☒ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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New Jersey
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57-1150621
|
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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Title of each class
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Trading Symbol
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Name of exchange on which
|
registered
|
||
Common Stock, no par
|
LINC
|
The NASDAQ Stock Market LLC
|
value per share
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Large accelerated filer ☐
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Accelerated filer ☒
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Non-accelerated filer ☐
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Smaller reporting company ☒
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||||||
Emerging growth company ☐
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PART I.
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1
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||
ITEM 1.
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1
|
||
ITEM 1A.
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22
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||
ITEM 1B.
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33
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ITEM 2.
|
34
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ITEM 3.
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34
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ITEM 4.
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34
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||
PART II.
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35
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ITEM 5.
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35
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ITEM 6.
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35
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||
ITEM 7.
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36
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||
ITEM 7A.
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47
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ITEM 8.
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47
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ITEM 9.
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47
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ITEM 9A.
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47
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ITEM 9B.
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48
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||
PART III.
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49
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ITEM 10.
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49
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ITEM 11.
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49
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ITEM 12.
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49
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ITEM 13.
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49
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ITEM 14.
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49
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PART IV.
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50
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ITEM 15.
|
50
|
• |
our failure to comply with the extensive existing regulatory framework applicable to our industry or our failure to obtain timely regulatory approvals in connection with a change of control of our company or
acquisitions;
|
• |
the promulgation of new regulations in our industry as to which we may find compliance challenging;
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• |
our success in updating and expanding the content of existing programs and developing new programs in a cost-effective manner or on a timely basis;
|
• |
our ability to implement our strategic plan;
|
• |
risks associated with changes in applicable federal laws and regulations including pending rulemaking by the U.S. Department of Education;
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• |
uncertainties regarding our ability to comply with federal laws and regulations regarding the 90/10 Rule and cohort default rates;
|
• |
risks associated with maintaining accreditation
|
• |
risks associated with opening new campuses and closing existing campuses;
|
• |
risks associated with integration of acquired schools;
|
• |
industry competition;
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• |
conditions and trends in our industry;
|
• |
general economic conditions; and
|
• |
other factors discussed under the headings “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
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ITEM 1. |
BUSINESS
|
• |
Expand Existing Areas of Study and Existing Facilities. We believe we can leverage our operations to expand our program offerings in existing areas of study and new high-demand
areas of study in the Transportation and Skilled Trades segment to capitalize on demand from students and employers in our target markets. Whenever possible, we seek to replicate programs across our campuses.
|
• |
Maximize Utilization of Existing Facilities. We are focused on improving capacity utilization of existing facilities through increased enrollments, the introduction of new
programs and partnerships with industry.
|
• |
Expand Market. We plan to deploy our resources to strengthen our brand, invest in new programs and seek opportunities to expand our footprint in new markets. We have a solid
portfolio of corporate and industry partners and they are constantly asking us to explore new geographies to serve them better. Regardless of whether we expand our current campuses to take advantage of the operating leverage or establish new
campuses, our goal is to remain competitive and prudently deploy our resources.
|
• |
Expand Teaching Platform. Using the lessons learned from the COVID-19 pandemic, we believe we can continue to transform our in-person education model to a hybrid
in-person/virtual training model that combines instructor-facilitated online teaching and demonstrations with hands-on labs.
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Current Programs Offered
|
||||
Area of Study
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Associate’s Degree
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Diploma and Certificate
|
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Automotive
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Automotive Service Management, Collision Repair & Refinishing Service Management, Diesel & Truck Service Management, Heavy Equipment Maintenance Service Management
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Automotive Mechanics, Automotive Technology, Automotive Technology with Audi, Automotive Technology with BMW FastTrack, Automotive Technology with Mopar X-Press, Automotive Technology with High Performance, Automotive Technology with
Volkswagen, Collision Repair and Refinishing Technology, Diesel & Truck Mechanics, Diesel & Truck Technology, Diesel & Truck Technology with Alternate Fuel Technology, Diesel & Truck Technology with Transport Refrigeration,
Diesel & Truck with Automotive Technology, Heavy Equipment Maintenance Technology, Heavy Equipment and Truck Technology
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|
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Skilled Trades
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Electronic Engineering Technology, Electronics Systems Service Management
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Electrical & Electronics Systems Technician, Electrician Training, HVAC, Welding Technology, Welding and Metal Fabrication Technology, Welding with Introduction to Pipefitting, CNC, Advanced Manufacturing with Robotics
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|
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Health Sciences
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Medical Assisting Technology
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Medical Office Assistant, Medical Assistant, Patient Care Technician, Medical Coding & Billing, Dental Assistant, Licensed Practical Nursing
|
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Hospitality
Services
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Culinary Arts & Food Services, Cosmetology, Aesthetics, International Baking and Pastry, Nail Technology, Therapeutic Massage & Bodywork Technician
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Information
Technology
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Computer Networking and Support
|
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Computer & Network Support Technician, Computer Systems Support Technician
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School
|
Last Accreditation Letter
|
Next Accreditation
|
||
Philadelphia, PA2
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November 26, 2018
|
May 1, 2023
|
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Union, NJ1
|
May 24, 2019
|
February 1, 2024
|
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Mahwah, NJ1
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December 4, 2019
|
August 1, 2024
|
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Melrose Park, IL2
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December 2, 2019
|
November 1, 2024
|
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Denver, CO1
|
June 14, 2016
|
February 1, 20214
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Columbia, MD
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March 8, 2017
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February 1, 2022
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Grand Prairie, TX1
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June 20, 2017
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August 1, 20214
|
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Allentown, PA2
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March 8, 2017
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February 1, 2022
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Nashville, TN1
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September 6, 2017
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May 1, 2022
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Indianapolis, IN
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May 15, 2018
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November 1, 20214
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New Britain, CT
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June 5, 2018
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January 1, 2023
|
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Shelton, CT2
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March 1, 2019
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September 1, 2023
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Queens, NY1
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September 4, 2018
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June 1, 2023
|
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East Windsor, CT2
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October 17, 2017
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February 1, 2023
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South Plainfield, NJ1
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December 2, 2019
|
August 1, 2024
|
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Iselin, NJ
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May 15, 2018
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May 15, 2023
|
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Moorestown, NJ3
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May 15, 2018
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May 15, 2023
|
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Paramus, NJ3
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May 15, 2018
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May 15, 2023
|
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Lincoln, RI3
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May 15, 2018
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May 15, 2023
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Somerville, MA3
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May 15, 2018
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May 15, 2023
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Summerlin, NV3
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May 15, 2018
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May 15, 2023
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Marietta, GA3
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May 15, 2018
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May 15, 2022
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1 |
Branch campus of main campus in Indianapolis, IN
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2 |
Branch campus of main campus in New Britain, CT
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3 |
Branch campus of main campus in Iselin, NJ
|
4 |
Campus going through reaccreditation
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Main Institution/Campus(es)
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Additional Location(s)
|
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Iselin, NJ
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Moorestown, NJ
|
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Paramus, NJ
|
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Somerville, MA
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Lincoln, RI
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Marietta, GA
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Las Vegas, NV (Summerlin)
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New Britain, CT
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Shelton, CT
|
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Philadelphia, PA
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East Windsor, CT
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Melrose Park, IL
|
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Allentown, PA
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Columbia, MD
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Indianapolis, IN
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Grand Prairie, TX
|
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Nashville, TN
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Denver, CO
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Union, NJ
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Mahwah, NJ
|
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Queens, NY
|
|||
South Plainfield, NJ
|
Institution
|
Expiration Date of Current
Program Participation
Agreement
|
|
Iselin, NJ
|
December 31, 20221
|
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Indianapolis, IN
|
September 30, 20221
|
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New Britain, CT
|
December 31, 20221
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1 |
Provisionally certified.
|
•
|
The equity ratio, which measures the institution’s capital resources, ability to borrow and financial viability;
|
• |
The primary reserve ratio, which measures the institution’s ability to support current operations from expendable resources; and
|
• |
The net income ratio, which measures the institution’s ability to operate at a profit.
|
• |
Posting a letter of credit in an amount equal to at least 50% of the total Title IV Program funds received by the institution during the institution’s most recently completed fiscal year; or
|
• |
Posting a letter of credit in an amount equal to at least 10% of the Title IV Program funds received by the institution during its most recently completed fiscal year accepting provisional certification; complying
with additional DOE monitoring requirements and agreeing to receive Title IV Program funds under an arrangement other than the DOE’s standard advance funding arrangement.
|
• |
the institution’s recalculated composite score is less than 1.0 as determined by the DOE as a result of an institutional liability from a settlement, final judgment, or final determination in an administrative or
judicial action or proceeding brought by a Federal or State entity;
|
• |
the institution’s recalculated composite score goes from less than 1.5 to less than 1.0 as determined by the DOE as a result of a withdrawal of owner’s equity from the institution;
|
• |
the SEC takes certain actions against the institution or the institution fails to comply with certain filing requirements; or
|
• |
the occurrence of two or more discretionary triggering events (as described below) within a certain time period.
|
• |
a show cause or similar order from the institution’s accrediting agency that could result in the withdrawal, revocation or suspension of institutional accreditation;
|
• |
a notice from the institution’s state licensing agency of an intent to withdraw or terminate the institution’s state licensure if the institution does not take steps to comply with state requirements;
|
• |
a default, delinquency, or other event occurs as a result of an institutional violation of a security or loan agreement that enables the creditor to require an increase in collateral, a change in contractual
obligations, an increase in interest rates or payment, or other sanctions, penalties or fees;
|
• |
a failure to comply with the 90/10 Rule during the institution’s most recently completed fiscal year;
|
• |
high annual drop-out rates from the institution as determined by the DOE; or
|
• |
official cohort default rates of at least 30 percent for the two most recent years unless a pending appeal could sufficiently reduce one of the rates.
|
• |
Comply with all applicable federal student financial aid requirements;
|
• |
Have capable and sufficient personnel to administer the federal student Title IV Programs;
|
• |
Administer Title IV Programs with adequate checks and balances in its system of internal controls over financial reporting;
|
• |
Divide the function of authorizing and disbursing or delivering Title IV Program funds so that no office has the responsibility for both functions;
|
• |
Establish and maintain records required under the Title IV Program regulations;
|
• |
Develop and apply an adequate system to identify and resolve discrepancies in information from sources regarding a student’s application for financial aid under the Title IV Program;
|
• |
Have acceptable methods of defining and measuring the satisfactory academic progress of its students;
|
• |
Refer to the Office of the Inspector General any credible information indicating that any applicant, student, employee, third party servicer or other agent of the school has been engaged in any fraud or other
illegal conduct involving Title IV Programs;
|
• |
Not be, and not have any principal or affiliate who is, debarred or suspended from federal contracting or engaging in activity that is cause for debarment or suspension;
|
• |
Provide adequate financial aid counseling to its students;
|
• |
Submit in a timely manner all reports and financial statements required by the Title IV Program regulations; and
|
• |
Not otherwise appear to lack administrative capability.
|
Item 1A. |
RISK FACTORS
|
• |
Student dissatisfaction with our programs and services;
|
• |
Diminished access to high school student populations;
|
• |
Our failure to maintain or expand our brand or other factors related to our marketing or advertising practices; and
|
• |
Our inability to maintain relationships with employers in the automotive, diesel, skilled trades and IT services industries.
|
• |
incur additional indebtedness and guarantee indebtedness;
|
• |
undertake capital expenditures;
|
• |
create or incur liens;
|
• |
pay dividends and distributions or repurchase capital stock;
|
• |
make investments, loans and advances; and
|
• |
enter into certain transactions with affiliates.
|
• |
authorize the issuance of blank check preferred stock that could be issued by our board of directors to thwart a takeover attempt;
|
• |
prohibit cumulative voting in the election of directors, which would otherwise allow holders of less than a majority of stock to elect some directors;
|
• |
require super-majority voting to effect amendments to certain provisions of our amended and restated certificate of incorporation;
|
• |
limit who may call special meetings of both the board of directors and shareholders;
|
• |
prohibit shareholder action by non-unanimous written consent and otherwise require all shareholder actions to be taken at a meeting of the shareholders;
|
• |
establish advance notice requirements for nominating candidates for election to the board of directors or for proposing matters that can be acted upon by shareholders at shareholders’ meetings; and
|
• |
require that vacancies on the board of directors, including newly created directorships, be filled only by a majority vote of directors then in office.
|
• |
general economic conditions;
|
• |
general conditions in the for-profit, post-secondary education industry;
|
• |
negative media coverage of the for-profit, post-secondary education industry;
|
• |
failure of certain of our schools or programs to maintain compliance under the gainful employment regulation, 90-10 Rule or with financial responsibility standards;
|
• |
the impact of DOE rulemaking and other changes in the highly regulated environment in which we operate;
|
• |
the initiation, pendency or outcome of litigation, accreditation reviews and regulatory reviews, inquiries and investigations;
|
• |
loss of key personnel;
|
• |
quarterly variations in our operating results;
|
• |
our ability to meet or exceed, or changes in, expectations of investors and analysts, or the extent of analyst coverage of us; and decisions by any significant investors to reduce their investment in our common stock.
|
ITEM 1B. |
ITEM 2. |
PROPERTIES
|
Location
|
Brand
|
Approximate Square Footage
|
||
Las Vegas, Nevada
|
Euphoria Institute
|
23,000
|
||
Columbia, Maryland
|
Lincoln College of Technology
|
110,000
|
||
Denver, Colorado
|
Lincoln College of Technology
|
212,000
|
||
Grand Prairie, Texas
|
Lincoln College of Technology
|
146,000
|
||
Indianapolis, Indiana
|
Lincoln College of Technology
|
189,000
|
||
Marietta, Georgia
|
Lincoln College of Technology
|
30,000
|
||
Melrose Park, Illinois
|
Lincoln College of Technology
|
88,000
|
||
Allentown, Pennsylvania
|
Lincoln Technical Institute
|
26,000
|
||
East Windsor, Connecticut
|
Lincoln Technical Institute
|
289,000
|
||
Iselin, New Jersey
|
Lincoln Technical Institute
|
32,000
|
||
Lincoln, Rhode Island
|
Lincoln Technical Institute
|
39,000
|
||
Mahwah, New Jersey
|
Lincoln Technical Institute
|
79,000
|
||
Moorestown, New Jersey
|
Lincoln Technical Institute
|
35,000
|
||
New Britain, Connecticut
|
Lincoln Technical Institute
|
35,000
|
||
Paramus, New Jersey
|
Lincoln Technical Institute
|
30,000
|
||
Philadelphia, Pennsylvania
|
Lincoln Technical Institute
|
29,000
|
||
Queens, New York
|
Lincoln Technical Institute
|
48,000
|
||
Shelton, Connecticut
|
Lincoln Technical Institute and Lincoln Culinary Institute
|
47,000
|
||
Somerville, Massachusetts
|
Lincoln Technical Institute
|
33,000
|
||
South Plainfield, New Jersey
|
Lincoln Technical Institute
|
60,000
|
||
Union, New Jersey
|
Lincoln Technical Institute
|
56,000
|
||
Nashville, Tennessee
|
Lincoln College of Technology
|
350,000
|
||
West Orange, New Jersey
|
Corporate Office
|
47,000
|
||
Blue Bell, Pennsylvania
|
Corporate Office
|
4,000
|
||
Suffield, Connecticut
|
Former Lincoln Technical Institute
|
132,000
|
ITEM 3. |
LEGAL PROCEEDINGS
|
ITEM 4. |
MINE SAFETY DISCLOSURES
|
ITEM 5. |
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
Plan Category
|
Number of
Securities to be
issued upon
exercise of
outstanding
options, warrants
and rights
|
Weighted-
average
exercise price
of outstanding
options,
warrants and
rights
|
Number of
securities
remaining
available for
future issuance
under equity
compensation
plans (excluding
securities
reflected in
column (a))
|
|||||||||
(a)
|
||||||||||||
Equity compensation plans approved by security holders
|
81,000
|
$
|
7.79
|
2,131,922
|
||||||||
Equity compensation plans not approved by security holders
|
-
|
-
|
-
|
|||||||||
Total
|
81,000
|
$
|
7.79
|
2,131,922
|
ITEM 6. |
SELECTED FINANCIAL DATA
|
ITEM 7. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
• |
Our internal financing is provided to students only after all other funding resources have been exhausted; thus, by the time this funding is available, students have completed approximately two-thirds of their curriculum and are more
likely to graduate;
|
• |
Funding for students who interrupt their education is typically covered by Title IV Program funds as long as they have been properly packaged for financial aid; and
|
• |
Creditworthy criteria to demonstrate a student’s ability to pay.
|
• |
Educational services and facilities. Major components of educational services and facilities expenses include faculty compensation and benefits, expenses of books and tools,
facility rent, maintenance, utilities, depreciation and amortization of property and equipment used in the provision of education services and other costs directly associated with teaching our programs excluding student services which is
included in selling, general and administrative expenses.
|
• |
Selling, general and administrative. Selling, general and administrative expenses include compensation and benefits of employees who are not directly associated with the
provision of educational services (such as executive management and school management, finance and central accounting, legal, human resources and business development), marketing and student enrollment expenses (including compensation and
benefits of personnel employed in sales and marketing and student admissions), costs to develop curriculum, costs of professional services, bad debt expense, rent for our corporate headquarters, depreciation and amortization of property and
equipment that is not used in the provision of educational services and other costs that are incidental to our operations. Selling, general and administrative expenses also includes the cost of all student services including financial aid and
career services. All marketing and student enrollment expenses are recognized in the period incurred.
|
Year Ended Dec 31,
|
||||||||
2020
|
2019
|
|||||||
Revenue
|
100.0
|
%
|
100.0
|
%
|
||||
Costs and expenses:
|
||||||||
Educational services and facilities
|
41.7
|
%
|
45.2
|
%
|
||||
Selling, general and administrative
|
53.3
|
%
|
53.1
|
%
|
||||
Loss on sale of assets
|
0.0
|
%
|
-0.2
|
%
|
||||
Total costs and expenses
|
95.0
|
%
|
98.1
|
%
|
||||
Operating income
|
5.0
|
%
|
1.9
|
%
|
||||
Interest expense, net
|
-0.4
|
%
|
-1.1
|
%
|
||||
Income from opeartions before income taxes
|
4.6
|
%
|
0.8
|
%
|
||||
(Benefit) provision for income taxes
|
-12.0
|
%
|
0.1
|
%
|
||||
Net income
|
16.6
|
%
|
0.7
|
%
|
Twelve Months Ended December 31,
|
||||||||||||
2020
|
2019
|
% Change
|
||||||||||
Revenue:
|
||||||||||||
Transportation and Skilled Trades
|
$
|
207,434
|
$
|
193,722
|
7.1
|
%
|
||||||
Healthcare and Other Professions
|
85,661
|
79,620
|
7.6
|
%
|
||||||||
Total
|
$
|
293,095
|
$
|
273,342
|
7.2
|
%
|
||||||
Operating Income (Loss):
|
||||||||||||
Transportation and Skilled Trades
|
$
|
34,458
|
$
|
21,979
|
56.8
|
%
|
||||||
Healthcare and Other Professions
|
11,068
|
7,588
|
45.9
|
%
|
||||||||
Corporate
|
(30,745
|
)
|
(24,329
|
)
|
-26.4
|
%
|
||||||
Total
|
$
|
14,781
|
$
|
5,238
|
182.2
|
%
|
||||||
Starts:
|
||||||||||||
Transportation and Skilled Trades
|
9,442
|
8,548
|
10.5
|
%
|
||||||||
Healthcare and Other Professions
|
4,879
|
4,386
|
11.2
|
%
|
||||||||
Total
|
14,321
|
12,934
|
10.7
|
%
|
||||||||
Average Population:
|
||||||||||||
Transportation and Skilled Trades
|
7,872
|
7,319
|
7.6
|
%
|
||||||||
Leave of Absense - COVID-19
|
(219
|
)
|
-
|
100.0
|
%
|
|||||||
Transportation and Skilled Trades Excluding Leave of Absense - COVID-19
|
7,653
|
7,319
|
4.6
|
%
|
||||||||
Healthcare and Other Professions
|
4,232
|
3,666
|
15.4
|
%
|
||||||||
Leave of Absense - COVID-19
|
(156
|
)
|
-
|
100.0
|
%
|
|||||||
Healthcare and Other Professions Excluding Leave of Absense - COVID-19
|
4,076
|
3,666
|
11.2
|
%
|
||||||||
Total
|
12,104
|
10,985
|
10.2
|
%
|
||||||||
Total Excluding Leave of Absense - COVID-19
|
11,729
|
10,985
|
6.8
|
%
|
||||||||
End of Period Population:
|
||||||||||||
Transportation and Skilled Trades
|
7,917
|
7,349
|
7.7
|
%
|
||||||||
Leave of Absense - COVID-19
|
(22
|
)
|
-
|
100.0
|
%
|
|||||||
Transportation and Skilled Trades Excluding Leave of Absense - COVID-19
|
7,895
|
7,349
|
7.4
|
%
|
||||||||
Healthcare and Other Professions
|
4,402
|
3,936
|
11.8
|
%
|
||||||||
Leave of Absense - COVID-19
|
(80
|
)
|
-
|
100.0
|
%
|
|||||||
Healthcare and Other Professions Excluding Leave of Absense - COVID-19
|
4,322
|
3,936
|
9.8
|
%
|
||||||||
Total
|
12,319
|
11,285
|
9.2
|
%
|
||||||||
Total Excluding Leave of Absense - COVID-19
|
12,217
|
11,285
|
8.3
|
%
|
• |
Revenue increased $13.7 million, or 7.1% to $207.4 million for the year ended December 31, 2020 from $193.7 million in the prior year comparable period. The increase in revenue was primarily due to a 4.6% increase
in average student population, driven by a 10.5% increase in student starts year over year.
|
• |
Educational services and facilities expense decreased $2.3 million, or 2.7% to $83.4 million for the year ended December 31, 2020 from $85.7 million in the prior year comparable period. The reduced costs year over
year were primarily driven by savings in facilities expense due to facility closures during the first and second quarter as a result of the COVID-19 pandemic, which drove down utilities expense, regular daily cleaning services and meal plan
expense. Further cost savings were realized from rent abatements at certain campuses resulting in lower rent expense while campuses were closed.
|
• |
Selling general and administrative expense increased $3.0 million, or 3.5% to $89.6 million for the year ended December 31, 2020 from $86.6 million in the prior year comparable period. The increase was primarily
due to bad debt expense and additional investments in marketing. Partially offsetting the increase were cost savings in sales expense and student services expense all of which are discussed in detail above in the consolidated results of
operations.
|
• |
Revenue increased by $6.1 million, or 7.6% to $85.7 million for the year ended December 31, 2020 from $79.6 million in the prior year comparable period. The increase in revenue was primarily due to a 11.2% increase
in average student population, driven by an 11.2% increase in student starts year over year.
|
• |
Educational services and facilities expense increased $1.0 million, or 2.7% to $38.8 million for the year ended December 31, 2020 from $37.8 million in the prior year comparable period. The increase was primarily
driven by increases in instructional expense and books and tools expense resulting from a larger student population year over year. Partially offsetting these costs were savings realized in facilities expense driven by facility closures
during the first and second quarter as a result of the COVID-19 pandemic, which drove down utilities expense and regular daily cleaning services. Further cost savings were realized from rent abatements at certain campuses resulting in lower
rent expense while campuses were closed.
|
• |
Selling general and administrative expense increased $1.5 million, or 4.5% to $35.8 million for the year ended December 31, 2020 from $34.3 million in the prior year comparable period. The increase was primarily
driven by bad debt expense, which is discussed in detail in the consolidated results of operations.
