BRIDGEPOINT EDUCATION INC, 10-Q filed on 5/15/2013
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2013
May 9, 2013
Entity Information [Line Items]
 
 
Entity Registrant Name
BRIDGEPOINT EDUCATION INC 
 
Entity Central Index Key
0001305323 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Accelerated Filer 
 
Document Type
10-Q 
 
Document Period End Date
Mar. 31, 2013 
 
Document Fiscal Year Focus
2013 
 
Document Fiscal Period Focus
Q1 
 
Amendment Flag
false 
 
Entity Common Stock, Shares Outstanding
 
54,108,715 
Condensed Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Current assets:
 
 
Cash and cash equivalents
$ 316,627 
$ 255,965 
Investments
111,838 
136,967 
Accounts receivable, net
69,352 
67,927 
Deferred income taxes
10,970 
10,936 
Prepaid expenses and other current assets
21,445 
19,810 
Total current assets
530,232 
491,605 
Property and equipment, net
94,930 
95,966 
Investments
96,475 
121,738 
Student loans receivable, net
14,524 
15,143 
Goodwill and intangibles, net
11,471 
10,739 
Deferred income taxes
13,262 
13,266 
Other long-term assets
2,206 
2,330 
Total assets
763,100 
750,787 
Current liabilities:
 
 
Accounts payable
6,901 
4,588 
Accrued liabilities
56,707 
44,640 
Deferred revenue and student deposits
140,969 
175,057 
Total current liabilities
204,577 
224,285 
Rent liability
25,798 
25,173 
Other long-term liabilities
10,610 
9,759 
Total liabilities
240,985 
259,217 
Commitments and contingencies (see Note 12)
   
   
Preferred stock, $0.01 par value:
 
 
20,000 shares authorized; zero shares issued and outstanding at March 31, 2013, and December 31, 2012
Common stock, $0.01 par value:
 
 
300,000 shares authorized; 61,416 issued and 54,109 outstanding at March 31, 2013; 61,406 issued and 54,099 outstanding at December 31, 2012
614 
614 
Additional paid-in capital
155,336 
151,709 
Retained earnings
501,565 
474,598 
Accumulated other comprehensive income
173 
222 
Treasury stock, 7,307 shares at cost at both March 31, 2013, and December 31, 2012
(135,573)
(135,573)
Total stockholders' equity
522,115 
491,570 
Total liabilities and stockholders' equity
$ 763,100 
$ 750,787 
Condensed Consolidated Balance Sheets Parenthetical (USD $)
Mar. 31, 2013
Dec. 31, 2012
Stockholders' equity:
 
 
Preferred stock, par value per share
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
20,000,000 
20,000,000 
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value per share
$ 0.01 
$ 0.01 
Common stock, shares authorized
300,000,000 
300,000,000 
Common stock, shares issued
61,416,000 
61,406,000 
Common stock, shares outstanding
54,109,000 
54,099,000 
Treasury stock, shares at cost
7,307,000 
7,307,000 
Condensed Consolidated Statements of Income (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Revenue
$ 221,984 
$ 250,437 
Costs and expenses:
 
 
Instructional costs and services
101,646 
84,224 1
Admissions advisory and marketing
57,543 
90,042 
General and administrative
19,375 
25,542 
Total costs and expenses
178,564 
199,808 
Operating income
43,420 
50,629 
Other income, net
818 
683 
Income before income taxes
44,238 
51,312 
Income tax expense
17,271 
19,341 
Net income
$ 26,967 
$ 31,971 
Earnings per share:
 
 
Basic (in USD per share)
$ 0.50 
$ 0.61 
Diluted (in USD per share)
$ 0.49 
$ 0.57 
Weighted average number of common shares outstanding used in computing earnings per share:
 
 
Basic (in shares)
54,129 
52,008 
Diluted (in shares)
55,001 
56,203 
Condensed Consolidated Statements of Comprehensive Income (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Net income
$ 26,967 
$ 31,971 
Other comprehensive income, net of tax:
 
 
Unrealized gains (losses) on investments
(49)
634 
Comprehensive income
$ 26,918 
$ 32,605 
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 Income (Loss)
Treasury Stock
Balance at Dec. 31, 2012
$ 491,570 
$ 614 
$ 151,709 
$ 474,598 
$ 222 
$ (135,573)
Balance, shares at Dec. 31, 2012
 
61,406,000 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Stock-based compensation
3,623 
 
3,623 
 
 
 
Exercise of stock options, shares
 
10,000 
 
 
 
 
Exercise of stock options
101 
101 
 
 
 
Excess tax benefit of option exercises, net of tax shortfall
(97)
 
(97)
 
 
 
Net income
26,967 
 
 
26,967 
 
 
Unrealized losses on investments, net of tax
(49)
 
 
 
(49)
 
Balance at Mar. 31, 2013
$ 522,115 
$ 614 
$ 155,336 
$ 501,565 
$ 173 
$ (135,573)
Balance, shares at Mar. 31, 2013
 
61,416,000 
 
 
 
 
Condensed Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Cash flows from operating activities
 
 
Net income
$ 26,967 
$ 31,971 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Provision for bad debts
18,294 
16,669 
Depreciation and amortization
4,831 
4,095 
Amortization of premium/discount
1,005 
1,754 
Stock-based compensation
3,623 
2,497 
Excess tax benefit of option exercises
(3,588)
Changes in operating assets and liabilities:
 
 
Accounts receivable
(19,381)
(46,053)
Prepaid expenses and other current assets
(1,635)
(459)
Student loans receivable
281 
(2,399)
Other long-term assets
124 
1,944 
Accounts payable and accrued liabilities
14,119 
26,851 
Deferred revenue and student deposits
(34,088)
3,723 
Other liabilities
1,476 
3,345 
Net cash provided by operating activities
15,616 
40,350 
Cash flows from investing activities
 
 
Capital expenditures
(2,994)
(7,236)
Purchases of investments
(108)
(36,573)
Capitalized curriculum development costs
(1,369)
(1,638)
Sales and maturities of investments
49,416 
28,923 
Net cash provided by (used in) investing activities
44,945 
(16,524)
Cash flows from financing activities
 
 
Proceeds from the exercise of stock options
101 
813 
Excess tax benefit of option exercises
3,588 
Net cash provided by financing activities
101 
4,401 
Net increase in cash and cash equivalents
60,662 
28,227 
Cash and cash equivalents at beginning of period
255,965 
133,921 
Cash and cash equivalents at end of period
316,627 
162,148 
Supplemental disclosure of non-cash transactions:
 
 
Purchase of equipment included in accounts payable and accrued liabilities
$ 673 
$ 1,465 
Nature of Business
Nature of Business
Nature of Business
Bridgepoint Education, Inc. (together with its subsidiaries, the “Company”), was incorporated in 1999 and is a provider of postsecondary education services. Its wholly-owned subsidiaries, Ashford University and University of the Rockies, are academic institutions that offer associate's, bachelor's, master's and doctoral programs online, as well as at their traditional campuses located in Clinton, Iowa, and Colorado Springs, Colorado, respectively.
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Principles of Consolidation
The condensed consolidated financial statements include the accounts of Bridgepoint Education, Inc. and its wholly-owned subsidiaries. Intercompany transactions have been eliminated in consolidation.
Unaudited Interim Financial Information
The condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012, which was filed with the Securities and Exchange Commission (“SEC”) on March 12, 2013. In the opinion of management, these financial statements include all adjustments (consisting of normal recurring adjustments) considered necessary to present a fair statement of the Company's condensed consolidated financial position, results of operations and cash flows as of and for the periods presented.
Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. The year-end condensed consolidated balance sheet data were derived from audited financial statements, but do not include all disclosures required by GAAP for complete annual financial statements.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements. Actual results could differ from those estimates.
Revision of Previously Issued Financial Statements
The Company identified an out of period adjustment for bad debt expense related to the aging of the Company's accounts receivable, which should have been recognized during the year ended December 31, 2012. The Company evaluated the cumulative impact of this item on prior periods under the guidance in ASC 250-10 relating to SEC Staff Accounting Bulletin (“SAB”) No. 99, “Materiality.” The Company also evaluated the impact of correcting this item through an adjustment to its financial statements for the three months ended March 31, 2013 and concluded, based on the guidance within ASC 250-10 relating to SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” to revise its previously issued financial statements to reflect the impact of this correction. Through this revision, the Company will increase and correct a bad debt expense total of $7.2 million, (pre-tax) in the fiscal year ended December 31, 2012. Prior periods will be revised as filed in connection with the filing of the Company's Form 10-Q's in 2013.
After the revisions described above, the Company's condensed consolidated financial statements as of and for the three months ended March 31, 2013 are properly stated. The table below presents the impact of this revision on the Company's consolidated balance sheet data as of December 31, 2012, the consolidated statement of income data and consolidated cash flow data for the year ended December 31, 2012, as well as the impact on the quarterly periods during the year ended December 31, 2012. There was no impact to the cash flows from operating activities in any of the periods presented due to the revision. The following table is presented in thousands, except per share data:

As Reported
 
As Revised
 
As Reported
 
As Revised
 
As Reported
 
As Revised
 
As Reported
 
As Revised
 
March 31, 2012
 
June 30, 2012
 
September 30, 2012
 
December 31, 2012
Consolidated balance sheet data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accounts receivable, net
$
92,853

 
$
91,129

 
$
99,617

 
$
91,139

 
$
111,010

 
$
99,919

 
$
75,177

 
$
67,927

Deferred income taxes
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
$
8,228

 
$
10,936

Total current assets
$
442,893

 
$
441,169

 
$
468,242

 
$
459,764

 
$
463,606

 
$
452,515

 
$
496,147

 
$
491,605

Total assets
$
684,171

 
$
682,447

 
$
731,597

 
$
723,119

 
$
747,190

 
$
736,099

 
$
755,329

 
$
750,787

Accrued liabilities
$
67,409

 
$
66,755

 
$
57,858

 
$
54,650

 
$
56,609

 
$
52,313

 
N/A

 
N/A

Total current liabilities
$
261,229

 
$
260,575

 
$
251,220

 
$
248,012

 
$
236,121

 
$
231,925

 
N/A

 
N/A

Total liabilities
$
289,950

 
$
289,296

 
$
282,541

 
$
279,333

 
$
269,761

 
$
265,565

 
N/A

 
N/A

Retained earnings
$
384,218

 
$
383,148

 
$
431,676

 
$
426,406

 
$
463,121

 
$
456,226

 
$
479,140

 
$
474,598

Total stockholders’ equity
$
394,221

 
$
393,151

 
$
449,056

 
$
443,786

 
$
477,429

 
$
470,534

 
$
496,112

 
$
491,570

Total liabilities and stockholders’ equity
$
684,171

 
$
682,447

 
$
731,597

 
$
723,119

 
$
747,190

 
$
736,099

 
$
755,329

 
$
750,787

 
Three Months Ended
 
March 31, 2012
 
June 30, 2012
 
September 30, 2012
 
December 31, 2012
Consolidated statement of income data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Instructional costs and services (1)
$
82,500

