BRIDGEPOINT EDUCATION INC, 10-Q filed on 5/3/2016
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2016
Apr. 28, 2016
Document and Entity Information [Abstract]
 
 
Entity Registrant Name
BRIDGEPOINT EDUCATION INC 
 
Entity Central Index Key
0001305323 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Accelerated Filer 
 
Document Type
10-Q 
 
Document Period End Date
Mar. 31, 2016 
 
Document Fiscal Year Focus
2016 
 
Document Fiscal Period Focus
Q1 
 
Amendment Flag
false 
 
Entity Common Stock, Shares Outstanding
 
46,290,801 
Condensed Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2016
Dec. 31, 2015
Current assets:
 
 
Cash and cash equivalents
$ 243,120 
$ 282,145 
Restricted cash
21,439 
24,685 
Investments
37,243 
19,387 
Accounts receivable, net
34,179 
24,091 
Student loans receivable, net
726 
775 
Prepaid expenses and other current assets
42,027 
52,192 
Total current assets
378,734 
403,275 
Property and equipment, net
19,568 
21,742 
Investments
50,056 
47,770 
Student loans receivable, net
7,147 
7,394 
Goodwill and intangibles, net
20,210 
21,265 
Other long-term assets
5,162 
5,320 
Total assets
480,877 
506,766 
Current liabilities:
 
 
Accounts payable and accrued liabilities
70,810 
79,196 
Deferred revenue and student deposits
82,379 
88,756 
Total current liabilities
153,189 
167,952 
Rent liability
17,842 
20,118 
Other long-term liabilities
14,974 
15,046 
Total liabilities
186,005 
203,116 
Commitments and contingencies (see Note 14)
   
   
Preferred stock, $0.01 par value:
 
 
20,000 shares authorized; zero shares issued and outstanding at both March 31, 2016, and December 31, 2015
0 
0 
Common stock, $0.01 par value:
 
 
300,000 shares authorized; 63,818 issued and 46,261 outstanding at March 31, 2016; 63,407 issued and 45,850 outstanding at December 31, 2015
638 
634 
Additional paid-in capital
190,028 
188,863 
Retained earnings
441,209 
451,321 
Accumulated other comprehensive income (loss)
66 
(99)
Treasury stock, 17,557 shares at cost at both March 31, 2016, and December 31, 2015
(337,069)
(337,069)
Total stockholders' equity
294,872 
303,650 
Total liabilities and stockholders' equity
$ 480,877 
$ 506,766 
Condensed Consolidated Balance Sheets - Parenthetical (USD $)
Mar. 31, 2016
Dec. 31, 2015
Stockholders' equity:
 
 
Preferred stock, par value
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
20,000,000 
20,000,000 
Preferred stock, shares issued
0 
0 
Preferred stock, shares outstanding
0 
0 
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
300,000,000 
300,000,000 
Common stock, shares issued
63,818,000 
63,407,000 
Common stock, shares outstanding
46,261,000 
45,850,000 
Treasury stock, shares at cost
17,557,000 
17,557,000 
Condensed Consolidated Statements of Income (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Income Statement [Abstract]
 
 
Revenue
$ 133,002 
$ 142,518 
Costs and expenses:
 
 
Instructional costs and services
69,586 
75,049 
Admissions advisory and marketing
51,677 
52,347 
General and administrative
13,455 
16,322 
Legal accrual
13,874 
0 
Restructuring and impairment charges
709 
0 
Total costs and expenses
149,301 
143,718 
Operating loss
(16,299)
(1,200)
Other income, net
683 
689 
Loss before income taxes
(15,616)
(511)
Income tax benefit
(5,504)
(140)
Net loss
$ (10,112)
$ (371)
Loss per share:
 
 
Basic (in usd per share)
$ (0.22)
$ (0.01)
Diluted (in usd per share)
$ (0.22)
$ (0.01)
Weighted average number of common shares outstanding used in computing loss per share:
 
 
Basic (in shares)
45,933 
45,428 
Diluted (in shares)
45,933 
45,428 
Condensed Consolidated Statements of Comprehensive Income (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Statement of Comprehensive Income [Abstract]
 
 
Net loss
$ (10,112)
$ (371)
Other comprehensive income, net of tax:
 
 
Unrealized gains on investments
165 
165 
Comprehensive loss
$ (9,947)
$ (206)
Condensed Consolidated Statement of Stockholders' Equity (USD $)
In Thousands, except Share data, unless otherwise specified
Total
Common Stock
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive (Loss) Income
Treasury Stock
Balance at Dec. 31, 2014
$ 365,881 
$ 630 
$ 180,720 
$ 521,775 
$ (175)
$ (337,069)
Balance, shares at Dec. 31, 2014
 
62,957,000 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Stock-based compensation
2,245 
 
2,245 
 
 
 
Exercise of stock options, shares
 
76,000 
 
 
 
 
Exercise of stock options
127 
 
127 
 
 
 
Excess tax benefit of option exercises and restricted stock, net of tax shortfall
(270)
 
(270)
 
 
 
Stock issued under stock incentive plan, net of shares held for taxes, shares
 
189,000 
 
 
 
 
Stock issued under stock incentive plan, net of shares held for taxes
(1,223)
2 
(1,225)
 
 
 
Net loss
(371)
 
 
(371)
 
 
Unrealized gains on investments, net of tax
165 
 
 
 
165 
 
Balance at Mar. 31, 2015
366,554 
632 
181,597 
521,404 
(10)
(337,069)
Balance, shares at Mar. 31, 2015
 
63,222,000 
 
 
 
 
Balance at Dec. 31, 2015
303,650 
634 
188,863 
451,321 
(99)
(337,069)
Balance, shares at Dec. 31, 2015
 
63,407,000 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Stock-based compensation
2,298 
 
2,298 
 
 
 
Exercise of stock options, shares
 
178,000 
 
 
 
 
Exercise of stock options
138 
2 
136 
 
 
 
Excess tax benefit of option exercises and restricted stock, net of tax shortfall
336 
 
336 
 
 
 
Stock issued under stock incentive plan, net of shares held for taxes, shares
 
233,000 
 
 
 
 
Stock issued under stock incentive plan, net of shares held for taxes
(1,603)
2 
(1,605)
 
 
 
Net loss
(10,112)
 
 
(10,112)
 
 
Unrealized gains on investments, net of tax
165 
 
 
 
165 
 
Balance at Mar. 31, 2016
$ 294,872 
$ 638 
$ 190,028 
$ 441,209 
$ 66 
$ (337,069)
Balance, shares at Mar. 31, 2016
 
63,818,000 
 
 
 
 
Condensed Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Cash flows from operating activities:
 
 
Net loss
$ (10,112)
$ (371)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
 
 
Provision for bad debts
9,619 
8,396 
Depreciation and amortization
3,729 
5,345 
Amortization of premium/discount
(51)
19 
Stock-based compensation
2,298 
2,245 
Excess tax benefit of option exercises
(336)
(231)
Loss on impairment of student loans receivable
141 
359 
Net (gain) loss on marketable securities
(19)
34 
Loss on impairment of fixed assets
0 
163 
Changes in operating assets and liabilities:
 
 
Restricted cash
3,298 
5,716 
Accounts receivable
(19,633)
(17,931)
Prepaid expenses and other current assets
(5,336)
360 
Student loans receivable
320 
260 
Other long-term assets
157 
(185)
Accounts payable and accrued liabilities
7,470 
10,270 
Deferred revenue and student deposits
(6,367)
(5,313)
Other liabilities
(2,348)
(1,748)
Net cash (used in) provided by operating activities
(17,170)
7,388 
Cash flows from investing activities:
 
 
Capital expenditures
(291)
(1,626)
Purchases of investments
(20,156)
(142)
Non-operating restricted cash
(52)
12 
Capitalized costs for intangible assets
(227)
(592)
Sales of investments
0 
10,101 
Maturities of investments
0 
20,000 
Net cash (used in) provided by investing activities
(20,726)
27,753 
Cash flows from financing activities:
 
 
Proceeds from exercise of stock options
138 
127 
Excess tax benefit of option exercises
336 
231 
Tax withholdings on issuance of stock awards
(1,603)
(1,225)
Net cash used in financing activities
(1,129)
(867)
Net (decrease) increase in cash and cash equivalents
(39,025)
34,274 
Cash and cash equivalents at beginning of period
282,145 
207,003 
Cash and cash equivalents at end of period
243,120 
241,277 
Supplemental disclosure of non-cash transactions:
 
