(Mark One) | |
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware (State or other jurisdiction of incorporation or organization) | 59-3551629 (I.R.S. Employer Identification No.) |
Large accelerated filer o | Accelerated filer x | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
As of June 30, 2016 | As of December 31, 2015 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 265,366 | $ | 282,145 | |||
Restricted cash | 21,623 | 24,685 | |||||
Investments | 35,329 | 19,387 | |||||
Accounts receivable, net | 29,797 | 24,091 | |||||
Student loans receivable, net | 955 | 775 | |||||
Prepaid expenses and other current assets | 41,433 | 52,192 | |||||
Total current assets | 394,503 | 403,275 | |||||
Property and equipment, net | 17,429 | 21,742 | |||||
Investments | 45,000 | 47,770 | |||||
Student loans receivable, net | 6,589 | 7,394 | |||||
Goodwill and intangibles, net | 19,246 | 21,265 | |||||
Other long-term assets | 3,576 | 5,320 | |||||
Total assets | $ | 486,343 | $ | 506,766 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 74,643 | $ | 79,196 | |||
Deferred revenue and student deposits | 81,216 | 88,756 | |||||
Total current liabilities | 155,859 | 167,952 | |||||
Rent liability | 15,911 | 20,118 | |||||
Other long-term liabilities | 14,801 | 15,046 | |||||
Total liabilities | 186,571 | 203,116 | |||||
Commitments and contingencies (see Note 14) | |||||||
Stockholders' equity: | |||||||
Preferred stock, $0.01 par value: | |||||||
20,000 shares authorized; zero shares issued and outstanding at both June 30, 2016, and December 31, 2015 | — | — | |||||
Common stock, $0.01 par value: | |||||||
300,000 shares authorized; 63,868 issued and 46,311 outstanding at June 30, 2016; 63,407 issued and 45,850 outstanding at December 31, 2015 | 639 | 634 | |||||
Additional paid-in capital | 191,560 | 188,863 | |||||
Retained earnings | 444,547 | 451,321 | |||||
Accumulated other comprehensive income (loss) | 95 | (99 | ) | ||||
Treasury stock, 17,557 shares at cost at both June 30, 2016, and December 31, 2015 | (337,069 | ) | (337,069 | ) | |||
Total stockholders' equity | 299,772 | 303,650 | |||||
Total liabilities and stockholders' equity | $ | 486,343 | $ | 506,766 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenue | $ | 137,970 | $ | 147,057 | $ | 270,972 | $ | 289,575 | |||||||
Costs and expenses: | |||||||||||||||
Instructional costs and services | 66,448 | 71,410 | 136,034 | 146,459 | |||||||||||
Admissions advisory and marketing | 52,531 | 48,495 | 104,208 | 100,842 | |||||||||||
General and administrative | 11,650 | 13,246 | 25,105 | 29,568 | |||||||||||
Legal accrual | 2,292 | — | 16,166 | — | |||||||||||
Restructuring and impairment charges | 1,692 | 14,418 | 2,401 | 14,418 | |||||||||||
Total costs and expenses | 134,613 | 147,569 | 283,914 | 291,287 | |||||||||||
Operating income (loss) | 3,357 | (512 | ) | (12,942 | ) | (1,712 | ) | ||||||||
Other income, net | 652 | 345 | 1,335 | 1,034 | |||||||||||
Income (loss) before income taxes | 4,009 | (167 | ) | (11,607 | ) | (678 | ) | ||||||||
Income tax expense (benefit) | 671 | 483 | (4,833 | ) | 343 | ||||||||||
Net income (loss) | $ | 3,338 | $ | (650 | ) | $ | (6,774 | ) | $ | (1,021 | ) | ||||
Earnings (loss) per share: | |||||||||||||||
Basic | $ | 0.07 | $ | (0.01 | ) | $ | (0.15 | ) | $ | (0.02 | ) | ||||
Diluted | $ | 0.07 | $ | (0.01 | ) | $ | (0.15 | ) | $ | (0.02 | ) | ||||
Weighted average number of common shares outstanding used in computing earnings (loss) per share: | |||||||||||||||
Basic | 46,289 | 45,674 | 46,111 | 45,552 | |||||||||||
Diluted | 47,001 | 45,674 | 46,111 | 45,552 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income (loss) | $ | 3,338 | $ | (650 | ) | $ | (6,774 | ) | $ | (1,021 | ) | ||||
Other comprehensive income, net of tax: | |||||||||||||||
Unrealized gains (losses) on investments | 29 | (30 | ) | 194 | 135 | ||||||||||
Comprehensive income (loss) | $ | 3,367 | $ | (680 | ) | $ | (6,580 | ) | $ | (886 | ) |
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Treasury Stock | ||||||||||||||||||||||
Shares | Par Value | Total | ||||||||||||||||||||||||
Balance at December 31, 2014 | 62,957 | $ | 630 | $ | 180,720 | $ | 521,775 | $ | (175 | ) | $ | (337,069 | ) | $ | 365,881 | |||||||||||
Stock-based compensation | — | — | 5,635 | — | — | — | 5,635 | |||||||||||||||||||
Exercise of stock options | 109 | 1 | 226 | — | — | — | 227 | |||||||||||||||||||
Excess tax benefit of option exercises and restricted stock, net of tax shortfall | — | — | (622 | ) | — | — | — | (622 | ) | |||||||||||||||||
Stock issued under employee stock purchase plan | 16 | — | 136 | — | — | — | 136 | |||||||||||||||||||
Stock issued under stock incentive plan, net of shares held for taxes | 194 | 2 | (1,260 | ) | — | — | — | (1,258 | ) | |||||||||||||||||
Net loss | — | — | — | (1,021 | ) | — | — | (1,021 | ) | |||||||||||||||||
Unrealized gains on investments, net of tax | — | — | — | — | 135 | — | 135 | |||||||||||||||||||
Balance at June 30, 2015 | 63,276 | $ | 633 | $ | 184,835 | $ | 520,754 | $ | (40 | ) | $ | (337,069 | ) | $ | 369,113 |
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Treasury Stock | ||||||||||||||||||||||
Shares | Par Value | Total | ||||||||||||||||||||||||
Balance at December 31, 2015 | 63,407 | $ | 634 | $ | 188,863 | $ | 451,321 | $ | (99 | ) | $ | (337,069 | ) | $ | 303,650 | |||||||||||
Stock-based compensation | — | — | 4,256 | — | — | — | 4,256 | |||||||||||||||||||
Exercise of stock options | 178 | 2 | 136 | — | — | — | 138 | |||||||||||||||||||
Stock issued under employee stock purchase plan | 16 | — | 112 | — | — | — | 112 | |||||||||||||||||||
Stock issued under stock incentive plan, net of shares held for taxes | 267 | 3 | (1,807 | ) | — | — | — | (1,804 | ) | |||||||||||||||||
Net loss | — | — | — | (6,774 | ) | — | — | (6,774 | ) | |||||||||||||||||
Unrealized gains on investments, net of tax | — | — | — | — | 194 | — | 194 | |||||||||||||||||||
Balance at June 30, 2016 | 63,868 | $ | 639 | $ | 191,560 | $ | 444,547 | $ | 95 | $ | (337,069 | ) | $ | 299,772 |
Six Months Ended June 30, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (6,774 | ) | $ | (1,021 | ) | |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||||||
Provision for bad debts | 15,977 | 15,364 | |||||
Depreciation and amortization | 6,913 | 10,629 | |||||
Amortization of premium/discount | 6 | 225 | |||||
Stock-based compensation | 4,256 | 5,635 | |||||
Excess tax benefit of option exercises | — | (314 | ) | ||||
Loss on impairment of student loans receivable | 242 | 923 | |||||
Net (gain) loss on marketable securities | (48 | ) | 38 | ||||
Loss on termination of leased space | — | 12,331 | |||||
Loss on disposal or impairment of fixed assets | 809 | 1,545 | |||||
Changes in operating assets and liabilities: | |||||||
Restricted cash | 3,089 | 4,596 | |||||
Accounts receivable | (21,575 | ) | (22,079 | ) | |||
Prepaid expenses and other current assets | (4,944 | ) | (2,704 | ) | |||
Student loans receivable | 632 | 529 | |||||
Other long-term assets | 1,744 | 40 | |||||
Accounts payable and accrued liabilities | 10,966 | 595 | |||||
Deferred revenue and student deposits | (7,530 | ) | (9,118 | ) | |||
Other liabilities | (4,451 | ) | (2,446 | ) | |||
Net cash (used in) provided by operating activities | (688 | ) | 14,768 | ||||
Cash flows from investing activities: | |||||||
Capital expenditures | (944 | ) | (2,182 | ) | |||
Purchases of investments | (20,205 | ) | (192 | ) | |||
Non-operating restricted cash | (27 | ) | (6,796 | ) | |||
Capitalized costs for intangible assets | (464 | ) | (1,191 | ) | |||
Sales of investments | — | 10,101 | |||||
Maturities of investments | 7,103 | 40,094 | |||||
Net cash (used in) provided by investing activities | (14,537 | ) | 39,834 | ||||
Cash flows from financing activities: | |||||||
Proceeds from exercise of stock options | 138 | 226 | |||||
Excess tax benefit of option exercises | — | 314 | |||||
Proceeds from the issuance of stock under employee stock purchase plan | 112 | 136 | |||||
Tax withholdings on issuance of stock awards | (1,804 | ) | (1,258 | ) | |||
Net cash used in financing activities | (1,554 | ) | (582 | ) | |||
Net (decrease) increase in cash and cash equivalents | (16,779 | ) | 54,020 | ||||
Cash and cash equivalents at beginning of period | 282,145 | 207,003 | |||||
Cash and cash equivalents at end of period | $ | 265,366 | $ | 261,023 | |||
Supplemental disclosure of non-cash transactions: | |||||||
Purchase of equipment included in accounts payable and accrued liabilities | $ | — | $ | 29 | |||
Issuance of common stock for vested restricted stock units | $ | 4,605 | $ | 3,071 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Asset impairment | $ | — | $ | 1,312 | $ | — | $ | 1,312 | |||||||
Student transfer agreement costs | (17 | ) | — | (33 | ) | — | |||||||||
Severance costs | 1,547 | 775 | 2,246 | 775 | |||||||||||
Lease exit and other costs | 162 | 12,331 | 188 | 12,331 | |||||||||||
Total restructuring and impairment charges | $ | 1,692 | $ | 14,418 | $ | 2,401 | $ | 14,418 |
Student Transfer Agreement Costs | Severance Costs | Lease Exit and Other Costs | Total | ||||||||||||
Balance at December 31, 2015 | $ | 3,224 | $ | 1,744 | $ | 13,921 | $ | 18,889 | |||||||
Restructuring and impairment charges | (33 | ) | 2,246 | 188 | 2,401 | ||||||||||
Payments | (104 | ) | (2,107 | ) | (4,554 | ) | (6,765 | ) | |||||||
Balance at June 30, 2016 | $ | 3,087 | $ | 1,883 | $ | 9,555 | $ | 14,525 |
As of June 30, 2016 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Mutual funds | $ | 1,566 | $ | — | $ | — | $ | 1,566 | |||||||
Corporate notes and bonds | — | 33,763 | — | 33,763 | |||||||||||
U.S. government and agency securities | — | 20,000 | — | 20,000 | |||||||||||
Certificates of deposit | — | 25,000 | — | 25,000 | |||||||||||
Total | $ | 1,566 | $ | 78,763 | $ | — | $ | 80,329 |
As of December 31, 2015 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Mutual funds | $ | 1,314 | $ | — | $ | — | $ | 1,314 | |||||||
Corporate notes and bonds | — | 40,843 | — | 40,843 | |||||||||||
Certificates of deposit | — | 25,000 | — | 25,000 | |||||||||||
Total | $ | 1,314 | $ | 65,843 | $ | — | $ | 67,157 |
June 30, 2016 | |||||||||||||||||
Gross unrealized | |||||||||||||||||
Maturities | Amortized Cost | Gain | Loss | Fair Value | |||||||||||||
Short-term | |||||||||||||||||
Corporate notes and bonds | 1 year or less | 33,727 | 36 | — | 33,763 | ||||||||||||
Long-term | |||||||||||||||||
U.S. government and agency securities | 3 years or less | 20,000 | — | — | 20,000 | ||||||||||||
Certificates of deposit | 3 years or less | 25,000 | — | — | 25,000 | ||||||||||||
Total | $ | 78,727 | $ | 36 | $ | — | $ | 78,763 |
December 31, 2015 | |||||||||||||||||
Gross unrealized | |||||||||||||||||
Maturities | Amortized Cost | Gain | Loss | Fair Value | |||||||||||||
Short-term | |||||||||||||||||
Corporate notes and bonds | 1 year or less | 18,113 | — | (40 | ) | 18,073 | |||||||||||
Long-term | |||||||||||||||||
Corporate notes and bonds | 3 years or less | 22,887 | — | (117 | ) | 22,770 | |||||||||||
Certificates of deposit | 3 years or less | 25,000 | — | — | 25,000 | ||||||||||||
Total | $ | 66,000 | $ | — | $ | (157 | ) | $ | 65,843 |
As of June 30, 2016 | As of December 31, 2015 | ||||||
Accounts receivable | $ | 45,330 | $ | 34,205 | |||
Less allowance for doubtful accounts | (15,533 | ) | (10,114 | ) | |||
Accounts receivable, net | $ | 29,797 | $ | 24,091 |
Beginning Balance | Charged to Expense | Deductions(1) | Ending Balance | ||||||||||||
Allowance for doubtful accounts receivable: | |||||||||||||||
For the six months ended June 30, 2016 | $ | (10,114 | ) | $ | 15,868 | $ | (10,449 | ) | $ | (15,533 | ) | ||||
For the six months ended June 30, 2015 | $ | (27,567 | ) | $ | 15,418 | $ | (16,216 | ) | $ | (26,769 | ) |
(1) | Deductions represent accounts written off, net of recoveries. |
Short-term: | As of June 30, 2016 | As of December 31, 2015 | |||||
Student loans receivable (non-tuition related) | $ | 436 | $ | 310 | |||
Student loans receivable (tuition related) | 592 | 555 | |||||
Current student loans receivable | 1,028 | 865 | |||||
Less allowance for doubtful accounts | (73 | ) | (90 | ) | |||
Student loans receivable, net | $ | 955 | $ | 775 |
Long-term: | As of June 30, 2016 | As of December 31, 2015 | |||||
Student loans receivable (non-tuition related) | $ | 2,749 | $ | 3,314 | |||
Student loans receivable (tuition related) | 4,769 | 4,943 | |||||
Non-current student loans receivable | 7,518 | 8,257 | |||||
Less allowance for doubtful accounts | (929 | ) | (863 | ) | |||
Student loans receivable, net | $ | 6,589 | $ | 7,394 |
Beginning Balance | Charged to Expense | Deductions(1) | Ending Balance | ||||||||||||
Allowance for doubtful student loans receivable (tuition related): | |||||||||||||||
For the six months ended June 30, 2016 | $ | (953 | ) | $ | 109 | $ | 60 | $ | (1,002 | ) | |||||
For the six months ended June 30, 2015 | $ | (1,495 | ) | $ | (54 | ) | $ | — | $ | (1,441 | ) |
(1) | Deductions represent accounts written off, net of recoveries. |
120 days and less | $ | 9,579 | |
From 121 - 270 days | 788 | ||
Greater than 270 days | 963 | ||
Total gross student loans receivable | 11,330 | ||
Less: Amounts reserved or impaired | (1,766 | ) | |
Less: Discount on student loans receivable | (2,020 | ) | |
Total student loans receivable, net | $ | 7,544 |
As of June 30, 2016 | As of December 31, 2015 | ||||||
Prepaid expenses | $ | 6,844 | $ | 7,005 | |||
Prepaid licenses | 5,592 | 5,221 | |||||
Income tax receivable | 25,089 | 20,169 | |||||
Prepaid insurance | 1,875 | 1,619 | |||||
Interest receivable | 341 | 299 | |||||
Insurance recoverable | 1,109 | 16,659 | |||||
Other current assets | 583 | 1,220 | |||||
Total prepaid expenses and other current assets | $ | 41,433 | $ | 52,192 |
As of June 30, 2016 | As of December 31, 2015 | ||||||
Furniture and office equipment | $ | 54,467 | $ | 63,354 | |||
Software | 11,990 | 12,605 | |||||
Leasehold improvements | 11,050 | 11,136 | |||||
Vehicles | 22 | 22 | |||||
Total property and equipment | 77,529 | 87,117 | |||||
Less accumulated depreciation | (60,100 | ) | (65,375 | ) | |||
Total property and equipment, net | $ | 17,429 | $ | 21,742 |
June 30, 2016 | |||||||||||
Definite-lived intangible assets: | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||
Capitalized curriculum costs | $ | 20,787 | $ | (15,820 | ) | $ | 4,967 | ||||
Purchased intangible assets | 15,850 | (4,138 | ) | 11,712 | |||||||
Total definite-lived intangible assets | $ | 36,637 | $ | (19,958 | ) | $ | 16,679 | ||||
Goodwill and indefinite-lived intangibles | 2,567 | ||||||||||
Total goodwill and intangibles, net | $ | 19,246 | |||||||||
December 31, 2015 | |||||||||||
Definite-lived intangible assets: | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||
Capitalized curriculum costs | $ | 20,323 | $ | (13,954 | ) | $ | 6,369 | ||||
Purchased intangible assets | 15,850 | (3,521 | ) | 12,329 | |||||||
Total definite-lived intangible assets | $ | 36,173 | $ | (17,475 | ) | $ | 18,698 | ||||
Goodwill and indefinite-lived intangibles | 2,567 | ||||||||||
Total goodwill and intangibles, net | $ | 21,265 |
Year Ended December 31, | ||||
2016 | $ | 2,194 | ||
2017 | 3,324 | |||
2018 | 2,258 | |||
2019 | 1,490 | |||
2020 | 1,245 | |||
Thereafter | 6,168 | |||
Total future amortization expense | $ | 16,679 |
As of June 30, 2016 | As of December 31, 2015 | ||||||
Accounts payable | $ | 135 | $ | 4,762 | |||
Accrued salaries and wages | 10,894 | 10,476 | |||||
Accrued bonus | 3,577 | 4,295 | |||||
Accrued vacation | 9,895 | 9,628 | |||||
Accrued litigation and fees | 12,528 | 720 | |||||
Accrued expenses | 23,091 | 17,243 | |||||
Rent liability | 11,336 | 13,406 | |||||
Accrued insurance liability | 3,187 | 18,666 | |||||
Total accounts payable and accrued liabilities | $ | 74,643 | $ | 79,196 |
As of June 30, 2016 | As of December 31, 2015 | ||||||
Deferred revenue | $ | 29,948 | $ | 23,311 | |||
Student deposits | 51,268 | 65,445 | |||||
Total deferred revenue and student deposits | $ | 81,216 | $ | 88,756 |
As of June 30, 2016 | As of December 31, 2015 | ||||||
Uncertain tax positions | $ | 7,860 | $ | 7,870 | |||
Legal settlements | 100 | 178 | |||||
Student transfer agreement costs | 1,636 | — | |||||
Other long-term liabilities | 5,205 | 6,998 | |||||
Total other long-term liabilities | $ | 14,801 | $ | 15,046 |
Year Ended December 31, | ||||
2016 | $ | 18,341 | ||
2017 | 36,208 | |||
2018 | 31,445 | |||
2019 | 20,876 | |||
2020 | 9,546 | |||
Thereafter | 7,148 | |||
Total minimum payments | $ | 123,564 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Numerator: | |||||||||||||||
Net income (loss) | $ | 3,338 | $ | (650 | ) | $ | (6,774 | ) | $ | (1,021 | ) | ||||
Denominator: | |||||||||||||||
Weighted average number of common shares outstanding | 46,289 | 45,674 | 46,111 | 45,552 | |||||||||||
Effect of dilutive options and stock units | 712 | — | — | — | |||||||||||
Diluted weighted average number of common shares outstanding | 47,001 | 45,674 | 46,111 | 45,552 | |||||||||||
Earnings (loss) per share: | |||||||||||||||
Basic earnings (loss) per share | $ | 0.07 | $ | (0.01 | ) | $ | (0.15 | ) | $ | (0.02 | ) | ||||
Diluted earnings (loss) per share | $ | 0.07 | $ | (0.01 | ) | $ | (0.15 | ) | $ | (0.02 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Stock options | 4,477 | 5,246 | 4,573 | 5,110 | |||||||
RSUs and PSUs | 406 | 605 | 989 | 631 |
• | our ability to successfully remediate the control deficiencies that gave rise to the material weaknesses in our internal control over financial reporting discussed in Part I, Item 4, “Controls and Procedures”; |
• | Ashford University’s ability to continue to operate an accredited institution subject to the requirements of the California Bureau for Private Postsecondary Education; |
• | our ability to comply with the extensive and continually evolving regulatory framework applicable to us and our institutions, including Title IV of the Higher Education Act of 1965, as amended (the “Higher Education Act”), and its implementing regulations, the Gainful Employment rules and regulations, state laws and regulatory requirements, and accrediting agency requirements; |
• | expectations regarding financial position, results of operations, liquidity and enrollment trends at our institutions; |
• | projections, predictions, expectations, estimates or forecasts as to our business, financial and operating results and future economic performance; |
• | expectations regarding the timing and effect of the closure of Ashford University’s campus in Clinton, Iowa (the “Clinton Campus”) after the 2015-2016 academic year; |
• | our ability to work with the U.S. Department of Veterans Affairs (the “VA”), the Iowa Department of Education (the “Iowa DOE”) and the Iowa State Approving Agency (the “ISAA”) to obtain continued approval of Ashford’s programs for GI Bill benefits and to prevent any disruption of educational benefits to Ashford’s veteran students; |
• | new initiatives focused on student success and academic quality; |
• | changes in our student fee structure; |
• | expectations regarding the adequacy of our cash and cash equivalents and other sources of liquidity for ongoing operations; |
• | expectations regarding investment in online and other advertising and capital expenditures; |
• | our anticipated seasonal fluctuations in results of operations; |
• | management’s goals and objectives; and |
• | other similar matters that are not historical facts. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Consolidated Statement of Income (Loss) Data: | |||||||||||||||
Revenue | $ | 137,970 | $ | 147,057 | $ | 270,972 | $ | 289,575 | |||||||
Operating income (loss) | $ | 3,357 | $ | (512 | ) | $ | (12,942 | ) | $ | (1,712 | ) | ||||
Consolidated Other Data: | |||||||||||||||
Period-end enrollment (1) | |||||||||||||||
Online | 48,799 | 50,516 | 48,799 | 50,516 | |||||||||||
Campus | 96 | 533 | 96 | 533 | |||||||||||
Total | 48,895 | 51,049 | 48,895 | 51,049 |
(1) | We define period-end enrollment as the number of active students on the last day of the financial reporting period. A student is considered active if the student has attended a class within the prior 15 days or is on an institutionally-approved break not to exceed 45 days, unless the student has graduated or provided notice of withdrawal. |
• | Certification: Institutions must certify that each of their gainful employment programs meet state and federal licensure, certification and accreditation requirements. |
• | Accountability Measures: To maintain Title IV eligibility, gainful employment programs will be required to meet minimum standards for the debt burden versus the earnings of their graduates. |
◦ | Pass: Programs whose graduates have annual loan payments less than 8% of total earnings or less than 20% of discretionary earnings. |
◦ | Zone: Programs whose graduates have annual loan payments between 8% and 12% of total earnings or between 20% and 30% of discretionary earnings. |
◦ | Fail: Programs whose graduates have annual loan payments greater than 12% of total earnings and greater than 30% of discretionary earnings. |
• | Transparency: Institutions will be required to make public disclosures regarding the performance and outcomes of their gainful employment programs. The disclosures will include information such as costs, earnings, debt and completion rates. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||
Costs and expenses: | |||||||||||
Instructional costs and services | 48.2 | 48.6 | 50.2 | 50.6 | |||||||
Admissions advisory and marketing | 38.1 | 33.0 | 38.5 | 34.8 | |||||||
General and administrative | 8.4 | 9.0 | 9.3 | 10.2 | |||||||
Legal accrual | 1.7 | — | 6.0 | — | |||||||
Restructuring and impairment charges | 1.2 | 9.8 | 0.9 | 5.0 | |||||||
Total costs and expenses | 97.6 | 100.4 | 104.9 | 100.6 | |||||||
Operating income (loss) | 2.4 | (0.4 | ) | (4.9 | ) | (0.6 | ) | ||||
Other income, net | 0.5 | 0.2 | 0.5 | 0.4 | |||||||
