(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Large accelerated filer ¨ | |||||
Non-accelerated filer ¨ | Smaller reporting company | ||||
Emerging growth company |
Page | ||||||||
Number | ||||||||
June 30, 2020 | September 30, 2019 | |||||||||||||
Assets | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Restricted cash | ||||||||||||||
Held-to-maturity investments | ||||||||||||||
Receivables, net | ||||||||||||||
Notes receivable, current portion | ||||||||||||||
Prepaid expenses | ||||||||||||||
Other current assets | ||||||||||||||
Total current assets | ||||||||||||||
Property and equipment, net | ||||||||||||||
Goodwill | ||||||||||||||
Notes receivable, less current portion | ||||||||||||||
Right-of-use assets for operating leases | — | |||||||||||||
Other assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
Liabilities and Shareholders’ Equity | ||||||||||||||
Accounts payable and accrued expenses | $ | $ | ||||||||||||
Dividends payable | ||||||||||||||
Deferred revenue | ||||||||||||||
Accrued tool sets | ||||||||||||||
Operating lease liability, current portion | — | |||||||||||||
Financing obligation, current portion | — | |||||||||||||
Other current liabilities | ||||||||||||||
Total current liabilities | ||||||||||||||
Deferred tax liabilities, net | ||||||||||||||
Deferred rent liability | — | |||||||||||||
Financing obligation | — | |||||||||||||
Operating lease liability | — | |||||||||||||
Other liabilities | ||||||||||||||
Total liabilities | ||||||||||||||
Commitments and contingencies (Note 14) | ||||||||||||||
Shareholders’ equity: | ||||||||||||||
Common stock, $ | ||||||||||||||
Preferred stock, $ | ||||||||||||||
Paid-in capital - common | ||||||||||||||
Paid-in capital - preferred | ||||||||||||||
Treasury stock, at cost, | ( | ( | ||||||||||||
Retained deficit | ( | ( | ||||||||||||
Total shareholders’ equity | ||||||||||||||
Total liabilities and shareholders’ equity | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Educational services and facilities | |||||||||||||||||||||||
Selling, general and administrative | |||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
Loss from operations | ( | ( | ( | ( | |||||||||||||||||||
Other income: | |||||||||||||||||||||||
Interest income | |||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Equity in earnings of unconsolidated affiliate | |||||||||||||||||||||||
Other income (expense), net | ( | ||||||||||||||||||||||
Total other income, net | |||||||||||||||||||||||
Loss before income taxes | ( | ( | ( | ( | |||||||||||||||||||
Income tax (expense) benefit | ( | ( | ( | ||||||||||||||||||||
Net (loss) income | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
Preferred stock dividends | |||||||||||||||||||||||
Loss available for distribution | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Earnings per share (See Note 16): | |||||||||||||||||||||||
Net loss per share - basic | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Net loss per share - diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Weighted average number of shares outstanding: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted |
Common Stock | Preferred Stock | Paid-in Capital - Common | Paid-in Capital - Preferred | Treasury Stock | Retained Deficit | Total Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of September 30, 2019 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock under employee plans | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares withheld for payroll taxes | ( | — | — | — | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2019 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock under employee plans | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares withheld for payroll taxes | ( | — | — | — | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for equity offering | — | — | — | — | ( | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2020 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock under employee plans | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2020 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ |
Common Stock | Preferred Stock | Paid-in Capital - Common | Paid-in Capital - Preferred | Treasury Stock | Retained Deficit | Total Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of September 30, 2018 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock under employee plans | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares withheld for payroll taxes | ( | — | — | — | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2018 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock under employee plans | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares withheld for payroll taxes | ( | — | — | — | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2019 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock under employee plans | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares withheld for payroll taxes | — | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2019 | ( | ( | ( |
Nine Months Ended June 30, | ||||||||||||||
2020 | 2019 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||
Net income (loss) | $ | $ | ( | |||||||||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Amortization of assets subject to financing obligation | ||||||||||||||
Amortization of right-of-use assets for operating leases | — | |||||||||||||
Bad debt expense | ||||||||||||||
Stock-based compensation | ||||||||||||||
Deferred income taxes | ||||||||||||||
Equity in earnings of unconsolidated affiliate | ( | |||||||||||||
Training equipment credits earned, net | ||||||||||||||
Other losses, net | ||||||||||||||
Changes in assets and liabilities: | ||||||||||||||
Receivables | ( | |||||||||||||
Prepaid expenses | ( | |||||||||||||
Other assets | ||||||||||||||
Notes receivable | ||||||||||||||
Accounts payable and accrued expenses | ( | |||||||||||||
Deferred revenue | ( | ( | ||||||||||||
Income tax (receivable) payable | ( | |||||||||||||
Accrued tool sets and other current liabilities | ||||||||||||||
Deferred rent liability | ( | |||||||||||||
Operating lease liability | ( | — | ||||||||||||
Other liabilities | ( | |||||||||||||
Net cash used in operating activities | ( | ( | ||||||||||||
Cash flows from investing activities: | ||||||||||||||
Purchase of held-to-maturity securities | ( | |||||||||||||
Proceeds from maturities of held-to-maturity securities | ||||||||||||||
Purchase of property and equipment | ( | ( | ||||||||||||
Proceeds from insurance policy | ||||||||||||||
Proceeds from disposal of property and equipment | ||||||||||||||
Return of capital contribution from unconsolidated affiliate | ||||||||||||||
Net cash used in investing activities | ( | ( | ||||||||||||
Cash flows from financing activities: | ||||||||||||||
Proceeds from equity offering | ||||||||||||||
Payment of preferred stock cash dividend | ( | ( | ||||||||||||
Payment of financing obligation and finance leases | ( | ( | ||||||||||||
Payment of payroll taxes on stock-based compensation through shares withheld | ( | ( | ||||||||||||
Net cash provided by (used in) financing activities | ( | |||||||||||||
Change in cash, cash equivalents and restricted cash | ( | ( | ||||||||||||
Cash and cash equivalents, beginning of period | ||||||||||||||
Restricted cash, beginning of period | ||||||||||||||
Cash, cash equivalents and restricted cash, beginning of period | ||||||||||||||
Cash and cash equivalents, end of period | ||||||||||||||
Restricted cash, end of period | ||||||||||||||
Cash, cash equivalents and restricted cash, end of period | $ | $ |
Nine Months Ended June 30, | ||||||||||||||
2020 | 2019 | |||||||||||||
Supplemental disclosure of cash flow information: | ||||||||||||||
Taxes (refunded) paid | $ | ( | $ | |||||||||||
Interest paid | ||||||||||||||
Training equipment obtained in exchange for services | ||||||||||||||
Depreciation of training equipment obtained in exchange for services | ||||||||||||||
Change in accrued capital expenditures during the period | ||||||||||||||
CARES Act funds received for student emergency grants (See Note 19) | ||||||||||||||
CARES Act funds disbursed for student emergency grants (See Note 19) | ||||||||||||||
CARES Act funds for institutional costs included in Receivables, net (See Note 19) | ||||||||||||||
June 30, 2020 | September 30, 2019 | |||||||||||||
Receivables, which includes tuition and notes receivable | $ | $ | ||||||||||||
Deferred revenue | $ | $ |
Severance | Other | Total | ||||||||||||||||||
Balance accrued at beginning of period | $ | $ | $ | |||||||||||||||||
Postemployment benefit charges | ||||||||||||||||||||
Cash paid | ( | ( | ( | |||||||||||||||||
Other non-cash adjustments (a) | ( | |||||||||||||||||||
Balance accrued at end of period | $ | $ | ( | $ |
Gross Unrealized | Estimated Fair | |||||||||||||||||||||||||
Due in less than 1 year: | Amortized Cost | Gains | Losses | Market Value | ||||||||||||||||||||||
Corporate bonds | $ | $ | $ | ( | $ | |||||||||||||||||||||
Total as of June 30, 2020 | $ | $ | $ | ( | $ |
Fair Value Measurements Using | ||||||||||||||||||||||||||
June 30, 2020 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||||||
Money market funds (a) | $ | $ | $ | $ | ||||||||||||||||||||||
Notes receivable (b) | ||||||||||||||||||||||||||
Corporate bonds (c) | ||||||||||||||||||||||||||
Total assets at fair value on a recurring basis | $ | $ | $ | $ |
Fair Value Measurements Using | ||||||||||||||||||||||||||
September 30, 2019 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||||||
Money market funds and corporate bonds (d) | $ | $ | $ | $ | ||||||||||||||||||||||
Notes receivable (b) | ||||||||||||||||||||||||||
Total assets at fair value on a recurring basis | $ | $ | $ | $ |
Depreciable Lives (in years) | June 30, 2020 | September 30, 2019 | ||||||||||||||||||
Land | — | $ | $ | |||||||||||||||||
Buildings and building improvements | ||||||||||||||||||||
Leasehold improvements | ||||||||||||||||||||
Training equipment | ||||||||||||||||||||
Office and computer equipment | ||||||||||||||||||||
Curriculum development | ||||||||||||||||||||
Software developed for internal use | ||||||||||||||||||||
Vehicles | ||||||||||||||||||||
Right-of-use assets for finance leases | Various | — | ||||||||||||||||||
Construction in progress | — | |||||||||||||||||||
Less: Accumulated depreciation and amortization | ( | ( | ||||||||||||||||||
$ | $ |
September 30, 2019 | ||||||||
Assets financed by financing obligations, gross | $ | |||||||
Less accumulated depreciation and amortization | ( | |||||||
Assets financed by financing obligations, net | $ |
June 30, 2020 | September 30, 2019 | |||||||||||||||||||||||||
Carrying Value | Ownership Percentage | Carrying Value | Ownership Percentage | |||||||||||||||||||||||
Investment in JV | $ | % | $ | % | ||||||||||||||||||||||
Nine Months Ended June 30, | ||||||||||||||
2020 | 2019 | |||||||||||||
Balance at beginning of period | $ | $ | ||||||||||||
Equity in earnings of unconsolidated affiliate | ||||||||||||||
Return of capital contribution from unconsolidated affiliate | ( | ( | ||||||||||||
Balance at end of period | $ | $ |
Lease Expense | Three Months Ended June 30, 2020 | Nine Months Ended June 30, 2020 | ||||||||||||
Operating lease expense (a) | $ | $ | ||||||||||||
Finance lease expense: | ||||||||||||||
Amortization of leased assets | ||||||||||||||
Interest on lease liabilities | ||||||||||||||
Variable lease expense | ||||||||||||||
Sublease income | ( | ( | ||||||||||||
Total net lease expense | $ | $ |
Leases | Classification | As of June 30, 2020 | ||||||||||||
Assets: | ||||||||||||||
Operating lease assets | Right-of-use assets for operating leases | $ | ||||||||||||
Finance lease assets | Property and equipment, net (a) | |||||||||||||
Total leased assets | $ | |||||||||||||
Liabilities: | ||||||||||||||
Current | ||||||||||||||
Operating lease liabilities | Operating lease liability, current portion | $ | ||||||||||||
Finance lease liabilities | Other current liabilities | |||||||||||||
Noncurrent | ||||||||||||||
Operating lease liabilities | Operating lease liability | |||||||||||||
Finance lease liabilities | Other liabilities | |||||||||||||
Total lease liabilities | $ |
Supplemental Disclosure of Cash Flow Information and Other Information | Nine Months Ended June 30, 2020 | |||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
Operating cash flows from operating leases | $ | |||||||
Operating cash flows from finance leases | ||||||||
Financing cash flows from finance leases | ||||||||
Non-cash activity related to lease liabilities: | ||||||||
Lease assets obtained in exchange for new operating lease liabilities | $ | |||||||
Leases assets obtained in exchange for new finance lease liabilities |
Lease Term and Discount Rate | As of June 30, 2020 | |||||||
Weighted-average remaining lease term (in years): | ||||||||
Operating leases | ||||||||
Finance leases | ||||||||
Weighted average discount rate: | ||||||||
Operating leases | % | |||||||
Finance leases | % |
As of June 30, 2020 | ||||||||||||||
Years ending September 30, | Operating Leases | Finance Leases | ||||||||||||
Remainder of 2020 | $ | $ | ||||||||||||
2021 | ||||||||||||||
2022 | ||||||||||||||
2023 | ||||||||||||||
2024 | ||||||||||||||
2025 and thereafter | ||||||||||||||
Total lease payments | ||||||||||||||
Less: interest | ( | ( | ||||||||||||