 
Purchase of equipment included in accounts payable and accrued liabilities
0 
35 
Issuance of common stock for vested restricted stock units
$ 4,073 
$ 2,993 
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 RockiesSM, 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.
In the third quarter of 2015, the Company announced that Ashford University’s campus in Iowa will be closing after the 2015-2016 academic year, following the implementation of a one-year teach-out plan. For additional information, refer to Note 3, “Restructuring and Impairment Charges.”
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Principles of Consolidation
The condensed consolidated financial statements include the accounts of Bridgepoint Education, Inc. and its wholly owned subsidiaries. Intercompany transactions have been eliminated in consolidation.
Unaudited Interim Financial Information
The condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the Securities and Exchange Commission (the “SEC”) on March 8, 2016. In the opinion of management, these financial statements include all adjustments, consisting of normal recurring adjustments, considered necessary to present a fair statement of the Company’s condensed consolidated financial position, results of operations and cash flows as of and for the periods presented.
Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP for complete annual financial statements.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Reclassifications
Certain reclassifications have been made to the prior years’ financial statements to conform to the current year presentation. The Company has combined the presentation of accounts payable and accrued liabilities on its condensed consolidated balance sheets. These reclassifications had no effect on previously reported results of operations or cash flows.
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, Revenue Recognition. This literature is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The accounting guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 can be adopted using one of two retrospective application methods. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606), Deferral of the Effective Date, which defers the effective date of ASU 2014-09 by one year, to fiscal years beginning after December 15, 2017. The Company continues to evaluate the impacts the adoption of ASU 2014-09 and ASU 2015-14 will have on the Company’s consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the lease commencement date: (i) a lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. The new lease guidance simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing. Public companies should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted for all public companies and all nonpublic companies upon issuance. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company is evaluating the impact the adoption of ASU 2016-02 will have on the Company’s consolidated financial statements.
In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). The amendments relate to when another party, along with the entity, is involved in providing a good or service to a customer. Topic 606, Revenue from Contracts with Customers requires an entity to determine whether the nature of its promise is to provide that good or service to the customer (i.e., the entity is a principal) or to arrange for the good or service to be provided to the customer by another party (i.e., the entity is an agent). The amendments in ASU 2016-08 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is evaluating the impact the adoption of ASU 2016-08 will have on the Company’s consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The update includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. While aimed at reducing the cost and complexity of the accounting for share-based payments, the amendments are expected to significantly impact net income, EPS and the statement of cash flows. Implementation and administration may present challenges for companies with significant share-based payment activities. ASU 2016-09 is effective for public companies for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company is evaluating the impact the adoption of ASU 2016-09 will have on the Company’s consolidated financial statements.
In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The update clarifies the following two aspects of Topic 606: (i) identifying performance obligations; and (ii) the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606. Public companies should apply the amendments for fiscal years beginning after December 15, 2017, including interim periods within those fiscal year. Early application for public companies is permitted only as of fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company is evaluating the impact the adoption of ASU 2016-10 will have on the Company’s consolidated financial statements.
Restructuring and Impairment Charges
Restructuring and Impairment Charges
Restructuring and Impairment Charges
In the prior year, the Company initiated various restructuring plans to better align its resources with its business strategy. The related restructuring charges are recorded in the restructuring and impairment charges line item on the Company’s condensed consolidated statements of income (loss). For the three months ended March 31, 2016, these charges were $0.7 million. There were no such charges for the three months ended March 31, 2015.
On July 7, 2015, the Company committed to the implementation of a plan to close Ashford University’s campus in Clinton, Iowa (the “Clinton Campus”) following the 2015-2016 academic year, at the end of May 2016. With the planned closure of the Clinton Campus, ground-based Ashford University students will be provided opportunities to continue to pursue their degrees as reflected in their respective student transfer agreements. During the year ended December 31, 2015, the Company recorded restructuring charges relating to future cash expenditures for student transfer agreements of $3.3 million. This estimate is based upon several assumptions that are subject to change, including assumptions related to the number of students who elect to continue to pursue their degrees through Ashford University’s online programs. During the three months ended March 31, 2016, the Company reassessed this estimate and reversed restructuring charges of $15,000 relating to future cash expenditures for student transfer agreement costs.
During the three months ended March 31, 2016, the Company recognized $0.7 million as restructuring charges relating to severance costs for wages and benefits.
As part of its continued efforts to streamline operations, the Company vacated or consolidated properties in Denver and San Diego and reassessed its obligations on non-cancelable leases. During the three months ended March 31, 2016, the Company recorded $25,000 as restructuring charges relating to lease exit and other costs.
The following table summarizes the amounts recorded in the restructuring and impairment charges line item on the Company’s condensed consolidated statements of income (loss) for each of the periods presented (in thousands):
 
Three Months Ended March 31,
 
2016
 
2015
Student transfer agreement costs
$
(15
)
 
—

Severance costs
699

 
—

Lease exit and other costs
25

 
—

Total restructuring and impairment charges
$
709

 
$
—


The following table summarizes the changes in the Company's restructuring liability by type during the three months ended March 31, 2016 (in thousands):
 
Student Transfer Agreement Costs
 
Severance Costs
 
Lease Exit and Other Costs
 
Total
Balance at December 31, 2015
$
3,224

 
$
1,744

 
$
13,921

 
$
18,889

Restructuring and impairment charges
(15
)
 
699

 
25

 
709

Payments
(82
)
 
(1,375
)
 
(2,149
)
 
(3,606
)
Balance at March 31, 2016
$
3,127

 
$
1,068

 
$
11,797

 
$
15,992

Accounts Receivable
Accounts Receivable
Accounts Receivable, Net
Accounts receivable, net, consist of the following (in thousands):
 
As of
March 31, 2016
 
As of
December 31, 2015
Accounts receivable
$
53,636

 
$
34,205

Less allowance for doubtful accounts
(19,457
)
 
(10,114
)
Accounts receivable, net
$
34,179

 
$
24,091


As of March 31, 2016 and December 31, 2015, there was an immaterial amount of accounts receivable with a payment due date of greater than one year.
The following table presents the changes in the allowance for doubtful accounts for accounts receivable for the periods indicated (in thousands):
 
Beginning
Balance
 
Charged to
Expense
 
Deductions(1)
 
Ending
Balance
Allowance for doubtful accounts receivable:
 
 
 
 
 
 
 
For the three months ended March 31, 2016
$
(10,114
)
 
$
9,545

 
$
(202
)
 
$
(19,457
)
For the three months ended March 31, 2015
$
(27,567
)
 
$
8,459

 
$
(4,765
)
 
$
(31,261
)
(1)
Deductions represent accounts written off, net of recoveries.
Investments
Investments
Investments
The following tables summarize the fair value information of short-term and long-term investments as of March 31, 2016 and December 31, 2015, respectively (in thousands):
 
As of March 31, 2016
 
Level 1
 
Level 2
 
Level 3
 
Total
Mutual funds
$
1,487

 
$
—

 
$
—

 
$
1,487

Corporate notes and bonds
—

 
40,818

 
—

 
40,818

U.S. government and agency securities
—

 
19,994

 
—

 
19,994

Certificates of deposit
—

 
25,000

 
—

 
25,000

Total
$
1,487

 
$
85,812

 
$
—

 
$
87,299

 
As of December 31, 2015
 
Level 1
 
Level 2
 
Level 3
 
Total
Mutual funds
$
1,314

 
$
—

 
$
—

 
$
1,314

Corporate notes and bonds
—

 
40,843

 
—

 
40,843

Certificates of deposit
—

 
25,000

 
—

 
25,000

Total
$
1,314

 
$
65,843

 
$
—

 
$
67,157


The tables above include amounts related to investments classified as other investments, such as certificates of deposit, which are carried at amortized cost. The amortized cost of such investments approximated fair value at each balance sheet date. The assumptions used in these fair value estimates are considered as other observable inputs and are therefore categorized as Level 2 measurements under the accounting guidance. The Company’s Level 2 investments are valued using readily available pricing sources that utilize market observable inputs, including the current interest rate for similar types of instruments. There were no transfers between level categories for our investments during the periods presented.
The following tables summarize the differences between amortized cost and fair value of short-term and long-term investments as of March 31, 2016 and December 31, 2015, respectively (in thousands):
 
March 31, 2016
 
 
 
 
 
Gross unrealized
 
 
 
Maturities
 
Amortized Cost
 
Gain
 
Loss
 
Fair Value
Short-term
 
 
 
 
 
 
 
 
 
Corporate notes and bonds
1 year or less
 
35,746

 
21

 
(11
)
 
35,756

Long-term
 
 
 
 
 
 
 
 
 
Corporate notes and bonds
3 years or less
 
5,060

 
2

 
—

 
5,062

U.S. government and agency securities
3 years or less
 
20,000

 
—

 
(6
)
 
19,994

Certificates of deposit
3 years or less
 
25,000

 
—

 
—

 
25,000

Total
 
 
$
85,806

 
$
23

 
$
(17
)
 
$
85,812

The above table does not include $1.5 million of mutual funds for March 31, 2016, which are recorded as trading securities.
 
December 31, 2015
 
 
 
 
 
Gross unrealized
 
 
 
Maturities
 
Amortized Cost
 
Gain
 
Loss
 
Fair Value
Short-term
 
 
 
 
 
 
 
 
 
Corporate notes and bonds
1 year or less
 
18,113

 
—

 
(40
)
 
18,073

Long-term
 
 
 
 
 
 
 
 
 
Corporate notes and bonds
3 years or less
 
22,887

 
—

 
(117
)
 
22,770

Certificates of deposit
3 years or less
 
25,000

 
—

 
—

 
25,000

Total
 
 
$
66,000

 
$
—

 
$
(157
)
 
$
65,843

The above table does not include $1.3 million of mutual funds for December 31, 2015, which are recorded as trading securities.
The Company records the changes in unrealized gains and losses on its investments arising during the period in the accumulated other comprehensive income line item on the Company’s condensed consolidated balance sheets. For each of the three months ended March 31, 2016 and 2015, the Company recorded net unrealized gains of $165,000 in accumulated other comprehensive income, net of $138,000 of tax expense for the three months ended March 31, 2015. There was no tax effect on net unrealized gains for the three months ended March 31, 2016.
There were no reclassifications out of accumulated other comprehensive income during the three months ended March 31, 2016. During the three months ended March 31, 2015, the Company reclassified $61,000 out of accumulated other comprehensive income, which was recognized in the other income, net, line item on the Company’s condensed consolidated statements of income (loss).
Student Loan Receivables
Student Loans Receivable
Student Loans Receivable, Net
Student loans receivable, net, consist of the following (in thousands):
Short-term:
As of
March 31, 2016
 
As of
December 31, 2015
   Student loans receivable (non-tuition related)
$
218

 
$
310

   Student loans receivable (tuition related)
544

 
555

   Current student loans receivable
762

 
865

Less allowance for doubtful accounts
(36
)
 
(90
)
Student loans receivable, net
$
726

 
$
775

Long-term:
As of
March 31, 2016
 
As of
December 31, 2015
   Student loans receivable (non-tuition related)
$
3,251

 
$
3,314

   Student loans receivable (tuition related)
4,895

 
4,943

   Non-current student loans receivable
8,146

 
8,257

Less allowance for doubtful accounts
(999
)
 
(863
)
Student loans receivable, net
$
7,147

 
$
7,394


Student loans receivable is presented net of any related discount, and the balances approximated fair value at each balance sheet date. The Company estimates the fair value of the student loans receivable by discounting the future cash flows using an interest rate of 4.5%, which approximates the interest rates used in similar arrangements. The assumptions used in this estimate are considered unobservable inputs and are therefore categorized as Level 3 measurements under the accounting guidance.
Revenue recognized related to student loans was immaterial during each of the three months ended March 31, 2016 and 2015. 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 (tuition related):
 
 
 
 
 
 
 
For the three months ended March 31, 2016
$
(953
)
 
$
74

 
$
(8
)
 
$
(1,035
)
For the three months ended March 31, 2015
$
(1,495
)
 
$
(63
)
 
$
—

 
$
(1,432
)
(1)
Deductions represent accounts written off, net of recoveries.
For the non-tuition related student loans receivable, the Company monitors the credit quality of the borrower using credit scores, aging history of the loan 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 three months ended March 31, 2016, $0.1 million of student loans were impaired. As of March 31, 2016, $0.6 million of student loans had been placed on non-accrual status.
As of March 31, 2016, the repayment status of gross student loans receivable was as follows (in thousands):
120 days and less
$
10,030

From 121 - 270 days
824

Greater than 270 days
824

Total gross student loans receivable
11,678

Less: Amounts reserved or impaired
(1,664
)
Less: Discount on student loans receivable
(2,141
)
Total student loans receivable, net
$
7,873