Income (loss) before income taxes | 2.9 | (0.2 | ) | (4.4 | ) | (0.2 | ) | ||||
Income tax expense (benefit) | 0.5 | 0.3 | (1.8 | ) | 0.1 | ||||||
Net income (loss) | 2.4 | % | (0.5 | )% | (2.6 | )% | (0.3 | )% |
Payments Due by Period | |||||||||||||||||||||||||||
Total | 2016 | 2017 | 2018 | 2019 | 2020 | Thereafter | |||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||
Operating lease obligations | $ | 123,564 | $ | 18,341 | $ | 36,208 | $ | 31,445 | $ | 20,876 | $ | 9,546 | $ | 7,148 | |||||||||||||
Other contractual obligations | 63,123 | 5,821 | 13,373 | 11,387 | 10,801 | 8,716 | 13,025 | ||||||||||||||||||||
Uncertain tax positions | 7,860 | — | 7,860 | — | — | — | — | ||||||||||||||||||||
Total | $ | 194,547 | $ | 24,162 | $ | 57,441 | $ | 42,832 | $ | 31,677 | $ | 18,262 | $ | 20,173 |
Exhibit | Description | ||
10.1 | # | Form of Performance Cash Award Agreement (with Performance Component) | |
10.2 | # | Form of Performance Cash Award Agreement (General) | |
10.3 | † | Master SAAS Agreement, dated April 22, 2016, with Regent Education, Inc. | |
10.4 | † | Campusnet Infrastructure as a Service (IaaS) Agreement, dated June 30, 2016, with Campus Management Corp. | |
10.5 | † | CampusCare Maintenance and Support Renewal, dated June 30, 2016, with Campus Management Corp. | |
10.6 | † | Addendum to CampusCare Support Agreement, date June 30, 2016, with Campus Management Corp. | |
31.1 | Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
31.2 | Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Andrew S. Clark, President and Chief Executive Officer, and Kevin Royal, Chief Financial Officer. | ||
99.1 | Disclosure required pursuant to Section 13(r) of the Securities Exchange Act of 1934. | ||
101 | The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, filed with the SEC on August 2, 2016, formatted in Extensible Business Reporting Language (“XBRL”): (i) the Condensed Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015; (ii) the Condensed Consolidated Statements of Income (Loss) for the three and six months ended June 30, 2016 and 2015; (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2016 and 2015; (iv) the Condensed Consolidated Statements of Stockholders’ Equity for the six months ended June 30, 2016 and 2015; (v) the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2015; and (vi) the Notes to Condensed Consolidated Financial Statements. |
# | Indicates management contract or compensatory plan or arrangement. |
† | Portions of this exhibit have been omitted pursuant to a request for confidential treatment and the non-public information has been filed separately with the SEC. |
BRIDGEPOINT EDUCATION, INC. | |
August 2, 2016 | /s/ KEVIN ROYAL |
Kevin Royal Chief Financial Officer (Principal financial officer and duly authorized to sign on behalf of the registrant) |
Performance Goal | Amount of Performance Cash Eligible for Earning | Threshold Performance Level (Payment at 50%) | Target Performance Level (Payment at 100%) | Range |
EBITDA3 | $[Amount x (1/2)] | Threshold EBITDA Goal Established for BPI Short Term Incentive Plan | Target EBITDA Goal Established for BPI Short Term Incentive Plan | 80%-100% |
Revenue4 | $[Amount x (1/2)] | Threshold Revenue Goal Established for BPI Short Term Incentive Plan | Target Revenue Goal Established for BPI Short Term Incentive Plan | 95%-100% |
PARTICIPANT: | BRIDGEPOINT EDUCATION, INC. | ||
Signature | By | ||
Print Name | Title | ||
Residence Address: | |||
PARTICIPANT: | BRIDGEPOINT EDUCATION, INC. | ||
Signature | By | ||
Print Name | Title | ||
Residence Address: | |||
CUSTOMER: BRIDGEPOINT EDUCATION, INC. | REGENT EDUCATION, INC. |
By (Signature): /s/ Andrew Clark | By (Signature): Randolph W Jones III |
Name (Printed): Andrew Clark | Name (Printed): Randy Jones |
Title: President and CEO | Title: CEO |
Date: Apr 22, 2016 | Date: Apr 22, 2016 |
Name | Product/Service Description | Term | # of End Users | List Price Per End User | Discount | Annual Cost | Total |
Regent 8 | Annual Subscription Fee | 3.25 years | [***] | $[***] | [***]% | $[***] | $[***] |
Hosting Services Fees | $[***] | ||||||
Software Usage Fees | $[***] | ||||||
Implementation Services | $[***] | ||||||
Regent Review | Annual Subscription Fee | 4.5 years | $[***] | $[***] | |||
Implementation Services | $[***] | $[***] | |||||
Total Fees | $[***] |
4/8/16 | 10/1/16 | 1/1/17 | 3/1/17 | 7/1/17 | 4/1/18 | 4/1/19 | 4/1/20 | Total | |
Implementation Services* | $[***] | $[***] | $[***] | $[***] | $[***] | $[***] | $[***] | $[***] | $[***] |
Hosting Services Fees | $[***] | $[***] | $[***] | $[***] | $[***] | $[***] | $[***] | $[***] | $[***] |
Software Usage Fees | $[***] | $[***] | $[***] | $[***] | $[***] | $[***] | $[***] | $[***] | $[***] |
Regent 8 Subscription Fee | $[***] | $[***] | $[***] | $[***] | $[***] | $[***] | $[***] | $[***] | $[***] |
Regent Review Subscription Fee | $[***] | $[***] | $[***] | $[***] | $[***] | $[***] | $[***] | $[***] | $[***] |
Total | $[***] | $[***] | $[***] | $[***] | $[***] | $[***] | $[***] | $[***] | $[***] |
CLIENT: BRIDGEPOINT EDUCATION, INC. | REGENT EDUCATION, INC. |
By (Signature): /s/ Andrew Clark | By (Signature): Randolph W Jones III |
Name (Printed): Andrew Clark | Name (Printed): Randy Jones |
Title: President and CEO | Title: CEO |
Date: Apr 22, 2016 | Date: Apr 22, 2016 |
(Total Quarterly Time – Unscheduled Downtime) | |||
System Availability = | Total Quarterly Time |
• | Server uptime |
• | Windows Services running on the machine |
• | Memory utilization / quota |
• | CPU utilization /quota |
• | Disk utilization / quota |
• | Port availability |
• | Health check pages |
• | Uptime availability Reports |
Type of Back-Up | Description | When does back-up occur? |
Daily Incremental Files | Transactional log files | Every fifteen minutes |
Daily Full Back-Up | Customer Database Content | Daily, Stored for 7 Days |
Weekly Full Back-Up | Customer Database Content | Weekly, Stored for 4 Weeks |
Monthly Full Backup | Customer Database Content | Monthly, Stored for 12 Months |
CUSTOMER: BRIDGEPOINT EDUCATION, INC. | REGENT EDUCATION, INC. |
By (Signature): /s/ Andrew Clark | By (Signature): Randolph W Jones III |
Name (Printed): Andrew Clark | Name (Printed): Randy Jones |
Title: President and CEO | Title: Chairman, CEO |
Date: Apr 22, 2016 | Date: Apr 22, 2016 |
BACKGROUND WHEREAS, CMC is engaged in part in the business of operating an infrastructure as a service business (“CMC IaaS”); WHEREAS, under a software license agreement with CMC (the “Master Agreement” or “Software License Agreement”), Customer has licensed certain software; and WHEREAS, CMC is willing to provide Customer with non-exclusive rights to deploy the approved software on the CMC IaaS in accordance with this Agreement; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows. The general terms (“General Terms”) below apply to CMC IaaS. Specific terms and conditions that apply are contained in the applicable Exhibits. In the event of a conflict between the General Terms and any term contained in an Exhibit, and/or Addendum, the following shall be the order of precedence: the Addendum, the Exhibit and the General Terms. GENERAL TERMS 1. DEFINITIONS “Application(s)” means any web or other application Customer creates using the CMC IaaS including any source code written by Customer to be used with the CMC IaaS, or hosted on a Virtual Machine (as defined below). “CMC Content” means any Content (as defined below) that CMC or any of its affiliates make available in connection with the CMC IaaS (as defined below) to allow access to and use of the CMC IaaS. “CMC Infrastructure as a Service (IaaS)” means a managed or an unmanaged Virtual Server that is running on the Infrastructure. “Licensed CMC Software” means software licensed from CMC pursuant to a Master Agreement or Software License Agreement. “Data Center” means CMC’s secure and fault tolerant managed facility where CMC IaaS is physically located. “CMC Marks” means any trademark, service marks, service or trade names, logos and other designations of CMC and its affiliates that CMC may make available to Customer in connection with this Agreement. | “Content” means software (including machine images), data, text, audio, video, imagines or other content. “Customer Content” means Content that Customer or any User (as defined below) (a) runs on the CMC IaaS, (b) causes to interfere with the CMC IaaS, or (c) uploads to the CMC IaaS under Customer’s account or otherwise transfers, processes, uses or stores in connection with Customer’s account. “Documentation” means the developer guides, user guides and any other technical and operations manuals and specifications for the CMC IaaS provided by CMC. “Downtime” means unplanned service disruptions to the CMC IaaS. Downtime shall exclude service disruptions arising from Customer’s systems or service providers or service disruptions due to Customer’s own errors. CMC will pass through, on a proportionate basis, to Customer any credits received from its third party hosting provider as a result of the Downtime. “Infrastructure” means the datacenters, security devices, cables, routers, switches, hosts, computer nodes, physical servers, and other equipment CMC uses to host Virtual Servers (as defined below). “Login Credentials” mean any password, authentication keys or security credentials that enable Customer’s access to and management of the CMC IaaS. “Policies” means CMC’s written policies to the extent applicable (e.g., Acceptable Use Policy, E-mail and Anti-Spam Policies) all of which are posted on the CMC web site at http://www.campusmanagement.com/EN-US/aboutUs/Pages/CampusNet.aspx, as may be updated from time to time. “Production Environment” means the specific environments including hardware, software, and database instance, which are exclusively used as the single authoritative and live system Customer uses for transactional processing. Production Environment excludes any and all testing, training, and other non-live application or environments. “Third Party Content” means Content made available to Customer by any third party in conjunction with the CMC IaaS. “User” means any individual that directly or indirectly through another user (a) accesses or uses Customer Content; or (b) otherwise accesses or uses the CMC IaaS under Customer’s account. |
“Virtual Servers” means one of any number of isolated server emulations running on a single physical servicer located on the Infrastructure. 2. USE OF THE CMC IAAS 2.1 Generally. Customer may access and use the CMC IaaS in accordance with this Agreement. Customer will adhere to all laws, rules and regulations applicable to its use of the CMC IaaS, including the Policies. The CMC IaaS is provided to Customer for its internal use and Customer shall not resell the CMC IaaS to any third party. 2.2 Third Party Content. Third Party Content, such as software applications provided by third parties, may be made available by other entities under separate terms and conditions. Customer is responsible to comply with applicable terms and conditions for Third Party Content. Customer’s use of any Third Party Content is at Customer’s sole risk. CMC is not responsible for providing support to Third Party Content. Customer understands that not all external Third Party Content may comply with CMC’s information security policies and Customer agrees to submit any new interface or connectivity requirement requests to CMC prior to installation into the Data Center. Third Party Content that does not comply with CMC’s information security policies will not be installed in the Data Center. 2.3 Facilities and Use of Customer Data. CMC will maintain appropriate administration, physical and technical safeguards that adhere to security standards that a reasonably prudent service provider in the same industry would provide under like circumstances to store and process Customer Data. CMC accesses and uses Customer Data only as necessary to provide the IaaS Service, perform or enforce contractual obligations or comply with applicable law. By using the CMC IaaS, Customer consents to the processing and storing of Customer Data. The parties agree that CMC is merely an information technology service provider. 3. CHANGES 3.1 To the CMC IaaS. Subject to Section 10.2(a)(ii), due to technology advancements and changes to Licensed CMC Software, CMC may change, discontinue or deprecate the CMC IaaS or change or remove features or functionality of the CMC IaaS from time to time. CMC will provide Customer with six (6) months prior notice of any material changes or discontinuance. 4. CMC OBLIGATIONS 4.1 Scope of Services. The CMC IaaS shall include: (i) the deployment and administration of server hardware and the licensed CMC software at the CMC hosting center; (ii) monitoring communication circuit that is reasonably within the control of CMC or CMC’s Internet service provider and hardware availability; (iii) installation of all updates, upgrades, releases, error corrections, and enhancements (except that configuration of new features exposed by such installation will require configuration by Customer or a separate Statement of Work) of the licensed CMC Software; and (iv) routine backups of software and data residing on the data repository location (“Data Repository Location”). This Agreement is strictly for the CMC IaaS described herein and does not grant a license to access or use the CMC software, which must be licensed by Customer under a separate Master Agreement or Software License Agreement, as applicable. The CMC IaaS shall be pursuant to the Service Level Agreement set forth in Exhibit C-4. CMC will not support environments that are not supported/certified by CMC product development or by third party vendors. | 4.2 Standard of Performance. CMC agrees to provide the CMC IaaS to and for the benefit of Customer in accordance with the terms of this Agreement, including all Schedules and Exhibits hereto, and use industry practices and methods to avoid, prevent, and mitigate any material adverse effect on the IaaS or the continuity and quality of the services being provided to Customer. 4.3 Infrastructure. CMC shall (i) provide the Infrastructure to meet the functional and performance requirements based on the components defined in Exhibit A; (ii) be responsible for the day-to-day management and maintenance of the Infrastructure required to support the licensed CMC Software and Applications; (iii) monitor the Infrastructure for thresholds and availability 7x24x365; and (iv) administer all operating systems, database, networking, virtualization, including Citrix and VMware, required to operate CMC’s Licensed Software. CMC will be responsible for software licenses for Microsoft Windows Operating System, Microsoft SQL Server, and Citrix software (if applicable) for non-CMC licensed software. In the case that the Customer requires additional infrastructure/environments to support non-CMC licensed software, then Customer shall be responsible for such licenses. 4.4 Software Licenses. CMC will provide third party software licenses required to operate CMC’s Licensed Software. 4.5 Information Security. CMC will make commercially reasonable efforts to keep Customer’s Content and data appropriately secured against unauthorized access including: (i) CMC will maintain Internet firewalls to protect Customer’s Infrastructure and Applications from unwanted and inappropriate access; (ii) CMC requires that all Internet traffic to and from the Infrastructure use encrypted methods to protect the confidentiality of the data stored in the Customer’s Applications; (iii) CMC will provide a Virtual Private Network (VPN) router at the CMC primary datacenter using IPSec/3DES encryption technologies for connecting the networks between the Data Center and Customer’s premises. Customer must provide a Cisco compatible device on its premises and local IP network configuration that does not conflict with the Data Center private IP addressing. Alternatively, Customer may choose to install a point to point circuit from Customer’s premises network with an endpoint to the Data Center as the primary mode of connectivity. All related expenses and costs for the point to point circuit and the projected date of availability will be Customer’s responsibility; (iv) All systems and services in the Data Center are subject to vulnerability scanning to identify any information security risks that may be present and trigger remediation efforts; (v) CMC will provide, install and maintain active anti-virus services on all appropriate systems and services installed in the Data Center; (vi) CMC requires that all Internet facing application services use SSL communications for proper encryption of data transmitted between the Data Center and Customer; and |
(vii) CMC will maintain regular patch management practices so that newly released security patches are applied to servers supporting Customer’s Applications. 4.6 Data Backup. CMC shall perform a complete backup of the Data Repository Location each night using generally accepted backup procedures (“Backup Data”). The Backup Data shall be maintained at the CampusNet Services colocation center and shall be retained for up to seven (7) days before being destroyed; provided, weekly, CMC shall make a copy of the Backup Data and store it at an off-site storage location (“Off-site Center”). The Backup Data shall be retained at the Off-site Center for twelve (12) months before being destroyed. Upon Customer request and for no additional charge, so long as Customer is not in default of the Agreement, CMC shall provide a copy of the Backup Data on a monthly basis. For an additional charge, Customer may request a copy of the Backup Data on a more frequent basis. The CMC IaaS is operated in a manner designated to provide for high levels of system availability. This includes redundancy for all major system components, or where appropriate, equipment supported by manufacturers providing the CMC IaaS with 24/7/365 service. 4.7 Availability of Service. The CMC IaaS and all Customer Content shall be accessible to Customer’s authorized users 24 hours per day, 7 days a week, excluding scheduled times for maintenance and updates of CMC IaaS infrastructure software of which Customer will be notified in advance, and any Downtime due to Internet outages resulting from failures reasonably outside the control of CMC or CMC’s hosting provider, corruption of Internet route information within a tier 1 internet route server environment, major connectivity failures within or between major tier 1 providers or corruption of internet root level DNS services. In the event that, during any three (3) month period, the Customer Content experiences three or more episodes of Downtime with one or more episodes of Downtime lasting at least six (6) hours each and two (2) or more additional episodes of Downtime lasting at least three (3) hours each, Customer shall have the right to terminate this Agreement upon fifteen (15) days written notice from the last episode of Downtime, within 180 days following the written notice to CMC, without payment of any penalty, which termination right shall be Customer's sole and exclusive remedy for Downtime other than Downtime caused by CMC's willful misconduct. 4.8 Control of Services. CMC shall manage the CMC IaaS. CMC may, in its sole discretion (i) reengineer CMC network components and/or change locations where services are performed; (ii) perform its obligations through its subsidiaries or affiliates, or through the use of selected independent subcontractors; and (ii) modify and/or replace technology or service architectures relating to the services. Notwithstanding clause (ii) above, CMC shall be responsible for such other party’s performance of CMC obligations under CMC IaaS. 4.9 Personnel. CMC will dedicate personnel necessary to perform its responsibilities hereunder. CMC reserves the right to determine the personnel assigned to the CMC IaaS and to replace, rotate or reassign such personnel during the CMC IaaS Term (as defined in Section 10.1 below). 4.10 Services Outside Scope. Any custom services provided outside the scope set forth above shall be engaged under professional services, subject to CMC's requirements, including, without limitation, any billing, and technical requirements. Any changes in federal, state or local requirements, or any Customer specific requirements, including, without limitation, with respect to security or privacy, that result in CMC providing additional services or incurring | costs, shall be billed to and promptly paid by Customer. CMC reserves the right to refuse to provide certain services in the event Customer's requirements are not practicable or changes in law affect CMC’s performance of obligations hereunder. 4.11 Minimization of Planned Service Disruptions. Whenever conditions reasonably permit, the parties will mutually agree on the scope, timing, frequency and duration of any planned service disruptions or delays and will jointly attempt to minimize any unnecessary impact on Customer’s business operations. Routine daily maintenance will be accomplished whenever possible by scheduling between the hours of 10:00 p.m. and 8:00 a.m. Eastern Time. In addition, longer maintenance will be accomplished when possible on weekends between the hours of 6:00 p.m. ET Saturday and 8:00 a.m. ET Monday, unless CMC notifies Customer otherwise. CMC shall monitor the CMC IaaS Services 24/7/365. 4.12 Unplanned Service Disruptions. Downtime may occur from time-to-time. CMC will use commercially reasonable efforts to attempt to prevent Downtime that could impact Customer’s business operations to the extent such factors are within CMC's reasonable control; provided, Customer acknowledges that conditions of Customer and third parties may affect Customer's use of the CMC IaaS, for which CMC shall have no liability or obligations (by way of example and not limitation, Internet disruptions or third party software bugs), although CMC will attempt to coordinate with Customer as reasonably requested to assist to correct the Downtime to the extent practicable. 4.13 Disaster Recovery Plan. Throughout the CMC IaaS Term, CMC shall maintain a disaster recovery plan and the capacity to execute such plan. Upon request by Customer, which shall not be more frequently than annually, CMC shall provide Customer with an executive summary of CMC’s most current disaster recovery plan. 4.14 Disaster Recovery. If the Data Center is damaged, in whole or part, by fire or other casualty at any time during the Term of this Agreement, CMC will promptly and diligently seek to have such damage repaired. If the Data Center is damaged in such a way that prevents CMC from securely delivering its services defined hereunder within a reasonable amount of time, then CMC shall failover the Production Environment and licensed CMC software to CMC’s disaster recovery warm facility. In such event, CMC expects the recovery time to be no more than forty-eight (48) hours, and CMC’s disaster recovery warm facility will support Customer’s Infrastructure at sixty percent (60%) of the Production Environment’s normal operating capacity. 5. CUSTOMERS OBLIGATIONS 5.1 Technical Data and Information. Customer shall provide CMC with all technical data and all other information CMC may reasonably request from time to time to allow CMC to supply the CMC IaaS to Customer. All information Customer supplies will be complete, accurate and given in good faith. 5.2 Lawful Use. Customer will use the CMC IaaS for legitimate and lawful business purposes only. Any breach of this Section 5.2 will constitute a material breach of this Agreement and in addition to CMC’s termination rights set forth in Section 10.2(b) below, CMC may, at any time and at CMC’s sole option, suspend all or part of the CMC IaaS immediately and until the breach is remediated. 5.3 Content. Customer is solely responsible for the Customer Content that Customer, Users or |
