|
Maryland
|
|
52-1975978
|
||
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer Identification Number)
|
||
|
|
|
|
|
2303 Dulles Station Boulevard
|
Herndon,
|
VA
|
|
20171
|
(Address of principal executive offices)
|
|
(Zip Code)
|
COMMON STOCK, $0.01 PAR VALUE
|
STRA
|
Nasdaq Global Select Market
|
(Title of each class)
|
(Trading symbol(s))
|
(Name of each exchange on which registered)
|
Large accelerated filer
|
☒
|
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
|
Smaller reporting company
|
☐
|
Emerging growth company
|
☐
|
|
|
|
|
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
the pace of growth of student enrollment;
|
•
|
our continued compliance with Title IV of the Higher Education Act of 1965, as amended (the “Higher Education Act” or “HEA”), and the regulations thereunder, as well as other federal laws and regulations, regional accreditation standards, and state regulatory requirements;
|
•
|
rulemaking by the U.S. Department of Education (“Department of Education” or the “Department”) and increased focus by the U.S. Congress on for-profit education institutions;
|
•
|
competitive factors;
|
•
|
risks associated with the opening of new campuses;
|
•
|
risks associated with the offering of new educational programs and adapting to other changes;
|
•
|
risks associated with the acquisition of existing educational institutions;
|
•
|
risks related to the timing of regulatory approvals;
|
•
|
our ability to continue to implement our growth strategy;
|
•
|
the amount of the costs, fees, expenses, and charges related to our merger with Capella;
|
•
|
the risk that our merger with Capella may not advance the combined company’s business strategy and growth strategy;
|
•
|
the risk that the combined company may experience difficulty integrating Strayer’s and Capella’s employees or operations;
|
•
|
the potential diversion of our management’s attention resulting from our merger with Capella;
|
•
|
risks associated with the ability of our students to finance their education in a timely manner; and
|
•
|
general economic and market conditions.
|
Item 1.
|
Business
|
•
|
increasing demand by employers for certain types of professional and skilled workers;
|
•
|
growth in the number of high school graduates from 2.8 million in 1999-2000 to an estimated 3.7 million in 2019-2020, according to the National Center for Education Statistics;
|
•
|
the significant and measurable income premium and enhanced employment prospects attributable to post-secondary education;
|
•
|
a number of initiatives underway to reduce the cost of a post-secondary education; and
|
•
|
continued demand from working adults for programs offered by regionally accredited institutions.
|
•
|
Focus on Innovation. The Company values innovation and actively invests in the educational experience to improve student success and employment outcomes, while also addressing national challenges including the affordability of higher education and meeting the skill requirements of employers. Capella University’s competency-based learning infrastructure and direct assessment capabilities, and Strayer University’s video, simulation and content capabilities are examples of this drive to transform education delivery and learning by working adults. As a combined Company, both Universities can leverage these transformational capabilities.
|
•
|
Consistent operating history. Strayer University has been in continuous operation since 1892 and Capella University since 1991, and both have demonstrated an ability to operate consistently and grow profitably. The combined Company has continued this track record, with a broader, more diversified product offering, a balanced revenue mix, cost and revenue synergies, and greater scale.
|
•
|
Practical and diversified programs. We offer programs in practical areas of adult education. In order to keep pace with a changing knowledge-based economy, we constantly strive to meet the evolving needs of our students, learners and their current and prospective employers by regularly refining, updating, and adding to our portfolio of educational programs. The Company has a diversified program portfolio that includes Strayer University’s programs in business, including the Jack Welch Management Institute, accounting, economics and information technology, and Capella University’s competency-based programs in healthcare and counseling, as well as a robust doctoral portfolio. This program diversity will help the Company better meet the educational needs of students in the modern economy.
|
•
|
Focus on adults pursuing career-relevant degree and non-degree programs. We focus on serving adults who are pursuing undergraduate and graduate degrees as well as non-degree certificates and training programs that will help them advance their careers and employment opportunities. We provide high quality student support services such as advising, writing, tutoring and research support; administrative services; library services; financial aid counseling; and career counseling. Increasingly, we are leveraging data and analytics to create personalized experiences for our students and learners, which is reflected in our early cohort persistence improvements and continued high student satisfaction.
|
•
|
Flexible program offerings. We offer flexible programs that allow students to attend classes and complete coursework during the day, in the evening, and on weekends throughout the calendar year at our on-ground campuses, and at the student or learner’s convenience through our comprehensive online program offerings.
|
•
|
Attractive and convenient campus locations. Strayer University’s campuses are located in growing metropolitan areas, mostly in the Mid-Atlantic and Southern regions where there are large populations of adults with demographic characteristics similar to those of our typical students. The campuses are attractive and modern, offering conducive learning environments in convenient locations. In 2019, Capella University opened its first campus center, which provides local students of its online classes with a physical location to study and to meet with enrollment counselors and academic advisors. This physical campus center is unique in comparison to most online education programs and positions Capella University to support its online learners more effectively. Capella University opened its first co-located campus center with Strayer University in Augusta, Georgia and plans to open more campus centers in 2020 and beyond.