Other Significant Balance Sheet Accounts
Other Significant Balance Sheet Accounts
Other Significant Balance Sheet Accounts
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consists of the following (in thousands):
 
As of
March 31, 2016
 
As of
December 31, 2015
Prepaid expenses
$
7,186

 
$
7,005

Prepaid licenses
4,807

 
5,221

Income tax receivable
25,709

 
20,169

Prepaid insurance
1,309

 
1,619

Interest receivable
378

 
299

Insurance recoverable
1,124

 
16,659

Other current assets
1,514

 
1,220

Total prepaid expenses and other current assets
$
42,027

 
$
52,192


Property and Equipment, Net
Property and equipment, net, consists of the following (in thousands):
 
As of
March 31, 2016
 
As of
December 31, 2015
Furniture and office equipment
$
63,614

 
$
63,354

Software
12,616

 
12,605

Leasehold improvements
11,136

 
11,136

Vehicles
22

 
22

Total property and equipment
87,388

 
87,117

Less accumulated depreciation and amortization
(67,820
)
 
(65,375
)
Total property and equipment, net
$
19,568

 
$
21,742


For the three months ended March 31, 2016 and 2015, depreciation expense was $2.4 million and $3.9 million, respectively.
Goodwill and Intangibles, Net
Goodwill and intangibles, net, consists of the following (in thousands):
 
March 31, 2016
Definite-lived intangible assets:
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Capitalized curriculum costs
$
20,551

 
$
(14,928
)
 
$
5,623

Purchased intangible assets
15,850

 
(3,830
)
 
12,020

     Total definite-lived intangible assets
$
36,401

 
$
(18,758
)
 
$
17,643

Goodwill and indefinite-lived intangibles
 
 
 
 
2,567

Total goodwill and intangibles, net
 
 
 
 
$
20,210

 
 
 
 
 
 
 
December 31, 2015
Definite-lived intangible assets:
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Capitalized curriculum costs
$
20,323

 
$
(13,954
)
 
$
6,369

Purchased intangible assets
15,850

 
(3,521
)
 
12,329

     Total definite-lived intangible assets
$
36,173

 
$
(17,475
)
 
$
18,698

Goodwill and indefinite-lived intangibles
 
 
 
 
2,567

Total goodwill and intangibles, net
 
 
 
 
$
21,265


For the three months ended March 31, 2016 and 2015, amortization expense was $1.3 million and $1.5 million, respectively.
The following table summarizes the estimated remaining amortization expense as of each fiscal year ended below (in thousands):
Year Ended December 31,
 
 
2016
$
3,397

2017
3,256

2018
2,180

2019
1,408

2020
1,234

Thereafter
6,168

Total future amortization expense
$
17,643


Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities consists of the following (in thousands):
 
As of
March 31, 2016
 
As of
December 31, 2015
Accounts payable
$
945

 
$
4,762

Accrued salaries and wages
7,780

 
10,476

Accrued bonus
2,783

 
4,295

Accrued vacation
9,894

 
9,628

Accrued litigation and fees
14,402

 
720

Accrued expenses
19,258

 
17,243

Rent liability
12,483

 
13,406

Accrued insurance liability
3,265

 
18,666

Total accounts payable and accrued liabilities
$
70,810

 
$
79,196


Deferred Revenue and Student Deposits
Deferred revenue and student deposits consist of the following (in thousands):
 
As of
March 31, 2016
 
As of
December 31, 2015
Deferred revenue
$
32,710

 
$
23,311

Student deposits
49,669

 
65,445

Total deferred revenue and student deposits
$
82,379

 
$
88,756


Other Long-Term Liabilities
Other long-term liabilities consist of the following (in thousands):
 
As of
March 31, 2016
 
As of
December 31, 2015
Uncertain tax positions
$
7,907

 
$
7,870

Legal settlements
132

 
178

Student transfer agreement costs
1,633

 
—

Other long-term liabilities
5,302

 
6,998

Total other long-term liabilities
$
14,974

 
$
15,046

Credit Facilities
Credit Facilities
Credit Facilities
The Company has issued letters of credit that are collateralized with cash in the aggregate amount of $6.7 million, which is included as restricted cash as of March 31, 2016.
As part of its normal business operations, the Company is required to provide surety bonds in certain states in which the Company does business. The Company has entered into a surety bond facility with an insurance company to provide such bonds when required. As of March 31, 2016, the Company’s total available surety bond facility was $12.0 million and the surety had issued bonds totaling $3.7 million on the Company’s behalf under such facility.
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 $5.7 million and $7.6 million for the three months ended March 31, 2016 and 2015, respectively.
The following table summarizes the future minimum rental payments under non-cancelable operating lease arrangements in effect at March 31, 2016 (in thousands):
Year Ended December 31,
 
 
2016
$
27,356

2017
36,127

2018
31,445

2019
20,876

2020
9,546

Thereafter
7,148

Total minimum payments
$
132,498

Earnings (Loss) Per Share
Earnings (Loss) Per Share
Loss Per Share
Basic loss per share is calculated by dividing net loss available to common stockholders by the weighted average number of common shares outstanding for the period.
Diluted loss per 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 stock options and the settlement of restricted stock units (“RSUs”) and performance stock units (“PSUs”).
The following table sets forth the computation of basic and diluted loss per share for the periods indicated (in thousands, except per share data):
 
Three Months Ended March 31,
 
2016
 
2015
Numerator:
 
 
 
Net loss
$
(10,112
)
 
$
(371
)
Denominator:
 
 
 
Weighted average number of common shares outstanding
45,933

 
45,428

Effect of dilutive options and stock units
—

 
—

Diluted weighted average number of common shares outstanding
45,933

 
45,428

Loss per share:
 
 
 
Basic loss per share
$
(0.22
)
 
$
(0.01
)
Diluted loss per share
$
(0.22
)
 
$
(0.01
)

The following table sets forth the number of stock options, RSUs and PSUs, as applicable, excluded from the computation of diluted common shares outstanding for the periods indicated below because their effect was anti-dilutive (in thousands):
 