subcontractors create, install, upload or transfer on, from or through the CMC IaaS. 5.4 Backups. Customer is solely responsible for backing up all Customer Content on the CMC IaaS to the Data Repository Location. Customer acknowledges and agrees to maintain outside the CMC IaaS a current backup copy of all Content stored in the CMC IaaS. 5.5 Software Updates. Customer acknowledges and agrees that from time to time CMC and third party providers will release critical patches or updates. Customer must agree to not unreasonably delay application of any software or hardware patches or updates identified by CMC as mandatory for use with the CMC IaaS. CMC may elect to discontinue service related to the applications or infrastructure with the identified vulnerability. 5.6 Digital Certificates. Customer agrees that it will provide 128bit, SSL Digital Certificates to support all internet facing services in support of Customer’s environment. 5.7 Customer Relationship Manager. Customer will appoint a relationship manager to manage the relationship established by this Agreement (“Customer Relationship Manager”) who will: (a) Coordinate and monitor Customer’s obligations under this Agreement, and serve as the primary liaison with the CMC relationship manager. (b) Provide communication on events and reporting problems with the CMC IaaS. (c) Provide CMC with an outage communications plan consisting of the name, telephone number including cell phone number, and email address of Customer personnel to be notified in the event of an outage. CMC shall contact Customer promptly regarding an outage or Downtime. 5.8 Connectivity. Customer agrees to provide the high-speed Internet and telecommunications connections and supporting equipment required by CMC to maintain connectivity between Customer’s remote location(s) and the CMC IaaS location. Customer will bear the costs of such connections and supporting equipment. CMC may assist Customer in defining such connectivity in which case Customer may, at CMC’s discretion, be billed for such professional services. 5.9 Software Licenses. CMC software and the CMC IaaS use many components of Microsoft products. At all times during the CMC IaaS Term, Customer is required to hold a basic Microsoft® Office license for each Customer computer that will be used on the CMC IaaS. To the extent applicable, Customer’s statement attesting to the existence of such valid license is attached as Exhibit C-2. 5.10 Print Drivers. CMC uses the Citrix universal print driver. Other printers may work, but Customer acknowledges that formatting and functionality may fail on any non-compliant printing standards or drivers. Customer may require assistance from its authorized printer vendor. 6. SECURITY AND DATA PRIVACY 6.1 Security. CMC IaaS provides Customer with certain software and functionality to help Customer protect Customer Content from unauthorized access. Customer shall properly configure and use the CMC IaaS so that it is suitable for Customer’s use. Customer is responsible for maintaining appropriate security and protection of Customer Content, which may include the use of encryption technology to protect Customer Content from unauthorized access. Customer is | responsible for providing any necessary notices to Users and obtaining any legally-required consents from Users concerning use of the CMC IaaS. Customer is solely responsible for complying with any laws or regulations that might apply to Customer Content. Login Credentials are for Customer’s internal use only. Customer is responsible for any use that occurs under Login Credentials. If Customer believes an unauthorized User has gained access to Login Credentials, Customer will notify CMC immediately. Neither CMC nor its affiliates are responsible for any unauthorized access to or use of Customer’s account. If CMC determines that there has been unauthorized access to, or use or disclosure of, Customer Content, CMC shall use commercially reasonable efforts to notify Customer, taking into account any applicable law, regulation, or governmental request. 6.2 Transfer of Data. Customer consents that CMC shall store Customer Content in the United States. CMC transfers Customer Data solely pursuant to CMC’s Backup Data obligations as set forth in Section 4.6 above. By uploading Customer Content into the CMC IaaS, Customer may transfer and access Customer Content from around the world, including to and from the United States. To the extent that Customer provides Customer Content in connection with CMC customer support, Customer consents that CMC may handle Customer Content in any country in which CMC or its affiliates maintain facilities. It is the responsibility of Customer to ensure that Customer complies with applicable law with respect to transferring data across geographical locations. 6.3 Compliance with Laws. CMC shall comply with all laws applicable to our provision of the CMC IaaS, including applicable security breach notification laws, but not including any laws applicable to Customer that are not generally applicable to information technology service providers. Customer shall comply with all laws applicable to Customer Data and Customer’s use of the CMC IaaS, including any laws applicable to Customer. 7. FEES, PAYMENT AND TAXES 7.1 General. The pricing for the CMC IaaS provided herein is set forth in Exhibit A. 7.2 Late Fees. Any amount invoiced under this Section 7 and not paid in full as required herein shall bear interest at the lesser of 1.5% per month or the highest rate allowed by applicable law, and shall be subject to reasonable costs and attorney's fees related to collection. Upon written notice, CMC reserves the right to suspend any or all services to delinquent accounts until such time as the account is brought current and Customer agrees to hold CMC harmless for any interruption of CMC IaaS arising from any payment delay. 7.3 Taxes. Customer will promptly pay, indemnify and hold CMC harmless from all taxes on the CMC IaaS, including transaction, local, value-added, sales and service taxes, other than taxes on the net income or profits of CMC. Subject to any applicable laws, the foregoing will not apply to the extent Customer is formed as a not-for-profit or publically funded state organization and promptly provides CMC an applicable tax exempt certificate. All prices quoted are net of taxes. 7.4 Disputed Invoice. Customer may withhold any invoiced line item amounts due hereunder if it, in good faith, disputes the item in a detailed writing within twenty (20) days of receipt of the invoice and promptly pays the undisputed amounts. CMC reserves the right to cease work without prejudice if undisputed amounts are not paid within thirty (30) days after the date of the invoice. CMC may allocate |
payments received to fees and expenses in its sole discretion and Customer’s communications on or with payments shall not be construed as a novation. 8. BILLING AND PAYMENT PROCEDURES 8.1 Payment Schedule. CMC will bill Customer as further described in Exhibit A. 8.2 Billing and Payment Dates. CMC will bill Customer monthly by the 10th of the following month as set forth in Exhibit A. Customer shall pay CMC in full on or before the fifteenth (15th) day following the date of the invoice. If Customer falls into arrears on payments, CMC may require Customer to maintain a deposit as a condition to CMC continuing to provide the CMC IaaS. 8.3 Changes. Customer may request to expand the CMC IaaS by delivering a written request and entering into a mutually executed Addendum. 9. TEMPORARY SUSPENSION 9.1 Generally. CMC may suspend Customer’s right to access or use any portion of all of the CMC IaaS immediately upon notice to Customer if: (a) Customer’s use of the CMC IaaS (i) poses a security risk to the CMC IaaS or any third party; (ii) may adversely impact the CMC IaaS or the systems or Content of any other CMC customer; (iii) may subject CMC, its affiliates or any third party to liability; (iv) may be fraudulent; or (v) violates Policies; (b) Suspension is required pursuant to CMC’s receipt of a subpoena or other request by a law enforcement agency; or (c) Customer is in breach of this Agreement, including Customer is delinquent on its payment obligations (except for Section 7.4 above) for more than 30 days. 9.2 Effect of Suspension. If CMC suspends Customer’s right to access or use any portion or all of the CMC IaaS: (a) Customer is responsible for all fees and charges Customer has incurred through the date of suspension; (b) Customer remains responsible for any applicable fees and charges for any CMC IaaS to which Customer continues to have access, as well as applicable data storage fees and charges, and fees and charges for in-process tasks completed after the date of suspension; and (c) Customer will not receive any service credits under the Service Level Agreement for any period of suspension. CMC will not erase any Customer Content as a result of Customer’s suspension. CMC’s right to suspend Customer’s access to CMC IaaS is in addition to CMC’s right to terminate this Agreement pursuant to Section 10 below. 10. TERM AND TERMINATION 10.1 Term. The CMC IaaS will commence on the Commencement Date and will continue for the period specified in Exhibit A (“CMC IaaS Term”). 10.2 Termination. (a) Customer: Customer may terminate this Agreement: | (i) with cause in the event CMC materially breaches its obligations under the Agreement and fails to cure such breach within thirty (30) days after receipt of written notice from Customer. (ii) early upon sixty (60) days written notice and payment of early termination fee as set forth in Exhibit A. (iii) pursuant to Section 4.7, Availability of Service, set forth above. (b) CMC. CMC may terminate this Agreement: (i) with cause in the event Customer materially breaches its obligations under the Agreement and fails to cure such breach within thirty (30) days after receipt of written notice from CMC. (ii) immediately upon notice to Customer: (A) for cause, if any act or omission by Customer results in a suspension described in Section 9.1 above; (B) if CMC’s relationship with a third party who provides software or other technology CMC uses to provide the CMC IaaS expires, terminates or requires CMC to change the way it provides the software or other technology as part of the CMC IaaS; (C) if it is CMC’s good faith belief that providing the CMC IaaS service offering to the entire customer base creates a substantial economic or technical burden or material security risk for CMC; (D) in order to comply with the law or requests from governmental entities; or (E) if CMC determines that the use of the CMC IaaS has become impractical or unfeasible for any legal or regulatory reason. 10.3 Effect of Termination. Upon termination of the CMC IaaS for any reason, CMC will disable Customer’s access to the CMC IaaS and Customer shall promptly pay all amounts due. Each party shall promptly return or destroy any of the other party’s Content or Confidential Information (as defined below). CMC may erase Customer Content stored on the Infrastructure thirty (30) days after the date of termination. Customer will pay CMC its reasonable fees and expenses on a time and material basis if CMC assists Customer with the transition of Customer Content. 11 CONFIDENTIAL INFORMATION 11.1 Confidential Information. Neither party nor any third party acting on its behalf will for any reason at any time use or disclose any proprietary information of the other party, including, without limitation, relating to the processes, techniques, work practices, customers, prospective customers, suppliers, vendors, business practices, strategies, business plans, financial information, marketing, third party licenses, products, proprietary rights or trade secrets of the other party (collectively the “Confidential Information”). Each party shall use at least the same degree of care in safeguarding the other party’s Confidential Information as it uses in safeguarding its own Confidential Information, but not less than due diligence and care, to prevent the theft, disclosure, copying, reproduction, distribution and preparation of derivative works of the other party's Confidential Information. Either party may disclose Confidential Information to its employees, independent contractors and advisors that have a need to know in the course of their assigned duties and responsibilities in connection with the Agreement, provided such parties are bound by legally binding obligations to protect such Confidential Information in a manner consistent with the Agreement. 11.2 Exceptions. Confidential Information does not include (i) information already known or independently developed by the recipient without use or reliance on the other party’s Confidential Information, as evidenced by records, (ii) |
information in the public domain through no wrongful act of the recipient, or (iii) information received from a third party who was not under a duty of non-disclosure. 11.3 Disclosure Required by Law. If one party (the “Receiving Party”) is required by a lawful order from any court or agency of competent jurisdiction to disclose Confidential Information of the other party (“Disclosing Party”), the Receiving Party shall promptly notify the Disclosing Party of such order so that the Disclosing Party may take reasonable steps to limit further disclosure, including obtaining a protective order or other reasonable assurance that confidential treatment will be accorded to the Confidential Information. If, in the absence of a protective order, the Receiving Party is compelled as a matter of law to disclose Confidential Information, the Receiving Party will use reasonable efforts to disclose only the Confidential Information that is required by law to be disclosed. With respect to publically funded state institutions, CMC acknowledges that certain information and documents may be subject to public records laws, and Customer shall provide CMC an opportunity to review and object to disclosure (including obtaining a protective order) pursuant to state law. 11.4 Remedies. Confidential Information shall remain the sole property of the Disclosing Party or its respective licensor. In the event of a breach or threatened breach of this provision, the Disclosing Party shall be entitled to obtain preliminary injunctive relief, without posting bond, to prevent the use and disclosure of such Confidential Information, in addition to all other remedies available at law and in equity. 12. INTELLECTUAL PROPERTY 12.1 CMC Content; CMC IaaS; License Grant. CMC, its affiliates and licensors own and reserve all right, title and interest in and to the CMC IaaS and CMC Content, including all improvements, enhancements, modifications and derivatives works thereof. CMC shall have a royalty-free, worldwide, perpetual license to use or incorporate into the CMC IaaS and Documentation any suggestions, ideas, enhancement requests, feedback, recommendations or other information provided by Customer or its Users relating to the operation of the CMC IaaS or Documentation. CMC grants Customer a non-exclusive and non-transferable license to do the following: (i) access and use the CMC IaaS solely in accordance with this Agreement; and (ii) copy and use the CMC Content solely in connection with Customer’s permitted use of the CMC IaaS. 12.2 Restrictions. Customer shall not (and shall not permit any User, employee, contractor or other party to): (i) copy, modify, create a derivative work of, reverse engineer, decompile, translate, disassemble or otherwise attempt to extract the source code of the CMC IaaS or any component thereof; or (ii) resell or sublicense the CMC IaaS. 12.3 Customer Content. Customer or Customer’s licensor own all right, title and interest in and to Customer Content. Except as provided in this Section 12, CMC obtains no rights under this Agreement to Customer Content. Customer consents to CMC’s use of Customer Content to provide the CMC IaaS to Customer. CMC may disclose Customer Content to provide the CMC IaaS to Customer and User or comply with any request of a governmental or regulatory body. 12.4 Trademarks and Copyrights. Third parties retain trademark, copyright and other proprietary rights in and to Third Party Content. CMC retains all right, title and interest to CMC Marks. | 13. WARRANTIES 13.1 CMC’s Limited Warranties. CMC represents, warrants and covenants that: (a) CMC has the authority to enter into this Agreement. (b) Neither it entering into nor its performance of this Agreement conflicts with or creates a breach of contract or obligation to which it is bound. (c) CMC shall perform the CMC IaaS in a professional and workmanlike manner. (d) CMC, in the operation of its business, shall remain at all times during the Agreement in compliance in all material respect with applicable federal, state and local laws, including, without limitation, all applicable U.S. Department of Education rules and regulations. 13.2 Customer’s Limited Warranties. Customer represents, warrants and covenants that: (a) Customer has authority to enter into and perform in accordance with the provisions of this Agreement. (b) Neither it entering into nor its performance of this Agreement conflicts with or creates a breach of contract or obligation to which it is bound. (c) No Customer Content on the CMC IaaS is illegal, defamatory, malicious, harmful or discriminatory based on race, sex, religion, nationality, disability, sexual orientation, or age. (d) Customer will not attempt to circumvent or disable any of the security-related, management or administrative features of the CMC IaaS. (e) Customer, in the operation of its business, shall remain at all times during the Agreement in compliance in all material respects with applicable federal, state and local laws, including, without limitation, all applicable U.S. Department of Education rules and regulations. 14. DISCLAIMER OF WARRANTIES. THE CMC IAAS IS PROVIDED “AS IS”. CMC AND ITS AFFILIATES AND LICENSORS MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE REGARDING THE CMC IAAS OR THE THIRD PARTY CONTENT, INCLUDING ANY WARRANTY THAT THE CMC IAAS OR THIRD PARTY CONTENT WILL BE UNINTERRUPTED, ERROR FREE OR FREE OF HARMFUL COMPONENTS, OR THAT ANY CONTENT, INCLUDING CUSTOMER CONTENT OR THIRD PARTY CONTENT, WILL BE SECURE OR NOT OTHERWISE LOST OR DAMAGED. CUSTOMER ACKNOWLEDGES THAT CMC DOES NOT CONTROL OR MONITOR THE TRANSFER OF DATA OVER THE INTERNET, AND THAT INTERNET ACCESSIBILITY CARRIES WITH IT THE RISK THAT CUSTOMER’S PRIVACY, CONFIDENTIAL INFORMATION AND PROPERTY MAY BE LOST OR COMPROMISED. EXCEPT TO THE EXTENT PROHIBITED BY LAW, CMC, ITS AFFILIATES AND LICENSORS DISCLAIM ALL WARRANTIES, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, TITLE, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT AND ANY WARRANTIES ARISING FORM A COURSE OF DEALING, USAGE OR TRADE PRACTICE. 15. LIMITATION OF LIABILITY. EXCEPT FOR THE OBLIGATIONS HEREIN TO INDEMNIFY AGAINST THIRD |
