BRIDGEPOINT EDUCATION INC, 10-Q filed on 8/6/2013
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 30, 2013
Aug. 2, 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
Jun. 30, 2013 
 
Document Fiscal Year Focus
2013 
 
Document Fiscal Period Focus
Q2 
 
Amendment Flag
false 
 
Entity Common Stock, Shares Outstanding
 
54,188,088 
Condensed Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2013
Dec. 31, 2012
Current assets:
 
 
Cash and cash equivalents
$ 363,121 
$ 255,965 
Investments
86,810 
136,967 
Accounts receivable, net
60,502 
67,927 
Deferred income taxes
11,020 
10,936 
Prepaid expenses and other current assets
20,294 
19,810 
Total current assets
541,747 
491,605 
Property and equipment, net
94,719 
95,966 
Investments
86,283 
121,738 
Student loans receivable, net
12,722 
15,143 
Goodwill and intangibles, net
11,686 
10,739 
Deferred income taxes
13,306 
13,266 
Other long-term assets
1,529 
2,330 
Total assets
761,992 
750,787 
Current liabilities:
 
 
Accounts payable
7,361 
4,588 
Accrued liabilities
45,089 
44,640 
Deferred revenue and student deposits
135,865 
175,057 
Total current liabilities
188,315 
224,285 
Rent liability
26,183 
25,173 
Other long-term liabilities
10,724 
9,759 
Total liabilities
225,222 
259,217 
Commitments and contingencies (see Note 12)
   
   
Preferred stock, $0.01 par value:
 
 
20,000 shares authorized; zero shares issued and outstanding at both June 30, 2013, and December 31, 2012
Common stock, $0.01 par value:
 
 
300,000 shares authorized; 61,485 issued and 54,178 outstanding at June 30, 2013; 61,406 issued and 54,099 outstanding at December 31, 2012
615 
614 
Additional paid-in capital
159,776 
151,709 
Retained earnings
511,933 
474,598 
Accumulated other comprehensive income
19 
222 
Treasury stock, 7,307 shares at cost at both June 30, 2013, and December 31, 2012
(135,573)
(135,573)
Total stockholders' equity
536,770 
491,570 
Total liabilities and stockholders' equity
$ 761,992 
$ 750,787 
Condensed Consolidated Balance Sheets Parenthetical (USD $)
Jun. 30, 2013
Dec. 31, 2012
Stockholders' equity:
 
 
Preferred stock, par value
$ 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
$ 0.01 
$ 0.01 
Common stock, shares authorized
300,000,000 
300,000,000 
Common stock, shares issued
61,485,000 
61,406,000 
Common stock, shares outstanding
54,178,000 
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 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Revenue
$ 197,574 
$ 256,302 
$ 419,558 
$ 506,739 
Costs and expenses:
 
 
 
 
Instructional costs and services
106,045 
85,279 1
207,691 
169,503 1
Admissions advisory and marketing
57,582 
87,194 
115,125 
177,236 
General and administrative
17,919 
15,047 
37,294 
40,589 
Total costs and expenses
181,546 
187,520 
360,110 
387,328 
Operating income
16,028 
68,782 
59,448 
119,411 
Other income, net
1,031 
854 
1,849 
1,537 
Income before income taxes
17,059 
69,636 
61,297 
120,948 
Income tax expense
6,691 
26,378 
23,962 
45,719 
Net income
$ 10,368 
$ 43,258 
$ 37,335 
$ 75,229 
Earnings per share:
 
 
 
 
Basic
$ 0.19 
$ 0.82 
$ 0.69 
$ 1.44 
Diluted
$ 0.19 
$ 0.77 
$ 0.67 
$ 1.34 
Weighted average number of common shares outstanding used in computing earnings per share:
 
 
 
 
Basic
54,136 
52,531 
54,132 
52,269 
Diluted
55,634 
56,233 
55,488 
56,203 
Condensed Consolidated Statements of Comprehensive Income (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Net income
$ 10,368 
$ 43,258 
$ 37,335 
$ 75,229 
Other comprehensive income (loss), net of tax:
 
 
 
 
Unrealized gains (losses) on investments
(154)
(203)
638 
Comprehensive income
$ 10,214 
$ 43,262 
$ 37,132 
$ 75,867 
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
7,443 
 
7,443 
 
 
 
Exercise of stock options, shares
 
17,000 
 
 
 
 
Exercise of stock options
183 
183 
 
 
 
Excess tax benefit of option exercises, net of tax shortfall
(162)
 
(162)
 
 
 
Stock issued under employee stock purchase plan, shares
 
62,000 
 
 
 
 
Stock issued under employee stock purchase plan
604 
603 
 
 
 
Net income
37,335 
 
 
37,335 
 
 
Unrealized losses on investments, net of tax
(203)
 
 
 
(203)
 
Balance at Jun. 30, 2013
$ 536,770 
$ 615 
$ 159,776 
$ 511,933 
$ 19 
$ (135,573)
Balance, shares at Jun. 30, 2013
 
61,485,000 
 
 
 
 
Condensed Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Cash flows from operating activities
 
 
Net income
$ 37,335 
$ 75,229 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Provision for bad debts
36,865 
33,401 
Depreciation and amortization
10,338 
8,384 
Amortization of premium/discount
3,100 
3,594 
Deferred income taxes
(2)
Stock-based compensation
7,443 
6,541 
Excess tax benefit of option exercises
(5,625)
Loss on impairment of student loans receivable
292 
Changes in operating assets and liabilities:
 
 
Accounts receivable
(28,744)
(62,501)
Prepaid expenses and other current assets
(96)
(5,084)
Student loans receivable
(5,626)
Other long-term assets
801 
2,071 
Accounts payable and accrued liabilities
2,153 
18,492 
Deferred revenue and student deposits
(39,192)
1,987 
Other liabilities
1,975 
5,945 
Net cash provided by operating activities
32,273 
76,806 
Cash flows from investing activities
 