|
•
|
Established brand names and alumni support. Strayer University and Capella University are established brand names in post-secondary adult education. Our students and graduates are effective ambassadors of both brands through their work at companies across corporate America and, along with our growing alumni networks, foster greater brand awareness and additional referral opportunities for new students and learners.
|
•
|
Improve student success — Our success depends on the success of our students. The more we focus on helping our students succeed, the more likely it is that we will succeed. In order to improve student success, we must continue to hire outstanding faculty, produce high quality academic content, and employ cutting edge technology that enables us to deploy faculty and content in increasingly efficient and effective ways.
|
•
|
Enhance student experience — Our students are predominately working adults who are furthering their education in order to advance their careers and professional lives. Our students are busy with work and family responsibilities that
|
•
|
Address affordability — Recognizing that affordability is a significant factor in a prospective student’s decision to further his or her education, the Company has implemented various initiatives to make its programs more affordable. For example, through the Graduation Fund, introduced at Strayer University in late 2013, qualifying students enrolled in a bachelor’s degree program are eligible to receive one free course for every three courses successfully completed towards a bachelor’s degree. The free courses earned are redeemable in one’s final academic year. Additionally, Capella University’s FlexPath direct assessment model provides opportunity to drive affordability through the potential for lower tuition costs, reduced time to completion, and increased flexibility. Strayer University and Capella University have also instituted various other tuition reductions and scholarships. We continue to monitor and assess the impact of our affordability initiatives and explore other ways to make our offerings as affordable as possible. We have also begun to deploy more aggressive technology innovations, including artificial intelligence and automation, which enable us to lower our operating costs and thus improve our ability to support lower tuition. Our focus on affordability is further supported by the corporate-level efficiencies achieved through the Merger.
|
•
|
Establish new platforms for growth — We are constantly looking for new ways to leverage our existing resources and capabilities to grow. The Merger provided an opportunity to leverage best-in-class processes and practices to accelerate growth, and we believe we can expand benefits to our students and students of other institutions through opportunistic business combinations. In 2018, we launched SEI Ventures, which is a seed-stage venture fund that supports pioneering education tech start-ups focused on transformational technologies that improve student success. In addition to providing capital, the venture fund offers portfolio companies the opportunity to pilot technologies at both of our Universities and our coding boot camps, subject to compliance with applicable laws. We also continue to develop new programs and concentrations.
|
•
|
Build a high performing culture — In order to be a leading provider of educational services, we must have talented and motivated faculty and employees who are passionate about serving students. We strive to attract the best talent and then develop and retain them. We want to be known as an employer of choice and be a place where one can build a long-term career.
|
Graduate Programs
|
|
Undergraduate Programs
|
Master of Business Administration (M.B.A.) Degree
|
|
Bachelor of Science (B.S.) Degree
|
Jack Welch Executive Master of Business Administration (M.B.A.) Degree
|
|
Accounting
|
|
Criminal Justice
|
|
Master of Education (M.Ed.) Degree
|
|
Information Technology
|
Master of Public Administration (M.P.A.) Degree
|
|
Bachelor of Business Administration (B.B.A.) Degree
|
Master of Science (M.S.) Degree
|
|
Accounting
|
Accounting
|
|
Acquisition and Contract Management
|
Health Services Administration
|
|
Entrepreneurship
|
Human Resource Management
|
|
Finance
|
Information Assurance
|
|
Health Services Administration
|
Information Systems
|
|
Hospitality and Tourism Management
|
Management
|
|
Human Resource Management
|
|
|
Management
|
|
|
Marketing
|
|
|
Project Management
|
|
|
Retail Management
|
|
|
Social Media Marketing
|
|
|
Joe Gibbs Performance Management
|
|
|
Bachelor of Applied Science in Management (B.A.S.M.) Degree
|
|
|
Associate in Arts (A.A.) Degree
|
|
|
Accounting
|
|
|
Acquisitions and Contract Management
|
|
|
Business Administration
|
|
|
Information Systems
|
|
|
Information Technology
|
|
|
Marketing
|
|
|
Diploma Program
|
|
|
Acquisition and Contract Management
|
Program
|
|
Number of
students
|
|
Percentage of
total students
|
||
Bachelor’s
|
|
45,080
|
|
|
78
|
%
|
Master’s
|
|
10,694
|
|
|
19
|
%
|
Associate
|
|
1,608
|
|
|
3
|
%
|
Total Degree
|
|
57,382
|
|
|
100
|
%
|
Diploma
|
|
18
|
|
|
*
|
|
Graduate Certificate
|
|
67
|
|
|
*
|
|
Undeclared
|
|
71
|
|
|
*
|
|
Total Non-Degree
|
|
156
|
|
|
*
|
|
Total Students
|
|
57,538
|
|
|
100
|
%
|
*
|
Represents less than 1%.