PARTY CLAIMS OR BREACH OF INTELLECTUAL PROPERTY RIGHTS, IN NO EVENT SHALL EITHER PARTY OR ITS AFFILIATES BE LIABLE, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES (INCLUDING LOST SAVINGS, PROFIT OR BUSINESS INTERRUPTION EVEN IF NOTIFIED IN ADVANCE OF SUCH POSSIBILITY) ARISING OUT OF OR PERTAINING TO THE SUBJECT MATTER OF THIS AGREEMENT. IN ADDITION, EXCEPT WITH RESPECT TO A WILLFUL BREACH, BREACH OF INTELLECTUAL PROPERTY RIGHTS, OR OBLIGATIONS HEREIN TO INDEMNIFY AGAINST THIRD PARTY CLAIMS, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR DAMAGES IN EXCESS OF THE TOTAL AMOUNT PAID FOR CMC IAAS DURING THE TWELVE MONTH PERIOD IMMEDIATELY PRECEDING THE DATE ANY SUCH CAUSE OF ACTION AROSE. The foregoing limitation of liability shall not be construed as an express or implied waiver by a publically funded state institution of its governmental immunity or as an express or implied acceptance by the institution of liabilities arising as a result of actions which lie in tort or could lie in tort in excess of the liabilities allowed under applicable state law. 16. INDEMNIFICATION 16.1 Customer. Customer shall indemnify, defend and hold harmless CMC and its affiliates, and each of its respective officers, directors, employees, agents, independent contractors, successors and assigns from and against liability for any third party claims based on: (i) Customer’s use of the CMC IaaS or any Customer Content; (ii) Customer’s breach of this Agreement or violation of applicable law; (iii) the alleged infringement or misappropriation of third party rights by Customer Content or by the use, development, design, production, advertising or marketing of Customer Content; (iv) Customer’s relationship with third party software providers for software installed or stored in the CMC IaaS; or (v) Customer’s failure to use reasonable security precautions. Furthermore, if CMC or its affiliates are obligated to respond to a third party subpoena or other compulsory legal order or process described in this Section 16.1, Customer shall also reimburse CMC for reasonable attorneys’ fees and costs and shall pay CMC on a time and material basis for time and materials spent. 16.2 CMC. CMC shall indemnify, defend and hold harmless Customer and its affiliates, and each of its respective officers, directors, employees, agents, independent contractors, successors and assigns from and against liability for any third party claims based upon the CMC IaaS infringing or misappropriating any U.S. patent, copyright, or trademark of such third party. Notwithstanding the foregoing, in no event will CMC have any obligations or liability under this Section 16.2 arising from: (i) Customer’s use of CMC IaaS in a modified, unauthorized or unintended form; (ii) Customer’s violation of this Agreement; (iii) Customer’s use of the non-current versions of the CMC IaaS; or (iv) any Customer Content. 16.3 Process. The indemnified party shall promptly notify the indemnifying party of any claim subject to this Section 16, but the indemnified party’s failure to promptly notify the indemnifying party will only affect the indemnifying party’s obligations under this Section 16 to the extent that the indemnified party’s failure prejudices the indemnifying party’s ability to defend the claim. The indemnifying party may: (i) use counsel of its choice (subject to the indemnified party’s written consent); and (ii) settle the claim as the indemnifying party deems appropriate, provided that the indemnifying party | obtains the indemnified party’s prior written consent before entering into any settlement. The indemnified party may also assume control of the defense and settlement of the claim. Publically funded state institutions shall be liable for damages incurred by CMC, but shall not be required to also indemnify CMC to the extent applicable state laws expressly prohibit the institution from indemnifying CMC. 17. DISPUTES; CHOICE OF LAW 17.1 Dispute Resolution. The parties agree that prior to commencing any legal action, all disputes between them shall be submitted for informal resolution to their respective chief operating officers or his/her authorized designee with power to bind his/her respective company. The representatives shall meet within ten (10) days at a mutually agreeable location, but shall not be required to meet for more than two (2) business days; the timeline for performance of each party’s obligations hereunder shall be tolled proportionately until, in accordance with the foregoing, the dispute is resolved or the parties stop meeting without having resolved such dispute. Provided, the foregoing process shall not require a party to delay obtaining any injunctive relief or equitable remedies based on a claim arising from the other party’s breach of intellectual property, confidentiality or non-solicitation obligations. 17.2 Jurisdiction; Venue. The parties agree that no oral or written representation made during the course of any settlement discussions shall constitute a party admission. If the parties are still unable to reconcile their differences in accordance with the foregoing procedures, each party hereby agrees that any controversy or claim, whether based on contract, tort or other legal theory, arising out or relating to the Agreement, shall be maintained exclusively in the jurisdiction and venue of the courts sitting in and for Palm Beach County and the Southern District of Florida. The prevailing party shall be entitled to reimbursement of reasonable attorneys' fees and costs. The parties expressly waive right to trial by jury. The foregoing choice of venue shall not apply to publically funded state institutions to the extent applicable state laws expressly prohibit the institution from litigating outside of its home state. 17.3 Governing Law. The Agreement shall be governed by and construed in accordance with the substantive laws of Florida, without regard to conflict of laws principles. The parties expressly opt out of the application of the UN Convention on the International Sale of Goods. The foregoing choice of law shall not apply to publically funded state institutions to the extent applicable state laws expressly prohibit the institution from litigating under a foreign state law. 18. ASSIGNMENT. CMC hereby agrees it shall not withhold consent to Customer’s assignment of the Agreement, in its entirety, in connection with the sale or acquisition of Customer of all or substantially all of the business assets or voting control, provided Customer and the assignee have fulfilled the following conditions prior to the transfer: (i) Customer shall provide written notice to CMC of the proposed assignment at least thirty (30) days prior to the date of such transaction; (ii) the assignee shall assume all liabilities under the Agreement and be bound to the Agreement; and (iii) Customer and assignee (if assignee is a CMC customer) shall not be in material breach of any agreement with CMC at the time of the transaction. 19. NOTICES. Notices sent to either party shall be effective when delivered in person or transmitted by fax |
machine with printed confirmation page (if delivered after 5:00 p.m. recipient's local time, then effective the next business day), one (1) business day after being sent by overnight courier, or two (2) business days after being sent by first class mail postage prepaid to the address on the first page hereof or such other address as a party may give notice in the same manner set forth in this Section 19. 20. FORCE MAJEURE. Neither party shall be liable for any delay in performing its obligations under the Agreement, if such delay is caused by circumstances beyond the party’s reasonable control, including without limitation, any acts of God, war, terrorism, floods, windstorm, labor disputes, change in laws or regulations, public health risks or epidemics, or delay of essential materials or services. In the event a non-performance or a delay in performance of obligations under the Agreement is due to a force majeure event, the period of performance shall be extended by the delay due to such event and any additional time that the parties may mutually agree is necessary for the remobilization of personnel and resources. However, the party not affected by the force majeure shall have the right to terminate the Agreement without penalty if the party affected by the force majeure event is unable to resume full performance within thirty (30) days of occurrence of the event. 21. INDEPENDENT CONTRACTOR STATUS; COMPLIANCE WITH LAW. Each party and its personnel are independent contractors in relation to the other party with respect to all matters arising under the Agreement. Nothing herein shall be deemed to establish a partnership, joint venture, association or employment relationship between the parties. Each party shall remain responsible, and shall indemnify and hold harmless the other party, for the withholding and payment of all federal, state and local personal income, wage, earnings, occupation, social security, worker's compensation, unemployment, sickness and disability insurance taxes, payroll levies or employee benefit requirements (under ERISA, state law or otherwise) now existing or hereafter enacted and attributable to themselves and their respective personnel. Each party shall comply with all applicable federal and state laws, rules and regulations, in effect or hereafter established, applicable to discrimination and unfair employment practices. Publically funded state institutions shall be liable for damages incurred by CMC, but shall not be required to also indemnify CMC, to the extent applicable state laws expressly prohibit the institution from indemnifying CMC. 22. AUDIT; COOPERATION. CMC reserves the right to verify compliance with this Agreement. In the event of an audit, Customer shall provide information or other materials reasonably requested by CMC. CMC monitors the overall performance and stability of the CMC IaaS. Customer shall not block or interfere with this monitoring. In the event that CMC reasonably believes that a problem with the CMC IaaS may be attributable to Customer’s use or Customer’s Content, then Customer shall cooperate with CMC to identify the source of the problem. 23. EXPORT LAWS. Customer shall comply with all export and import laws and regulations of the United States and such other governments as are applicable. Customer hereby certifies that it will not directly or indirectly, export, re-export, or transship software or related information, or media in violation of United States laws and regulations. 24. U.S. GOVERNMENT LICENSING. With respect to the procurement of any CMC IaaS by or for the U.S. Government, any software provided in connection with the CMC IaaS is commercial computer software. To the extent | applicable, the use, duplication, or disclosure by the Government is subject to restrictions as set forth in the Agreement and are licensed with “Restricted Rights” as provided for in FAR 52.227-14, FAR 52.227-19(c), DFAR 252.227-7013, and other agency data rights provisions, as applicable. Customer is responsible for ensuring that copies are marked with a restricted rights notices and legends. CMC reserves all rights not expressly granted to Customer. 25. PROMOTIONAL MATERIALS. CMC may use Customer’s name and reference the existence of the Agreement and ancillary agreements (without referencing detailed terms and pricing) in marketing materials and presentations. 26. MISCELLANEOUS. This Agreement constitutes the entire and exclusive agreement between the parties with respect to the subject matter hereof and supersede all prior and contemporaneous communications, whether written or oral. The Agreement may be modified or amended only by the mutual written agreement of the parties. In the event of a conflict between the Agreement and any term contained in an Exhibit or an Addendum, the following shall be the order of precedence: the Addendum, the Exhibit, the General Terms. Any provision hereof found by a tribunal of competent jurisdiction to be illegal or unenforceable shall be automatically conformed to the minimum requirements of law and all other provisions shall remain in full force and effect. Waiver of any provision hereof in one instance shall not preclude enforcement thereof on future occasions. Headings are for reference purposes only and have no substantive effect. The provisions which by their nature should apply beyond their terms will remain in force after any termination or expiration of this Agreement. Copies of the Agreement and notices generated in accordance herewith shall be treated as original documents admissible into evidence, unless a document's authenticity is genuinely placed into question. The Agreement may be executed in counterparts, each of which shall be deemed an original and together shall be deemed the entire Agreement. AGREED AND ACCEPTED by the undersigned authorized representatives of the parties as of the date first set forth above. BRIDGEPOINT EDUCATION INC. By: /s/ Mike Stansbury Print: Mike Stansbury Title: Vice President IT Date: Jun 30, 2016 CAMPUS MANAGEMENT CORP. By: /s/ Anders Nessen Print: Anders Nessen Title: CFO Date: Jun 30, 2016 |
COMPONENTS | QUANTITY | UNIT |
COMPUTE | [***] | vCPU |
STORAGE | [***] | Gigabytes (GB) |
MEMORY | [***] | Gigabytes (GB) RAM |
BANDWIDTH | [***] | Mbps Bandwidth (In/Out) |
PUBLIC IPs | [***] | IP address |
VPN ENDPOINTS | [***] | Tunnels |
SOFTWARE NAME | LICENSE QUANTITY | UNIT |
Citrix XenApp | [***] | Concurrent Users / CALs |
Microsoft SQL Server | [***] | Server licenses |
Microsoft Windows Server | [***] | Server licenses |
SETUP FEE | |
TOTAL | $[***] |
MONTHLY FEE | |
July 1, 2016 – December 30, 2016 | $[***] |
January 1, 2017 – June 30, 2021 | $[***] |
Termination Period | Termination Fee |
Year One | [***] percent ([***]%) of the fees due for the first year, plus [***] percent ([***]%) of the Monthly Fees due for years 2 through 5 under this Agreement. |
Years 2-5 | [***] ([***]) percent of the Monthly Fee due for remaining months under this Agreement. |
Renewal Term | [***] percent ([***]%) of the fees due for the renewal year. |
Downgrade Period | Downgrade Fee |
Years 1-5, Renewal Term | [***] ([***]) percent of the Monthly Fee for the affected Service multiplied by the number of remaining months under this Agreement. |
• | Procure the hardware and software required for running the CMC server and database |
• | Set up the operating system and other required software on the servers |
• | Set up CMC Applications |
• | Set up and configure firewall protection |
• | Set up data Back-ups |
• | Designate emergency contacts at CMC and Customer site |
• | Customer will provide CMC’s staff with a list of any User Information that Customer wants stored in the database associated with the Applications. |
• | Customer will implement and use the e-mail format and SMTP settings specified by CMC that Customer must use to ensure that all e-mails and data transmissions are received by CMC. |
• | Customer must configure its computers, network router and firewall to allow data to flow between its system and the CMC Applications in a secure manner. |
• | Customer will be responsible for configuring, monitoring and maintaining its computer and software systems including but not limited to system security, Local Area Network, network equipment, network and connections. |
1. | Software Licenses |
2. | Software Support |
3. | Software Version Functionality |
4. | Hold Harmless and Indemnity |
BRIDGEPOINT EDUCATION INC. | Campus Management |
By: [s1] /s/ Mike Stansbury | By: [s3] /s/ Anders Nessen |
Print: [p1] Mike Stansbury | Print: Anders Nessen |
Title: [t1] Vice President IT | Title: CFO |
Date: [d1] Jun 30, 2016 | Date: Jun 30, 2016 |
1. | The Service Level is [***]%. |
2. | The Monthly Uptime Percentage is calculated for a given calendar month using the following formula: |
Monthly Uptime Percentage = | ||
Total number of minutes in a given calendar month | minus | Total number of minutes of Downtime in a given calendar month |
Total number of minutes in a given calendar month |
1. | CMC acknowledges that service availability and performance are critical. Customer may report service outages or performance issues via CMC’s ServiceDesk. Additionally, CMC will proactively monitor the overall health and availability of the service. Service availability and performance will be measured using user experience transactions “Transactions” conducted at 5 minute intervals (excluding non-business hours defined below) to validate availability (uptime) and performance (response time) for the following user functions: |
a. | CMC and Customer will agree upon the appropriate response times prior to the production environment is built out in the CampusNet data center. |
b. | CMC and Customer acknowledge that neither party currently has this monitoring capability deployed and CMC commits to having this within 6 months after the execution of this Agreement. |
c. | CMC and Customer agree to review the performance metrics on a yearly basis to ensure the appropriate metrics are being tracked and provide an opportunity to update as mutually agreed upon. |
Product | Transaction | Description | Response Time |
CampusNexus CRM | Login to CRM | Login to CRM | TBD |
Load a lead record | Load a lead record after initial logon | TBD | |
Run Default Advisor Filter | Run default advisor filter after initial logon | TBD | |
CampusNexus Student | Login to Student | Login to Student | TBD |
Load Student Master | Load a Student Master after initial logon | TBD | |
View -> Student Accounts -> Ledger Card | View a student’s Ledger Card after initial logon | TBD | |
View -> Academic Records -> Degree Progress Audit | View a Degree Progress Audit after initial logon | TBD | |
Daily - > Academic Records -> Schedule Classes -> Filter Term | Bring up a class schedule in edit mode after initial logon | TBD |
d. | If the performance SLA is not met and persists for longer than 15 minutes, Customer may deem that the event is materially impactful, and Customer can request the event be treated as an outage for the period of SLA non-compliance, and applicable service credits will apply. |
e. | Based on technical changes within the supported Product, CMC will substitute the technology/method used to provide equivalent monitoring as required. |
2. | External Web Response Time |
a. | A list of URLs can be monitored to record average response time and mimic a real end-user experience. |
Product | URL | Description | Response Time |
CampusNexus CRM iServices | https://cloud339-web2.campusnet.net/HEFoundationiService/SISConnectorSvc.Asmx | Web service for the connector | TBD |
TBD | COF iServices | TBD | |
CampusVue Portal | https://cloud339-web1rockies.campusnet.net | Website for Rockies’ CampusVue Portal | TBD |
https://cloud339-web4ashford.campusnet.net | Website for Ashford’s CampusVue Portal | TBD | |
Rockies & Ashford TBD | Student Portal logon as measured from within the local data center | TBD |
a. | Monitoring of CRM websites will be contingent on the adoption of CRM 10.1 or higher |
b. | URLs will be updated with production links once production is available |
c. | Based on technical changes within the supported Product, substitute Web Response URLs (or the technical equivalent) may be monitored to as required. |
1. | Should the Service Level fall below [***]% for a given month, CMC shall provide a Service Credit as noted in the chart below: |
Monthly Uptime Percentage | Service Credit* |
< [***]% | [***]% |
< [***]% | [***]% |
<[***]% | [***]% |
In the unlikely event of an outage that is over [***] hours from the initial time of reporting and not successfully cutover to the secondary disaster recovery site. | [***]% |
2. | A Service Credit is Customer’s sole and exclusive remedy for any violation of this SLA. |
3. | A Service Credit awarded in any calendar month shall not, under any circumstance, exceed Customer’s monthly Subscription Fee. |
1. | In order to make a Claim, Customer must be in compliance with policies for acceptable use of the Service found in the Agreement. |
2. | In order to be eligible to submit a Claim with respect to any Incident, Customer must first have notified CMC support service of the Incident within five (5) business days following an Incident by calling 1-800-483-9106 or by e-mailing CMC Support at support@campusmgmt.com. Customer must provide all reasonable details regarding the Incident including but not limited to, detailed description of the Incident, the duration of the Incident, the number of affected users and the locations of such users and any attempts made by Customer to resolve the Incident. |
3. | Customer must submit the Claim to CMC support service by calling 1-800-483-9106 or e-mail at hostingclaims@campusmgmt.com and providing any additional evidence reasonably required by CMC to support the Claim (as set forth in Section C(2) above), by the end of the month following the month in which the Incident which is the subject of the Claim occurs (for example, Incident occurs on January 15th, Customer provides Notice on January 20th, Customer must provide sufficient evidence to support Claim by February 28th). |
4. | CMC will use all information reasonably available to it to validate Claims and make a good faith judgment on whether the SLA and Service Levels apply to the Claim. |
5. | CMC will use commercially reasonable efforts to process Claims within 30 days. |
1. | Downtime does not include: |
v. | That resulted from actions or inactions by Customer or Customer’s employees, agents, contractors, or vendors, or anyone gaining access to CMC’s network by means of Customer’s passwords or equipment. |
vi. | That were caused by Customer’s use of the Service after CMC advised Customer to modify its use of the Service, if Customer did not modify its use as advised; or |
viii. | Through Customer’s use of beta, trial offers, early access programs and/or demos (as determined by CMC). |
1. | Standard Hours of CampusNet Support |
a. | Normal Business Hours are defined as 8:00 AM Eastern Time to 8:00 PM Eastern Time, Monday through Friday and exclude public holidays and CMC observed holidays. |
2. | Emergency Support |
a. | Emergency support is provided 24x7x365 as defined in the Response Times |
3. | Response Times |
a. | Response times listed below reflect targets and are not contractual obligations. Response time commitments do not promise a complete resolution within the stated time frames. Rather, the time commitment is intended to indicate the estimated target time interval in which the Client will be contacted by CMC after CMC initial triage and confirmation from the Client to verify the severity of the incident. All Severity One issues need to be submitted telephonically as well as through ServiceDsk. |
Severity Level | Description – Normal Business Hours | Initial Response Time | Notification Schedule |
1 – Critical | • Production Emergency o Inoperability of critical business functions with no reasonable workaround available o Significant data corruption with no reasonable workaround available o Significant financial impact with no reasonable workaround available • Reasonable workaround may not be possible. If it is then this should be downgraded to a Severity 2 | 15 Minutes | Every 60 minutes after triage via email or phone until resolution and via ServiceDesk incident management tool. |