 
Capital expenditures
(6,778)
(14,957)
Purchases of investments
(26,689)
(108,354)
Restricted cash
(25)
Capitalized curriculum development costs
(2,353)
(2,935)
Sales and maturities of investments
109,916 
88,189 
Net cash provided by (used in) investing activities
74,096 
(38,032)
Cash flows from financing activities
 
 
Proceeds from exercise of stock options
183 
1,396 
Excess tax benefit of option exercises
5,625 
Proceeds from the issuance of stock under employee stock purchase plan
604 
707 
Proceeds from the exercise of warrants
Net cash provided by financing activities
787 
7,730 
Net increase in cash and cash equivalents
107,156 
46,504 
Cash and cash equivalents at beginning of period
255,965 
133,921 
Cash and cash equivalents at end of period
363,121 
180,425 
Supplemental disclosure of non-cash transactions:
 
 
Purchase of equipment included in accounts payable and accrued liabilities
$ 1,416 
$ 1,036 
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 Iowa and Colorado, respectively.
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Principles of Consolidation
The condensed consolidated financial statements include the accounts of Bridgepoint Education, Inc. and its wholly-owned subsidiaries. Intercompany transactions have been eliminated in consolidation.
Unaudited Interim Financial Information
The condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012, which was filed with the Securities and Exchange Commission (“SEC”) on March 12, 2013, and amended on May 17, 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
During the first quarter of 2013, the Company identified a $7.2 million 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 and determined to revise its previously issued financial statements to reflect the impact of this correction. Prior periods are revised 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 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 months of grace period (after graduation or withdrawal) before the repayment period begins. On the 0.0% student loans, the Company imputes interest using the rate that would be used in a market transaction with similar terms. Interest income on student loans is recognized using the effective interest method and is recorded within other income in the condensed consolidated statements of income. Revenue recognized related to students loans was immaterial during each of the three and six months ended June 30, 2013 and June 30, 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. Based on these factors, the Company considers loans to be impaired when they reach a delinquency status that requires specialized collection efforts. The Company records a loss reserve for the full book value of the impaired loans. For both the three and six months ended June 30, 2013, there was $0.3 million recorded for loan loss reserves. The loan loss reserve is maintained at a level deemed adequate by management based on a periodic analysis of the individual loans and is recorded within the instructional costs and services line in the condensed consolidated statements of income.
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 month 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 and six months ended June 30, 2013 and June 30, 2012, consisted of incremental shares of common stock issuable upon the exercise of options 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 June 30,
 
Six Months Ended June 30,
 
2013
 
2012
 
2013
 
2012
Numerator:
 
 
 
 
 
 
 
Net income
$
10,368

 
$
43,258

 
$
37,335

 
$
75,229

Denominator:
 
 
 
 
 
 
 
Weighted average number of common shares outstanding
54,136

 
52,531

 
54,132

 
52,269

Effect of dilutive options and restricted stock units
1,402

 
3,447

 
1,261

 
3,674

Effect of dilutive warrants
96

 
255

 
95

 
260

Diluted weighted average number of common shares outstanding
55,634

 
56,233

 
55,488

 
56,203

Earnings per share:
 
 
 
 
 
 
 
Basic earnings per share
$
0.19

 
$
0.82

 
$
0.69

 
$
1.44

Diluted earnings per share
$
0.19

 
$
0.77

 
$
0.67

 
$
1.34


For the periods indicated below, the computation of dilutive common shares outstanding excludes certain options and restricted stock units to purchase shares of common stock because their effect was anti-dilutive.
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(in thousands)
2013
 
2012
 
2013
 
2012
Options
3,850

 
1,795

 
3,649

 
1,093

Restricted stock units
22

 

 
11

 

Significant Balance Sheet Accounts
Significant Balance Sheet Accounts
Significant Balance Sheet Accounts
Receivables, Net
Receivables, net, consist of the following (in thousands):
 
As of
June 30, 2013
 
As of
December 31, 2012
Accounts receivable
$
113,945

 
$
114,635

Less allowance for doubtful accounts
(53,443
)
 
(46,708
)
Accounts receivable, net
$
60,502

 
$
67,927

 
 
 
 
Student loans receivable (non-tuition related)
$
8,671

 
$
9,279

Student loans receivable (tuition related)
5,748

 
8,171

Student loans receivable
14,419

 
17,450

Less allowance for doubtful accounts
(1,697
)
 
(2,307
)
Student loans receivable, net
$
12,722

 
$
15,143


As of June 30, 2013 and December 31, 2012, there was $1.6 million and $0.6 million, respectively, of current net student loans receivable included within net 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 six months ended June 30, 2013
$
(46,708
)
 
$
37,336

 
$
30,601

 
$
(53,443
)
For the six months ended June 30, 2012
(35,627
)
 
33,518

 
28,396

 
(40,749
)
 
 
 
 
 
 
 
 
Allowance for student loans receivable (tuition related):
 
 
 
 
 
 
 
For the six months ended June 30, 2013
$
(2,307
)
 
$
(471
)
 
$
139

 
$
(1,697
)
For the six months ended June 30, 2012
(2,338
)
 
(117
)
 

 
(2,221
)
(1)
Deductions represent accounts written off, net of recoveries.
For the non-tuition related student loans receivable, the Company monitors the credit quality using credit scores, aging history and delinquency trending. The loan reserve methodology is reviewed on a quarterly basis. Delinquency is the main factor of determining if a loan is impaired. If a loan were determined to be impaired, interest would no longer accrue. For both the three and six months ended June 30, 2013, there was $0.3 million loans that were impaired, and as of June 30, 2013, an immaterial amount of loans had been placed on non-accrual status.
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following (in thousands):
 
As of
June 30, 2013
 
As of
December 31, 2012
Prepaid expenses
$
9,322

 
$
9,367

Prepaid licenses
4,193

 
5,864

Prepaid income taxes
3,252

 