Three Months Ended March 31,
 
2016
 
2015
Stock options
4,510

 
4,889

RSUs and PSUs
921

 
558

Stock-Based Compensation
Stock-Based Compensation
Stock-Based Compensation
The Company recorded $2.3 million and $2.2 million of stock-based compensation expense for the three months ended March 31, 2016 and 2015, respectively. The related income tax benefit was $0.9 million and $0.8 million for the three months ended March 31, 2016 and 2015, respectively.
During the three months ended March 31, 2016, the Company granted 0.4 million RSUs at a grant date fair value of $10.59 and 0.4 million RSUs vested. During the three months ended March 31, 2015, the Company granted 0.8 million RSUs at a grant date fair value of $9.43 and 0.3 million RSUs vested.
During the three months ended March 31, 2016, the Company did not grant any PSUs and no PSUs vested. During the three months ended March 31, 2015, the Company granted 0.6 million PSUs at a weighted average grant date fair value of $8.18 and no PSUs vested.
During the three months ended March 31, 2016, the Company granted 0.4 million stock options at a grant date fair value of $4.99 and 0.2 million stock options were exercised. During the three months ended March 31, 2015, the Company granted 0.4 million stock options and 0.1 million stock options were exercised.
As of March 31, 2016, there was unrecognized compensation cost of $15.2 million related to unvested stock options, RSUs and PSUs.
Income Taxes
Income Taxes
Income Taxes
The Company recognizes deferred tax assets if realization of such assets is more likely than not. In order to make this determination, the Company evaluates factors including the ability to generate future taxable income from reversing taxable temporary differences, forecasts of financial and taxable income or loss, and the ability to carryback certain operating losses to refund taxes paid in prior years. The cumulative loss incurred over the three-year period ended March 31, 2016 constituted significant negative objective evidence against the Company’s ability to realize a benefit from its federal deferred tax assets. Such objective evidence limited the ability of the Company to consider in its evaluation other subjective evidence such as the Company’s projections for future growth. On the basis of its evaluation, the Company determined that its deferred tax assets were not more likely than not to be realized and that a full valuation allowance against its deferred tax assets should continue to be maintained as of March 31, 2016.
The Company determines the interim income tax provision by applying the estimated effective income tax rate expected to be applicable for the full fiscal year to income before income taxes for the period. In determining the full year estimate, the Company does not include the estimated impact of unusual and/or infrequent items, which may cause significant variations in the customary relationship between income tax expense and income before income taxes.
The Company’s effective income tax rate for the three months ended March 31, 2016 was 35.2%, which included a discrete tax benefit of $5.2 million associated with a legal accrual.
At each of March 31, 2016 and December 31, 2015, the Company had $20.6 million of gross unrecognized tax benefits, of which $13.4 million would impact the effective income tax rate if recognized. The Company’s continuing practice is to recognize interest and penalties related to uncertain tax positions in the income tax expense line item on the Company’s condensed consolidated statements of income (loss). Accrued interest and penalties related to uncertain tax positions was $2.0 million as of both March 31, 2016 and December 31, 2015.
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 any potential change to have a material effect on the Company’s results of operations or financial position in the next year.
The tax years 2008 through 2015 are open to examination by major taxing jurisdictions to which the Company is subject. The Company is currently under audit by the California Franchise Tax Board for the years 2008 through 2012. In connection with the California Franchise Tax Board audit, in 2014 the Company filed a refund claim for years 2008 through 2010 for approximately $12.6 million. However, the Company will not recognize benefit in its financial statements related to the refund claim until the final resolution of the audit examination.
The Company is also subject to various other state audits. With respect to all open audits, the Company does not expect any significant adjustments to amounts already reserved.
Regulatory
Regulatory
Regulatory
The Company is subject to extensive regulation by federal and state governmental agencies and accrediting bodies. In particular, the Higher Education Act of 1965, as amended (the “Higher Education Act”), and the regulations promulgated thereunder by the U.S. Department of Education (the “Department”) subject the Company to significant regulatory scrutiny on the basis of numerous standards that institutions of higher education must satisfy in order to participate in the various federal student financial assistance programs under Title IV of the Higher Education Act.
Ashford University is regionally accredited by WASC Senior College and University Commission (“WSCUC”) and University of the Rockies is regionally accredited by the Higher Learning Commission (“HLC”).
Department of Education Program Review of Ashford University
On July 31, 2014, the Company and Ashford University received notification from the Department that it intended to conduct a program review of Ashford University’s administration of federal student financial aid programs (“Title IV programs”) in which the university participates. The review commenced on August 25, 2014, and covers federal financial aid years 2012-2013 and 2013-2014, as well as compliance with the Jeanne Clery Disclosure of Campus Security Policy and Campus Crime Statistics Act (the “Clery Act”), the Drug-Free Schools and Communities Act and related regulations. Ashford University was provided with the Department’s program review report and has responded to such initial report. Following consideration of the university’s response, the Department will issue a Final Program Review Determination letter.
WSCUC Grant of Initial Accreditation of Ashford University
In July 2013, WSCUC granted Initial Accreditation to Ashford University for five years, until July 15, 2018. In December 2013, Ashford University effected its transition to WSCUC 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 monitoring process, Ashford University hosted a visiting team from WSCUC in a special visit in April 2015. In July 2015, Ashford University received an Action Letter from WSCUC outlining the findings arising out of its team’s special visit. The Action Letter stated that the WSCUC visiting team found substantial evidence that Ashford University continues to make sustained progress in all six areas recommended by WSCUC in 2013.
WSCUC also performs Mid-Cycle Reviews of its accredited institutions near the midpoint of their periods of accreditation, as required by the Department. The purpose of the Mid-Cycle Review is to identify problems with an institution’s or program’s continued compliance with agency standards while taking into account institutional or program strengths and stability. The Mid-Cycle Review report, which is expected to be submitted by Ashford University to WSCUC in May 2016, will focus particularly on student achievement, including indicators of educational effectiveness, retention and graduation data.
Licensure by California BPPE
To be eligible to participate in Title IV programs, an institution must be legally authorized to offer its educational programs by the states in which it is physically located. Effective July 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 WSCUC accreditation, Ashford University designated its San Diego, California facilities as its main campus for Title IV purposes and submitted an Application for Approval to Operate an Accredited Institution to the State of California, Department of Consumer Affairs, Bureau for Private Postsecondary Education (“BPPE”) on September 10, 2013.
In April 2014, the application was granted, and the university was approved by BPPE to operate in California until July 15, 2018. As a result, Ashford University is no longer exempt from certain laws and regulations applicable to private, post-secondary educational institutions. These laws and regulations entail certain California reporting requirements including, but not limited to, graduation, employment and licensing data, certain changes of ownership and control, faculty and programs, and student refund policies, as well as the triggering of other state and federal student employment data reporting and disclosure requirements.
Negotiated Rulemaking and Other Executive Action
Three negotiated rulemaking sessions held between January and March of 2014 resulted in draft regulations to enact changes to the Clery Act required by the enactment of the Violence Against Women Act (“VAWA”). The Department published final regulations in the Federal Register on October 20, 2014, which became effective on July 1, 2015. Among other things, VAWA requires institutions to compile statistics for additional incidents to those currently required by the Clery Act and include certain policies, procedures and programs pertaining to these incidents in annual security reports.
The Department held Program Integrity and Improvement negotiated rulemaking sessions between February and May of 2014 that focused on topics including, but not limited to, cash management of Title IV program funds, state authorization for programs offering distance or correspondence education, credit and clock hour conversions, the retaking of coursework, and the definition of “adverse credit” for PLUS loan borrowers. No consensus resulted from the rulemaking sessions. As a result, the Department had discretion to propose Program Integrity regulations in these areas. In August 2014, the Department published a Notice of Proposed Rulemaking proposing new regulations regarding the federal Direct PLUS loan program. The final regulations became effective on July 1, 2015 and update the standards for determining if a potential parent or student borrower has an adverse credit history for purposes of eligibility for a PLUS loan. Specifically, the regulations revise the definition of “adverse credit history” and require that parents and students who have an adverse credit history, but who are approved for a PLUS loan on the basis of extenuating circumstances or who obtain an endorser for the PLUS loan, must receive loan counseling before receiving the loan.
On September 3, 2014, the Department published a notice in the Federal Register to announce its intention to establish a negotiated rulemaking committee to prepare proposed regulations for the William D. Ford “Federal Direct Loan Program” authorized by the Higher Education Act. Two public hearings were held in October and November 2014. On December 19, 2014, the Department published a notice to announce its intention to establish the committee to (i) prepare proposed regulations to establish a new Pay as Your Earn repayment plan for those not covered by the existing Federal Direct Loan Program and (ii) establish procedures for Federal Family Education Loan Program (“FFEL Program”) loan holders to use to identify U.S. military service members who may be eligible for a lower interest rate on their FFEL Program loans. The committee met in February, March and April of 2015. On July 9, 2015, the Department published a Notice of Proposed Rulemaking proposing to amend the regulations governing the Federal Direct Loan Program, and on October 30, 2015, the regulations were amended to create a new income-contingent repayment plan in accordance with President Obama’s initiative to allow more Federal Direct Loan Program borrowers to cap their loan payments at 10% of their monthly income. Changes were also made to the FFEL Program and Federal Direct Loan Program regulations to streamline and enhance existing processes and provide additional support to struggling borrowers. The amended regulations also expand the circumstances in which an institution may challenge or appeal a draft or final cohort default rate based on the institution’s participation rate index.
On October 30, 2014, the Obama administration announced that the Department would lead an effort to formalize an interagency task force to conduct oversight of for-profit institutions of higher education, especially regarding alleged unfair, deceptive, and abusive policies and practices. The task force has been formed and includes the Departments of Justice, Treasury and Veterans Affairs, as well as the Consumer Financial Protection Bureau, the Federal Trade Commission, the SEC and state Attorneys General. The stated purpose of the task force is to “coordinate...activities and promote information sharing to protect students from unfair, deceptive and abusive policies and practices.”
On March 24, 2015, the Department’s Office of Inspector General (the “OIG”) issued a final audit report titled “Federal Student Aid’s Oversight of Schools’ Compliance with the Incentive Compensation Ban.” In its report, the OIG concluded that the Department’s Office of Federal Student Aid (the “FSA”) failed to (i) revise its enforcement procedures and guidance after the Department eliminated the incentive compensation safe harbors in 2010, (ii) develop procedures and guidance on appropriate enforcement action and (iii) properly resolve incentive compensation ban findings. In response to the report, the OIG and the FSA agreed on corrective action that may increase scrutiny and enforcement action related to the payment of incentive compensation.
On May 18, 2015, the Department published a Notice of Proposed Rulemaking to amend cash management regulations related to Title IV program funds. The proposed regulations address student access to Title IV program funds, financial account fees and the opening of financial accounts. The proposed regulations also clarify how the Department treats previously passed coursework for Title IV eligibility purposes and streamline the requirements for converting clock hours to credit hours.
On June 8, 2015, the Department held a press conference and released a document entitled “Fact Sheet: Protecting Students from Abusive Career Colleges” in which the Department announced processes that will be established to assist students who may have been the victims of fraud in gaining relief under the “defense to repayment” provisions of the Federal Direct Loan Program regulations. Rarely used in the past, the defense to repayment provisions allow a student to assert as a defense against repayment of federal Direct Loans any commission of fraud or other violation of applicable state law by the school related to such loans or the educational services paid for. The processes outlined by the Department on June 8 include (i) extending debt relief eligibility to groups of students where possible, (ii) providing loan forbearance and pausing payments while claims are being resolved, (iii) appointing a Special Master dedicated to borrower defense issues for students who believe they have a defense to repayment, (iv) establishing a streamlined process and (v) building a better system for debt relief for the future. The Department noted that building a better system for debt relief would involve developing new regulations to clarify and streamline loan forgiveness under the defense to repayment provisions, while maintaining or enhancing current consumer protection standards and strengthening provisions that hold schools accountable for actions that result in loan discharges.
On August 20, 2015, the Department announced its intention to establish a negotiated rulemaking committee to prepare proposed regulations for the Federal Student Aid programs authorized under Title IV of the Higher Education Act. The Department held two public hearings in September 2015 at which interested parties commented on the topics suggested by the Department and suggested additional topics that should be considered for action by the negotiating committee. The Department also accepted written comments and suggestions. The Department convened a committee to develop proposed regulations for determining which acts or omissions of an institution of higher education a borrower may assert as a defense to repayment, and the consequences of the assertion of such borrower defenses for borrowers, institutions and the Department. Specifically, the Department addressed (i) the procedures to be used for a borrower to establish a defense to repayment, (ii) the criteria the Department will use to identify acts or omissions of an institution that constitute defenses to repayment, (iii) the standards and procedures the Department will use to determine the liability of the institution for amounts based on borrower defenses and (iv) the effect of borrower defenses on institutional capability assessments. The committee met in January, February and March of 2016 and was unable to reach a consensus. Therefore, the Department has discretion to draft a proposed rule and has announced its intent to do so, with the goal of a final rule by November 1, 2016 and an effective date of July 1, 2017.
On February 8, 2016, the Department announced the creation of a Student Aid Enforcement Unit to respond more quickly and efficiently to allegations of illegal actions by higher education institutions. In April 2016, the Department drafted a set of standards clarifying the information accreditors must submit, including the format in which information should be submitted, when notifying federal officials about actions taken against schools they accredit. The Department will accept public comments on the proposed standards through June 6, 2016.
On April 22, 2016, the Department issued a Dear Colleague Letter to federally recognized accrediting agencies regarding the flexibility those agencies have in differentiating their reviews of institutions and programs. The Department’s letter encourages accrediting agencies to use that flexibility to focus monitoring and resources on student achievement and problematic institutions or programs. The Department also encourages regional accreditors, such as WSCUC and HLC, to consider adding the use of quantitative measures, in addition to the qualitative measures of student achievement already utilized, in reviewing institutions’ processes for evaluating and validating student learning, and to consider licensing and placement rates in its accreditation of institutions that offer applied, professional and occupational programs.
Substantial misrepresentation
The Higher Education Act prohibits an institution participating in Title IV programs from engaging in substantial misrepresentation of the nature of its educational programs, financial charges or graduate employability. Under the Department’s rules, a “misrepresentation” is any false, erroneous or misleading statement an institution, one of its representatives or any ineligible institution, organization or person with whom the institution has an agreement to provide educational programs or marketing, advertising, recruiting, or admissions services makes directly to a student or prospective student or any member of the public, or to an accrediting agency, a state agency or the Department. The Department’s rules define a “substantial misrepresentation” as any misrepresentation on which the person to whom it was made could reasonably be expected to rely, or has reasonably relied, to that person’s detriment.
On December 10, 2015, Ashford University received a request for information from the Multi-Regional and Foreign School Participation Division of the FSA for (i) advertising and marketing materials provided to prospective students regarding the transferability of certain credit, (ii) documents produced in response to the Consumer Financial Protection Bureau’s (the “CFPB”) August 10, 2015 Civil Investigative Demand related to the CFPB’s investigation to determine whether for-profit post-secondary education companies or other unnamed persons have engaged in or are engaging in unlawful acts or practices related to the advertising, marketing or origination of private student loans, (iii) certain documents produced in response to subpoenas and interrogatories issued by the California Attorney General and (iv) records created between 2009 and 2012 related to the disbursement of certain Title IV funds. The FSA is investigating representations made by Ashford University to potential and enrolled students, and has asked the Company and Ashford University to assist in its assessment of Ashford University’s compliance with the prohibition on substantial misrepresentations. The Company and Ashford University intend to provide the FSA with their full cooperation with a view toward demonstrating the compliant nature of their practices.
If the Department determines that one of the Company’s institutions has engaged in substantial misrepresentation, the Department may (i) attempt to revoke the institution’s program participation agreement if the institution is provisionally certified, (ii) impose limitations on the institution’s participation in Title IV programs if the institution is provisionally certified, (iii) deny applications from the institution for approval of new programs or locations or other matters or (iv) initiate proceedings to fine the institution or limit, suspend or terminate its eligibility to participate in Title IV programs. Because Ashford University is provisionally certified, it could be subject to the actions set forth in clauses (i) and (ii) above in addition to any other actions taken by the Department if it were determined that Ashford University has engaged in substantial misrepresentation.
Administrative capability