Present value of lease liabilities | ||||||||||||||
Less: current lease liabilities | ( | ( | ||||||||||||
Long-term lease liabilities | $ | $ |
Years ending September 30, | Gross | Sublease income | Net | |||||||||||||||||
2020 | $ | $ | ( | $ | ||||||||||||||||
2021 | ( | |||||||||||||||||||
2022 | ( | |||||||||||||||||||
2023 | ( | |||||||||||||||||||
2024 | ||||||||||||||||||||
Thereafter | ||||||||||||||||||||
Total lease payments | $ | $ | ( | $ |
June 30, 2020 | September 30, 2019 | |||||||||||||
Accounts payable | $ | $ | ||||||||||||
Accrued compensation and benefits | ||||||||||||||
Other accrued expenses | ||||||||||||||
Total accounts payable and accrued expenses | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Basic earnings per common share: | |||||||||||||||||||||||
Net (loss) income | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
Less: Preferred stock dividend declared | ( | ( | ( | ( | |||||||||||||||||||
Loss available for distribution | ( | ( | ( | ( | |||||||||||||||||||
Income allocated to participating securities | |||||||||||||||||||||||
Net loss available to common shareholders | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Weighted average basic shares outstanding | |||||||||||||||||||||||
Basic loss per common share | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Diluted earnings per common share: | |||||||||||||||||||||||
Loss available for distribution | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Weighted average basic shares outstanding | |||||||||||||||||||||||
Dilutive effect related to employee stock plans | |||||||||||||||||||||||
Dilutive effect related to preferred stock | |||||||||||||||||||||||
Weighted average diluted shares outstanding | |||||||||||||||||||||||
Diluted loss per common share | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Anti-dilutive shares excluded: | |||||||||||||||||||||||
Outstanding stock-based grants | |||||||||||||||||||||||
Convertible preferred stock | |||||||||||||||||||||||
Total anti-dilutive shares excluded |
Postsecondary Education | Other | Consolidated | |||||||||||||||
Three Months Ended June 30, 2020 | |||||||||||||||||
Revenues | $ | $ | $ | ||||||||||||||
Loss from operations | ( | ( | ( | ||||||||||||||
Depreciation and amortization (a) | |||||||||||||||||
Net loss | ( | ( | ( | ||||||||||||||
Three Months Ended June 30, 2019 | |||||||||||||||||
Revenues | |||||||||||||||||
Loss from operations | ( | ( | ( | ||||||||||||||
Depreciation and amortization (a) | |||||||||||||||||
Net (loss) income | ( | ( | |||||||||||||||
Postsecondary Education | Other | Consolidated | |||||||||||||||
Nine Months Ended June 30, 2020 | |||||||||||||||||
Revenues | |||||||||||||||||
Loss from operations | ( | ( | ( | ||||||||||||||
Depreciation and amortization (a) | |||||||||||||||||
Net income (loss) | ( | ||||||||||||||||
Nine Months Ended June 30, 2019 | |||||||||||||||||
Revenues | |||||||||||||||||
Loss from operations | ( | ( | ( | ||||||||||||||
Depreciation and amortization (a)(b) | |||||||||||||||||
Net loss | ( | ( | ( | ||||||||||||||
As of June 30, 2020 | |||||||||||||||||
Total assets | |||||||||||||||||
As of September 30, 2019 | |||||||||||||||||
Total assets |
Three Months Ended June 30, | ||||||||||||||
2020 | 2019 | |||||||||||||
Revenues | 100.0 | % | 100.0 | % | ||||||||||
Operating expenses: | ||||||||||||||
Educational services and facilities | 59.6 | % | 54.2 | % | ||||||||||
Selling, general and administrative | 65.7 | % | 46.4 | % | ||||||||||
Total operating expenses | 125.3 | % | 100.6 | % | ||||||||||
Loss from operations | (25.3) | % | (0.6) | % | ||||||||||
Interest income | 0.4 | % | 0.4 | % | ||||||||||
Interest expense | — | % | (1.0) | % | ||||||||||
Other income, net | 0.6 | % | 0.7 | % | ||||||||||
Total other income, net | 1.0 | % | 0.1 | % | ||||||||||
Loss before income taxes | (24.3) | % | (0.5) | % | ||||||||||
Income tax expense | — | % | — | % | ||||||||||
Net loss | (24.4) | % | (0.5) | % | ||||||||||
Preferred stock dividends | 2.4 | % | 1.7 | % | ||||||||||
Loss available for distribution | (26.8) | % | (2.2) | % |
Three Months Ended June 30, | ||||||||||||||
2020 | 2019 | |||||||||||||
Salaries expense | 15,728 | $ | 18,660 | |||||||||||
Employee benefits and tax | 2,586 | 4,143 | ||||||||||||
Bonus expense | 703 | 100 | ||||||||||||
Stock-based compensation | 20 | — | ||||||||||||
Compensation and related costs | 19,037 | 22,903 | ||||||||||||
Depreciation and amortization expense | 3,082 | 3,869 | ||||||||||||
Occupancy costs | 9,323 | 8,661 | ||||||||||||
Supplies and maintenance expense | 1,623 | 2,408 | ||||||||||||
Contract service expense | 523 | 725 | ||||||||||||
Student expense | 478 | 532 | ||||||||||||
Taxes and licensing expense | 647 | 904 | ||||||||||||
Other educational services and facilities expense | (2,237) | 2,834 | ||||||||||||
Total educational services and facilities expense | $ | 32,476 | $ | 42,836 |
Three Months Ended June 30, | ||||||||||||||
2020 | 2019 | |||||||||||||
Salaries expense | $ | 13,849 | $ | 14,045 | ||||||||||
Employee benefits and tax | 2,896 | 3,592 | ||||||||||||
Bonus expense | 4,074 | 2,134 | ||||||||||||
Stock-based compensation | 533 | 169 | ||||||||||||
Compensation and related costs | 21,352 | 19,940 | ||||||||||||
Advertising expense | 9,045 | 9,484 | ||||||||||||
Professional services expense | 942 | 1,194 | ||||||||||||
Contract services expense | 868 | 878 | ||||||||||||
Depreciation and amortization expense | 177 | 362 | ||||||||||||
Other selling, general and administrative expenses | 3,402 | 4,803 | ||||||||||||
Total selling, general and administrative expenses | $ | 35,786 | $ | 36,661 |
Nine Months Ended June 30, | ||||||||||||||
2020 | 2019 | |||||||||||||
Revenues | 100.0 | % | 100.0 | % | ||||||||||
Operating expenses: | ||||||||||||||
Educational services and facilities | 52.7 | % | 55.1 | % | ||||||||||
Selling, general and administrative | 51.8 | % | 50.3 | % | ||||||||||
Total operating expenses | 104.5 | % | 105.4 | % | ||||||||||
Loss from operations | (4.5) | % | (5.4) | % | ||||||||||
Interest income | 0.4 | % | 0.5 | % | ||||||||||
Interest expense | — | % | (1.0) | % | ||||||||||
Other (expense) income, net | — | % | 0.6 | % | ||||||||||
Total other income, net | 0.4 | % | 0.1 | % | ||||||||||
Loss before income taxes | (4.1) | % | (5.3) | % | ||||||||||
Income tax benefit (expense) | 4.8 | % | (0.1) | % | ||||||||||
Net income (loss) | 0.7 | % | (5.4) | % | ||||||||||
Preferred stock dividends | 1.8 | % | 1.6 | % | ||||||||||
Loss available for distribution | (1.1) | % | (7.0) | % |
Nine Months Ended June 30, | ||||||||||||||
2020 | 2019 | |||||||||||||
Salaries expense | $ | 53,582 | $ | 59,269 | ||||||||||
Employee benefits and tax | 9,014 | 12,383 | ||||||||||||
Bonus expense | 1,269 | 330 | ||||||||||||
Stock-based compensation | 38 | — | ||||||||||||
Compensation and related costs | 63,903 | 71,982 | ||||||||||||
Depreciation and amortization expense | 9,087 | 11,613 | ||||||||||||
Occupancy costs | 28,674 | 26,510 | ||||||||||||
Supplies and maintenance expense | 6,510 | 7,600 | ||||||||||||
Contract service expense | 2,123 | 2,779 | ||||||||||||
Student expense | 1,979 | 1,792 | ||||||||||||
Taxes and licensing expense | 1,952 | 2,766 | ||||||||||||
Other educational services and facilities expense | 4,033 | 9,351 | ||||||||||||
Total educational services and facilities expense | $ | 118,261 | $ | 134,393 |
Nine Months Ended June 30, | ||||||||||||||
2020 | 2019 | |||||||||||||
Salaries expense | $ | 43,203 | $ | 43,876 | ||||||||||
Employee benefits and tax | 9,147 | 10,830 | ||||||||||||
Bonus expense | 11,029 | 6,981 | ||||||||||||
Stock-based compensation | 1,522 | 1,531 | ||||||||||||
Compensation and related costs | 64,901 | 63,218 | ||||||||||||
Advertising expense | 30,062 | 31,415 | ||||||||||||
Contract services expense | 3,170 | 7,362 | ||||||||||||
Professional services expense | 2,965 | 3,839 | ||||||||||||
Depreciation and amortization expense | 744 | 1,111 | ||||||||||||
Other selling, general and administrative expenses | 14,355 | 15,740 | ||||||||||||
Total selling, general and administrative expenses | $ | 116,197 | $ | 122,685 |
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
Net (loss) income | $ | (13,268) | $ | (365) | $ | 1,558 | $ | (13,345) | ||||||||||||||||||
Interest income | (218) | (358) | (901) | (1,153) | ||||||||||||||||||||||
Interest expense | 2 | 802 | 5 | 2,424 | ||||||||||||||||||||||
Income tax expense (benefit) | 21 | 31 | (10,699) | 253 | ||||||||||||||||||||||
Depreciation and amortization (1) | 3,259 | 4,326 | 9,831 | 13,023 | ||||||||||||||||||||||
EBITDA | $ | (10,204) | $ | 4,436 | $ | (206) | $ | 1,202 |
Exhibit Number | Description | |||||||
31.1* | ||||||||
31.2* | ||||||||
32.1* | ||||||||
32.2* | ||||||||
101.INS* | XBRL Instance Document. | |||||||
101.SCH* | XBRL Taxonomy Extension Schema Document. | |||||||
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document. | |||||||
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document. |
UNIVERSAL TECHNICAL INSTITUTE, INC. | |||||||||||||||||
Date: | August 7, 2020 | By: | /s/ Jerome A. Grant | ||||||||||||||
Name: | Jerome A. Grant | ||||||||||||||||
Title: | Chief Executive Officer (Principal Executive Officer) |
/s/ Jerome A. Grant | |||||
Jerome A. Grant | |||||
Chief Executive Officer | |||||
(Principal Executive Officer) |
/s/ Troy R. Anderson | |||||
Troy R. Anderson | |||||
Executive Vice President and Chief Financial Officer | |||||
(Principal Financial Officer and Principal Accounting Officer) |
Date: | August 7, 2020 | |||||||||||||||||||
/s/ Jerome A. Grant | ||||||||||||||||||||
Jerome A. Grant | ||||||||||||||||||||
Chief Executive Officer | ||||||||||||||||||||
(Principal Executive Officer) | ||||||||||||||||||||
Date: | August 7, 2020 | |||||||||||||
/s/ Troy R. Anderson | ||||||||||||||
Troy R. Anderson | ||||||||||||||
Executive Vice President and Chief Financial Officer | ||||||||||||||
(Principal Financial Officer and Principal Accounting Officer) | ||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Jun. 30, 2020 |
Sep. 30, 2019 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 32,693,000 | 32,499,000 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 700,000 | 700,000 |
Preferred stock, shares outstanding | 700,000 | 700,000 |
Preferred stock, liquidation preference (in dollars per share) | $ 100 | $ 100 |
Treasury stock, shares, at cost | 82,000 | 6,865,000 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Revenue | ||||
Revenues | $ 54,483 | $ 79,042 | $ 224,434 | $ 243,838 |
Operating expenses: | ||||
Educational services and facilities | 32,476 | 42,836 | 118,261 | 134,393 |
Selling, general and administrative | 35,786 | 36,661 | 116,197 | 122,685 |
Total operating expenses | 68,262 | 79,497 | 234,458 | 257,078 |
Loss from operations | (13,779) | (455) | (10,024) | (13,240) |
Other income: | ||||
Interest income | 218 | 358 | 901 | 1,153 |
Interest expense | (2) | (802) | (5) | (2,424) |
Equity in earnings of unconsolidated affiliate | 0 | 100 | 0 | 298 |
Other income (expense), net | 316 | 465 | (13) | 1,121 |
Total other income, net | 532 | 121 | 883 | 148 |
Loss before income taxes | (13,247) | (334) | (9,141) | (13,092) |
Income tax (expense) benefit | (21) | (31) | 10,699 | (253) |
Net income (loss) | (13,268) | (365) | 1,558 | (13,345) |
Preferred stock dividends | 1,309 | 1,309 | 3,941 | 3,927 |
Loss available for distribution | $ (14,577) | $ (1,674) | $ (2,383) | $ (17,272) |
Earnings per share (See Note 16): | ||||
Net income (loss) per share - basic (in dollars per share) | $ (0.45) | $ (0.07) | $ (0.08) | $ (0.68) |
Net income (loss) per share - diluted (in dollars per share) | $ (0.45) | $ (0.07) | $ (0.08) | $ (0.68) |
Weighted average number of shares outstanding: | ||||
Basic (in shares) | 32,607,000 | 25,498,000 | 28,871,000 | 25,410,000 |
Diluted (in shares) | 32,607,000 | 25,498,000 | 28,871,000 | 25,410,000 |
Nature of the Business |
9 Months Ended |
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Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of the Business | Nature of the Business We are the leading provider of postsecondary education for students seeking careers as professional automotive, diesel, collision repair, motorcycle and marine technicians as well as welders and computer numerical control (“CNC”) machining technicians as measured by total average undergraduate full-time enrollment and graduates. We offer certificate, diploma or degree programs at 12 campuses across the United States under the banner of several well-known brands, including Universal Technical Institute, Motorcycle Mechanics Institute, Marine Mechanics Institute and NASCAR Technical Institute. This excludes the Norwood, Massachusetts campus that was closed on July 31, 2020. We also offer manufacturer specific advanced training (“MSAT”) programs, including student-paid electives, at our campuses and manufacturer or dealer sponsored training at certain campuses and dedicated training centers. We have provided technical education for 55 years. We work closely with leading original equipment manufacturers (“OEMs”) and employers to understand their needs for qualified service professionals. Revenues generated from our schools consist primarily of tuition and fees paid by students. To pay for a substantial portion of their tuition, the majority of students rely on funds received from federal financial aid programs under Title IV Programs of the Higher Education Act of 1965, as amended (“HEA”), as well as from various veterans benefits programs. For further discussion, see Note 2 on “Summary of Significant Accounting Policies - Concentration of Risk” and Note 18 on “Government Regulation and Financial Aid” included in our 2019 Annual Report on Form 10-K filed with the SEC on December 6, 2019.