|
Cash Flow Summary
Year Ended December 31,
|
||||||||
2020
|
2019
|
|||||||
(In thousands)
|
||||||||
Net cash provided by operating activities
|
$
|
23,485
|
$
|
988
|
||||
Net cash used in investing activities
|
$
|
(5,483
|
)
|
$
|
(4,810
|
)
|
||
Net cash used in financing activities
|
$
|
(18,620
|
)
|
$
|
(3,480
|
)
|
As of December 31,
|
||||||||
2020
|
2019
|
|||||||
Credit agreement
|
$
|
17,833
|
$
|
34,833
|
||||
Deferred financing fees
|
(621
|
)
|
(805
|
)
|
||||
Subtotal
|
17,212
|
34,028
|
||||||
Less current maturities
|
(2,000
|
)
|
(2,000
|
)
|
||||
Total long-term debt
|
$
|
15,212
|
$
|
32,028
|
ITEM 7A. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8. |
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
ITEM 9. |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A. |
CONTROLS AND PROCEDURES
|
ITEM 9B. |
OTHER INFORMATION
|
ITEM 10. |
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11. |
EXECUTIVE COMPENSATION
|
ITEM 12. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14. |
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
ITEM 15. |
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
1. |
Financial Statements
|
2. |
Financial Statement Schedule
|
3. |
Exhibits Required by Securities and Exchange Commission Regulation S-K
|
Exhibit
Number
|
Description
|
|
Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to the Company’s Registration Statement on Form S-1/A (Registration No. 333-123644) filed June 7, 2005.
|
||
Certificate of Amendment, dated November 14, 2019, to the Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement on Form
S-3 filed October 6, 2020).
|
||
Bylaws of the Company, as amended on March 8, 2019 (incorporated by reference to the Company’s Form 8-K filed June 28 2005).
|
||
Specimen Stock Certificate evidencing shares of common stock (incorporated by reference to the Company’s Registration Statement on Form S-1/A (Registration No. 333-123644) filed June 21, 2005).
|
||
Registration Rights Agreement, dated as of November 14, 2019, between the Company and the investors parties thereto (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed November 14,
2019).
|
||
Description of Securities of the Company
|
||
Employment Agreement, dated as of December 10, 2020, between the Company and Scott M. Shaw (incorporated by reference to the Company’s Current Report on Form 8-K filed December 11, 2020).
|
||
Employment Agreement, dated as of November 7, 2018, between the Company and Scott M. Shaw (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed November 9, 2018).
|
||
Employment Agreement, dated as of December 10, 2020, between the Company and Brian K. Meyers (incorporated by reference to the Company’s Current Report on Form 8-K filed December 11, 2020).
|
||
Employment Agreement, dated as of November 7, 2018, between the Company and Brian K. Meyers (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed November 9, 2018).
|
||
|
||
Employment Agreement, dated as of December 10, 2020, between the Company and Stephen M. Buchenot (incorporated by reference to the Company’s Current Report on Form 8-K filed December 11, 2020).
|
||
Employment Agreement dated April 3, 2019 between the Company and Stephen M. Buchenot (incorporated by reference to the Company’s Current Report on Form 8-K filed April 5, 2019).
|
||
Lincoln Educational Services Corporation 2020 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.16 of the Current Report on Form 8-K dated June 5, 2020).
|
Securities Purchase Agreement, dated as of November 14, 2019, between the Company and the investors parties thereto (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed November 14,
2019).
|
||
Credit Agreement, dated as of November 14, 2019, among the Company, Lincoln Technical Institute, Inc. and its subsidiaries, and Sterling National Bank (incorporated by reference to the Company’s Quarterly
Report on Form 10-Q filed November 14, 2019).
|
||
First Amendment to Credit Agreement, dated as of November 10, 2020, among the Company, Lincoln Technical Institute, Inc. and its subsidiaries, and Sterling National Bank (incorporated by reference to the
Company’s Quarterly Report on Form 10-Q filed November 12, 2020).
|
||
Form of Indemnification Agreement between the Company and each director of the Company (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed November 14, 2019).
|
||
Indemnification Agreement between the Company and John A. Bartholdson (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed November 14, 2019).
|
||
Subsidiaries of the Company.
|
||
Consent of Independent Registered Public Accounting Firm.
|
||
Power of Attorney (included on the Signatures page of the Company’s Annual Report on Form 10-K filed March 6, 2021).
|
||
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
||
101*
|
The following financial statements from Lincoln Educational Services Corporation’s Annual Report on Form 10-K for the year ended December 31, 2020, formatted in XBRL: (i) Consolidated Statements of Operations, (ii) Consolidated Balance
Sheets, (iii) Consolidated Statements of Cash Flows, (iv) Consolidated Statements of Comprehensive (Loss) Income, (v) Consolidated Statement of Changes in Stockholders’ Equity and (vi) the Notes to Consolidated Financial Statements, tagged as
blocks of text and in detail.
|
* |
Filed herewith.
|
+ |
Indicates management contract or compensatory plan or arrangement required to be filed or incorporated by reference as an exhibit to this Form 10-K pursuant to Item 15(b) of Form 10-K.
|
** |
As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.
|
LINCOLN EDUCATIONAL SERVICES CORPORATION
|
|||
By:
|
/s/ Brian Meyers
|
||
Brian Meyers
|
|||
Executive Vice President, Chief Financial Officer and Treasurer
|
|||
(Principal Accounting and Financial Officer)
|
Signature
|
Title
|
Date
|
||
/s/ Scott M. Shaw
|
|
|
||
Scott M. Shaw
|
Chief Executive Officer and Director
|
March 8, 2021 | ||
/s/ Brian K. Meyers
|
Executive Vice President, Chief Financial Officer and
Treasurer (Principal Accounting and Financial Officer)
|
March 8, 2021
|
||
Brian K. Meyers
|
||||
/s/ John A. Bartholdson
|
Director
|
March 8, 2021
|
||
John A. Bartholdson
|
||||
/s/ Peter S. Burgess
|
Director
|
March 8, 2021
|
||
Peter S. Burgess
|
||||
/s/ James J. Burke, Jr.
|
Director
|
March 8, 2021
|
||
James J. Burke, Jr.
|
||||
/s/ Kevin M. Carney
|
Director
|
March 8, 2021
|
||
Kevin M. Carney
|
||||
/s/ Celia H. Currin
|
Director
|
March 8, 2021
|
||
Celia H. Currin
|
||||
/s/ Ronald E. Harbour
|
Director
|
March 8, 2021
|
||
Ronald E. Harbour
|
||||
/s/ J. Barry Morrow
|
Director
|
March 8, 2021
|
||
J. Barry Morrow
|
||||
/s/ Michael A. Plater
|
Director
|
March 8, 2021
|
||
Michael A. Plater
|
||||
/s/ Carlton Rose
|
Director
|
March 8, 2021
|
||
Carlton Rose
|
Page Number
|
|
Reports of Independent Registered Public Accounting Firm
|
F-2
|
Consolidated Balance Sheets as of December 31, 2020 and 2019
|
F-5
|
Consolidated Statements of Operations for the years ended December 31, 2020 and 2019
|
F-7
|
Consolidated Statements of Other Comprehensive Income for the years ended December 31, 2020 and 2019
|
F-8
|
Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity for the years ended December 31, 2020 and 2019
|
F-9
|
Consolidated Statements of Cash Flows for the years ended December 31, 2020 and 2019
|
F-10
|
Notes to Consolidated Financial Statements
|
F-12
|
Schedule II-Valuation and Qualifying Accounts
|
F-38
|
• |
We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of the reporting units within the Transportation and Skilled Trades Segment such as controls
related to management’s selection of the long-term growth rate, discount rate, EBITDA multiples and control premiums, as well as forecasts of future revenue, student start growth and EBITDA margins.
|
• |
We evaluated management’s ability to accurately forecast future revenues and EBITDA margins by comparing actual results to management’s historical forecasts.
|
• |
We evaluated the reasonableness of management’s revenue and EBITDA margin forecasts by comparing the forecasts to:
|
o |
Historical revenues and EBITDA margins.
|
o |
Internal communications to management and the Board of Directors.
|
o |
Forecasted information included in Company press releases, as well as in analyst and industry reports for the Company and certain peer companies.
|
• |
With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodologies (2) EBITDA multiples (3) control premiums (4) long-term growth rate and (5) the discount rate by:
|
o |
Testing the source information underlying the determination of the discount rate, the selection of the EBITDA multiples, control premiums, long-term growth rates and the discount rate and the mathematical accuracy of the calculations.
|
o |
Developing a range of independent estimates and comparing those to the EBITDA multiples, control premiums, long-term growth rates and the discount rate selected by management.
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$
|
38,026
|
$
|
23,644
|
||||
Accounts receivable, less allowance of $25,174 and $18,107 at December 31, 2020 and 2019, respectively
|
30,021
|
20,652
|
||||||
Inventories
|
2,394
|
1,608
|
||||||
Prepaid income taxes and income taxes receivable
|
-
|
383
|
||||||
Prepaid expenses and other current assets
|
3,723
|
4,190
|
||||||
Total current assets
|
74,164
|
50,477
|
||||||
PROPERTY, EQUIPMENT AND FACILITIES - At cost, net of accumulated depreciation and amortization of $176,300 and $172,408 at December 31, 2020 and 2019, respectively
|
48,388
|
49,345
|
||||||
OTHER ASSETS:
|
||||||||
Noncurrent restricted cash
|
-
|
15,000
|
||||||
Noncurrent receivables, less allowance of $3,465 and $2,260 at December 31, 2020 and 2019, respectively
|
16,463
|
15,337
|
||||||
Deferred income taxes, net
|
35,718
|
-
|
||||||
Operating lease right-of-use assets
|
55,187
|
49,065
|
||||||
Goodwill
|
14,536
|
14,536
|
||||||
Other assets, net
|
734
|
1,003
|
||||||
Total other assets
|
122,638
|
94,941
|
||||||
TOTAL ASSETS
|
$
|
245,190
|
$
|
194,763
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
LIABILITIES, SERIES A CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Current portion of credit agreement
|
$
|
2,000
|
$
|
2,000
|
||||
Unearned tuition
|
23,453
|
23,411
|
||||||
Accounts payable
|
15,676
|
14,584
|
||||||
Accrued expenses
|
16,692
|
7,869
|
||||||
Income taxes payable
|
491
|
-
|
||||||
Current portion of operating lease liabilities
|
8,504
|
9,142
|
||||||
Other short-term liabilities
|
26
|
199
|
||||||
Total current liabilities
|
66,842
|
57,205
|
||||||
NONCURRENT LIABILITIES:
|
||||||||
Long-term credit agreement
|
15,212
|
32,028
|
||||||
Pension plan liabilities
|
4,252
|
4,015
|
||||||
Deferred income taxes, net
|
-
|
153
|
||||||
Long-term portion of operating lease liabilities
|
52,702
|
46,018
|
||||||
Other long-term liabilities
|
3,133
|
214
|
||||||
Total liabilities
|
142,141
|
139,633
|
||||||
COMMITMENTS AND CONTINGENCIES
|
||||||||
SERIES A CONVERTIBLE PREFERRED STOCK
|
||||||||
Preferred stock, no par value - 10,000,000 shares authorized, Series A convertible preferred shares, 12,700 shares issued and outstanding at December 31, 2020 and no shares issued and
outstanding at December 31, 2019
|
11,982
|
11,982
|
||||||
STOCKHOLDERS’ EQUITY:
|
||||||||
Common stock, no par value - authorized 100,000,000 shares at December 31, 2020 and 2019, issued and outstanding 26,476,329 shares at December 31, 2020 and 25,231,710 shares at December 31,
2019
|
141,377
|
141,377
|
||||||
Additional paid-in capital
|
30,512
|
30,145
|
||||||
Treasury stock at cost - 5,910,541 shares at December 31, 2020 and 2019
|
(82,860
|
)
|
(82,860
|
)
|
||||
Retained earnings (accumulated deficit)
|
6,203
|
(42,058
|
)
|
|||||
Accumulated other comprehensive loss
|
(4,165
|
)
|
(3,456
|
)
|
||||
Total stockholders’ equity
|
91,067
|
43,148
|
||||||
TOTAL LIABILITIES, SERIES A CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
|
$
|
245,190
|
$
|
194,763
|
Year Ended December 31,
|
||||||||
2020
|
2019
|
|||||||
REVENUE
|
$
|
293,095
|
$
|
273,342
|
||||
COSTS AND EXPENSES:
|
||||||||
Educational services and facilities
|
122,196
|
123,495
|
||||||
Selling, general and administrative
|
156,199
|
145,176
|
||||||
Gain on sale of assets
|
(81
|
)
|
(567
|
)
|
||||
Total costs and expenses
|
278,314
|
268,104
|
||||||
OPERATING INCOME
|
14,781
|
5,238
|
||||||
OTHER:
|
||||||||
Interest income
|
-
|
8
|
||||||
Interest expense
|
(1,275
|
)
|
(2,963
|
)
|
||||
INCOME BEFORE INCOME TAXES
|
13,506
|
2,283
|
||||||
(BENEFIT) PROVISION FOR INCOME TAXES
|
(35,059
|
)
|
268
|
|||||
NET INCOME
|
48,565
|
2,015
|
||||||
PREFERRED STOCK DIVIDENDS
|
1,378
|
-
|
||||||
INCOME AVAILABLE TO COMMON STOCKHOLDERS
|
$
|
47,187
|
$
|
2,015
|
||||
Basic
|
||||||||
Net income per share
|
$
|
1.49
|
$
|
0.08
|
||||
Diluted
|
||||||||
Net income per share
|
$
|
1.49
|
$
|
0.08
|
||||
Weighted average number of common shares outstanding:
|
||||||||
Basic
|
24,748
|
24,554
|
||||||
Diluted
|
24,748
|
24,554
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Net income
|
$
|
48,565
|
$
|
2,015
|
||||
Other comprehensive income
|
||||||||
Derivative qualifying as a cash flow hedge, net of taxes (nil)
|
(703
|
)
|
(174
|
)
|
||||
Employee pension plan adjustments, net of taxes (1)
|
(6
|
)
|
780
|
|||||
Comprehensive income
|
$
|
47,856
|
$
|
2,621
|
Stockholders’ Equity
|
||||||||||||||||||||||||||||||||||||
Additional
Paid-in
Capital
|
Treasury
Stock
|
Retained
Earnings
(Accumulated
Deficit)
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Total
|
Series A
Convertible
Preferred Stock
|
|||||||||||||||||||||||||||||||
Common Stock
|
||||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||||||||||
BALANCE - January 1, 2018
|
24,641,792
|
$
|
141,377
|
$
|
29,484.0
|
$
|
(82,860
|
)
|
$
|
(44,073
|
)
|
$
|
(4,062
|
)
|
$
|
39,866
|
-
|
-
|
||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
2,015
|
-
|
2,015
|
-
|
-
|
|||||||||||||||||||||||||||
Employee pension plan adjustments
|
-
|
-
|
-
|
-
|
-
|
780
|
780
|
-
|
-
|
|||||||||||||||||||||||||||
Derivative qualifying as cash flow hedge
|
-
|
-
|
-
|
-
|
-
|
(174
|
)
|
(174
|
)
|
-
|
-
|
|||||||||||||||||||||||||
Issuance of series A convertible preferred stock,
net of issuance costs
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
12,700
|
11,982
|
|||||||||||||||||||||||||||
Stock-based compensation expense
|
||||||||||||||||||||||||||||||||||||
Restricted stock
|
595,436
|
-
|
679
|
-
|
-
|
-
|
679
|
-
|
-
|
|||||||||||||||||||||||||||
Net share settlement for
equity-based compensation
|
(5,518
|
)
|
-
|
(18
|
)
|
-
|
-
|
-
|
(18
|
)
|
-
|
-
|
||||||||||||||||||||||||
BALANCE - December 31, 2019
|
25,231,710
|
141,377
|
30,145
|
(82,860
|
)
|
(42,058
|
)
|
(3,456
|
)
|
43,148
|
12,700
|
11,982
|
||||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
48,565
|
-
|
48,565
|
-
|
-
|
|||||||||||||||||||||||||||
Preferred stock dividend
|
-
|
-
|
(1,074
|
)
|
-
|
(304
|
)
|
-
|
(1,378
|
)
|
-
|
-
|
||||||||||||||||||||||||
Employee pension plan adjustments
|
-
|
-
|
-
|
-
|
-
|
(6
|
)
|
(6
|
)
|
-
|
-
|
|||||||||||||||||||||||||
Derivative qualifying as cash flow hedge
|
-
|
-
|
-
|
-
|
-
|
(703
|
)
|
(703
|
)
|
-
|
-
|
|||||||||||||||||||||||||
Stock-based compensation expense
|
||||||||||||||||||||||||||||||||||||
Restricted stock
|
1,319,734
|
-
|
1,686
|
-
|
-
|
-
|
1,686
|
-
|
-
|
|||||||||||||||||||||||||||
Net share settlement for
equity-based compensation
|
(75,115
|
)
|
-
|
(245
|
)
|
-
|
-
|
-
|
(245
|
)
|
-
|
-
|
||||||||||||||||||||||||
BALANCE - December 31, 2020
|
26,476,329
|
$
|
141,377
|
$
|
30,512
|
$
|
(82,860
|
)
|
$
|
6,203
|
$
|
(4,165
|
)
|
$
|
91,067
|
12,700
|
$
|
11,982
|
Year Ended December 31,
|
||||||||
2020
|
2019
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income
|
$
|
48,565
|
$
|
2,015
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
7,400
|
8,116
|
||||||
Amortization of deferred finance fees
|
181
|
190
|
||||||
Write-off of deferred finance fees
|
-
|
512
|
||||||
Deferred income taxes
|
(35,871
|
)
|
153
|
|||||
Gain on disposition of assets
|
(81
|
)
|
(567
|
)
|
||||
Fixed asset donation
|
(334
|
)
|
(1,084
|
)
|
||||
Provision for doubtful accounts
|
26,888
|
20,847
|
||||||
Stock-based compensation expense
|
1,686
|
679
|
||||||
(Increase) decrease in assets:
|
||||||||
Accounts receivable
|
(37,383
|
)
|
(25,986
|
)
|
||||
Inventories
|
(786
|
)
|
(157
|
)
|
||||
Prepaid income taxes and income taxes receivable
|
383
|
219
|
||||||
Prepaid expenses and current assets
|
158
|
(502
|
)
|
|||||
Other assets
|
193
|
(1,368
|
)
|
|||||
Increase (decrease) in liabilities:
|
||||||||
Accounts payable
|
856
|
444
|
||||||
Accrued expenses
|
8,823
|
(1,687
|
)
|
|||||
Unearned tuition
|
42
|
866
|
||||||
Income taxes payable
|
491
|
-
|
||||||
Other liabilities
|
2,274
|
(1,702
|
)
|
|||||
Total adjustments
|
(25,080
|
)
|
(1,027
|
)
|
||||
Net cash provided by operating activities
|
23,485
|
988
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Capital expenditures
|
(5,580
|
)
|
(5,385
|
)
|
||||
Proceeds from insurance settlement
|
97
|
575
|
||||||
Net cash used in investing activities
|
(5,483
|
)
|
(4,810
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds from borrowings
|
11,000
|
40,045
|
||||||
Payments on borrowings
|
(28,000
|
)
|
(54,514
|
)
|
||||
Credit (payment) of deferred finance fees
|
3
|
(975
|
)
|
|||||
Net share settlement for equity-based compensation
|
(245
|
)
|
(18
|
)
|
||||
Dividend payment for preferred stock
|
(1,378
|
)
|
-
|
|||||
Proceeds from sale of convertible preferred stock
|
-
|
12,700
|
||||||
Payment of convertible preferred stock issuance costs
|
-
|
(718
|
)
|
|||||
Net cash used in financing activities
|
(18,620
|
)
|
(3,480
|
)
|
||||
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
(618
|
)
|
(7,302
|
)
|
||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of year
|
38,644
|
45,946
|
||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of year
|
$
|
38,026
|
$
|
38,644
|
Year Ended December 31,
|
||||||||
2020
|
2019
|
|||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
||||||||
Cash paid during the year for:
|
||||||||
Interest
|
$
|
1,110
|
$
|
2,155
|
||||
Income taxes
|
$
|
179
|
$
|
118
|
||||
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||
Liabilities accrued for or noncash purchases of property and equipment
|
$
|
975
|
$
|
2,852
|
1. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
2. |
FINANCIAL AID AND REGULATORY COMPLIANCE
|
• |
Posting a letter of credit in an amount equal to at least 50% of the total Title IV Program funds received by the institution during the institution’s most recently completed fiscal year; or
|
• |
Posting a letter of credit in an amount equal to at least 10% of the Title IV Program funds received by the institution during its most recently completed fiscal year accepting provisional certification;
complying with additional DOE monitoring requirements and agreeing to receive Title IV Program funds under an arrangement other than the DOE’s standard advance funding arrangement.
|
• |
the institution’s recalculated composite score is less than 1.0 as determined by the DOE as a result of an institutional liability from a settlement, final judgment, or final determination in an administrative
or judicial action or proceeding brought by a federal or state entity;
|
• |
the institution’s recalculated composite score goes from less than 1.5 to less than 1.0 as determined by the DOE as a result of a withdrawal of owner’s equity from the institution;
|
• |
the SEC takes certain actions against the institution or the institution fails to comply with certain filing requirements; or
|
• |
the occurrence of two or more discretionary triggering events (as described below) within a certain time period.
|
• |
a show cause or similar order from the institution’s accrediting agency that could result in the withdrawal, revocation or suspension of institutional accreditation;
|
• |
a notice from the institution’s state licensing agency of an intent to withdraw or terminate the institution’s state licensure if the institution does not take steps to comply with state requirements;
|
• |
a default, delinquency, or other event occurs as a result of an institutional violation of a security or loan agreement that enables the creditor to require an increase in collateral, a change in contractual
obligations, an increase in interest rates or payment, or other sanctions, penalties or fees;
|
• |
a failure to comply with the 90/10 Rule during the institution’s most recently completed fiscal year;
|
• |
high annual drop-out rates from the institution as determined by the DOE; or
|
• |
official cohort default rates of at least 30 percent for the two most recent years unless a pending appeal could sufficiently reduce one of the rates.