The Department specifies extensive criteria by which an institution must establish that it has the requisite administrative capability to participate in Title IV programs. To meet the administrative capability standards, an institution must, among other things, (i) comply with all applicable Title IV program requirements (ii) have an adequate number of qualified personnel to administer Title IV programs, (iii) have acceptable standards for measuring the satisfactory academic progress of its students, (iv) have procedures in place for awarding, disbursing and safeguarding Title IV funds and for maintaining required records, (v) administer Title IV programs with adequate checks and balances in its system of internal control over financial reporting, (vi) not be, and not have any principal or affiliate who is, debarred or suspended from federal contracting or engaging in activity that is cause for debarment or suspension, (vii) provide financial aid counseling to its students, (viii) refer to the OIG any credible information indicating that any student, parent, employee, third-party servicer or other agent of the institution has engaged in any fraud or other illegal conduct involving Title IV programs, (ix) timely submit all required reports and financial statements and (x) not otherwise appear to lack administrative capability.
Ashford University and University of the Rockies were notified by the Department that it did not believe the institutions fully responded to the disclosures of data required by the Gainful Employment regulations, that this was an indication of a serious lack of administrative capability, and that as a result the Department would not make any decisions regarding the addition of any new programs or additional locations until the reporting requirements were met. The Department informed the Company that failure to fully comply in all Gainful Employment data reporting requirements could result in the referral of the errant institution to the Department’s Administrative Actions and Appeals Service Group for consideration of an administrative action against that institution, including a fine, the limitation, suspension or termination of institutional eligibility to participate in Title IV programs, or revocation of the institution’s program participation agreement (if provisional). The Company worked with the Department to address their concerns with respect to the reporting of the Company’s institutions under the Gainful Employment regulations. The Department has since approved two new programs for Ashford University, and the Company does not anticipate any actions against its institutions related to this notification.
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
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 FSA. Ashford University provided the FSA a detailed response to the OIG’s final audit report in February 2011. In June 2011, in connection with two of the six findings, the FSA requested that Ashford University conduct a file review of the return to Title IV fund calculations for all Title IV recipients who withdrew from distance education programs during the 2006-2007 award year. The institution cooperated with the request and supplied the information within the time frame required. If the FSA were to determine to assess a monetary liability or commence other administrative action, Ashford University would have an opportunity to contest the assessment or proposed action through administrative proceedings, with the right to seek review of any final administrative action in the federal courts.
The outcome of this audit is uncertain at this point because of the many questions of fact and law that may arise. At present, the Company cannot reasonably estimate a range of loss for this action based on the information available to the Company. Accordingly, the Company has not accrued any liability associated with this matter.
Iowa Attorney General Civil Investigation of Ashford University
In February 2011, Ashford University received from the Attorney General of the State of Iowa (the “Iowa Attorney General”) a Civil Investigative Demand and Notice of Intent to Proceed (the “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 requested documents and detailed information for the time period January 1, 2008 to present. On numerous occasions, representatives from the Company and Ashford University met with the Iowa Attorney General to discuss the status of the investigation and the Iowa Attorney General’s allegations against the Company that had been communicated to the Company in June 2013. As a result of these meetings, on May 15, 2014, the Iowa Attorney General, the Company and Ashford University entered into an Assurance of Voluntary Compliance (the “AVC”) in full resolution of the CID and the Iowa Attorney General’s allegations. The AVC, in which the Company and Ashford University do not admit any liability, contains several components including injunctive relief, nonmonetary remedies and a payment to the Iowa Attorney General to be used for restitution to Iowa consumers, costs and fees. The AVC also provides for the appointment of a settlement administrator for a period of three years to review the Company’s and Ashford University’s compliance with the terms of the AVC. The Company had originally accrued $9.0 million in 2013 related to this matter, which represented its best estimate of the total restitution, cost of non-monetary remedies and future legal costs. The remaining accrual is $0.7 million as of March 31, 2016.
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 (the “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 (the “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 and Consumer Financial Protection Bureau Subpoena of Bridgepoint Education, Inc. and Ashford University
In January 2013, the Company received from the Attorney General of the State of California (the “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 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 Investigative Subpoena related to recorded calls and electronic marketing data. On September 25, 2013, the Company reached an agreement with the CA Attorney General to produce certain categories of the documents requested in the petition and stipulated to continue the hearing on the petition to enforce from October 3, 2013 to January 9, 2014. On January 13, 2014 and June 19, 2014, the Company received additional Investigative Subpoenas from the CA Attorney General each requesting additional documents and information for the time period March 1, 2009 through the current date.
On August 10, 2015, the Company and Ashford University received from the CFPB Civil Investigative Demands related to the CFPB’s investigation to determine whether for-profit post-secondary-education companies or other unnamed persons have engaged in or are engaging in unlawful acts or practices related to the advertising, marketing or origination of private student loans. The Company and Ashford University provided documents and other information to the CFPB and the CFPB attended several meetings with representatives from the Company and the CA Attorney General’s office to discuss the status of both investigations, additional information requests, and specific concerns related to possible unfair business practices in connection with the Company’s recruitment of students and debt collection practices.
All of the parties met again in March and April of 2016 to discuss the status of the investigations and explore a potential joint resolution involving injunctive relief, other non-monetary remedies and a payment to the CA Attorney General and the CFPB. The Company currently estimates that a reasonable range of loss for this matter is between $13.9 million and $30.0 million. The Company has accrued $13.9 million related to this matter, which represents its current best estimate of the cost of resolution of this matter.
Massachusetts Attorney General Investigation of Bridgepoint Education, Inc. and Ashford University
On July 21, 2014, the Company and Ashford University received from the Attorney General of the State of Massachusetts (the “MA Attorney General”) a Civil Investigative Demand relating to the MA Attorney General’s investigation of for-profit educational institutions and whether the university’s business practices complied with Massachusetts consumer protection laws. Pursuant to the Civil Investigative Demand, the MA Attorney General has requested from the Company and Ashford University documents and information for the time period January 1, 2006 to present. The Company is cooperating with the investigation and cannot predict the eventual scope, duration or outcome of the investigation at this time.
Securities & Exchange Commission Subpoena of Bridgepoint Education, Inc.
On July 22, 2014, the Company received from the SEC a subpoena relating to certain of the Company’s accounting practices, including revenue recognition, receivables and other matters relating to the Company’s previously disclosed intention to restate its financial statements for fiscal year ended December 31, 2013 and revise its financial statements for the years ended December 31, 2011 and 2012, and the prior revision of the Company’s financial statements for the fiscal year ended December 31, 2012. Pursuant to the subpoena, the SEC has requested from the Company documents and detailed information for the time period January 1, 2009 to present. The Company is cooperating with the investigation and cannot predict the eventual scope, duration or outcome of the investigation at this time. As a result, the Company cannot reasonably estimate a range of loss for this action and accordingly has not accrued any liability associated with this action.
Securities Class Actions
Consolidated 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. 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, as amended (the “Exchange Act”), 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 WSCUC accreditation process and the Company’s financial forecasts. The Court denied the motion to dismiss for alleged misrepresentations concerning Ashford University’s persistence rates.
Following the conclusion of discovery, the parties entered into an agreement to settle the litigation for $15.5 million, which was recorded by the Company during the third quarter of 2015 and funded by the Company’s insurance carriers in the first quarter of 2016. The settlement was granted preliminary approval by the Court on December 14, 2015, proceeded through the shareholder claims administration process, and was granted final approval by the Court on April 25, 2016.
Zamir v. Bridgepoint Education, Inc., et al.
On February 24, 2015, a securities class action complaint was filed in the U.S. District Court for the Southern District of California by Nelda Zamir naming the Company, Andrew Clark and Daniel Devine as defendants. The complaint asserts violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, claiming that the defendants made false and materially misleading statements and failed to disclose material adverse facts regarding the Company’s business, operations and prospects, specifically regarding the Company’s improper application of revenue recognition methodology to assess collectability of funds owed by students. The complaint asserts a putative class period stemming from August 7, 2012 to May 30, 2014 and seeks unspecified monetary relief, interest and attorneys’ fees. On July 15, 2015, the Court granted plaintiff’s motion for appointment as lead plaintiff and for appointment of lead counsel.
On September 18, 2015, the plaintiff filed a substantially similar amended complaint that asserts a putative class period stemming from March 12, 2013 to May 30, 2014. The amended complaint also names Patrick Hackett, Adarsh Sarma, Warburg Pincus & Co., Warburg Pincus LLC, Warburg Pincus Partners LLC, and Warburg Pincus Private Equity VIII, L.P. as additional defendants. On November 24, 2015, all defendants filed motions to dismiss, which are currently pending with the Court. The outcome of this legal proceeding is uncertain at this point because of the many questions of fact and law that may arise. Based on information available to the Company at present, it cannot reasonably estimate a range of loss for this action. 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 captioned 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 lawsuit 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 captioned 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 captioned 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 captioned Cannon v. Clark, et al. and is substantially similar to the previously filed California State Court derivative action now captioned 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 lawsuit 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 the Company’s behalf against the members of the Company’s 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 complaints are captioned Di Giovanni v. Clark, et al. and Craig-Johnston v. Clark, et al. The complaints generally allege that all of the defendants breached their fiduciary duties and were unjustly enriched and that the individual defendants wasted corporate assets in connection with the tender offer commenced by the Company on November 13, 2013. The lawsuits seek unspecified monetary relief and disgorgement, as well as other equitable relief and attorneys’ fees. On February 28, 2014, the defendants filed motions to dismiss, which were granted by the Court on October 17, 2014. The plaintiffs filed a notice of appeal on December 8, 2014 and the case is currently under appeal with the United States Court of Appeals for the Ninth Circuit.
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 the Company’s behalf against the members of the Company’s 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 complaint is captioned Klein v. Clark, et al. and generally alleges that all of the defendants breached their fiduciary duties and were unjustly enriched and that the individual defendants wasted corporate assets in connection with the tender offer commenced by the Company on November 13, 2013. The lawsuit seeks unspecified monetary relief and disgorgement, as well as other equitable relief and attorneys’ fees. On March 21, 2014, the Court granted the parties’ stipulation to stay the case until the motions to dismiss in the related federal derivative action were decided. On November 14, 2014, the Court dismissed the case but retained jurisdiction in the event the dismissal in the federal case is reversed on appeal by the United States Court of Appeals for the Ninth Circuit.
Reardon v. Clark, et al.
On March 18, 2015, a shareholder derivative complaint was filed in the Superior Court of the State of California in San Diego. The complaint asserts derivative claims on the Company’s behalf against certain of its current and former officers and directors. The complaint is captioned Reardon 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 lawsuit seeks unspecified monetary relief and disgorgement, as well as other equitable relief and attorneys’ fees. Pursuant to a stipulation among the parties, on May 27, 2015, the Court ordered the case stayed during discovery in the underlying Zamir securities class action, but permitted the plaintiff to receive copies of any discovery conducted in the underlying Zamir securities class 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 complaint is captioned 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 Department that the institutions were in compliance with various regulations governing 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 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 complaint is captioned 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 Department 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.
In March 2015, the Company filed a motion to dismiss the case pursuant to the public disclosure bar, which was granted without leave to amend by the Court on August 17, 2015. The relators filed a notice of appeal on September 15, 2015 and the case is currently under appeal with the United States Court of Appeals for the Ninth Circuit. During the pendency of the appeal, the parties agreed to settle the case for an immaterial amount and are in the process of finalizing a settlement agreement.
Cavazos v. Ashford University
On June 22, 2015, Diamond Cavazos filed a purported class action against Ashford University in the Superior Court of the State of California in San Diego. The complaint is captioned Diamond Cavazos v. Ashford University, LLC and generally alleges various wage and hour claims under California law for failure to pay overtime, failure to pay minimum wages and failure to provide rest and meal breaks. The lawsuit seeks 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. Before responding to the complaint, the parties entered into an agreement to settle the case for an immaterial amount and the Court dismissed the case without prejudice on January 15, 2016.
Coleman et al. v. Ashford University
On June 4, 2015, Brandy Coleman and a group of seven other former employees filed a purported class action against Ashford University in the Superior Court of the State of California in San Diego. The complaint is captioned Brandy Coleman v. Ashford University, LLC and generally alleges violations of the California WARN Act for back pay and benefits associated with the termination of the plaintiffs’ employment in May 2015. The lawsuit seeks unpaid wages, penalties and interest on behalf of the putative class members, as well as other equitable relief and attorneys’ fees. Before responding to the complaint, the parties entered into an agreement to settle the case for an immaterial amount and the Court dismissed the case without prejudice on January 29, 2016.
Summary of Significant Accounting Policies (Policies)
Principles of Consolidation 
Principles of Consolidation
The condensed consolidated financial statements include the accounts of Bridgepoint Education, Inc. and its wholly owned subsidiaries. Intercompany transactions have been eliminated in consolidation.
Unaudited Interim Financial Information 
Unaudited Interim Financial Information
The condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the Securities and Exchange Commission (the “SEC”) on March 8, 2016. In the opinion of management, these financial statements include all adjustments, consisting of normal recurring adjustments, considered necessary to present a fair statement of the Company’s condensed consolidated financial position, results of operations and cash flows as of and for the periods presented.
Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP for complete annual financial statements.
Use of Estimates 
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Reclassifications 
Reclassifications
Certain reclassifications have been made to the prior years’ financial statements to conform to the current year presentation. The Company has combined the presentation of accounts payable and accrued liabilities on its condensed consolidated balance sheets. These reclassifications had no effect on previously reported results of operations or cash flows.
Recent Accounting Pronouncements 
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, Revenue Recognition. This literature is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The accounting guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 can be adopted using one of two retrospective application methods. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606), Deferral of the Effective Date, which defers the effective date of ASU 2014-09 by one year, to fiscal years beginning after December 15, 2017. The Company continues to evaluate the impacts the adoption of ASU 2014-09 and ASU 2015-14 will have on the Company’s consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the lease commencement date: (i) a lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. The new lease guidance simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing. Public companies should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted for all public companies and all nonpublic companies upon issuance. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company is evaluating the impact the adoption of ASU 2016-02 will have on the Company’s consolidated financial statements.
In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). The amendments relate to when another party, along with the entity, is involved in providing a good or service to a customer. Topic 606, Revenue from Contracts with Customers requires an entity to determine whether the nature of its promise is to provide that good or service to the customer (i.e., the entity is a principal) or to arrange for the good or service to be provided to the customer by another party (i.e., the entity is an agent). The amendments in ASU 2016-08 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is evaluating the impact the adoption of ASU 2016-08 will have on the Company’s consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The update includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. While aimed at reducing the cost and complexity of the accounting for share-based payments, the amendments are expected to significantly impact net income, EPS and the statement of cash flows. Implementation and administration may present challenges for companies with significant share-based payment activities. ASU 2016-09 is effective for public companies for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company is evaluating the impact the adoption of ASU 2016-09 will have on the Company’s consolidated financial statements.
In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The update clarifies the following two aspects of Topic 606: (i) identifying performance obligations; and (ii) the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606. Public companies should apply the amendments for fiscal years beginning after December 15, 2017, including interim periods within those fiscal year. Early application for public companies is permitted only as of fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company is evaluating the impact the adoption of ASU 2016-10 will have on the Company’s consolidated financial statements.
Restructuring and Impairment Charges Restructuring and Impairment Charges (Tables)
Summary of Restructuring Charges 
The following table summarizes the amounts recorded in the restructuring and impairment charges line item on the Company’s condensed consolidated statements of income (loss) for each of the periods presented (in thousands):
 