Prepaid insurance
1,802

 
1,134

Interest receivable
1,112

 
2,221

Other current assets
613

 
1,224

Total prepaid expenses and other current assets
$
20,294

 
$
19,810


Property and Equipment, Net
Property and equipment, net, consist of the following (in thousands):
 
As of
June 30, 2013
 
As of
December 31, 2012
Land
$
7,091

 
$
7,091

Buildings and building improvements
26,653

 
25,430

Furniture, office equipment and software
91,550

 
85,709

Leasehold improvements
24,376

 
23,756

Vehicles
147

 
147

Total property and equipment
149,817

 
142,133

Less accumulated depreciation and amortization
(55,098
)
 
(46,167
)
Total property and equipment, net
$
94,719

 
$
95,966


Goodwill and Intangibles, Net
Goodwill and intangibles, net, consist of the following (in thousands):
 
As of
June 30, 2013
 
As of
December 31, 2012
Goodwill and indefinite-lived intangibles
$
3,424

 
$
3,424

 
 
 
 
Definite-lived intangible assets
$
12,330

 
$
9,978

Less accumulated amortization
(4,068
)
 
(2,663
)
Definite-lived intangible assets, net
8,262

 
7,315

 
 
 
 
Total goodwill and intangibles, net
$
11,686

 
$
10,739


For the three months ended June 30, 2013 and June 30, 2012, amortization expense was $0.8 million and $0.3 million, respectively. For the six months ended June 30, 2013 and June 30, 2012, amortization expense was $1.4 million and $0.6 million, respectively. The Company estimates that the remaining amortization expense for those intangibles which have been placed into service as of June 30, 2013, will be approximately $1.7 million, $3.0 million, $1.9 million and $0.2 million over the remaining fiscal years ending December 31, 2013, December 31, 2014, December 31, 2015 and December 31, 2016, respectively.
Accrued Liabilities
Accrued liabilities consist of the following (in thousands):
 
As of
June 30, 2013
 
As of
December 31, 2012
Accrued salaries and wages
$
17,197

 
$
11,585

Accrued bonus
3,295

 
1,603

Accrued vacation
9,722

 
8,993

Accrued expenses
14,875

 
15,924

Accrued income taxes payable

 
6,535

Total accrued liabilities
$
45,089

 
$
44,640


Included in the accrued salaries and wages as of June 30, 2013, is $5.1 million of severance costs for wages and benefits. There was a reduction in force announced during the second quarter of 2013 for which the Company recognized $5.9 million of severance cost during the three months ended June 30, 2013. The reduction in force was necessary in order to better align personnel resources with the impact of previously announced institutional initiatives regarding enrollments. The total severance amount was charged as $4.8 million to instructional costs and services, $0.3 million to admissions advisory and marketing expenses, and $0.8 million to general and administrative expenses. These costs are expected to be fully paid by the end of the third quarter of 2013 from existing cash on hand. The Company does not expect any additional material severance costs during the remainder of 2013 and there were no other related contract termination costs.
Deferred Revenue and Student Deposits
Deferred revenue and student deposits consist of the following (in thousands):
 
As of
June 30, 2013
 
As of
December 31, 2012
Deferred revenue
$
36,478

 
$
44,967

Student deposits
99,387

 
130,090

Total deferred revenue and student deposits
$
135,865

 
$
175,057

Investments
Investments
Investments
The following tables summarize the fair value information of short and long-term investments as of June 30, 2013, and December 31, 2012, respectively (in thousands):
 
As of June 30, 2013
 
Level 1
 
Level 2
 
Level 3
 
Total
Demand notes
$

 
$
583

 
$

 
$
583

Corporate notes and bonds

 
73,021

 