|
3. |
NET INCOME PER SHARE
|
Year Ended December 31,
|
||||||||
(in thousands, except share data)
|
2020
|
2019
|
||||||
Numerator:
|
||||||||
Net income
|
$
|
48,565
|
$
|
2,015
|
||||
Less: preferred stock dividend
|
(1,378
|
)
|
-
|
|||||
Less: allocation to preferred stockholders
|
(8,224
|
)
|
(54
|
)
|
||||
Less: allocation to restricted stockholders
|
(2,150
|
)
|
(38
|
)
|
||||
Net income allocated to common stockholders
|
$
|
36,813
|
$
|
1,923
|
||||
Basic net income per share:
|
||||||||
Denominator:
|
||||||||
Weighted average common shares outstanding
|
24,748,496
|
24,554,033
|
||||||
Basic net income per share
|
$
|
1.49
|
$
|
0.08
|
||||
Diluted net income per share:
|
||||||||
Denominator:
|
||||||||
Weighted average number of:
|
||||||||
Common shares outstanding
|
24,748,496
|
24,554,033
|
||||||
Dilutive potential common shares outstanding:
|
||||||||
Series A Preferred Stocck
|
-
|
-
|
||||||
Unvested restricted stock
|
-
|
-
|
||||||
Stock options
|
-
|
-
|
||||||
Dilutive shares outstanding
|
24,748,496
|
24,554,033
|
||||||
Diluted net income per share
|
$
|
1.49
|
$
|
0.08
|
Year Ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Series A preferred stock
|
-
|
-
|
||||||
Unvested restricted stock
|
632,693
|
88,848
|
||||||
632,693
|
88,848
|
4. |
REVENUE RECOGNITION
|
Year ended December 31, 2020
|
||||||||||||
Transportation and
Skilled Trades
Segment
|
Healthcare and
Other Professions
Segment
|
Consolidated
|
||||||||||
Timing of Revenue Recognition
|
||||||||||||
Services transferred at a point in time
|
$
|
12,519
|
$
|
4,718
|
$
|
17,237
|
||||||
Services transferred over time
|
194,915
|
80,943
|
275,858
|
|||||||||
Total revenues
|
$
|
207,434
|
$
|
85,661
|
$
|
293,095
|
Year ended December 31, 2019
|
||||||||||||
Transportation and
Skilled Trades
Segment
|
Healthcare and
Other Professions
Segment
|
Consolidated
|
||||||||||
Timing of Revenue Recognition
|
||||||||||||
Services transferred at a point in time
|
$
|
11,881
|
$
|
4,521
|
$
|
16,402
|
||||||
Services transferred over time
|
181,841
|
75,099
|
256,940
|
|||||||||
Total revenues
|
$
|
193,722
|
$
|
79,620
|
$
|
273,342
|
5. |
LEASES
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Operating cash flow information:
|
||||||||
Cash paid for amounts included in the measurement of operating lease liabilities
|
$
|
15,390
|
$
|
12,926
|
||||
Non-cash activity:
|
||||||||
Lease liabilities arising from obtaining right-of-use assets*
|
$
|
14,890
|
$
|
63,911
|
Year Ended
December 31,
|
||||||||
2020
|
2019
|
|||||||
Weighted-average remaining lease term
|
6.11 years
|
6.22 years
|
||||||
Weighted-average discount rate
|
11.33
|
%
|
12.86
|
%
|
Year ending December 31,
|
||||
2021
|
14,705
|
|||
2022
|
14,750
|
|||
2023
|
13,451
|
|||
2024
|
12,306
|
|||
2025
|
10,748
|
|||
Thereafter
|
18,380
|
|||
Total lease payments
|
84,340
|
|||
Less: imputed interest
|
(23,133
|
)
|
||
Present value of lease liabilities
|
$
|
61,207
|
6. |
GOODWILL
|
Gross
Goodwill
Balance
|
Accumulated
Impairment
Losses
|
Net
Goodwill
Balance
|
||||||||||
Balance as of January 1, 2019
|
$
|
117,176
|
$
|
102,640
|
$
|
14,536
|
||||||
Adjustments
|
-
|
-
|
-
|
|||||||||
Balance as of December 31, 2019
|
117,176
|
102,640
|
14,536
|
|||||||||
Adjustments
|
-
|
-
|
-
|
|||||||||
Balance as of December 31, 2020
|
$
|
117,176
|
$
|
102,640
|
$
|
14,536
|
7. |
PROPERTY, EQUIPMENT AND FACILITIES
|
Useful life
(years)
|
At December 31,
|
|||||||||||
2020
|
2019
|
|||||||||||
Land
|
-
|
$
|
6,969
|
$
|
6,969
|
|||||||
Buildings and improvements
|
1-25
|
134,526
|
131,739
|
|||||||||
Equipment, furniture and fixtures
|
1-7
|
82,133
|
81,900
|
|||||||||
Vehicles
|
3
|
733
|
825
|
|||||||||
Construction in progress
|
-
|
327
|
320
|
|||||||||
224,688
|
221,753
|
|||||||||||
Less accumulated depreciation and amortization
|
(176,300
|
)
|
(172,408
|
)
|
||||||||
$
|
48,388
|
$
|
49,345
|
8. |
ACCRUED EXPENSES
|
At December 31,
|
||||||||
2020
|
2019
|
|||||||
Accrued compensation and benefits
|
$
|
12,476
|
$
|
3,785
|
||||
Accrued real estate taxes
|
2,614
|
1,763
|
||||||
Other accrued expenses
|
1,602
|
2,321
|
||||||
$
|
16,692
|
$
|
7,869
|
9. |
LONG-TERM DEBT
|
At December 31,
|
||||||||
2020
|
2019
|
|||||||
Credit agreement
|
$
|
17,833
|
$
|
34,833
|
||||
Deferred financing fees
|
(621
|
)
|
(805
|
)
|
||||
17,212
|
34,028
|
|||||||
Less current maturities
|
(2,000
|
)
|
(2,000
|
)
|
||||
$
|
15,212
|
$
|
32,028
|
Year ending December 31,
|
||||
2021
|
$
|
2,000
|
||
2022
|
2,000
|
|||
2023
|
2,000
|
|||
2024
|
11,833
|
|||
$
|
17,833
|
10. |
STOCKHOLDERS’ EQUITY
|
Shares
|
Weighted
Average Grant
Date Fair Value
Per Share
|
|||||||
Nonvested restricted stock outstanding at December 31, 2018
|
35,908
|
$
|
2.23
|
|||||
Granted
|
598,982
|
3.15
|
||||||
Cancelled
|
(3,546
|
)
|
3.17
|
|||||
Vested
|
(35,908
|
)
|
2.23
|
|||||
Nonvested restricted stock outstanding at December 31, 2019
|
595,436
|
3.15
|
||||||
Granted
|
1,319,734
|
2.68
|
||||||
Cancelled
|
-
|
-
|
||||||
Vested
|
(343,011
|
)
|
3.40
|
|||||
Nonvested restricted stock outstanding at December 31, 2020
|
1,572,159
|
2.77
|
Shares
|
Weighted
Average
Exercise Price
Per Share
|
Weighted
Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic
Value
|
||||||||||
Outstanding January 1, 2018
|
167,667
|
$
|
12.11
|
2.97 years
|
$
|
-
|
|||||||
Cancelled
|
(28,667
|
)
|
11.98
|
-
|
|||||||||
Outstanding December 31, 2018
|
139,000
|
12.14
|
2.53 years
|
-
|
|||||||||
Cancelled
|
(23,000
|
)
|
20.15
|
-
|
|||||||||
Outstanding December 31, 2019
|
116,000
|
10.56
|
1.83 years
|
-
|
|||||||||
Cancelled
|
(35,000
|
)
|
16.95
|
||||||||||
Outstanding December 31, 2020
|
81,000
|
7.79
|
1.17 years
|
-
|
|||||||||
Vested as of December 31, 2020
|
81,000
|
7.79
|
1.17 years
|
-
|
|||||||||
Exercisable as of December 31, 2020
|
81,000
|
7.79
|
1.17 years
|
-
|
11. |
PENSION PLAN
|
Year Ended December 31,
|
||||||||
2020
|
2019
|
|||||||
CHANGES IN BENEFIT OBLIGATIONS:
|
||||||||
Benefit obligation-beginning of year
|
$
|
22,832
|
$
|
21,105
|
||||
Service cost
|
35
|
33
|
||||||
Interest cost
|
654
|
812
|
||||||
Actuarial loss
|
2,115
|
2,103
|
||||||
Benefits paid
|
(1,278
|
)
|
(1,221
|
)
|
||||
Benefit obligation at end of year
|
24,358
|
22,832
|
||||||
CHANGE IN PLAN ASSETS:
|
||||||||
Fair value of plan assets-beginning of year
|
18,817
|
16,835
|
||||||
Actual return on plan assets
|
2,567
|
3,203
|
||||||
Benefits paid
|
(1,278
|
)
|
(1,221
|
)
|
||||
Fair value of plan assets-end of year
|
20,106
|
18,817
|
||||||
BENEFIT OBLIGATION IN EXCESS OF FAIR VALUE FUNDED STATUS:
|
$
|
(4,252
|
)
|
$
|
(4,015
|
)
|
At December 31,
|
||||||||
2020
|
2019
|
|||||||
Noncurrent liabilities
|
$
|
(4,252
|
)
|
$
|
(4,015
|
)
|
Year Ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Accumulated loss
|
$
|
(5,655
|
)
|
$
|
(5,648
|
)
|
||
Deferred income taxes
|
2,367
|
2,366
|
||||||
Accumulated other comprehensive loss
|
$
|
(3,288
|
)
|
$
|
(3,282
|
)
|
Year Ended December 31,
|
||||||||
2020
|
2019
|
|||||||
COMPONENTS OF NET PERIODIC BENEFIT COST
|
||||||||
Service cost
|
$
|
35
|
$
|
33
|
||||
Interest cost
|
654
|
812
|
||||||
Expected return on plan assets
|
(1,044
|
)
|
(1,011
|
)
|
||||
Recognized net actuarial loss
|
585
|
691
|
||||||
Net periodic benefit cost
|
$
|
230
|
$
|
525
|
Quoted Prices
in Active
Markets for
Identical Assets
|
Significant
Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
||||||||||||||
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
|||||||||||||
Equity securities
|
$
|
6,688
|
$
|
-
|
$
|
-
|
$
|
6,688
|
||||||||
Fixed income
|
6,739
|
-
|
-
|
6,739
|
||||||||||||
International equities
|
4,480
|
-
|
-
|
4,480
|
||||||||||||
Real estate
|
1,016
|
-
|
-
|
1,016
|
||||||||||||
Cash and equivalents
|
1,183
|
-
|
-
|
1,183
|
||||||||||||
Balance at December 31, 2020
|
$
|
20,106
|
$
|
-
|
$
|
-
|
$
|
20,106
|
Quoted Prices
in Active
Markets for
Identical Assets
|
Significant
Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
||||||||||||||
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
|||||||||||||
Equity securities
|
$
|
6,259
|
$
|
-
|
$
|
-
|
$
|
6,259
|
||||||||
Fixed income
|
6,313
|
-
|
-
|
6,313
|
||||||||||||
International equities
|
4,165
|
-
|
-
|
4,165
|
||||||||||||
Real estate
|
964
|
-
|
-
|
964
|
||||||||||||
Cash and equivalents
|
1,116
|
-
|
-
|
1,116
|
||||||||||||
Balance at December 31, 2019
|
$
|
18,817
|
$
|
-
|
$
|
-
|
$
|
18,817
|
2020
|
2019
|
|||||||
Equity securities
|
33
|
%
|
33
|
%
|
||||
Fixed income
|
34
|
%
|
34
|
%
|
||||
International equities
|
22
|
%
|
22
|
%
|
||||
Real estate
|
5
|
%
|
5
|
%
|
||||
Cash and equivalents
|
6
|
%
|
6
|
%
|
||||
Total
|
100
|
%
|
100
|
%
|
2020
|
2019
|
|||||||
Discount rate
|
2.08
|
%
|
2.93
|
%
|
||||
Rate of compensation increase
|
2.75
|
%
|
2.75
|
%
|
2020
|
2019
|
|||||||
Discount rate
|
2.08
|
%
|
2.93
|
%
|
||||
Rate of compensation increase
|
2.75
|
%
|
2.75
|
%
|
||||
Long-term rate of return
|
5.25
|
%
|
5.75
|
%
|
Year Ending December 31,
|
||||
2021
|
$
|
1,336
|
||
2022
|
1,356
|
|||
2023
|
1,385
|
|||
2024
|
1,401
|
|||
2025
|
1,388
|
|||
Years 2026-2030
|
6,743
|
12. |
INCOME TAXES
|
Year Ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Current:
|
||||||||
Federal
|
$
|
-
|
$
|
-
|
||||
State
|
802
|
115
|
||||||
Total
|
802
|
115
|
||||||
Deferred:
|
||||||||
Federal
|
(21,743
|
)
|
120
|
|||||
State
|
(14,118
|
)
|
33
|
|||||
Total
|
(35,861
|
)
|
153
|
|||||
Total (benefit) provision
|
$
|
(35,059
|
)
|
$
|
268
|
Year Ended December 31,
|
||||||||||||||||
2020
|
2019
|
|||||||||||||||
Income before taxes
|
$
|
13,506
|
$
|
2,283
|
||||||||||||
Expected tax
|
$
|
2,836
|
21.0
|
%
|
$
|
479
|
21.0
|
%
|
||||||||
State tax benefit (net of federal)
|
(10,513
|
)
|
-77.8
|
%
|
148
|
6.5
|
||||||||||
Valuation allowance
|
(27,420
|
)
|
-203.0
|
%
|
(428
|
)
|
(18.8
|
)
|
||||||||
Other
|
38
|
0.2
|
%
|
69
|
3.0
|
|||||||||||
Total
|
$
|
(35,059
|
)
|
-259.6
|
%
|
$
|
268
|
11.7
|
%
|
At December 31,
|
||||||||
2020
|
2019
|
|||||||
Gross noncurrent deferred tax assets (liabilities)
|
||||||||
Allowance for bad debts
|
$
|
7,659
|
$
|
5,461
|
||||
Accrued benefits
|
1,208
|
-
|
||||||
Stock-based compensation
|
317
|
178
|
||||||
Lease liability
|
16,369
|
14,822
|
||||||
Right-of-use asset
|
(14,759
|
)
|
(13,156
|
)
|
||||
Depreciation
|
11,298
|
10,981
|
||||||
Goodwill
|
(1,091
|
)
|
(766
|
)
|
||||
Other intangibles
|
100
|
135
|
||||||
Pension plan liabilities
|
1,137
|
1,286
|
||||||
Net operating loss carryforwards
|
13,480
|
18,261
|
||||||
Gross noncurrent deferred tax assets, net
|
35,718
|
37,202
|
||||||
Less valuation allowance
|
-
|
(37,355
|
)
|
|||||
Noncurrent deferred tax assets (liabilities), net
|
$
|
35,718
|
$
|
(153
|
)
|
13. |
FAIR VALUE
|
December 31, 2020
|
||||||||||||||||||||
Carrying
|
Quoted Prices in
Active Markets
for Identical
Assets
|
Significant Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
|||||||||||||||||
Amount
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
||||||||||||||||
Financial Assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
38,026
|
$
|
38,026
|
$
|
-
|
$
|
-
|
$
|
38,026
|
||||||||||
Prepaid expenses and other current assets
|
3,723
|
-
|
3,723
|
-
|
3,723
|
|||||||||||||||
Financial Liabilities:
|
||||||||||||||||||||
Accrued expenses
|
$
|
16,692
|
$
|
-
|
$
|
16,692
|
$
|
-
|
$
|
16,692
|
||||||||||
Other short term liabilities
|
26
|
-
|
26
|
-
|
26
|
|||||||||||||||
Derivative qualifying as cash flow hedge
|
703
|
-
|
703
|
-
|
703
|
|||||||||||||||
Credit facility
|
17,212
|
-
|
15,487
|
-
|
15,487
|
December 31, 2019
|
||||||||||||||||||||
Carrying
|
Quoted Prices in
Active Markets
for Identical
Assets
|
Significant Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
|||||||||||||||||
Amount
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
||||||||||||||||
Financial Assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
23,644
|
$
|
23,644
|
$
|
-
|
$
|
-
|
$
|
23,644
|
||||||||||
Restricted cash
|
15,000
|
15,000
|
-
|
-
|
15,000
|
|||||||||||||||
Prepaid expenses and other current assets
|
4,190
|
-
|
4,190
|
-
|
4,190
|
|||||||||||||||
Financial Liabilities:
|
||||||||||||||||||||
Accrued expenses
|
$
|
7,869
|
$
|
-
|
$
|
7,869
|
$
|
-
|
$
|
7,869
|
||||||||||
Other short term liabilities
|
199
|
-
|
199
|
-
|
199
|
|||||||||||||||
Derivative qualifying as cash flow hedge
|
174
|
-
|
174
|
-
|
174
|
|||||||||||||||
Credit facility
|
34,028
|
-
|
34,028
|
-
|
34,028
|
December 31, 2020
|
December 31, 2019
|
|||||||||||||||
Liability(1)
|
Liability(1)
|
|||||||||||||||
Notional
|
Fair Value
|
Notional
|
Fair Value
|
|||||||||||||
Derivative derived as a hedging instrument:
|
||||||||||||||||
Interest Rate Swap
|
$
|
17,800
|
$
|
700
|
$
|
19,800
|
$
|
100
|
(1) |
The Company’s derivative liability is measured at fair value using observable market inputs such as interest rates and our own credit risk as well as an evaluation of our counterparty’s credit risk. Based on
these inputs the derivative liability is classified within Level 2 of the valuation hierarchy. The liability is included in other long-term liabilities in the consolidated balance sheets.
|
Year Ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Interest expense
|
||||||||
Interest Rate Swap
|
$
|
100
|
$
|
100
|
Year Ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Derivative qualifying as cash flow hedge
|
||||||||
Interest rate swap loss
|
$
|
700
|
$
|
200
|
14. |
SEGMENT REPORTING
|
For the Year Ended December 31,
|
||||||||||||||||||||||||
Revenue
|
Operating Income (Loss)
|
|||||||||||||||||||||||
2020
|
% of
Total
|
2019
|
% of
Total
|
2020
|
2019
|
|||||||||||||||||||
Transportation and Skilled Trades
|
$
|
207,434
|
70.8
|
%
|
$
|
193,722
|
70.9
|
%
|
$
|
34,458
|
$
|
21,979
|
||||||||||||
Healthcare and Other Professions
|
85,661
|
29.2
|
%
|
79,620
|
29.1
|
%
|
11,068
|
7,588
|
||||||||||||||||
Corporate
|
-
|
0.0
|
%
|
-
|
0.0
|
%
|
(30,745
|
)
|
(24,329
|
)
|
||||||||||||||
Total
|
$
|
293,095
|
100
|
%
|
$
|
273,342
|
100
|
%
|
$
|
14,781
|
$
|
5,238
|
Total Assets
|
||||||||
December 31, 2020
|
December 31, 2019
|
|||||||
Transportation and Skilled Trades
|
$
|
133,078
|
$
|
121,611
|
||||
Healthcare and Other Professions
|
32,753
|
27,945
|
||||||
Corporate
|
79,359
|
45,207
|
||||||
Total
|
$
|
245,190
|
$
|
194,763
|
15. |
COMMITMENTS AND CONTINGENCIES
|
16. |
COVID-19 PANDEMIC AND CARES ACT
|
Description
|
Balance at
Beginning of
Period
|
Charged to
Expense
|
Accounts
Written-off
|
Balance at
End of
Period
|
||||||||||||
Allowance accounts for the year ended:
|
||||||||||||||||
December 31, 2020
|
||||||||||||||||
Student receivable allowance
|
$
|
20,367
|
$
|
26,887
|
$
|
(18,615
|
)
|
$
|
28,639
|
|||||||
December 31, 2019
|
||||||||||||||||
Student receivable allowance
|
$
|
16,993
|
$
|
20,847
|
$
|
(17,473
|
)
|
$
|
20,367
|
Name
|
Jurisdiction
|
Lincoln Technical Institute, Inc. (wholly owned)
|
New Jersey
|
New England Acquisition LLC (wholly owned through Lincoln Technical Institute, Inc.)
|
Delaware
|
Nashville Acquisition, LLC (wholly owned through Lincoln Technical Institute, Inc.)
|
Delaware
|
Euphoria Acquisition, LLC (wholly owned through Lincoln Technical Institute, Inc.)
|
Delaware
|
LTI Holdings, LLC (wholly owned through Lincoln Technical Institute, Inc.)
|
Colorado
|
LCT Acquisition, LLC (wholly owned through Lincoln Technical Institute, Inc.)
|
Delaware
|
NN Acquisition, LLC (wholly owned through Lincoln Technical Institute, Inc.)