|
Public Service Leadership
|
|
|
Doctor of Philosophy in Criminal Justice
|
|
Master of Science in Emergency Management
|
Doctor of Philosophy in Emergency Management
|
|
Master of Public Administration (MPA)
|
Doctor of Emergency Management (DEM)
|
|
Master of Social Work (MSW)
|
Doctor of Public Administration (DPA)
|
|
Master of Social Work - Advanced Standing
|
Doctor of Social Work (DSW)
|
|
Bachelor of Science (BS) in Criminal Justice
|
Master of Science in Criminal Justice
|
|
|
Nursing and Health Sciences
|
|
|
Doctor of Health Administration (DHA)
|
|
Master of Science in Nursing (MSN)
|
General Health Administration
|
|
Care Coordination (FlexPath option available)
|
Health Care Leadership
|
|
Nursing Education (FlexPath option available)
|
Health Care Quality & Analytics
|
|
Nursing Informatics (FlexPath option available)
|
Health Policy and Advocacy
|
|
Nursing Leadership and Administration (FlexPath option available)
|
Doctor of Public Health (DrPH)
|
|
RN-to-MSN Care Coordination (FlexPath option available)
|
Doctor of Nursing Practice (DNP)
|
|
RN-to-MSN Nursing Education (FlexPath option available)
|
Master of Health Administration (MHA)
|
|
RN-to-MSN Nursing Informatics (FlexPath option available)
|
General Health Administration (FlexPath option available)
|
|
RN-to-MSN Nursing Leadership and Administration (FlexPath option available)
|
Health Care Informatics (FlexPath option available)
|
|
|
Health Care Leadership (FlexPath option available)
|
|
Bachelor of Science in Health Care Administration
|
Health Care Operations
|
|
Health Information Management (FlexPath option available)
|
Master of Public Health (MPH)
|
|
Leadership (FlexPath option available)
|
Bachelor of Science (BS) in Public Health
|
|
|
Bachelor of Science in Nursing (BSN) (FlexPath option available)
|
|
|
Psychology
|
|
|
Doctor of Philosophy in Psychology
|
|
Master of Science in Psychology
|
Behavior Analysis
|
|
Applied Behavior Analysis
|
Developmental Psychology
|
|
Child and Adolescent Development (FlexPath option available)
|
Educational Psychology
|
|
Educational Psychology (FlexPath option available)
|
General Psychology
|
|
General Psychology (FlexPath option available)
|
Industrial/Organizational Psychology
|
|
Industrial/Organizational Psychology (FlexPath option available)
|
Doctor of Psychology (PsyD)
|
|
Sport Psychology (FlexPath option available)
|
Clinical Psychology
|
|
Bachelor of Science in Psychology
|
Doctor of Psychology (PsyD) in School Psychology
|
|
General Psychology (FlexPath option available)
|
Master of Science in Clinical Psychology
|
|
Bachelor of Science in Psychology Pre-Counseling
|
Applied Research
|
|
|
Clinical Counseling
|
|
|
Forensic
|
|
|
Business and Technology
|
|
|
Doctor of Business Administration (DBA)
|
|
Doctor of Philosophy in Information Technology
|
Accounting
|
|
General Information Technology
|
Business Intelligence
|
|
Information Assurance and Cybersecurity
|
Global Operations and Supply Chain Management
|
|
Information Technology Education
|
Human Resource Management
|
|
Project Management
|
Information Technology Management
|
|
Master of Science in Human Resources Management
|
Leadership
|
|
General Human Resource Management
|
Project Management
|
|
Master of Science in Analytics
|
Strategy and Innovation
|
|
Master of Science in Information Assurance and Cybersecurity
|
Doctor of Philosophy in Business Management
|
|
Digital Forensics
|
Accounting
|
|
Health Care Security
|
General Business Management
|
Network Defense
|
|
Human Resource Management
|
|
Master of Science in Information Technology
|
Information Technology Management
|
|
Analytics
|
Leadership
|
|
Cybersecurity
|
Project Management
|
|
Enterprise Networks and Cloud Computing
|
Strategy and Innovation
|
|
General Information Technology
|
Master of Business Administration (MBA)
|
|
Project Management
|
Self-Designed (FlexPath option available)
|
|
Bachelor of Science in Business
|
Health Care Management (FlexPath option available)
|
|
Accounting (FlexPath option available)
|
Human Resource Management (FlexPath option available)
|
|
Business Administration (FlexPath option available)
|
Project Management (FlexPath option available)
|
|
Finance
|
Doctor of Information Technology (DIT)
|
|
Health Care Management (FlexPath option available)
|
General Information Technology
|
|
Human Resource Management (FlexPath option available)
|
Information Assurance and Cybersecurity
|
|
Management and Leadership (FlexPath option available)
|
Information Technology Education
|
|
Marketing
|
Project Management
|
|
Project Management (FlexPath option available)
|
|
|
Bachelor of Science (BS) in Information Technology
|
|
|
General Information Technology (FlexPath option available)
|
|
|
Health Information Management
|
|
|
Information Assurance and Cybersecurity (FlexPath option available)
|
|
|
Project Management (FlexPath option available)
|
|
|
Software Development
|
Counseling and Human Services
|
|
|
Doctor of Human Services (DHS)
|
|
Master of Science in Human Services
|
Advanced Program Evaluation and Data Analytics
|
|
Leadership and Organizational Management
|
Leadership and Organizational Management
|
|
Program Evaluation and Data Analytics
|
Doctor of Philosophy in Human Services
|
|
Social and Community Services
|
Multidisciplinary Human Services
|
|
Master of Science in Marriage and Family Counseling/Therapy
|
Social and Community Services
|
|