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Basis of Presentation |
9 Months Ended |
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Jun. 30, 2020 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, our condensed consolidated financial statements do not include all the information and footnotes required by GAAP for complete financial statements. Normal and recurring adjustments considered necessary for a fair statement of the results for the interim periods have been included. Operating results for the nine months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending September 30, 2020. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2019 Annual Report on Form 10-K filed with the SEC on December 6, 2019. The unaudited condensed consolidated financial statements include the accounts of Universal Technical Institute, Inc. and our wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.
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Recent Accounting Pronouncements |
9 Months Ended |
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Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Effective the First Quarter of Fiscal 2020 Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which amended the FASB Accounting Standards Codification (“ASC”) by creating ASC 842 to replace ASC 840. ASU 2016-02 requires lessees to recognize a right-of-use (“ROU”) asset and a lease liability on the balance sheet for substantially all leases, with the exception of short-term leases. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of income. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842) to provide entities with relief from the costs of implementing certain aspects of the new leasing standard. It also allows lessors to elect not to separate lease and non-lease components when certain conditions are met. In March 2019, the FASB issued ASU 2019-01, Lease (Topic 842): Codification Improvements (“ASU 2019-01”). ASU 2019-01 clarifies certain items regarding lessor accounting. It also clarifies the interim disclosure requirements during transition. The new guidance in ASC 842 also provides a package of transition practical expedients that allow an entity to not reassess (1) whether any expired or existing contracts contain a lease, (2) the lease classification of any expired or existing lease, and (3) initial direct costs for any existing lease. We adopted ASC 842 effective October 1, 2019, and elected the package of transition practical expedients. We also elected additional transitional practical expedients that allow an entity to not reassess land easements not previously addressed under ASC 840 and to not recognize on the balance sheet leases with terms of less than 12 months. We are using the modified retrospective method without the recasting of comparative periods’ financial information. We did not elect the practical expedient to use hindsight in determining a lease term of the ROU assets at the adoption date. As a result of adopting the new standard, we recognized an operating lease liability of $163.0 million and an operating lease ROU asset of $148.6 million on October 1, 2019. The change resulted in the de-recognition of approximately $0.9 million of other assets and $15.3 million of other liabilities. The standard did not materially impact our condensed consolidated statements of operations and cash flows. In addition, we have two build-to-suit leases that were accounted for as financing obligations and related assets because we had continued involvement in the related facility after the construction period was completed. The financing obligations are now classified as operating leases in accordance with the new standard as of the transition date, including recognition of operating lease ROU assets and lease liabilities. The change resulted in the de-recognition of approximately $40.7 million existing deferred financing obligations and $31.6 million in related assets. The net impact of the de-recognition and the adoption of ASC 842 as of October 1, 2019 was an increase in stockholders’ equity of approximately $9.1 million, with a subsequent adjustment during the three months ended March 31, 2020, which reduced the impact to stockholders’ equity by $0.1 million. The transition also resulted in the recognition of rent expense, which was previously reported as interest expense under the former guidance. Fair Value Measurement In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) (“ASU 2018-13”). ASU 2018-13 amends the disclosure requirements of ASC 820, changing the fair value measurement disclosure requirements of ASC 820 by adding new disclosure requirements, modifying existing disclosure requirements and eliminating other disclosure requirements. We adopted ASU 2018-13 as of October 1, 2019. There was no impact to our financial statements or disclosures. Cloud Computing Arrangements In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and other Internal-use Software (Subtopic 350-40) (“ASU 2018-15”). ASU 2018-15 aligns the accounting for costs incurred to implement a cloud computing arrangement (“CCA”) that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, ASU 2018-15 amends ASC 350 to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in a CCA that is considered a service contract. Early adoption was permitted. The effect of this new standard on our consolidated financial statements will be dependent on our entry into any future cloud computing arrangements. Effective the First Quarter of Fiscal 2021 In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 includes an impairment model known as the current expected credit loss model that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. In April 2019, the FASB issued ASU 2019-05, Targeted Transition Relief, which provides transition relief to entities adopting ASU 2016-13. We are currently evaluating the impact ASU 2016-13 will have on our results of operations, financial condition and financial statement disclosures. Effective the First Quarter of Fiscal 2022 In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). The amendments in ASU 2019-12 simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. We are currently evaluating the impact that the update will have on our results of operations, financial condition and financial statement disclosures.
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Revenue from Contracts with Customers |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contracts with Customers | Revenue from Contracts with Customers Nature of Goods and Services Postsecondary Education Revenues consist primarily of student tuition and fees derived from the programs we provide after reductions are made for discounts and scholarships that we sponsor and for refunds for students who withdraw from our programs prior to specified dates. We apply the five-step model outlined in ASC 606, Revenue from Contracts from Customers. Tuition and fee revenue is recognized ratably over the term of the course or program offered. The majority of our programs are designed to be completed in 36 to 90 weeks, and our advanced training programs range from 12 to 23 weeks in duration. We supplement our revenues with sales of textbooks and program supplies and other revenues, which are recognized as the transfer of goods or services occurs. Deferred revenue represents the excess of tuition and fee payments received as compared to tuition and fees earned and is reflected as a current liability in our condensed consolidated balance sheets because it is expected to be earned within the next 12 months. Additionally, certain students participate in a proprietary loan program that extends repayment terms for their tuition. We purchase said loans from the lender and, based on historical collection rates, believe a portion of these loans are collectible. Accordingly, we recognize tuition and loan origination fees financed by the loan and any related interest revenue under the effective interest method required under the loan based on the amount we expect to collect, and we recognize these revenues ratably over the term of the course or program offered. Other We provide dealer technician training or instructor staffing services to manufacturers. Revenues are recognized as transfer of the services occurs. We provide postsecondary education and other services in the same geographical market, the United States. The impact of economic factors on the nature, amount, timing and uncertainty of revenue and cash flows is consistent among our various postsecondary education programs. See Note 17 for disaggregated segment revenue information. Contract Balances Contract assets primarily relate to our rights to consideration for a student’s progress through our training program in relation to our services performed but not billed at the reporting date. The contract assets are transferred to the receivables when the rights become unconditional. Currently, we do not have any contract assets that have not transferred to a receivable. Our deferred revenue is considered a contract liability and primarily relates to our enrollment agreements where we received payments for tuition but we have not yet delivered the related training programs to satisfying the related performance obligations. The advance consideration received from students or Title IV funding is deferred revenue until the training program has been delivered to the students. The following table provides information about receivables and deferred revenue resulting from our enrollment agreements with students:
During the nine months ended June 30, 2020, the deferred revenue balance included decreases for revenues recognized during the period and increases related to new students who started their training programs during the period. Transaction Price Allocated to the Remaining Performance Obligations Tuition and fee revenue is recognized ratably over the term of the course or program offered. The majority of our undergraduate programs are designed to be completed in 36 to 90 weeks, and our advanced training programs range from 12 to 23 weeks in duration. Impacts of COVID-19 On March 19, 2020, we suspended all in person classes at all of our campuses for the safety and protection of our students and staff, to help slow the spread of COVID-19 and to comply with state and local orders and restrictions. Upon the suspension of all in person classes, we provided all students with the opportunity to take a leave of absence or to continue their education via an online curriculum. On March 25, 2020, we began offering the classroom portion of our training online so that the more than 8,000 students who elected to remain active in the program could continue their education remotely. As our training is a combination of classroom lectures and hands-on labs, there is a portion of most classes that cannot be delivered online and needs to be completed in-person at the campus lab. During the three months ended June 30, 2020, as campuses were able to reopen, we transitioned our on-campus, in-person education model to a blended training model that combines online, instructor-delivered teaching and demonstrations with hands-on labs. In May of 2020, we resumed in-person labs at eight of our campus locations. Four of our campuses resumed in-person labs in June of 2020, and our final campus to resume in-person labs in Bloomfield, New Jersey opened on July 1, 2020. On-campus labs have been re-designed to meet the health, safety and social distancing guidelines imposed by the Centers for Disease Control (“CDC”) and state and local jurisdictions, while still meeting our accreditation and curriculum requirements. Now that all of our campuses have reopened, once a student returns to campus for in-person labs, under the new guidelines it takes on average approximately six to nine weeks for that student to catch up on the lab work that he was unable to complete during the campus closure and prior to his return. As a result, the graduation dates for many of the students who would have completed their programs between March and September of 2020 have been delayed. Additionally, some students have not returned to campus to complete the in-person labs and remain only in the online portion of the curriculum, essentially only completing half of each course, while others are completing catch up labs, but over an extended period of time. We continue to recognize revenue ratably over the term of the course or program offered, taking into consideration those only completing the online curriculum, and the catch up period for active students and the impact it has on expected graduation dates. As a result, we deferred revenue of $10.8 million during the three months ended June 30, 2020. Of the $0.3 million revenue deferred during the three months ended March 31, 2020, $0.2 million was recognized during the three months ended June 30, 2020, as those students were able to complete their in-person labs and graduate.