 
$
84,224

 
$
78,525

 
$
85,279

 
$
88,373

 
$
90,986

 
$
105,875

 
$
102,034

Total costs and expenses
$
198,084

 
$
199,808

 
$
180,766

 
$
187,520

 
$
202,354

 
$
204,967

 
$
184,253

 
$
180,412

Operating income
$
52,353

 
$
50,629

 
$
75,536

 
$
68,782

 
$
49,722

 
$
47,109

 
$
25,103

 
$
28,944

Income before income taxes
$
53,036

 
$
51,312

 
$
76,390

 
$
69,636

 
$
50,677

 
$
48,064

 
$
25,980

 
$
29,822

Income tax expense
$
19,995

 
$
19,341

 
$
28,932

 
$
26,378

 
$
19,232

 
$
18,244

 
$
9,962

 
$
11,450

Net income
$
33,041

 
$
31,971

 
$
47,458

 
$
43,258

 
$
31,445

 
$
29,820

 
$
16,019

 
$
18,372

Earnings per share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Basic
$
0.64

 
$
0.61

 
$
0.90

 
$
0.82

 
$
0.59

 
$
0.56

 
$
0.30

 
$
0.34

   Diluted
$
0.59

 
$
0.57

 
$
0.84

 
$
0.77

 
$
0.56

 
$
0.53

 
$
0.29

 
$
0.33

 
Year to Date Period Ended
 
March 31, 2012
 
June 30, 2012
 
September 30, 2012
 
December 31, 2012
Consolidated statement of income data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Instructional costs and services (1)
$
82,500

 
$
84,224

 
$
161,025

 
$
169,503

 
$
249,398

 
$
260,489

 
$
355,273

 
$
362,523

Total costs and expenses
$
198,084

 
$
199,808

 
$
378,850

 
$
387,328

 
$
581,204

 
$
592,295

 
$
765,457

 
$
772,707

Operating income
$
52,353

 
$
50,629

 
$
127,889

 
$
119,411

 
$
177,611

 
$
166,520

 
$
202,714

 
$
195,464

Income before income taxes
$
53,036

 
$
51,312

 
$
129,426

 
$
120,948

 
$
180,103

 
$
169,012

 
$
206,084

 
$
198,834

Income tax expense
$
19,995

 
$
19,341

 
$
48,927

 
$
45,719

 
$
68,159

 
$
63,963

 
$
78,121

 
$
75,413

Net income
$
33,041

 
$
31,971

 
$
80,499

 
$
75,229

 
$
111,944

 
$
105,049

 
$
127,963

 
$
123,421

Earnings per share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Basic
$
0.64

 
$
0.61

 
$
1.54

 
$
1.44

 
$
2.13

 
$
2.00

 
$
2.42

 
$
2.33

   Diluted
$
0.59

 
$
0.57

 
$
1.43

 
$
1.34

 
$
2.00

 
$
1.87

 
$
2.29

 
$
2.21

Consolidated statement of cash flow data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
$
33,041

 
$
31,971

 
$
80,499

 
$
75,229

 
$
111,944

 
$
105,049

 
$
127,963

 
$
123,421

Provision for bad debts
$
14,945

 
$
16,669

 
$
24,923

 
$
33,401

 
$
41,327

 
$
52,418

 
$
66,446

 
$
73,696

Deferred income taxes
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
$
(7,264
)
 
$
(9,972
)
Accounts payable and accrued liabilities
$
27,505

 
$
26,851

 
$
21,700

 
$
18,492

 
$
23,559

 
$
19,363

 
N/A

 
N/A


(1) The amounts in the “as reported” column for instructional costs and services above reflect reclassified amounts for each respective period. For additional information, see also Note 3, “Reclassification.”
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable consists of student accounts receivable, which represent amounts due for tuition, technology fees and other fees from currently enrolled and former students. Students generally fund their education through grants and/or loans under various Title IV programs, tuition assistance from military and corporate employers or personal funds.
Accounts receivable are stated at the amount management expects to collect from outstanding balances. For accounts receivable, an allowance for doubtful accounts is estimated by management based on (i) an assessment of individual accounts receivable over a specific aging and amount (and all other balances on a pooled basis based on historical collection experience), (ii) consideration of the nature of the receivable accounts and (iii) potential changes in the business or economic environment. The provision for bad debts is recorded within the instructional costs and services line in the condensed consolidated statements of income.
Student Loans Receivable and Loan Loss Reserves
Student loans receivable consist of loans to qualified students and have a repayment period of 10 years from the date of graduation or withdrawal from the Company's institutions. The interest rate charged on student loans is a fixed rate of either 4.5% or 0.0% depending upon the repayment plan selected. If the student selects the rate of 0.0%, the student must pay $50 per month on the loan while enrolled in school and during the six month grace period (after graduation or withdrawal) before the repayment period begins. On the 0.0% student loans, the Company imputes interest using the rate that would be used in a market transaction with similar terms. Interest income on student loans is recognized using the effective interest method and is recorded within other income in the condensed consolidated statements of income. Revenue recognized related to students loans was immaterial during for the three months ended March 31, 2013 and March 31, 2012, respectively.
Student loans receivable are stated at the amount management expects to collect from outstanding balances. For tuition related student loan receivables, the Company estimates an allowance for doubtful accounts, similar to that of accounts receivable, based on (i) an assessment of individual loans receivable over a specific aging and amount (and all other balances on a pooled basis based on historical collection experience), (ii) consideration of the nature of the receivable accounts, (iii) potential changes in the business or economic environment and (iv) related FICO scores and other industry metrics. The related provision for bad debts is recorded within the instructional costs and services line in the condensed consolidated statements of income.
For non-tuition related student loans, the Company utilizes an impairment methodology. Under this methodology, management determines whether a loan would be impaired if it is probable that the Company will be unable to collect all amounts due in accordance with the contractual terms of the individual loan agreement. This assessment is based on an analysis of several factors including aging history and delinquency trending, the risk characteristics and loan performance of the specific loans, as well as current economic conditions and industry trends. For impaired loans, the Company would establish a specific loan loss reserve for the difference between the recorded investment in the loan and the present value of the expected future cash flows. As of March 31, 2013, there are no amounts recorded for the loan loss reserve. The loan loss reserve is maintained at a level deemed adequate by management based on a periodic analysis of the individual loans.
Recently Adopted Accounting Pronouncements
In July 2012, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2012-02, which amends Accounting Standards Codification Topic 350, Testing Indefinite-Lived Intangible Assets for Impairment. The amended standard reduces the cost and complexity of testing indefinite-lived intangible assets, other than goodwill, for impairment by allowing companies to perform a qualitative assessment to determine whether further impairment testing is necessary, similar in approach to the goodwill impairment test. The guidance provided in ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The Company adopted ASU 2012-02, effective January 1, 2013, and such adoption did not have a material effect on our condensed consolidated financial statements.
In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, or AOCI, which amends Accounting Standards Codification Topic 220, Comprehensive Income. Under ASU 2013-02, an entity is required to provide information about the amounts reclassified out of AOCI by component in a single note or on the face of the financial statements. The guidance provided in ASU 2013-02 is effective for interim and annual reporting periods beginning after December 15, 2012. The Company adopted ASU 2013-02, effective January 1, 2013, and such adoption did not have a material effect on our condensed consolidated financial statements.
Reclassification
Reclassification
Reclassification
Effective in the fourth quarter of 2012, the Company made changes in the presentation of its operating expenses. The Company determined that these changes would better reflect industry practices and would provide more meaningful information as well as increased transparency to its operations. The Company believes its expenses as reclassified better represent the operational changes and the business initiatives that have been implemented. The Company has reclassified prior periods to conform to the new presentation.
The following table depicts the Company's operating expenses as previously reported as well as currently reclassified on its condensed consolidated statements of income for each of the three months periods noted below (in thousands):
 
March 31, 2012
 
June 30, 2012
 
September 30, 2012
 
December 31, 2012
Instructional costs and services (as reported)
$
68,475

 
$
65,395

 
$
75,699

 
$
105,875

   Impact of reclassification
14,025

 
13,130

 
12,674

 

Instructional costs and services (as reclassified)
82,500

 
78,525

 
88,373

 
105,875

   Impact of bad debt revision
1,724

 
6,754

 
2,613

 
(3,841
)
Instructional costs and services (as reclassified and revised)
84,224

 
85,279

 
90,986

 
102,034

 
 
 
 
 
 
 
 
Admissions advisory and marketing (as reported)
80,063

 
78,608

 
90,291

 
65,239

   Impact of reclassification
9,979

 
8,586

 
6,443

 

Admissions advisory and marketing (as reclassified)
90,042

 
87,194

 
96,734

 
65,239

 
 
 
 
 
 
 
 
General and administrative (as reported)
49,546

 
36,763

 
36,364

 
13,139

   Impact of reclassification
(24,004
)
 
(21,716
)
 
(19,117
)
 

General and administrative (as reclassified)
25,542

 
15,047

 
17,247

 
13,139

 
 
 
 
 
 
 
 
     Total costs and expenses (as reclassified and revised)
$
199,808

 
$
187,520

 
$
204,967

 
$
180,412


For additional information, see also Note 2, “Summary of Significant Accounting Policies - Revision of Previously Issued Financial Statements.”
Earnings Per Share
Earnings Per Share
Earnings Per Share
Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share is calculated by dividing net income by the sum of (i) the weighted average number of common shares outstanding for the period and (ii) potentially dilutive securities outstanding during the period, if the effect is dilutive.
Potentially dilutive common shares for the three months ended March 31, 2013 and March 31, 2012, consisted of incremental shares of common stock issuable upon the exercise of options and warrants and upon the settlement of restricted stock units.
The following table sets forth the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data):
 
Three Months Ended March 31,
 
2013
 
2012
Numerator:
 
 
 
Net income
$
26,967

 
$
31,971

Denominator:
 
 
 
Weighted average number of common shares outstanding
54,129

 
52,008

Effect of dilutive options and restricted stock units
778

 
3,932

Effect of dilutive warrants
94

 
263

Diluted weighted average number of common shares outstanding
55,001

 
56,203

Earnings per share:
 
 
 
Basic earnings per share
$
0.50

 
$
0.61

Diluted earnings per share
$
0.49

 
$
0.57


For the periods indicated below, the computation of dilutive common shares outstanding excludes certain options to purchase shares of common stock because their effect was anti-dilutive.
 