General Marriage and Family Counseling/Therapy
|
Doctor of Philosophy in Advanced Studies in Human Behavior
|
|
Master of Science in Clinical Mental Health Counseling
|
General Advanced Studies in Human Behavior
|
|
Master of Science in School Counseling
|
Doctor of Philosophy in Counselor Education and Supervision
|
|
|
Master of Science in Addiction Studies
|
|
|
Education
|
|
|
Doctor of Education (EdD)
|
|
Doctor of Philosophy in Education (PhD)
|
Adult Education
|
|
Curriculum and Instruction
|
Curriculum and Instruction
|
|
Instructional Design for Online Learning
|
Educational Leadership
|
|
Leadership in Educational Administration
|
Performance Improvement Leadership
|
|
Leadership for Higher Education
|
Reading and Literacy
|
|
Nursing Education
|
Education Specialist (EdS)
|
|
Post-secondary and Adult Education
|
Curriculum and Instruction
|
|
Special Education Leadership
|
Leadership in Educational Administration
|
|
Master of Science in Education Innovation and Technology
|
Personalized and Competency-Based Instruction
|
|
Competency-Based Instruction
|
Reading and Literacy
|
General Educational Technology
|
|
Teacher Leader in Digital Transformation
|
|
Instruction in the 1:1 Environment
|
Teacher Leader in K-12 Studies
|
|
Personalized Learning
|
Master of Science in Higher Education
|
|
Professional Growth and Development
|
Adult Education
|
|
Master of Education (MEd) in Teaching and Learning (FlexPath option available)
|
Higher Education Leadership and Administration
|
|
|
Integrative Studies
|
|
|
Master of Science in Education
|
|
|
Curriculum and Instruction
|
|
|
Early Childhood Education
|
|
|
Early Childhood Education Studies
|
|
|
English Language Learning and Teaching
|
|
|
Instructional Design for Online Learning
|
|
|
Leadership in Educational Administration
|
|
|
Reading and Literacy
|
|
|
Special Education Teaching
|
|
|
Training and Performance Improvement
|
|
|
Program
|
|
Number of
learners
|
|
Percentage of
total learners
|
||
Doctoral
|
|
8,503
|
|
|
22
|
%
|
Master's
|
|
18,295
|
|
|
47
|
%
|
Bachelor's
|
|
11,419
|
|
|
29
|
%
|
Other
|
|
1,003
|
|
|
2
|
%
|
Total
|
|
39,220
|
|
|
100
|
%
|
•
|
U.S. armed forces relationships and discount program available to all members of the U.S. armed forces, including active duty members, veterans, National Guard members, reservists, civilian employees of the Department of Defense and immediate family members of active duty personnel.
|
•
|
Corporate, healthcare and federal relationships with more than 500 large and mid-size organizations.
|
•
|
Educational relationships that encourage graduates of nearly 300 community colleges to enroll in Capella University undergraduate programs and faculty and administrators to enroll in Capella University graduate programs.
|
•
|
Whether the institution and the program were approved by the state in which the graduate seeks licensure, or by a professional association;
|
•
|
Whether the program from which the learner graduated and the curriculum completed meets all state requirements; and
|
•
|
Whether the institution and/or the specific program is accredited.
|
•
|
Federal Grants. Grants under the Federal Pell Grant program are available to eligible students based on financial need and other factors.
|
•
|
Campus-Based Programs. The campus-based Title IV programs include the Federal Supplemental Educational Opportunity Grant program, the Federal Perkins Loan, and the Federal Work-Study Program. Neither Strayer University nor Capella University actively participates in the Federal Perkins Loan program, which expired on September 30, 2017. In addition, Strayer University does not actively participate in the Federal Work-Study Program.
|
•
|
Federal Direct Student Loans. Under the William D. Ford Federal Direct Loan Program, the Department of Education makes loans directly to students and their parents. Undergraduate students who demonstrate financial need may qualify for a subsidized loan. The federal government pays the interest on a subsidized loan while the student is in school and during any approved periods of deferment, after which the student’s obligation to repay the loan begins. Unsubsidized loans are available to students who do not qualify for a subsidized loan or, in some cases, in addition to a subsidized loan. PLUS loans, including Graduate PLUS loans, are unsubsidized loans available in amounts up to the total cost of attendance less any other financial aid.
|
•
|
Require the repayment of Title IV funds;
|
•
|
Transfer the institution from the Department of Education’s advance system of receiving Title IV program funds to a cash monitoring or reimbursement system, under which an institution must disburse its own funds to learners and document the learners’ eligibility for Title IV program funds before receiving such funds from the Department of Education;
|
•
|
Place the institution on provisional certification status; or
|
•
|
Commence a proceeding to impose a fine or to limit, suspend or terminate the participation of the institution in Title IV programs.
|
•
|
If an institution’s cohort default rate is 30% or more in a given fiscal year, the institution will be required to assemble a “default prevention task force” and submit to the Department of Education a default improvement plan.
|
•
|
If an institution’s cohort default rate exceeds 30% for two consecutive years, the institution will be required to review, revise, and resubmit its default improvement plan.