Three Months Ended March 31,
 
2016
 
2015
Student transfer agreement costs
$
(15
)
 
—

Severance costs
699

 
—

Lease exit and other costs
25

 
—

Total restructuring and impairment charges
$
709

 
$
—

Schedule of Restructuring Reserve by Type of Cost 
The following table summarizes the changes in the Company's restructuring liability by type during the three months ended March 31, 2016 (in thousands):
 
Student Transfer Agreement Costs
 
Severance Costs
 
Lease Exit and Other Costs
 
Total
Balance at December 31, 2015
$
3,224

 
$
1,744

 
$
13,921

 
$
18,889

Restructuring and impairment charges
(15
)
 
699

 
25

 
709

Payments
(82
)
 
(1,375
)
 
(2,149
)
 
(3,606
)
Balance at March 31, 2016
$
3,127

 
$
1,068

 
$
11,797

 
$
15,992

Accounts Receivable (Tables) (Allowance for Doubtful Accounts, Current)
Schedule of Accounts Receivable, Net 
Accounts receivable, net, consist of the following (in thousands):
 
As of
March 31, 2016
 
As of
December 31, 2015
Accounts receivable
$
53,636

 
$
34,205

Less allowance for doubtful accounts
(19,457
)
 
(10,114
)
Accounts receivable, net
$
34,179

 
$
24,091

Changes in Allowance for Doubtful Accounts, Accounts Receivable 
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 three months ended March 31, 2016
$
(10,114
)
 
$
9,545

 
$
(202
)
 
$
(19,457
)
For the three months ended March 31, 2015
$
(27,567
)
 
$
8,459

 
$
(4,765
)
 
$
(31,261
)
(1)
Deductions represent accounts written off, net of recoveries.
Investments (Tables)
Fair Value Information of Short and Long-term Investments 
The following tables summarize the fair value information of short-term and long-term investments as of March 31, 2016 and December 31, 2015, respectively (in thousands):
 
As of March 31, 2016
 
Level 1
 
Level 2
 
Level 3
 
Total
Mutual funds
$
1,487

 
$
—

 
$
—

 
$
1,487

Corporate notes and bonds
—

 
40,818

 
—

 
40,818

U.S. government and agency securities
—

 
19,994

 
—

 
19,994

Certificates of deposit
—

 
25,000

 
—

 
25,000

Total
$
1,487

 
$
85,812

 
$
—

 
$
87,299

 
As of December 31, 2015
 
Level 1
 
Level 2
 
Level 3
 
Total
Mutual funds
$
1,314

 
$
—

 
$
—

 
$
1,314

Corporate notes and bonds
—

 
40,843

 
—

 
40,843

Certificates of deposit
—

 
25,000

 
—

 
25,000

Total
$
1,314

 
$
65,843

 
$
—

 
$
67,157

Schedule of Difference Between Amortized Cost and Fair Value 
The following tables summarize the differences between amortized cost and fair value of short-term and long-term investments as of March 31, 2016 and December 31, 2015, respectively (in thousands):
 
March 31, 2016
 
 
 
 
 
Gross unrealized
 
 
 
Maturities
 
Amortized Cost
 
Gain
 
Loss
 
Fair Value
Short-term
 
 
 
 
 
 
 
 
 
Corporate notes and bonds
1 year or less
 
35,746

 
21

 
(11
)
 
35,756

Long-term
 
 
 
 
 
 
 
 
 
Corporate notes and bonds
3 years or less
 
5,060

 
2

 
—

 
5,062

U.S. government and agency securities
3 years or less
 
20,000

 
—

 
(6
)
 
19,994

Certificates of deposit
3 years or less
 
25,000

 
—

 
—

 
25,000

Total
 
 
$
85,806

 
$
23

 
$
(17
)
 
$
85,812

The above table does not include $1.5 million of mutual funds for March 31, 2016, which are recorded as trading securities.
 