Three Months Ended March 31,
(in thousands)
2013
 
2012
Options
5,478

 
81

Significant Balance Sheet Accounts
Significant Balance Sheet Accounts
Significant Balance Sheet Accounts
Receivables, Net
Receivables, net, consist of the following (in thousands):
 
As of
March 31, 2013
 
As of
December 31, 2012
Accounts receivable
$
118,081

 
$
114,635

Less allowance for doubtful accounts
(48,729
)
 
(46,708
)
Accounts receivable, net
$
69,352

 
$
67,927

 
 
 
 
Student loans receivable (non-tuition related)
$
8,831

 
$
9,279

Student loans receivable (tuition related)
8,036

 
8,171

Student loans receivable
16,867

 
17,450

Less allowance for doubtful accounts
(2,343
)
 
(2,307
)
Student loans receivable, net
$
14,524

 
$
15,143


As of March 31, 2013 and December 31, 2012, there was $0.9 million and $0.6 million, respectively, of current student loans receivable included within accounts receivable. Student loans receivable is presented net of any related discount, and the balances approximated fair value at each balance sheet date. The Company estimated the fair value of the student loans receivable by discounting the future cash flows using current rates for similar arrangements. The assumptions used in this estimate are considered unobservable inputs and are therefore categorized as Level 3 measurements under the accounting guidance.
The following table presents the changes in the allowance for doubtful accounts for 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, 2013
$
(46,708
)
 
$
18,258

 
$
16,237

 
$
(48,729
)
For the three months ended March 31, 2012
(35,627
)
 
17,080

 
12,919

 
(39,788
)
 
 
 
 
 
 
 
 
Allowance for student loans receivable (tuition related):
 
 
 
 
 
 
 
For the three months ended March 31, 2013
$
(2,307
)
 
$
36

 
$

 
$
(2,343
)
For the three months ended March 31, 2012
(2,338
)
 
(411
)
 

 
(1,927
)
(1)
Deductions represent accounts written off, net of recoveries.
For the non-tuition related student loans receivable, the Company monitors the credit quality using credit scores, aging history and delinquency trending. The loan reserve methodology is reviewed on a quarterly basis. Delinquency is the main factor of determining if a loan is impaired. If a loan were determined to be impaired, interest would no longer accrue. As of as March 31, 2013, no loans have been impaired, however an immaterial amount of loans had been placed on non-accrual status as of the balance sheet date.
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following (in thousands):
 
As of
March 31, 2013
 
As of
December 31, 2012
Prepaid expenses
$
10,454

 
$
9,367

Prepaid licenses
4,525

 
5,864

Prepaid insurance
3,389

 
1,134

Interest receivable
2,267

 
2,221

Other current assets
810

 
1,224

Total prepaid expenses and other current assets
$
21,445

 
$
19,810


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

 
$
7,091

Buildings and building improvements
25,510

 
25,430

Furniture, office equipment and software
88,663

 
85,709

Leasehold improvements
23,880

 
23,756

Vehicles
147

 
147

Total property and equipment
145,291

 
142,133

Less accumulated depreciation and amortization
(50,361
)
 
(46,167
)
Total property and equipment, net
$
94,930

 
$
95,966


Goodwill and Intangibles, Net
Goodwill and intangibles, net, consist of the following (in thousands):
 
As of
March 31, 2013
 
As of
December 31, 2012
Goodwill and indefinite-lived intangibles
$
3,424

 
$
3,424

 
 
 
 
Definite-lived intangible assets
$
11,347

 
$
9,978

Less accumulated amortization
(3,300
)
 
(2,663
)
Definite-lived intangible assets, net
8,047

 
7,315

 
 
 
 
Total goodwill and intangibles, net
$
11,471

 
$
10,739


For the three months ended March 31, 2013 and March 31, 2012, amortization expense was $0.6 million and $0.3 million, respectively. The Company estimates that the remaining amortization expense for those intangibles which have been placed into service as of March 31, 2013, will be approximately $2.0 million, $2.4 million and $1.2 million over the remaining fiscal years ending December 31, 2013, December 31, 2014 and December 31, 2015, respectively.
Accrued Liabilities
Accrued liabilities consist of the following (in thousands):
 
As of
March 31, 2013
 
As of
December 31, 2012
Accrued salaries and wages
$
13,096

 
$
11,585

Accrued bonus
3,573

 
1,603

Accrued vacation
9,606

 
8,993

Accrued expenses
15,040

 
15,924

Accrued income taxes payable
15,392

 
6,535

Total accrued liabilities
$
56,707

 
$
44,640


Deferred Revenue and Student Deposits
Deferred revenue and student deposits consist of the following (in thousands):
 
As of
March 31, 2013
 
As of
December 31, 2012
Deferred revenue
$
38,818

 
$
44,967

Student deposits
102,151

 
130,090

Total deferred revenue and student deposits
$
140,969

 
$
175,057

Investments
Investments
Investments
The following tables summarize the fair value information of short and long-term investments as of March 31, 2013, and December 31, 2012, respectively (in thousands):
 
As of March 31, 2013
 
Level 1
 
Level 2
 
Level 3
 
Total
Demand notes
$

 
$
547

 
$

 
$
547

Corporate notes and bonds

 
98,277

 

 
98,277

Total
$

 
$
98,824

 
$

 
$
98,824

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

 
$
415

 
$

 
$
415

Corporate notes and bonds

 
148,801

 

 
148,801

Total
$

 
$
149,216

 
$

 
$
149,216


The above tables do not include amounts related to investments classified as other investments, such as certificates of deposit, which are carried at amortized cost. The amortized cost of such investments approximated fair value at each balance sheet date. The assumptions used in these fair value estimates are considered as other observable inputs and are therefore categorized as Level 2 measurements under the accounting guidance. The balances of such other investments were $109.5 million at both March 31, 2013, and December 31, 2012, respectively. The balances of total short-term and long-term investments combined were $208.3 million and $258.7 million, as of March 31, 2013, and December 31, 2012, respectively.
The Company records the changes in unrealized gains and losses on its investments arising during the period in other comprehensive income. For the three months ended March 31, 2013 and 2012, the Company recorded a net unrealized loss of $49,000, and a net unrealized gain of $634,000, respectively, in other comprehensive income which were net of tax effect of $30,000 and $(383,000), respectively.
Credit Facilities
Credit Facilities
Credit Facilities
On April 13, 2012, the Company entered into a $50 million revolving line of credit (“Facility”) pursuant to an Amended and Restated Revolving Credit Agreement (“Revolving Credit Agreement”) with the lenders signatory thereto and Comerica, as administrative agent for the lenders. The Revolving Credit Agreement amended, restated and superseded any prior loan documents. At the Company's option, the Company may increase the size of the Facility up to $100 million (in certain minimum increments), subject to the terms and conditions of the Revolving Credit Agreement. Additionally, the Company may request swing-line advances under the Facility up to $3 million in the aggregate.
Under the Revolving Credit Agreement and the documents executed in connection therewith (collectively, the “Facility Loan Documents”), the lenders have agreed to make loans to the Company and issue letters of credit on the Company's behalf, subject to the terms and conditions of the Facility Loan Documents. The Facility has a term of three years and matures on April 13, 2015. Interest and fees accruing under the Facility are payable quarterly in arrears and principal is payable at maturity. The Company may terminate the Facility upon five days notice, without premium or penalty, other than customary breakage fees.
For any advance under the Facility, interest will accrue at either the “Base Rate” or the “Eurodollar-based Rate,” at the Company's option. The Base Rate means, for any day, 0.5% plus the greatest of: (1) the prime rate for such day, (2) the Federal Funds Effective Rate in effect on such day, plus 1.0%, and (3) the daily adjusting LIBOR rate, plus 1.0%. The Eurodollar-based Rate means, for any day, 1.5% plus the quotient of (1) the LIBOR Rate, divided by (2) a percentage equal to 100% minus the maximum rate on such date at which the Agent is required to maintain reserves on “Eurocurrency Liabilities” as defined in Regulation D of the Board of Governors of the Federal Reserve System. For any advance under the swing line, interest will accrue at either the Base Rate or, if made available to the Company by the swing line lender, at the lender's option, a different rate quoted by such lender. For any letter of credit issued on the Company's behalf under the Facility, the Company is required to pay a fee of 1.50% of the undrawn amount of such letter of credit plus a letter of credit facing fee. The Company is also required to pay a facility fee of 0.25% of the aggregate commitment then in effect under the Facility, whether used or unused.
The Facility Loan Documents contain other customary affirmative, negative and financial maintenance covenants, representations and warranties, events of default, and remedies upon an event of default, including the acceleration of debt and the right to foreclose on the collateral securing the Facility. The Company was in compliance with all financial covenants in the Facility Loan Documents as of March 31, 2013.
As security for the performance of the Company's obligations under the Facility Loan Documents, the Company granted the lenders a first priority security interest in substantially all of the Company's assets, including its real property.
As of March 31, 2013, and up to the date of filing, the Company had no borrowings outstanding under the Facility. As of March 31, 2013, the Company used the availability under the line of credit to issue letters of credit aggregating $5.8 million.
Surety Bond Facility
As part of its normal business operations, the Company is required to provide surety bonds in certain states in which the Company does business. In May 2009, the Company entered into a surety bond facility with an insurance company to provide such bonds when applicable. As of March 31, 2013, the total available surety bond facility was $12.0 million and the Company had issued surety bonds totaling $8.7 million.
Stock-Based Compensation
Stock-Based Compensation
Stock-Based Compensation
The Company recorded $3.6 million and $2.5 million of stock-based compensation expense for the three months ended March 31, 2013 and 2012, respectively. The related income tax benefit was $1.4 million and $0.9 million for the three months ended March 31, 2013 and 2012, respectively.
There were 0.9 million restricted stock units (“RSUs”) granted during the three months ended March 31, 2013 at a grant date fair value of $10.23. No RSUs vested during the three months ended March 31, 2013.
The Company granted options to purchase 0.5 million shares of common stock during the three months ended March 31, 2013. During the three months ended March 31, 2013, options to purchase 9,662 shares of common stock were exercised.
The following weighted average assumptions were used to value the options granted during the three months ended March 31, 2013, pursuant to the Black-Scholes option pricing model:
Exercise price per share
$
10.23