Severity Level | Description – Normal Business Hours | Initial Response Time | Notification Schedule |
2 – High | • Implementation Emergency o Impedes (does not allow the product to be installed and deployed) progress during the implementation phase of the project • Go-live o Is not impeding progress during implementation, but is required to be resolved prior to going into production • Any partial business down scenario or significant productivity impact to the customer • Reasonable workaround possible - WITHOUT requiring any significant effort on the customers part | 1 Hours | Updates via ServiceDesk incident management tool. |
3 – Medium | • A reasonable workaround is/may be available - product is functional and does not create bad data • Product is fully functional but the issue may create a negative impression on the quality and/or functional capabilities of the product • No business down scenario but productivity impact such as performance or process | 12 Hours | Updates via ServiceDesk incident management tool. |
4 – Low | • Usability and/or moderate functionality or low impact performance issues • Low impact and low frequency type issues | 24 Hours | Updates via ServiceDesk incident management tool. |
Severity Level | Description – Normal Business Hours | Initial Response Time | Notification Schedule |
“1” Critical | • Production Emergency o Inoperability of critical business functions with no reasonable workaround available o Significant data corruption with no reasonable workaround available o Significant financial impact with no reasonable workaround available Reasonable workaround may not be possible. If it is then this should be downgraded to a Severity 2 | 30 Minutes | Every 60 minutes after triage via email or phone until resolution and via ServiceDesk incident management tool. |
Severity Level | Description – Normal Business Hours | Initial Response Time | Notification Schedule |
“2” High | • Implementation Emergency o Impedes (does not allow the product to be installed and deployed) progress during the implementation phase of the project • Go-live o Is not impeding progress during implementation, but is required to be resolved prior to going into production • Any partial business down scenario or significant productivity impact to the customer Reasonable workaround possible - WITHOUT requiring any significant effort on the customers part | Next business day as defined under Normal Business Hours | Updates via ServiceDesk incident management tool. |
“3” Medium | • A reasonable workaround is/may be available - product is functional and does not create bad data • Product is fully functional but the issue may create a negative impression on the quality and/or functional capabilities of the product No business down scenario but productivity impact such as performance or process | Next business day as defined under Normal Business Hours | Updates via ServiceDesk incident management tool. |
“4” Low | • Usability and/or moderate functionality or low impact performance issues • Low impact and low frequency type issues | Next business day as defined under Normal Business Hours | Updates via ServiceDesk incident management tool. |
1. | “Agreement” means the CampusNet® IaaS Agreement that governs the Service. |
2. | “Claim” means a claim submitted by Customer to CMC that a Service Level under this SLA has not been met and that a Service Credit may be due to Customer. |
3. | “CMC” means Campus Management Corp. |
4. | “Customer” means the person or organization that contracted for Services under the Agreement. |
5. | “Downtime” means a period of time when Customers are unable to access the Service at the furthest point on CMC’s firewall facing the public Internet. |
6. | “Exclusions” means the performance or availability issues that are noted in Section D. |
7. | “Incident” means a set of circumstances resulting in an inability to meet a Service Level. |
8. | “Notice” means that within five (5) business days following an Incident, Customer must notify Customer Support of the Incident. |
9. | “Service” or “Services” means the infrastructure as a service provided to Customer pursuant to the Agreement. |
10. | “Scheduled Downtime” means published maintenance windows or times where CMC notifies Customer of periods of Downtime for scheduled network, hardware, Service maintenance or Service upgrades at least twenty-four (24) hours prior to the commencement of such Downtime, except for unforeseen emergency maintenance that can be carried out during the next published maintenance window. |
11. | “Service Credit” means the amount credited to Customer by CMC for a validated Claim. |
12. | “Service Level” means the percentage of Service availability for a given month that CMC agrees to provide Customer, which is measured by the Monthly Uptime Percentage. |
13. | “Subscription Fee” means the monthly amount that Customer pays CMC for their subscription to the Service. |
1. | CMC agrees to rotate the encryption keys for the data storage used by Customer every two years commencing on the Commencement Date. |
1. | CMC agrees to a technology refresh of the existing perimeter firewalls to more current technology on or before June 30, 2017. |
Licensed Program | CampusCare® Premium 2016 Fees | CampusCare® Premium 2017 Fees |
CampusNexus® Student Portal Web Services | $[***] $[***] $[***] | $[***] $[***] $[***] |
CampusNexus CRM | $[***] | $[***] |
Less Discount | ($[***]) | ($[***]) |
Total Annual CampusCare Renewal Fees | $[***] | $[***] |
Annual TAM Fees* | $[***] | $[***] |
Annual PSSC Fees* | $[***] | $[***] |
CampusInsight Passes: | [***] |
Keys: | [***] |
Professional Services Hours*: | The CampusCare fees above include [***] Professional Services hours to be used during the 2016 calendar year, and [***] Professional Services hours to be used during the 2017 calendar year. |
Payment: | Customer shall pay one payment of $[***] due by November 27, 2015. |
See the following page for terms and conditions. |
BRIDGEPOINT EDUCATION INC. | CAMPUS MANAGEMENT CORP. |
By: /s/ Mike Stansbury ] | By: /s/ Anders Nessen 3] |
Print: Mike Stansbury | Print: Anders Nessen ] |
Title: Vice President IT | Title: CFO |
Date: Jun 30, 2016 | Date: Jun 30, 2016 |
1. | Should Customer execute a full scope Infrastructure as a Service Agreement for its production environment (“IaaS Agreement”) by December 31, 2017, and for so long as it remains hosted with CMC on such IaaS Agreement, Customer shall receive CampusCare Premium support at the CampusCare Fees shown below, commencing 2018. |
Licensed Program | CampusCare® Premium Fees |
CampusNexus® Student Portal Web Services | $[***] $[***] $[***] |
CampusNexus CRM | $[***] |
Less Prepayment Discount** | ($[***]) |
Total Annual CampusCare Renewal Fees | $[***] |
Annual TAM Fees* | $[***] |
Annual PSSC Fees* | $[***] |
2. | The above discount is further contingent on timely payments and no default under the CampusCare Agreement. |
BRIDGEPOINT EDUCATION INC. | CAMPUS MANAGEMENT CORP. |
By: /s/ Mike Stansbury ] | By: /s/ Anders Nessen 3] |
Print: Mike Stansbury | Print: Anders Nessen ] |
Title: Vice President IT | Title: CFO |
Date: Jun 30, 2016 | Date: Jun 30, 2016 |
1. | I have reviewed this Quarterly Report on Form 10-Q of Bridgepoint Education, Inc.; |
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(s) 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(s) 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. |
/s/ ANDREW S. CLARK | ||
Andrew S. Clark President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Bridgepoint Education, Inc.; |
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(s) 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(s) 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. |
/s/ KEVIN ROYAL | ||
Kevin Royal Chief Financial Officer |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"); and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ ANDREW S. CLARK | ||
Andrew S. Clark President and Chief Executive Officer (Principal Executive Officer) |
/s/ KEVIN ROYAL | ||
Kevin Royal Chief Financial Officer (Principal Financial Officer) |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jul. 28, 2016 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | BRIDGEPOINT EDUCATION INC | |
Entity Central Index Key | 0001305323 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 46,310,817 |
Condensed Consolidated Balance Sheets - Parenthetical - $ / shares |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Stockholders' equity: | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 63,868,000 | 63,407,000 |
Common stock, shares outstanding | 46,311,000 | 45,850,000 |
Treasury stock, shares at cost | 17,557,000 | 17,557,000 |
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Revenue | $ 137,970 | $ 147,057 | $ 270,972 | $ 289,575 |
Costs and expenses: | ||||
Instructional costs and services | 66,448 | 71,410 | 136,034 | 146,459 |
Admissions advisory and marketing | 52,531 | 48,495 | 104,208 | 100,842 |
General and administrative | 11,650 | 13,246 | 25,105 | 29,568 |
Legal accrual | 2,292 | 0 | 16,166 | 0 |
Restructuring and impairment charges | 1,692 | 14,418 | 2,401 | 14,418 |
Total costs and expenses | 134,613 | 147,569 | 283,914 | 291,287 |
Operating income (loss) | 3,357 | (512) | (12,942) | (1,712) |
Other income, net | 652 | 345 | 1,335 | 1,034 |
Income (loss) before income taxes | 4,009 | (167) | (11,607) | (678) |
Income tax expense (benefit) | 671 | 483 | (4,833) | 343 |
Net income (loss) | $ 3,338 | $ (650) | $ (6,774) | $ (1,021) |
Earnings (loss) per share: | ||||
Basic (in usd per share) | $ 0.07 | $ (0.01) | $ (0.15) | $ (0.02) |
Diluted (in usd per share) | $ 0.07 | $ (0.01) | $ (0.15) | $ (0.02) |
Weighted average number of common shares outstanding used in computing earnings (loss) per share: | ||||
Basic (in shares) | 46,289 | 45,674 | 46,111 | 45,552 |
Diluted (in shares) | 47,001 | 45,674 | 46,111 | 45,552 |
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 3,338 | $ (650) | $ (6,774) | $ (1,021) |
Other comprehensive income, net of tax: | ||||
Unrealized gains (losses) on investments | 29 | (30) | 194 | 135 |
Comprehensive income (loss) | $ 3,367 | $ (680) | $ (6,580) | $ (886) |
Nature of Business |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | Nature of Business Bridgepoint Education, Inc. (together with its subsidiaries, the “Company”), incorporated in 1999, is a provider of postsecondary education services. Its wholly-owned subsidiaries, Ashford University® and University of the RockiesSM, are regionally accredited academic institutions that offer associate’s, bachelor’s, master’s and doctoral programs. |
Summary of Significant Accounting Policies |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Principles of Consolidation The condensed consolidated financial statements include the accounts of Bridgepoint Education, Inc. and its wholly owned subsidiaries. Intercompany transactions have been eliminated in consolidation. Unaudited Interim Financial Information The condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the Securities and Exchange Commission (the “SEC”) on March 8, 2016. In the opinion of management, the condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, considered necessary to present a fair statement of the Company’s condensed consolidated financial position, results of operations and cash flows as of and for the periods presented. Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP for complete annual financial statements. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications Certain reclassifications have been made to the prior years’ financial statements to conform to the current year presentation. The Company has combined the presentation of accounts payable and accrued liabilities on its condensed consolidated balance sheets. These reclassifications had no effect on previously reported results of operations or cash flows. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) Topic 605, Revenue Recognition. This literature is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The accounting guidance also requires additional disclosure regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 can be adopted using one of two retrospective application methods. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606), Deferral of the Effective Date, which defers the effective date of ASU 2014-09 by one year, to fiscal years beginning after December 15, 2017. The Company continues to evaluate which transition approach to use and the impacts the adoption of ASU 2014-09 and ASU 2015-14 will have on the Company’s consolidated financial statements. In April 2015, the FASB issued ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The update includes cloud computing arrangements, examples of which include: (i) software as a service; (ii) platform as a service; (iii) infrastructure as a service; and (iv) other similar hosting arrangements. The update adds guidance to Subtopic 350-40, Intangibles - Goodwill and Other - Internal-Use Software, that will help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement. The guidance already exists within the FASB section 985-605-55, but it is included in a Subtopic applied by cloud service providers to determine whether an arrangement includes the sale or license of software. The amendments in this update were effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The adoption of ASU 2015-05 did not have a material impact to the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the lease commencement date: (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and ASC Topic 606, Revenue from Contracts with Customers. The new lease guidance simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing. Public companies should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted for all public companies and all nonpublic companies upon issuance. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company continues to evaluate the impact the adoption of ASU 2016-02 will have on the Company’s consolidated financial statements. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). The amendments relate to when another party, along with the entity, is involved in providing a good or service to a customer. ASC Topic 606, Revenue from Contracts with Customers requires an entity to determine whether the nature of its promise is to provide that good or service to the customer (i.e., the entity is a principal) or to arrange for the good or service to be provided to the customer by another party (i.e., the entity is an agent). The amendments in ASU 2016-08 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company continues to evaluate the impact the adoption of ASU 2016-08 will have on the Company’s consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The update includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. While aimed at reducing the cost and complexity of the accounting for share-based payments, the amendments are expected to significantly impact net income, EPS and the statement of cash flows. Implementation and administration may present challenges for companies with significant share-based payment activities. ASU 2016-09 is effective for public companies for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company will adopt this update as of January 1, 2017 using the prospective method. The Company continues to evaluate the impact the adoption of ASU 2016-09 will have on the Company’s consolidated financial statements. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The update clarifies Topic 606 with respect to (i) the identification of performance obligations and (ii) the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606. Public companies should apply the amendments in this update for fiscal years beginning after December 15, 2017, including interim periods within those fiscal year. The Company continues to evaluate the impact the adoption of ASU 2016-10 will have on the Company’s consolidated financial statements. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The update addresses narrow-scope improvements to the guidance on collectibility, noncash consideration and completed contracts at transition. Additionally, the amendments in this update provide a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. The amendments in this update affect the guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements for ASC Topic 606. The Company continues to evaluate the impact the adoption of ASU 2016-12 will have on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The update requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. The update requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. The update is effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 (i.e., January 1, 2020, for calendar year entities). Early application will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company does not believe the adoption of ASU 2016-13 will have a material impact on the Company’s consolidated financial statements. |
Restructuring and Impairment Charges |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Impairment Charges | Restructuring and Impairment Charges The Company previously initiated various restructuring plans to better align its resources with its business strategy. The related restructuring charges are recorded in the restructuring and impairment charges line item on the Company’s condensed consolidated statements of income (loss). For the three and six months ended June 30, 2016, these charges were $1.7 million and $2.4 million, respectively. In July 2015, the Company committed to the implementation of a plan to close Ashford University’s campus in Clinton, Iowa (the “Clinton Campus”) following the 2015-2016 academic year, during the second quarter of 2016. With the closure of the Clinton Campus, ground-based Ashford University students were provided opportunities to continue to pursue their degrees as reflected in their respective student transfer agreements. During the year ended December 31, 2015, the Company originally recorded restructuring charges relating to future cash expenditures for student transfer agreements of approximately $3.3 million. This estimate was based upon several assumptions that are subject to change, including assumptions related to the number of students who elect to continue to pursue their degrees through Ashford University’s online programs. During the three and six months ended June 30, 2016, the Company reassessed this estimate and reduced the restructuring charges by $17,000 and $33,000, respectively, relating to future cash expenditures for student transfer agreement costs. During the three and six months ended June 30, 2016, the Company recognized $1.5 million and $2.2 million, respectively, as restructuring charges relating to severance costs for wages and benefits. As part of its continued efforts to streamline operations, the Company vacated or consolidated properties in Denver and San Diego and reassessed its obligations on non-cancelable leases. During the three and six months ended June 30, 2016, the Company recorded $162,000 and $188,000, respectively, as restructuring charges relating to lease exit and other costs. The following table summarizes the amounts recorded in the restructuring and impairment charges line item on the Company’s condensed consolidated statements of income (loss) for each of the periods presented (in thousands):
The following table summarizes the changes in the Company's restructuring liability by type during the six months ended June 30, 2016 (in thousands):
The restructuring liability amounts are recorded within the (i) accounts payable and accrued liabilities account, (ii) rent liability account and (iii) other long-term liabilities account on the condensed consolidated balance sheets. |
Accounts Receivable |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable | Accounts Receivable, Net Accounts receivable, net, consist of the following (in thousands):
As of each of June 30, 2016 and December 31, 2015, there was an immaterial amount of accounts receivable with a payment due date of greater than one year. The following table presents the changes in the allowance for doubtful accounts for accounts receivable for the periods indicated (in thousands):
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Investments |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments The following tables summarize the fair value information of short-term and long-term investments as of June 30, 2016 and December 31, 2015, respectively (in thousands):
The tables above include mutual funds, which are considered to be Level 1 investments and consist of the investments relating to the Company’s deferred compensation plan. The tables above also include amounts related to investments classified as other investments, such as certificates of deposit, which are carried at amortized cost. The amortized cost of such investments approximated fair value at each balance sheet date. The assumptions used in these fair value estimates are considered other observable inputs and are therefore categorized as Level 2 measurements under the accounting guidance. The Company’s Level 2 investments are valued using readily available pricing sources that utilize market observable inputs, including the current interest rate for similar types of instruments. There were no transfers between level categories for our investments during the periods presented. The Company also holds money market securities within its cash and cash equivalents on the condensed consolidated balance sheets that are classified as Level 1 securities. The following tables summarize the differences between amortized cost and fair value of short-term and long-term investments as of June 30, 2016 and December 31, 2015, respectively (in thousands):
The above table does not include $1.6 million of mutual funds for June 30, 2016, which are recorded as trading securities.