December 31, 2015
 
 
 
 
 
Gross unrealized
 
 
 
Maturities
 
Amortized Cost
 
Gain
 
Loss
 
Fair Value
Short-term
 
 
 
 
 
 
 
 
 
Corporate notes and bonds
1 year or less
 
18,113

 
—

 
(40
)
 
18,073

Long-term
 
 
 
 
 
 
 
 
 
Corporate notes and bonds
3 years or less
 
22,887

 
—

 
(117
)
 
22,770

Certificates of deposit
3 years or less
 
25,000

 
—

 
—

 
25,000

Total
 
 
$
66,000

 
$
—

 
$
(157
)
 
$
65,843

The above table does not include $1.3 million of mutual funds for December 31, 2015, which are recorded as trading securities.
Student Loans Receivable (Tables)
Delinquency Status of Gross Student Loans Receivable 
As of March 31, 2016, the repayment status of gross student loans receivable was as follows (in thousands):
120 days and less
$
10,030

From 121 - 270 days
824

Greater than 270 days
824

Total gross student loans receivable
11,678

Less: Amounts reserved or impaired
(1,664
)
Less: Discount on student loans receivable
(2,141
)
Total student loans receivable, net
$
7,873

Schedule of Student Loans Receivable, Net 
Student loans receivable, net, consist of the following (in thousands):
Short-term:
As of
March 31, 2016
 
As of
December 31, 2015
   Student loans receivable (non-tuition related)
$
218

 
$
310

   Student loans receivable (tuition related)
544

 
555

   Current student loans receivable
762

 
865

Less allowance for doubtful accounts
(36
)
 
(90
)
Student loans receivable, net
$
726

 
$
775

Long-term:
As of
March 31, 2016
 
As of
December 31, 2015
   Student loans receivable (non-tuition related)
$
3,251

 
$
3,314

   Student loans receivable (tuition related)
4,895

 
4,943

   Non-current student loans receivable
8,146

 
8,257

Less allowance for doubtful accounts
(999
)
 
(863
)
Student loans receivable, net
$
7,147

 
$
7,394

Changes in Allowance for Doubtful Accounts, Student Loans Receivable 
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 (tuition related):
 
 
 
 
 
 
 
For the three months ended March 31, 2016
$
(953
)
 
$
74

 
$
(8
)
 
$
(1,035
)
For the three months ended March 31, 2015
$
(1,495
)
 
$
(63
)
 
$
—

 
$
(1,432
)
(1)
Deductions represent accounts written off, net of recoveries.
Other Significant Balance Sheet Accounts (Tables)
Prepaid Expenses and Other Current Assets 
Prepaid expenses and other current assets consists of the following (in thousands):
 
As of
March 31, 2016
 
As of
December 31, 2015
Prepaid expenses
$
7,186

 
$
7,005

Prepaid licenses
4,807

 
5,221

Income tax receivable
25,709

 
20,169

Prepaid insurance
1,309

 
1,619

Interest receivable
378

 
299

Insurance recoverable
1,124

 
16,659

Other current assets
1,514

 
1,220

Total prepaid expenses and other current assets
$
42,027

 
$
52,192

Property and Equipment, Net 
Property and equipment, net, consists of the following (in thousands):
 
As of
March 31, 2016
 
As of
December 31, 2015
Furniture and office equipment
$
63,614

 
$
63,354

Software
12,616

 
12,605

Leasehold improvements
11,136

 
11,136

Vehicles
22

 
22

Total property and equipment
87,388

 
87,117

Less accumulated depreciation and amortization
(67,820
)
 
(65,375
)
Total property and equipment, net
$
19,568

 
$
21,742

Goodwill and Intangibles, Net 
Goodwill and intangibles, net, consists of the following (in thousands):
 
March 31, 2016
Definite-lived intangible assets:
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Capitalized curriculum costs
$
20,551

 
$
(14,928
)
 
$
5,623

Purchased intangible assets
15,850

 
(3,830
)
 
12,020

     Total definite-lived intangible assets
$
36,401

 
$
(18,758
)
 
$
17,643

Goodwill and indefinite-lived intangibles
 
 
 
 
2,567

Total goodwill and intangibles, net
 
 
 
 
$
20,210

 
 
 
 
 
 
 
December 31, 2015
Definite-lived intangible assets:
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Capitalized curriculum costs
$
20,323

 
$
(13,954
)
 
$
6,369

Purchased intangible assets
15,850

 
(3,521
)
 
12,329

     Total definite-lived intangible assets
$
36,173

 
$
(17,475
)
 
$
18,698

Goodwill and indefinite-lived intangibles
 
 
 
 
2,567

Total goodwill and intangibles, net
 
 
 
 
$
21,265

Intangibles, Estimated Remaining Amortization Expense 
The following table summarizes the estimated remaining amortization expense as of each fiscal year ended below (in thousands):
Year Ended December 31,
 
 
2016
$
3,397

2017
3,256

2018
2,180

2019
1,408

2020
1,234

Thereafter
6,168

Total future amortization expense
$
17,643

Accrued Liabilities 
Accounts payable and accrued liabilities consists of the following (in thousands):
 
As of
March 31, 2016
 
As of
December 31, 2015
Accounts payable
$
945

 
$
4,762

Accrued salaries and wages
7,780

 
10,476

Accrued bonus
2,783

 
4,295

Accrued vacation
9,894

 
9,628

Accrued litigation and fees
14,402

 
720

Accrued expenses
19,258

 
17,243

Rent liability
12,483

 
13,406

Accrued insurance liability
3,265

 
18,666

Total accounts payable and accrued liabilities
$
70,810

 
$
79,196

Deferred Revenue and Student Deposits 
Deferred revenue and student deposits consist of the following (in thousands):
 
As of
March 31, 2016
 
As of
December 31, 2015
Deferred revenue
$
32,710

 
$
23,311

Student deposits
49,669

 
65,445

Total deferred revenue and student deposits
$
82,379

 
$
88,756

Other Long-Term Liabilities 
Other long-term liabilities consist of the following (in thousands):
 
As of
March 31, 2016
 
As of
December 31, 2015
Uncertain tax positions
$
7,907

 
$
7,870

Legal settlements
132

 
178

Student transfer agreement costs
1,633

 
—

Other long-term liabilities
5,302

 
6,998

Total other long-term liabilities
$
14,974

 
$
15,046

Lease Obligations (Tables)
Schedule of Future Minimum Rental Payments for Operating Leases
The following table summarizes the future minimum rental payments under non-cancelable operating lease arrangements in effect at March 31, 2016 (in thousands):
Year Ended December 31,
 
 
2016
$
27,356

2017
36,127

2018
31,445

2019
20,876

2020
9,546

Thereafter
7,148

Total minimum payments
$
132,498

Earnings (Loss) Per Share (Tables)
Computation of Basic and Diluted Earnings Per Common Share 
The following table sets forth the computation of basic and diluted loss per share for the periods indicated (in thousands, except per share data):
 
Three Months Ended March 31,
 
2016
 
2015
Numerator:
 
 
 
Net loss
$
(10,112
)
 
$
(371
)
Denominator:
 
 
 
Weighted average number of common shares outstanding
45,933

 
45,428

Effect of dilutive options and stock units
—

 
—

Diluted weighted average number of common shares outstanding
45,933

 
45,428

Loss per share:
 
 
 
Basic loss per share
$
(0.22
)
 
$
(0.01
)
Diluted loss per share
$
(0.22
)
 
$
(0.01
)
Antidilutive Securities 
The following table sets forth the number of stock options, RSUs and PSUs, as applicable, excluded from the computation of diluted common shares outstanding for the periods indicated below because their effect was anti-dilutive (in thousands):
 
Three Months Ended March 31,
 
2016
 
2015
Stock options
4,510

 
4,889

RSUs and PSUs
921

 
558

Restructuring and Impairment Charges (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Restructuring Reserve [Roll Forward]
 
 
 
Restructuring reserve at beginning of period
$ 18,889 
 
 
Restructuring and impairment charges
709 
0 
 
Payments
(3,606)
 
 
Restructuring reserve at end of period
15,992 
 
 
Severance costs
 
 
 
Restructuring Reserve [Roll Forward]
 
 
 
Restructuring reserve at beginning of period
1,744 
 
 
Restructuring and impairment charges
699 
0 
3,300 
Payments
(1,375)
 
 
Restructuring reserve at end of period
1,068 
 
1,744 
Service Agreements
 
 
 
Restructuring Reserve [Roll Forward]
 
 
 
Restructuring reserve at beginning of period
3,224 
 
 
Restructuring and impairment charges
(15)
0 
 
Payments
(82)
 
 
Restructuring reserve at end of period
3,127 
 
 
Lease Agreements
 
 
 
Restructuring Reserve [Roll Forward]
 
 
 
Restructuring reserve at beginning of period
13,921 
 
 
Restructuring and impairment charges
25 
0 
 
Payments
(2,149)
 
 
Restructuring reserve at end of period
$ 11,797 
 
 
Accounts Receivable (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2016
Dec. 31, 2015
Receivables [Abstract]
 
 
Accounts receivable
$ 53,636 
$ 34,205 
Less allowance for doubtful accounts
(19,457)
(10,114)
Accounts receivable, net
$ 34,179 
$ 24,091 
Investments (Details) (USD $)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale Securities, Amortized Cost Basis
$ 85,806,000 
 
$ 66,000,000 
Available-for-sale securities
85,812,000 
 
65,843,000 
Unrealized gains on investments
165,000 
165,000 
 
Unrealized gains (losses) on investments, tax expense (benefit)
0 
138,000 
 
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax
0 
61,000 
 
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax
23,000 
 
0 
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax
(17,000)
 
(157,000)
Investments
87,299,000 
 
67,157,000 
Level 1
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Investments
1,487,000 
 
1,314,000 
Level 2
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Investments
85,812,000 
 
65,843,000 
Level 3
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Investments
0 
 
0 
Corporate Debt Securities, Current [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale Securities, Amortized Cost Basis
35,746,000 
 
18,113,000 
Available-for-sale securities
35,756,000 
 
18,073,000 
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax
21,000 
 
0 
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax
(11,000)
 
(40,000)
Mutual funds
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
1,487,000 
 
1,314,000 
Mutual funds |
Level 1
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Trading Securities
1,487,000 
 
1,314,000 
Available-for-sale securities
1,487,000 
 
1,314,000 
Mutual funds |
Level 2
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
0 
 
0 
Mutual funds |
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
40,818,000 
 
40,843,000 
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
40,818,000 
 
40,843,000 
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 
U.S. government and agency securities
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale Securities, Amortized Cost Basis
20,000,000 
 
 
Available-for-sale securities
19,994,000 
 
 
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax
0 
 
 
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax
(6,000)
 
 
U.S. government and agency securities |
Level 1
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
0 
 
 
U.S. government and agency securities |
Level 2
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
19,994,000 
 
 
U.S. government and agency securities |
Level 3
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
0 
 
 
Certificates of deposit
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
25,000,000 
 
25,000,000 
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
25,000,000 
 
25,000,000 
Certificates of deposit |
Level 3
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
0 
 
0 
Corporate Debt Securities, Noncurrent [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale Securities, Amortized Cost Basis
5,060,000 
 
22,887,000 
Available-for-sale securities
5,062,000 
 
22,770,000 
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax
2,000 
 
0 
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax
0 
 
(117,000)
Certificates of Deposit, Non-current [Member]
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale Securities, Amortized Cost Basis
25,000,000 
 