|
•
|
If an institution’s cohort default rate exceeds 30% for two out of three consecutive years, the Department of Education may subject the institution to provisional certification.
|
•
|
If an institution’s cohort default rate is equal to or greater than 30% for each of the three most recent federal fiscal years for which data are available, the institution will be ineligible to participate in the Direct Loan Program and Federal Pell Grant Program.
|
|
Strayer University
|
|
Capella University
|
|
National Average
Proprietary
Institutions
|
|||
2016
|
10.4
|
%
|
|
6.8
|
%
|
|
15.2
|
%
|
2015
|
10.6
|
%
|
|
6.5
|
%
|
|
15.6
|
%
|
2014
|
13.2
|
%
|
|
6.9
|
%
|
|
15.5
|
%
|
•
|
have an annual income rate ratio that does not exceed 8%; or
|
•
|
have a discretionary income rate that does not exceed 20%.
|
Item 1A.
|
Risk Factors
|
•
|
the emergence of more successful competitors;
|
•
|
customer dissatisfaction with our services and programs;
|
•
|
performance problems with our online systems; and
|
•
|
our failure to maintain or expand our brand or other factors related to our marketing.
|
Item 1B.
|
Unresolved Staff Comments
|
Item 2.
|
Properties
|
Item 3.
|
Legal Proceedings
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
2018
|
|
2019
|
First Quarter
|
$0.25
|
|
$0.50
|
Second Quarter
|
$0.25
|
|
$0.50
|
Third Quarter
|
$0.50
|
|
$0.50
|
Fourth Quarter
|
$0.50
|
|
$0.60
|
Name
|
|
12/31/14
|
|
12/31/15
|
|
12/31/16
|
|
12/31/17
|
|
12/31/18
|
|
12/31/19
|
||||||
Strategic Education, Inc.
|
|
100
|
|
|
81
|
|
|
109
|
|
|
121
|
|
|
153
|
|
|
214
|
|
NASDAQ Stock Market (U.S.)
|
|
100
|
|
|
106
|
|
|
114
|
|
|
146
|
|
|
140
|
|
|
189
|
|
Peer Group
|
|
100
|
|
|
74
|
|
|
95
|
|
|
115
|
|
|
142
|
|
|
152
|
|
*
|
The comparison assumes $100 was invested on December 31, 2014 in our common stock, the NASDAQ Stock Market (U.S.) Index, and the peer companies selected by us.
|
|
Total number of shares repurchased
|
|
Average dollar price paid per share
|
|
Cost of share repurchases
(millions)
|
|||||
2003
|
32,350
|
|
|
$
|
99.57
|
|
|
$
|
3.2
|
|
2004
|
346,444
|
|
|
106.13
|
|
|
36.8
|
|
||
2005
|
410,071
|
|
|
92.59
|
|
|
38.0
|
|
||
2006
|
349,066
|
|
|
100.39
|
|
|
35.0
|
|
||
2007
|
260,818
|
|
|
146.05
|
|
|
38.1
|
|
||
2008
|
603,382
|
|
|
180.86
|
|
|
109.1
|
|
||
2009
|
451,613
|
|
|
177.34
|
|
|
80.1
|
|
||
2010
|
687,340
|
|
|
168.06
|
|
|
115.5
|
|
||
2011
|
1,581,444
|
|
|
128.15
|
|
|
202.7
|
|
||
2012
|
484,841
|
|
|
51.56
|
|
|
25.0
|
|
||
2013
|
495,085
|
|
|
50.49
|
|
|
25.0
|
|
||
2014
|
—
|
|
|
—
|
|
|
—
|
|
||
2015
|
—
|
|
|
—
|
|
|
—
|
|
||
2016
|
—
|
|
|
—
|
|
|
—
|
|
||
2017
|
—
|
|
|
—
|
|
|
—
|
|
||
2018
|
—
|
|
|
—
|
|
|
—
|
|
||
2019
|
—
|
|
|
—
|
|
|
—
|
|
||
Total
|
5,702,454
|
|
|
$
|
124.24
|
|
|
$
|
708.5
|
|
Item 6.
