan
$ 3.3 
$ 3.3 
$ 2.2 
Commitments and Contingencies (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Commitments and Contingencies Disclosure [Abstract]
 
 
Loss Contingency, Range of Possible Loss, Minimum
$ 6.2 
 
Loss Contingency, Range of Possible Loss, Maximum
9.5 
 
Estimated Litigation Liability
9.0 
 
Loss contingency, estimate of possible loss
 
$ 10.8 
Concentration of Risk (Details) (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Concentration Risk [Line Items]
 
 
 
Cash and cash equivalents, FDIC insurance limit
$ 250,000 
 
 
Ashford University
 
 
 
Concentration Risk [Line Items]
 
 
 
Actual percentage of revenue from Title IV programs
85.60% 
86.40% 
86.80% 
University of the Rockies
 
 
 
Concentration Risk [Line Items]
 
 
 
Actual percentage of revenue from Title IV programs
87.60% 
87.30% 
85.00% 
Quarterly Results of Operations (Unaudited) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended 9 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Jun. 30, 2013
Jun. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Consolidated balance sheet data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$ 212,526 
$ 392,299 
$ 322,578 
$ 275,533 
$ 208,971 
$ 131,501 
$ 123,901 
$ 103,405 
$ 322,578 
$ 123,901 
$ 392,299 
$ 131,501 
$ 212,526 
$ 208,971 
$ 80,207 
$ 139,658 
Restricted cash
36,946 
39,463 
40,543 
41,094 
46,994 
50,076 
56,524 
58,768 
40,543 
56,524 
39,463 
50,076 
36,946 
46,994 
 
 
Accounts receivable, net
22,953 
41,842 
43,393 
51,835 
54,487 
84,178 
74,826 
75,846 
43,393 
74,826 
41,842 
84,178 
22,953 
54,487 
 
 
Student loans receivable, net, current
1,043 
1,682 
1,607 
880 
556 
533 
519 
421 
1,607 
519 
1,682 
533 
1,043 
556 
 
 
Current deferred tax assets
16,683 
15,586 
15,573 
15,524 
15,490 
8,106 
8,235 
8,235 
15,573 
8,235 
15,586 
8,106 
16,683 
15,490 
 
 
Prepaid expenses and other current assets
21,563 
19,072 
23,891 
25,245 
20,053 
22,944 
25,105 
18,367 
23,891 
25,105 
19,072 
22,944 
21,563 
20,053 
 
 
Total current assets
377,615 
545,165 
534,395 
521,949 
483,518 
440,322 
448,902 
429,604 
534,395 
448,902 
545,165 
440,322 
377,615 
483,518 
 
 
Student loans receivable, net
11,785 
 
 
13,788 
14,416 
14,291 
14,232 
11,035 
 
14,232 
 
14,291 
11,785 
14,416 
 
 
Deferred income taxes, non-current
18,507 
13,724 
13,746 
13,701 
13,706 
11,550 
11,608 
11,604 
13,746 
11,608 
13,724 
11,550 
18,507 
13,706 
 
 
Total assets
570,012 
765,599 
755,080 
754,520 
742,413 
724,003 
712,289 
670,651 
755,080 
712,289 
765,599 
724,003 
570,012 
742,413 
 
 
Accrued liabilities
54,290 
48,828 
48,336 
58,801 
44,640 
50,044 
54,006 
64,595 
48,336 
54,006 
48,828 
50,044 
54,290 
44,640 
 
 
Deferred revenue and student deposits
132,791 
 
 
 
175,057 
 
 
 
 
 
 
 
132,791 
175,057 
 
 
Total current liabilities
192,276 
184,597 
190,331 
206,671 
224,285 
229,656 
247,368 
258,415 
190,331 
247,368 
184,597 
229,656 
192,276 
224,285 
 
 
Total liabilities
225,474 
219,636 
227,238 
243,079 
259,217 
263,296 
278,689 
287,136 
227,238 
278,689 
219,636 
263,296 
225,474 
259,217 
 
 
Retained earnings
512,107 
517,216 
503,005 
490,891 
466,224 
446,399 
416,220 
373,512 
503,005 
416,220 
517,216 
446,399 
512,107 
466,224 
 