 
73,021

Total
$

 
$
73,604

 
$

 
$
73,604

 
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 $99.5 million at June 30, 2013, and $109.5 million as of December 31, 2012. The balances of total combined short-term and long-term investments was $173.1 million and $258.7 million, as of June 30, 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 June 30, 2013 and 2012, the Company recorded a net unrealized loss of $154,000, and a net unrealized gain of $4,000, respectively, in other comprehensive income which were net of tax benefit of $93,000 and $5,000, respectively. For the six months ended June 30, 2013 and 2012, the Company recorded a net unrealized loss of $203,000, and a net unrealized gain of $638,000, respectively, in other comprehensive income which were net of tax benefit of $124,000 and tax expense of $378,000, 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 specific terms and conditions. The Facility has a term of three years and matures on April 13, 2015. Interest and fees accruing under the Facility are payable quarterly in arrears and principal is payable at maturity. The Company may terminate the Facility upon five days notice, without premium or penalty, other than customary breakage fees.
For any advance under the Facility, interest will accrue at either the “Base Rate” or the “Eurodollar-based Rate,” at the Company's option. The Base Rate means, for any day, 0.5% plus the greatest of: (1) the prime rate for such day, (2) the Federal Funds Effective Rate in effect on such day, plus 1.0%, and (3) the daily adjusting LIBOR rate, plus 1.0%. The Eurodollar-based Rate means, for any day, 1.5% plus the quotient of (1) the LIBOR Rate, divided by (2) a percentage equal to 100% minus the maximum rate on such date at which Comerica is required to maintain reserves on “Eurocurrency Liabilities” as defined in Regulation D of the Board of Governors of the Federal Reserve System. For any advance under the swing line, interest will accrue at either the Base Rate or, if made available to the Company by the swing line lender, at the lender's option, a different rate quoted by such lender. For any letter of credit issued on the Company's behalf under the Facility, the Company is required to pay a fee of 1.50% of the undrawn amount of such letter of credit plus a letter of credit facing fee. The Company is also required to pay a facility fee of 0.25% of the aggregate commitment then in effect under the Facility, whether used or unused.
The Facility Loan Documents contain other customary affirmative, negative and financial maintenance covenants, representations and warranties, events of default, and remedies upon an event of default, including the acceleration of debt and the right to foreclose on the collateral securing the Facility. The Company was in compliance with all financial covenants in the Facility Loan Documents as of June 30, 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 June 30, 2013, and up to the date of filing, the Company had no borrowings outstanding under the Facility. As of June 30, 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 June 30, 2013, the total available surety bond facility was $12.0 million and the Company had issued surety bonds totaling $8.8 million.
Stock-Based Compensation
Stock-Based Compensation
Stock-Based Compensation
The Company recorded $3.8 million and $4.0 million of stock-based compensation expense for the three months ended June 30, 2013 and 2012, respectively, and $7.4 million and $6.5 million of stock-based compensation expense for the six months ended June 30, 2013 and 2012, respectively. The related income tax benefit was $1.4 million and $1.5 million for the three months ended June 30, 2013 and 2012, respectively, and $2.8 million and $2.4 million for the six months ended June 30, 2013 and 2012, respectively.
There were 0.1 million restricted stock units (“RSUs”) granted during the three months ended June 30, 2013 at a grant date fair value of $12.81. No RSUs vested during the three months ended June 30, 2013.
The Company did not grant any options to purchase shares of common stock during the three months ended June 30, 2013. During the three months ended June 30, 2013, options to purchase 7,794 shares of common stock were exercised.
As of June 30, 2013, there was unrecognized compensation cost of $19.8 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 June 30, 2013, warrants to purchase 0.1 million shares of common stock remain outstanding. The Company has not issued any warrants since 2005. During the six months ended June 30, 2013, there were no warrants to purchase shares of common stock exercised. All outstanding warrants are currently exercisable and expire in the fourth quarter of 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 six months ended June 30, 2013, was 38.6%. The Company's effective income tax rate was 39.1% for the six months ended June 30, 2013. The effective rate for the six months ended June 30, 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 June 30, 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, respectively, would impact the effective income tax rate if recognized.
The Company is subject to U.S. federal income tax and multiple state tax jurisdictions. The 2002 through 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 June 30, 2013, and December 31, 2012, was $1.9 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.
WASC Grant of Initial Accreditation to Ashford University. On July 10, 2013, the WASC Senior College and University Commission (“WASC”) granted Initial Accreditation to Ashford University for five years, until July 15, 2018. This WASC action permits Ashford University to designate WASC as its accreditor of record, subject to (i) the Department's prior approval, (ii) the university's voluntary withdrawal from HLC, (iii) receipt of acknowledgment by HLC, and (iv) release of HLC's relevant records to WASC. WASC found that the university has responded to its previously expressed concerns, judged that Ashford University is in substantial compliance with WASC standards and established a process for monitoring progress in implementing recommendations in several areas related to growth, infrastructure, student retention and student outcomes. As part of the monitoring process, the university will host WASC in a Special Visit in spring 2015. The university intends to transition from HLC to WASC and name WASC as its accreditor of record, subject to approval by the Department.
HLC Accreditation of Ashford University. Ashford University remains accredited by HLC and on Notice. Notice is an HLC 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. 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.
On July 18, 2013 Ashford University provided a monitoring report to HLC stating that it had been granted Initial Accreditation by WASC for five years and that the university intends to name WASC as its accreditor of record, subject to approval by the Department. However, if the Department does not recognize the change of accreditor or if the Department has not yet recognized the change of accreditor, the university will be required to host HLC in a focused evaluation on or before December 15, 2013 to examine retention, graduation and the university's progress in resolving the identified issues. Unless the university withdraws from HLC prior to such date, the HLC Board of Trustees will consider information provided in the July 2013 monitoring report and the December 2013 focused evaluation at its meeting in February 2014 and take action as appropriate. At its February 2014 meeting HLC may determine to 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. 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.
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 covers the 2010-2011 and 2011-2012 award years, but may be expanded if deemed appropriate by the Department.
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. In October 2012, the HLC Special Advisory Visit Team Report stated that the team analyzed the non-financial indicators. The report did not request further information, and the University has had no further communication with HLC regarding the non-financial indicators.
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. HLC notified the University by letter dated June 13, 2013 that HLC had reviewed the report, that HLC accepts the explanatory report on the non-financial indicators, and that no further action is needed at this time.
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.
Department of Education Negotiated Rulemaking. The Department held negotiated rulemaking public hearings in May and June 2013 and has indicated that this activity is part of a series of rulemaking efforts to achieve a long-term agenda in higher education focused on access, affordability, academic quality and completion. Recent hearings have focused on topics including, but not limited to, cash management of Title IV program funds, state authorization for programs offering distance or correspondence education, gainful employment, credit and clock hour conversions, changes made to the Clery Act by the Violence Against Women Act of 2013 (P.L. 113-4), and the definition of “adverse credit” for PLUS borrowers. In June 2013, the Department announced its intention to establish a negotiated rulemaking committee to prepare proposed regulations that would establish standards for programs that prepare students for gainful employment in a recognized occupation. The Department's Notice sought nominees for the two sessions that will occur on September 9-11, 2013 and October 21-23, 2013. This rulemaking process is expected to produce new regulations, which, if published in final form after November 1, 2013 and on or before November 1, 2014, would typically take effect in July 2015. The Notice stated that the Department plans to establish committees to address the other rulemaking issues in the coming months. Compliance with additional regulations, and/or regulatory scrutiny that results in the Company being allegedly out of compliance with these regulations, could result in direct and indirect costs of compliance, fines, liabilities, sanctions or lawsuits, which could have a material adverse effect on enrollments, revenues, financial condition, cash flows and results of operations.
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. On June 24, 2013, representatives from Bridgepoint and Ashford University met with Attorney General Tom Miller and other representatives from the Iowa Attorney General's office to discuss the status of the investigation and a potential resolution involving injunctive relief and a monetary payment. Ashford University is cooperating with the investigation and cannot predict the eventual scope, duration or outcome of the investigation at this time. As a result, the Company cannot reasonably estimate a range of loss for this action and accordingly has not accrued any liability associated with this action.
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. On July 24, 2013, the CA Attorney General filed a petition to enforce certain categories of the Subpoena related to recorded calls and electronic marketing data. The Company believes the requests are overly broad and unduly burdensome, and is currently preparing its response to the petition. The Company cannot predict the eventual scope, duration or outcome of the investigation at this time. As a result, the Company cannot reasonably estimate a range of loss for this action and accordingly has not accrued any liability associated with this action.
Stevens v. Bridgepoint Education, Inc.
In February 2011, the Company received a copy of a complaint filed as a class action lawsuit naming the Company, Ashford University, LLC, and certain employees as defendants. The complaint was filed in the Superior Court of the State of California in San Diego and was captioned Stevens v. Bridgepoint Education, Inc. 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. On March 14, 2013, the Company filed a motion to deny class certification for students enrolled on or after May 2007 when Ashford University adopted a binding arbitration policy. The motion is currently pending with the Court.
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 U.S. Department of Justice filed a notice stipulating to the dismissal and the Court granted the dismissal on June 12, 2013.
In January 2013, the Company received notice that the U.S. Department of Justice had declined to intervene in a qui tam complaint filed in the U.S. District Court for the Southern District of California by James Carter and Roger Lengyel under the Federal False Claims Act on July 2, 2010 and unsealed on January 2, 2013. The case is entitled United States of America, ex rel., James Carter and Roger Lengyel v. Bridgepoint Education, Inc., Ashford University. The qui tam complaint alleges, among other things, that since March 2005, the Company and Ashford University have violated the Federal False Claims Act by falsely certifying to the U.S. Department of Education that Ashford University was in compliance with federal rules regarding the payment of incentive compensation to enrollment personnel in connection with the institution's participation in Title IV programs. Pursuant to a stipulation between the parties, the relators filed an amended complaint on May 10, 2013. The amended complaint is substantially similar to the original complaint and seeks significant damages, penalties and other relief. The Company intends to vigorously defend against the allegations set forth in the amended complaint and filed a motion to dismiss on June 24, 2013, which is currently pending.
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 were granted on May 20, 2013. The parties are in the process of selecting an arbitrator.
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 was authorized to purchase shares from time to time in the open market, through block trades or otherwise. No shares were repurchased under this program and the program expired on April 30, 2013.
Subsequent Events
Subsequent Events
Subsequent Events
On July 10, 2013, WASC granted Initial Accreditation to Ashford University for five years, until July 15, 2018. For additional information, see also Note 11, “Regulatory.”
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, and amended on May 17, 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 months of grace period (after graduation or withdrawal) before the repayment period begins. On the 0.0% student loans, the Company imputes interest using the rate that would be used in a market transaction with similar terms. Interest income on student loans is recognized using the effective interest method and is recorded within other income in the condensed consolidated statements of income. Revenue recognized related to students loans was immaterial during each of the three and six months ended June 30, 2013 and June 30, 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. Based on these factors, the Company considers loans to be impaired when they reach a delinquency status that requires specialized collection efforts. The Company records a loss reserve for the full book value of the impaired loans. For both the three and six months ended June 30, 2013, there was $0.3 million recorded for loan loss reserves. The loan loss reserve is maintained at a level deemed adequate by management based on a periodic analysis of the individual loans
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 month 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 June 30,
 