|
Selected Financial Data
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
||||||||||
|
(Dollar and share amounts in thousands, except per share data)
|
||||||||||||||||||
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
434,437
|
|
|
$
|
441,088
|
|
|
$
|
454,851
|
|
|
$
|
634,185
|
|
|
$
|
997,137
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Instructional and support costs
|
250,449
|
|
|
259,931
|
|
|
268,943
|
|
|
371,542
|
|
|
530,604
|
|
|||||
General and administration
|
114,731
|
|
|
126,898
|
|
|
129,332
|
|
|
194,035
|
|
|
272,411
|
|
|||||
Amortization of intangible assets
|
—
|
|
|
—
|
|
|
—
|
|
|
25,694
|
|
|
61,667
|
|
|||||
Merger and integration costs
|
—
|
|
|
—
|
|
|
11,879
|
|
|
45,745
|
|
|
21,923
|
|
|||||
Fair value adjustments and impairment of intangible assets
|
(441
|
)
|
|
(3,213
|
)
|
|
(7,512
|
)
|
|
19,909
|
|
|
—
|
|
|||||
Total costs and expenses
|
364,739
|
|
|
383,616
|
|
|
402,642
|
|
|
656,925
|
|
|
886,605
|
|
|||||
Income (loss) from operations
|
69,698
|
|
|
57,472
|
|
|
52,209
|
|
|
(22,740
|
)
|
|
110,532
|
|
|||||
Other income (expense)
|
(3,567
|
)
|
|
(180
|
)
|
|
437
|
|
|
3,601
|
|
|
13,192
|
|
|||||
Income (loss) before income taxes
|
66,131
|
|
|
57,292
|
|
|
52,646
|
|
|
(19,139
|
)
|
|
123,724
|
|
|||||
Provision (benefit) for income taxes
|
26,108
|
|
|
22,490
|
|
|
32,034
|
|
|
(3,468
|
)
|
|
42,586
|
|
|||||
Net income (loss)
|
$
|
40,023
|
|
|
$
|
34,802
|
|
|
$
|
20,612
|
|
|
$
|
(15,671
|
)
|
|
$
|
81,138
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
3.78
|
|
|
$
|
3.28
|
|
|
$
|
1.93
|
|
|
$
|
(1.03
|
)
|
|
$
|
3.73
|
|
Diluted
|
$
|
3.73
|
|
|
$
|
3.21
|
|
|
$
|
1.84
|
|
|
$
|
(1.03
|
)
|
|
$
|
3.67
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
10,588
|
|
|
10,610
|
|
|
10,678
|
|
|
15,190
|
|
|
21,725
|
|
|||||
Diluted(a)
|
10,740
|
|
|
10,845
|
|
|
11,199
|
|
|
15,190
|
|
|
22,097
|
|
|||||
Other Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation and amortization
|
$
|
18,104
|
|
|
$
|
17,817
|
|
|
$
|
18,733
|
|
|
$
|
54,543
|
|
|
$
|
104,861
|
|
Stock-based compensation expense
|
$
|
10,213
|
|
|
$
|
10,767
|
|
|
$
|
11,627
|
|
|
$
|
15,532
|
|
|
$
|
12,160
|
|
Capital expenditures
|
$
|
12,692
|
|
|
$
|
13,161
|
|
|
$
|
18,051
|
|
|
$
|
27,547
|
|
|
$
|
38,689
|
|
Cash dividends per common share (paid)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.00
|
|
|
$
|
1.50
|
|
|
$
|
2.10
|
|
Average enrollment(b)
|
40,450
|
|
|
41,556
|
|
|
44,155
|
|
|
63,638
|
|
|
91,797
|
|
|||||
Strayer University Campuses(c)
|
76
|
|
|
74
|
|
|
71
|
|
|
72
|
|
|
77
|
|
|||||
Full-time employees(d)
|
1,401
|
|
|
1,542
|
|
|
1,389
|
|
|
3,017
|
|
|
3,076
|
|
|
At December 31,
|
||||||||||||||||||
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash, cash equivalents, and marketable securities
|
$
|
106,889
|
|
|
$
|
129,245
|
|
|
$
|
155,933
|
|
|
$
|
386,531
|
|
|
$
|
491,200
|
|
Working capital(e)
|
74,761
|
|
|
100,704
|
|
|
121,282
|
|
|
295,230
|
|
|
367,346
|
|
|||||
Total assets
|
248,434
|
|
|
298,696
|
|
|
321,278
|
|
|
1,661,029
|
|
|
1,789,408
|
|
|||||
Long-term debt
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other long-term liabilities
|
47,987
|
|
|
50,483
|
|
|
43,015
|
|
|
110,674
|
|
|
169,950
|
|
|||||
Total liabilities
|
105,578
|
|
|
110,322
|
|
|
112,081
|
|
|
235,805
|
|
|
326,698
|
|
|||||
Total stockholders’ equity
|
142,856
|
|
|
188,374
|
|
|
209,197
|
|
|
1,425,224
|
|
|
1,462,710
|
|
(a)
|
Diluted weighted average shares outstanding include common shares issued and outstanding, and the dilutive impact of restricted stock, restricted stock units, and outstanding stock options using the Treasury Stock Method.
|
(b)
|
Reflects average student enrollment for Strayer University for the four academic terms for each year indicated, and for Capella University since August 1, 2018.
|
(c)
|
Reflects number of campuses offering classes during the fourth quarter of each year indicated.
|
(d)
|
Reflects full-time employees, including full-time faculty, as of December 31 of each year indicated.
|
(e)
|
Working capital is calculated by subtracting current liabilities from current assets.