 
Total stockholders’ equity
344,538 
545,963 
527,842 
511,441 
483,196 
460,707 
433,600 
383,515 
527,842 
433,600 
545,963 
460,707 
344,538 
483,196 
347,549 
233,828 
Total liabilities and stockholders' equity
570,012 
765,599 
755,080 
754,520 
742,413 
724,003 
712,289 
670,651 
755,080 
712,289 
765,599 
724,003 
570,012 
742,413 
 
 
Consolidated statement of income data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
162,225 
182,768 
193,470 
212,986 
206,521 
245,917 
249,534 
241,433 
406,456 
490,967 
589,224 
736,884 
751,449 
943,405 
915,247 
 
Instructional costs and services
90,541 
83,562 
99,603 
97,028 
97,485 
84,666 
79,719 
81,202 
196,631 
160,921 
280,193 
245,587 
370,734 
343,072 
288,882 
 
General and administrative
 
15,175 
17,152 
18,739 
12,566 
16,870 
14,747 
25,314 
35,891 
40,061 
51,066 
56,931 
76,894 
69,497 
57,793 
 
Total costs and expenses
172,095 
163,244 
174,337 
173,310 
175,290 
198,270 
181,660 
196,558 
347,647 
378,218 
510,891 
576,488 
682,986 
751,778 
644,294 
 
Operating income (loss)
(9,870)
19,524 
19,133 
39,676 
31,231 
47,647 
67,874 
44,875 
58,809 
112,749 
78,333 
160,396 
68,463 
191,627 
270,953 
 
Other income, net
 
 
748 
837 
912 
996 
883 
740 
1,585 
1,623 
2,371 
2,619 
3,082 
3,531 
2,871 
 
Income before income taxes
(9,159)
20,310 
19,881 
40,513 
32,143 
48,643 
68,757 
45,615 
60,394 
114,372 
80,704 
163,015 
71,545 
195,158 
273,824 
 
Income tax expense
(4,050)
6,099 
7,767 
15,846 
12,318 
18,464 
26,049 
17,181 
23,613 
43,230 
29,712 
61,694 
25,662 
74,012 
102,746 
 
Net income
(5,109)
14,211 
12,114 
24,667 
19,825 
30,179 
42,708 
28,434 
36,781 
71,142 
50,992 
101,321 
45,883 
121,146 
171,078 
 
Basic earnings (loss) per share (in USD per share)
$ (0.10)
$ 0.26 
$ 0.22 
$ 0.46 
$ 0.37 
$ 0.57 
$ 0.81 
$ 0.55 
$ 0.68 
$ 1.36 
$ 0.94 
$ 1.93 
$ 0.85 
$ 2.29 
$ 3.27 
 
Diluted earnings (loss) per share (in USD per share)
$ (0.10)
$ 0.25 
$ 0.22 
$ 0.45 
$ 0.36 
$ 0.54 
$ 0.76 
$ 0.51 
$ 0.66 
$ 1.27 
$ 0.91 
$ 1.81 
$ 0.83 
$ 2.17 
$ 2.99 
 
Consolidated statement of cash flow data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for bad debts
 
 
 
13,040 
 
 
 
13,418 
24,403 
24,289 
31,670 
36,610 
47,119 
52,767 
43,203 
 
Amortization of premium/discount
 
 
 
1,407 
 
 
 
2,125 
2,165 
4,470 
2,662 
6,922 
2,624 
8,992 
3,969 
 
Restricted cash
 
 
 
5,900 
 
 
 
(5,028)
6,451 
(2,809)
7,531 
3,639 
10,048 
6,721 
(4,855)
 
Accounts receivable
 
 
 
(10,229)
 
 
 
(37,153)
(13,222)
(46,772)
(18,826)
(68,357)
(15,973)
(62,333)
(43,300)
 
Prepaid expenses and other current assets
 
 
 
(5,656)
 
 
 
32 
(4,110)
(6,806)
(155)
(4,548)
(2,607)
(2,387)
(3,547)
 
Student loans receivable
 
 
 
(133)
 
 
 
(3,214)
 
(6,666)
 
(6,729)
291 
(5,742)
(6,021)
 
Deferred income taxes
 
 
 
 
 
 
 
 
 
 
 
 
(6,962)
(11,373)
5,601 
 
Accounts payable and accrued liabilities
 
 
 
16,213 
 
 
 