The above table does not include $1.3 million of mutual funds for December 31, 2015, which are recorded as trading securities. The Company records changes in unrealized gains and losses on its investments during the period in the accumulated other comprehensive income line item on the Company’s condensed consolidated balance sheets. For the three months ended June 30, 2016 and 2015, the Company recorded net unrealized gains of $29,000 and net unrealized losses of $30,000, respectively, in accumulated other comprehensive income. There was no tax effect on net unrealized gains for the three months ended June 30, 2016, and net unrealized losses for the three months ended June 30, 2015 was net of $77,000 of tax benefit. For the six months ended June 30, 2016 and 2015, the Company recorded net unrealized gains of $194,000 and $135,000, respectively, in other comprehensive income. There was no tax effect on net unrealized gains for the six months ended June 30, 2016, and net unrealized gains for the six months ended June 30, 2015 was net of tax expense of $61,000. There were no reclassifications out of accumulated other comprehensive income during the six months ended June 30, 2016. During the six months ended June 30, 2015, the Company reclassified $61,000 out of accumulated other comprehensive income, which was recognized in the other income, net, line item on the Company’s condensed consolidated statements of income (loss). |
Student Loan Receivables |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Student Loans Receivable | Student Loans Receivable, Net Student loans receivable, net, consist of the following (in thousands):
Student loans receivable is presented net of any related discount, and the balances approximated fair value at each balance sheet date. The Company estimates the fair value of the student loans receivable by discounting the future cash flows using an interest rate of 4.5%, which approximates the interest rates used in similar arrangements. The assumptions used in this estimate are considered unobservable inputs and are therefore categorized as Level 3 measurements under the accounting guidance. Revenue recognized related to student loans was immaterial during each of the six months ended June 30, 2016 and 2015. The following table presents the changes in the allowance for doubtful accounts for student loans receivable (tuition related) for the periods indicated (in thousands):
For the non-tuition related student loans receivable, the Company monitors the credit quality of the borrower using credit scores, aging history of the loan and delinquency trending. The loan reserve methodology is reviewed on a quarterly basis. Delinquency is the main factor in determining if a loan is impaired. If a loan were determined to be impaired, interest would no longer accrue. For the six months ended June 30, 2016, approximately $0.2 million of student loans were impaired. As of June 30, 2016, approximately $0.8 million of student loans had been placed on non-accrual status. As of June 30, 2016, the repayment status of gross student loans receivable was as follows (in thousands):
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Other Significant Balance Sheet Accounts |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Significant Balance Sheet Accounts | Other Significant Balance Sheet Accounts Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consists of the following (in thousands):
Property and Equipment, Net Property and equipment, net, consists of the following (in thousands):
For the three months ended June 30, 2016 and 2015, depreciation expense was $2.0 million and $3.8 million, respectively. For the six months ended June 30, 2016 and June 30, 2015, depreciation expense was $4.4 million and $7.7 million, respectively. Goodwill and Intangibles, Net Goodwill and intangibles, net, consists of the following (in thousands):
For the three months ended June 30, 2016 and 2015, amortization expense was $1.2 million and $1.5 million, respectively. For the six months ended June 30, 2016 and June 30, 2015, amortization expense was $2.5 million and $2.9 million, respectively. The following table summarizes the estimated remaining amortization expense as of each fiscal year ended below (in thousands):
Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities consists of the following (in thousands):
Deferred Revenue and Student Deposits Deferred revenue and student deposits consists of the following (in thousands):
Other Long-Term Liabilities Other long-term liabilities consists of the following (in thousands):
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Credit Facilities |
6 Months Ended |
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Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Credit Facilities | Credit Facilities The Company has issued letters of credit that are collateralized with cash in the aggregate amount of $6.7 million, which is included as restricted cash as of June 30, 2016. As part of its normal business operations, the Company is required to provide surety bonds in certain states in which the Company does business. The Company has entered into a surety bond facility with an insurance company to provide such bonds when required. As of June 30, 2016, the Company’s total available surety bond facility was $12.0 million and the surety had issued bonds totaling $3.4 million on the Company’s behalf under such facility. |
Lease Obligations |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Obligations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Obligations | Lease Obligations Operating leases The Company leases certain office facilities and office equipment under non-cancelable lease arrangements that expire at various dates through 2023, subject to certain renewal options. Rent expense under non-cancelable operating lease arrangements is accounted for on a straight-line basis and totaled $11.6 million and $27.3 million for the six months ended June 30, 2016 and 2015, respectively. The following table summarizes the future minimum rental payments under non-cancelable operating lease arrangements in effect at June 30, 2016 (in thousands):
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Earnings (Loss) Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per share is calculated by dividing net income (loss) available to common stockholders for the period by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) available to common stockholders for the period by the sum of (i) the weighted average number of common shares outstanding for the period, plus (ii) potentially dilutive securities outstanding during the period, if the effect is dilutive. Potentially dilutive securities for the periods presented include incremental stock options, unvested restricted stock units (“RSUs”) and unvested performance stock units (“PSUs”). The following table sets forth the computation of basic and diluted earnings (loss) per share for the periods indicated (in thousands, except per share data):
During periods in which the Company reported a net loss, basic and diluted loss per share were the same. The following table sets forth the number of stock options, RSUs and PSUs, as applicable, excluded from the computation of diluted earnings (loss) per share for the periods indicated below because their effect was anti-dilutive (in thousands):
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Stock-Based Compensation |
6 Months Ended |
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Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation The Company recorded $2.0 million and $3.4 million of stock-based compensation expense for the three months ended June 30, 2016 and 2015, respectively, and $4.3 million and $5.6 million of stock-based compensation expense for the six months ended June 30, 2016 and 2015, respectively. The related income tax benefit was $0.7 million and $1.3 million for the three months ended June 30, 2016 and 2015, respectively, and $1.6 million and $2.1 million for the six months ended June 30, 2016 and 2015, respectively. During the six months ended June 30, 2016, the Company granted 0.4 million RSUs at a grant date fair value of $10.52 and 0.4 million RSUs vested. During the six months ended June 30, 2015, the Company granted 0.9 million RSUs at a grant date fair value of $9.44 and 0.3 million RSUs vested. During the six months ended June 30, 2016, the Company did not grant any performance-based or market-based PSUs and no performance-based or market-based PSUs vested. During the six months ended June 30, 2015, the Company granted 0.5 million performance-based PSUs at a weighted average grant date fair value of $9.86 and no performance-based PSUs vested. During the six months ended June 30, 2015, the Company granted 0.2 million market-based PSUs at a weighted average grant date fair value of $4.04 and no market-based PSUs vested. During the six months ended June 30, 2016, the Company granted 0.4 million stock options at a grant date fair value of $4.99 and 0.2 million stock options were exercised. During the six months ended June 30, 2015, the Company granted 0.5 million stock options at a grant date fair value of $4.57 and 0.1 million stock options were exercised. As of June 30, 2016, there was unrecognized compensation cost of $12.5 million related to unvested stock options, RSUs and PSUs. |
Income Taxes |
6 Months Ended |
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Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company recognizes deferred tax assets if realization of such assets is more likely than not. In order to make this determination, the Company evaluates a number of factors including the ability to generate future taxable income from reversing taxable temporary differences, forecasts of financial and taxable income or loss, and the ability to carryback certain operating losses to refund taxes paid in prior years. The cumulative loss incurred over the three-year period ended June 30, 2016 constituted significant negative objective evidence against the Company’s ability to realize a benefit from its federal deferred tax assets. Such objective evidence limited the ability of the Company to consider in its evaluation certain subjective evidence such as the Company’s projections for future growth. On the basis of its evaluation, the Company determined that its deferred tax assets were not more likely than not to be realized and that a full valuation allowance against its deferred tax assets should continue to be maintained as of June 30, 2016. The Company determines the interim income tax provision by applying the estimated effective income tax rate expected to be applicable for the full fiscal year to income before income taxes for the period. In determining the full year estimate, the Company does not include the estimated impact of unusual and/or infrequent items, which may cause significant variations in the customary relationship between income tax expense and income before income taxes. The Company’s current estimated annual effective income tax rate that has been applied to normal, recurring operations for the six months ended June 30, 2016 was 22.5%. The Company’s actual effective income tax rate was 41.6% for the six months ended June 30, 2016, which included $6.1 million of a discrete tax benefit associated with a legal accrual. The actual effective income tax rate for the six months ended June 30, 2016 differed from the Company’s estimated annual effective income tax rate due to a legal accrual and an additional interest accrual on unrecognized tax benefits for the six months ended June 30, 2016. At each of June 30, 2016 and December 31, 2015, the Company had $20.6 million of gross unrecognized tax benefits, of which $13.4 million would impact the effective income tax rate if recognized. The Company’s continuing practice is to recognize interest and penalties related to uncertain tax positions in the income tax expense line item on the Company’s condensed consolidated statements of income (loss). Accrued interest and penalties related to uncertain tax positions was $2.3 million and $2.0 million as of June 30, 2016 and December 31, 2015, respectively. It is reasonably possible that the total amount of the unrecognized tax benefit will change during the next 12 months. However, the Company does not expect any potential change to have a material effect on the Company’s results of operations or financial position in the next year. The tax years 2008 through 2015 are open to examination by major taxing jurisdictions to which the Company is subject. The Company is currently under audit by the California Franchise Tax Board for the years 2008 through 2012. In connection with the California Franchise Tax Board audit, the Company filed a refund claim for years 2008 through 2010 for approximately $12.6 million in 2014. However, the Company will not recognize benefit in its financial statements related to the refund claim until the final resolution of the audit examination. The Company is also subject to various other state audits. With respect to all open audits, the Company does not expect any significant adjustments to amounts already reserved. |
Regulatory |
6 Months Ended |
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Jun. 30, 2016 | |
Regulatory [Abstract] | |
Regulatory | Regulatory The Company is subject to extensive regulation by federal and state governmental agencies and accrediting bodies. In particular, the Higher Education Act of 1965, as amended (the “Higher Education Act”), and the regulations promulgated thereunder by the U.S. Department of Education (the “Department”) subject the Company to significant regulatory scrutiny on the basis of numerous standards that institutions of higher education must satisfy in order to participate in the various federal student financial assistance programs under Title IV of the Higher Education Act. Ashford University is regionally accredited by WASC Senior College and University Commission (“WSCUC”) and University of the Rockies is regionally accredited by the Higher Learning Commission (“HLC”). Department of Education Program Reviews of Ashford University On July 31, 2014, the Company and Ashford University received notification from the Department that it intended to conduct a program review of Ashford University’s administration of federal student financial aid programs (“Title IV programs”) in which the university participates. The review commenced on August 25, 2014, and covers federal financial aid years 2012-2013 and 2013-2014, as well as compliance with the Jeanne Clery Disclosure of Campus Security Policy and Campus Crime Statistics Act (the “Clery Act”), the Drug-Free Schools and Communities Act and related regulations. Ashford University was provided with the Department’s program review report and has responded to such initial report. Following consideration of the university’s response, the Department will issue a Final Program Review Determination letter. On July 7, 2016, Ashford University was notified by the Department that an off-site program review had been scheduled to assess Ashford’s administration of the Title IV programs in which it participates. The program review commenced on July 25, 2016 and initially will cover students identified in the 2009-2012 calendar year data previously provided by Ashford to the Department in response to a request for information received from the Multi-Regional and Foreign School Participation Division of the Department’s Office of Federal Student Aid (the “FSA”) on December 10, 2015, but the program review may be expanded if appropriate. WSCUC Accreditation of Ashford University In July 2013, WSCUC granted Initial Accreditation to Ashford University for five years, until July 15, 2018. In December 2013, Ashford University effected its transition to WSCUC accreditation and designated its San Diego, California facilities as its main campus and its Clinton, Iowa campus as an additional location. As part of a continuing monitoring process, Ashford University hosted a visiting team from WSCUC in a special visit in April 2015. In July 2015, Ashford University received an Action Letter from WSCUC outlining the findings arising out of its visiting team’s special visit. The Action Letter stated that the WSCUC visiting team found substantial evidence that Ashford University continues to make sustained progress in all six areas recommended by WSCUC in 2013. As part of its institutional review process, WSCUC will conduct a comprehensive review of Ashford University scheduled to commence with an off-site review in fall 2017, followed by an on-site review in spring 2018. Licensure by California BPPE To be eligible to participate in Title IV programs, an institution must be legally authorized to offer its educational programs by the states in which it is physically located. In connection with its transition to WSCUC accreditation, Ashford University designated its San Diego, California facilities as its main campus for Title IV purposes and submitted an Application for Approval to Operate an Accredited Institution to the State of California, Department of Consumer Affairs, Bureau for Private Postsecondary Education (“BPPE”) on September 10, 2013. In April 2014, the application was granted, and Ashford University was approved by BPPE to operate in California until July 15, 2018. As a result, the university is subject to laws and regulations applicable to private, post-secondary educational institutions located in California, including reporting requirements related to graduation, employment and licensing data, certain changes of ownership and control, faculty and programs, and student refund policies. Ashford also remains subject to other state and federal student employment data reporting and disclosure requirements. Negotiated Rulemaking and Other Executive Action On June 8, 2015, the Department held a press conference and released a document entitled “Fact Sheet: Protecting Students from Abusive Career Colleges” in which the Department announced processes that would be established to assist students who may have been the victims of fraud in gaining relief under the “defense to repayment” provisions of the William D. Ford Federal Direct Loan Program (the “Direct Loan Program”) regulations. Rarely used in the past, the defense to repayment provisions allow a student to assert as a defense against repayment of federal direct loans any commission of fraud or other violation of applicable state law by the school related to such loans or the educational services paid for. On June 16, 2016, the Department published proposed regulations regarding borrower defense to repayment and related matters. The regulations establish a 45-day notice and comment period, and the Department plans to publish its final regulations by November 1, 2016 with an effective date of July 1, 2017. The Department proposes to amend the regulations governing the Direct Loan Program to, among other things, establish a new federal standard and process for determining whether a borrower has a defense to repayment of a student loan based on an act or omission of a school, and amend the Student Assistance General Provisions by revising the financial responsibility standards and adding disclosure requirements for schools. On July 9, 2015, the Department published a Notice of Proposed Rulemaking proposing to amend the regulations governing the Direct Loan Program. On October 30, 2015, the regulations were amended to create a new income-contingent repayment plan in accordance with President Obama’s initiative to allow more Direct Loan Program borrowers to cap their loan payments at 10% of their monthly income. Changes were also made to the Federal Family Education Loan Program and Direct Loan Program regulations to streamline and enhance existing processes and provide additional support to struggling borrowers. The amended regulations also expand the circumstances in which an institution may challenge or appeal a draft or final cohort default rate based on the institution’s participation rate index. On February 8, 2016, the Department announced the creation of a Student Aid Enforcement Unit to respond more quickly and efficiently to allegations of illegal actions by higher education institutions. In April 2016, the Department drafted a set of standards clarifying the information accreditors must submit, including the format in which information should be submitted, when notifying federal officials about actions taken against schools they accredit. The Department accepted public comments on the proposed standards through June 6, 2016, and plans to publish a final rule by November 1, 2016 to be effective in July 2017. On April 22, 2016, the Department issued a Dear Colleague Letter to federally recognized accrediting agencies regarding the flexibility those agencies have in differentiating their reviews of institutions and programs. The Department’s letter encourages accrediting agencies to use that flexibility to focus monitoring and resources on student achievement and problematic institutions or programs. The Department also encourages regional accreditors, such as WSCUC and HLC, to consider adding the use of quantitative measures, in addition to the qualitative measures of student achievement already utilized, in reviewing institutions’ processes for evaluating and validating student learning, and to consider licensing and placement rates in its accreditation of institutions that offer applied, professional and occupational programs. On July 22, 2016, the Department issued proposed regulations to ensure that institutions offering distance education are legally authorized and monitored by states, as required by the Higher Education Act. The proposed regulations clarify state authorization requirements for institutions to participate in the Department’s Title IV programs by, among other things, (i) requiring institutions offering distance education or correspondence courses to be authorized by each state in which they enroll students, if such authorization is required by the state, (ii) requiring institutions to document the state process for resolving student complaints regarding distance education programs and (iii) requiring public and individualized disclosures to enrolled and prospective students in distance education programs, including disclosures regarding adverse actions taken against the institution, the institution’s refund policies and whether each of the institution’s programs meet applicable state licensure or certification requirements. The proposed regulations recognize authorization through participation in a state authorization reciprocity agreement, as long as the agreement does not prevent a state from enforcing its own consumer laws. The proposed regulations were published in the Federal Register on July 25, 2016, and the public comment period will end August 24, 2016. The Department expects to publish a final regulation before the end of 2016. Substantial misrepresentation The Higher Education Act prohibits an institution participating in Title IV programs from engaging in substantial misrepresentation regarding the nature of its educational programs, its financial charges or the employability of its graduates. Under the Department’s rules, a “misrepresentation” is any false, erroneous or misleading statement an institution, one of its representatives or any ineligible institution, organization or person with whom the institution has an agreement to provide educational programs or marketing, advertising, recruiting, or admissions services makes directly or indirectly to a student, prospective student or any member of the public, or to an accrediting agency, a state agency or the Department. The Department’s rules define a “substantial misrepresentation” as any misrepresentation on which the person to whom it was made could reasonably be expected to rely, or has reasonably relied, to that person’s detriment. On December 10, 2015, Ashford University received a request for information from the Multi-Regional and Foreign School Participation Division of the FSA for (i) advertising and marketing materials provided to prospective students regarding the transferability of certain credit, (ii) documents produced in response to the August 10, 2015 Civil Investigative Demand from the Consumer Financial Protection Bureau (the “CFPB”) related to the CFPB’s investigation to determine whether for-profit post-secondary education companies or other unnamed persons have engaged in or are engaging in unlawful acts or practices related to the advertising, marketing or origination of private student loans, (iii) certain documents produced in response to subpoenas and interrogatories issued by the Attorney General of the State of California (the “CA Attorney General”) and (iv) records created between 2009 and 2012 related to the disbursement of certain Title IV funds. The FSA is investigating representations made by Ashford University to potential and enrolled students, and has asked the Company and Ashford University to assist in its assessment of Ashford University’s compliance with the prohibition on substantial misrepresentations. The Company