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Strayer University is an institution of higher learning that offers undergraduate and graduate degree programs in business administration, accounting, information technology, education, health services administration, public administration, and criminal justice at 77 physical campuses, predominantly located in the eastern United States, and online. Strayer University is accredited by the Middle States Commission on Higher Education (hereinafter referred to as “Middle States” or “Middle States Commission”), one of the seven regional collegiate accrediting agencies recognized by the Department. By offering its programs both online and in physical classrooms, Strayer University provides its working adult students flexibility and convenience.
|
•
|
The Jack Welch Management Institute (“JWMI”) offers an executive MBA online and is a Top 25 Princeton Review ranked online MBA program.
|
•
|
In 2019, Strayer University’s average total enrollment increased 11.0% to 52,963 students compared to 47,733 students in 2018. New student enrollment for the period increased 6.6%.
|
•
|
Capella University is an online post-secondary education company that offers a variety of doctoral, master’s and bachelor’s degree programs, primarily for working adults, in the following primary disciplines: public service leadership, nursing and health sciences, social and behavioral sciences, business and technology, education, and undergraduate studies. Capella University focuses on master's and doctoral degrees, with 68% of its learners enrolled in a master’s or doctoral degree program. Capella University's academic offerings are built with competency-based curricula and are delivered in an online format that is convenient and flexible. Capella University designs its offerings to help working adult learners develop specific competencies they can apply in
|
•
|
In 2019, Capella University’s average total enrollment increased 2.1% to 38,834 students compared to 38,050 students in 2018. New student enrollment for the period increased 8.9%.
|
•
|
DevMountain is a software development program offering affordable, high-quality, leading-edge software coding education at multiple campus locations and online.
|
•
|
Hackbright Academy is a software engineering school for women. Its primary offering is an intensive 12-week accelerated software development program, together with placement services and coaching.
|
•
|
Sophia Learning is an innovative company which leverages technology and high quality academic content to provide self-paced online courses eligible for transfer credit into over 2,000 colleges and universities.
|
•
|
a purchase accounting adjustment to record Capella University contract liabilities at fair value as a result of the Company's merger with Capella Education Company,
|
•
|
amortization and depreciation expense related to intangible assets and software assets acquired through the Company’s merger with Capella Education Company,
|
•
|
transaction and integration costs associated with the Company’s merger with Capella Education Company,
|
•
|
fair value adjustments to the value of contingent consideration, impairment charges for intangible assets related to the Company's acquisition of The New York Code and Design Academy, and adjustments to reserves for leases on facilities no longer in use,
|
•
|
income from partnership and other investments that are not part of our core operations, and
|
•
|
discrete tax adjustments related to stock-based compensation and other adjustments.
|
|
|
|
Non-GAAP Adjustments
|
|
|
||||||||||||||||||||||||||
|
As Reported (GAAP)
|
|
Contract
liability
adjustment(1)
|
|
Amortization of
intangible assets(2)
|
|
Merger and integration costs(3)
|
|
Fair value adjustments
and impairment of
intangible assets(4)
|
|
Income from other investments(5)
|
|
Tax adjustments(6)
|
|
As Adjusted (Non-
GAAP)
|
||||||||||||||||
Revenues
|
$
|
997,137
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
997,137
|
|
Total costs and expenses
|
886,605
|
|
|
—
|
|
|
(61,667
|
)
|
|
(21,923
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
803,015
|
|
||||||||
Operating income
|
110,532
|
|
|
—
|
|
|
61,667
|
|
|
21,923
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
194,122
|
|
||||||||
Operating margin
|
11.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19.5%
|
|
||||||||||||||
Net income
|
$
|
81,138
|
|
|
$
|
—
|
|
|
$
|
61,667
|
|
|
$
|
21,923
|
|
|
$
|
—
|
|
|
$
|
(3,446
|
)
|
|
$
|
(14,001
|
)
|
|
$
|
147,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Diluted earnings per share
|
$
|
3.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
6.67
|
|
||||||||||||
Weighted average diluted shares outstanding
|
22,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,097
|
|
|
|
|
Non-GAAP Adjustments
|
|
|
||||||||||||||||||||||||||
|
As Reported (GAAP)
|
|
Contract
liability
adjustment(1)
|
|
Amortization of
intangible assets(2)
|
|
Merger and integration costs(3)
|
|
Fair value adjustments
and impairment of
intangible assets(4)
|
|
Income from other investments(5)
|
|
Tax adjustments(6)
|
|
As Adjusted (Non-
GAAP)
|
||||||||||||||||
Revenues
|
$
|
634,185
|
|
|
$
|
28,748
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
662,933
|
|
Total costs and expenses
|
656,925
|
|
|
—
|
|
|
(25,694
|
)
|
|
(45,745
|
)
|
|
(19,909
|
)
|
|
—
|
|
|
—
|
|
|
565,577
|
|
||||||||
Operating income (loss)
|
(22,740
|
)
|
|
28,748
|
|
|
25,694
|
|
|
45,745
|
|
|
19,909
|
|
|
—
|
|
|
—
|
|
|
97,356
|
|
||||||||
Operating margin
|
-3.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14.7%
|
|
||||||||||||||
Net income (loss)
|
$
|
(15,671
|
)
|
|
$
|
28,748
|
|
|
$
|
25,694
|
|
|
$
|
45,745
|
|
|
$
|
19,909
|
|
|
$
|
—
|
|
|
$
|
(29,348
|
)
|
|
$
|
75,077
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Diluted earnings (loss) per share
|
$
|
(1.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4.75
|
|
||||||||||||
Weighted average diluted shares outstanding
|
15,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,801
|
|
|
|
|
Non-GAAP Adjustments
|
|
|
||||||||||||||||||||||||||
|
As Reported (GAAP)
|
|
Contract
liability
adjustment(1)
|
|
Amortization of
intangible assets(2)
|
|
Merger and integration costs(3)
|
|
Fair value adjustments
and impairment of
intangible assets(4)
|
|
Income from other investments(5)
|
|
Tax adjustments(6)
|
|
As Adjusted (Non-
GAAP)
|
||||||||||||||||
Revenues
|
$
|
454,851
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
454,851
|
|
Total costs and expenses
|
402,642
|
|
|
—
|
|
|
—
|
|
|
(11,879
|
)
|
|
7,512
|
|
|
—
|
|
|
—
|
|
|
398,275
|
|
||||||||
Operating income
|
52,209
|
|
|
—
|
|
|
—
|
|
|
11,879
|
|
|
(7,512
|
)
|
|
—
|
|
|
—
|
|
|
56,576
|
|
||||||||
Operating margin
|
11.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.4%
|
|
||||||||||||||
Net income
|
$
|
20,612
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,879
|
|
|
$
|
(7,512
|
)
|
|
$
|
—
|
|
|
$
|
9,892
|
|
|
$
|
34,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Diluted earnings per share
|
$
|
1.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3.11
|
|
||||||||||||
Weighted average diluted shares outstanding
|
11,199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,199
|
|
(1)
|
Reflects a purchase accounting adjustment to record Capella University contract liabilities at fair value as a result of the Company’s merger with CEC.