|
Delaware
|
1. |
I have reviewed this Annual Report on Form 10-K of Lincoln Educational Services Corporation;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
Date: March 8, 2021
|
|
/s/ Scott Shaw
|
|
Scott Shaw
|
|
Chief Executive Officer
|
1. |
I have reviewed this Annual Report on Form 10-K of Lincoln Educational Services Corporation;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect
the registrant’s ability to record, process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: March 8, 2021
|
|
/s/ Brian Meyers
|
|
Brian Meyers
|
|
Chief Financial Officer
|
/s/ Scott Shaw
|
|
Scott Shaw
|
|
Chief Executive Officer
|
/s/ Brian Meyers
|
|
Brian Meyers
|
|
Chief Financial Officer
|
Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Mar. 03, 2021 |
Jun. 30, 2020 |
|
Cover [Abstract] | |||
Entity Registrant Name | LINCOLN EDUCATIONAL SERVICES CORP | ||
Entity Central Index Key | 0001286613 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2020 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Entity Address, State or Province | NJ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 78,301,591 | ||
Entity Common Stock, Shares Outstanding | 26,988,965 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
CURRENT ASSETS: | ||
Accounts receivable, allowance | $ 25,174 | $ 18,107 |
PROPERTY, EQUIPMENT AND FACILITIES - accumulated depreciation and amortization | 176,300 | 172,408 |
OTHER ASSETS: | ||
Noncurrent receivables, allowance | $ 3,465 | $ 2,260 |
STOCKHOLDERS' EQUITY: | ||
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 26,476,329 | 25,231,710 |
Common stock, shares outstanding (in shares) | 26,476,329 | 25,231,710 |
Treasury stock, shares (in shares) | 5,910,541 | 5,910,541 |
Series A Convertible Preferred Stock [Member] | ||
SERIES A CONVERTIBLE PREFERRED STOCK | ||
Preferred stock, par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 12,700 | 0 |
Preferred stock, shares outstanding (in shares) | 12,700 | 0 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract] | ||
REVENUE | $ 293,095 | $ 273,342 |
COSTS AND EXPENSES: | ||
Educational services and facilities | 122,196 | 123,495 |
Selling, general and administrative | 156,199 | 145,176 |
Gain on sale of assets | (81) | (567) |
Total costs and expenses | 278,314 | 268,104 |
OPERATING INCOME | 14,781 | 5,238 |
OTHER: | ||
Interest income | 0 | 8 |
Interest expense | (1,275) | (2,963) |
INCOME BEFORE INCOME TAXES | 13,506 | 2,283 |
(BENEFIT) PROVISION FOR INCOME TAXES | (35,059) | 268 |
NET INCOME | 48,565 | 2,015 |
PREFERRED STOCK DIVIDENDS | 1,378 | 0 |
INCOME AVAILABLE TO COMMON STOCKHOLDERS | $ 47,187 | $ 2,015 |
Basic | ||
Net income per share (in dollars per share) | $ 1.49 | $ 0.08 |
Diluted | ||
Net income per share (in dollars per share) | $ 1.49 | $ 0.08 |
Weighted average number of common shares outstanding: | ||
Basic (in shares) | 24,748,496 | 24,554,033 |
Diluted (in shares) | 24,748,496 | 24,554,033 |
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME [Abstract] | ||
Net income | $ 48,565 | $ 2,015 |
Other comprehensive income | ||
Derivative qualifying as a cash flow hedge, net of taxes (nil) | (703) | (174) |
Employee pension plan adjustments, net of taxes (1) | (6) | 780 |
Comprehensive income | $ 47,856 | $ 2,621 |
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Other comprehensive income | ||
Derivative qualifying as a cash flow hedge, taxes | $ 0 | $ 0 |
Employee pension plan adjustments, taxes | $ 1 | $ 1 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Business Activities—Lincoln Educational Services Corporation and its subsidiaries (collectively, the “Company”, “we”, “our” and “us”, as applicable) provide diversified career-oriented post-secondary education to recent high school graduates and working adults. The Company, which currently operates 22 schools in 14 states, offers programs in automotive technology, skilled trades (which include HVAC, welding and computerized numerical control and electronic systems technology, among other programs), healthcare services (which include nursing, dental assistant and medical administrative assistant, among other programs), hospitality services (which include culinary, therapeutic massage, cosmetology and aesthetics) and information technology. The schools operate under Lincoln Technical Institute, Lincoln College of Technology, Lincoln Culinary Institute, and Euphoria Institute of Beauty Arts and Sciences and associated brand names. Most of the campuses serve major metropolitan markets and each typically offers courses in multiple areas of study. Five of the campuses are destination schools, which attract students from across the United States and, in some cases, from abroad. The Company’s other campuses primarily attract students from their local communities and surrounding areas. All of the campuses are nationally or regionally accredited and are eligible to participate in federal financial aid programs by the U.S. Department of Education (the “DOE”) and applicable state education agencies and accrediting commissions which allow students to apply for and access federal student loans as well as other forms of financial aid. The Company’s business is organized into three reportable business segments: (a) Transportation and Skilled Trades, (b) Healthcare and Other Professions (“HOPS”), and (c) Transitional, which refers to our campus operations which have been closed. COVID-19 Pandemic— During the first quarter of 2020, the coronavirus disease (“COVID-19”) began to spread worldwide and has caused significant disruptions to the U.S. and world economies. In early March 2020, the Company began seeing the impact of the COVID-19 pandemic on our business. The impact was primarily related to transitioning classes from in-person, hands-on learning to online, remote learning. As part of this transition, the Company has incurred additional expenses. In addition, some students were placed on leave of absence as they could not complete their externships and some students chose not to participate in online learning. Additionally, certain programs were extended due to restricted access to externship sites and classroom labs. Due to state and local provisions, our schools reopened on a phased basis from May through August 2020. Currently, all of our schools have re-opened and the majority of the students who were placed on leave or otherwise deferred their programs are actively working to finish their programs over the next few months. As COVID-19 continues to affect many states and its course is unpredictable, the full impact on the Company’s consolidated financial statements remains uncertain. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law which includes a $2 trillion federal economic relief package providing financial assistance and other relief to individuals and businesses impacted by the spread of COVID-19. The CARES Act includes provisions for financial assistance and other regulatory relief benefitting students and their postsecondary institutions. The Company has and will continue to evaluate the impact of the CARES Act on the Company’s results of operations and cash flows. See Note 16 – COVID-19 Pandemic and CARES Act for additional discussion about the CARES Act. Liquidity—As of December 31, 2020, the Company had cash and cash equivalents of $38.0 million. As of December 31, 2020, the Company had a net cash balance of $20.8 million calculated as cash and cash equivalents, less both the short-term and long-term portions of the Company’s Credit Facility (defined below). As of December 31, 2020, the Company also can borrow an additional $21.0 million under its Credit Facility. As of December 31, 2019, the Company had a net cash balance of $4.6 million. The Company believes that its likely sources of cash should be sufficient to fund operations for the next twelve months and thereafter for the foreseeable future. However, the circumstances relating to COVID-19 and its evolution are unpredictable and, if circumstances surrounding COVID-19 should evolve in a significantly adverse manner it is possible our liquidity could be materially and adversely affected. Principles of Consolidation—The accompanying consolidated financial statements include the accounts of Lincoln Educational Services Corporation and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. Cash and Cash Equivalents—Cash and cash equivalents include all cash balances and highly liquid short-term investments, which contain original maturities within three months of purchase. Pursuant to the DOE’s cash management requirements, the Company retains funds from financial aid programs under Title IV of the Higher Education Act in segregated cash management accounts. The segregated accounts do not require a restriction on use of the cash and, as such, these amounts are classified as cash and cash equivalents on the consolidated balance sheet. Restricted Cash—Restricted cash consists of deposits that were maintained at financial institutions under a cash collateral agreement pursuant to the Company’s prior credit facility. The amounts of zero and $15.0 million as of December 31, 2020 and 2019, respectively, of restricted cash is included in long-term assets in the consolidated balance sheets as the restrictions were greater than one year, respectively. Refer to Note 9 for more information on the Company’s credit facility. Accounts Receivable—The Company reports accounts receivable at net realizable value, which is equal to the gross receivable less an estimated allowance for uncollectible accounts. Noncurrent accounts receivable represent amounts due from graduates in excess of 12 months from the balance sheet date. Allowance for Uncollectible Accounts—Based upon experience and judgment, an allowance is established for uncollectible accounts with respect to tuition receivables. In establishing the allowance for uncollectible accounts, the Company considers, among other things, current and expected economic conditions, a student’s status (in-school or out-of-school), whether or not a student is currently making payments, and overall collection history. Changes in trends in any of these areas may impact the allowance for uncollectible accounts. The receivables balances of withdrawn students with delinquent obligations are reserved for based on our collection history. Inventories—Inventories consist mainly of textbooks, computers, tools and supplies. Inventories are valued at the lower of cost or market on a first-in, first-out basis. Property, Equipment and Facilities—Depreciation and Amortization—Property, equipment and facilities are stated at cost. Major renewals and improvements are capitalized, while repairs and maintenance are expensed when incurred. Upon the retirement, sale or other disposition of assets, costs and related accumulated depreciation are eliminated from the accounts and any gain or loss is reflected in operating income (loss). For financial statement purposes, depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the assets, and amortization of leasehold improvements is computed over the lesser of the term of the lease or its estimated useful life. Advertising Costs—Costs related to advertising are expensed as incurred and approximated $31.2 million and $29.8 million for the years ended December 31, 2020 and 2019, respectively. These amounts are included in selling, general and administrative expenses in the consolidated statements of operations. Goodwill and Other Intangible Assets— The Company tests its goodwill for impairment annually, or whenever events or changes in circumstances indicate an impairment may have occurred, by comparing its reporting unit’s carrying value to its implied fair value. Impairment may result from, among other things, deterioration in the performance of the acquired business, adverse market conditions, adverse changes in applicable laws or regulations, reductions in market value of the Company, and changes that restrict the activities of the acquired business, and a variety of other circumstances. If the Company determines that an impairment has occurred, it is required to record a write-down of the carrying value and charge the impairment as an operating expense in the period the determination is made. In evaluating the recoverability of the carrying value of goodwill and other indefinite-lived intangible assets, the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the acquired assets. Changes in strategy or market conditions could significantly impact these judgments in the future and require an adjustment to the recorded balances. The goodwill is allocated among nine reporting units within the Transportation and Skilled Trades Segment. When we test goodwill balances for impairment, we determine the fair value of each of our reporting units using an equal weighting of the discounted cash flow model and the market approach. The determination of fair value using the discounted cash flow model requires significant estimates and assumptions related to forecasts of future revenues, which is driven by student start growth, EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortization) margins, the long-term growth rate used in the calculation of the terminal value, and the discount rate to apply against each reporting unit’s financial metrics. The determination of fair value using the market approach requires significant estimates and assumptions related to the selection of EBITDA multiples and the control premiums. Changes in these assumptions could have a significant impact on either the fair value, the amount of any goodwill impairment charge, or both. Although we believe our projected future operating results and cash flows and related estimates regarding fair values are based on reasonable assumptions, historically projected operating results and cash flows have not always been achieved. The failure of one of our reporting units to achieve projected operating results and cash flows in the near term or long term may reduce the estimated fair value of the reporting unit below its carrying value and result in the recognition of a goodwill impairment charge. Significant management judgment is necessary to evaluate the impact of operating and macroeconomic changes and to estimate future cash flows. Assumptions used in our impairment evaluations, such as forecasted growth rates and our cost of capital, are based on the best available market information and are consistent with our internal forecasts and operating plans. In addition to cash flow estimates, our valuations are sensitive to the rate used to discount cash flows and future growth assumptions. At December 31, 2020 and 2019, we conducted our annual test for goodwill impairment and determined we did not have an impairment. Impairment of Long-Lived Assets—The Company reviews the carrying value of its long-lived assets and identifiable intangibles for possible impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The Company evaluates long-lived assets for impairment by examining estimated future cash flows using Level 3 inputs. These cash flows are evaluated by using weighted probability techniques as well as comparisons of past performance against projections. Assets may also be evaluated by identifying independent market values. If the Company determines that an asset’s carrying value is impaired, it will record a write-down of the carrying value of the asset and charge the impairment as an operating expense in the period in which the determination is made. The Company concluded that for the years ended December 31, 2020 and 2019, there were no long-lived asset impairments. Concentration of Credit Risk—Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments. The Company places its cash and cash equivalents with high credit quality financial institutions. The Company’s cash balances with financial institutions typically exceed the Federal Deposit Insurance Corporation (“FDIC”) limit of $0.25 million. The Company’s cash balances on deposit at December 31, 2020, exceeded the balance insured by the FDIC by approximately $37.75 million. The Company has not experienced any losses to date on its invested cash. The Company extends credit for tuition and fees to many of its students. The credit risk with respect to these accounts receivable is mitigated through the students’ participation in federally funded financial aid programs unless students withdraw prior to the receipt of federal funds for those students. In addition, the remaining tuition receivables are primarily comprised of smaller individual amounts due from students. With respect to student receivables, the Company had no significant concentrations of credit risk as of December 31, 2020 and 2019. Use of Estimates in the Preparation of Financial Statements—The preparation of financial statements in conformity with generally accepted accounting principles in the United States (“GAAP’) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. On an ongoing basis, the Company evaluates the estimates and assumptions, including those used to determine the incremental borrowing rate to calculate lease liabilities and right-of-use (“ROU”) assets, lease term to calculate lease cost, revenue recognition, bad debts, impairments, fixed assets, income taxes, benefit plans and certain accruals. Actual results could differ from those estimates. Income Taxes—The Company accounts for income taxes in accordance with Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes” (“ASC 740”). This statement requires an asset and a liability approach for measuring deferred taxes based on temporary differences between the financial statement and tax bases of assets and liabilities existing at each balance sheet date using enacted tax rates for years in which taxes are expected to be paid or recovered. In accordance with ASC 740, the Company assesses our deferred tax asset to determine whether all or any portion of the asset is more likely than not unrealizable. A valuation allowance is required to be established or maintained when, based on currently available information, it is more likely than not that all or a portion of a deferred tax asset will not be realized. In accordance with ASC 740, our assessment considers whether there has been sufficient income in recent years and whether sufficient income is expected in future years in order to utilize the deferred tax asset. In evaluating the realizability of deferred income tax assets, the Company considered, among other things, historical levels of income, expected future income, the expected timing of the reversals of existing temporary reporting differences, and the expected impact of tax planning strategies that may be implemented to prevent the potential loss of future income tax benefits. Significant judgment is required in determining the future tax consequences of events that have been recognized in our consolidated financial statements and/or tax returns. Differences between anticipated and actual outcomes of these future tax consequences could have a material impact on the Company’s consolidated financial position or results of operations. Changes in, among other things, income tax legislation, statutory income tax rates, or future income levels could materially impact the Company’s valuation of income tax assets and liabilities and could cause our income tax provision to vary significantly among financial reporting periods. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. During the years ended December 31, 2020 and 2019, we did not record any interest and penalties expense associated with uncertain tax positions. Derivative Instruments—The Company records the fair value of derivative instruments as either assets or liabilities on the balance sheet. The accounting for gains and losses resulting from changes in fair value is dependent on the use of the derivative and whether it is designated and qualifies for hedge accounting. All qualifying hedging activities are documented at the inception of the hedge and must meet the definition of highly effective in offsetting changes to future cash. The Company utilizes the change in variable cash flows method to evaluate hedge effectiveness quarterly. We record the fair value of the qualifying hedges in other long-term liabilities (for derivative liabilities) and other assets (for derivative assets). All unrealized gains and losses on derivatives that are designated and qualify for hedge accounting are reported in other comprehensive income (loss) and recognized when the underlying hedged transaction affects earnings. Changes in the fair value of these derivatives are recognized in other comprehensive income. The Company classifies the cash flows from a cash flow hedge within the same category as the cash flows from the items being hedged. Start-up Costs—Costs related to the start of new campuses are expensed as incurred. New Accounting Pronouncements In October 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2020-10, “Codification Improvements”, which makes minor technical corrections and clarifications to the ASU. The amendments in Sections B and C of the ASU are effective for annual periods beginning after December 15, 2020, for public business entities. For all other entities, the amendments are effective for annual periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. This Update is not expected to have a significant impact on the Company’s consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”. This ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU removes separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature and hence most of the instruments will be accounted for as a single model (either debt or equity). The ASU also states that entities must apply the if-converted method to all convertible instruments for calculation of diluted EPS and the treasury stock method is no longer available. An entity can use either a full or modified retrospective approach to adopt the ASU’s guidance. ASU No. 2020-06 is effective for the Company as a smaller reporting company for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. For convertible instruments that include a down-round feature, entities may early adopt the amendments that apply to the down-round features if they have not yet adopted the amendments in ASU 2017-11. The Company is currently assessing the impact that this ASU will have on its consolidated financial statements and related disclosures. In March 2020, the FASB issued ASU 2020-03, “Codification Improvements to Financial Instruments” (“ASU 2020-03”). ASU 2020-03 improves and clarifies various financial instruments topics. ASU 2020-03 includes seven different issues that describe the areas of improvement and the related amendments to GAAP. The Company adopted ASU 2020-03 upon issuance, which did not have a material effect on the Company’s consolidated financial statements and related disclosures. In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes”, which simplifies the accounting for income taxes by removing certain exceptions to the general principles of ASC 740, “Income Taxes”. ASU 2019-12 also clarifies and amends GAAP for other areas of Topic 740. This ASU is effective for fiscal years beginning after December 15, 2020 and early adoption is permitted. Depending on the amendment, adoption may be applied on a retrospective, modified retrospective or prospective basis. The Company is currently assessing the impact that this ASU will have on its consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-14, “Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans”. This ASU adds, modifies and clarifies several disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. This guidance is effective for fiscal years ending after December 15, 2020. Early adoption is permitted. The Company is currently assessing the impact that this ASU will have on its consolidated financial statements and related disclosures. The Company adopted ASU 2018-14 on January 1, 2020, which did not have a material effect on the Company’s consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” and subsequently issued additional guidance that modified ASU 2016-13. ASU 2016-13 and the subsequent modifications are identified as Accounting Standards Codification (“ASC”) 326. The standard requires an entity to change its accounting approach in determining impairment of certain financial instruments, including trade receivables, from an “incurred loss” to a “current expected credit loss” model. Further, the FASB issued ASU No. 2019-04, ASU No. 2019-05 and ASU 2019-11 to provide additional guidance on the credit losses standard. In November 2019, FASB issued ASU No. 2019-10, “Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)”. This ASU defers the effective date of ASU 2016-13 for public companies that are considered smaller reporting companies as defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Additionally, in February and March 2020, the FASB issued ASU 2020-02, “Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842)” ASU 2020-02 adds a SEC paragraph pursuant to the issuance of SEC Staff Accounting Bulletin No. 119 on loan losses to FASB Codification Topic 326 and also updates the SEC section of the Codification for the change in the effective date of Topic 842. Early adoption is permitted. We are currently assessing the impact that these ASUs will have on our consolidated financial statements and related disclosures. |
FINANCIAL AID AND REGULATORY COMPLIANCE |
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FINANCIAL AID AND REGULATORY COMPLIANCE |
Financial Aid The Company’s schools and students participate in a variety of government-sponsored financial aid programs that assist students in paying the cost of their education. The largest source of such support is the federal programs of student financial assistance under Title IV of the Higher Education Act of 1965, as amended, commonly referred to as the Title IV Programs, which are administered by the U.S. Department of Education (the “DOE”). During the years ended December 31, 2020 and 2019, approximately 77% and 78%, respectively, of net revenues on a cash basis were indirectly derived from funds distributed under Title IV Programs. For the years ended December 31, 2020 and 2019, the Company calculated that no individual DOE reporting entity received more than 90% of its revenue, determined on a cash basis under DOE regulations, from the Title IV Program funds. The Company’s calculations may be subject to review by the DOE. Under DOE regulations, a proprietary institution that derives more than 90% of its total revenue from the Title IV Programs for two consecutive fiscal years becomes immediately ineligible to participate in the Title IV Programs and may not reapply for eligibility until the end of two fiscal years. An institution with revenues exceeding 90% for a single fiscal year, will be placed on provisional certification and may be subject to other enforcement measures. If one of the Company’s institutions violated the 90/10 Rule and became ineligible to participate in Title IV Programs but continued to disburse Title IV Program funds, the DOE would require the institution to repay all Title IV Program funds received by the institution after the effective date of the loss of eligibility. Regulatory Compliance To participate in Title IV Programs, a school must be authorized to offer its programs of instruction by relevant state education agencies, be accredited by an accrediting commission recognized by the DOE and be certified as an eligible institution by the DOE. For this reason, the schools are subject to extensive regulatory requirements imposed by all of these entities. After the schools receive the required certifications by the appropriate entities, the schools must demonstrate their compliance with the DOE regulations of the Title IV Programs on an ongoing basis. Included in these regulations is the requirement that the institution must satisfy specific standards of financial responsibility. The DOE evaluates institutions for compliance with these standards each year, based upon the institution’s annual audited financial statements, as well as following a change in ownership resulting in a change of control of the institution. The DOE calculates the institution’s composite score for financial responsibility based on its (i) equity ratio, which measures the institution’s capital resources, ability to borrow and financial viability; (ii) primary reserve ratio, which measures the institution’s ability to support current operations from expendable resources; and (iii) net income ratio, which measures the institution’s ability to operate at a profit. This composite score can range from -1 to +3. The composite score must be at least 1.5 for the institution to be deemed financially responsible without the need for further oversight. If an institution’s composite score is below 1.5, but is at least 1.0, it is in a category denominated by the DOE as “the zone.” Under the DOE regulations, institutions that are in the zone typically may be permitted by the DOE to continue to participate in the Title IV Programs by choosing one of two alternatives: 1) the “Zone Alternative” under which an institution is required to make disbursements to students under the Heightened Cash Monitoring 1 (“HCM1”) payment method, or a different payment method other than the advance payment method, and to notify the DOE within 10 days after the occurrence of certain oversight and financial events or 2) submit a letter of credit to the DOE equal to 50 percent of the Title IV Program funds received by the institution during its most recent fiscal year. The DOE permits an institution to participate under the “Zone Alternative” for a period of up to three consecutive fiscal years. Under the HCM1 payment method, the institution is required to make Title IV Program disbursements to eligible students and parents before it requests or receives funds for the amount of those disbursements from the DOE. As long as the student accounts are credited before the funding requests are initiated, an institution is permitted to draw down funds through the DOE’s electronic system for grants management and payments for the amount of disbursements made to eligible students. Unlike the Heightened Cash Monitoring 2 (“HCM2”) and the reimbursement payment methods, the HCM1 payment method typically does not require schools to submit documentation to the DOE and wait for DOE approval before drawing down Title IV Program funds. Effective July 1, 2016, a school under HCM1, HCM2 or reimbursement payment methods must also pay any credit balances due to a student before drawing down funds for the amount of those disbursements from the DOE, even if the student or parent provides written authorization for the school to hold the credit balance. If an institution’s composite score is below 1.0, the institution is considered by the DOE to lack financial responsibility. If the DOE determines that an institution does not satisfy the DOE’s financial responsibility standards, depending on its composite score and other factors, that institution may establish its eligibility to participate in the Title IV Programs on an alternative basis by, among other things:
The DOE has evaluated the financial responsibility of our institutions on a consolidated basis. We submitted to the DOE our audited financial statements for the 2018 fiscal years reflecting a composite score of 1.1, respectively, based upon our calculations. The DOE indicated in a January 13, 2020 letter its determination that our institutions are “in the zone” based on our composite scores for the 2018 fiscal year and that we are required to operate under the Zone Alternative requirements, including the requirement to make disbursements under the HCM1 payment method and to notify the DOE within 10 days of the occurrence of certain oversight and financial events. We also are required to submit to the DOE bi-weekly cash balance submissions outlining our available cash on hand, monthly actual and projected cash flow statements, and monthly student rosters. Because of the impact of the COVID-19 pandemic, the DOE extended the deadline for institutions to submit audited financial statements. We initially submitted to the DOE our audited financial statements for the 2019 fiscal year on July 2, 2020 and anticipated that our composite score for the year would be 1.6. The DOE requested that we resubmit 2019 audited financials and composite score calculation utilizing new technical revisions to the composite score calculation that took effect on July 1, 2020. We prepared an updated submission and composite score calculation in response to the DOE’s notice and resubmitted our financial statements for the 2019 fiscal year on November 13, 2020 with a recalculated composite score of 1.5. Subsequently, on February 16, 2021, we received a letter from the DOE confirming our composite score of 1.5 for fiscal year 2019 as well as removing the Company from the Zone Alternative requirements. However, the Company will remain on HCM1 until we meet certain requirements outlined by the DOE in its letter which we are hopeful will be complete within the next few months. For the 2020 fiscal year, we calculated our composite score to be 2.7. This score is subject to determination by the DOE based on its review of our consolidated audited financial statements for the 2020 fiscal year, but we believe it is likely that the DOE will determine that our institutions comply with the composite score requirement. On September 23, 2019, the DOE published final regulations with a general effective date of July 1, 2020 that, among other things, modified the list of triggering events that could result in the DOE determining that the institution lacks financial responsibility and must submit to the DOE a letter of credit or other form of acceptable financial protection and accept other conditions on the institution’s Title IV Program eligibility. The regulations create lists of mandatory triggering events and discretionary triggering events. An institution is not able to meet its financial or administrative obligations if a mandatory triggering event occurs. The mandatory triggering events include:
The DOE also may determine that an institution lacks financial responsibility if one of the following discretionary triggering events occurs and the event is likely to have a material adverse effect on the financial condition of the institution:
The regulations require the institution to notify the DOE of the occurrence of a mandatory or discretionary triggering event and to provide certain information to the DOE to demonstrate why the event does not establish the institution’s lack of financial responsibility or require the submission of a letter of credit or imposition of other requirements. The expanded financial responsibility regulations could result in the DOE recalculating and reducing our composite score to account for DOE estimates of potential losses under one or more of the extensive list of triggering circumstances and also could result in the imposition of conditions and requirements including a requirement to provide a letter of credit or other form of financial protection. It is difficult to predict the amount or duration of any letter of credit requirement that the DOE might impose under the regulation. The requirement to submit a letter of credit or to accept other conditions or restrictions could have a material adverse effect on our schools’ business and results of operations. Closed School Loan Discharges The DOE may grant closed school loan discharges of federal student loans based upon applications by qualified students. The DOE also may initiate discharges on its own for students who have not reenrolled in another Title IV Program eligible school within three years after the closure and who attended campuses that closed on or after November 1, 2013, as did some of our former campuses. If the DOE discharges some or all of these loans, the DOE may seek to recover the cost of the loan discharges from us. On September 3, 2020, we received determination letters asserting liabilities for closed school loan discharges in connection with the closure of three campuses. We subsequently provided additional documentation to the DOE that support reductions in the liability amounts. The DOE subsequently issued letters reducing the liabilities for two of the campuses to approximately $81,000 and $46,000, respectively. We have paid these amounts to the DOE. We are currently waiting for the DOE to respond to our response for the third campus. The DOE asserted liabilities of $412,000, but we provided documentation demonstrating that the liabilities should be reduced to $104,000. On February 11, 2021, we received a determination letter from the DOE for closed school loan discharges for the closure of a fourth campus in the amount of approximately $74,000. We expect to provide documentation demonstrating that the liabilities should be reduced to approximately $64,000. We cannot predict the timing or amount of the outcome of the DOE’s consideration of our response for the third and fourth campuses, not can we predict any additional loan discharges that the DOE may approve or the liabilities that the DOE may seek from us for these campuses or other campuses that have closed in the past. We have the right to appeal any asserted liabilities under an administrative appeal process within the DOE. We cannot predict the timing or potential outcome of any administrative appeals of any such liabilities. |
NET INCOME PER SHARE |
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NET INCOME PER SHARE |
The Company presents basic and diluted income per common share using the two-class method which requires all outstanding Series A Preferred Stock and unvested restricted stock that contain rights to non-forfeitable dividends and therefore participate in undistributed income with common shareholders to be included in computing income per common share. Under the two-class method, net income is reduced by the amount of dividends declared in the period for each class of common stock and participating security. The remaining undistributed income is then allocated to common stock and participating securities, based on their respective rights to receive dividends. Series A Preferred Stock and unvested restricted stock contain non-forfeitable rights to dividends on an if-converted basis and on the same basis as common shares, respectively, and are considered participating securities. The Series A Preferred Stock and unvested restricted stock are not included in the computation of basic income per common share in periods in which we have a net loss, as the Series A Preferred Stock and unvested restricted stock are not contractually obligated to share in our net losses. However, the cumulative dividends on preferred stock for the period decreases the income or increases the net loss allocated to common shareholders unless the dividend is paid in the period. Basic income per common share has been computed by dividing net income allocated to common shareholders by the weighted-average number of common shares outstanding. The basic and diluted net income amounts are the same for the years ended December 31, 2020 and 2019 as a result of the anti-dilutive impact of the potentially dilutive securities. Net income (loss) per common share was calculated using the treasury stock method for September 30, 2019, June 30, 2019 and March 31, 2019. Dilutive potential common shares include outstanding stock options, unvested restricted stock and Series A Preferred Stock. The Company uses the more dilutive method of calculating the diluted income per share by applying the more dilutive of either (a) the treasury stock method, if-converted method, or (b) the two-class method in its diluted income (loss) per common share calculation. Potentially dilutive shares are determined by applying the treasury stock method to the assumed exercise of outstanding stock options and the assumed vesting of restricted stock. Potentially dilutive shares issuable upon conversion of the Series A Preferred Stock are calculated using the if-converted method. The following is a reconciliation of the numerator and denominator of the diluted net income per share computations for the periods presented below:
The following table summarizes the potential weighted average shares of common stock that were excluded from the determination of our diluted shares outstanding as they were anti-dilutive:
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REVENUE RECOGNITION |
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REVENUE RECOGNITION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE RECOGNITION |
Substantially all of our revenues are considered to be revenues from contracts with students. The related accounts receivable balances are recorded in our balance sheets as student accounts receivable. We do not have significant revenue recognized from performance obligations that were satisfied in prior periods, and we do not have any transaction price allocated to unsatisfied performance obligations other than in our unearned tuition. We record revenue for students who withdraw from our schools only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Unearned tuition represents contract liabilities primarily related to our tuition revenue. We have elected not to provide disclosure about transaction prices allocated to unsatisfied performance obligations if original contract durations are less than one-year, or if we have the right to consideration from a student in an amount that corresponds directly with the value provided to the student for performance obligations completed to date in accordance with ASC 606. We have assessed the costs incurred to obtain a contract with a student and determined them to be immaterial. Unearned tuition in the amount of $23.5 million and $23.4 million is recorded in the current liabilities section of the accompanying consolidated balance sheets as of December 31, 2020 and 2019, respectively. The change in this contract liability balance during the year ended December 31, 2020 is the result of payments received in advance of satisfying performance obligations, offset by revenue recognized during that period. Revenue recognized for the year ended December 31, 2020 that was included in the contract liability balance at the beginning of the year was $23.4 million. The following table depicts the timing of revenue recognition:
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LEASES |
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LEASES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES |
The Company determines if an arrangement is a lease at inception. The Company considers any contract where there is an identified asset and that it has the right to control the use of such asset in determining whether the contract contains a lease. An operating lease right-of-use (“ROU”) asset represents the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are to be recognized at the commencement date based on the present value of lease payments over the lease term. As all of the Company’s operating leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available on the adoption date in determining the present value of lease payments. We estimate the incremental borrowing rate based on a yield curve analysis, utilizing the interest rate derived from the fair value analysis of our credit facility and adjusting it for factors that appropriately reflect the profile of secured borrowing over the expected term of the lease. The operating lease ROU assets include any lease payments made prior to the rent commencement date and exclude lease incentives. Our leases have remaining lease terms of one year to 11 years. Lease terms may include options to extend the lease term used in determining the lease obligation when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments are recognized on a straight-line basis over the lease term for operating leases. Our operating lease cost for the years ended December 31, 2020 and 2019 was $15.3 and $14.5 million, respectively. Our variable lease cost for the years ended December 31, 2020 and 2019 was $0.6 and $2.9 million, respectively. The net change in ROU asset and operating lease liability are included in other assets in the consolidated cash flows for the years ended December 31, 2020 and 2019. During the year ended December 31, 2020, the Company has withheld portions of and/or delayed payments to certain of its landlords as the Company sought to renegotiate payment terms, in order to further maintain liquidity given the temporary closures of its facilities. In some instances, the negotiations with landlords have led to agreements with landlords for rent abatements or rental deferrals, while, in other cases, negotiations are ongoing. Total payments withheld or deferred as of December 31, 2020 were approximately $0.5 million and are included in current liabilities. In accordance with the FASB’s recent Staff Q&A regarding rent concessions related to the effects of the COVID-19 pandemic, the Company has elected to account for agreed concessions by landlords that do not result in a substantial increase in the rights of the landlord or the obligations of the Company, as lessee, as though enforceable rights and obligations for those concessions existed in the original lease agreements and the Company has elected not to re-measure the related lease liabilities and right-of-use assets associated with rent concessions due to COVID-19. For qualifying rent abatement concessions, the Company has recorded negative lease expense for the amount of the concession during the period of relief, and for qualifying deferrals of rental payments, the Company has recognized a payable in lieu of recognizing a decrease in cash for the lease payment that would have been made based on the original terms of the lease agreement, which will be reduced when the deferred payment is made in the future. During the year ended December 31, 2020, the Company recognized $0.6 million of negative lease expense related to rent abatement concessions. Supplemental cash flow information and non-cash activity related to our operating leases are as follows:
* Includes effect of adoption of ASU 2016-02 and related amendments and a new lease entered into on January 1, 2019 of $5.6 million. As of December 31, 2020, there were four lease modifications that resulted in noncash re-measurements of the related ROU asset and operating lease liability of $14.9 million. Weighted-average remaining lease term and discount rate for our operating leases is as follows:
Maturities of lease liabilities by fiscal year for our operating leases as of December 31, 2020 are as follows:
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GOODWILL |
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GOODWILL [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL |
Changes in the carrying amount of goodwill during the years ended December 31, 2020 and 2019 are as follows:
As of December 31, 2020 and 2019, the goodwill balance of $14.5 million is related to the Transportation and Skilled Trades segment. |
PROPERTY, EQUIPMENT AND FACILITIES |
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PROPERTY, EQUIPMENT AND FACILITIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY, EQUIPMENT AND FACILITIES |
Property, equipment and facilities consist of the following:
Depreciation and amortization expense of property, equipment and facilities was $7.4 million and $8.1 million for the years ended December 31, 2020 and 2019, respectively. |
ACCRUED EXPENSES |
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ACCRUED EXPENSES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCRUED EXPENSES |
Accrued expenses consist of the following:
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LONG-TERM DEBT |
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LONG-TERM DEBT [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LONG-TERM DEBT |
Long-term debt consists of the following:
Credit Facility with Sterling National Bank On November 14, 2019, the Company entered into a new senior secured credit agreement (the “Credit Agreement”) with its lender, Sterling National Bank (the “Lender”), providing for borrowing in the aggregate principal amount of up to $60 million (the “Credit Facility”). The Credit Facility is comprised of four facilities: (1) a $20 million senior secured term loan maturing on December 1, 2024 (the “Term Loan”), with monthly interest and principal payments based on 120-month amortization with the outstanding balance due on the maturity date; (2) a $10 million senior secured delayed draw term loan maturing on December 1, 2024 (the “Delayed Draw Term Loan”), with monthly interest payments for the first 18 months and thereafter monthly payments of interest and principal based on 120-month amortization and all balances due on the maturity date; (3) a $15 million senior secured committed revolving line of credit providing a sublimit of up to $10 million for standby letters of credit maturing on November 13, 2022 (the “Revolving Loan”), with monthly payments of interest only; and (4) a $15 million senior secured non-restoring line of credit maturing on January 31, 2021 (the “Line of Credit Loan”). The Credit Agreement gives the Company the right to permanently terminate, in its entirety, the Revolving Loan or the Line of Credit Loan or permanently reduce the amount available for borrowing under the Revolving Loan or the Line of Credit Loan. In April 2020, the Company terminated the Line of Credit Loan. On November 10, 2020, the Company entered into an amendment to its Credit Agreement to extend the Delayed Draw Availability Period by one year to May 31, 2022 and to increase the amount of permitted cash dividends that the Company can pay on its Series A Preferred Stock during the first twenty-four months of the Credit Agreement from $1.7 million to $2.3 million. The Credit Facility is secured by a first priority lien in favor of the Lender on substantially all of the personal property owned by the Company, as well as a pledge of the stock and other equity in the Company’s subsidiaries and mortgages on parcels of real property owned by the Company in Colorado, Tennessee and Texas, at which three of the Company’s schools are located, as well as a former school property owned by the Company located in Connecticut. At the closing of the Credit Facility, the Lender advanced the Term Loan to the Company, the net proceeds of which were $19.7 million after deduction of the Lender’s origination fee in the amount of $0.3 million and other Lender fees and reimbursements to the Lender that are customary for facilities of this type. The Company used the net proceeds of the Term Loan, together with cash on hand, to repay the existing credit facility and transaction expenses. Pursuant to the terms of the Credit Agreement, letters of credit issued under the Revolving Loan reduce dollar for dollar the availability of borrowings under the Revolving Loan. Borrowings under the Line of Credit Loan are to be secured by cash collateral. Under the Credit Agreement, borrowing under the Delayed Draw Term Loan was available through May 31, 2021 but an amendment to the Credit Agreement entered into on November 10, 2020 extended the period through May 31. 2022. Accrued interest on each loan under the Credit Facility will be payable monthly in arrears. The Term Loan and the Delayed Draw Term Loan bear interest at a floating interest rate based on the then one month London Interbank Offered Rate (“LIBOR”) plus 3.50%. At the closing of the Credit Facility, the Company entered into a swap transaction with the Lender for 100% of the principal balance of the Term Loan, which matures on the same date as the Term Loan. At the end of the borrowing availability period for the Delayed Draw Term Loan, the Company is required to enter into a swap transaction with the Lender for 100% of the principal balance of the Delayed Draw Term Loan, which will mature on the same date as the Delayed Draw Term Loan, pursuant to a swap agreement between the Company and the Lender or the Lender’s affiliate. The Term Loan and Delayed Draw Term Loan are subject to a LIBOR interest rate floor of .25% if there is no swap agreement. Revolving Loans bear interest at a floating interest rate based on the then LIBOR plus an indicative spread determined by the Company’s leverage as defined in the Credit Agreement or, if the borrowing of a Revolving Loan is to be repaid within 30 days of such borrowing, the Revolving Loan will accrue interest at the Lender’s prime rate plus .50% with a floor of 4.0%. Line of Credit Loans will bear interest at a floating interest rate based on the Lender’s prime rate of interest. Revolving Loans are subject to a LIBOR interest rate floor of .00%. Letters of credit are charged an annual fee equal to (i) an applicable margin determined by the leverage ratio of the Company less (ii) .25%, paid quarterly in arrears, in addition to the Lender’s customary fees for issuance, amendment and other standard fees. Letters of credit totaling $4 million that were outstanding under the existing credit facility are treated as letters of credit under the Revolving Loan. Under the terms of the Credit Agreement, the Company may prepay the Term Loan and/or the Delayed Draw Term Loan in full or in part without penalty except for any amount required to compensate the Lender for any swap breakage or other costs incurred in connection with such prepayment. The Lender receives an unused facility fee of 0.50% per annum payable quarterly in arrears on the unused portions of the Revolving Loan and the Line of Credit Loan. In addition to the foregoing, the Credit Agreement contains customary representations, warranties and affirmative and negative covenants (including financial covenants that (i) restrict capital expenditures, (ii) restrict leverage, (iii) require maintaining minimum tangible net worth, (iv) require maintaining a minimum fixed charge coverage ratio and (v) require the maintenance of a minimum of $5 million in quarterly average aggregate balances on deposit with the Lender, which, if not maintained, will result in the assessment of a quarterly fee of $12,500), as well as events of default customary for facilities of this type. As of December 31, 2020, the Company was in compliance with all debt covenants. The Credit Agreement also limited the payment of cash dividends during the first twenty-four months of the agreement to $1.7 million but an amendment to the Credit Agreement entered into on November 10, 2020 raised the cash dividend limit to $2.3 million in such twenty-four-month period. As of December 31, 2020 and 2019, the Company had $17.8 million and $34.8 million, respectively, outstanding under the Credit Facility offset by $0.6 million and $0.8 million of deferred finance fees, respectively. In January 2020, the Company repaid the $15.0 million outstanding on the Line of Credit Loan. As of December 31, 2020 and December 31, 2019, letters of credit in the aggregate outstanding principal amount of $4.0 million and $4.0 million, respectively, were outstanding under the Credit Facility. Scheduled maturities of long-term debt at December 31, 2020 are as follows:
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STOCKHOLDERS' EQUITY |
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STOCKHOLDERS' 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. The Company has not declared or paid any cash dividends on our common stock since the Company’s Board of Directors discontinued our quarterly cash dividend program in February 2015. The Company has no current intentions to resume the payment of cash dividends in the foreseeable future. Preferred Stock On November 14, 2019, the Company raised gross proceeds of $12.7 million from the sale of 12,700 shares of its newly designated Series A Convertible Preferred Stock, no par value per share (the “Series A Preferred Stock”). The Series A Preferred Stock was designated by the Company’s Board of Directors pursuant to a certificate of amendment to the Company’s amended and restated certificate of incorporation (the “Charter Amendment”). The liquidation preference associated with the Series A Preferred Stock was $1,000 per share at December 31, 2020. Upon issuance each share of Series A Preferred Stock was convertible at $2.36 per share of common stock (as may be adjusted pursuant to the Charter Amendment, the “Conversion Price”) into 423,729 shares of common stock (the number of shares into which the Series A Preferred Stock is convertible at any time, the “Conversion Shares”). The Company incurred issuance costs of $0.7 million as part of this transaction. The description below provides a summary of certain material terms of the Series A Preferred Stock: Securities Purchase Agreement. The Series A Preferred Stock was sold by the Company pursuant to a Securities Purchase Agreement dated as of November 14, 2019 (the “SPA”) among the Company, Juniper Targeted Opportunity Fund, L.P. and Juniper Targeted Opportunities, L.P. (together, “Juniper Purchasers”) and Talanta Investment, Inc. (“Talanta,” together with Juniper Purchasers, the “Investors”). Among other things, the SPA includes covenants relating to the appointment of a director to the Company’s Board of Directors to be selected solely by the holders of the Series A Preferred Stock. Dividends. Dividends on the Series A Preferred Stock (“Series A Dividends”), at the initial annual rate of 9.6% is to be paid, in arrears, from the date of issuance quarterly on each December 31, March 31, June 30 and September 30 with September 30, 2020 being the first dividend payment date. The Company, at its option, may pay dividends either (a) in cash or (b) by increasing the number of Conversion Shares by the dollar amount of the dividend divided by the Conversion Price. The dividend rate is subject to increase (a) 2.4% per annum on the fifth anniversary of the issuance of the Series A Preferred Stock (b) by 2% per annum but in no event above 14% per annum should the Company fail to perform certain obligations under the Charter Amendment. The Series A Preferred Stock is not currently redeemable and may not become redeemable in the future. As a result, the Company is not required to re-measure the Series A Preferred Stock and does not accrete changes in the redemption value. As of December 31, 2020, we paid a $1.4 million cash dividend on the outstanding shares of Series A Preferred Stock rather than increasing the number of Conversion Shares. Dividends are included in the consolidated balance sheets within additional paid-in-capital when the Company maintains an accumulated deficit. Series A Preferred Stock Holders Right to Convert into Common Stock. Each share of Series A Preferred Stock, at any time, is convertible into a number of shares of common stock equal to (i) the sum of (A) $1,000 (subject to adjustment as provided in the Charter Amendment) plus (B) the dollar amount of any declared Series A Dividends not paid in cash divided by (ii) the Conversion Price ($2.36 per share subject to anti-dilution adjustments) as of the applicable Conversion Date (as defined in the Charter Amendment). At all times, however, the number of Conversion Shares that can be issued to any Series A Preferred Stock Holder may not result in such holder and its affiliates owning more than 19.99% of the total number of shares of common stock outstanding after giving effect to the conversion (the “Hard Cap”), unless prior shareholder approval is obtained or no longer required by the rules of the principal stock exchange on which the Company’s common stock trade. Mandatory Conversion. If, at any time following November 14, 2022 the volume weighted average price of the Company’s common stock equals or exceeds 2.25 times the Conversion Price (currently $5.31 per share) for a period of 20 consecutive trading days and on each such trading day at least 20,000 shares of common stock was traded, the Company may, at its option and subject to the Hard Cap, require that any or all of the then outstanding shares of Series A Preferred Stock be automatically converted into Conversion Shares. Redemption. Beginning November 14, 2024, the Company may redeem all or any of the Series A Preferred Stock for a cash price equal to the greater of (“Liquidation Preference”) (i) the sum of $1,000 (subject to adjustment as provided in the Charter Amendment) plus the dollar amount of any declared Series A Dividends not paid in cash and (ii) the value of the Conversion Shares were such Series A Preferred Stock converted (as determined in the Charter Amendment) without regard to the Hard Cap. Change of Control. In the event of certain changes of control, some of which are not in the Company’s control, as defined in the Charter Amendment as a “Fundamental Change” or a “Liquidation” (as defined in the Charter Amendment), the holders of Series A Preferred Stock shall be entitled to receive the Liquidation Preference, unless such Fundamental Change is a stock merger in which certain value and volume requirements are met, in which case the Series A Preferred Stock will be converted into common stock in connection with such stock merger. The Company has classified the Series A Preferred Stock as mezzanine equity on the Consolidated Balance Sheet based upon the terms of a change of control which could be outside the Company’s control. Voting. Holders of shares of Series A Preferred Stock will be entitled to vote with the holders of shares of common stock and not as a separate class, at any annual or special meeting of shareholders of the Company, on an as-converted basis, in all cases subject to the Hard Cap. In addition, a majority of the voting power of the Series A Preferred Stock must approve certain significant actions of the Company, including (i) declaring a dividend or otherwise redeeming or repurchasing any shares of common stock and other junior securities, if any, subject to certain exceptions, (ii) incurring indebtedness, except for certain permitted indebtedness and (iii) creating a subsidiary other than a wholly-owned subsidiary. Additional Provisions. The Series A Preferred Stock is perpetual and therefore does not have a maturity date. The conversion price of the Series A Preferred Stock is subject to anti-dilution protections if the Company affects a stock split, stock dividend, subdivision, reclassification or combination of its common stock and certain other economically dilutive events. Registration Rights Agreement. The Company also is a party to a Registration Rights Agreement (“RRA”) with the investors of the Series A Preferred Stock. The RRA provides for unlimited demand registration rights, of which there can be two underwritten offerings each for at least $5 million in gross proceeds, and piggyback registration rights, with respect to the Conversion Shares. In addition, the RRA obligated the Company to register “for the shelf” the resale of the Conversion Shares through the filing of a registration statement to such effect (the “Resale Shelf Registration Statement”) and have such Resale Shelf Registration Statement declared effective by the Securities and Exchange Commission (the “SEC”). The SEC declared the Resale Shelf Registration Statement effective on October 16, 2020. Restricted Stock The Company currently has three stock incentive plans: a Long-Term Incentive Plan (the “LTIP”), a Non-Employee Directors Restricted Stock Plan (the “Non-Employee Directors Plan”) and the Lincoln Educational Services Corporation 2020 Incentive Compensation Plan (the “2020 Plan”). 