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Postemployment Benefits |
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Postemployment Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Postemployment Benefits | Postemployment BenefitsOn February 18, 2019, we announced that our campus in Norwood, Massachusetts is no longer accepting new student applications. The last group of students started on March 18, 2019 and completed the curriculum in July 2020, with the campus closing on July 31, 2020. The total postemployment benefits incurred due to the campus closure were approximately $1.1 million. Additionally, we periodically enter into agreements that provide postemployment benefits to personnel whose employment is terminated. On October 21, 2019, we announced the retirement of our President and Chief Executive Officer, Kimberly J. McWaters, effective October 31, 2019. During the nine months ended June 30, 2020, we incurred postemployment benefit charges of $1.5 million and paid cash of $1.1 million, in accordance with Ms. McWaters’ Retirement Agreement and Release of Claims, dated October 31, 2019. The postemployment benefit liability, which is included in “Accounts payable and accrued expenses” on the accompanying condensed consolidated balance sheets, is generally paid out ratably over the terms of the agreements, which range from 1 month to 24 months, with the final agreement expiring in 2021. The activity for the postemployment benefit liability for the nine months ended June 30, 2020 was as follows:
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Investments |
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Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments During the second quarter of 2020, we raised approximately $49.5 million in net proceeds from an underwritten public offering of shares of our common stock. See Note 15 for further details on the equity offering. We invested a portion of the proceeds from the equity offering in held-to-maturity securities, which primarily consist of corporate bonds from large cap industrial and selected financial companies with a minimum credit rating of A. We have the ability and intention to hold these investments until maturity and therefore have classified these investments as held-to-maturity and recorded them at amortized cost. The amortized cost, gross unrealized gains or losses, and fair value of investments classified as held-to-maturity at June 30, 2020 were as follows:
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The accounting framework for determining fair value includes a hierarchy for ranking the quality and reliability of the information used to measure fair value, which enables the reader of the financial statements to assess the inputs used to develop those measurements. The fair value hierarchy consists of three tiers: Level 1: Defined as quoted market prices in active markets for identical assets or liabilities. Level 2: Defined as inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, model-based valuation techniques for which all significant assumptions are observable in the market or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Defined as unobservable inputs that are not corroborated by market data. Any transfers of investments between levels occurs at the end of the reporting period. Assets measured or disclosed at fair value on a recurring basis consisted of the following:
(a) Money market funds are reflected as “Cash and cash equivalents” in our condensed consolidated balance sheet as of June 30, 2020. (b) Notes receivable relate to our proprietary loan program. (c) Corporate bonds are reflected as “Held-to-maturity investments” in our condensed consolidated balance sheet as of June 30, 2020. (d) Money market funds and corporate bonds are reflected as “Cash and cash equivalents” in our condensed consolidated balance sheet as of September 30, 2019.
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Property and Equipment, net |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment, net | Property and Equipment, net Property and equipment, net consisted of the following:
As previously discussed in Note 3, the adoption of ASC 842 as of October 1, 2019 resulted in the de-recognition of the assets associated with our financing obligations, which were previously included in “Buildings and building improvements.” In addition, certain items related to the build-to-suit leases in “Buildings and building improvements” were reclassified to “Leasehold improvements” as part of the adoption of ASC 842. The following amounts, which are included in the above table, represented assets financed by financing obligations as of September 30, 2019:
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Goodwill |
9 Months Ended |
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Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill Our goodwill balance of $8.2 million as of June 30, 2020 resulted from the acquisition of our motorcycle and marine education business in Orlando, Florida in 1998 and relates to our Postsecondary Education segment. Goodwill represents the excess of the cost of an acquired business over the estimated fair values of the assets acquired and liabilities assumed. Goodwill is reviewed at least annually for impairment, which may result from the deterioration in the operating performance of the acquired business, adverse market conditions, adverse changes in applicable laws or regulations and a variety of other circumstances. Any resulting impairment charge would be recognized as an expense in the period in which impairment is identified. On March 19, 2020, we suspended all in person classes at all of our campuses, including our Orlando, Florida campus, for the safety and protection of our students and staff, to help slow the spread of COVID-19, and to comply with state and local orders and restrictions. On March 25, 2020, we began offering the classroom portion of our training online so that students who elected to remain enrolled in the program could continue their education from home. During May of 2020, our Orlando, Florida campus reopened for students to complete hands-on labs, which have been re-designed to meet CDC, state and local guidelines for health, safety and social distancing. While some student graduation dates have been delayed due to the closure, most of the students enrolled at our Orlando, Florida campus prior to the COVID-19 outbreak continue to progress through their programs under the new blended training model. Even with the impacts of COVID-19, our new student enrollments for the nine months ended June 30, 2020 at the Orlando, Florida campus are higher than our expectations. As a result, there were no indicators of goodwill impairment as of June 30, 2020.
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Investment in Unconsolidated Affiliate |
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Investment in Unconsolidated Affiliate [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in Unconsolidated Affiliate | Investment in Unconsolidated Affiliate In 2012, we invested $4.0 million to acquire an equity interest of approximately 28% in a joint venture (“JV”) related to the lease of our Lisle, Illinois campus facility. In connection with this investment, we do not possess a controlling financial interest as we do not hold a majority of the equity interest, nor do we have the power to make major decisions without approval from the other equity member. Therefore, we do not qualify as the primary beneficiary. Accordingly, this investment is accounted for under the equity method of accounting. We recognize our proportionate share of the JV's net income or loss during each accounting period and any return of capital as a change in our investment. Investment in unconsolidated affiliate consisted of the following and is included within “Other assets” on our condensed consolidated balance sheets:
Investment in unconsolidated affiliate included the following activity during the period:
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases We lease 10 of our 12 campuses and our corporate headquarters under non-cancelable operating leases, some of which contain escalation clauses and requirements to pay other fees associated with the leases. Our lease for the Norwood, Massachusetts campus ended on July 31, 2020 when the campus closed. Also, during the three months ended June 30, 2020, we relocated our corporate headquarters facility in conjunction with the expiration of the existing lease agreement, and entered into a new long-term lease agreement at a new facility. The facility leases have original lease terms ranging from 8 to 20 years and expire at various dates through 2031. In addition, the leases commonly include lease incentives in the form of rent abatements and tenant improvement allowances. We sublease certain portions of unused building space to third parties, which currently result in minimal income. All of the leases, other than those that may qualify for the short-term scope exception of 12 months or less, are recorded on our condensed consolidated balance sheets. Some of the facility leases are subject to annual changes in the Consumer Price Index (“CPI”). While lease liabilities are not remeasured as a result of changes to the CPI, changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. Many of our lease agreements include options to extend the lease, which we do not include in our minimum lease terms unless they are reasonably certain to be exercised. There are no early termination with penalties, residual value guarantees, restrictions or covenants imposed by our facility leases. Significant Assumptions and Judgments To determine if a contract is or contains a lease, we considered whether (1) explicitly or implicitly identified assets have been deployed in the contract and (2) we obtain substantially all of the economic benefits from the use of that underlying asset and direct how and for what purpose the asset is used during the term of the contract. If we determine a contract is, or contains, a lease, we assess whether the contract contains multiple lease components. We consider a lease component to be separate from other lease components in the contract if (a) we can benefit from the right of use either on its own or together with other resources that are readily available to us and (b) the right of use is neither highly dependent on nor highly interrelated with the other right(s) to use underlying assets in the contract. In contracts involving the use of real estate, we separate the right to use land from other underlying assets unless the effect of separating the land is insignificant to the resulting lease accounting. We have elected to account for the lease and non-lease components as a single lease component. For all leases we are a party to, the discount rate implicit in the lease was not readily determinable. Therefore, we used our incremental borrowing rate for each lease to determine the present value of the lease. We determined the incremental borrowing rate applicable to each lease through a model that represents the rate of interest we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The incremental borrowing rate was applied to each lease based on the remaining term of the lease. The components of lease expense are included in “Educational services and facilities” and “Selling, general and administrative” on the condensed consolidated statement of operations, with the exception of interest on lease liabilities, which is included in “Interest expense.” The components of lease expense during the three and nine months ended June 30, 2020 were as follows:
(a) Excludes the expense for short-term leases not accounted for under ASC 842, which was not significant for the three and nine months ended June 30, 2020. Supplemental balance sheet, cash flow and other information related to our leases was as follows:
(a) Finance lease assets are recorded net of accumulated amortization of $70.0 thousand as of June 30, 2020.
Maturities of lease liabilities were as follows:
The maturities of lease liabilities as of June 30, 2020 includes the future minimum lease payments for the build-to-suit leases that were presented separately in our 2019 Annual Report on Form 10-K filed with the SEC on December 6, 2019. Disclosures Related to Periods Prior to the Adoption of ASC 842 As of September 30, 2019, minimum lease payments under non-cancelable operating leases by period were expected to be as follows (in thousands):
Related Party Transactions for Leases Rent expense includes rent paid to related parties, which was approximately $0.5 million for the three months ended June 30, 2020 and 2019, respectively, and $1.5 million for the nine months ended June 30, 2020 and 2019, respectively. Since 1991, two of our properties comprising our Orlando, Florida location have been leased from entities controlled by John C. White, a director on our Board of Directors. The leases extend through August 19, 2022 and August 31, 2022 with annual base lease payments for the first year under this lease totaling approximately $0.3 million and $0.7 million, with annual adjustments based on the higher of (i) an amount equal to 4% of the total annual rent for the immediately preceding year or (ii) the percentage of increase in the CPI. These transactions were not considered significant as of June 30, 2020.
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Accounts Payable and Accrued Expenses |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Expenses | Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consisted of the following:
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Income Taxes |
9 Months Ended |
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Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our income tax expense for the three months ended June 30, 2020 was $21 thousand, or 0.2% of pre-tax loss, compared to income tax expense of $31 thousand, or 9.3% of pre-tax loss, for the three months ended June 30, 2019. For the nine months ended June 30, 2020, our income tax benefit was $10.7 million, or 117.0% of pre-tax loss, compared to income tax expense of $0.3 million, or 1.9% of pre-tax loss, for the nine months ended June 30, 2019. The effective income tax rate in each period differed from the federal statutory tax rate of 21% primarily as a result of changes in the valuation allowance and state taxes. The balance of the valuation allowance for our deferred tax assets was $19.1 million and $25.7 million as of June 30, 2020 and September 30, 2019, respectively. The significant decrease in the valuation allowance for the nine months ended June 30, 2020, and the related income tax benefit, was primarily attributable to the carryback of net operating losses (“NOLs”) under the provisions of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and the adoption of ASC 842 as of October 1, 2019. The CARES Act, which was enacted on March 27, 2020, made tax law changes to provide financial relief to companies as a result of the business impacts of COVID-19. Key income tax provisions of the CARES Act include changes in NOL carryback and carryforwards rules, acceleration of alternative minimum tax credit recovery, increase of the net interest expense deduction limit and charitable contribution limit, and immediate write-off of qualified improvement property. The CARES Act allows us to carryback $20.3 million and $13.0 million of NOLs arising in the years ended September 30, 2019 and September 30, 2018, respectively, generating a tax refund of approximately $11.3 million. During the nine months ended June 30, 2020, we recorded a receivable for the expected refund. We have also adjusted our deferred tax liabilities and deferred tax assets, and the corresponding valuation allowance, for the impact of the NOL provisions in the CARES Act. As of June 30, 2020, we continued to have a full valuation allowance against all deferred tax assets that rely upon future taxable income for their realization and will continue to evaluate our valuation allowance in future periods for any change in circumstances that causes a change in judgment about the realizability of the deferred tax assets. The amount of the deferred tax assets considered realizable, however, could be adjusted in future periods if estimates of future taxable income during the carryforward period are increased, if objective negative evidence in the form of cumulative losses is no longer present and if additional weight may be given to subjective evidence such as our projections for growth.