24,691 
5,400 
17,847 
8,960 
17,094 
13,220 
12,100 
27,509 
 
Deferred revenue and student deposits
 
 
 
(33,747)
 
 
 
 
(39,996)
 
(48,160)
 
(41,607)
(3,921)
11,870 
 
Cash flows from operating activities
 
 
 
21,516 
 
 
 
35,321 
38,724 
73,996 
61,808 
97,226 
85,586 
149,905 
215,954 
 
As Reported
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated balance sheet data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
249,472 
431,762 
363,121 
316,267 
255,965 
181,577 
180,425 
162,148 
363,121 
180,425 
431,762 
181,577 
249,472 
255,965 
 
 
Restricted cash
0 
0 
0 
0 
0 
0 
0 
25 
0 
0 
0 
0 
0 
0 
 
 
Accounts receivable, net
28,565 
51,123 
60,502 
69,352 
67,371 
99,919 
91,139 
91,129 
60,502 
91,139 
51,123 
99,919 
28,565 
67,371 
 
 
Student loans receivable, net, current
 
0 
0 
0 
 
0 
0 
0 
0 
0 
0 
0 
 
 
 
 
Current deferred tax assets
15,232 
11,033 
11,020 
10,970 
10,936 
5,313 
5,442 
5,441 
11,020 
5,442 
11,033 
5,313 
15,232 
10,936 
 
 
Prepaid expenses and other current assets
21,369 
16,057 
20,294 
21,445 
19,810 
22,722 
22,966 
17,864 
20,294 
22,966 
16,057 
22,722 
21,369 
19,810 
 
 
Total current assets
381,582 
545,196 
541,747 
530,232 
491,605 
452,515 
459,764 
441,169 
541,747 
459,764 
545,196 
452,515 
381,582 
491,605 
 
 
Student loans receivable, net
 
 
 
14,524 
15,143 
14,992 
14,998 
12,065 
 
14,998 
 
14,992 
 
15,143 
 
 
Deferred income taxes, non-current
 
13,284 
13,306 
13,262 
13,266 
10,752 
10,810 
10,805 
13,306 
10,810 
13,284 
10,752 
 
13,266 
 
 
Total assets
573,979 
765,190 
761,992 
763,100 
750,787 
736,099 
723,119 
682,447 
761,992 
723,119 
765,190 
736,099 
573,979 
750,787 
 
 
Accrued liabilities
54,756 
43,567 
45,089 
56,707 
 
52,313 
54,650 
66,755 
45,089 
54,650 
43,567 
52,313 
54,756 
 
 
 
Deferred revenue and student deposits
 
 
135,865 
 
 
 
 
 
135,865 
 
 
 
 
 
 
 
Total current liabilities
192,742 
179,336 
188,315 
204,577 
 
231,925 
248,012 
260,575 
188,315 
248,012 
179,336 
231,925 
192,742 
 
 
 
Total liabilities
225,940 
214,375 
225,222 
240,985 
 
265,565 
279,333 
289,296 
225,222 
279,333 
214,375 
265,565 
225,940 
 
 
 
Retained earnings
515,608 
522,068 
511,933 
501,565 
474,598 
456,226 
426,406 
383,148 
511,933 
426,406 
522,068 
456,226 
515,608 
474,598 
 
 
Total stockholders’ equity
348,039 
550,815 
536,770 
522,115 
491,570 
470,534 
443,786 
393,151 
536,770 
443,786 
550,815 
470,534 
348,039 
491,570 
 
 
Total liabilities and stockholders' equity
573,979 
765,190 
761,992 
763,100 
750,787 
736,099 
723,119 
682,447 
761,992 
723,119 
765,190 
736,099 
573,979 
750,787 
 
 
Consolidated statement of income data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
163,453 
185,612 
197,574 
221,984 
209,356 
252,076 
256,302 
250,437 
419,558 
506,739 
605,170 
758,815 
768,623 
968,171 
 
 
Instructional costs and services
93,755 
92,204 
106,045 
101,646 
102,034 
90,986 
85,279 
84,224 
207,691 
169,503 
299,895 
260,489 
395,928 
364,001 
 
 
General and administrative
 
16,050 
17,919 
19,375 
13,139 
17,247 
15,047 
25,542 
37,294 
40,589 
53,344 
57,836 
 
 
 