2020 Plan On March 26, 2020, the Board adopted the 2020 Plan to provide an incentive to certain directors, officers, employees and consultants of the Company to align their interests in the Company’s success with those of its shareholders through the grant of equity-based awards. On June 16, 2020, the shareholders of the Company approved the 2020 Plan. The 2020 Plan is administered by the Compensation Committee of the Board, or such other qualified committee appointed by the Board, who will, among other duties, have full power and authority to take all actions and to make all determinations required or provided for under the 2020 Plan. Pursuant to the 2020 Plan, the Company may grant options, share appreciation rights, restricted shares, restricted share units, incentive stock options and nonqualified stock options. The Plan has a duration of 10 years. Subject to adjustment as described in the 2020 Plan, the aggregate number of common shares available for issuance under the 2020 Plan is 2,000,000 shares. As of December 31, 2020, 111,376 restricted shares have been issued to non-employee directors which vest on the first anniversary of the grant date. On August 7, 2020, two non-employee directors were appointed to the Company’s Board of Directors and 17,096 restricted shares were granted to each non-employee director. The restricted shares vest on June 16, 2021. Also on August 7, 2020, a non-employee director retired from his position on the Company’s Board of Directors. Accordingly, 12,762 shares were accelerated to vest effective August 7, 2020. LTIP Under the LTIP, certain employees have received awards of restricted shares of common stock based on service and performance. The number of shares granted to each employee is based on the amount of the award and the fair market value of a share of common stock on the date of grant. The 2020 Plan makes it clear that there will be no new grants under the LTIP effective as of the date of shareholder approval, June 16, 2020. The 2020 Plan also states that the shares available under the 2020 Plan will be two million shares plus the number of shares remaining available under the LTIP. As no shares remain available under the LTIP there can be no additional grants under the LTIP. Grants under the LTIP remain in effect according to their terms. Therefore, those grants are subject to the particular award agreement relating thereto and to the LTIP to the extent that the prior plan provides rules relating to those grants. The LTIP remains in effect only to that extent. On February 20, 2020, performance-based restricted shares were granted to certain employees of the Company. The shares vest 20%, 30% and 50% on the first, second and third anniversary dates, respectively, based upon the attainment of a financial target during each fiscal years ending December 31, 2020, 2021 and 2022, respectively, except in extraordinary circumstances. There is no restriction on the right to vote or the right to receive dividends with respect to any of such restricted shares. For the year ended December 31, 2020 the Company recorded expense of $0.5 million as the expectation of attainment of the target is probable. On February 28, 2019, restricted shares were granted to certain employees of the Company, which shares ratably vest over three years. There is no restriction on the right to vote or the right to receive dividends with respect to any of such restricted shares. For the years ending December 31, 2020 and 2019, the Company recorded expense of $0.5 million and $0.4 million, respectively, in connection with this grant. Non-Employee Directors Plan Pursuant to the Non-Employee Directors Plan, each non-employee director of the Company receives an annual award of restricted shares of common stock on the date of the Company’s annual meeting of shareholders. The number of shares granted to each non-employee director is based on the fair market value of a share of common stock on that date. The restricted shares vest on the first anniversary of the grant date. There is no restriction on the right to vote or the right to receive dividends with respect to any of such restricted shares. For the years ended December 31, 2020 and 2019, the Company completed a net share settlement for 75,115 and 5,518 restricted shares, respectively, on behalf of certain employees that participate in the LTIP upon the vesting of the restricted shares pursuant to the terms of the LTIP. The net share settlement was in connection with income taxes incurred on restricted shares that vested and were transferred to the employees during 2019 and/or 2018, creating taxable income for the employees. At the employees’ request, the Company will pay these taxes on behalf of the employees in exchange for the employees returning an equivalent value of restricted shares to the Company. These transactions resulted in a decrease of $0.2 million and less than $0.1 million for each of the years ended December 31, 2020 and 2019, respectively, to equity on the consolidated balance sheets as the cash payment of the taxes effectively was a repurchase of the restricted shares granted in previous years. The following is a summary of transactions pertaining to restricted stock:
The restricted stock expense for the years ended December 31, 2020 and 2019 was $1.7 million and $0.7 million, respectively. The unrecognized restricted stock expense as of December 31, 2020 and 2019 was $3.2 million and $1.2 million, respectively. As of December 31, 2020, outstanding restricted shares under the LTIP had aggregate intrinsic value of $10.2 million. Stock Options The fair value of the stock options used to compute stock-based compensation is the estimated present value at the date of grant using the Black-Scholes option pricing model. The following is a summary of transactions pertaining to stock options:
As of December 31, 2020, there was no unrecognized pre-tax compensation expense. |
PENSION PLAN |
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PENSION PLAN [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PENSION PLAN |
The Company sponsors a noncontributory defined benefit pension plan covering substantially all of the Company’s union employees. Benefits are provided based on employees’ years of service and earnings. This plan was frozen on December 31, 1994 for non-union employees. The following table sets forth the plan’s funded status and amounts recognized in the consolidated financial statements:
For the year ended December 31, 2020, the actuarial loss of $2.1 million was due to the decrease in the discount rate from 2.93% to 2.08%. Amounts recognized in the consolidated balance sheets consist of:
Amounts recognized in accumulated other comprehensive loss consist of:
The accumulated benefit obligation was $24.4 million and $22.8 million at December 31, 2020 and 2019, respectively. The following table provides the components of net periodic cost for the plan:
The estimated net loss and prior service cost for the plan that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next year is $0.5 million. The following tables present plan assets using the fair value hierarchy as of December 31, 2020 and 2019. The fair value hierarchy has three levels based on the reliability of inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets. Level 2 refers to fair values estimated using observable prices that are based on inputs not quoted in active markets but observable by market data, while Level 3 includes the fair values estimated using significant non-observable inputs. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
Fair value of total plan assets by major asset category as of December 31:
Weighted-average assumptions used to determine benefit obligations as of December 31:
Weighted-average assumptions used to determine net periodic pension cost for years ended December 31:
As this plan was frozen to non-union employees on December 31, 1994, the difference between the projected benefit obligation and accumulated benefit obligation is not significant in any year. The Company invests plan assets based on a total return on investment approach, pursuant to which the plan assets include a diversified blend of equity and fixed income investments toward a goal of maximizing the long-term rate of return without assuming an unreasonable level of investment risk. The Company determines the level of risk based on an analysis of plan liabilities, the extent to which the value of the plan assets satisfies the plan liabilities and the plan’s financial condition. The investment policy includes target allocations ranging from 30% to 70% for equity investments, 20% to 60% for fixed income investments and 0% to 10% for cash equivalents. The equity portion of the plan assets represents growth and value stocks of small, medium and large companies. The Company measures and monitors the investment risk of the plan assets both on a quarterly basis and annually when the Company assesses plan liabilities. The Company uses a building block approach to estimate the long-term rate of return on plan assets. This approach is based on the capital markets assumption that the greater the volatility, the greater the return over the long term. An analysis of the historical performance of equity and fixed income investments, together with current market factors such as the inflation and interest rates, are used to help make the assumptions necessary to estimate a long-term rate of return on plan assets. Once this estimate is made, the Company reviews the portfolio of plan assets and makes adjustments thereto that the Company believes are necessary to reflect a diversified blend of equity and fixed income investments that is capable of achieving the estimated long-term rate of return without assuming an unreasonable level of investment risk. The Company also compares the portfolio of plan assets to those of other pension plans to help assess the suitability and appropriateness of the plan’s investments. The Company does not expect to make contributions to the plan in 2021. However, after considering the funded status of the plan, movements in the discount rate, investment performance and related tax consequences, the Company may choose to make additional contributions to the plan in any given year. The total amount of the Company’s contributions paid under its pension plan was zero for each of the years ended December 31, 2020 and 2019, respectively. Information about the expected benefit payments for the plan is as follows:
The Company has a 401(k) defined contribution plan for all eligible employees. Employees may contribute up to 25% of their compensation into the plan. The Company may contribute up to an additional 30% of the employee’s contributed amount up to 6% of compensation. For the years ended December 31, 2020 and 2019, the Company’s expense for the 401(k) plan amounted to $0.4 million and $0.1 million, respectively. |
INCOME TAXES |
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INCOME TAXES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES |
Components of the (benefit) provision for income taxes were as follows:
Effective Tax rate The reconciliation of the effective tax rate to the U.S. Statutory Federal Income tax rate was:
Our income tax benefit for the year ended December 31, 2020 was $35.1 million compared to an income tax provision of $0.3 million in the prior year. The 2020 tax benefit primarily relates to a release of the valuation allowance on deferred tax assets. After weighing all the evidence, management determined that it was more likely than not that the deferred tax assets were realizable and, therefore, the valuation allowance was no longer required. As a result, the Company released the full valuation allowance as of December 31, 2020. Deferred Taxes and Valuation Allowance The components of the non-current deferred tax assets/(liabilities) were as follows:
Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. As of December 31, 2019, the Company recorded a valuation allowance of $37.4 million against its net deferred tax assets. As of December 31, 2020, the Company has net operating loss (“NOL”) carryforwards of $43.1 million. Of the $43.1 million NOL carryforwards, $29.3 million will start expiring in 2034 and ending in 2037 if unused. The net operating losses generated in 2018 and beyond can be carried over indefinitely under the Tax Act. Utilization of the NOL carryforwards may be subject to a substantial limitation due to ownership change limitations that may occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), as well as similar state and foreign provisions. These ownership changes may limit the amount of NOL and tax credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain shareholders or public groups. As of December 31, 2020 and 2019, the Company no longer has any liability for uncertain tax positions. The Company recognizes accrued interest and penalties related to uncertain tax positions in income tax expense. The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various states. The Company is no longer subject to U.S. federal income tax examinations for years before 2017 and, generally, is no longer subject to state and local income tax examinations by tax authorities for years before 2017 with few exceptions. |
FAIR VALUE |
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FAIR VALUE |
The carrying amount and estimated fair value of the Company’s financial instrument assets and liabilities, which are not measured at fair value on the Consolidated Balance Sheets, are listed in the table below:
As of December 31, 2020, we estimated the fair value of the Credit Facility based on a present value analysis utilizing aggregate market yields obtained from independent pricing sources for similar financial instruments. As of December 31, 2019, we estimated that the carrying value of the Credit Facility approximates the fair value due to the fact that the Credit Facility was entered into in close proximity to December 31, 2019. The carrying amounts reported on the Consolidated Balance Sheets for Cash and cash equivalents, Restricted cash and Noncurrent restricted cash approximate fair value because they are highly liquid. The carrying amounts reported on the Consolidated Balance Sheets for Prepaid expenses and Other current assets, Accrued expenses and Other short term liabilities approximate fair value due to the short-term nature of these items. Qualifying Hedge Derivative On November 14, 2019, the Company entered into an interest rate swap for the Term Loan with a notional amount of $20 million which expires on December 1, 2024. The loan has a 10-year straight line amortization. A principal amount of $0.2 million is paid monthly. This interest rate swap converts the floating interest rate Term Loan to a fixed rate, plus a borrowing spread. The interest rate is variable based on LIBOR plus 3.50% and the Company’s fixed rate is 5.36%. The Company designated this interest rate swap as a cash flow hedge. The Company entered into this interest rate swap to hedge exposure resulting from the interest rate risk. The purpose of this hedge is to reduce the variability of the interest rate based on LIBOR. The Company manages these exposures within specified guidelines through the use of derivatives. All of our derivative instruments are utilized for risk management purposes, and the Company does not use derivatives for speculative trading purposes. The following summarizes the fair value of the outstanding derivative:
The following summarizes the financial statement classification and amount of interest expense recognized on hedging instruments:
The following summarizes the effect of derivative instruments designated as hedging instruments in Other Comprehensive Income/(Loss):
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SEGMENT REPORTING |
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SEGMENT REPORTING [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING |
We operate our business in three reportable segments: (a) the Transportation and Skilled Trades segment; (b) the Healthcare and Other Professions segment; and (c) the Transitional segment. Our reportable segments have been determined based on a method by which we now evaluate performance and allocate resources. Each reportable segment represents a group of post-secondary education providers that offer a variety of degree and non-degree academic programs. These segments are organized by key market segments to enhance operational alignment within each segment to more effectively execute our strategic plan. Each of the Company’s schools is a reporting unit and an operating segment. Our operating segments are described below. Transportation and Skilled Trades – The Transportation and Skilled Trades segment offers academic programs mainly in the career-oriented disciplines of transportation and skilled trades (e.g. automotive, diesel, HVAC, welding and manufacturing). Healthcare and Other Professions – The Healthcare and Other Professions segment offers academic programs in the career-oriented disciplines of health sciences, hospitality and business and information technology (e.g. dental assistant, medical assistant, practical nursing, culinary arts and cosmetology). Transitional – The Transitional segment refers to our campus operations which have been closed. The schools in the Transitional segment employed a gradual teach-out process that enabled the schools to continue to operate to allow their current students to complete their course of study. The Company continually evaluates each campus for profitability, earning potential, and customer satisfaction. This evaluation takes several factors into consideration, including the campus’s geographic location and program offerings, as well as skillsets required of our students by their potential employers. The purpose of this evaluation is to ensure that our programs provide our students with the best possible opportunity to succeed in the marketplace with the goals of attracting more students to our programs and, ultimately, to provide our shareholders with the maximum return on their investment. Campuses classified in the Transitional segment have been subject to this process and have been strategically identified for closure. As of December 31 of each of 2020 and 2019, no campuses were categorized in the Transitional segment. We evaluate segment performance based on operating results. Adjustments to reconcile segment results to consolidated results are included under the caption “Corporate,” which primarily includes unallocated corporate activity. Summary financial information by reporting segment is as follows:
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COMMITMENTS AND CONTINGENCIES |
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Dec. 31, 2020 | |||
COMMITMENTS AND CONTINGENCIES [Abstract] | |||
COMMITMENTS AND CONTINGENCIES |
Litigation and Regulatory Matters— In the ordinary conduct of our business, we are subject to periodic lawsuits, investigations and claims, including, but not limited to, claims involving students or graduates and routine employment matters. Although we cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against us, we do not believe that any currently pending legal proceeding to which we are a party will have a material effect on our business, financial condition, results of operations or cash flows. Following a wave of hundreds of class action lawsuits being served upon colleges and universities across the country in connection with transitioning from in-person to online classes due to COVID-19, a class action lawsuit was filed against the Company in New Jersey Federal District Court and served on December 21, 2020. Like most of the other lawsuits across the country, the suit alleges breach of contract, unjust enrichment and conversion. In lieu of an answer, on January 25, 2021 the Company filed a Motion to Dismiss Plaintiff’s Complaint for Failure to State a Claim. The Motion remains pending before the Court. On February 17, 2021, Plaintiff’s counsel notified the Company that it would be amending its complaint to address deficiencies the Company outlined in its Motion to Dismiss. As previously reported, on July 6, 2018, the Company received an administrative subpoena from the Office of the Attorney General of the State of New Jersey (“NJ OAG”). Pursuant to the subpoena, the NJ OAG requested certain documents and detailed information relating to the November 21, 2012 Civil Investigative Demand letter addressed to the Company by the Massachusetts Office of the Attorney General (“MOAG”) that resulted in a previously reported Final Judgment by Consent between the Company and the MOAG dated July 13, 2015. The Company responded to this request and, the NJ OAG issued two supplemental subpoenas requesting additional information. The Company has responded to these requests and has received no further communications from the NJ OAG to date. Student Financing Plans—At December 31, 2020, the Company had outstanding net financing commitments to its students to assist them in financing their education of approximately $21.7 million, net of interest. Executive Employment Agreements—The Company entered into employment contracts with key executives that provide for continued salary payments if the executives are terminated for reasons other than cause, as defined in the agreements. The future employment contract commitments for such employees were approximately $7.6 million at December 31, 2020. Change in Control Agreements—In the event of a change of control several key executives will receive continued salary payments based on their employment agreements. Surety Bonds—Each of the Company’s campuses must be authorized by the applicable state education agency in which the campus is located to operate and to grant degrees, diplomas or certificates to its students. The campuses are subject to extensive, ongoing regulation by each of these states. In addition, the Company’s campuses are required to be authorized by the applicable state education agencies of certain other states in which the campuses recruit students. The Company is required to post surety bonds on behalf of its campuses and education representatives with multiple states to maintain authorization to conduct its business. At December 31, 2020, the Company has posted surety bonds in the total amount of approximately $12.3 million. |
COVID-19 PANDEMIC AND CARES ACT |
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Dec. 31, 2020 | |||
COVID-19 PANDEMIC AND CARES ACT [Abstract] | |||
COVID-19 PANDEMIC AND CARES ACT |
The Company began seeing the impact of the global COVID-19 pandemic on its business in early March and some effects of the pandemic have continued. The spread of COVID-19 has had an unprecedented impact on higher educational institutions across the country, including our schools, and has led to the closure of campuses and the transition of academic programs from in-person to online delivery. The impact for the Company was primarily related to transitioning classes from in-person, hands-on learning to online, remote learning. As part of this transition, the Company has incurred additional expenses. Related to this transition, some students have been placed on leave of absence as they could not complete their externships and some students chose not to participate in online learning. Additionally, certain programs were extended due to restricted access to externship sites and classroom labs which did not have a material impact on our consolidated financial statements. In accordance with phased re-opening as applied on a state-by-state basis, all of our schools have now re-opened and the majority of the students who were on leave of absence or have deferred their programs returned to school to finish their programs. The Company expects to continue to be impacted by COVID-19 as the situation remains dynamic and evolving and subject to rapid and possibly material change. Additional impacts may arise of which the Company is not currently aware. The nature and extent of such impacts will depend on future developments, which are highly uncertain and cannot be predicted. On March 27, 2020, the CARES Act was signed into law, which includes a $2 trillion federal economic relief package providing financial assistance and other relief to individuals and businesses impacted by the spread of COVID-19. The CARES Act includes provisions for financial assistance and other regulatory relief benefitting students and their postsecondary institutions. Among other things, the CARES Act includes a $14 billion higher education emergency relief fund (“HEERF”) for the DOE to distribute directly to institutions of higher education. Institutions are required to use at least half of the HEERF funds for emergency grants to students for expenses related to disruptions in campus operations (e.g., food, housing, etc.). Institutions are permitted to use the remainder of the funds for additional emergency grants to students or to cover institutional costs associated with significant changes to the delivery of instruction due to the COVID-19 emergency, provided that those costs do not include payment to contractors for the provision of pre-enrollment recruitment activities, endowments, or capital outlays associated with facilities related to athletics, sectarian instruction, or religious worship. The law requires institutions receiving funds to continue to the greatest extent practicable to pay its employees and contractors during the period of any disruptions or closures related to the COVID-19 emergency. The DOE has allocated funds to each institution of higher education based on a formula contained in the CARES Act. The formula is heavily weighted toward institutions with large numbers of Pell Grant recipients. The DOE allocated $27.4 million to our schools to be distributed in two equal installments and must be utilized by April 30, 2021. The Company had available $13.7 million in the first installment which was intended for emergency grants to students. As of December 31, 2020, the Company has distributed $13.3 million to the students and remainder was distributed in January 2021. As of December 31, 2020, the Company had available $13.7 million from the second installment which is intended for institutional costs and additional emergency grants to students. As of December 31, 2020, the Company has utilized $5.8 million of these funds for permitted expenses which was netted against the original expenses included in selling, general and administrative on the Consolidated Statement of Operations. As of December 31, 2020, the remaining funds are held by the DOE and the Company receives them as they are utilized. The DOE also has published guidance regarding permitted and prohibited use of these funds and requirements for reporting the use of these funds. If the funds are not spent or accounted for in accordance with applicable requirements, we could be required to return funds or be subject to other sanctions. The CARES Act also contains separate educational provisions that relieve both institutions and students from complying with the requirement to repay Title IV funds following a student’s withdrawal as a result of the COVID-19 emergency. Ordinarily, when a student withdraws, the institution (and, in some cases, the student) may be required to return unearned portions of the Title IV grant and loan funds awarded for the period. Institutions will be required to report to the DOE the total amount of grant and loan funds the institution has not returned due to the waiver. For federal loan borrowers, the CARES Act also directs the DOE to cancel the borrower’s obligation to repay any Direct Loan associated with the relevant period. The law also expands the options to avoid student withdrawals due to a cessation of attendance by placing students on an approved leave of absence and waives certain requirements normally applicable to a leave of absence. The CARES Act also allows institutions to exclude from the calculation of a student’s satisfactory academic progress any attempted credits not completed due to the COVID-19 emergency. The Company is also permitted to delay payment of FICA payroll taxes until January 1, 2021. The Company will have to repay 50% of the deferred payments by December 31, 2021, and the remaining 50% by December 31, 2022. As of December 31, 2020, the Company had deferred payments of $4.5 million. On December 27, 2020, the Consolidated Appropriations Act, 2021 was signed into law. This annual appropriations bill contained the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (“CRRSAA”). CRRSAA provided an additional $81.9 billion to the Education Stabilization Fund including $22.7 billion for the HEERF, which were originally created by the CARES Act in March 2020. The higher education provisions of the CRRSAA are intended in part to provide additional financial assistance benefitting students and their postsecondary institutions in the wake of the spread of COVID-19 across the country and its impact on higher educational institutions. Like the CARES Act, the CRRSAA directs the majority of HEERF funds to a general program providing direct grants to institutions. Institutions generally must designate “at least the same amount” of the funds for direct grants to students as was required under the CARES Act. However, for-profit institutions may only use the new HEERF funds for grants to students. The student grants must prioritize students with exceptional need and may be used for any component of the student’s cost of attendance or for emergency costs that arise due to coronavirus, such as tuition, food, housing, health care (including mental health care), or child care. Public and nonprofit institutions may use the remaining HEERF funds to (1) defray expenses associated with coronavirus (including lost revenue, reimbursement for expenses already incurred, technology costs associated with a transition to distance education, faculty and staff trainings, and payroll); (2) carry out student support activities authorized by the Higher Education Act that address needs related to coronavirus; or (3) for additional financial aid grants to students. Upon the passage of the CRRSAA, DOE began allocating the funds to each institution of higher education based on a formula contained in the law. The DOE has allocated a total of $15.4 million to our schools and the funds became available in February 2021. The DOE has begun releasing guidance relating to the use of these funds and is expected to provide additional information in the coming weeks. Failure to comply with requirements for the usage and reporting of these funds could result in requirements to repay some or all of the allocated funds and in other sanctions. |