Risk-free interest rate
1.0
%
Expected dividend yield

Expected volatility
58.9
%
Expected life (in years)
5.85

Grant date fair value per share
$
5.48


As of March 31, 2013, there was unrecognized compensation cost of $23.8 million related to unvested options and RSUs.
Warrants
Warrants
Warrants
The Company has issued warrants to purchase common stock to various employees, consultants, licensors and lenders with exercise prices ranging from $1.125 to $9.00. Each warrant represents the right to purchase one share of common stock. As of March 31, 2013, warrants to purchase 0.1 million shares of common stock remain outstanding. The Company has not issued any warrants since 2005. During the three months ended March 31, 2013, there were no warrants to purchase shares of common stock exercised. All outstanding warrants are currently exercisable and begin to expire in 2013.
Income Taxes
Income Taxes
Income Taxes
The Company's current estimated annual effective income tax rate that has been applied to normal, recurring operations for the three months ended March 31, 2013, was 38.3%. The Company's effective income tax rate was also 39.0% for the three months ended March 31, 2013. The effective rate for the three months ended March 31, 2013 differed from the Company's estimated annual effective tax rate due to the impact of discrete items on the Company's income before the provision for income taxes, particularly increases to gross unrecognized tax benefits and related accrued interest.
At March 31, 2013, and December 31, 2012, the Company had $9.9 million and $9.3 million of gross unrecognized tax benefits, respectively, of which $7.0 million and $6.6 million would impact the effective income tax rate if recognized.
The Company is subject to U.S. federal income tax and multiple state tax jurisdictions. The 2002 through 2012 tax years remain open to examination by major taxing jurisdictions to which the Company is subject.
The Company's continuing practice is to recognize interest and penalties related to uncertain tax positions in income tax expense. Accrued interest and penalties related to uncertain tax positions as of March 31, 2013, and December 31, 2012, was $1.8 million and $1.7 million, respectively.
The California Franchise Tax Board commenced an audit of the Company's 2008 and 2009 California income tax returns in October 2011. The Company does not expect any significant adjustments resulting from this audit. It is reasonably possible that the amount of the unrecognized tax benefit will change during the next 12 months, however the Company does not expect the potential change to have a material effect on the results of operations or financial position in the next year.
Regulatory
Regulatory
Regulatory
The Company is subject to extensive regulation by federal and state governmental agencies and accrediting bodies. In particular, the Higher Education Act of 1965, as amended (“Higher Education Act”), and the regulations promulgated thereunder by the U.S. Department of Education (“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 and University of the Rockies are both regionally accredited by the Higher Learning Commission of the North Central Association of Colleges and Schools (“HLC”). As discussed below, Ashford University has been placed on Notice by HLC. In September 2010, Ashford University also applied for eligibility from the Accrediting Commission for Senior Colleges and Universities of the Western Association of Schools and Colleges (“WASC”).
Loss of accreditation would denigrate the value of our institutions' educational programs and would cause them to lose their eligibility to participate in Title IV programs, which would have a material adverse effect on enrollments, revenues, financial condition, cash flows and results of operations.
Denial of Initial Accreditation for Ashford University. On July 5, 2012, Ashford University received official notice that WASC acted (1) to deny initial accreditation to the institution because it had not yet demonstrated substantial compliance with certain of the WASC Standards for Accreditation and (2) to permit the institution to reapply for accreditation with a single special visit to occur as early as spring 2013. On October 11, 2012, Ashford University reapplied for accreditation. Under WASC rules, the reapplication must demonstrate that Ashford University has satisfactorily addressed the report's conclusions and has come into compliance with the WASC Standards of Accreditation. A site visit by WASC took place in April 2013, and we anticipate the WASC commission's consideration of the institution's reapplication at its June 2013 meeting.
Notification from HLC regarding placement of Ashford University on Notice. On July 12, 2012, Ashford University received a letter from HLC stating that (1) Ashford University had been placed on special monitoring because of the decision by WASC to deny the institution initial accreditation and also because of certain other non-financial data provided by the institution that indicated a need for further commission review, and (2) the institution would be required to provide a report to HLC regarding its fulfillment of the commission's Criteria for Accreditation and Core Components, including the Minimum Expectations. Submission of the report was followed by an advisory visit.
On February 27, 2013, Ashford University received a letter from HLC stating that on February 21, 2013 the university was placed on Notice due to (1) its current non-compliance with HLC's jurisdictional policy, a policy that became effective on July 1, 2012 and requires a “substantial presence,” as defined by commission policy, in HLC's 19-state north central region, and (2) concerns regarding its future ability to remain in compliance with certain accreditation criteria, particularly the revised criteria that became effective on January 1, 2013. Specifically, HLC noted that its action in placing the university on Notice was related in part to the alignment of the university's mission with its instructional model, governance of the university independent from its corporate parent, sufficiency of faculty, assessment of student learning and use of data to improve graduation and retention rates, and shared governance structures involving faculty and administration.
Ashford University remains accredited. Notice is a commission sanction indicating that an institution is pursuing a course of action that, if continued, could lead it to be out of compliance with one or more criteria for accreditation. HLC determined that Ashford University is not currently in compliance with HLC's substantial presence policy and set forth procedures and a timeline for evaluating the university's implementation of its previously reviewed plan with respect to substantial presence in the event Ashford University does not gain accreditation from WASC.
On or before July 19, 2013, Ashford University must provide a monitoring report to HLC stating whether the university has gained accreditation from WASC. On April 22, 2013 HLC rescheduled the date by which such monitoring report must be provided from July 10, 2013 to July 19, 2013. If the university has not been accredited by WASC by July 19, 2013, the university will also be required to host a focused evaluation no later than October 1, 2013, to evaluate, among other things, whether the university has completed specific steps, following its implementation plan, to establish presence in HLC's region as required pursuant to HLC's jurisdictional requirements. Ashford University will be required to host a focused evaluation on or before December 15, 2013 to examine retention, graduation and the university's progress in resolving the identified issues. This evaluation will take place whether or not the university gains WASC accreditation if HLC remains the gatekeeper for Ashford University's Title IV funds or if the university has not voluntarily resigned its HLC accreditation. In its letter, HLC stated that its Board of Trustees will consider information provided in the monitoring report and in the October 2013 focused evaluation, if it is required, and the December 2013 focused evaluation at its meeting in February 2014 and take action as appropriate. HLC may remove the university from Notice, or in the event the identified concerns, including satisfaction of HLC's jurisdictional requirements, have not been satisfactorily addressed, place the university on probation or take other action, which could include a show-cause order or withdrawal of accreditation.
HLC Notification regarding Ashford University Non-Financial Indicator Conditions. On July 13, 2012, HLC notified Ashford University that it had been identified for further inquiry based on certain non-financial data the institution provided in its 2012 Institutional Annual Report. Under HLC's Institutional Update process, all accredited and candidate institutions are required to provide certain financial and non-financial data to the commission annually; HLC then screens the non-financial data for seven indicator conditions and requests an institutional report from institutions that meet certain of these conditions. The purpose of the screening process is to identify institutions that may be at risk of not meeting certain of HLC's Criteria for Accreditation.
Ashford University was identified for further inquiry because it met three of the indicator conditions: (1) the number of degrees awarded increased 40% or more compared to the prior year; (2) the number of full-time faculty increased 25% or more compared to the prior year; and (3) the ratio of full-time faculty to the number of degree programs was less than one in the period reported. As Ashford University was already under review through the HLC special monitoring process and was required to provide a written report and host an advisory visit, as outlined in the letter received from the commission on July 12, 2012, Ashford University addressed these non-financial indicators and related Core Components in the report it submitted on September 3, 2012 as part of the special monitoring process.
HLC Notification regarding University of the Rockies Non-Financial Indicator Conditions. On July 24, 2012, HLC notified University of the Rockies that it had been identified for further inquiry based on certain non-financial data the institution provided in its 2012 Institutional Annual Report. University of the Rockies was identified for further inquiry because it met two of the indicator conditions: (1) the number of degrees awarded increased 40% or more compared to the prior year; and (2) the number of full-time faculty increased 25% or more compared to the prior year. Accordingly, HLC requested that University of the Rockies provide a report to the commission demonstrating the institution's ability to continue meeting the Core Components in light of the conditions at the institution that led to the indicators being identified. This report was provided on August 29, 2012. The HLC staff will review the report, may request additional information if necessary, and will determine whether the report requires further review by a panel; if so, the panel will review the report and recommend whether the commission should accept the report, require further monitoring through a subsequent report or focused visit, or recommend action such as placing the institution on sanction.
Notification from U.S. Department of Education regarding on-site program review of University of the Rockies. On July 25, 2012, University of the Rockies received a letter from the Department stating that it scheduled an on-site program review. This review occurred from August 20, 2012 through August 24, 2012. The review was to assess the institution's administration of Title IV programs and initially will cover the 2010-2011 and 2011-2012 award years, but may be expanded if deemed appropriate by the Department.
Request for information from Ashford University by Iowa College Student Aid Commission. On September 22, 2012, the Iowa College Student Aid Commission requested that Ashford University provide the commission with certain information and documentation related to, among other matters, the denial of Ashford University's application for WASC accreditation, the university's compliance with HLC criteria and policies, a teach-out plan in the event that Ashford University is unsuccessful in obtaining WASC accreditation and is sanctioned by HLC, and information relating to admissions employees, receipt of financial aid, availability of books, credit balance authorizations, and academic and financial support and advisement services to students. The commission requested that Ashford University provide the requested information by November 12, 2012 and make an in-person presentation during the commission's meeting on November 16, 2012. The university made the presentation and continues to work with the commission to ensure they receive timely accreditation-related updates.
Commitments and Contingencies
Commitments and Contingencies
Commitments and Contingencies
From time to time, the Company is a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. When the Company becomes aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, the Company records a liability for the loss. 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. Below is a list of material legal proceedings to which the Company or its subsidiaries is a party.
Compliance Audit by the Department's Office of the Inspector General (“OIG”)
In January 2011, Ashford University received a final audit report from the OIG regarding the compliance audit commenced in May 2008 and covering the period July 1, 2006 through June 30, 2007. The audit covered Ashford University's administration of Title IV program funds, including compliance with regulations governing institutional and student eligibility, awards and disbursements of Title IV program funds, verification of awards and returns of unearned funds during that period, and its compensation of financial aid and recruiting personnel during the period May 10, 2005 through June 30, 2009.
The final audit report contained audit findings, in each case for the period July 1, 2006 through June 30, 2007, which are applicable to award year 2006-2007. Each finding was accompanied by one or more recommendations to the Department's Office of Federal Student Aid (“FSA”). 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.
Iowa Attorney General Civil Investigation of Ashford University
In February 2011, Ashford University received from the Attorney General of the State of Iowa (“Iowa Attorney General”) a Civil Investigative Demand and Notice of Intent to Proceed (“CID”) relating to the Iowa Attorney General's investigation of whether certain of the university's business practices comply with Iowa consumer laws. Pursuant to the CID, the Iowa Attorney General has requested documents and detailed information for the time period January 1, 2008 to present. Ashford University is cooperating with the investigation and cannot predict the eventual scope, duration or outcome of the investigation at this time.
New York Attorney General Investigation of Bridgepoint Education, Inc.
In May 2011, the Company received from the Attorney General of the State of New York (“NY Attorney General”) a Subpoena relating to the NY Attorney General's investigation of whether the Company and its academic institutions have complied with certain New York state consumer protection, securities and finance laws. Pursuant to the Subpoena, the NY Attorney General has requested from the Company and its academic institutions documents and detailed information for the time period March 17, 2005 to present. The Company is cooperating with the investigation and cannot predict the eventual scope, duration or outcome of the investigation at this time.
North Carolina Attorney General Investigation of Ashford University
In September 2011, Ashford University received from the Attorney General of the State of North Carolina (“NC Attorney General”) an Investigative Demand relating to the NC Attorney General's investigation of whether the university's business practices complied with North Carolina consumer protection law. Pursuant to the Investigative Demand, the NC Attorney General has requested from Ashford University documents and detailed information for the time period January 1, 2008 to present. Ashford University is cooperating with the investigation and cannot predict the eventual scope, duration or outcome of the investigation at this time.
California Attorney General Investigation of For-Profit Educational Institutions
In January 2013, the Company received from the Attorney General of the State of California (“CA Attorney General”) an Investigative Subpoena relating to the CA Attorney General's investigation of for-profit educational institutions. Pursuant to the Investigative Subpoena, the CA Attorney General has requested documents and detailed information for the time period March 1, 2009 to present. The Company is cooperating with the investigation and cannot predict the eventual scope, duration or outcome of the investigation at this time.
Stevens v. Bridgepoint Education, Inc.
In February 2011, the Company received a copy of a complaint filed as a class action lawsuit naming the Company, Ashford University, LLC, and certain employees as defendants. The complaint was filed in the Superior Court of the State of California in San Diego and was captioned Stevens v. Bridgepoint Education, Inc. In April 2011, the Company received a copy of a complaint filed as a class action lawsuit naming the Company and Ashford University, LLC, as defendants. The complaint was filed in the Superior Court of the State of California in San Diego, and was captioned Moore v. Ashford University, LLC. In May 2011, the Company received a copy of a complaint filed as a class action lawsuit naming the Company as a defendant. The complaint was filed in the Superior Court of the State of California in San Diego on May 6, 2011, and was captioned Sanchez v. Bridgepoint Education, Inc. All three of these complaints generally alleged that the plaintiffs and similarly situated employees were improperly denied certain wage and hour protections under California law.