and Ashford University intend to provide the FSA with their full cooperation with a view toward demonstrating the compliant nature of their practices. As discussed above, the Department is currently conducting an off-site program review to assess Ashford’s administration of the Title IV programs in which it participates, which initially will cover students identified in the 2009-2012 calendar year data provided by Ashford to the Department in response to the FSA’s December 10, 2015 request for information. If the Department determines that one of the Company’s institutions has engaged in substantial misrepresentation, the Department may (i) revoke the institution’s program participation agreement, if the institution is provisionally certified, (ii) impose limitations on the institution’s participation in Title IV programs, if the institution is provisionally certified, (iii) deny participation applications made on behalf of the institution or (iv) initiate proceedings to fine the institution or to limit, suspend or terminate the participation of the institution in Title IV programs. Because Ashford University is provisionally certified, if the Department determined that Ashford University has engaged in substantial misrepresentation, the Department may take the actions set forth in clauses (i) and (ii) above in addition to any other actions taken by the Department. Administrative capability The Department specifies extensive criteria by which an institution must establish that it has the requisite administrative capability to participate in Title IV programs. To meet the administrative capability standards, an institution must, among other things, (i) administer Title IV program in accordance with all applicable statutes and regulations, and all related special arrangements and agreements, (ii) have an adequate number of qualified personnel to administer Title IV programs, (iii) administer Title IV programs with adequate checks and balances in its system of internal control over financial reporting, (iv) establish and maintain required records, (v) establish, publish and apply acceptable standards for measuring the satisfactory academic progress of its students, (vi) have adequate procedures in place for properly awarding, disbursing and safeguarding Title IV program funds, (vii) refer to the Department’s Office of Inspector General (the “OIG”) any credible information indicating that an applicant for Title IV program funds or any employee, third-party servicer or other agent of the institution may have engaged in fraud or other illegal conduct involving Title IV programs, (viii) provide adequate financial aid counseling to its students who apply for Title IV program funds, (ix) timely submit all required reports and financial statements, (x) not be, and not have any principal or affiliate who is, debarred or suspended from programs and activities involving federal financial and nonfinancial assistance and benefits or engaging in activity that is cause for such debarment or suspension, (xi) not otherwise appear to lack the ability to administer Title IV programs competently. Ashford University and University of the Rockies were notified by the Department that it did not believe the institutions fully responded to the disclosures of data required by the Gainful Employment regulations, that this was an indication of a serious lack of administrative capability, and that as a result the Department would not make any decisions regarding the addition of any new programs or additional locations until the reporting requirements were met. The Department informed the Company that failure to fully comply in all Gainful Employment data reporting requirements could result in the referral of the errant institution to the Department’s Administrative Actions and Appeals Service Group for consideration of an administrative action against that institution, including a fine, the limitation, suspension or termination of institutional eligibility to participate in Title IV programs, or revocation of the institution’s program participation agreement (if provisional). The Company worked with the Department to address their concerns with respect to the reporting of the Company’s institutions under the Gainful Employment regulations. The Department has since approved new programs for Ashford University, and the Company does not anticipate any actions against its institutions related to this notification. GI Bill Benefits On May 20, 2016, the Company received a letter from the Iowa Department of Education (the “Iowa DOE”) indicating that, as a result of the planned closure of the Clinton Campus, the Iowa State Approving Agency (the “ISAA”) would no longer continue to approve Ashford’s programs for GI Bill benefits after June 30, 2016, and recommending Ashford seek approval through the State Approving Agency of jurisdiction for any location that meets the definition of a “main campus” or “branch campus”. Ashford University began the process of applying for approval through the State Approving Agency in California (“CSAAVE”), while also working with representatives from the U.S. Department of Veterans Affairs (the “VA”), the ISAA and CSAAVE in order to prevent any disruption of educational benefits to Ashford’s veteran students. On June 20, 2016, the Company received a second letter from the Iowa DOE indicating that the Iowa DOE had issued a stay of the ISAA’s withdrawal of approval of Ashford’s programs for GI Bill benefits effective immediately until the earlier of (i) 90 days from June 20, 2016 or (ii) the date on which CSAAVE completed its review and issued a decision regarding the approval of Ashford in California. Ashford received communication from CSAAVE indicating that additional information and documentation would be required before Ashford’s application could be considered for CSAAVE approval. Ashford subsequently withdrew the CSAAVE application and is currently working with the VA, the Iowa DOE and the ISAA to obtain continued approval of Ashford’s programs for GI Bill benefits and to prevent any disruption of educational benefits to Ashford’s veteran students. |
Commitments and Contingencies |
6 Months Ended |
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Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation From time to time, the Company is a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. When the Company becomes aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. In accordance with authoritative guidance, the Company records loss contingencies in its financial statements only for matters in which losses are probable and can be reasonably estimated. Where a range of loss can be reasonably estimated with no best estimate in the range, the Company records the minimum estimated liability. If the loss is not probable or the amount of the loss cannot be reasonably estimated, the Company discloses the nature of the specific claim if the likelihood of a potential loss is reasonably possible and the amount involved is material. The Company continuously assesses the potential liability related to the Company’s pending litigation and revises its estimates when additional information becomes available. Below is a list of material legal proceedings to which the Company or its subsidiaries is a party. Compliance Audit by the Department’s Office of the Inspector General In January 2011, Ashford University received a final audit report from the OIG regarding the compliance audit commenced in May 2008 and covering the period July 1, 2006 through June 30, 2007. The audit covered Ashford University’s administration of Title IV program funds, including compliance with regulations governing institutional and student eligibility, awards and disbursements of Title IV program funds, verification of awards and returns of unearned funds during that period, and compensation of financial aid and recruiting personnel during the period May 10, 2005 through June 30, 2009. The final audit report contained audit findings, in each case for the period July 1, 2006 through June 30, 2007, which are applicable to award year 2006-2007. Each finding was accompanied by one or more recommendations to the FSA. Ashford University provided the FSA a detailed response to the OIG’s final audit report in February 2011. In June 2011, in connection with two of the six findings, the FSA requested that Ashford University conduct a file review of the return to Title IV fund calculations for all Title IV recipients who withdrew from distance education programs during the 2006-2007 award year. The institution cooperated with the request and supplied the information within the time frame required. If the FSA were to determine to assess a monetary liability or commence other administrative action, Ashford University would have an opportunity to contest the assessment or proposed action through administrative proceedings, with the right to seek review of any final administrative action in the federal courts. The outcome of this audit is uncertain at this point because of the many questions of fact and law that may arise. At present, the Company cannot reasonably estimate a range of loss for this action based on the information available to the Company. Accordingly, the Company has not accrued any liability associated with this matter. Iowa Attorney General Civil Investigation of Ashford University In February 2011, Ashford University received from the Attorney General of the State of Iowa (the “Iowa Attorney General”) a Civil Investigative Demand and Notice of Intent to Proceed (the “Iowa CID”) relating to the Iowa Attorney General’s investigation of whether certain of the university’s business practices comply with Iowa consumer laws. Pursuant to the Iowa CID, the Iowa Attorney General requested documents and detailed information for the time period January 1, 2008 to present. On numerous occasions, representatives from the Company and Ashford University met with the Iowa Attorney General to discuss the status of the investigation and the Iowa Attorney General’s allegations against the Company that had been communicated to the Company in June 2013. As a result of these meetings, on May 15, 2014, the Iowa Attorney General, the Company and Ashford University entered into an Assurance of Voluntary Compliance (the “AVC”) in full resolution of the Iowa CID and the Iowa Attorney General’s allegations. The AVC, in which the Company and Ashford University do not admit any liability, contains several components including injunctive relief, nonmonetary remedies and a payment to the Iowa Attorney General to be used for restitution to Iowa consumers, costs and fees. The AVC also provides for the appointment of a settlement administrator for a period of three years to review the Company’s and Ashford University’s compliance with the terms of the AVC. The Company had originally accrued $9.0 million in 2013 related to this matter, which represented its best estimate of the total restitution, cost of non-monetary remedies and future legal costs. The remaining accrual is $0.6 million as of June 30, 2016. New York Attorney General Investigation of Bridgepoint Education, Inc. In May 2011, the Company received from the Attorney General of the State of New York (the “NY Attorney General”) a subpoena relating to the NY Attorney General’s investigation of whether the Company and its academic institutions have complied with certain New York state consumer protection, securities and finance laws. Pursuant to the subpoena, the NY Attorney General has requested from the Company and its academic institutions documents and detailed information for the time period March 17, 2005 to present. The Company is cooperating with the investigation and cannot predict the eventual scope, duration or outcome of the investigation at this time. North Carolina Attorney General Investigation of Ashford University In September 2011, Ashford University received from the Attorney General of the State of North Carolina (the “NC Attorney General”) an Investigative Demand relating to the NC Attorney General’s investigation of whether the university’s business practices complied with North Carolina consumer protection laws. Pursuant to the Investigative Demand, the NC Attorney General has requested from Ashford University documents and detailed information for the time period January 1, 2008 to present. Ashford University is cooperating with the investigation and cannot predict the eventual scope, duration or outcome of the investigation at this time. California Attorney General Investigation of For-Profit Educational Institutions and Consumer Financial Protection Bureau Subpoena of Bridgepoint Education, Inc. and Ashford University In January 2013, the Company received from the CA Attorney General an Investigative Subpoena relating to the CA Attorney General’s investigation of for-profit educational institutions. Pursuant to the Investigative Subpoena, the CA Attorney General requested documents and detailed information for the time period March 1, 2009 to present. On July 24, 2013, the CA Attorney General filed a petition to enforce certain categories of the Investigative Subpoena related to recorded calls and electronic marketing data. On September 25, 2013, the Company reached an agreement with the CA Attorney General to produce certain categories of the documents requested in the petition and stipulated to continue the hearing on the petition to enforce from October 3, 2013 to January 9, 2014. On January 13, 2014 and June 19, 2014, the Company received additional Investigative Subpoenas from the CA Attorney General each requesting additional documents and information for the time period March 1, 2009 through the current date. On August 10, 2015, the Company and Ashford University received from the CFPB Civil Investigative Demands related to the CFPB’s investigation to determine whether for-profit post-secondary-education companies or other unnamed persons have engaged in or are engaging in unlawful acts or practices related to the advertising, marketing or origination of private student loans. The Company and Ashford University provided documents and other information to the CFPB and the CFPB attended several meetings with representatives from the Company and the CA Attorney General’s office to discuss the status of both investigations, additional information requests, and specific concerns related to possible unfair business practices in connection with the Company’s recruitment of students and debt collection practices. All of the parties met again in the spring of 2016 to discuss the status of the investigations and explore a potential joint resolution involving injunctive relief, other non-monetary remedies and a payment to the CA Attorney General and the CFPB. The Company currently estimates that a reasonable range of loss for this matter is between $16.2 million and $30.0 million. The Company has recorded an expense of $16.2 million related to this matter, which represents its current best estimate of the cost of resolution of this matter. Massachusetts Attorney General Investigation of Bridgepoint Education, Inc. and Ashford University On July 21, 2014, the Company and Ashford University received from the Attorney General of the State of Massachusetts (the “MA Attorney General”) a Civil Investigative Demand (the “MA CID”) relating to the MA Attorney General’s investigation of for-profit educational institutions and whether the university’s business practices complied with Massachusetts consumer protection laws. Pursuant to the MA CID, the MA Attorney General has requested from the Company and Ashford University documents and information for the time period January 1, 2006 to present. The Company is cooperating with the investigation and cannot predict the eventual scope, duration or outcome of the investigation at this time. Securities & Exchange Commission Subpoena of Bridgepoint Education, Inc. On July 22, 2014, the Company received from the SEC a subpoena relating to certain of the Company’s accounting practices, including revenue recognition, receivables and other matters relating to the Company’s previously disclosed intention to restate its financial statements for fiscal year ended December 31, 2013 and revise its financial statements for the years ended December 31, 2011 and 2012, and the prior revision of the Company’s financial statements for the fiscal year ended December 31, 2012. Pursuant to the subpoena, the SEC has requested from the Company documents and detailed information for the time period January 1, 2009 to present. On May 18, 2016, the Company received a second subpoena from the SEC seeking additional information from the Company, including information with respect to the accrual disclosed by the Company in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 with respect to the potential joint resolution of investigations by the CA Attorney General and the CFPB (the “CA AG/CFPB Investigations”), the Company’s scholarship and institutional loan programs and any other extensions of credit made by the Company to students, and student enrollment and retention at the Company’s academic institutions. Pursuant to the subpoena, the SEC has requested from the Company documents and detailed information for, in the case of the CA AG/CFPB Investigations, the periods at issue in such investigations, in the case of the Company’s scholarship and institutional loan programs and related matters, the period from January 1, 2011 to the present, and for all other matters, the period from January 1, 2014 to the present. The Company is cooperating with the SEC and cannot predict the eventual scope, duration or outcome of the investigation at this time. As a result, the Company cannot reasonably estimate a range of loss for this action and accordingly has not accrued any liability associated with this action. Department of Justice Civil Investigative Demand On July 7, 2016, the Company received from the U.S. Department of Justice (the “DOJ”) a Civil Investigative Demand (the “DOJ CID”) related to the DOJ's investigation concerning allegations that the Company may have misstated Title IV refund revenue or overstated revenue associated with private secondary loan programs and thereby misrepresented its compliance with the 90/10 rule of the Higher Education Act. Pursuant to the DOJ CID, the DOJ has requested from the Company documents and information for fiscal years 2011-2014. The Company is evaluating the DOJ CID and intends to fully cooperate with the DOJ on this matter. Securities Class Actions Consolidated Securities Class Action On July 13, 2012, a securities class action complaint was filed in the U.S. District Court for the Southern District of California by Donald K. Franke naming the Company, Andrew Clark, Daniel Devine and Jane McAuliffe as defendants for allegedly making false and materially misleading statements regarding the Company’s business and financial results, specifically the concealment of accreditation problems at Ashford University. The complaint asserted a putative class period stemming from May 3, 2011 to July 6, 2012. A substantially similar complaint was also filed in the same court by Luke Sacharczyk on July 17, 2012 making similar allegations against the Company, Andrew Clark and Daniel Devine. The Sacharczyk complaint asserted a putative class period stemming from May 3, 2011 to July 12, 2012. On July 26, 2012, another purported securities class action complaint was filed in the same court by David Stein against the same defendants based upon the same general set of allegations and class period. The complaints alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder and sought unspecified monetary relief, interest and attorneys’ fees. On October 22, 2012, the Sacharczyk and Stein actions were consolidated with the Franke action and the Court appointed the City of Atlanta General Employees’ Pension Fund and the Teamsters Local 677 Health Services & Insurance Plan as lead plaintiffs. A consolidated complaint was filed on December 21, 2012 and the Company filed a motion to dismiss on February 19, 2013. On September 13, 2013, the Court granted the motion to dismiss with leave to amend for alleged misrepresentations relating to Ashford University’s quality of education, the WSCUC accreditation process and the Company’s financial forecasts. The Court denied the motion to dismiss for alleged misrepresentations concerning Ashford University’s persistence rates. Following the conclusion of discovery, the parties entered into an agreement to settle the litigation for $15.5 million, which was recorded by the Company during the third quarter of 2015 and funded by the Company’s insurance carriers in the first quarter of 2016. The settlement was granted preliminary approval by the Court on December 14, 2015, proceeded through the shareholder claims administration process, and was granted final approval by the Court on April 25, 2016. Zamir v. Bridgepoint Education, Inc., et al. On February 24, 2015, a securities class action complaint was filed in the U.S. District Court for the Southern District of California by Nelda Zamir naming the Company, Andrew Clark and Daniel Devine as defendants. The complaint asserts violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, claiming that the defendants made false and materially misleading statements and failed to disclose material adverse facts regarding the Company’s business, operations and prospects, specifically regarding the Company’s improper application of revenue recognition methodology to assess collectability of funds owed by students. The complaint asserts a putative class period stemming from August 7, 2012 to May 30, 2014 and seeks unspecified monetary relief, interest and attorneys’ fees. On July 15, 2015, the Court granted plaintiff’s motion for appointment as lead plaintiff and for appointment of lead counsel. On September 18, 2015, the plaintiff filed a substantially similar amended complaint that asserts a putative class period stemming from March 12, 2013 to May 30, 2014. The amended complaint also names Patrick Hackett, Adarsh Sarma, Warburg Pincus & Co., Warburg Pincus LLC, Warburg Pincus Partners LLC, and Warburg Pincus Private Equity VIII, L.P. as additional defendants. On November 24, 2015, all defendants filed motions to dismiss. On July 25, 2016, the Court granted the motions to dismiss and granted plaintiff leave to file an amended complaint within 30 days. The outcome of this legal proceeding is uncertain at this point because of the many questions of fact and law that may arise. Based on information available to the Company at present, it cannot reasonably estimate a range of loss for this action. Accordingly, the Company has not accrued any liability associated with this action. Shareholder Derivative Actions In re Bridgepoint, Inc. Shareholder Derivative Action On July 24, 2012, a shareholder derivative complaint was filed in California Superior Court by Alonzo Martinez. In the complaint, the plaintiff asserts a derivative claim on the Company’s behalf against certain of its current and former officers and directors. The complaint is captioned Martinez v. Clark, et al. and generally alleges that the individual defendants breached their fiduciary duties of candor, good faith and loyalty, wasted corporate assets and were unjustly enriched. The lawsuit seeks unspecified monetary relief and disgorgement on behalf of the Company, as well as other equitable relief and attorneys’ fees. On September 28, 2012, a substantially similar shareholder derivative complaint was filed in California Superior Court by David Adolph-Laroche. In the complaint, the plaintiff asserts a derivative claim on the Company’s behalf against certain of its current and former officers and directors. The complaint is captioned Adolph-Laroche v. Clark, et al. and generally alleges that the individual defendants breached their fiduciary duties of candor, good faith and loyalty, wasted corporate assets and were unjustly enriched. On October 11, 2012, the Adolph-Laroche action was consolidated with the Martinez action and the case is now captioned In re Bridgepoint, Inc. Shareholder Derivative Action. A consolidated complaint was filed on December 18, 2012 and the defendants filed a motion to stay the case while the underlying securities class action is pending. The motion was granted by the Court on April 11, 2013. A status conference was held on October 10, 2013, during which the Court ordered the stay continued for the duration of discovery in the securities class action, but permitted the plaintiff to receive copies of any discovery responses served in the underlying securities class action. Cannon v. Clark, et al. On November 1, 2013, a shareholder derivative complaint was filed in the U.S. District Court for the Southern District of California by James Cannon. In the complaint, the plaintiff asserts a derivative claim on the Company’s behalf against certain of its current officers and directors. The complaint is captioned Cannon v. Clark, et al. and is substantially similar to the previously filed California State Court derivative action now captioned In re Bridgepoint, Inc. Shareholder Derivative Action. In