Six Months Ended June 30,
 
2013
 
2012
 
2013
 
2012
Numerator:
 
 
 
 
 
 
 
Net income
$
10,368

 
$
43,258

 
$
37,335

 
$
75,229

Denominator:
 
 
 
 
 
 
 
Weighted average number of common shares outstanding
54,136

 
52,531

 
54,132

 
52,269

Effect of dilutive options and restricted stock units
1,402

 
3,447

 
1,261

 
3,674

Effect of dilutive warrants
96

 
255

 
95

 
260

Diluted weighted average number of common shares outstanding
55,634

 
56,233

 
55,488

 
56,203

Earnings per share:
 
 
 
 
 
 
 
Basic earnings per share
$
0.19

 
$
0.82

 
$
0.69

 
$
1.44

Diluted earnings per share
$
0.19

 
$
0.77

 
$
0.67

 
$
1.34

For the periods indicated below, the computation of dilutive common shares outstanding excludes certain options and restricted stock units to purchase shares of common stock because their effect was anti-dilutive.
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(in thousands)
2013
 
2012
 
2013
 
2012
Options
3,850

 
1,795

 
3,649

 
1,093

Restricted stock units
22

 

 
11

 

Significant Balance Sheet Accounts (Tables)
Receivables, net, consist of the following (in thousands):
 
As of
June 30, 2013
 
As of
December 31, 2012
Accounts receivable
$
113,945

 
$
114,635

Less allowance for doubtful accounts
(53,443
)
 
(46,708
)
Accounts receivable, net
$
60,502

 
$
67,927

 
 
 
 
Student loans receivable (non-tuition related)
$
8,671

 
$
9,279

Student loans receivable (tuition related)
5,748

 
8,171

Student loans receivable
14,419

 
17,450

Less allowance for doubtful accounts
(1,697
)
 
(2,307
)
Student loans receivable, net
$
12,722

 
$
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 six months ended June 30, 2013
$
(46,708
)
 
$
37,336

 
$
30,601

 
$
(53,443
)
For the six months ended June 30, 2012
(35,627
)
 
33,518

 
28,396

 
(40,749
)
 
 
 
 
 
 
 
 
Allowance for student loans receivable (tuition related):
 
 
 
 
 
 
 
For the six months ended June 30, 2013
$
(2,307
)
 
$
(471
)
 
$
139

 
$
(1,697
)
For the six months ended June 30, 2012
(2,338
)
 