In October 2011, the above named cases were consolidated because they involved common questions of fact and law, with Stevens v. Bridgepoint Education, Inc. designated as the lead case. In April 2012, the Company entered into a settlement agreement with the plaintiffs of the above named cases to settle the claims on a class-wide basis. Under the terms of the settlement agreement, the Company agreed to pay an amount to settle the plaintiffs' claims, plus any related payroll taxes. The Company accrued a $10.8 million expense in connection with the settlement agreement during the three months ended March 31, 2012. On August 24, 2012, the Court granted final approval of the class action settlement and entered a final judgment in accordance with the terms of the settlement agreement. This settlement was paid out prior to December 31, 2012.
Securities Class Action
On July 13, 2012, a securities class action complaint was filed in the U.S. District Court for the Southern District of California by Donald K. Franke naming the Company, Andrew Clark, Daniel Devine and Jane McAuliffe as defendants for allegedly making false and materially misleading statements regarding the Company's business and financial results, specifically the concealment of accreditation problems at Ashford University. The complaint asserts a putative class period stemming from May 3, 2011 to July 6, 2012. A substantially similar complaint was also filed in the same court by Luke Sacharczyk on July 17, 2012 making similar allegations against the Company, Andrew Clark and Daniel Devine. The Sacharczyk complaint asserts a putative class period stemming from May 3, 2011 to July 12, 2012. Finally, on July 26, 2012, another purported securities class action complaint was filed in the same court by David Stein against the same defendants based upon the same general set of allegations and class period. The complaints allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and seek unspecified monetary relief, interest, and attorneys’ fees.
On October 22, 2012, the Sacharczyk and Stein actions were consolidated with the Franke action and the Court appointed the City of Atlanta General Employees Pension Fund and the Teamsters Local 677 Health Services & Insurance Plan as lead plaintiffs. A consolidated complaint was filed on December 21, 2012. The Company intends to vigorously defend against the consolidated action and filed a motion to dismiss on February 19, 2013, which is currently pending.
Shareholder Derivative Action
On July 24, 2012, a shareholder derivative complaint was filed in California Superior Court by Alonzo Martinez. In the complaint, the plaintiff asserts a derivative claim on the Company's behalf against certain of its current and former officers and directors. The complaint is entitled Martinez v. Clark, et al., and generally alleges that the individual defendants breached their fiduciary duties of candor, good faith and loyalty, wasted corporate assets and were unjustly enriched. The complaint seeks unspecified monetary relief and disgorgement on behalf of the Company, as well as other equitable relief and attorneys' fees. On September 28, 2012, a substantially similar shareholder derivative complaint was filed in California Superior Court by David Adolph-Laroche. In the complaint, the plaintiff asserts a derivative claim on the Company's behalf against certain of its current and former officers and directors. The complaint is entitled Adolph-Laroche v. Clark, et al, and generally alleges that the individual defendants breached their fiduciary duties of candor, good faith and loyalty, wasted corporate assets and were unjustly enriched.
On October 11, 2012, the Adolph-Laroche action was consolidated with the Clark action and the case is now entitled In re Bridgepoint, Inc. Shareholder Derivative Action. A consolidated complaint was filed on December 18, 2012. 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, however the Court scheduled a further status conference for September 6, 2013.
Guzman v. Bridgepoint Education, Inc.
In January 2011, Betty Guzman filed a class action lawsuit against the Company, Ashford University and University of the Rockies in the U.S. District Court for the Southern District of California. The complaint is entitled Guzman v. Bridgepoint Education, Inc., et al, and alleges that the defendants engaged in misrepresentation and other unlawful behavior in their efforts to recruit and retain students. The complaint asserts a putative class period of March 1, 2005 through the present. In March 2011, the defendants filed a motion to dismiss the complaint, which was granted by the Court with leave to amend in October 2011.
In January 2012, the plaintiff filed a first amended complaint asserting similar claims and the same class period, and the defendants filed another motion to dismiss. In May 2012, the Court granted the University of the Rockies' motion to dismiss and granted in part and denied in part the motion to dismiss filed by the Company and Ashford University. The Court also granted the plaintiff leave to file a second amended complaint. In August 2012, the plaintiff filed a second amended complaint asserting similar claims and the same class period. The second amended complaint seeks unspecified monetary relief, disgorgement of all profits, various other equitable relief, and attorneys' fees. The defendants filed a motion to strike portions of the second amended complaint, which was granted in part and denied in part. The lawsuit is proceeding to discovery.
The Company believes the lawsuit is without merit and intends to vigorously defend against it. However, because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. Based on the information available to the Company at present, it cannot reasonably estimate a range of loss for this action and accordingly has not accrued any liability associated with this action.
Qui Tam Complaints
In December 2012, the Company received notice that the U.S. Department of Justice had declined to intervene in a qui tam complaint filed in the U.S. District Court for the Southern District of California by Ryan Ferguson and Mark T. Pacheco under the Federal False Claims Act on March 10, 2011 and unsealed on December 26, 2012. The case is entitled United States of America, ex rel., Ryan Ferguson and Mark T. Pacheco v. Bridgepoint Education, Inc., Ashford University and University of the Rockies. The qui tam complaint alleges, among other things, that since March 10, 2005, the Company caused its institutions, Ashford University and University of the Rockies, to violate the Federal False Claims Act by falsely certifying to the U.S. Department of Education that the institutions were in compliance with various regulations governing the Title IV programs, including those that require compliance with federal rules regarding the payment of incentive compensation to enrollment personnel, student disclosures, and misrepresentation in connection with the institutions' participation in the Title IV programs. The complaint seeks significant damages, penalties and other relief. On April 30, 2013, the relators petitioned the Court for voluntary dismissal of the complaint without prejudice. The dismissal is currently pending court approval.
In January 2013, the Company received notice that the U.S. Department of Justice had declined to intervene in a qui tam complaint filed in the U.S. District Court for the Southern District of California by James Carter and Roger Lengyel under the Federal False Claims Act on July 2, 2010 and unsealed on January 2, 2013. The case is entitled United States of America, ex rel., James Carter and Roger Lengyel v. Bridgepoint Education, Inc., Ashford University. The qui tam complaint alleges, among other things, that since March 2005, the Company and Ashford University have violated the Federal False Claims Act by falsely certifying to the U.S. Department of Education that Ashford University was in compliance with federal rules regarding the payment of incentive compensation to enrollment personnel in connection with the institution's participation in Title IV programs. Pursuant to a stipulation between the parties, the relators filed an amended complaint on May 10, 2013 and our response to the amended complaint is due on June 24, 2013.  The amended complaint is substantially similar to the original complaint and seeks significant damages, penalties and other relief. The Company intends to vigorously defend against the allegations set forth in the amended complaint.
Employee Class Actions
On October 24, 2012, a class action complaint was filed in California Superior Court by former employee Marla Montano naming the Company and Ashford University as defendants. The case is entitled Marla Montano v. Bridgepoint Education and Ashford University. The complaint asserts a putative class consisting of former employees who were terminated in January 2012 and July 2012 as a result of a mass layoff, relocation or termination and alleges that the defendants failed to comply with the notice and payment provisions of the California WARN Act. A substantially similar complaint, entitled Dilts v. Bridgepoint Education and Ashford University, was also filed in the same court on the same day by Austin Dilts making similar allegations and asserting the same putative class. The complaints seek back pay, the cost of benefits, penalties and interest on behalf of the putative class members, as well as other equitable relief and attorneys' fees.
The Company and Ashford University intend to vigorously defend against these actions. On January 25, 2013, the Company filed motions to compel binding arbitration with the Court, which are currently pending.
Stock Repurchase Program
Stock Repurchase Program
Stock Repurchase Program
On April 30, 2012, the Company's board of directors authorized the repurchase of up to $75.0 million of the Company's outstanding shares of common stock over the following 12 months. The repurchase program was authorized by the Company's board of directors with the intention of creating additional value for stockholders. Under the repurchase program, the Company is authorized to purchase shares from time to time in the open market, through block trades or otherwise. No shares were repurchased under this program.
Subsequent Events
Subsequent Events
Subsequent Events
Qui Tam Complaint - On April 30, 2013, Ryan Ferguson and Mark T. Pacheco filed a petition with the U.S. District Court for the Southern District of California for voluntary dismissal without prejudice of the qui tam complaint they filed with the Court under the Federal False Claims Act. The dismissal is currently pending court approval. For further discussion of the qui tam complaint, see Note 12, “Commitments and Contingencies.”
Summary of Significant Accounting Policies (Policies)
Principles of Consolidation
The condensed consolidated financial statements include the accounts of Bridgepoint Education, Inc. and its wholly-owned subsidiaries. Intercompany transactions have been eliminated in consolidation.
Unaudited Interim Financial Information
The condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012, which was filed with the Securities and Exchange Commission (“SEC”) on March 12, 2013. In the opinion of management, these financial statements include all adjustments (consisting of normal recurring adjustments) considered necessary to present a fair statement of the Company's condensed consolidated financial position, results of operations and cash flows as of and for the periods presented.
Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. The year-end condensed consolidated balance sheet data were derived from audited financial statements, but do not include all disclosures required by GAAP for complete annual financial statements.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements. Actual results could differ from those estimates.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable consists of student accounts receivable, which represent amounts due for tuition, technology fees and other fees from currently enrolled and former students. Students generally fund their education through grants and/or loans under various Title IV programs, tuition assistance from military and corporate employers or personal funds.
Accounts receivable are stated at the amount management expects to collect from outstanding balances. For accounts receivable, an allowance for doubtful accounts is estimated by management based on (i) an assessment of individual accounts receivable over a specific aging and amount (and all other balances on a pooled basis based on historical collection experience), (ii) consideration of the nature of the receivable accounts and (iii) potential changes in the business or economic environment. The provision for bad debts is recorded within the instructional costs and services line in the condensed consolidated statements of income.
Student Loans Receivable and Loan Loss Reserves
Student loans receivable consist of loans to qualified students and have a repayment period of 10 years from the date of graduation or withdrawal from the Company's institutions. The interest rate charged on student loans is a fixed rate of either 4.5% or 0.0% depending upon the repayment plan selected. If the student selects the rate of 0.0%, the student must pay $50 per month on the loan while enrolled in school and during the six month grace period (after graduation or withdrawal) before the repayment period begins. On the 0.0% student loans, the Company imputes interest using the rate that would be used in a market transaction with similar terms. Interest income on student loans is recognized using the effective interest method and is recorded within other income in the condensed consolidated statements of income. Revenue recognized related to students loans was immaterial during for the three months ended March 31, 2013 and March 31, 2012, respectively.
Student loans receivable are stated at the amount management expects to collect from outstanding balances. For tuition related student loan receivables, the Company estimates an allowance for doubtful accounts, similar to that of accounts receivable, based on (i) an assessment of individual loans receivable over a specific aging and amount (and all other balances on a pooled basis based on historical collection experience), (ii) consideration of the nature of the receivable accounts, (iii) potential changes in the business or economic environment and (iv) related FICO scores and other industry metrics. The related provision for bad debts is recorded within the instructional costs and services line in the condensed consolidated statements of income.
For non-tuition related student loans, the Company utilizes an impairment methodology. Under this methodology, management determines whether a loan would be impaired if it is probable that the Company will be unable to collect all amounts due in accordance with the contractual terms of the individual loan agreement. This assessment is based on an analysis of several factors including aging history and delinquency trending, the risk characteristics and loan performance of the specific loans, as well as current economic conditions and industry trends. For impaired loans, the Company would establish a specific loan loss reserve for the difference between the recorded investment in the loan and the present value of the expected future cash flows. As of March 31, 2013, there are no amounts recorded for the loan loss reserve. The loan loss reserve is maintained at a level deemed adequate by management based on a periodic analysis of the individual loans.
Recently Adopted Accounting Pronouncements
In July 2012, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2012-02, which amends Accounting Standards Codification Topic 350, Testing Indefinite-Lived Intangible Assets for Impairment. The amended standard reduces the cost and complexity of testing indefinite-lived intangible assets, other than goodwill, for impairment by allowing companies to perform a qualitative assessment to determine whether further impairment testing is necessary, similar in approach to the goodwill impairment test. The guidance provided in ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The Company adopted ASU 2012-02, effective January 1, 2013, and such adoption did not have a material effect on our condensed consolidated financial statements.
In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, or AOCI, which amends Accounting Standards Codification Topic 220, Comprehensive Income. Under ASU 2013-02, an entity is required to provide information about the amounts reclassified out of AOCI by component in a single note or on the face of the financial statements. The guidance provided in ASU 2013-02 is effective for interim and annual reporting periods beginning after December 15, 2012. The Company adopted ASU 2013-02, effective January 1, 2013, and such adoption did not have a material effect on our condensed consolidated financial statements.
Summary of Significant Accounting Policies (Tables)
Schedule of Quantifying Prior Year Misstatements Corrected in Current Year Financial Statements [Table Text Block]
The table below presents the impact of this revision on the Company's consolidated balance sheet data as of December 31, 2012, the consolidated statement of income data and consolidated cash flow data for the year ended December 31, 2012, as well as the impact on the quarterly periods during the year ended December 31, 2012. There was no impact to the cash flows from operating activities in any of the periods presented due to the revision. The following table is presented in thousands, except per share data:

As Reported
 
As Revised
 
As Reported
 
As Revised
 
As Reported
 
As Revised
 
As Reported
 
As Revised
 
March 31, 2012
 
June 30, 2012
 
September 30, 2012
 
December 31, 2012
Consolidated balance sheet data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accounts receivable, net
$
92,853

 
$
91,129

 
$
99,617

 
$
91,139

 
$
111,010

 
$
99,919

 
$
75,177

 
$
67,927

Deferred income taxes
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
$
8,228

 
$
10,936

Total current assets
$
442,893

 
$
441,169

 
$
468,242

 
$
459,764

 
$
463,606

 
$
452,515

 
$
496,147

 
$
491,605

Total assets
$
684,171

 
$
682,447

 
$
731,597

 
$
723,119

 
$
747,190

 
$
736,099

 
$
755,329

 
$
750,787

Accrued liabilities
$
67,409

 
$
66,755

 
$
57,858

 
$
54,650

 
$
56,609

 
$
52,313

 
N/A

 
N/A

Total current liabilities
$
261,229

 
$
260,575

 
$
251,220

 
$
248,012

 
$
236,121

 
$
231,925

 
N/A

 
N/A

Total liabilities
$
289,950

 
$
289,296

 
$
282,541

 
$
279,333

 
$
269,761

 
$
265,565

 
N/A

 
N/A

Retained earnings
$
384,218

 
$
383,148

 
$
431,676

 
$
426,406

 
$
463,121

 
$
456,226

 
$
479,140

 
$
474,598

Total stockholders’ equity
$
394,221

 
$
393,151

 
$
449,056

 
$
443,786

 
$
477,429

 
$
470,534

 
$
496,112

 
$
491,570

Total liabilities and stockholders’ equity
$
684,171

 
$
682,447

 
$
731,597

 
$
723,119

 
$
747,190

 
$
736,099

 
$
755,329

 
$
750,787

 
Three Months Ended
 
March 31, 2012
 
June 30, 2012
 
September 30, 2012
 
December 31, 2012
Consolidated statement of income data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Instructional costs and services (1)
$
82,500

 
$
84,224

 
$
78,525

 
$
85,279

 
$
88,373

 
$
90,986

 
$
105,875

 
$
102,034

Total costs and expenses
$
198,084

 
$
199,808

 
$
180,766

 
$
187,520

 
$
202,354

 
$
204,967

 
$
184,253

 
$
180,412

Operating income
$
52,353

 
$
50,629

 
$
75,536

 
$
68,782

 
$
49,722

 
$
47,109

 
$
25,103

 
$
28,944

Income before income taxes
$
53,036

 
$
51,312

 
$
76,390

 
$
69,636

 
$
50,677

 
$
48,064

 
$
25,980

 
$
29,822

Income tax expense
$
19,995

 
$
19,341

 
$
28,932

 
$
26,378

 
$
19,232

 
$
18,244

 
$
9,962

 
$
11,450

Net income
$
33,041

 
$
31,971

 
$
47,458

 
$
43,258

 
$
31,445

 
$
29,820

 
$
16,019

 
$
18,372

Earnings per share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Basic
$
0.64

 
$
0.61

 
$
0.90

 
$
0.82

 
$
0.59

 
$
0.56

 
$
0.30

 
$
0.34

   Diluted
$
0.59

 
$
0.57

 
$
0.84

 
$
0.77

 
$
0.56

 
$
0.53

 
$
0.29

 
$
0.33

 
Year to Date Period Ended
 
March 31, 2012
 
June 30, 2012
 
September 30, 2012
 
December 31, 2012
Consolidated statement of income data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Instructional costs and services (1)
$
82,500

 
$
84,224

 
$
161,025

 
$
169,503

 
$
249,398

 
$
260,489

 
$
355,273

 
$
362,523

Total costs and expenses
$
198,084

 
$
199,808

 
$
378,850

 
$
387,328

 
$
581,204

 
$
592,295

 
$
765,457

 
$
772,707

Operating income
$
52,353

 
$
50,629

 
$
127,889

 
$
119,411

 
$
177,611

 
$
166,520

 
$
202,714

 
$
195,464

Income before income taxes
$
53,036

 
$
51,312

 
$
129,426

 
$
120,948

 
$
180,103

 
$
169,012

 
$
206,084

 
$
198,834

Income tax expense
$
19,995

 
$
19,341

 
$
48,927

 
$
45,719

 
$
68,159

 
$
63,963

 
$
78,121

 
$
75,413

Net income
$
33,041

 
$
31,971

 
$
80,499

 
$
75,229

 
$
111,944

 
$
105,049

 
$
127,963

 
$
123,421

Earnings per share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Basic
$
0.64

 
$
0.61

 
$
1.54

 
$
1.44

 
$
2.13

 
$
2.00

 
$
2.42

 
$
2.33

   Diluted
$
0.59

 
$
0.57

 
$
1.43

 
$
1.34

 
$
2.00

 
$
1.87

 
$
2.29

 
$
2.21

Consolidated statement of cash flow data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
$
33,041

 
$
31,971

 
$
80,499

 
$
75,229

 
$
111,944

 
$
105,049

 
$
127,963

 
$
123,421

Provision for bad debts
$
14,945

 
$
16,669

 
$
24,923

 
$
33,401

 
$
41,327

 
$
52,418

 
$
66,446

 
$
73,696

Deferred income taxes
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
$
(7,264
)
 
$
(9,972
)
Accounts payable and accrued liabilities
$
27,505

 
$
26,851

 
$
21,700

 
$
18,492

 
$
23,559

 
$
19,363

 
N/A

 
N/A

Reclassification (Tables)
Reclassification
The following table depicts the Company's operating expenses as previously reported as well as currently reclassified on its condensed consolidated statements of income for each of the three months periods noted below (in thousands):
 
March 31, 2012
 
June 30, 2012
 
September 30, 2012
 
December 31, 2012
Instructional costs and services (as reported)
$
68,475

 
$
65,395

 
$
75,699

 
$
105,875

   Impact of reclassification
14,025

 
13,130

 
12,674

 

Instructional costs and services (as reclassified)
82,500

 
78,525

 
88,373

 
105,875

   Impact of bad debt revision
1,724

 
6,754

 
2,613

 
(3,841
)
Instructional costs and services (as reclassified and revised)
84,224

 
85,279

 
90,986

 
102,034

 
 
 
 
 
 
 
 
Admissions advisory and marketing (as reported)
80,063

 
78,608

 
90,291

 
65,239

   Impact of reclassification
9,979

 
8,586

 
6,443

 

Admissions advisory and marketing (as reclassified)
90,042

 
87,194

 
96,734

 
65,239

 
 
 
 
 
 
 
 
General and administrative (as reported)
49,546

 
36,763

 
36,364

 
13,139

   Impact of reclassification
(24,004
)
 
(21,716
)
 
(19,117
)
 

General and administrative (as reclassified)
25,542

 
15,047

 
17,247

 
13,139

 
 
 
 
 
 
 
 
     Total costs and expenses (as reclassified and revised)
$
199,808

 
$
187,520

 
$
204,967

 
$
180,412

Earnings Per Share (Tables)
The following table sets forth the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data):
 
Three Months Ended March 31,
 
2013
 
2012
Numerator:
 
 
 
Net income
$
26,967

 
$
31,971

Denominator:
 
 
 
Weighted average number of common shares outstanding
54,129

 
52,008

Effect of dilutive options and restricted stock units
778

 
3,932

Effect of dilutive warrants
94

 
263

Diluted weighted average number of common shares outstanding
55,001

 
56,203

Earnings per share:
 
 
 
Basic earnings per share
$
0.50

 
$
0.61

Diluted earnings per share
$
0.49

 
$
0.57

For the periods indicated below, the computation of dilutive common shares outstanding excludes certain options to purchase shares of common stock because their effect was anti-dilutive.
 
Three Months Ended March 31,
(in thousands)
2013
 
2012
Options
5,478

 
81

Significant Balance Sheet Accounts (Tables)
Receivables, net, consist of the following (in thousands):
 
As of
March 31, 2013
 
As of
December 31, 2012
Accounts receivable
$
118,081

 
$
114,635

Less allowance for doubtful accounts
(48,729
)
 
(46,708
)
Accounts receivable, net
$
69,352

 
$
67,927

 
 
 
 
Student loans receivable (non-tuition related)
$
8,831

 
$
9,279

Student loans receivable (tuition related)
8,036

 
8,171

Student loans receivable
16,867

 
17,450

Less allowance for doubtful accounts
(2,343
)
 
(2,307
)
Student loans receivable, net
$
14,524

 
$
15,143

The following table presents the changes in the allowance for doubtful accounts for the periods indicated (in thousands):
 
Beginning
Balance
 
Charged to
Expense
 
Deductions(1)
 
Ending
Balance
Allowance for doubtful accounts receivable:
 
 
 
 
 
 
 
For the three months ended March 31, 2013
$
(46,708
)
 
$
18,258

 
$
16,237

 
$
(48,729
)
For the three months ended March 31, 2012
(35,627
)
 
17,080

 
12,919

 
(39,788
)
 
 
 
 
 
 
 
 
Allowance for student loans receivable (tuition related):
 
 
 
 
 
 
 
For the three months ended March 31, 2013
$
(2,307
)
 
$
36

 
$

 
$
(2,343
)
For the three months ended March 31, 2012
(2,338
)
 
(411
)
 

 
(1,927
)
(1)
Deductions represent accounts written off, net of recoveries.
Prepaid expenses and other current assets consist of the following (in thousands):
 
As of
March 31, 2013
 
As of
December 31, 2012
Prepaid expenses
$
10,454

 
$
9,367

Prepaid licenses
4,525

 
5,864

Prepaid insurance
3,389

 
1,134

Interest receivable
2,267

 
2,221

Other current assets
810

 
1,224

Total prepaid expenses and other current assets
$
21,445

 
$
19,810

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

 
$
7,091

Buildings and building improvements
25,510

 
25,430

Furniture, office equipment and software
88,663

 
85,709

Leasehold improvements
23,880

 
23,756

Vehicles
147

 
147

Total property and equipment
145,291

 
142,133

Less accumulated depreciation and amortization
(50,361
)
 
(46,167
)
Total property and equipment, net
$
94,930

 
$
95,966

Goodwill and intangibles, net, consist of the following (in thousands):
 
As of
March 31, 2013
 
As of
December 31, 2012
Goodwill and indefinite-lived intangibles
$
3,424

 
$
3,424

 
 