the complaint, plaintiff generally alleges that the individual defendants breached their fiduciary duties of candor, good faith and loyalty, wasted corporate assets and were unjustly enriched. The lawsuit seeks unspecified monetary relief and disgorgement on behalf of the Company, as well as other equitable relief and attorneys’ fees. Pursuant to a stipulation among the parties, on January 6, 2014, the Court ordered the case stayed during discovery in the underlying securities class action, but permitted the plaintiff to receive copies of any discovery responses served in the underlying securities class action. Di Giovanni v. Clark, et al., and Craig-Johnston v. Clark, et al. On December 9, 2013, two nearly identical shareholder derivative complaints were filed in the United States District Court for the Southern District of California. The complaints assert derivative claims on the Company’s behalf against the members of the Company’s board of directors as well as against Warburg Pincus & Co., Warburg Pincus LLC, Warburg Pincus Partners LLC, and Warburg Pincus Private Equity VIII, L.P. The two complaints are captioned Di Giovanni v. Clark, et al. and Craig-Johnston v. Clark, et al. The complaints generally allege that all of the defendants breached their fiduciary duties and were unjustly enriched and that the individual defendants wasted corporate assets in connection with the tender offer commenced by the Company on November 13, 2013. The lawsuits seek unspecified monetary relief and disgorgement, as well as other equitable relief and attorneys’ fees. On February 28, 2014, the defendants filed motions to dismiss, which were granted by the Court on October 17, 2014. The plaintiffs filed a notice of appeal on December 8, 2014 and the case is currently under appeal with the United States Court of Appeals for the Ninth Circuit. Klein v. Clark, et al. On January 9, 2014, a shareholder derivative complaint was filed in the Superior Court of the State of California in San Diego. The complaint asserts derivative claims on the Company’s behalf against the members of the Company’s board of directors as well as against Warburg Pincus & Co., Warburg Pincus LLC, Warburg Pincus Partners LLC, and Warburg Pincus Private Equity VIII, L.P. The complaint is captioned Klein v. Clark, et al. and generally alleges that all of the defendants breached their fiduciary duties and were unjustly enriched and that the individual defendants wasted corporate assets in connection with the tender offer commenced by the Company on November 13, 2013. The lawsuit seeks unspecified monetary relief and disgorgement, as well as other equitable relief and attorneys’ fees. On March 21, 2014, the Court granted the parties’ stipulation to stay the case until the motions to dismiss in the related federal derivative action were decided. On November 14, 2014, the Court dismissed the case but retained jurisdiction in the event the dismissal in the federal case is reversed on appeal by the United States Court of Appeals for the Ninth Circuit. Reardon v. Clark, et al. On March 18, 2015, a shareholder derivative complaint was filed in the Superior Court of the State of California in San Diego. The complaint asserts derivative claims on the Company’s behalf against certain of its current and former officers and directors. The complaint is captioned Reardon v. Clark, et al. and generally alleges that the individual defendants breached their fiduciary duties of candor, good faith and loyalty, wasted corporate assets and were unjustly enriched. The lawsuit seeks unspecified monetary relief and disgorgement, as well as other equitable relief and attorneys’ fees. Pursuant to a stipulation among the parties, on May 27, 2015, the Court ordered the case stayed during discovery in the underlying Zamir securities class action, but permitted the plaintiff to receive copies of any discovery conducted in the underlying Zamir securities class action. Qui Tam Complaints In December 2012, the Company received notice that the DOJ had declined to intervene in a qui tam complaint filed in the U.S. District Court for the Southern District of California by Ryan Ferguson and Mark T. Pacheco under the federal False Claims Act on March 10, 2011 and unsealed on December 26, 2012. The complaint was captioned United States of America, ex rel., Ryan Ferguson and Mark T. Pacheco v. Bridgepoint Education, Inc., Ashford University and University of the Rockies. The qui tam complaint alleged, among other things, that since March 10, 2005, the Company caused its institutions, Ashford University and University of the Rockies, to violate the federal False Claims Act by falsely certifying to the Department that the institutions were in compliance with various regulations governing Title IV programs, including those that require compliance with federal rules regarding the payment of incentive compensation to enrollment personnel, student disclosures, and misrepresentation in connection with the institutions’ participation in Title IV programs. The complaint sought significant damages, penalties and other relief. On April 30, 2013, the relators petitioned the Court for voluntary dismissal of the complaint without prejudice. The DOJ filed a notice stipulating to the dismissal and the Court granted the dismissal on June 12, 2013. In January 2013, the Company received notice that the DOJ had declined to intervene in a qui tam complaint filed in the U.S. District Court for the Southern District of California by James Carter and Roger Lengyel under the federal False Claims Act on July 2, 2010 and unsealed on January 2, 2013. The complaint is captioned United States of America, ex rel., James Carter and Roger Lengyel v. Bridgepoint Education, Inc., Ashford University. The qui tam complaint alleged, among other things, that since March 2005, the Company and Ashford University had violated the federal False Claims Act by falsely certifying to the Department that Ashford University was in compliance with federal rules regarding the payment of incentive compensation to enrollment personnel in connection with the institution’s participation in Title IV programs. Pursuant to a stipulation between the parties, the relators filed an amended complaint on May 10, 2013. The amended complaint was substantially similar to the original complaint and sought significant damages, penalties and other relief. In March 2015, the Company filed a motion to dismiss the case pursuant to the public disclosure bar, which was granted without leave to amend by the Court on August 17, 2015. The relators filed a notice of appeal on September 15, 2015 and the case was under appeal with the United States Court of Appeals for the Ninth Circuit. During the pendency of the appeal, the parties agreed to settle the case for an immaterial amount and the appeal was subsequently dismissed on July 22, 2016. |
Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of Bridgepoint Education, Inc. and its wholly owned subsidiaries. Intercompany transactions have been eliminated in consolidation. |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the Securities and Exchange Commission (the “SEC”) on March 8, 2016. In the opinion of management, the condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, considered necessary to present a fair statement of the Company’s condensed consolidated financial position, results of operations and cash flows as of and for the periods presented. Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP for complete annual financial statements. |
Use of Estimates | Use of Estimates The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Reclassifications | Reclassifications Certain reclassifications have been made to the prior years’ financial statements to conform to the current year presentation. The Company has combined the presentation of accounts payable and accrued liabilities on its condensed consolidated balance sheets. These reclassifications had no effect on previously reported results of operations or cash flows. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) Topic 605, Revenue Recognition. This literature is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The accounting guidance also requires additional disclosure regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 can be adopted using one of two retrospective application methods. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606), Deferral of the Effective Date, which defers the effective date of ASU 2014-09 by one year, to fiscal years beginning after December 15, 2017. The Company continues to evaluate which transition approach to use and the impacts the adoption of ASU 2014-09 and ASU 2015-14 will have on the Company’s consolidated financial statements. In April 2015, the FASB issued ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The update includes cloud computing arrangements, examples of which include: (i) software as a service; (ii) platform as a service; (iii) infrastructure as a service; and (iv) other similar hosting arrangements. The update adds guidance to Subtopic 350-40, Intangibles - Goodwill and Other - Internal-Use Software, that will help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement. The guidance already exists within the FASB section 985-605-55, but it is included in a Subtopic applied by cloud service providers to determine whether an arrangement includes the sale or license of software. The amendments in this update were effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The adoption of ASU 2015-05 did not have a material impact to the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the lease commencement date: (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and ASC Topic 606, Revenue from Contracts with Customers. The new lease guidance simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing. Public companies should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted for all public companies and all nonpublic companies upon issuance. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company continues to evaluate the impact the adoption of ASU 2016-02 will have on the Company’s consolidated financial statements. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). The amendments relate to when another party, along with the entity, is involved in providing a good or service to a customer. ASC Topic 606, Revenue from Contracts with Customers requires an entity to determine whether the nature of its promise is to provide that good or service to the customer (i.e., the entity is a principal) or to arrange for the good or service to be provided to the customer by another party (i.e., the entity is an agent). The amendments in ASU 2016-08 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company continues to evaluate the impact the adoption of ASU 2016-08 will have on the Company’s consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The update includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. While aimed at reducing the cost and complexity of the accounting for share-based payments, the amendments are expected to significantly impact net income, EPS and the statement of cash flows. Implementation and administration may present challenges for companies with significant share-based payment activities. ASU 2016-09 is effective for public companies for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company will adopt this update as of January 1, 2017 using the prospective method. The Company continues to evaluate the impact the adoption of ASU 2016-09 will have on the Company’s consolidated financial statements. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The update clarifies Topic 606 with respect to (i) the identification of performance obligations and (ii) the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606. Public companies should apply the amendments in this update for fiscal years beginning after December 15, 2017, including interim periods within those fiscal year. The Company continues to evaluate the impact the adoption of ASU 2016-10 will have on the Company’s consolidated financial statements. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The update addresses narrow-scope improvements to the guidance on collectibility, noncash consideration and completed contracts at transition. Additionally, the amendments in this update provide a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. The amendments in this update affect the guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements for ASC Topic 606. The Company continues to evaluate the impact the adoption of ASU 2016-12 will have on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The update requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. The update requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. The update is effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 (i.e., January 1, 2020, for calendar year entities). Early application will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company does not believe the adoption of ASU 2016-13 will have a material impact on the Company’s consolidated financial statements. |
Restructuring and Impairment Charges Restructuring and Impairment Charges (Tables) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Restructuring Charges | The following table summarizes the amounts recorded in the restructuring and impairment charges line item on the Company’s condensed consolidated statements of income (loss) for each of the periods presented (in thousands):
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Schedule of Restructuring Reserve by Type of Cost | The following table summarizes the changes in the Company's restructuring liability by type during the six months ended June 30, 2016 (in thousands):
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Accounts Receivable (Tables) - Allowance for Doubtful Accounts, Current |
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Schedule of Accounts Receivable, Net | Accounts receivable, net, consist of the following (in thousands):
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Changes in Allowance for Doubtful Accounts, Accounts Receivable | The following table presents the changes in the allowance for doubtful accounts for accounts receivable for the periods indicated (in thousands):
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Investments (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Information of Short and Long-term Investments | The following tables summarize the fair value information of short-term and long-term investments as of June 30, 2016 and December 31, 2015, respectively (in thousands):
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Schedule of Difference Between Amortized Cost and Fair Value | The following tables summarize the differences between amortized cost and fair value of short-term and long-term investments as of June 30, 2016 and December 31, 2015, respectively (in thousands):
The above table does not include $1.6 million of mutual funds for June 30, 2016, which are recorded as trading securities.
The above table does not include $1.3 million of mutual funds for December 31, 2015, which are recorded as trading securities. |
Student Loans Receivable (Tables) |
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Delinquency Status of Gross Student Loans Receivable | As of June 30, 2016, the repayment status of gross student loans receivable was as follows (in thousands):
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Schedule of Student Loans Receivable, Net | Student loans receivable, net, consist of the following (in thousands):
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Changes in Allowance for Doubtful Accounts, Student Loans Receivable | The following table presents the changes in the allowance for doubtful accounts for student loans receivable (tuition related) for the periods indicated (in thousands):
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Other Significant Balance Sheet Accounts (Tables) |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consists of the following (in thousands):
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Property and Equipment, Net | Property and equipment, net, consists of the following (in thousands):
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Goodwill and Intangibles, Net | Goodwill and intangibles, net, consists of the following (in thousands):
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Intangibles, Estimated Remaining Amortization Expense | The following table summarizes the estimated remaining amortization expense as of each fiscal year ended below (in thousands):
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Accrued Liabilities | Accounts payable and accrued liabilities consists of the following (in thousands):
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Deferred Revenue and Student Deposits | Deferred revenue and student deposits consists of the following (in thousands):
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Other Long-Term Liabilities | Other long-term liabilities consists of the following (in thousands):
|
Lease Obligations (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Obligations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments for Operating Leases | The following table summarizes the future minimum rental payments under non-cancelable operating lease arrangements in effect at June 30, 2016 (in thousands):
|
Earnings (Loss) Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Basic and Diluted Earnings Per Common Share | The following table sets forth the computation of basic and diluted earnings (loss) per share for the periods indicated (in thousands, except per share data):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Antidilutive Securities | The following table sets forth the number of stock options, RSUs and PSUs, as applicable, excluded from the computation of diluted earnings (loss) per share for the periods indicated below because their effect was anti-dilutive (in thousands):
|
Accounts Receivable (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Receivables [Abstract] | ||
Accounts receivable | $ 45,330 | $ 34,205 |
Less allowance for doubtful accounts | (15,533) | (10,114) |
Accounts receivable, net | $ 29,797 | $ 24,091 |
Accounts Receivable (Change in Allowance) (Details) - Allowance for Doubtful Accounts, Current - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Beginning Balance | $ (10,114) | $ (27,567) |
Charged to Expense | 15,868 | 15,418 |
Deductions(1) | (10,449) | (16,216) |
Ending Balance | $ (15,533) | $ (26,769) |
Student Loans Receivable (Change in Allowance) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Provision for Loan and Lease Losses | $ 200 | ||
Allowance for Notes Receivable | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Beginning Balance | $ (953) | $ (1,495) | |
Charged to Expense | 109 | (54) | |
Deductions(1) | 60 | 0 | |
Ending Balance | $ (1,002) | $ (1,002) | $ (1,441) |
Student Loans Receivable (Delinquency Status) (Details) $ in Thousands |
Jun. 30, 2016
USD ($)
|
---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Loans placed on non-accrual status | $ 800 |
Allowance for Notes Receivable | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
120 days and less | 9,579 |
From 121 - 270 days | 788 |
Greater than 270 days | 963 |
Total gross student loans receivable | 11,330 |
Less: Amounts reserved or impaired | (1,766) |
Less: Discount on student loans receivable | (2,020) |
Total student loans receivable, net | $ 7,544 |
Other Significant Balance Sheet Accounts (Prepaid Expenses and Other Current Assets) (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Prepaid Expense and Other Assets, Current [Abstract] | ||
Prepaid expenses | $ 6,844 | $ 7,005 |
Prepaid licenses | 5,592 | 5,221 |
Income Taxes Receivable, Current | 25,089 | 20,169 |
Prepaid insurance | 1,875 | 1,619 |
Interest receivable | 341 | 299 |
Insurance recoverable | 1,109 | 16,659 |
Other current assets | 583 | 1,220 |
Total prepaid expenses and other current assets | $ 41,433 | $ 52,192 |
Other Significant Balance Sheet Accounts (Property and Equipment, Net) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
|
Property, Plant and Equipment [Line Items] | |||||
Depreciation | $ 2,000 | $ 3,800 | $ 4,400 | $ 7,700 | |
Amortization of Intangible Assets | 1,200 | $ 1,500 | 2,500 | $ 2,900 | |
Property and equipment, gross | 77,529 | 77,529 | $ 87,117 | ||
Less accumulated depreciation | (60,100) | (60,100) | (65,375) | ||
Total property and equipment, net | 17,429 | 17,429 | 21,742 | ||
Furniture and office equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 54,467 | 54,467 | 63,354 | ||
Software | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 11,990 | 11,990 | 12,605 | ||
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 11,050 | 11,050 | 11,136 | ||
Vehicles | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 22 | $ 22 | $ 22 |
Other Significant Balance Sheet Accounts (Accrued Liabilities) (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Balance Sheet Related Disclosures [Abstract] | ||
Accounts Payable | $ 135 | $ 4,762 |
Accrued salaries and wages | 10,894 | 10,476 |
Accrued bonus | 3,577 | 4,295 |
Accrued vacation | 9,895 | 9,628 |
Accrued litigation and fees | 12,528 | 720 |
Accrued expenses | 23,091 | 17,243 |
Rent liability | 11,336 | 13,406 |
Accrued insurance liability | 3,187 | 18,666 |
Accounts Payable and Accrued Liabilities, Current | $ 74,643 | $ 79,196 |
Other Significant Balance Sheet Accounts (Deferred Revenue) (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Deferred Revenue [Abstract] | ||
Deferred revenue | $ 29,948 | $ 23,311 |
Student deposits | 51,268 | 65,445 |
Total deferred revenue and student deposits | $ 81,216 | $ 88,756 |
Other Significant Balance Sheet Accounts (Other Long-term Liabilities) (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Balance Sheet Related Disclosures [Abstract] | ||
Uncertain tax positions | $ 7,860 | $ 7,870 |
Legal settlements | 100 | 178 |
Restructuring Reserve, Noncurrent | 1,636 | 0 |
Other long-term liabilities | 5,205 | 6,998 |
Total other long-term liabilities | $ 14,801 | $ 15,046 |
Credit Facilities (Details) $ in Millions |
Jun. 30, 2016
USD ($)
|
---|---|
Line of Credit Facility [Line Items] | |
Revolving line of credit, letters of credit outstanding | $ 6.7 |
Surety Bond Facility [Abstract] | |
Surety bond facility, available amount | 12.0 |
Surety bond facility, issued amount | $ 3.4 |
Lease Obligations (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Lease Obligations [Abstract] | ||
Operating Leases, Rent Expense, Net | $ 11,600 | $ 27,300 |
2016 | 18,341 | |
2017 | 36,208 | |
2018 | 31,445 | |
2019 | 20,876 | |
2020 | 9,546 | |
Thereafter | 7,148 | |
Total minimum payments | $ 123,564 |
Earnings (Loss) Per Share (Basic and Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Numerator: | ||||
Net income (loss) | $ 3,338 | $ (650) | $ (6,774) | $ (1,021) |
Denominator: | ||||
Weighted average number of common shares outstanding (in shares) | 46,289 | 45,674 | 46,111 | 45,552 |
Effect of dilutive options and restricted stock units (in shares) | 712 | 0 | 0 | 0 |
Diluted weighted average number of common shares outstanding (in shares) | 47,001 | 45,674 | 46,111 | 45,552 |
Earnings (loss) per share: | ||||
Basic (in usd per share) | $ 0.07 | $ (0.01) | $ (0.15) | $ (0.02) |
Diluted (in usd per share) | $ 0.07 | $ (0.01) | $ (0.15) | $ (0.02) |
Earnings (Loss) Per Share (Anti-dilutive Securities) (Details) - shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of dilutive common shares outstanding | 4,477 | 5,246 | 4,573 | 5,110 |
RSUs and PSUs | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of dilutive common shares outstanding | 406 | 605 | 989 | 631 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2016 |
Dec. 31, 2015 |
|
Valuation Allowance [Line Items] | |||
Estimated annual effective tax rate | 22.50% | ||
Effective tax rate | 41.60% | ||
Unrecognized Tax Benefits | $ 20.6 | $ 20.6 | $ 20.6 |
Gross unrecognized tax benefits that would impact effective tax rate if recognized | 13.4 | 13.4 | 13.4 |
Income tax examination refund | 12.6 | ||
Accrued interest and penalties related to uncertain tax positions | 2.3 | $ 2.3 | $ 2.0 |
Deferred Tax Asset [Member] | |||
Valuation Allowance [Line Items] | |||
Discrete tax benefit | $ 6.1 |
Commitments and Contingencies (Details) - USD ($) $ in Millions |
Jun. 30, 2016 |
Dec. 31, 2013 |
---|---|---|
IOWA | ||
Loss Contingencies [Line Items] | ||
Estimated litigation liability | $ 0.6 | $ 9.0 |
CALIFORNIA | ||
Loss Contingencies [Line Items] | ||
Estimated litigation liability | 16.2 | |
Insurance Settlement [Member] | ||
Loss Contingencies [Line Items] | ||
Estimated litigation liability | 15.5 | |
Minimum [Member] | CALIFORNIA | ||
Loss Contingencies [Line Items] | ||
Loss Contingency, Range of Possible Loss, Minimum | 16.2 | |
Maximum [Member] | CALIFORNIA | ||
Loss Contingencies [Line Items] | ||
Loss Contingency, Range of Possible Loss, Minimum | $ 30.0 |
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