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Commitments and Contingencies |
9 Months Ended |
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Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal In the ordinary conduct of our business, we are periodically subject to lawsuits, demands in arbitration, investigations, regulatory proceedings or other claims, including, but not limited to, claims involving current or former students, routine employment matters, business disputes and regulatory demands. When we are aware of a claim or potential claim, we assess 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, we accrue a liability for the loss. When a loss is not both probable and estimable, we do not accrue a liability. Where a loss is not probable but is reasonably possible, including if a loss in excess of an accrued liability is reasonably possible, we determine whether it is possible to provide an estimate of the amount of the loss or range of possible losses for the claim. Because we cannot predict with certainty the ultimate resolution of the legal proceedings (including lawsuits, investigations, regulatory proceedings or claims) asserted against us, it is not currently possible to provide such an estimate. The ultimate outcome of pending legal proceedings to which we are a party may have a material adverse effect on our business, cash flows and results of operations or financial condition.
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Shareholders' Equity |
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Jun. 30, 2020 | |
Equity [Abstract] | |
Shareholders’ Equity | Shareholders’ Equity Common Stock Holders of our common stock are entitled to receive dividends when and as declared by our Board of Directors and have the right to one vote per share on all matters requiring shareholder approval. On June 9, 2016, our Board of Directors voted to eliminate the quarterly cash dividend on our common stock. Any future common stock dividends require the approval of a majority of the voting power of the Series A Preferred Stock. Preferred Stock Preferred Stock consists of 10,000,000 authorized preferred shares of $0.0001 par value each. As of June 30, 2020 and September 30, 2019, 700,000 shares of Series A Convertible Preferred Stock (“Series A Preferred Stock”) were issued and outstanding. The liquidation preference associated with the Series A Preferred Stock was $100 per share at June 30, 2020 and September 30, 2019. Pursuant to the terms of the Securities Purchase Agreement, we may pay a cash dividend on each share of the Series A Preferred Stock at a rate of 7.5% per year on the liquidation preference then in effect (“Cash Dividend”). If we do not pay a Cash Dividend, the liquidation preference shall be increased to an amount equal to the current liquidation preference in effect plus an amount reflecting that liquidation preference multiplied by the Cash Dividend rate then in effect plus 2.0% per year (“Accrued Dividend”). Cash Dividends are payable semi-annually in arrears on September 30 and March 31 of each year, and begin to accrue on the first day of the applicable dividend period. We paid Cash Dividends of $2.6 million on March 27, 2020. Equity Offering On February 20, 2020, we entered into an Underwriting Agreement with B. Riley FBR, Inc., as representative of the several underwriters named therein (the “Underwriters”), to issue and sell an aggregate of 6,782,610 shares (the “Firm Shares”) of our common stock, par value $0.0001 per share (the “Common Stock”), in a public offering, at a price to the public of $7.75 per share, pursuant to a registration statement on Form S-3 (Registration No. 333-236146) (the “Registration Statement”) and the accompanying prospectus, and related prospectus supplement, filed with the SEC (the “Offering”). In addition, we granted the Underwriters an option (“Option”) to purchase up to an additional 1,017,390 shares of the Common Stock for a period of 30 days from February 20, 2020. The Offering of the Firm Shares closed on February 25, 2020. The net proceeds from the Offering were approximately $49.5 million, after deducting underwriting discounts. Direct costs of $0.4 million related to the offering were recorded to equity during the three months ended March 31, 2020. The Underwriters did not exercise the Option in full for the additional 1,017,390 shares. The 6,782,610 shares purchased were issued from Treasury Stock on February 25, 2020, leaving 82,287 shares in Treasury stock as of March 31, 2020 and June 30, 2020. We intend to use the proceeds for working capital, capital expenditures, and other general corporate purposes, which may include the addition of new campuses, the expansion of existing programs and the development of new programs, and the purchase of real property and campus infrastructure. We may also use a portion of the net proceeds to fund potential strategic acquisitions of complementary businesses, assets, services or technologies. Share Repurchase Program On December 20, 2011, our Board of Directors authorized the repurchase of up to $25.0 million of our common stock in the open market or through privately negotiated transactions. The timing and actual number of shares purchased will depend on a variety of factors such as price, corporate and regulatory requirements and prevailing market conditions. We may terminate or limit the share repurchase program at any time without prior notice. We did not repurchase shares during the nine months ended June 30, 2020 or June 30, 2019. As of June 30, 2020, we have purchased 1,677,570 shares at an average price per share of $9.09 and a total cost of approximately $15.3 million under this program. Under the terms of the Securities Purchase Agreement, future stock purchases under this program require the approval of a majority of the voting power of the Series A Preferred Stock.
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Earnings per Share |
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Earnings per Share | Earnings per Share We calculate basic earnings per share pursuant to the two-class method as a result of the issuance of the Series A Preferred Stock on June 24, 2016. Our Series A Preferred Stock is considered a participating security because, in the event that we pay a dividend or make a distribution on the outstanding common stock, we shall also pay each holder of the Series A Preferred Stock a dividend on an as-converted basis. The two-class method is an earnings allocation formula that determines earnings per share for common stock and participating securities according to dividend and participation rights in undistributed earnings. Under this method, all earnings, distributed and undistributed, are allocated to common shares and participating securities based on their respective rights to receive dividends. The Series A Preferred Stock is not included in the computation of basic earnings per common share in periods in which we have a net loss, as the Series A Preferred Stock is not contractually obligated to share in our net losses. Diluted earnings per common share is calculated using the more dilutive of the as-converted or the two-class method. Dilutive potential common shares include outstanding stock options, unvested restricted share awards and units and convertible preferred stock. The basic and diluted weighted average shares outstanding are the same for the three and nine months ended June 30, 2020 and 2019 as a result of the net loss available to common shareholders and anti-dilutive impact of the potentially dilutive securities. The following table summarizes the computation of basic and diluted earnings per common share under the as-converted or two-class method, as well as the anti-dilutive shares excluded:
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Segment Information |
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Segment Information | Segment Information Our principal business is providing postsecondary education. We also provide manufacturer-specific training, and these operations are managed separately from our campus operations. These operations do not currently meet the quantitative criteria for segments and therefore are reflected in the “Other” category. Our equity method investment and other non-postsecondary education operations are also included within the “Other” category. Corporate expenses are allocated to “Postsecondary Education” and the “Other” category based on compensation expense. Summary information by reportable segment was as follows:
(a) Excludes depreciation of training equipment obtained in exchange for services of $0.3 million and $1.0 million for the three and nine months ended June 30, 2020, respectively, and $0.4 million and $1.1 million for the three and nine months ended June 30, 2019, respectively. (b) During nine months ended June 30, 2019, depreciation and amortization included $2.0 million of amortization of assets subject to a financing obligation.
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Government Regulation and Financial Aid |
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Jun. 30, 2020 | |
Government Regulation and Financial Aid [Abstract] | |
Government Regulation And Financial Aid | Government Regulation and Financial Aid As discussed at length in our 2019 Annual Report on Form 10-K filed with the SEC on December 6, 2019, our institutions participate in a range of government-sponsored student assistance programs. The most significant of these is the federal student aid programs administered by the U.S. Department of Education (“ED”) pursuant to Title IV of the Higher Education Act (“HEA”), commonly referred to as the Title IV Programs. Generally, to participate in the Title IV Programs, an institution must be licensed or otherwise legally authorized to operate in the state where it is physically located, be accredited by an accreditor recognized by ED, be certified as an eligible institution by ED, offer at least one eligible program of education, and comply with other statutory and regulatory requirements. See “Regulatory Environment” in our 2019 Annual Report on Form 10-K filed with the SEC on December 6, 2019. State Authorization and Regulation Each of our institutions must be licensed or otherwise legally authorized to operate in the state where the institution is located to operate and offer a postsecondary education program to our students. In some cases, our institutions also must be authorized by state education agencies in states other than the state in which the institution is physically located, if the institution recruits in the other state. State education authorization also is required to participate in the Title IV Programs. Our institutions are subject to extensive, ongoing regulation by each of these agencies. See “Regulatory Environment - State Authorization and Regulation” in our 2019 Annual Report on Form 10-K filed with the SEC on December 6, 2019. We believe that each of our institutions is in substantial compliance with state education agency requirements. The level of regulatory oversight varies substantially from state to state and is extensive in some states. State laws and regulations typically establish standards for instruction, qualifications of faculty, location and nature of facilities and equipment, administrative procedures, marketing, recruiting, student outcomes reporting, disclosure obligations to students, limitations on mandatory arbitration clauses in enrollment agreements, financial operations and other operational matters. States often change their requirements in response to ED regulations or implement requirements that may impact institutional and student success, and our institutions must respond quickly to remain in compliance. Also, from time to time, states may transition authority between state agencies, and we must comply with the new state agency’s rules, procedures and other documentation requirements. If any one of our campuses were to lose its authorization from the education agency of the state in which the campus is located, that campus would be unable to offer its programs and we could be forced to close that campus. If one of our campuses were to lose its authorization from a state other than the state in which the campus is located, that campus would not be able to recruit students in that state. Accreditation Accreditation is a non-governmental process through which an institution voluntarily submits to ongoing qualitative reviews by an organization of peer institutions. Accreditation by an ED-recognized accrediting agency is required for an institution to be certified to participate in the Title IV Programs. All of our institutions are accredited by the Accrediting Commission of Career Schools and Colleges (“ACCSC”), an accrediting agency recognized by ED. See “Regulatory Environment - Accreditation” in our 2019 Annual Report on Form 10-K filed with the SEC on December 6, 2019 for further details. We believe that each of our institutions is in substantial compliance with ACCSC accreditation standards. Our campuses’ grants of accreditation periodically expire and require renewal. A school that is faithfully engaged in the renewal of accreditation process and is meeting all of the requirements of that process continues to be accredited if the school’s term of accreditation has exceeded the period of time last granted by ACCSC. In December 2019, ACCSC conducted a renewal of accreditation on-site evaluation at our Bloomfield, New Jersey campus, which resulted in zero findings of non-compliance. The campus received a Renewal of Education through May 2025 during the ACCSC Commission meeting in May 2020. Regulation of Federal Student Financial Aid Programs All of our institutions are certified to participate in the Title IV Programs. ED will certify a postsecondary institution to participate in the Title IV Programs only after the institution has demonstrated compliance with the HEA and ED’s extensive regulations regarding institutional eligibility. An institution must also demonstrate its compliance to ED on an ongoing basis. See “Regulatory Environment - Regulation of Federal Student Financial Aid Programs” in our 2019 Annual Report on Form 10-K filed with the SEC on December 6, 2019 for further details. Accreditation and Innovation Regulations On January 7, 2019, ED released a set of draft proposed regulations for consideration and negotiation as part of its “Accreditation and Innovation” rulemaking. The draft proposed regulations covered a broad range of topics, including the following: (1) the recognition of accrediting agencies and accreditation procedures; (2) the legal authorization of institutions by states; (3) the definition of a credit hour, competency-based education, direct assessment programs and standards for distance education programs; (4) the eligibility of faith-based entities to participate in ED’s higher education and student aid programs; and (5) the Teacher Education Assistance for College and Higher Education (“TEACH”) Grant. On June 12, 2019, ED published proposed regulations relating to ED’s recognition of accrediting agencies and accreditation procedures and the legal authorization of institutions by states. The proposed regulations were published in a notice of proposed rulemaking in the Federal Register and made available for public comment. On November, 1, 2019, ED published the final regulations. The final regulations include revisions to the standards that accrediting agencies must meet to qualify for ED recognition, the rules governing authorization by state agencies, and certain provisions requiring institutions to report and disclose institutional information to current and prospective students. These regulations became effective July 1, 2020. On July 1, 2020, ED published the final regulations relating to faith based entities and Teach Grants. These regulations will be effective July 1, 2021. Last, on April 2, 2020, ED published a Notice of Proposed Rulemaking in the Federal Register related to distance education and innovation regulations for a 30-day public comment period. ED is expected to publish a final regulation prior to November 1, 2020. Our process of reviewing the potential impact of any regulations issued in connection with the “Accreditation and Innovation” rulemaking is continuing. Borrower Defense and Financial Responsibility