Schedule II-Valuation and Qualifying Accounts |
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Schedule II-Valuation and Qualifying Accounts [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule II-Valuation and Qualifying Accounts | Schedule II—Valuation and Qualifying Accounts (in thousands)
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Dec. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Business Activities | Business Activities—Lincoln Educational Services Corporation and its subsidiaries (collectively, the “Company”, “we”, “our” and “us”, as applicable) provide diversified career-oriented post-secondary education to recent high school graduates and working adults. The Company, which currently operates 22 schools in 14 states, offers programs in automotive technology, skilled trades (which include HVAC, welding and computerized numerical control and electronic systems technology, among other programs), healthcare services (which include nursing, dental assistant and medical administrative assistant, among other programs), hospitality services (which include culinary, therapeutic massage, cosmetology and aesthetics) and information technology. The schools operate under Lincoln Technical Institute, Lincoln College of Technology, Lincoln Culinary Institute, and Euphoria Institute of Beauty Arts and Sciences and associated brand names. Most of the campuses serve major metropolitan markets and each typically offers courses in multiple areas of study. Five of the campuses are destination schools, which attract students from across the United States and, in some cases, from abroad. The Company’s other campuses primarily attract students from their local communities and surrounding areas. All of the campuses are nationally or regionally accredited and are eligible to participate in federal financial aid programs by the U.S. Department of Education (the “DOE”) and applicable state education agencies and accrediting commissions which allow students to apply for and access federal student loans as well as other forms of financial aid. The Company’s business is organized into three reportable business segments: (a) Transportation and Skilled Trades, (b) Healthcare and Other Professions (“HOPS”), and (c) Transitional, which refers to our campus operations which have been closed. |
Liquidity | Liquidity—As of December 31, 2020, the Company had cash and cash equivalents of $38.0 million. As of December 31, 2020, the Company had a net cash balance of $20.8 million calculated as cash and cash equivalents, less both the short-term and long-term portions of the Company’s Credit Facility (defined below). As of December 31, 2020, the Company also can borrow an additional $21.0 million under its Credit Facility. As of December 31, 2019, the Company had a net cash balance of $4.6 million. The Company believes that its likely sources of cash should be sufficient to fund operations for the next twelve months and thereafter for the foreseeable future. However, the circumstances relating to COVID-19 and its evolution are unpredictable and, if circumstances surrounding COVID-19 should evolve in a significantly adverse manner it is possible our liquidity could be materially and adversely affected. |
Principles of Consolidation | Principles of Consolidation—The accompanying consolidated financial statements include the accounts of Lincoln Educational Services Corporation and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. |
Cash and Cash Equivalents | Cash and Cash Equivalents—Cash and cash equivalents include all cash balances and highly liquid short-term investments, which contain original maturities within three months of purchase. Pursuant to the DOE’s cash management requirements, the Company retains funds from financial aid programs under Title IV of the Higher Education Act in segregated cash management accounts. The segregated accounts do not require a restriction on use of the cash and, as such, these amounts are classified as cash and cash equivalents on the consolidated balance sheet. |
Restricted Cash | Restricted Cash—Restricted cash consists of deposits that were maintained at financial institutions under a cash collateral agreement pursuant to the Company’s prior credit facility. The amounts of zero and $15.0 million as of December 31, 2020 and 2019, respectively, of restricted cash is included in long-term assets in the consolidated balance sheets as the restrictions were greater than one year, respectively. Refer to Note 9 for more information on the Company’s credit facility. |
Accounts Receivable | Accounts Receivable—The Company reports accounts receivable at net realizable value, which is equal to the gross receivable less an estimated allowance for uncollectible accounts. Noncurrent accounts receivable represent amounts due from graduates in excess of 12 months from the balance sheet date. |
Allowance for Uncollectible Accounts | Allowance for Uncollectible Accounts—Based upon experience and judgment, an allowance is established for uncollectible accounts with respect to tuition receivables. In establishing the allowance for uncollectible accounts, the Company considers, among other things, current and expected economic conditions, a student’s status (in-school or out-of-school), whether or not a student is currently making payments, and overall collection history. Changes in trends in any of these areas may impact the allowance for uncollectible accounts. The receivables balances of withdrawn students with delinquent obligations are reserved for based on our collection history. |
Inventories | Inventories—Inventories consist mainly of textbooks, computers, tools and supplies. Inventories are valued at the lower of cost or market on a first-in, first-out basis. |
Property, Equipment and Facilities - Depreciation and Amortization | Property, Equipment and Facilities—Depreciation and Amortization—Property, equipment and facilities are stated at cost. Major renewals and improvements are capitalized, while repairs and maintenance are expensed when incurred. Upon the retirement, sale or other disposition of assets, costs and related accumulated depreciation are eliminated from the accounts and any gain or loss is reflected in operating income (loss). For financial statement purposes, depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the assets, and amortization of leasehold improvements is computed over the lesser of the term of the lease or its estimated useful life. |
Advertising Costs | Advertising Costs—Costs related to advertising are expensed as incurred and approximated $31.2 million and $29.8 million for the years ended December 31, 2020 and 2019, respectively. These amounts are included in selling, general and administrative expenses in the consolidated statements of operations |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets— The Company tests its goodwill for impairment annually, or whenever events or changes in circumstances indicate an impairment may have occurred, by comparing its reporting unit’s carrying value to its implied fair value. Impairment may result from, among other things, deterioration in the performance of the acquired business, adverse market conditions, adverse changes in applicable laws or regulations, reductions in market value of the Company, and changes that restrict the activities of the acquired business, and a variety of other circumstances. If the Company determines that an impairment has occurred, it is required to record a write-down of the carrying value and charge the impairment as an operating expense in the period the determination is made. In evaluating the recoverability of the carrying value of goodwill and other indefinite-lived intangible assets, the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the acquired assets. Changes in strategy or market conditions could significantly impact these judgments in the future and require an adjustment to the recorded balances. The goodwill is allocated among nine reporting units within the Transportation and Skilled Trades Segment. When we test goodwill balances for impairment, we determine the fair value of each of our reporting units using an equal weighting of the discounted cash flow model and the market approach. The determination of fair value using the discounted cash flow model requires significant estimates and assumptions related to forecasts of future revenues, which is driven by student start growth, EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortization) margins, the long-term growth rate used in the calculation of the terminal value, and the discount rate to apply against each reporting unit’s financial metrics. The determination of fair value using the market approach requires significant estimates and assumptions related to the selection of EBITDA multiples and the control premiums. Changes in these assumptions could have a significant impact on either the fair value, the amount of any goodwill impairment charge, or both. Although we believe our projected future operating results and cash flows and related estimates regarding fair values are based on reasonable assumptions, historically projected operating results and cash flows have not always been achieved. The failure of one of our reporting units to achieve projected operating results and cash flows in the near term or long term may reduce the estimated fair value of the reporting unit below its carrying value and result in the recognition of a goodwill impairment charge. Significant management judgment is necessary to evaluate the impact of operating and macroeconomic changes and to estimate future cash flows. Assumptions used in our impairment evaluations, such as forecasted growth rates and our cost of capital, are based on the best available market information and are consistent with our internal forecasts and operating plans. In addition to cash flow estimates, our valuations are sensitive to the rate used to discount cash flows and future growth assumptions. At December 31, 2020 and 2019, we conducted our annual test for goodwill impairment and determined we did not have an impairment. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets—The Company reviews the carrying value of its long-lived assets and identifiable intangibles for possible impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The Company evaluates long-lived assets for impairment by examining estimated future cash flows using Level 3 inputs. These cash flows are evaluated by using weighted probability techniques as well as comparisons of past performance against projections. Assets may also be evaluated by identifying independent market values. If the Company determines that an asset’s carrying value is impaired, it will record a write-down of the carrying value of the asset and charge the impairment as an operating expense in the period in which the determination is made. The Company concluded that for the years ended December 31, 2020 and 2019, there were no long-lived asset impairments. |
Concentration of Credit Risk | Concentration of Credit Risk—Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments. The Company places its cash and cash equivalents with high credit quality financial institutions. The Company’s cash balances with financial institutions typically exceed the Federal Deposit Insurance Corporation (“FDIC”) limit of $0.25 million. The Company’s cash balances on deposit at December 31, 2020, exceeded the balance insured by the FDIC by approximately $37.75 million. The Company has not experienced any losses to date on its invested cash. The Company extends credit for tuition and fees to many of its students. The credit risk with respect to these accounts receivable is mitigated through the students’ participation in federally funded financial aid programs unless students withdraw prior to the receipt of federal funds for those students. In addition, the remaining tuition receivables are primarily comprised of smaller individual amounts due from students. With respect to student receivables, the Company had no significant concentrations of credit risk as of December 31, 2020 and 2019. |
Use of Estimates in the Preparation of Financial Statements | Use of Estimates in the Preparation of Financial Statements—The preparation of financial statements in conformity with generally accepted accounting principles in the United States (“GAAP’) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. On an ongoing basis, the Company evaluates the estimates and assumptions, including those used to determine the incremental borrowing rate to calculate lease liabilities and right-of-use (“ROU”) assets, lease term to calculate lease cost, revenue recognition, bad debts, impairments, fixed assets, income taxes, benefit plans and certain accruals. Actual results could differ from those estimates. |
Income Taxes | Income Taxes—The Company accounts for income taxes in accordance with Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes” (“ASC 740”). This statement requires an asset and a liability approach for measuring deferred taxes based on temporary differences between the financial statement and tax bases of assets and liabilities existing at each balance sheet date using enacted tax rates for years in which taxes are expected to be paid or recovered. In accordance with ASC 740, the Company assesses our deferred tax asset to determine whether all or any portion of the asset is more likely than not unrealizable. A valuation allowance is required to be established or maintained when, based on currently available information, it is more likely than not that all or a portion of a deferred tax asset will not be realized. In accordance with ASC 740, our assessment considers whether there has been sufficient income in recent years and whether sufficient income is expected in future years in order to utilize the deferred tax asset. In evaluating the realizability of deferred income tax assets, the Company considered, among other things, historical levels of income, expected future income, the expected timing of the reversals of existing temporary reporting differences, and the expected impact of tax planning strategies that may be implemented to prevent the potential loss of future income tax benefits. Significant judgment is required in determining the future tax consequences of events that have been recognized in our consolidated financial statements and/or tax returns. Differences between anticipated and actual outcomes of these future tax consequences could have a material impact on the Company’s consolidated financial position or results of operations. Changes in, among other things, income tax legislation, statutory income tax rates, or future income levels could materially impact the Company’s valuation of income tax assets and liabilities and could cause our income tax provision to vary significantly among financial reporting periods. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. During the years ended December 31, 2020 and 2019, we did not record any interest and penalties expense associated with uncertain tax positions. |
Derivative Instruments | Derivative Instruments—The Company records the fair value of derivative instruments as either assets or liabilities on the balance sheet. The accounting for gains and losses resulting from changes in fair value is dependent on the use of the derivative and whether it is designated and qualifies for hedge accounting. All qualifying hedging activities are documented at the inception of the hedge and must meet the definition of highly effective in offsetting changes to future cash. The Company utilizes the change in variable cash flows method to evaluate hedge effectiveness quarterly. We record the fair value of the qualifying hedges in other long-term liabilities (for derivative liabilities) and other assets (for derivative assets). All unrealized gains and losses on derivatives that are designated and qualify for hedge accounting are reported in other comprehensive income (loss) and recognized when the underlying hedged transaction affects earnings. Changes in the fair value of these derivatives are recognized in other comprehensive income. The Company classifies the cash flows from a cash flow hedge within the same category as the cash flows from the items being hedged. |
Start-up Costs | Start-up Costs—Costs related to the start of new campuses are expensed as incurred. |
New Accounting Pronouncements | New Accounting Pronouncements In October 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2020-10, “Codification Improvements”, which makes minor technical corrections and clarifications to the ASU. The amendments in Sections B and C of the ASU are effective for annual periods beginning after December 15, 2020, for public business entities. For all other entities, the amendments are effective for annual periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. This Update is not expected to have a significant impact on the Company’s consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”. This ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU removes separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature and hence most of the instruments will be accounted for as a single model (either debt or equity). The ASU also states that entities must apply the if-converted method to all convertible instruments for calculation of diluted EPS and the treasury stock method is no longer available. An entity can use either a full or modified retrospective approach to adopt the ASU’s guidance. ASU No. 2020-06 is effective for the Company as a smaller reporting company for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. For convertible instruments that include a down-round feature, entities may early adopt the amendments that apply to the down-round features if they have not yet adopted the amendments in ASU 2017-11. The Company is currently assessing the impact that this ASU will have on its consolidated financial statements and related disclosures. In March 2020, the FASB issued ASU 2020-03, “Codification Improvements to Financial Instruments” (“ASU 2020-03”). ASU 2020-03 improves and clarifies various financial instruments topics. ASU 2020-03 includes seven different issues that describe the areas of improvement and the related amendments to GAAP. The Company adopted ASU 2020-03 upon issuance, which did not have a material effect on the Company’s consolidated financial statements and related disclosures. In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes”, which simplifies the accounting for income taxes by removing certain exceptions to the general principles of ASC 740, “Income Taxes”. ASU 2019-12 also clarifies and amends GAAP for other areas of Topic 740. This ASU is effective for fiscal years beginning after December 15, 2020 and early adoption is permitted. Depending on the amendment, adoption may be applied on a retrospective, modified retrospective or prospective basis. The Company is currently assessing the impact that this ASU will have on its consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-14, “Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans”. This ASU adds, modifies and clarifies several disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. This guidance is effective for fiscal years ending after December 15, 2020. Early adoption is permitted. The Company is currently assessing the impact that this ASU will have on its consolidated financial statements and related disclosures. The Company adopted ASU 2018-14 on January 1, 2020, which did not have a material effect on the Company’s consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” and subsequently issued additional guidance that modified ASU 2016-13. ASU 2016-13 and the subsequent modifications are identified as Accounting Standards Codification (“ASC”) 326. The standard requires an entity to change its accounting approach in determining impairment of certain financial instruments, including trade receivables, from an “incurred loss” to a “current expected credit loss” model. Further, the FASB issued ASU No. 2019-04, ASU No. 2019-05 and ASU 2019-11 to provide additional guidance on the credit losses standard. In November 2019, FASB issued ASU No. 2019-10, “Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)”. This ASU defers the effective date of ASU 2016-13 for public companies that are considered smaller reporting companies as defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Additionally, in February and March 2020, the FASB issued ASU 2020-02, “Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842)” ASU 2020-02 adds a SEC paragraph pursuant to the issuance of SEC Staff Accounting Bulletin No. 119 on loan losses to FASB Codification Topic 326 and also updates the SEC section of the Codification for the change in the effective date of Topic 842. Early adoption is permitted. We are currently assessing the impact that these ASUs will have on our consolidated financial statements and related disclosures. |
NET INCOME PER SHARE (Tables) |
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET INCOME PER SHARE [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Numerator and Denominator of Diluted Net Income Per Share Computations | The following is a reconciliation of the numerator and denominator of the diluted net income per share computations for the periods presented below:
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Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table summarizes the potential weighted average shares of common stock that were excluded from the determination of our diluted shares outstanding as they were anti-dilutive:
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REVENUE RECOGNITION (Tables) |
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE RECOGNITION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depicts Timing of Revenue Recognition | The following table depicts the timing of revenue recognition:
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LEASES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information and Non-cash Activity Related to Operating Leases | Supplemental cash flow information and non-cash activity related to our operating leases are as follows:
* Includes effect of adoption of ASU 2016-02 and related amendments and a new lease entered into on January 1, 2019 of $5.6 million. |
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Weighted Average Remaining Lease Term and Discount Rate | Weighted-average remaining lease term and discount rate for our operating leases is as follows:
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Maturities of Lease Liabilities | Maturities of lease liabilities by fiscal year for our operating leases as of December 31, 2020 are as follows:
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GOODWILL (Tables) |
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Carrying Amount of Goodwill | Changes in the carrying amount of goodwill during the years ended December 31, 2020 and 2019 are as follows:
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PROPERTY, EQUIPMENT AND FACILITIES (Tables) |
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY, EQUIPMENT AND FACILITIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Equipment and Facilities | Property, equipment and facilities consist of the following:
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ACCRUED EXPENSES (Tables) |
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCRUED EXPENSES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses | Accrued expenses consist of the following:
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LONG-TERM DEBT (Tables) |
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LONG-TERM DEBT [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt | Long-term debt consists of the following:
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Maturities of Long-term Debt | Scheduled maturities of long-term debt at December 31, 2020 are as follows:
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STOCKHOLDERS' EQUITY (Tables) |
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STOCKHOLDERS' EQUITY [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transactions Pertaining to Restricted Stock | The following is a summary of transactions pertaining to restricted stock:
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Transactions Pertaining to Option Plans | The following is a summary of transactions pertaining to stock options:
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PENSION PLAN (Tables) |
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PENSION PLAN [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Plan's Funded Status | The following table sets forth the plan’s funded status and amounts recognized in the consolidated financial statements:
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Amounts Recognized in Consolidated Balance Sheets | Amounts recognized in the consolidated balance sheets consist of:
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Amounts Recognized in Accumulated Other Comprehensive Loss | Amounts recognized in accumulated other comprehensive loss consist of:
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Components of Net Periodic Cost for Plan | The following table provides the components of net periodic cost for the plan:
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Plan Assets using Fair Value Hierarchy | The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
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Fair Value of Total Plan Assets by Major Asset Category | Fair value of total plan assets by major asset category as of December 31:
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Expected Benefit Payments for Plan | Information about the expected benefit payments for the plan is as follows:
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Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted Average Assumptions | Weighted-average assumptions used to determine benefit obligations as of December 31:
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Periodic Pension Cost [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted Average Assumptions | Weighted-average assumptions used to determine net periodic pension cost for years ended December 31:
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INCOME TAXES (Tables) |
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INCOME TAXES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of the Provision for Income Taxes | Components of the (benefit) provision for income taxes were as follows:
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Reconciliation of Effective Tax Rate to U.S. Statutory Federal Income Tax Rate | The reconciliation of the effective tax rate to the U.S. Statutory Federal Income tax rate was:
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Components of Non-current Deferred Tax Assets/(Liabilities) | The components of the non-current deferred tax assets/(liabilities) were as follows:
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FAIR VALUE (Tables) |
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, by Balance Sheet Grouping | The carrying amount and estimated fair value of the Company’s financial instrument assets and liabilities, which are not measured at fair value on the Consolidated Balance Sheets, are listed in the table below:
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Fair Value of the Outstanding Derivative | The following summarizes the fair value of the outstanding derivative:
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Financial Statement Classification and Amount of Interest Expense Recognized on Hedging Instruments | The following summarizes the financial statement classification and amount of interest expense recognized on hedging instruments:
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|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments Designated as Hedging Instruments in Other Comprehensive Income/(Loss) | The following summarizes the effect of derivative instruments designated as hedging instruments in Other Comprehensive Income/(Loss):
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SEGMENT REPORTING (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Information by Reporting Segment | Summary financial information by reporting segment is as follows:
|
GOODWILL (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Changes in Carrying Amount of Goodwill [Abstract] | |||
Gross Goodwill Balance | $ 117,176 | $ 117,176 | $ 117,176 |
Accumulated Impairment Losses | 102,640 | 102,640 | 102,640 |
Net Goodwill Balance | 14,536 | 14,536 | $ 14,536 |
Adjustments | 0 | 0 | |
Transportation and Skilled Trades [Member] | |||
Changes in Carrying Amount of Goodwill [Abstract] | |||
Net Goodwill Balance | $ 14,500 | $ 14,500 |
PROPERTY, EQUIPMENT AND FACILITIES (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Property, equipment and facilities net [Abstract] | ||
Property, equipment and facilities, Gross | $ 224,688 | $ 221,753 |
Less accumulated depreciation and amortization | (176,300) | (172,408) |
Property, equipment and facilities, Net | 48,388 | 49,345 |
Depreciation and amortization expense | 7,400 | 8,100 |
Land [Member] | ||
Property, equipment and facilities net [Abstract] | ||
Property, equipment and facilities, Gross | 6,969 | 6,969 |
Buildings and Improvements [Member] | ||
Property, equipment and facilities net [Abstract] | ||
Property, equipment and facilities, Gross | $ 134,526 | 131,739 |
Buildings and Improvements [Member] | Minimum [Member] | ||
Property, equipment and facilities net [Abstract] | ||
Useful life | 1 year | |
Buildings and Improvements [Member] | Maximum [Member] | ||
Property, equipment and facilities net [Abstract] | ||
Useful life | 25 years | |
Equipment, Furniture and Fixtures [Member] | ||