 
 
Definite-lived intangible assets
$
11,347

 
$
9,978

Less accumulated amortization
(3,300
)
 
(2,663
)
Definite-lived intangible assets, net
8,047

 
7,315

 
 
 
 
Total goodwill and intangibles, net
$
11,471

 
$
10,739

Accrued liabilities consist of the following (in thousands):
 
As of
March 31, 2013
 
As of
December 31, 2012
Accrued salaries and wages
$
13,096

 
$
11,585

Accrued bonus
3,573

 
1,603

Accrued vacation
9,606

 
8,993

Accrued expenses
15,040

 
15,924

Accrued income taxes payable
15,392

 
6,535

Total accrued liabilities
$
56,707

 
$
44,640

Deferred revenue and student deposits consist of the following (in thousands):
 
As of
March 31, 2013
 
As of
December 31, 2012
Deferred revenue
$
38,818

 
$
44,967

Student deposits
102,151

 
130,090

Total deferred revenue and student deposits
$
140,969

 
$
175,057

Investments (Tables)
Fair Value Information of Short and Long-term Investments
The following tables summarize the fair value information of short and long-term investments as of March 31, 2013, and December 31, 2012, respectively (in thousands):
 
As of March 31, 2013
 
Level 1
 
Level 2
 
Level 3
 
Total
Demand notes
$

 
$
547

 
$

 
$
547

Corporate notes and bonds

 
98,277

 

 
98,277

Total
$

 
$
98,824

 
$

 
$
98,824

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

 
$
415

 
$

 
$
415

Corporate notes and bonds

 
148,801

 

 
148,801

Total
$

 
$
149,216

 
$

 
$
149,216

Stock-Based Compensation (Tables)
Summary of Assumptions Used for Options Granted
The following weighted average assumptions were used to value the options granted during the three months ended March 31, 2013, pursuant to the Black-Scholes option pricing model:
Exercise price per share
$
10.23

Risk-free interest rate
1.0
%
Expected dividend yield

Expected volatility
58.9
%
Expected life (in years)
5.85

Grant date fair value per share
$
5.48

Summary of Significant Accounting Policies (Accounting Changes) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended 9 Months Ended 12 Months Ended
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Jun. 30, 2012
Sep. 30, 2012
Dec. 31, 2012
Consolidated balance sheet data:
 
 
 
 
 
 
 
 
Accounts receivable, net
 
$ 67,927 
$ 99,919 
$ 91,139 
$ 91,129 
$ 91,139 
$ 99,919 
$ 67,927 
Deferred income taxes
 
10,936 
 
 
 
 
 
10,936 
Total current assets
530,232 
491,605 
452,515 
459,764 
441,169 
459,764 
452,515 
491,605 
Total assets
763,100 
750,787 
736,099 
723,119 
682,447 
723,119 
736,099 
750,787 
Accrued liabilities
56,707 
44,640 
52,313 
54,650 
66,755 
54,650 
52,313 
44,640 
Liabilities, Current
204,577 
224,285 
231,925 
248,012 
260,575 
248,012 
231,925 
224,285 
Liabilities
240,985 
259,217 
265,565 
279,333 
289,296 
279,333 
265,565 
259,217 
Retained earnings
501,565 
474,598 
456,226 
426,406 
383,148 
426,406 
456,226 
474,598 
Total stockholders’ equity
522,115 
491,570 
470,534 
443,786 
393,151 
443,786 
470,534 
491,570 
Total liabilities and stockholders’ equity
763,100 
750,787 
736,099 
723,119 
682,447 
723,119 
736,099 
750,787 
Consolidated statement of income data:
 
 
 
 
 
 
 
 
Instructional costs and services
101,646 
102,034 1
90,986 1
85,279 1
84,224 1
169,503 1
260,489 1
362,523 1
Total costs and expenses
178,564 
180,412 
204,967 
187,520 
199,808 
387,328 
592,295 
772,707 
Operating income
43,420 
28,944 
47,109 
68,782 
50,629 
119,411 
166,520 
195,464 
Income before income taxes
 
29,822 
48,064 
69,636 
51,312 
120,948 
169,012 
198,834 
Income tax expense
17,271 
11,450 
18,244 
26,378 
19,341 
45,719 
63,963 
75,413 
Net income
26,967 
18,372 
29,820 
43,258 
31,971 
75,229 
105,049 
123,421 
Earnings per share:
 
 
 
 
 
 
 
 
Basic (in USD per share)
$ 0.50 
$ 0.34 
$ 0.56 
$ 0.82 
$ 0.61 
$ 1.44 
$ 2.00 
$ 2.33 
Diluted (in USD per share)
$ 0.49 
$ 0.33 
$ 0.53 
$ 0.77 
$ 0.57 
$ 1.34 
$ 1.87 
$ 2.21 
Consolidated statement of cash flow data:
 
 
 
 
 
 
 
 
Net income
26,967 
18,372 
29,820 
43,258 
31,971 
75,229 
105,049 
123,421 
Provision for bad debts
18,294 
73,696 
 
 
16,669 
33,401 
52,418 
 
Deferred income taxes
 
 
 
 
 
 
 
(9,972)
Accounts payable and accrued liabilities
14,119 
 
 
 
26,851 
18,492 
19,363 
 
Other liabilities
1,476 
 
 
 
3,345 
 
 
 
As Reported
 
 
 
 
 
 
 
 
Consolidated balance sheet data:
 
 
 
 
 
 
 
 
Accounts receivable, net
 
75,177 
111,010 
99,617 
92,853 
99,617 
111,010 
75,177 
Deferred income taxes
 
8,228 
 
 
 
 
 
8,228 
Total current assets
 
496,147 
463,606 
468,242 
442,893 
468,242 
463,606 
496,147 
Total assets
 
755,329 
747,190 
731,597 
684,171 
731,597 
747,190 
755,329 
Accrued liabilities
 
 
56,609 
57,858 
67,409 
57,858 
56,609 
 
Liabilities, Current
 
 
236,121 
251,220 
261,229 
251,220 
236,121 
 
Liabilities
 
 
269,761 
282,541 
289,950 
282,541 
269,761 
 
Retained earnings
 
479,140 
463,121 
431,676 
384,218 
431,676 
463,121 
479,140 
Total stockholders’ equity
 
496,112 
477,429 
449,056 
394,221 
449,056 
477,429 
496,112 
Total liabilities and stockholders’ equity
 
755,329 
747,190 
731,597 
684,171 
731,597 
747,190 
755,329 
Consolidated statement of income data:
 
 
 
 
 
 
 
 
Instructional costs and services
 
105,875 1
88,373 
78,525 
82,500 
 
 
355,273 1
Total costs and expenses
 
184,253 
202,354 
180,766 
198,084 
378,850 
581,204 
765,457 
Operating income
 
25,103 
49,722 
75,536 
52,353 
127,889 
177,611 
202,714 
Income before income taxes
 
25,980 
50,677 
76,390 
53,036 
129,426 
180,103 
206,084 
Income tax expense
 
9,962 
19,232 
28,932 
19,995 
48,927 
68,159 
78,121 
Net income
 
16,019 
31,445 
47,458 
33,041 
80,499 
111,944 
127,963 
Earnings per share:
 
 
 
 
 
 
 
 
Basic (in USD per share)
 
$ 0.30 
$ 0.59 
$ 0.90 
$ 0.64 
$ 1.54 
$ 2.13 
$ 2.42 
Diluted (in USD per share)
 
$ 0.29 
$ 0.56 
$ 0.84 
$ 0.59 
$ 1.43 
$ 2.00 
$ 2.29 
Consolidated statement of cash flow data:
 
 
 
 
 
 
 
 
Net income
 
16,019 
31,445 
47,458 
33,041 
80,499 
111,944 
127,963 
Provision for bad debts
 
66,446 
 
 
14,945 
24,923 
41,327 
 
Deferred income taxes
 
 
 
 
 
 
 
(7,264)
Accounts payable and accrued liabilities
 
 
 
 
27,505 
21,700 
23,559 
 
Restatement Adjustment |
As Reported
 
 
 
 
 
 
 
 
Consolidated statement of income data:
 
 
 
 
 
 
 
 
Instructional costs and services
 
 
88,373 1
78,525 1
82,500 1
161,025 1
249,398 1
 
Adjustment to Reflect Changes to Aging of Accounts Receivable |
Restatement Adjustment
 
 
 
 
 
 
 
 
Consolidated statement of cash flow data:
 
 
 
 
 
 
 
 
Provision for bad debts
 
$ (3,841)
$ 2,613 
$ 6,754 
$ 1,724 
 
 
$ 7,200 
Summary of Significant Accounting Policies (Receivables) (Details) (USD $)
3 Months Ended
Mar. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
Student loans receivable, repayment term following graduation or withdrawal
10 years 
Student loans receivable, grace period following graduation or withdrawal
6 months 
Repayment Plan One
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
Student loans receivable, interest rate
4.50% 
Repayment Plan Two
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
Student loans receivable, interest rate
0.00% 
Student loans receivable, monthly payment during school and grace period
$ 50 
Reclassification (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended 9 Months Ended 12 Months Ended
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Jun. 30, 2012
Sep. 30, 2012
Dec. 31, 2012
Reclassification [Line Items]
 
 
 
 
 
 
 
 
Instructional costs and services
$ 101,646 
$ 102,034 1
$ 90,986 1
$ 85,279 1
$ 84,224 1
$ 169,503 1
$ 260,489 1
$ 362,523 1
Provision for bad debts
18,294 
73,696 
 
 
16,669 
33,401 
52,418 
 
Admissions advisory and marketing
57,543 
65,239 
96,734 
87,194 
90,042 
 
 
 
General and administrative
19,375 
13,139 
17,247 
15,047 
25,542 
 
 
 
Total costs and expenses
178,564 
180,412 
204,967 
187,520 
199,808 
387,328 
592,295 
772,707 
As Originally Reported
 
 
 
 
 
 
 
 
Reclassification [Line Items]
 
 
 
 
 
 
 
 
Instructional costs and services
 
105,875 
75,699 
65,395 
68,475 
 
 
 
Admissions advisory and marketing
 
65,239 
90,291 
78,608 
80,063 
 
 
 
General and administrative
 
13,139 
36,364 
36,763 
49,546 
 
 
 
Original Restatement Adjustment
 
 
 
 
 
 
 
 
Reclassification [Line Items]
 
 
 
 
 
 
 
 
Instructional costs and services
 
12,674 
13,130 
14,025 
 
 
 
Admissions advisory and marketing
 
6,443 
8,586 
9,979 
 
 
 
General and administrative
 
(19,117)
(21,716)
(24,004)
 
 
 
As Reported
 
 
 
 
 
 
 
 
Reclassification [Line Items]
 
 
 
 
 
 
 
 
Instructional costs and services
 
105,875 1
88,373 
78,525 
82,500 
 
 
355,273 1
Provision for bad debts
 
66,446 
 
 
14,945 
24,923 
41,327 
 
Total costs and expenses
 
184,253 
202,354 
180,766 
198,084 
378,850 
581,204 
765,457 
Adjustment to Reflect Changes to Aging of Accounts Receivable |
Restatement Adjustment
 
 
 
 
 
 
 
 
Reclassification [Line Items]
 
 
 
 
 
 
 