(117
)
 

 
(2,221
)
(1)
Deductions represent accounts written off, net of recoveries.
Prepaid expenses and other current assets consist of the following (in thousands):
 
As of
June 30, 2013
 
As of
December 31, 2012
Prepaid expenses
$
9,322

 
$
9,367

Prepaid licenses
4,193

 
5,864

Prepaid income taxes
3,252

 

Prepaid insurance
1,802

 
1,134

Interest receivable
1,112

 
2,221

Other current assets
613

 
1,224

Total prepaid expenses and other current assets
$
20,294

 
$
19,810

Property and equipment, net, consist of the following (in thousands):
 
As of
June 30, 2013
 
As of
December 31, 2012
Land
$
7,091

 
$
7,091

Buildings and building improvements
26,653

 
25,430

Furniture, office equipment and software
91,550

 
85,709

Leasehold improvements
24,376

 
23,756

Vehicles
147

 
147

Total property and equipment
149,817

 
142,133

Less accumulated depreciation and amortization
(55,098
)
 
(46,167
)
Total property and equipment, net
$
94,719

 
$
95,966

Goodwill and intangibles, net, consist of the following (in thousands):
 
As of
June 30, 2013
 
As of
December 31, 2012
Goodwill and indefinite-lived intangibles
$
3,424

 
$
3,424

 
 
 
 
Definite-lived intangible assets
$
12,330

 
$
9,978

Less accumulated amortization
(4,068
)
 
(2,663
)
Definite-lived intangible assets, net
8,262

 
7,315

 
 
 
 
Total goodwill and intangibles, net
$
11,686

 
$
10,739

Accrued liabilities consist of the following (in thousands):
 
As of
June 30, 2013
 
As of
December 31, 2012
Accrued salaries and wages
$
17,197

 
$
11,585

Accrued bonus
3,295

 
1,603

Accrued vacation
9,722

 
8,993

Accrued expenses
14,875

 
15,924

Accrued income taxes payable

 
6,535

Total accrued liabilities
$
45,089

 
$
44,640

Deferred revenue and student deposits consist of the following (in thousands):
 
As of
June 30, 2013
 
As of
December 31, 2012
Deferred revenue
$
36,478

 
$
44,967

Student deposits
99,387

 
130,090

Total deferred revenue and student deposits
$
135,865

 
$
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 June 30, 2013, and December 31, 2012, respectively (in thousands):
 
As of June 30, 2013
 
Level 1
 
Level 2
 
Level 3
 
Total
Demand notes
$

 
$
583

 
$

 
$
583

Corporate notes and bonds

 
73,021

 

 
73,021

Total
$

 
$
73,604

 
$

 
$
73,604

 
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

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
Jun. 30, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Jun. 30, 2013
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
541,747 
491,605 
452,515 
459,764 
441,169 
541,747 
459,764 
452,515 
491,605 
Total assets
761,992 
750,787 
736,099 
723,119 
682,447 
761,992 
723,119 
736,099 
750,787 
Accrued liabilities
45,089 
44,640 
52,313 
54,650 
66,755 
45,089 
54,650 
52,313 
44,640 
Liabilities, Current
188,315 
224,285 
231,925 
248,012 
260,575 
188,315 
248,012 
231,925 
224,285 
Liabilities
225,222 
259,217 
265,565 
279,333 
289,296 
225,222 
279,333 
265,565 
259,217 
Retained earnings
511,933 
474,598 
456,226 
426,406 
383,148 
511,933 
426,406 
456,226 
474,598 
Total stockholders’ equity
536,770 
491,570 
470,534 
443,786 
393,151 
536,770 
443,786 
470,534 
491,570 
Total liabilities and stockholders’ equity
761,992 
750,787 
736,099 
723,119 
682,447 
761,992 
723,119 
736,099 
750,787 
Consolidated statement of income data:
 
 
 
 
 
 
 
 
 
Instructional costs and services
106,045 
102,034 1
90,986 1
85,279 1
84,224 1
207,691 
169,503 1
260,489 1
362,523 1
Total costs and expenses
181,546 
180,412 
204,967 
187,520 
199,808 
360,110 
387,328 
592,295 
772,707 
Operating income
16,028 
28,944 
47,109 
68,782 
50,629 
59,448 
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
6,691 
11,450 
18,244 
26,378 
19,341 
23,962 
45,719 
63,963 
75,413 
Net income
10,368 
18,372 
29,820 
43,258 
31,971 
37,335 
75,229 
105,049 
123,421 
Earnings per share:
 
 
 
 
 
 
 
 
 
Basic
$ 0.19 
$ 0.34 
$ 0.56 
$ 0.82 
$ 0.61 
$ 0.69 
$ 1.44 
$ 2.00 
$ 2.33 
Diluted
$ 0.19 
$ 0.33 
$ 0.53 
$ 0.77 
$ 0.57 
$ 0.67 
$ 1.34 
$ 1.87 
$ 2.21 
Consolidated statement of cash flow data:
 
 
 
 
 
 
 
 
 
Net income
10,368 
18,372 
29,820 
43,258 
31,971 
37,335 
75,229 
105,049 
123,421 
Provision for bad debts
 
 
 
16,669 
 
36,865 
33,401 
52,418 
73,696 
Deferred income taxes
 
 
 
 
 
(2)
 
(9,972)
Accounts payable and accrued liabilities
 
 
 
26,851 
 
2,153 
18,492 
19,363 
 
Other liabilities
 
 
 
 
 
1,975 
5,945 
 
 
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
 
$ 0.30 
$ 0.59 
$ 0.90 
$ 0.64 
 
$ 1.54 
$ 2.13 
$ 2.42 
Diluted
 
$ 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
 
 
 