Regulations On July 1, 2020, ED’s final rule on borrower defense and financial responsibility became effective. The borrower defense aspect of the regulations allows borrowers who were defrauded by their college or university to seek full or partial forgiveness of their federal student loan. Applicable regulations depend on when the relevant loan was disbursed: Loans disbursed before July 1, 2017 are subject to ED’s 1994 regulations; Loans disbursed on or after July 1, 2017 and before July 1, 2020 are subject to ED’s 2016 regulations; and loans disbursed on or after July 1, 2020 are subject to ED’s 2020 regulations, which became effective July 1, 2020. The financial responsibility aspect of the new regulations continue to include a list of events that could result in ED determining that an institution has failed ED’s financial responsibility standards and requiring a letter of credit or other form of acceptable financial protection and the acceptance of other conditions or requirements. The regulations establish revised lists of mandatory triggering events and of discretionary triggering events for which ED may determine that an institution is not able to meet its financial or administrative obligations if the events are likely to have a material adverse effect on the financial condition of the institution. The regulations require the institution to notify ED of the occurrence of a mandatory or discretionary event in accordance with procedures established by ED, typically within 10 days of the occurrence of the event with certain exceptions. ED may make a determination that an institution fails to meet the financial responsibility standards based on the occurrence of one or more mandatory or discretionary triggers and impose a letter of credit and/or other conditions upon the institution. See “Regulation of Federal Student Aid Programs - Defense to Repayment Regulations - Financial Protection Requirements” in our 2019 Annual Report on Form 10-K filed with the SEC on December 6, 2019. Closed School Loan Discharges As part of the borrower defense regulations effective July 1, 2020, ED revised the regulations concerning the discharge of student loans based on the school’s closure or a false claim of high school completion under certain circumstances. The new regulations apply to loans first disbursed on or after July 1, 2020. Among other things, the new regulations allow students to obtain a discharge if, among other requirements, they were enrolled not more than 180 days before the campus closed. ED has the authority to extend the 180-day period for extenuating circumstances. The borrower also must certify that the student has not accepted the opportunity to complete, or is not continuing in, the program of study or comparable program through either an institutional teach-out plan performed by the school or a teach-out agreement at another school, approved by the school’s accrediting agency and, if applicable, state licensing agency. ED also has the authority to discharge on its own initiative the loans of qualified borrowers without a borrower application if the borrower did not subsequently re-enroll in any Title IV eligible institution within three years from the date the school closed. These regulations limit this authority to schools that close between November 1, 2013 and July 1, 2020. On February 18, 2019, we announced that our campus in Norwood, Massachusetts is no longer accepting new student applications, and its last class group of students started on March 18, 2019. The campus closed on July 31, 2020, after the July 1, 2020 effective date of the regulations. We provided all of the students enrolled at the campus prior to February 18, 2019 the ability to complete their programs, however some students withdrew before graduation and potentially qualified for a loan discharge. An electronic announcement published by ED on November 25, 2019, stated that ED was about to begin issuing letters assessing closed school loan discharge liabilities against schools pursuant to the 2016 defense to repayment regulations. The letter stated that such schools would be given an opportunity to request reconsideration by submitting written evidence to show that the determination is unwarranted. UTI has not received any such assessment letters from ED. Compliance with Regulatory Standards and Requests As described in our 2019 Annual Report on Form 10-K filed with the SEC on December 6, 2019, in connection with the issuance of our Series A Preferred Stock, effective July 2016 ED requested the submission of bi-weekly cash flow projection reports and a monthly student roster. On February 28, 2018, ED notified us that the cash flow projection reports would be required on a monthly basis instead of the previously requested bi-weekly basis. This special reporting will continue until we are otherwise notified by ED. COVID-19 and the CARES Act On March 13, 2020, the United States declared a national emergency concerning the COVID-19 pandemic, effective March 1, 2020. ED, consistent with its authority under then-existing statutes and regulations, issued guidance on March 5, 2020, outlining a range of accommodations intended to address interruptions of study related to COVID-19. This guidance was updated on March 20, 2020, by adding an attachment titled “COVID-19 FAQs” to the March 5, 2020 announcement. Together, these documents offered guidance and flexibility regarding a wide range of regulatory requirements, including provisions relating to the offering of distance education, campus-based assistance programs, the length of an academic year, the measurement of satisfactory academic progress and the return of unearned Title IV Program funds to ED, among others. We reviewed and implemented many of these flexibilities, including the opportunity to temporarily offer distance education. On March 27, 2020, President Trump signed the CARES Act, which provides additional flexibilities and accommodations, beyond those offered by the ED in its March 5, 2020 guidance, particularly with regard to the campus-based assistance programs, the measurement of satisfactory academic progress and the return of unearned Title IV Program funds to ED. Shortly thereafter, on April 3, 2020, ED issued further guidance, providing additional regulatory flexibilities, and in some cases, implementing the accommodations provided for in the CARES Act. Guidance has also been published regarding immigration, discrimination, safety, and privacy issues, as well as the Higher Education Emergency Relief Fund (“HEERF”) established under the CARES Act. ED has indicated that additional guidance is forthcoming. We continue to review the CARES Act and the guidance from ED and implement available legislative and regulatory relief as applicable. Distance Education In response to COVID-19, ED provided broad approval for institutions to use distance learning modalities without going through the standard ED approval process through December 31, 2020. ED also permitted accreditors to waive their distance review requirements. ACCSC has granted institutions temporary approval to offer distance education through December 31, 2020. State agencies have also provided distance education flexibility, but the processes and expiration dates for temporary distance education approval vary by state, and states have been granting extensions to these temporary approvals as they approach expiration. We have availed ourselves of this temporary flexibility in all our programs and we are in full compliance with all state and ACCSC requirements. To afford us additional flexibility beyond the current temporary approval period(s), we have initiated the approval process with ACCSC, state agencies, or both to be able of offer distance education and a blended learning format for all of our programs on a more permanent basis. Additionally, as a result of previously implementing our Tech II curriculum, we are currently approved to offer distance education at our Avondale, Arizona, Rancho Cucamonga, California, Sacramento, California, Orlando, Florida, Dallas-Ft. Worth, Texas, Long Beach, California and Bloomfield, New Jersey campuses for our Automotive/Diesel Tech II programs by ACCSC, state agencies, or both.
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Higher Education Emergency Relief Fund under the CARES Act |
9 Months Ended |
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Jun. 30, 2020 | |
Unusual or Infrequent Items, or Both [Abstract] | |
Higher Education Emergency Relief Fund under the CARES Act | Higher Education Emergency Relief Fund under the CARES Act The CARES Act established the HEERF. The HEERF includes approximately $12.5 billion in relief funds to be distributed directly to institutions of higher education. At least 50% of the funds awarded to an institution of higher education must be used for emergency financial aid grants to students. The remaining funds must be used “to cover any costs associated with significant changes to the delivery of instruction due to the coronavirus.” In order to access the HEERF funds, institutions must complete two Funding and Certification Agreements (the “HEERF Agreements”), one for the emergency financial grants to students portion and the other for the institutional portion, which obligate the recipient to administer the funds in a manner that is consistent with the CARES Act and federal laws cited in the HEERF Agreements. The HEERF Agreements also subject the recipient to a range of reporting and audit requirements. ED has emphasized that institutions should be prepared to report the use of the funds and to describe any internal controls the institution has in place to ensure that funds were used for allowable purposes and in accordance with cash management principles. The agency also has encouraged institutions to keep detailed records of how they are expending all funds received under the HEERF and indicated that further instructions are forthcoming in a notice in the Federal Register. A failure to administer the HEERF funds in accordance with applicable laws at regular intervals could result in a future repayment liability. The allocations to the higher education institutions were set by a formula prescribed in the CARES Act, which is weighted significantly by the number of full-time students who are Pell-eligible, but also takes into consideration the total population of the school and the number of students who were not enrolled full-time online before the COVID-19 outbreak. ED utilized the most recent data available from the Integrated Postsecondary Education Data System and Federal Student Aid for this calculation. In May 2020, we were granted approximately $33.0 million in HEERF funds. HEERF Funds for Student Grants Per the HEERF Agreements, at least 50% of HEERF funds received were to be used exclusively for emergency financial aid grants to students impacted by COVID-19, supporting their efforts to stay in school and continue their training toward graduation and future careers. In May of 2020, we received $16.5 million designated for student grants and deposited these funds into a separate cash account that is classified on our condensed consolidated balance sheet as “Restricted cash.” As of June 30, 2020, we have awarded approximately $11.0 million in the form of grants to over 6,900 students, and $5.5 million remains in Restricted cash with an offsetting liability included in “Accounts payable and accrued expenses.” HEERF Funds for Significant Changes to the Delivery of Instruction In addition, in May of 2020 we received $16.5 million for the institutional portion of the HEERF funds. Such funds may be used to provide additional emergency financial aid grants to students, to cover institutional costs associated with significant changes to the delivery of instruction due to coronavirus, or not used at all and returned to the government. It is our general intent to draw the institutional funds from the ED’s G5 Grants Management System (“G5”) as we incur and record the expenses. As of June 30, 2020, the $16.5 million remained in our G5 account with the ED and is not included in our “Cash and cash equivalents” on our condensed consolidated balance sheet. Per the CARES Act, the HEERF Agreements, and ED guidance, the following requirements are generally applicable to all allowable institutional costs: •Funds may only be used to cover institutional costs associated with significant changes to the delivery of instruction due to the coronavirus. •Costs must have been incurred on or after March 13, 2020. •Funds must be used promptly and to the greatest extent practicable within one year of the date the funds are received and no later than September 30, 2022. •The use of funds must be documented and reported. As explained in the HEERF Agreements, we have “discretion in determining how to allocate and use the funds provided under the CARES Act, provided the funds will be spent only on those costs for which Recipient has a reasoned basis for concluding such costs have a clear nexus to significant changes to the delivery of instruction due to the coronavirus.” Institutional costs that the ED has specifically designated as allowable include: additional emergency grants to students; reimbursements for refunds made to students for services the institution could no longer provide such as housing, food, room and board, and tuition; technology costs including laptops, hotspots, and other information technology equipment and software to enable students to participate in distance learning; qualified scholarships and payment for future academic terms; and payments to a third-party service provider or online program manager for each additional student using the distance learning platform. The ED has specifically prohibited costs related to pre-enrollment recruiting activities, endowments, capital outlays associated with facilities to athletics, sectarian instruction, or religious worship, executive compensation, investor benefits, and to pay student balances or student debt. Prior to the COVID-19 crisis, the majority of our training programs were delivered exclusively through in-person instruction at our campus locations. In order to allow our students to continue their education during the COVID-19 crisis, beginning on March 25, 2020, we shifted our predominantly on-campus, in-person education model to a blended training model that combines online, instructor-delivered teaching and demonstrations with hands-on labs. We incurred significant costs for the initial development and implementation of our online training program for students including software purchases, audio/video equipment purchases and labor hours to record the instructional videos and for training of faculty, and enhancements to the online student experience. In May of 2020, we resumed in-person labs at eight of our campus locations. Four of our campuses resumed in-person labs in June of 2020, and our final campus to resume in-person labs in Bloomfield, New Jersey opened on July 1, 2020. On-campus labs have been re-designed or modified to meet the guidelines set by the CDC, as well as state and local jurisdictions for health, safety and social distancing. In order to comply with these new guidelines, we incurred costs for sanitization supplies, partitions, labor hours and other related expenses to ensure safety and social distancing. In total, we incurred approximately $5.9 million between March 15, 2020 and June 30, 2020 related to the changes in the delivery of instruction due to the coronavirus. We have consulted with our outside regulatory counsel and believe that all of these costs are allowable expenses for the institutional HEERF funds under the CARES Act. As a result, we have recorded a receivable of $5.9 million as of June 30, 2020, and have offset our total operating expenses by $5.9 million for the three months ended June 30, 2020. Of the $5.9 million, $4.9 million was recorded in “Educational services and facilities” and $1.0 million was recorded in “Selling, general and administrative” on the condensed consolidated statements of operation for the three months ended June 30, 2020. It is our general intent to draw the institutional funds from the G5 account as we incur and record the expenses. We plan to draw the funds related to the expenses incurred through June 30, 2020 during the three months ended September 30, 2020.