 
Provision for bad debts
 
$ (3,841)
$ 2,613 
$ 6,754 
$ 1,724 
 
 
$ 7,200 
Earnings Per Share (Basic and Diluted Earnings Per Share) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended 9 Months Ended 12 Months Ended
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Jun. 30, 2012
Sep. 30, 2012
Dec. 31, 2012
Numerator:
 
 
 
 
 
 
 
 
Net income
$ 26,967 
$ 18,372 
$ 29,820 
$ 43,258 
$ 31,971 
$ 75,229 
$ 105,049 
$ 123,421 
Denominator:
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding (in shares)
54,129 
 
 
 
52,008 
 
 
 
Effect of dilutive options and restricted stock units (in shares)
778 
 
 
 
3,932 
 
 
 
Effect of dilutive warrants (in shares)
94 
 
 
 
263 
 
 
 
Diluted weighted average number of common shares outstanding (in shares)
55,001 
 
 
 
56,203 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
Basic earnings per share (in USD per share)
$ 0.50 
$ 0.34 
$ 0.56 
$ 0.82 
$ 0.61 
$ 1.44 
$ 2.00 
$ 2.33 
Diluted earnings per share (in USD per share)
$ 0.49 
$ 0.33 
$ 0.53 
$ 0.77 
$ 0.57 
$ 1.34 
$ 1.87 
$ 2.21 
Earnings Per Share (Anti-dilutive Securities) (Details) (Stock Options)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Stock Options
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
Options
5,478 
81 
Significant Balance Sheet Accounts (Receivables, Net) (Details) (USD $)
Mar. 31, 2013
Dec. 31, 2012
Accounts Receivable, Net
 
 
Accounts receivable
$ 118,081,000 
$ 114,635,000 
Less allowance for doubtful accounts
(48,729,000)
(46,708,000)
Accounts receivable, net
69,352,000 
67,927,000 
Student Loans Receivable, Net
 
 
Student loans receivable
16,867,000 
17,450,000 
Less allowance for doubtful accounts
(2,343,000)
(2,307,000)
Student loans receivable, net
14,524,000 
15,143,000 
Current student loans receivable included within accounts receivable
900,000 
600,000 
Student Loans Receivable (Non-tuition Related)
 
 
Student Loans Receivable, Net
 
 
Student loans receivable
8,831,000 
9,279,000 
Student Loans Receivable (Tuition Related)
 
 
Student Loans Receivable, Net
 
 
Student loans receivable
$ 8,036,000 
$ 8,171,000 
Significant Balance Sheet Accounts (Allowance for Doubtful Accounts) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Allowance for Doubtful Accounts Receivable
 
 
Changes in allowance for doubtful accounts
 
 
Beginning Balance
$ (46,708)
$ (35,627)
Charged to Expense
18,258 
17,080 
Deductions
16,237 1
12,919 1
Ending Balance
(48,729)
(39,788)
Allowance for Doubtful Student Loans Receivable (Tuition Related)
 
 
Changes in allowance for doubtful accounts
 
 
Beginning Balance
(2,307)
(2,338)
Charged to Expense
36 
(411)
Deductions
1
1
Ending Balance
$ (2,343)
$ (1,927)
Significant Balance Sheet Accounts (Prepaid Expenses and Other Current Assets) (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Prepaid Expense and Other Assets, Current [Abstract]
 
 
Prepaid expenses
$ 10,454 
$ 9,367 
Prepaid licenses
4,525 
5,864 
Prepaid insurance
3,389 
1,134 
Interest receivable
2,267 
2,221 
Other current assets
810 
1,224 
Total prepaid expenses and other current assets
$ 21,445 
$ 19,810 
Significant Balance Sheet Accounts (Property and Equipment, Net) (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
$ 145,291 
$ 142,133 
Less accumulated depreciation and amortization
(50,361)
(46,167)
Total property and equipment, net
94,930 
95,966 
Land
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
7,091 
7,091 
Buildings and Building Improvements
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
25,510 
25,430 
Furniture, Office Equipment and Software
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
88,663 
85,709 
Leasehold Improvements
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
23,880 
23,756 
Vehicles
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
$ 147 
$ 147 
Significant Balance Sheet Accounts (Goodwill and Intangibles, Net) (Details) (USD $)
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Dec. 31, 2012
Goodwill and Intangibles, Net [Abstract]
 
 
 
Goodwill and indefinite-lived intangibles
$ 3,424,000 
 
$ 3,424,000 
Definite-lived intangible assets
11,347,000 
 
9,978,000 
Less accumulated amortization
(3,300,000)
 
(2,663,000)
Definite-lived intangible assets, net
8,047,000 
 
7,315,000 
Total goodwill and intangibles, net
11,471,000 
 
10,739,000 
Amortization expense
600,000 
300,000 
 
Future amortization expense, 2013
2,000,000 
 
 
Future amortization expense, 2014
2,400,000 
 
 
Future amortization expense, 2015
$ 1,200,000 
 
 
Significant Balance Sheet Accounts (Accrued Liabilities) (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Accrued Liabilities, Current [Abstract]
 
 
 
 
 
Accrued salaries and wages
$ 13,096 
$ 11,585 
 
 
 
Accrued bonus
3,573 
1,603 
 
 
 
Accrued vacation
9,606 
8,993 
 
 
 
Accrued expenses
15,040 
15,924 
 
 
 
Accrued income taxes payable
15,392 
6,535 
 
 
 
Total accrued liabilities
$ 56,707 
$ 44,640 
$ 52,313 
$ 54,650 
$ 66,755 
Significant Balance Sheet Accounts (Deferred Revenue) (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Deferred Revenue [Abstract]
 
 
Deferred revenue
$ 38,818 
$ 44,967 
Student deposits
102,151 
130,090 
Total deferred revenue and student deposits
$ 140,969 
$ 175,057 
Investments (Details) (USD $)
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
$ 98,824,000 
 
$ 149,216,000 
Other investments and securities, at cost
109,500,000 
 
109,500,000 
Investments
208,300,000 
 
258,700,000 
Unrealized losses on investments, net of tax
(49,000)
634,000 
 
Unrealized gains (losses) on investments, tax effect
(30,000)
383,000 
 
Level 1
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
 
Level 2
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
98,824,000 
 
149,216,000 
Level 3
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
 
Demand Notes
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
547,000 
 
415,000 
Demand Notes |
Level 1
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
 
Demand Notes |
Level 2
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
547,000 
 
415,000 
Demand Notes |
Level 3
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
 
Corporate Notes and Bonds
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
98,277,000 
 
148,801,000 
Corporate Notes and Bonds |
Level 1
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
 
Corporate Notes and Bonds |
Level 2
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
98,277,000 
 
148,801,000 
Corporate Notes and Bonds |
Level 3
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Available-for-sale securities
$ 0 
 
$ 0 
Credit Facilities (Details) (USD $)
0 Months Ended 3 Months Ended
Apr. 13, 2012
Mar. 31, 2013
May 15, 2013
Line of Credit Facility [Line Items]
 
 
 
Revolving line of credit, amount outstanding
 
$ 0 
 
Surety Bond Facility [Abstract]
 
 
 
Surety bond facility, available amount
 
12,000,000 
 
Surety bond facility, issued amount
 
8,700,000 
 
January 2010 Credit Facility
 
 
 
Line of Credit Facility [Line Items]
 
 
 
Revolving line of credit, letters of credit outstanding
 
5,800,000 
 
April 2012 Credit Facility
 
 
 
Line of Credit Facility [Line Items]
 
 
 
Revolving line of credit, current borrowing capacity
50,000,000 
 
 
Revolving line of credit, maximum borrowing capacity
100,000,000 
 
 
Revolving line of credit, maximum swing-line advances
3,000,000 
 
 
Revolving line of credit, term
3 years 
 
 
Revolving line of credit, notice required for termination
 
5 days 
 
Commitment fee, percentage on undrawn amount of letter of credit
1.50% 
 
 
Revolving line of credit, facility fee, percentage
0.25% 
 
 
Revolving line of credit, amount outstanding
 
 
$ 0 
Base Rate |
April 2012 Credit Facility
 
 
 
Line of Credit Facility [Line Items]
 
 
 
Revolving line of credit, fixed portion of interest rate
0.50% 
 
 
Eurodollar-based Rate |
April 2012 Credit Facility
 
 
 
Line of Credit Facility [Line Items]
 
 
 
Revolving line of credit, fixed portion of interest rate
1.50% 
 
 
Federal Funds Effective Rate |
Base Rate |
April 2012 Credit Facility
 
 
 
Line of Credit Facility [Line Items]
 
 
 
Revolving line of credit, variable portion of interest rate, addition to reference rate
1.00% 
 
 
Daily Adjusting LIBOR |
Base Rate |
April 2012 Credit Facility
 
 
 
Line of Credit Facility [Line Items]
 
 
 
Revolving line of credit, variable portion of interest rate, addition to reference rate
1.00% 
 
 
Stock-Based Compensation (Details) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Stock-based compensation expense
$ 3.6 
$ 2.5 
Income tax benefit of stock-based compensation expense
1.4 
0.9 
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
 
 
Exercise price per share
$ 10.23 
 
Grant date fair value per share
$ 5.48 
 
Stock Options
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Stock options granted
500,000 
 
Stock options exercised
9,662 
 
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
 
 
Risk-free interest rate
1.00% 
 
Expected dividend yield
0.00% 
 
Expected volatility
58.90% 
 
Expected life (in years)
5 years 10 months 6 days 
 
Unrecognized compensation cost related to unvested options and RSUs
$ 23.8 
 
Restricted Stock Units (RSUs)
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
RSUs granted during period
900,000 
 
RSUs granted during period, grant date fair value
$ 10.23 
 
RSUs vested during period
 
Warrants (Details) (USD $)
Mar. 31, 2013
Warrants and Rights Note Disclosure [Abstract]
 
Warrant exercise price, low
$ 1.125 
Warrant exercise price, high
$ 9.000 
Warrant purchase rights
Warrants outstanding
100,000 
Income Taxes (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Dec. 31, 2012
Income Tax Disclosure [Abstract]
 
 
Estimated annual effective tax rate
38.30% 
 
Effective income tax rate
39.00% 
 
Gross unrecognized tax benefits
$ 9.9 
$ 9.3 
Gross unrecognized tax benefits that would impact effective tax rate if recognized
7.0 
6.6 
Accrued interest and penalties related to uncertain tax positions
$ 1.8 
$ 1.7 
Regulatory (Details)
3 Months Ended 12 Months Ended
Mar. 31, 2013
condition
state
Mar. 31, 2013
Ashford University
condition
Dec. 31, 2012
University of the Rockies
condition
Regulatory [Line Items]
 
 
 
Number of states in north central region governed by Higher Learning Commission
19 
 
 
Number of indicator conditions monitored by Higher Learning Commission
 
 
Number of indicator conditions met
 
Indicator condition, maximum increase in number of degrees awarded compared to prior year, percentage
40.00% 
 
 
Indicator condition, maximum increase in number of full-time faculty compared to prior year, percentage
25.00% 
 
 
Indicator condition, minimum ratio of full-time faculty to number of degree programs
 
 
Commitments and Contingencies (Details) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2012
Commitments and Contingencies Disclosure [Abstract]
 
Loss contingency, settlement agreement, consideration
$ 10.8 
Stock Repurchase Program (Details) (USD $)
0 Months Ended
Apr. 30, 2012
Equity, Class of Treasury Stock [Line Items]
 
Stock repurchase program, period in force
12 months 
Repurchase of Equity
 
Equity, Class of Treasury Stock [Line Items]
 
Stock repurchase program, authorized amount
$ 75,000,000.0