14,945 
 
 
24,923 
41,327 
66,446 
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 6 Months Ended
Jun. 30, 2013
Jun. 30, 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 
Amounts recorded for loan loss reserves
$ 300,000 
$ 300,000 
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
Jun. 30, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Jun. 30, 2013
Jun. 30, 2012
Sep. 30, 2012
Dec. 31, 2012
Reclassification [Line Items]
 
 
 
 
 
 
 
 
 
Instructional costs and services
$ 106,045 
$ 102,034 1
$ 90,986 1
$ 85,279 1
$ 84,224 1
$ 207,691 
$ 169,503 1
$ 260,489 1
$ 362,523 1
Provision for bad debts
 
 
 
16,669 
 
36,865 
33,401 
52,418 
73,696 
Admissions advisory and marketing
57,582 
65,239 
96,734 
87,194 
90,042 
115,125 
177,236 
 
 
General and administrative
17,919 
13,139 
17,247 
15,047 
25,542 
37,294 
40,589 
 
 
Total costs and expenses
181,546 
180,412 
204,967 
187,520 
199,808 
360,110 
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
 
 
 
14,945 
 
 
24,923 
41,327 
66,446 
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
Jun. 30, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Jun. 30, 2013
Jun. 30, 2012
Sep. 30, 2012
Dec. 31, 2012
Numerator:
 
 
 
 
 
 
 
 
 
Net income
$ 10,368 
$ 18,372 
$ 29,820 
$ 43,258 
$ 31,971 
$ 37,335 
$ 75,229 
$ 105,049 
$ 123,421 
Denominator:
 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding
54,136 
 
 
52,531 
 
54,132 
52,269 
 
 
Effect of dilutive options and restricted stock units
1,402 
 
 
3,447 
 
1,261 
3,674 
 
 
Effect of dilutive warrants
96 
 
 
255 
 
95 
260 
 
 
Diluted weighted average number of common shares outstanding
55,634 
 
 
56,233 
 
55,488 
56,203 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
 
Basic earnings per share
$ 0.19 
$ 0.34 
$ 0.56 
$ 0.82 
$ 0.61 
$ 0.69 
$ 1.44 
$ 2.00 
$ 2.33 
Diluted earnings per share
$ 0.19 
$ 0.33 
$ 0.53 
$ 0.77 
$ 0.57 
$ 0.67 
$ 1.34 
$ 1.87 
$ 2.21 
Earnings Per Share (Anti-dilutive Securities) (Details)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Options
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Antidilutive securities excluded from computation of dilutive common shares outstanding
3,850 
1,795 
3,649 
1,093 
Restricted stock units
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Antidilutive securities excluded from computation of dilutive common shares outstanding
22 
11 
Significant Balance Sheet Accounts (Receivables, Net) (Details) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2013
Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
 
Amounts recorded for loan loss reserves
$ 300,000 
$ 300,000 
 
Accounts Receivable, Net
 
 
 
Accounts receivable
113,945,000 
113,945,000 
114,635,000 
Less allowance for doubtful accounts
(53,443,000)
(53,443,000)
(46,708,000)
Accounts receivable, net
60,502,000 
60,502,000 
67,927,000 
Student Loans Receivable, Net
 
 
 
Student loans receivable
14,419,000 
14,419,000 
17,450,000 
Less allowance for doubtful accounts
(1,697,000)
(1,697,000)
(2,307,000)
Student loans receivable, net
12,722,000 
12,722,000 
15,143,000 
Current student loans receivable included within accounts receivable
1,600,000 
1,600,000 
600,000 
Student Loans Receivable (Non-tuition Related)
 
 
 
Student Loans Receivable, Net
 
 
 
Student loans receivable
8,671,000 
8,671,000 
9,279,000 
Student Loans Receivable (Tuition Related)
 
 
 
Student Loans Receivable, Net
 
 
 
Student loans receivable
$ 5,748,000 
$ 5,748,000 
$ 8,171,000 
Significant Balance Sheet Accounts (Allowance for Doubtful Accounts) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2013
Jun. 30, 2013
Allowance for Doubtful Accounts Receivable
Jun. 30, 2012
Allowance for Doubtful Accounts Receivable
Jun. 30, 2013
Allowance for Doubtful Student Loans Receivable (Tuition Related)
Jun. 30, 2012
Allowance for Doubtful Student Loans Receivable (Tuition Related)
Valuation and Qualifying Accounts Disclosure [Line Items]
 
 
 
 
 
 
Amounts recorded for loan loss reserves
$ 300 
$ 300 
 
 
 
 
Changes in allowance for doubtful accounts
 
 
 
 
 
 
Beginning Balance
 
 
(46,708)
(35,627)
(2,307)
(2,338)
Charged to Expense
 
 
37,336 
33,518 
(471)
(117)
Deductions
 
 
30,601 1
28,396 1
139 1
1
Ending Balance
 
 
$ (53,443)
$ (40,749)
$ (1,697)
$ (2,221)
Significant Balance Sheet Accounts (Prepaid Expenses and Other Current Assets) (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2013
Dec. 31, 2012
Prepaid Expense and Other Assets, Current [Abstract]
 
 
Prepaid expenses
$ 9,322 
$ 9,367 
Prepaid licenses
4,193 
5,864 
Prepaid income taxes
3,252 
Prepaid insurance
1,802 
1,134 
Interest receivable
1,112 
2,221 
Other current assets
613 
1,224 
Total prepaid expenses and other current assets
$ 20,294 
$ 19,810 
Significant Balance Sheet Accounts (Property and Equipment, Net) (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2013
Dec. 31, 2012
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
$ 149,817 
$ 142,133 
Less accumulated depreciation and amortization
(55,098)
(46,167)
Total property and equipment, net
94,719 
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
26,653 
25,430 
Furniture, Office Equipment and Software
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
91,550 
85,709 
Leasehold Improvements
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
24,376 
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 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Dec. 31, 2012
Goodwill and Intangibles, Net [Abstract]
 
 
 
 
 