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Recent Accounting Pronouncements (Policies) |
9 Months Ended |
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Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Pronouncements | Effective the First Quarter of Fiscal 2020 Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which amended the FASB Accounting Standards Codification (“ASC”) by creating ASC 842 to replace ASC 840. ASU 2016-02 requires lessees to recognize a right-of-use (“ROU”) asset and a lease liability on the balance sheet for substantially all leases, with the exception of short-term leases. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of income. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842) to provide entities with relief from the costs of implementing certain aspects of the new leasing standard. It also allows lessors to elect not to separate lease and non-lease components when certain conditions are met. In March 2019, the FASB issued ASU 2019-01, Lease (Topic 842): Codification Improvements (“ASU 2019-01”). ASU 2019-01 clarifies certain items regarding lessor accounting. It also clarifies the interim disclosure requirements during transition. The new guidance in ASC 842 also provides a package of transition practical expedients that allow an entity to not reassess (1) whether any expired or existing contracts contain a lease, (2) the lease classification of any expired or existing lease, and (3) initial direct costs for any existing lease. We adopted ASC 842 effective October 1, 2019, and elected the package of transition practical expedients. We also elected additional transitional practical expedients that allow an entity to not reassess land easements not previously addressed under ASC 840 and to not recognize on the balance sheet leases with terms of less than 12 months. We are using the modified retrospective method without the recasting of comparative periods’ financial information. We did not elect the practical expedient to use hindsight in determining a lease term of the ROU assets at the adoption date. As a result of adopting the new standard, we recognized an operating lease liability of $163.0 million and an operating lease ROU asset of $148.6 million on October 1, 2019. The change resulted in the de-recognition of approximately $0.9 million of other assets and $15.3 million of other liabilities. The standard did not materially impact our condensed consolidated statements of operations and cash flows. In addition, we have two build-to-suit leases that were accounted for as financing obligations and related assets because we had continued involvement in the related facility after the construction period was completed. The financing obligations are now classified as operating leases in accordance with the new standard as of the transition date, including recognition of operating lease ROU assets and lease liabilities. The change resulted in the de-recognition of approximately $40.7 million existing deferred financing obligations and $31.6 million in related assets. The net impact of the de-recognition and the adoption of ASC 842 as of October 1, 2019 was an increase in stockholders’ equity of approximately $9.1 million, with a subsequent adjustment during the three months ended March 31, 2020, which reduced the impact to stockholders’ equity by $0.1 million. The transition also resulted in the recognition of rent expense, which was previously reported as interest expense under the former guidance. Fair Value Measurement In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) (“ASU 2018-13”). ASU 2018-13 amends the disclosure requirements of ASC 820, changing the fair value measurement disclosure requirements of ASC 820 by adding new disclosure requirements, modifying existing disclosure requirements and eliminating other disclosure requirements. We adopted ASU 2018-13 as of October 1, 2019. There was no impact to our financial statements or disclosures. Cloud Computing Arrangements In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and other Internal-use Software (Subtopic 350-40) (“ASU 2018-15”). ASU 2018-15 aligns the accounting for costs incurred to implement a cloud computing arrangement (“CCA”) that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, ASU 2018-15 amends ASC 350 to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in a CCA that is considered a service contract. Early adoption was permitted. The effect of this new standard on our consolidated financial statements will be dependent on our entry into any future cloud computing arrangements. Effective the First Quarter of Fiscal 2021 In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 includes an impairment model known as the current expected credit loss model that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. In April 2019, the FASB issued ASU 2019-05, Targeted Transition Relief, which provides transition relief to entities adopting ASU 2016-13. We are currently evaluating the impact ASU 2016-13 will have on our results of operations, financial condition and financial statement disclosures. Effective the First Quarter of Fiscal 2022 In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). The amendments in ASU 2019-12 simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. We are currently evaluating the impact that the update will have on our results of operations, financial condition and financial statement disclosures.
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Nature of Goods and Services/Contract Balances | Nature of Goods and Services Postsecondary Education Revenues consist primarily of student tuition and fees derived from the programs we provide after reductions are made for discounts and scholarships that we sponsor and for refunds for students who withdraw from our programs prior to specified dates. We apply the five-step model outlined in ASC 606, Revenue from Contracts from Customers. Tuition and fee revenue is recognized ratably over the term of the course or program offered. The majority of our programs are designed to be completed in 36 to 90 weeks, and our advanced training programs range from 12 to 23 weeks in duration. We supplement our revenues with sales of textbooks and program supplies and other revenues, which are recognized as the transfer of goods or services occurs. Deferred revenue represents the excess of tuition and fee payments received as compared to tuition and fees earned and is reflected as a current liability in our condensed consolidated balance sheets because it is expected to be earned within the next 12 months. Additionally, certain students participate in a proprietary loan program that extends repayment terms for their tuition. We purchase said loans from the lender and, based on historical collection rates, believe a portion of these loans are collectible. Accordingly, we recognize tuition and loan origination fees financed by the loan and any related interest revenue under the effective interest method required under the loan based on the amount we expect to collect, and we recognize these revenues ratably over the term of the course or program offered. Other We provide dealer technician training or instructor staffing services to manufacturers. Revenues are recognized as transfer of the services occurs. We provide postsecondary education and other services in the same geographical market, the United States. The impact of economic factors on the nature, amount, timing and uncertainty of revenue and cash flows is consistent among our various postsecondary education programs. See Note 17 for disaggregated segment revenue information. Contract Balances Contract assets primarily relate to our rights to consideration for a student’s progress through our training program in relation to our services performed but not billed at the reporting date. The contract assets are transferred to the receivables when the rights become unconditional. Currently, we do not have any contract assets that have not transferred to a receivable. Our deferred revenue is considered a contract liability and primarily relates to our enrollment agreements where we received payments for tuition but we have not yet delivered the related training programs to satisfying the related performance obligations. The advance consideration received from students or Title IV funding is deferred revenue until the training program has been delivered to the students.
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Revenue from Contracts with Customers (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract with Customer, Asset and Liability | The following table provides information about receivables and deferred revenue resulting from our enrollment agreements with students:
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Postemployment Benefits (Tables) |
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Schedule of Changes in Accumulated Postemployment Benefit Obligations | The activity for the postemployment benefit liability for the nine months ended June 30, 2020 was as follows:
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Investments (Tables) |
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Schedule of Held-to-Maturity Investments | The amortized cost, gross unrealized gains or losses, and fair value of investments classified as held-to-maturity at June 30, 2020 were as follows:
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Fair Value of Our Trading Securities, Money Market Funds, Notes Receivable and Corporate Bonds | Assets measured or disclosed at fair value on a recurring basis consisted of the following:
(a) Money market funds are reflected as “Cash and cash equivalents” in our condensed consolidated balance sheet as of June 30, 2020. (b) Notes receivable relate to our proprietary loan program. (c) Corporate bonds are reflected as “Held-to-maturity investments” in our condensed consolidated balance sheet as of June 30, 2020. (d) Money market funds and corporate bonds are reflected as “Cash and cash equivalents” in our condensed consolidated balance sheet as of September 30, 2019.
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Property and Equipment, net (Tables) |
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Property and Equipment, Net | Property and equipment, net consisted of the following:
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Assets Financed by Financing Obligations | The following amounts, which are included in the above table, represented assets financed by financing obligations as of September 30, 2019:
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Investment in Unconsolidated Affiliate (Tables) |
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Equity Method Investment | Investment in unconsolidated affiliate consisted of the following and is included within “Other assets” on our condensed consolidated balance sheets:
Investment in unconsolidated affiliate included the following activity during the period:
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Leases (Tables) |
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Lease Expense | The components of lease expense during the three and nine months ended June 30, 2020 were as follows:
(a) Excludes the expense for short-term leases not accounted for under ASC 842, which was not significant for the three and nine months ended June 30, 2020.
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Supplemental Information | Supplemental balance sheet, cash flow and other information related to our leases was as follows:
(a) Finance lease assets are recorded net of accumulated amortization of $70.0 thousand as of June 30, 2020.
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Maturities of Operating Lease Liabilities After Adoption of 842 | Maturities of lease liabilities were as follows:
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Maturities of Finance Lease Liabilities After Adoption of 842 | Maturities of lease liabilities were as follows:
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Maturities of Operating Leases Before Adoption of 842 | As of September 30, 2019, minimum lease payments under non-cancelable operating leases by period were expected to be as follows (in thousands):
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Accounts Payable and Accrued Expenses (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consisted of the following:
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Earnings per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Calculation of Weighted Average Number of Shares Outstanding Used in Computing Basic and Diluted Net Income Loss Per Share | The following table summarizes the computation of basic and diluted earnings per common share under the as-converted or two-class method, as well as the anti-dilutive shares excluded:
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table summarizes the computation of basic and diluted earnings per common share under the as-converted or two-class method, as well as the anti-dilutive shares excluded:
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Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Information by Reportable Segment | Summary information by reportable segment was as follows:
(a) Excludes depreciation of training equipment obtained in exchange for services of $0.3 million and $1.0 million for the three and nine months ended June 30, 2020, respectively, and $0.4 million and $1.1 million for the three and nine months ended June 30, 2019, respectively. (b) During nine months ended June 30, 2019, depreciation and amortization included $2.0 million of amortization of assets subject to a financing obligation.