Property, equipment and facilities net [Abstract] | ||
Property, equipment and facilities, Gross | $ 82,133 | 81,900 |
Equipment, Furniture and Fixtures [Member] | Minimum [Member] | ||
Property, equipment and facilities net [Abstract] | ||
Useful life | 1 year | |
Equipment, Furniture and Fixtures [Member] | Maximum [Member] | ||
Property, equipment and facilities net [Abstract] | ||
Useful life | 7 years | |
Vehicles [Member] | ||
Property, equipment and facilities net [Abstract] | ||
Useful life | 3 years | |
Property, equipment and facilities, Gross | $ 733 | 825 |
Construction in Progress [Member] | ||
Property, equipment and facilities net [Abstract] | ||
Property, equipment and facilities, Gross | $ 327 | $ 320 |
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
ACCRUED EXPENSES [Abstract] | ||
Accrued compensation and benefits | $ 12,476 | $ 3,785 |
Accrued real estate taxes | 2,614 | 1,763 |
Other accrued expenses | 1,602 | 2,321 |
Accrued expenses | $ 16,692 | $ 7,869 |
LONG-TERM DEBT (Details) $ in Thousands |
1 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Nov. 11, 2020
USD ($)
|
Nov. 10, 2020
USD ($)
|
Nov. 14, 2019
USD ($)
Facility
|
Jan. 31, 2020
USD ($)
|
Dec. 31, 2020
USD ($)
School
|
Dec. 31, 2019
USD ($)
|
|
Long-term debt [Abstract] | ||||||
Deferred financing fees | $ (621) | $ (805) | ||||
Long term debt | 17,212 | 34,028 | ||||
Less current maturities | (2,000) | (2,000) | ||||
Long-term debt, excluding current maturities | 15,212 | 32,028 | ||||
Lender's origination fee | 621 | 805 | ||||
Letters of credit outstanding | 4,000 | 4,000 | ||||
Line of credit facility, repayment | $ 15,000 | |||||
Scheduled maturities of long-term debt [Abstract] | ||||||
2021 | 2,000 | |||||
2022 | 2,000 | |||||
2023 | 2,000 | |||||
2024 | 11,833 | |||||
Long term debt | 17,833 | 34,800 | ||||
Credit Agreement [Member] | ||||||
Long-term debt [Abstract] | ||||||
Credit agreement | $ 17,833 | $ 34,833 | ||||
Term to extend delayed draw availability period | 1 year | |||||
Period consideration for payment of cash dividend | 24 months | |||||
Limit on payment of cash dividends | $ 2,300 | $ 1,700 | ||||
Minimum quarterly average aggregate balances to be maintained | $ 5,000 | |||||
Bank fees if minimum quarterly average aggregate balances is not maintained | $ 12,500 | |||||
Credit Agreement [Member] | Series A Preferred Stock [Member] | ||||||
Long-term debt [Abstract] | ||||||
Period consideration for payment of cash dividend | 24 months | |||||
Limit on payment of cash dividends | $ 2,300 | $ 1,700 | ||||
Credit Facility [Member] | ||||||
Long-term debt [Abstract] | ||||||
Line of credit facility, maximum borrowing capacity | $ 60,000 | |||||
Number of facilities available in 2019 credit agreement | Facility | 4 | |||||
Number of schools in states covered under first priority lien | School | 3 | |||||
Credit Facility [Member] | Letter of Credit [Member] | ||||||
Long-term debt [Abstract] | ||||||
Percentage of letter of credit fee, quarterly installment | 0.25% | |||||
Credit Facility [Member] | Term Loan [Member] | ||||||
Long-term debt [Abstract] | ||||||
Deferred financing fees | $ (300) | |||||
Line of credit facility, maximum borrowing capacity | 20,000 | |||||
Expiration date of credit facility | Dec. 01, 2024 | |||||
Line of credit facility, amortization schedule based period for interest and principal payments | 120 months | |||||
Net proceeds from term loan | 19,700 | |||||
Lender's origination fee | $ 300 | |||||
Percentage of swap transaction of principal balance | 100.00% | |||||
Credit Facility [Member] | Term Loan [Member] | LIBOR [Member] | ||||||
Long-term debt [Abstract] | ||||||
Term of variable rate | 1 month | |||||
Interest rate on credit facility | 3.50% | |||||
Credit Facility [Member] | Term Loan [Member] | LIBOR [Member] | Interest Rate Floor [Member] | ||||||
Long-term debt [Abstract] | ||||||
Interest rate on credit facility | 0.25% | |||||
Credit Facility [Member] | Delayed Draw Term Loan [Member] | ||||||
Long-term debt [Abstract] | ||||||
Line of credit facility, maximum borrowing capacity | $ 10,000 | |||||
Expiration date of credit facility | Dec. 01, 2024 | |||||
Line of credit facility, amortization schedule based period for interest and principal payments | 120 months | |||||
Line of credit facility, monthly interest payment period | 18 months | |||||
Percentage of swap transaction of principal balance | 100.00% | |||||
Credit Facility [Member] | Delayed Draw Term Loan [Member] | LIBOR [Member] | ||||||
Long-term debt [Abstract] | ||||||
Term of variable rate | 1 month | |||||
Interest rate on credit facility | 3.50% | |||||
Credit Facility [Member] | Delayed Draw Term Loan [Member] | LIBOR [Member] | Interest Rate Floor [Member] | ||||||
Long-term debt [Abstract] | ||||||
Interest rate on credit facility | 0.25% | |||||
Credit Facility [Member] | Credit Agreement [Member] | ||||||
Long-term debt [Abstract] | ||||||
Line of credit facility, maximum borrowing capacity | $ 15,000 | |||||
Expiration date of credit facility | Jan. 31, 2021 | |||||
Credit Facility [Member] | Revolving Loan [Member] | ||||||
Long-term debt [Abstract] | ||||||
Line of credit facility, maximum borrowing capacity | $ 15,000 | |||||
Expiration date of credit facility | Nov. 13, 2022 | |||||
Line of credit facility, frequency of principal and interest periodic payment | Monthly | |||||
Loan repayment period | 30 days | |||||
Credit Facility [Member] | Revolving Loan [Member] | Interest Rate Floor [Member] | ||||||
Long-term debt [Abstract] | ||||||
Interest rate on credit facility | 4.00% | |||||
Credit Facility [Member] | Revolving Loan [Member] | LIBOR [Member] | Interest Rate Floor [Member] | ||||||
Long-term debt [Abstract] | ||||||
Interest rate on credit facility | 0.00% | |||||
Credit Facility [Member] | Revolving Loan [Member] | Prime Rate [Member] | ||||||
Long-term debt [Abstract] | ||||||
Interest rate on credit facility | 0.50% | |||||
Credit Facility [Member] | Revolving Loan [Member] | Letter of Credit [Member] | ||||||
Long-term debt [Abstract] | ||||||
Line of credit facility, maximum borrowing capacity | $ 10,000 | |||||
Letters of credit outstanding | $ 4,000 |
STOCKHOLDERS' EQUITY, Common Stock and Preferred Stock (Details) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Nov. 14, 2019
USD ($)
Number
$ / shares
shares
|
Dec. 31, 2020
USD ($)
Vote
$ / shares
shares
|
Dec. 31, 2019
USD ($)
$ / shares
shares
|
|
Preferred Stock [Abstract] | |||
Amount raised from issuance of stock | $ 0 | ||
Dividends [Abstract] | |||
Dividends paid on shares of Series A preferred stock | $ 1,378 | 0 | |
Common Stock [Member] | |||
Common Stock [Abstract] | |||
Common stock voting rights per share | Vote | 1 | ||
Cash dividends declared or paid | $ 0 | ||
Preferred Stock [Abstract] | |||
Number of shares issued upon conversion of preferred stock (in shares) | shares | 423,729 | ||
Series A Preferred Stock [Member] | |||
Preferred Stock [Abstract] | |||
Amount raised from issuance of stock | $ 12,700 | $ 11,982 | |
Issuance of series A convertible preferred stock, net of issuance costs (in shares) | shares | 12,700 | 12,700 | |
Preferred stock, par value (in dollars per share) | $ / shares | $ 0 | $ 0 | $ 0 |
Liquidation preference per share (in dollars per share) | $ / shares | 1,000 | ||
Conversion price (in dollars per share) | $ / shares | $ 2.36 | $ 5.31 | |
Stock issuance cost | $ 700 | ||
Dividends [Abstract] | |||
Dividend rate | 9.60% | ||
First dividend payment date | Sep. 30, 2020 | ||
Increase in dividend rate on fifth anniversary | 2.40% | ||
Dividends paid on shares of Series A preferred stock | $ 1,400 | ||
Preferred Stock Holders Right to Convert into Common Stock [Abstract] | |||
Conversion amount | $ 1,000 | ||
Mandatory Conversion [Abstract] | |||
Consecutive trading days, in which common stock exceeds the conversion price | 20 days | ||
Redemption [Abstract] | |||
Amount of adjustment provided in charter agreement after fifth anniversary | $ 1,000 | ||
Registration Rights Agreement [Abstract] | |||
Number of underwritten offerings | Number | 2 | ||
Series A Preferred Stock [Member] | Minimum [Member] | |||
Dividends [Abstract] | |||
Dividend rate if failure to perform certain obligations | 2.00% | ||
Preferred Stock Holders Right to Convert into Common Stock [Abstract] | |||
Percentage of common stock owned by holder and affiliates | 19.99% | ||
Mandatory Conversion [Abstract] | |||
Weighted average price of common stock equals or exceeds the conversion price | 2.25 | ||
Number of shares traded on each trading day (in shares) | shares | 20,000 | ||
Registration Rights Agreement [Abstract] | |||
Gross proceeds from underwritten offerings | $ 5,000 | ||
Series A Preferred Stock [Member] | Maximum [Member] | |||
Dividends [Abstract] | |||
Dividend rate if failure to perform certain obligations | 14.00% |
STOCKHOLDERS' EQUITY, Restricted Stock and Stock Options (Details) $ / shares in Units, $ in Thousands |
12 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Aug. 07, 2020
Director
shares
|
Feb. 20, 2020 |
Dec. 31, 2020
USD ($)
Plan
$ / shares
shares
|
Dec. 31, 2019
USD ($)
$ / shares
shares
|
Dec. 31, 2018
USD ($)
$ / shares
shares
|
Dec. 31, 2017
USD ($)
$ / shares
shares
|
Jun. 16, 2020
shares
|
|
Stockholders' Equity Note Details [Abstract] | |||||||
Number of stock incentive plans | Plan | 3 | ||||||
Shares [Abstract] | |||||||
Outstanding, beginning balance (in shares) | 116,000 | 139,000 | 167,667 | ||||
Canceled (in shares) | (35,000) | (23,000) | (28,667) | ||||
Outstanding, ending balance (in shares) | 81,000 | 116,000 | 139,000 | 167,667 | |||
Vested (in shares) | 81,000 | ||||||
Exercisable, ending balance (in shares) | 81,000 | ||||||
Weighted Average Exercise Price Per Share [Abstract] | |||||||
Outstanding, beginning balance (in dollars per share) | $ / shares | $ 10.56 | $ 12.14 | $ 12.11 | ||||
Canceled (in dollars per share) | $ / shares | 16.95 | 20.15 | 11.98 | ||||
Outstanding, ending balance (in dollars per share) | $ / shares | 7.79 | $ 10.56 | $ 12.14 | $ 12.11 | |||
Vested (in dollars per share) | $ / shares | 7.79 | ||||||
Exercisable, ending balance (in dollars per share) | $ / shares | $ 7.79 | ||||||
Weighted Average Remaining Contractual Term [Abstract] | |||||||
Outstanding, balance | 1 year 2 months 1 day | 1 year 9 months 29 days | 2 years 6 months 11 days | 2 years 11 months 19 days | |||
Vested | 1 year 2 months 1 day | ||||||
Exercisable, ending balance | 1 year 2 months 1 day | ||||||
Aggregate Intrinsic Value [Abstract] | |||||||
Outstanding, beginning balance | $ | $ 0 | $ 0 | $ 0 | ||||
Cancelled | $ | 0 | 0 | |||||
Outstanding, ending balance | $ | 0 | $ 0 | $ 0 | $ 0 | |||
Vested | $ | 0 | ||||||
Exercisable, ending balance | $ | $ 0 | ||||||
First Anniversary Date [Member] | |||||||
Stockholders' Equity Note Details [Abstract] | |||||||
Percentage of vesting of performance-based shares | 20.00% | ||||||
Second Anniversary Date [Member] | |||||||
Stockholders' Equity Note Details [Abstract] | |||||||
Percentage of vesting of performance-based shares | 30.00% | ||||||
Third Anniversary Date [Member] | |||||||
Stockholders' Equity Note Details [Abstract] | |||||||
Percentage of vesting of performance-based shares | 50.00% | ||||||
Restricted Stock [Member] | |||||||
Stockholders' Equity Note Details [Abstract] | |||||||
Restricted shares granted to each director (in shares) | 17,096 | ||||||
Shares [Abstract] | |||||||
Nonvested restricted stock outstanding, beginning balance (in shares) | 595,436 | 35,908 | |||||
Granted (in shares) | 1,319,734 | 598,982 | |||||
Cancelled (in shares) | 0 | (3,546) | |||||
Vested (in shares) | (343,011) | (35,908) | |||||
Nonvested restricted stock outstanding, ending balance (in shares) | 1,572,159 | 595,436 | 35,908 | ||||
Weighted Average Grant Date Fair Value [Abstract] | |||||||
Nonvested restricted stock outstanding, beginning balance (in dollars per share) | $ / shares | $ 3.15 | $ 2.23 | |||||
Granted (in dollars per share) | $ / shares | 2.68 | 3.15 | |||||
Cancelled (in dollars per share) | $ / shares | 0 | 3.17 | |||||
Vested (in dollars per share) | $ / shares | 3.40 | 2.23 | |||||
Nonvested restricted stock outstanding, ending balance (in dollars per share) | $ / shares | $ 2.77 | $ 3.15 | $ 2.23 | ||||
Recognized restricted stock expense | $ | $ 1,700 | $ 700 | |||||
Unrecognized restricted stock expense | $ | 3,200 | 1,200 | |||||
Stock Options [Member] | |||||||
Aggregate Intrinsic Value [Abstract] | |||||||
Unrecognized pre-tax compensation expense | $ | $ 0 | ||||||
2020 Plan [Member] | |||||||
Stockholders' Equity Note Details [Abstract] | |||||||
Number of shares available for issuance under incentive plan (in shares) | 2,000,000 | ||||||
2020 Plan [Member] | June 16, 2020 [Member] | |||||||
Stockholders' Equity Note Details [Abstract] | |||||||
Stock option award issuance, plan duration | 10 years | ||||||
LTIP Plan [Member] | |||||||
Stockholders' Equity Note Details [Abstract] | |||||||
Number of shares available for issuance under incentive plan (in shares) | 2,000,000 | ||||||
Performance-based restricted stock compensation expense | $ | $ 500 | ||||||
LTIP Plan [Member] | February 28, 2019 [Member] | |||||||
Stockholders' Equity Note Details [Abstract] | |||||||
Vesting period of performance-based shares | 3 years | ||||||
LTIP Plan [Member] | Restricted Stock [Member] | |||||||
Weighted Average Grant Date Fair Value [Abstract] | |||||||
Outstanding restricted shares, intrinsic value | $ | $ 10,200 | ||||||
LTIP Plan [Member] | Restricted Stock [Member] | February 28, 2019 [Member] | |||||||
Weighted Average Grant Date Fair Value [Abstract] | |||||||
Recognized restricted stock expense | $ | $ 500 | $ 400 | |||||
Non Employee Directors Plan [Member] | |||||||
Stockholders' Equity Note Details [Abstract] | |||||||
Number of directors appointed | Director | 2 | ||||||
Net share settlement for restricted stock (in shares) | 75,115 | 5,518 | |||||
Decrease in equity due to payment of tax for employee | $ | $ 200 | ||||||
Non Employee Directors Plan [Member] | Maximum [Member] | |||||||
Stockholders' Equity Note Details [Abstract] | |||||||
Decrease in equity due to payment of tax for employee | $ | $ 100 | ||||||
Non Employee Directors Plan [Member] | Restricted Stock [Member] | |||||||
Stockholders' Equity Note Details [Abstract] | |||||||
Number of shares issued under incentive plan (in shares) | 111,376 | ||||||
Shares [Abstract] | |||||||
Vested (in shares) | (12,762) |
PENSION PLAN, Plan's funded status (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
CHANGES IN BENEFIT OBLIGATIONS [Roll Forward] | ||
Benefit obligation-beginning of year | $ 22,832 | $ 21,105 |
Service cost | 35 | 33 |
Interest cost | 654 | 812 |
Actuarial loss | 2,115 | 2,103 |
Benefits paid | (1,278) | (1,221) |
Benefit obligation at end of year | 24,358 | 22,832 |
CHANGE IN PLAN ASSETS [Roll Forward] | ||
Fair value of plan assets-beginning of year | 18,817 | 16,835 |
Actual return on plan assets | 2,567 | 3,203 |
Benefits paid | (1,278) | (1,221) |
Fair value of plan assets-end of year | 20,106 | 18,817 |
BENEFIT OBLIGATION IN EXCESS OF FAIR VALUE FUNDED STATUS: | $ (4,252) | $ (4,015) |
Discount rate | 2.08% | 2.93% |
PENSION PLAN (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Amounts recognized in the consolidated balance sheets [Abstract] | |||
Noncurrent liabilities | $ (4,252) | $ (4,015) | |
Amounts recognized in accumulated other comprehensive loss [Abstract] | |||
Accumulated loss | (5,655) | (5,648) | |
Deferred income taxes | 2,367 | 2,366 | |
Accumulated other comprehensive loss | (3,288) | (3,282) | |
Accumulated benefit obligation | 24,400 | 22,800 | |
COMPONENTS OF NET PERIODIC BENEFIT COST [Abstract] | |||
Service cost | 35 | 33 | |
Interest cost | 654 | 812 | |
Expected return on plan assets | (1,044) | (1,011) | |
Recognized net actuarial loss | 585 | 691 | |
Net periodic benefit cost | 230 | 525 | |
Amortization of estimated net loss, transition obligation and prior service cost from accumulated other comprehensive income into net periodic benefit cost | 500 | ||
Plan assets using the fair value hierarchy [Abstract] | |||
Fair value of plan assets | $ 20,106 | $ 18,817 | $ 16,835 |
Fair value of total plan assets by major asset category | 100.00% | 100.00% | |
Weighted-average assumptions used to determine benefit obligations [Abstract] | |||
Discount rate | 2.08% | 2.93% | |
Rate of compensation increase | 2.75% | 2.75% | |
Weighted-average assumptions used to determine net periodic pension cost [Abstract] | |||
Discount rate | 2.08% | 2.93% | |
Pension contributions | $ 0 | $ 0 | |
Expected benefit payments for the plan [Abstract] | |||
Maximum contribution by employee specified as percentage of compensation | 25.00% | ||
Additional contribution by employer | 30.00% | ||
Maximum percentage of compensation contributed by employer as matching contribution | 6.00% | ||
Compensation expense for the 401(k) plan | $ 400 | 100 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | |||
Plan assets using the fair value hierarchy [Abstract] | |||
Fair value of plan assets | 20,106 | 18,817 | |
Significant Other Observable Inputs (Level 2) [Member] | |||
Plan assets using the fair value hierarchy [Abstract] | |||
Fair value of plan assets | 0 | 0 | |
Significant Unobservable Inputs (Level 3) [Member] | |||
Plan assets using the fair value hierarchy [Abstract] | |||
Fair value of plan assets | 0 | 0 | |
Equity Securities [Member] | |||
Plan assets using the fair value hierarchy [Abstract] | |||
Fair value of plan assets | $ 6,688 | $ 6,259 | |
Fair value of total plan assets by major asset category | 33.00% | 33.00% | |
Equity Securities [Member] | Minimum [Member] | |||
Weighted-average assumptions used to determine net periodic pension cost [Abstract] | |||
Target plan asset allocations | 30.00% | ||
Equity Securities [Member] | Maximum [Member] | |||
Weighted-average assumptions used to determine net periodic pension cost [Abstract] | |||
Target plan asset allocations | 70.00% | ||
Equity Securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | |||
Plan assets using the fair value hierarchy [Abstract] | |||
Fair value of plan assets | $ 6,688 | $ 6,259 | |
Equity Securities [Member] | Significant Other Observable Inputs (Level 2) [Member] | |||
Plan assets using the fair value hierarchy [Abstract] | |||
Fair value of plan assets | 0 | 0 | |
Equity Securities [Member] | Significant Unobservable Inputs (Level 3) [Member] | |||
Plan assets using the fair value hierarchy [Abstract] | |||
Fair value of plan assets | 0 | 0 | |
Fixed Income [Member] | |||
Plan assets using the fair value hierarchy [Abstract] | |||
Fair value of plan assets | $ 6,739 | $ 6,313 | |
Fair value of total plan assets by major asset category | 34.00% | 34.00% | |
Fixed Income [Member] | Minimum [Member] | |||
Weighted-average assumptions used to determine net periodic pension cost [Abstract] | |||
Target plan asset allocations | 20.00% | ||
Fixed Income [Member] | Maximum [Member] | |||
Weighted-average assumptions used to determine net periodic pension cost [Abstract] | |||
Target plan asset allocations | 60.00% | ||
Fixed Income [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | |||
Plan assets using the fair value hierarchy [Abstract] | |||
Fair value of plan assets | $ 6,739 | $ 6,313 | |
Fixed Income [Member] | Significant Other Observable Inputs (Level 2) [Member] | |||
Plan assets using the fair value hierarchy [Abstract] | |||
Fair value of plan assets | 0 | 0 | |
Fixed Income [Member] | Significant Unobservable Inputs (Level 3) [Member] | |||
Plan assets using the fair value hierarchy [Abstract] | |||
Fair value of plan assets | 0 | 0 | |
International Equities [Member] | |||
Plan assets using the fair value hierarchy [Abstract] | |||
Fair value of plan assets | $ 4,480 | $ 4,165 | |
Fair value of total plan assets by major asset category | 22.00% | 22.00% | |
International Equities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | |||
Plan assets using the fair value hierarchy [Abstract] | |||
Fair value of plan assets | $ 4,480 | $ 4,165 | |
International Equities [Member] | Significant Other Observable Inputs (Level 2) [Member] | |||
Plan assets using the fair value hierarchy [Abstract] | |||
Fair value of plan assets | 0 | 0 | |
International Equities [Member] | Significant Unobservable Inputs (Level 3) [Member] | |||
Plan assets using the fair value hierarchy [Abstract] | |||
Fair value of plan assets | 0 | 0 | |
Real Estate [Member] | |||
Plan assets using the fair value hierarchy [Abstract] | |||
Fair value of plan assets | $ 1,016 | $ 964 | |
Fair value of total plan assets by major asset category | 5.00% | 5.00% | |
Real Estate [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | |||
Plan assets using the fair value hierarchy [Abstract] | |||
Fair value of plan assets | $ 1,016 | $ 964 | |
Real Estate [Member] | Significant Other Observable Inputs (Level 2) [Member] | |||
Plan assets using the fair value hierarchy [Abstract] | |||
Fair value of plan assets | 0 | 0 | |
Real Estate [Member] | Significant Unobservable Inputs (Level 3) [Member] | |||
Plan assets using the fair value hierarchy [Abstract] | |||
Fair value of plan assets | 0 | 0 | |
Cash and Equivalents [Member] | |||
Plan assets using the fair value hierarchy [Abstract] | |||
Fair value of plan assets | $ 1,183 | $ 1,116 | |
Fair value of total plan assets by major asset category | 6.00% | 6.00% | |
Cash and Equivalents [Member] | Minimum [Member] | |||
Weighted-average assumptions used to determine net periodic pension cost [Abstract] | |||
Target plan asset allocations | 0.00% | ||
Cash and Equivalents [Member] | Maximum [Member] | |||
Weighted-average assumptions used to determine net periodic pension cost [Abstract] | |||
Target plan asset allocations | 10.00% | ||
Cash and Equivalents [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | |||
Plan assets using the fair value hierarchy [Abstract] | |||
Fair value of plan assets | $ 1,183 | $ 1,116 | |
Cash and Equivalents [Member] | Significant Other Observable Inputs (Level 2) [Member] | |||
Plan assets using the fair value hierarchy [Abstract] | |||
Fair value of plan assets | 0 | 0 | |
Cash and Equivalents [Member] | Significant Unobservable Inputs (Level 3) [Member] | |||
Plan assets using the fair value hierarchy [Abstract] | |||
Fair value of plan assets | $ 0 | $ 0 | |
Pension Plan [Member] | |||
Weighted-average assumptions used to determine net periodic pension cost [Abstract] | |||
Discount rate | 2.08% | 2.93% | |
Rate of compensation increase | 2.75% | 2.75% | |
Long-term rate of return | 5.25% | 5.75% | |
Expected benefit payments for the plan [Abstract] | |||
2021 | $ 1,336 | ||
2022 | 1,356 | ||
2023 | 1,385 | ||
2024 | 1,401 | ||
2025 | 1,388 | ||
Years 2026-2030 | $ 6,743 |
INCOME TAXES (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Current [Abstract] | ||
Federal | $ 0 | $ 0 |
State | 802 | 115 |
Total | 802 | 115 |
Deferred [Abstract] | ||
Federal | (21,743) | 120 |
State | (14,118) | 33 |
Total | (35,861) | 153 |
Total (benefit) provision | (35,059) | 268 |
Effective income tax rate reconciliation, amount [Abstract] | ||
Income before taxes | 13,506 | 2,283 |
Expected tax | 2,836 | 479 |
State tax benefit (net of federal) | (10,513) | 148 |
Valuation allowance | (27,420) | (428) |
Other | 38 | 69 |
Total (benefit) provision | $ (35,059) | $ 268 |
Effective income tax rate reconciliation, percent [Abstract] | ||
Federal corporate tax rate | 21.00% | 21.00% |
State tax benefit (net of federal) | (77.80%) | 6.50% |
Valuation allowance | (203.00%) | (18.80%) |
Other | 0.20% | 3.00% |
Total | (259.60%) | 11.70% |
Gross noncurrent deferred tax assets (liabilities) [Abstract] | ||
Allowance for bad debts | $ 7,659 | $ 5,461 |
Accrued benefits | 1,208 | 0 |
Stock-based compensation | 317 | 178 |
Lease liability | 16,369 | 14,822 |
Right-of-use asset | (14,759) | (13,156) |
Depreciation | 11,298 | 10,981 |
Goodwill | (1,091) | (766) |
Other intangibles | 100 | 135 |
Pension plan liabilities | 1,137 | 1,286 |
Net operating loss carryforwards | 13,480 | 18,261 |
Gross noncurrent deferred tax assets, net | 35,718 | 37,202 |
Less valuation allowance | 0 | (37,355) |
Noncurrent deferred tax (liabilities) assets, net | 35,718 | |
Noncurrent deferred tax assets (liabilities), net | $ (153) | |
Net operating loss carryforwards | 43,100 | |
Net operating loss carryforwards, subject to expiration | $ 29,300 | |
Net operating loss carryforwards, period of ownership change | 3 years | |
Net operating loss carryforwards, minimum percentage of ownership change | 50.00% |
FAIR VALUE (Details) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Carrying Amount [Member] | ||
Financial Assets [Abstract] | ||
Cash and cash equivalents | $ 38,026 | $ 23,644 |
Restricted cash | 15,000 | |
Prepaid expenses and other current assets | 3,723 | 4,190 |
Financial Liabilities [Abstract] | ||
Accrued expenses | 16,692 | 7,869 |
Other short term liabilities | 26 | 199 |
Derivative qualifying as cash flow hedge | 703 | 174 |
Credit facility | 17,212 | 34,028 |
Fair Value [Member] | ||
Financial Assets [Abstract] | ||
Cash and cash equivalents | 38,026 | 23,644 |
Restricted cash | 15,000 | |
Prepaid expenses and other current assets | 3,723 | 4,190 |
Financial Liabilities [Abstract] | ||
Accrued expenses | 16,692 | 7,869 |
Other short term liabilities | 26 | 199 |
Derivative qualifying as cash flow hedge | 703 | 174 |
Credit facility | 15,487 | 34,028 |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value [Member] | ||
Financial Assets [Abstract] | ||
Cash and cash equivalents | 38,026 | 23,644 |
Restricted cash | 15,000 | |
Prepaid expenses and other current assets | 0 | 0 |
Financial Liabilities [Abstract] | ||
Accrued expenses | 0 | 0 |
Other short term liabilities | 0 | 0 |
Derivative qualifying as cash flow hedge | 0 | 0 |
Credit facility | 0 | 0 |
Significant Other Observable Inputs (Level 2) [Member] | Fair Value [Member] | ||
Financial Assets [Abstract] | ||
Cash and cash equivalents | 0 | 0 |
Restricted cash | 0 | |
Prepaid expenses and other current assets | 3,723 | 4,190 |
Financial Liabilities [Abstract] | ||
Accrued expenses | 16,692 | 7,869 |
Other short term liabilities | 26 | 199 |
Derivative qualifying as cash flow hedge | 703 | 174 |
Credit facility | 15,487 | 34,028 |
Significant Unobservable Inputs (Level 3) [Member] | Fair Value [Member] | ||
Financial Assets [Abstract] | ||
Cash and cash equivalents | 0 | 0 |
Restricted cash | 0 | |
Prepaid expenses and other current assets | 0 | 0 |
Financial Liabilities [Abstract] | ||
Accrued expenses | 0 | 0 |
Other short term liabilities | 0 | 0 |
Derivative qualifying as cash flow hedge | 0 | 0 |
Credit facility | $ 0 | $ 0 |
FAIR VALUE, Qualifying Hedge Derivative (Details) - USD ($) $ in Thousands |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Nov. 14, 2019 |
|||
Term Loan [Member] | |||||
Derivative [Abstract] | |||||
Amortization period | 10 years | ||||
Amount of principal payment | $ 200 | ||||
Interest Rate Swap [Member] | |||||
Fair Value, Outstanding Derivative [Abstract] | |||||
Notional amount | $ 20,000 | ||||
Interest Rate Swap [Member] | Term Loan [Member] | |||||
Derivative [Abstract] | |||||
Fixed rate | 5.36% | ||||
Interest Rate Swap [Member] | Designated as Hedging Instrument [Member] | |||||
Fair Value, Outstanding Derivative [Abstract] | |||||
Notional amount | [1] | $ 17,800 | $ 19,800 | ||
Fair value | [1] | 700 | 100 | ||
Classification and Amount of Interest Expense Recognized on Hedging Instruments [Abstract] | |||||
Interest expense | 100 | 100 | |||
Interest Rate Swap [Member] | Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | |||||
Derivative Instruments Designated As Hedging Instruments In Other Comprehensive Income/(Loss) [Roll Forward] | |||||
Interest rate swap loss | $ 700 | $ 200 | |||
LIBOR [Member] | Interest Rate Swap [Member] | Term Loan [Member] | |||||
Derivative [Abstract] | |||||
Variable rate | 3.50% | ||||
|
SEGMENT REPORTING (Details) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2020
USD ($)
Segment
|
Dec. 31, 2019
USD ($)
|
|
SEGMENT REPORTING [Abstract] | ||
Number of reportable segments | Segment | 3 | |
Summary financial information by reporting segment [Abstract] | ||
Revenue | $ 293,095 | $ 273,342 |
Percentage of Total Revenue | 100.00% | 100.00% |
Operating Income (Loss) | $ 14,781 | $ 5,238 |
Assets | 245,190 | 194,763 |
Transportation and Skilled Trades [Member] | ||
Summary financial information by reporting segment [Abstract] | ||
Revenue | 207,434 | 193,722 |
Healthcare and Other Professions [Member] | ||
Summary financial information by reporting segment [Abstract] | ||
Revenue | 85,661 | 79,620 |
Reportable Segments [Member] | Transportation and Skilled Trades [Member] | ||
Summary financial information by reporting segment [Abstract] | ||
Revenue | $ 207,434 | $ 193,722 |
Percentage of Total Revenue | 70.80% | 70.90% |
Operating Income (Loss) | $ 34,458 | $ 21,979 |
Assets | 133,078 | 121,611 |
Reportable Segments [Member] | Healthcare and Other Professions [Member] | ||
Summary financial information by reporting segment [Abstract] | ||
Revenue | $ 85,661 | $ 79,620 |
Percentage of Total Revenue | 29.20% | 29.10% |
Operating Income (Loss) | $ 11,068 | $ 7,588 |
Assets | 32,753 | 27,945 |
Corporate [Member] | ||
Summary financial information by reporting segment [Abstract] | ||
Revenue | $ 0 | $ 0 |
Percentage of Total Revenue | 0.00% | 0.00% |
Operating Income (Loss) | $ (30,745) | $ (24,329) |
Assets | $ 79,359 | $ 45,207 |
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2020
USD ($)
Subpoenas
| |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
Number of supplemental subpoenas requesting additional information | Subpoenas | 2 |
Outstanding net loan commitment | $ 21.7 |
Future employment contract commitments | 7.6 |
Surety bonds | $ 12.3 |
COVID-19 PANDEMIC AND CARES ACT (Details) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 27, 2020
USD ($)
|
Dec. 31, 2020
USD ($)
Intallment
|
|
COVID-19 [Abstract] | ||
Total amount expected to be received under CARES Act | $ 27.4 | |
Number of installments used to allocated funds to schools | Intallment | 2 | |
Emergency grants available in first installment under CARES Act | $ 13.7 | |
Emergency grants distributed to students under CARES Act | 13.3 | |
Emergency grants available in second installment under CARES Act | 13.7 | |
Utilized amount of permitted expenses | 5.8 | |
Deferred payments under CARES Act | 4.5 | |
CRRSAA provided an additional amount to Education Stabilization Fund | $ 81,900.0 | |
Amount included in Education Stabilization Fund for HEERF | $ 22,700.0 | |
DOE allocated amount to schools | $ 15.4 |
Schedule II-Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Movement in Valuation Allowances and Reserves [Abstract] | ||
Balance at beginning of period | $ 20,367 | $ 16,993 |
Charged to expense | 26,887 | 20,847 |
Accounts written-off | (18,615) | (17,473) |
Balance at end of period | $ 28,639 | $ 20,367 |
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