Goodwill and indefinite-lived intangibles
$ 3,424,000 
 
$ 3,424,000 
 
$ 3,424,000 
Definite-lived intangible assets
12,330,000 
 
12,330,000 
 
9,978,000 
Less accumulated amortization
(4,068,000)
 
(4,068,000)
 
(2,663,000)
Definite-lived intangible assets, net
8,262,000 
 
8,262,000 
 
7,315,000 
Total goodwill and intangibles, net
11,686,000 
 
11,686,000 
 
10,739,000 
Amortization expense
800,000 
300,000 
1,400,000 
600,000 
 
Future amortization expense, 2013
1,700,000 
 
1,700,000 
 
 
Future amortization expense, 2014
3,000,000 
 
3,000,000 
 
 
Future amortization expense, 2015
1,900,000 
 
1,900,000 
 
 
Future amortization expense, 2016
$ 200,000 
 
$ 200,000 
 
 
Significant Balance Sheet Accounts (Accrued Liabilities) (Details) (USD $)
3 Months Ended
Jun. 30, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Accrued liabilites [Line Items]
 
 
 
 
 
Accrued Employee Benefits
$ 5,100,000 
 
 
 
 
Accrued Salaries, Current
17,197,000 
11,585,000 
 
 
 
Severance Costs
5,900,000 
 
 
 
 
Accrued Bonuses, Current
3,295,000 
1,603,000 
 
 
 
Accrued Vacation, Current
9,722,000 
8,993,000 
 
 
 
Other Accrued Liabilities, Current
14,875,000 
15,924,000 
 
 
 
Accrued Income Taxes, Current
6,535,000 
 
 
 
Accrued liabilities
45,089,000 
44,640,000 
52,313,000 
54,650,000 
66,755,000 
Instructional costs and services [Member]
 
 
 
 
 
Accrued liabilites [Line Items]
 
 
 
 
 
Severance Costs
4,800,000 
 
 
 
 
Admissions advisory and marketing [Member]
 
 
 
 
 
Accrued liabilites [Line Items]
 
 
 
 
 
Severance Costs
300,000 
 
 
 
 
General and Administrative [Member]
 
 
 
 
 
Accrued liabilites [Line Items]
 
 
 
 
 
Severance Costs
$ 800,000 
 
 
 
 
Significant Balance Sheet Accounts (Deferred Revenue) (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2013
Dec. 31, 2012
Deferred Revenue [Abstract]
 
 
Deferred revenue
$ 36,478 
$ 44,967 
Student deposits
99,387 
130,090 
Total deferred revenue and student deposits
$ 135,865 
$ 175,057 
Investments (Details) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
 
Available-for-sale securities
$ 73,604,000 
 
$ 73,604,000 
 
$ 149,216,000 
Other investments and securities, at cost
99,500,000 
 
99,500,000 
 
109,500,000 
Investments
173,100,000 
 
173,100,000 
 
258,700,000 
Unrealized gains (losses) on investments
(154,000)
4,000 
(203,000)
638,000 
 
Unrealized gains (losses) on investments, tax effect
(93,000)
(5,000)
(124,000)
378,000 
 
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
73,604,000 
 
73,604,000 
 
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
583,000 
 
583,000 
 
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
583,000 
 
583,000 
 
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
73,021,000 
 
73,021,000 
 
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
73,021,000 
 
73,021,000 
 
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 
 
$ 0 
Credit Facilities (Details) (USD $)
0 Months Ended 6 Months Ended
Apr. 13, 2012
Jun. 30, 2013
Aug. 6, 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
 
8,800,000 
 
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 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Stock-based compensation expense
$ 3.8 
$ 4.0 
$ 7.4 
$ 6.5 
Income tax benefit of stock-based compensation expense
1.4 
1.5 
2.8 
2.4 
RSU's granted during the period
100,000 
 
 
 
Options
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Stock options exercised
7,794 
 
 
 
Unrecognized compensation cost related to unvested options and RSUs
$ 19.8 
 
$ 19.8 
 
Restricted stock units
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
RSUs granted during period, grant date fair value
$ 12.81 
 
 
 
RSUs vested during period
 
 
 
Warrants (Details) (USD $)
Jun. 30, 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
Jun. 30, 2013
Dec. 31, 2012
Income Tax Disclosure [Abstract]
 
 
Estimated annual effective tax rate
38.60% 
 
Effective income tax rate
39.10% 
 
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
$ 1.9 
$ 1.7 
Regulatory (Details)
6 Months Ended 12 Months Ended 0 Months Ended
Jun. 30, 2013
condition
Jun. 30, 2013
Ashford University
condition
Dec. 31, 2012
University of the Rockies [Member]
condition
Jul. 10, 2013
Subsequent Event
Ashford University
Regulatory [Line Items]
 
 
 
 
Accreditation granted by WASC, initial term
 
 
 
5 years 
Accreditation, Regulatory Terms, Number of Indicator Conditions Monitored by Accreditation Agency
 
 
 
Accreditation, Regulatory Compliance, Number of Indicator Conditions Met
 
 
Accreditation, Regulatory Terms, Indicator Condition, Maximum Increase in Number of Degrees Awarded Compared to Prior Year, Percentage
40.00% 
 
 
 
Accreditation, Regulatory Terms, Indicator Condition, Maximum Increase in Number of Full-time Faculty Compared to Prior Year, Percentage
25.00% 
 
 
 
Accreditation, Regulatory Terms, Indicator Condition, Minimum Ratio of Full-time Faculty to Number of Degree Programs
 
 
 
Commitments and Contingencies (Details) (USD $)
In Millions, unless otherwise specified
Jun. 30, 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 
Subsequent Events (Details) (Ashford University, Subsequent Event)
0 Months Ended
Jul. 10, 2013
Ashford University |
Subsequent Event
 
Subsequent Event [Line Items]
 
Accreditation granted by WASC, initial term
5 years