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Nature of the Business - Narrative (Details) |
Jun. 30, 2020
location
|
---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of campuses through which undergraduate degree, diploma and certificate programs are offered | 12 |
Revenue from Contracts with Customers (Details) $ in Thousands |
1 Months Ended | 3 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020
USD ($)
campus
|
May 31, 2020
campus
|
Jun. 30, 2020
USD ($)
|
Mar. 31, 2020
USD ($)
|
Sep. 30, 2019
USD ($)
|
|
Disaggregation of Revenue [Line Items] | |||||
Receivables, which includes tuition and notes receivable | $ 51,597 | $ 51,597 | $ 44,629 | ||
Number of campuses, in-person labs resumed | campus | 4 | 8 | |||
Deferred revenue | $ 32,913 | 32,913 | $ 42,886 | ||
Students [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Deferred revenue | $ 10,800 | 10,800 | $ 300 | ||
Revenue recognized | $ 200 |
Postemployment Benefits - Narrative (Details) $ in Thousands |
9 Months Ended |
---|---|
Jun. 30, 2020
USD ($)
| |
Schedule Of Postemployment Benefits [Line Items] | |
Postemployment benefits liability, noncurrent | $ 1,100 |
Postemployment benefit charges | 2,135 |
Cash paid | $ 1,807 |
Minimum | |
Schedule Of Postemployment Benefits [Line Items] | |
Period for payment of post employment benefit | 1 month |
Maximum | |
Schedule Of Postemployment Benefits [Line Items] | |
Period for payment of post employment benefit | 24 months |
Postretirement Benefits Plans | |
Schedule Of Postemployment Benefits [Line Items] | |
Postemployment benefit charges | $ 1,500 |
Cash paid | $ 1,100 |
Postemployment Benefits - Postemployment Activity (Details) $ in Thousands |
9 Months Ended |
---|---|
Jun. 30, 2020
USD ($)
| |
Postemployment Benefits Disclosure [Line Items] | |
Balance accrued at beginning of period | $ 753 |
Postemployment benefit charges | 2,135 |
Cash paid | (1,807) |
Other non-cash adjustments | 88 |
Balance accrued at end of period | 1,169 |
Severance | |
Postemployment Benefits Disclosure [Line Items] | |
Balance accrued at beginning of period | 721 |
Postemployment benefit charges | 2,087 |
Cash paid | (1,623) |
Other non-cash adjustments | 109 |
Balance accrued at end of period | 1,294 |
Other | |
Postemployment Benefits Disclosure [Line Items] | |
Balance accrued at beginning of period | 32 |
Postemployment benefit charges | 48 |
Cash paid | (184) |
Other non-cash adjustments | (21) |
Balance accrued at end of period | $ (125) |
Investments - Narrative (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Investments, Debt and Equity Securities [Abstract] | ||
Proceeds from equity offering | $ 49,137 | $ 0 |
Investments - Schedule of Held-to-Maturity Investments (Details) $ in Thousands |
Jun. 30, 2020
USD ($)
|
---|---|
Schedule of Held-to-maturity Securities [Line Items] | |
Amortized Cost | $ 31,578 |
Gross Unrealized Gains | 24 |
Gross Unrealized Losses | (8) |
Estimated Fair Market Value | 31,594 |
Corporate bonds | |
Schedule of Held-to-maturity Securities [Line Items] | |
Amortized Cost | 31,578 |
Gross Unrealized Gains | 24 |
Gross Unrealized Losses | (8) |
Estimated Fair Market Value | $ 31,594 |
Property and Equipment, net - Assets Financed by Financing Obligations (Details) - Buildings and building improvements $ in Thousands |
Sep. 30, 2019
USD ($)
|
---|---|
Assets financed by financing obligations [Line Items] | |
Assets financed by financing obligations, gross | $ 45,816 |
Less accumulated depreciation and amortization | (14,208) |
Assets financed by financing obligations, net | $ 31,608 |
Goodwill (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Sep. 30, 2019 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 8,222 | $ 8,222 |
Investment in Unconsolidated Affiliate - Narrative (Details) - Investment in JV - USD ($) $ in Thousands |
Jun. 30, 2020 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2012 |
---|---|---|---|---|---|
Schedule of Equity Method Investments [Line Items] | |||||
Carrying Value | $ 4,459 | $ 4,338 | $ 4,304 | $ 4,206 | $ 4,000 |
Ownership Percentage | 27.972% | 27.972% | 28.00% |
Investment in Unconsolidated Affiliate - Unconsolidated Affiliate Activity (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Schedule of Equity Method Investments [Roll Forward] | ||||
Equity in earnings of unconsolidated affiliate | $ 0 | $ 100 | $ 0 | $ 298 |
Return of capital contribution from unconsolidated affiliate | (190) | (200) | ||
Investment in JV | ||||
Schedule of Equity Method Investments [Roll Forward] | ||||
Balance at beginning of period | 4,338 | 4,206 | ||
Equity in earnings of unconsolidated affiliate | 311 | 298 | ||
Return of capital contribution from unconsolidated affiliate | (190) | (200) | ||
Balance at end of period | $ 4,459 | $ 4,304 | $ 4,459 | $ 4,304 |
Leases - Narrative (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020
USD ($)
location
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2020
USD ($)
location
|
Jun. 30, 2019
USD ($)
|
Sep. 30, 2019
USD ($)
|
|
Lessee, Lease, Description [Line Items] | |||||
Number of lease contracts | location | 10 | ||||
Number of campuses | location | 12 | 12 | |||
Retained deficit | $ (38,098) | $ (38,098) | $ (44,673) | ||
Operating lease, rent expense including related parties | 500 | $ 500 | 1,500 | $ 1,500 | |
Operating lease payments due | 176,429 | $ 176,429 | |||
Minimum annual rent increase, percent | 4.00% | ||||
John C. White, Property One | |||||
Lessee, Lease, Description [Line Items] | |||||
Operating lease payments due | 300 | $ 300 | |||
John C. White, Property Two | |||||
Lessee, Lease, Description [Line Items] | |||||
Operating lease payments due | $ 700 | $ 700 | |||
Minimum | |||||
Lessee, Lease, Description [Line Items] | |||||
Lease term | 8 years | 8 years | |||
Maximum | |||||
Lessee, Lease, Description [Line Items] | |||||
Lease term | 20 years | 20 years |
Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2020 |
|
Leases [Abstract] | ||
Operating lease expense | $ 7,494 | $ 22,478 |
Finance lease expense: | ||
Amortization of leased assets | 32 | 70 |
Interest on lease liabilities | 2 | 5 |
Variable lease expense | 1,090 | 3,269 |
Sublease income | (145) | (653) |
Total net lease expense | $ 8,473 | $ 25,169 |
Leases - Maturities of Operating Leases After Adoption of 842 (Details) $ in Thousands |
Jun. 30, 2020
USD ($)
|
---|---|
Operating Leases | |
Remainder of 2020 | $ 8,053 |
2021 | 28,141 |
2022 | 26,863 |
2023 | 16,261 |
2024 | 15,137 |
2025 and thereafter | 81,974 |
Total lease payments | 176,429 |
Less: interest | (29,555) |
Present value of lease liabilities | 146,874 |
Less: current lease liabilities | (24,930) |
Operating lease liabilities | 121,944 |
Finance Leases | |
Remainder of 2020 | 34 |
2021 | 135 |
2022 | 110 |
2023 | 23 |
2024 | 0 |
2025 and thereafter | 0 |
Total lease payments | 302 |
Less: interest | (10) |
Present value of lease liabilities | 292 |
Less: current lease liabilities | (128) |
Long-term lease liabilities | $ 164 |
Leases - Maturities of Operating Leases Before Adoption of 842 (Details) $ in Thousands |
Sep. 30, 2019
USD ($)
|
---|---|
Gross | |
2020 | $ 26,379 |
2021 | 23,531 |
2022 | 21,621 |
2023 | 10,461 |
2024 | 9,180 |
Thereafter | 41,822 |
Total lease payments | 132,994 |
Sublease income | |
2020 | (362) |
2021 | (77) |
2022 | (78) |
2023 | (20) |
2024 | 0 |
Thereafter | 0 |
Total lease payments | (537) |
Net | |
2020 | 26,017 |
2021 | 23,454 |
2022 | 21,543 |
2023 | 10,441 |
2024 | 9,180 |
Thereafter | 41,822 |
Total lease payments | $ 132,457 |
Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Sep. 30, 2019 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accounts payable | $ 12,309 | $ 10,033 |
Accrued compensation and benefits | 27,786 | 22,230 |
Other accrued expenses | 16,535 | 13,615 |
Total accounts payable and accrued expenses | $ 56,630 | $ 45,878 |
Income Taxes - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jun. 30, 2020 |
Dec. 31, 2019 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Income Tax Disclosure [Abstract] | |||||||
Income tax (expense) benefit | $ (21) | $ (31) | $ 10,699 | $ (253) | |||
Income tax rate, percent | 0.20% | 9.30% | 117.00% | 1.90% | |||
Valuation allowance for deferred tax assets | $ 19,100 | $ 19,100 | $ 25,700 | ||||
Net operating loss | $ 20,300 | $ 13,000 | |||||
Tax refund | $ 11,300 | $ 172 |
Earnings per Share - Calculation of earnings per share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Earnings Per Share [Abstract] | ||||||||
Net income (loss) | $ (13,268) | $ 10,142 | $ 4,684 | $ (365) | $ (5,263) | $ (7,717) | $ 1,558 | $ (13,345) |
Less: Preferred stock dividend declared | (1,309) | (1,309) | (3,941) | (3,927) | ||||
Loss available for distribution | (14,577) | (1,674) | (2,383) | (17,272) | ||||
Income allocated to participating securities | 0 | 0 | 0 | 0 | ||||
Net loss available to common shareholders | $ (14,577) | $ (1,674) | $ (2,383) | $ (17,272) | ||||
Weighted average basic shares outstanding (in shares) | 32,607,000 | 25,498,000 | 28,871,000 | 25,410,000 | ||||
Basic income (loss) per common share (in dollars per share) | $ (0.45) | $ (0.07) | $ (0.08) | $ (0.68) | ||||
Weighted Average Number of Shares Outstanding, Diluted [Abstract] | ||||||||
Dilutive effect related to employee stock plans | 0 | 0 | 0 | 0 | ||||
Dilutive effect related to preferred stock | 0 | 0 | 0 | 0 | ||||
Diluted shares outstanding (in shares) | 32,607,000 | 25,498,000 | 28,871,000 | 25,410,000 | ||||
Diluted income (loss) per common share (in dollars per share) | $ (0.45) | $ (0.07) | $ (0.08) | $ (0.68) |
Earnings per Share - Schedule of antidilutive securities (Details) - shares shares in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total anti-dilutive shares excluded (in shares) | 21,302 | 21,294 | 21,318 | 21,408 |
Outstanding stock-based grants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total anti-dilutive shares excluded (in shares) | 281 | 273 | 297 | 387 |
Convertible preferred stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total anti-dilutive shares excluded (in shares) | 21,021 | 21,021 | 21,021 | 21,021 |
Segment Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Sep. 30, 2019 |
|
Segment Reporting Information [Line Items] | |||||||||
Revenues | $ 54,483 | $ 79,042 | $ 224,434 | $ 243,838 | |||||
Operating Income (Loss) | (13,779) | (455) | (10,024) | (13,240) | |||||
Depreciation and amortization | 2,927 | 4,002 | 8,821 | 11,957 | |||||
Net income (loss) | (13,268) | $ 10,142 | $ 4,684 | (365) | $ (5,263) | $ (7,717) | 1,558 | (13,345) | |
Total assets | 421,583 | 421,583 | $ 270,526 | ||||||
Depreciation of training equipment obtained in exchange for services | 300 | 400 | 1,011 | 1,066 | |||||
Depreciation and amortization, assets subject to financing obligation | 2,000 | ||||||||
Operating Segments | Postsecondary Education | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenues | 52,199 | 75,396 | 213,780 | 232,561 | |||||
Operating Income (Loss) | (13,341) | (402) | (9,331) | (12,071) | |||||
Depreciation and amortization | 2,904 | 3,966 | 8,729 | 11,835 | |||||
Net income (loss) | (12,830) | (413) | 2,251 | (12,474) | |||||
Total assets | 415,103 | 415,103 | 263,974 | ||||||
Corporate, Non-Segment | Other | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenues | 2,284 | 3,646 | 10,654 | 11,277 | |||||
Operating Income (Loss) | (438) | (53) | (693) | (1,169) | |||||
Depreciation and amortization | 23 | 36 | 92 | 122 | |||||
Net income (loss) | (438) | $ 48 | (693) | $ (871) | |||||
Total assets | $ 6,480 | $ 6,480 | $ 6,552 |
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