 
Total costs and expenses
175,309 
172,761 
181,546 
178,564 
180,412 
204,967 
187,520 
199,808 
360,110 
387,328 
532,871 
592,295 
708,180 
772,707 
 
 
Operating income (loss)
(11,856)
12,851 
16,028 
43,420 
28,944 
47,109 
68,782 
50,629 
59,448 
119,411 
72,299 
166,520 
60,443 
195,464 
 
 
Other income, net
 
 
1,031 
818 
878 
955 
854 
683 
1,849 
1,537 
2,636 
2,492 
3,346 
3,370 
 
 
Income before income taxes
(11,146)
13,638 
17,059 
44,238 
29,822 
48,064 
69,636 
51,312 
61,297 
120,948 
74,935 
169,012 
63,789 
198,834 
 
 
Income tax expense
(4,686)
3,503 
6,691 
17,271 
11,450 
18,244 
26,378 
19,341 
23,962 
45,719 
27,465 
63,963 
22,779 
75,413 
 
 
Net income
(6,460)
10,135 
10,368 
26,967 
18,372 
29,820 
43,258 
31,971 
37,335 
75,229 
47,470 
105,049 
41,010 
123,421 
 
 
Basic earnings (loss) per share (in USD per share)
$ (0.12)
$ 0.19 
$ 0.19 
$ 0.50 
$ 0.34 
$ 0.56 
$ 0.82 
$ 0.61 
$ 0.69 
$ 1.44 
$ 0.88 
$ 2.00 
$ 0.76 
$ 2.33 
 
 
Diluted earnings (loss) per share (in USD per share)
$ (0.12)
$ 0.18 
$ 0.19 
$ 0.49 
$ 0.33 
$ 0.53 
$ 0.77 
$ 0.57 
$ 0.67 
$ 1.34 
$ 0.85 
$ 1.87 
$ 0.74 
$ 2.21 
 
 
Consolidated statement of cash flow data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for bad debts
 
 
 
18,294 
 
 
 
16,669 
36,865 
33,401 
53,649 
52,418 
72,313 
73,696 
 
 
Amortization of premium/discount
 
 
 
1,005 
 
 
 
1,754 
3,100 
3,594 
3,596 
5,384 
3,559 
6,805 
 
 
Restricted cash
 
 
 
0 
 
 
 
0 
0 
0 
0 
0 
0 
0 
 
 
Accounts receivable
 
 
 
(19,381)
 
 
 
(46,053)
(28,744)
(62,501)
(36,056)
(90,188)
(34,348)
(81,577)
 
 
Prepaid expenses and other current assets
 
 
 
(1,635)
 
 
 
(459)
(96)
(5,084)
3,395 
(3,982)
(2,411)
(1,056)
 
 
Student loans receivable
 
 
 
281 
 
 
 
(2,399)
 
(5,626)
 
(5,730)
 
(3,778)
 
 
Deferred income taxes
 
 
 
 
 
 
 
 
 
 
 
 
(10,506)
(9,972)
 
 
Accounts payable and accrued liabilities
 
 
 
14,119 
 
 
 
26,851 
2,153 
18,492 
3,699 
19,363 
13,687 
 
 
 
Deferred revenue and student deposits
 
 
 
(34,088)
 
 
 
 
(39,192)
 
(48,610)
 
 
(10,389)
 
 
Cash flows from operating activities
 
 
 
15,616 
 
 
 
40,350 
32,273 
76,806 
54,277 
93,588 
75,538 
143,185 
 
 
As Reclassified
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated balance sheet data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accounts receivable, net
 
49,441 
58,895 
68,472 
 
99,386 
90,620 
90,708 
58,895 
90,620 
49,441 
99,386 
 
 
 
 
Student loans receivable, net, current
 
1,682 
1,607 
880 
 
533 
519 
421 
1,607 
519 
1,682 
533 
 
 
 
 
Consolidated statement of income data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Instructional costs and services
 
93,079 
106,812 
102,282 
102,607 
91,362 
85,579 
84,453 
209,094 
170,032 
302,173 
261,394 
 
 
 
 
General and administrative
 
$ 15,175 
$ 17,152 
$ 18,739 
$ 12,566 
$ 16,870 
$ 14,747 
$ 25,314 
$ 35,891 
$ 40,061 
$ 51,066 
$ 56,931