25,000,000 
Available-for-sale securities
25,000,000 
 
25,000,000 
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax
0 
 
0 
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax
$ 0 
 
$ 0 
Accounts Receivable (Change in Allowance) (Details) (Allowance for Doubtful Accounts, Current, USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Allowance for Doubtful Accounts, Current
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
Beginning Balance
$ (10,114)
$ (27,567)
Charged to Expense
9,545 
8,459 
Deductions(1)
(202)
(4,765)
Ending Balance
$ (19,457)
$ (31,261)
Student Loans Receivable (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Mar. 31, 2016
Student Loans Receivable (Non-tuition Related)
Dec. 31, 2015
Student Loans Receivable (Non-tuition Related)
Mar. 31, 2016
Student Loans Receivable (Tuition Related)
Dec. 31, 2015
Student Loans Receivable (Tuition Related)
Mar. 31, 2016
Repayment Plan One [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
 
 
 
 
 
 
 
Student loans receivable, short-term
$ 762 
$ 865 
$ 218 
$ 310 
$ 544 
$ 555 
 
Less allowance for doubtful accounts, short-term
(36)
(90)
 
 
 
 
 
Student loans receivable, net, short-term
726 
775 
 
 
 
 
 
Student loans receivable, long-term
8,146 
8,257 
3,251 
3,314 
4,895 
4,943 
 
Less allowance for doubtful accounts, long-term
(999)
(863)
 
 
 
 
 
Student loans receivable, net, long-term
$ 7,147 
$ 7,394 
 
 
 
 
 
Loans Receivable, Interest Rate, Stated Percentage
 
 
 
 
 
 
4.50% 
Student Loans Receivable (Change in Allowance) (Details) (USD $)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
Provision for Loan and Lease Losses
$ 100,000 
 
Allowance for Notes Receivable
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
Beginning Balance
(953,000)
(1,495,000)
Charged to Expense
74,000 
(63,000)
Deductions(1)
(8,000)
0 
Ending Balance
$ (1,035,000)
$ (1,432,000)
Student Loans Receivable (Delinquency Status) (Details) (USD $)
Mar. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
Loans placed on non-accrual status
$ 600,000 
Allowance for Notes Receivable
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
120 days and less
10,030,000 
From 121 - 270 days
824,000 
Greater than 270 days
824,000 
Total gross student loans receivable
11,678,000 
Less: Amounts reserved or impaired
(1,664,000)
Less: Discount on student loans receivable
(2,141,000)
Total student loans receivable, net
$ 7,873,000 
Other Significant Balance Sheet Accounts (Prepaid Expenses and Other Current Assets) (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2016
Dec. 31, 2015
Prepaid Expense and Other Assets, Current [Abstract]
 
 
Prepaid expenses
$ 7,186 
$ 7,005 
Prepaid licenses
4,807 
5,221 
Income Taxes Receivable, Current
25,709 
20,169 
Prepaid insurance
1,309 
1,619 
Interest receivable
378 
299 
Insurance recoverable
1,124 
16,659 
Other current assets
1,514 
1,220 
Total prepaid expenses and other current assets
$ 42,027 
$ 52,192 
Other Significant Balance Sheet Accounts (Property and Equipment, Net) (Details) (USD $)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Property, Plant and Equipment [Line Items]
 
 
 
Depreciation
$ 2,400,000 
$ 3,900,000 
 
Property and equipment, gross
87,388,000 
 
87,117,000 
Less accumulated depreciation and amortization
(67,820,000)
 
(65,375,000)
Total property and equipment, net
19,568,000 
 
21,742,000 
Furniture and office equipment
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property and equipment, gross
63,614,000 
 
63,354,000 
Software
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property and equipment, gross
12,616,000 
 
12,605,000 
Leasehold improvements
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property and equipment, gross
11,136,000 
 
11,136,000 
Vehicles
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property and equipment, gross
$ 22,000 
 
$ 22,000 
Other Significant Balance Sheet Accounts (Goodwill and Intangibles, Net) (Details) (USD $)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Goodwill and Intangibles, Net
 
 
 
Definite-lived intangible assets, gross carrying amount
$ 36,401,000 
 
$ 36,173,000 
Definite-lived intangible assets, accumulated amortization
(18,758,000)
 
(17,475,000)
Definite-lived intangible assets, net carrying amount
17,643,000 
 
18,698,000 
Goodwill and indefinite-lived intangibles
2,567,000 
 
2,567,000 
Total goodwill and intangibles, net
20,210,000 
 
21,265,000 
Amortization expense
1,300,000 
1,500,000 
 
Future Amortization Expense
 
 
 
2015
3,397,000 
 
 
2016
3,256,000 
 
 
2017
2,180,000 
 
 
2018
1,408,000 
 
 
2019
1,234,000 
 
 
Thereafter
6,168,000 
 
 
Total future amortization expense
17,643,000 
 
 
Capitalized Curriculum Costs
 
 
 
Goodwill and Intangibles, Net
 
 
 
Definite-lived intangible assets, gross carrying amount
20,551,000 
 
20,323,000 
Definite-lived intangible assets, accumulated amortization
(14,928,000)
 
(13,954,000)
Definite-lived intangible assets, net carrying amount
5,623,000 
 
6,369,000 
Purchased Intangible Assets
 
 
 
Goodwill and Intangibles, Net
 
 
 
Definite-lived intangible assets, gross carrying amount
15,850,000 
 
15,850,000 
Definite-lived intangible assets, accumulated amortization
(3,830,000)
 
(3,521,000)
Definite-lived intangible assets, net carrying amount
$ 12,020,000 
 
$ 12,329,000 
Other Significant Balance Sheet Accounts (Accrued Liabilities) (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2016
Dec. 31, 2015
Balance Sheet Related Disclosures [Abstract]
 
 
Accounts Payable
$ 945 
$ 4,762 
Accrued salaries and wages
7,780 
10,476 
Accrued bonus
2,783 
4,295 
Accrued vacation
9,894 
9,628 
Accrued litigation and fees
14,402 
720 
Accrued expenses
19,258 
17,243 
Rent liability
12,483 
13,406 
Accrued insurance liability
3,265 
18,666 
Accounts Payable and Accrued Liabilities, Current
$ 70,810 
$ 79,196 
Other Significant Balance Sheet Accounts (Deferred Revenue) (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2016
Dec. 31, 2015
Deferred Revenue [Abstract]
 
 
Deferred revenue
$ 32,710 
$ 23,311 
Student deposits
49,669 
65,445 
Total deferred revenue and student deposits
$ 82,379 
$ 88,756 
Other Significant Balance Sheet Accounts (Other Long-term Liabilities) (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2016
Dec. 31, 2015
Balance Sheet Related Disclosures [Abstract]
 
 
Uncertain tax positions
$ 7,907 
$ 7,870 
Legal settlements
132 
178 
Restructuring Reserve, Noncurrent
1,633 
0 
Other long-term liabilities
5,302 
6,998 
Total other long-term liabilities
$ 14,974 
$ 15,046 
Credit Facilities (Details) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2016
Line of Credit Facility [Line Items]
 
Revolving line of credit, letters of credit outstanding
$ 6.7 
Surety Bond Facility [Abstract]
 
Surety bond facility, available amount
12.0 
Surety bond facility, issued amount
$ 3.7 
Lease Obligations (Details) (USD $)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Lease Obligations [Abstract]
 
 
Operating Leases, Rent Expense, Net
$ 5,700,000 
$ 7,600,000 
2016
27,356,000 
 
2017
36,127,000 
 
2018
31,445,000 
 
2019
20,876,000 
 
2020
9,546,000 
 
Thereafter
7,148,000 
 
Total minimum payments
$ 132,498,000 
 
Earnings (Loss) Per Share (Basic and Diluted Earnings Per Share) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Numerator:
 
 
Net loss
$ (10,112)
$ (371)
Denominator:
 
 
Weighted average number of common shares outstanding (in shares)
45,933 
45,428 
Effect of dilutive options and restricted stock units (in shares)
0 
0 
Diluted weighted average number of common shares outstanding (in shares)
45,933 
45,428 
Loss per share:
 
 
Basic (in usd per share)
$ (0.22)
$ (0.01)
Diluted (in usd per share)
$ (0.22)
$ (0.01)
Earnings (Loss) Per Share (Anti-dilutive Securities) (Details)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Stock options
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
Antidilutive securities excluded from computation of dilutive common shares outstanding
4,510 
4,889 
RSUs and PSUs
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
Antidilutive securities excluded from computation of dilutive common shares outstanding
921 
558 
Stock-Based Compensation (Details) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Stock-based compensation expense
$ 2.3 
$ 2.2 
Income tax benefit of stock-based compensation expense
0.9 
0.8 
Unrecognized compensation cost related to unvested options and RSUs
$ 15.2 
 
Restricted Stock Units
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Non-option equity instruments granted during the period
437,460 
800,000 
Grant date fair value
$ 10.59 
$ 9.43 
Equity instruments other than options vested during period
384,631 
300,000 
Performance Shares
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Non-option equity instruments granted during the period
 
600,000 
Grant date fair value
 
$ 8.18 
Equity instruments other than options vested during period
0 
0 
Stock options
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Non-option equity instruments granted during the period
358,040 
400,000 
Grant date fair value
$ 4.99 
 
Stock options exercised
177,678 
100,000 
Income Taxes (Details) (USD $)
3 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Valuation Allowance [Line Items]
 
 
Effective Income Tax Rate Reconciliation, Percent
35.20% 
 
Unrecognized Tax Benefits
$ 20,600,000 
$ 20,600,000 
Gross unrecognized tax benefits that would impact effective tax rate if recognized
13,400,000 
13,400,000 
Income tax examination refund
 
12,600,000 
Accrued interest and penalties related to uncertain tax positions
2,000,000 
2,000,000 
Deferred Tax Asset [Member]
 
 
Valuation Allowance [Line Items]
 
 
Valuation allowance recorded in third quarter of 2015 for future amortization expense
$ 5,200,000 
 
Commitments and Contingencies (Details) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2016
Dec. 31, 2013
IOWA
 
 
Loss Contingencies [Line Items]
 
 
Estimated litigation liability
$ 0.7 
$ 9.0 
CALIFORNIA
 
 
Loss Contingencies [Line Items]
 
 
Estimated litigation liability
13.9 
 
Loss Contingency, Range of Possible Loss, Minimum
13.9 
 
Loss Contingency, Range of Possible Loss, Maximum
30.0 
 
Insurance Settlement [Member]
 
 
Loss Contingencies [Line Items]
 
 
Estimated litigation liability
$ 15.5