|
(2)
|
Reflects amortization and depreciation expense of intangible assets and software assets acquired through the Company’s merger with CEC.
|
(3)
|
Reflects transaction and integration charges associated with the Company's merger with CEC.
|
(4)
|
Reflects adjustments to the value of contingent consideration in 2017, and an impairment of goodwill and intangible assets in 2018, related to the Company's acquisition of the New York Code and Design Academy.
|
(5)
|
Reflects income recognized from the Company's investments in partnership interests and other investments.
|
(6)
|
Reflects tax impacts of the adjustments described above and discrete tax adjustments related to stock-based compensation and other adjustments, utilizing an adjusted annual effective tax rate of 27.8%, 25.6% and 38.8% for 2019, 2018 and 2017, respectively.
|
|
Payments Due By Period
|
||||||||||||||||||
|
Total
|
|
Less than 1
Year
|
|
1-3
Years
|
|
3-5
Years
|
|
More than
5 Years
|
||||||||||
Lease liabilities(1)
|
$
|
119,668
|
|
|
$
|
29,178
|
|
|
$
|
39,830
|
|
|
$
|
23,068
|
|
|
$
|
27,592
|
|
(1)
|
Excludes $6.5 million of legally binding minimum payments for leases signed but not yet commenced.
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
Page
|
Strategic Education, Inc.
|
|
|
December 31, 2018
|
|
December 31, 2019
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
311,732
|
|
|
$
|
419,693
|
|
Marketable securities
|
37,121
|
|
|
34,874
|
|
||
Tuition receivable, net
|
55,694
|
|
|
51,523
|
|
||
Other current assets
|
15,814
|
|
|
18,004
|
|
||
Total current assets
|
420,361
|
|
|
524,094
|
|
||
Property and equipment, net
|
122,677
|
|
|
117,029
|
|
||
Right-of-use lease assets
|
—
|
|
|
84,778
|
|
||
Marketable securities, non-current
|
37,678
|
|
|
36,633
|
|
||
Intangible assets, net
|
328,344
|
|
|
273,011
|
|
||
Goodwill
|
732,540
|
|
|
732,075
|
|
||
Other assets
|
19,429
|
|
|
21,788
|
|
||
Total assets
|
$
|
1,661,029
|
|
|
$
|
1,789,408
|
|
|
|
|
|
||||
LIABILITIES & STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
85,979
|
|
|
$
|
90,828
|
|
Income taxes payable
|
419
|
|
|
1,352
|
|
||
Contract liabilities
|
38,733
|
|
|
39,284
|
|
||
Lease liabilities
|
—
|
|
|
25,284
|
|
||
Total current liabilities
|
125,131
|
|
|
156,748
|
|
||
Deferred income tax liabilities
|
59,358
|
|
|
47,942
|
|
||
Lease liabilities, non-current
|
—
|
|
|
80,557
|
|
||
Other long-term liabilities
|
51,316
|
|
|
41,451
|
|
||
Total liabilities
|
235,805
|
|
|
326,698
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Common stock, par value $0.01; 32,000,000 shares authorized; 21,743,498 and 21,964,809 shares issued and outstanding at December 31, 2018 and 2019, respectively
|
217
|
|
|
220
|
|
||
Additional paid-in capital
|
1,306,653
|
|
|
1,309,438
|
|
||
Accumulated other comprehensive income
|
32
|
|
|
233
|
|
||
Retained earnings
|
118,322
|
|
|
152,819
|
|
||
Total stockholders’ equity
|
1,425,224
|
|
|
1,462,710
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,661,029
|
|
|
$
|
1,789,408
|
|
|
For the Year Ended
December 31, |
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
Revenues
|
$
|
454,851
|
|
|
$
|
634,185
|
|
|
$
|
997,137
|
|
Costs and expenses:
|
|
|
|
|
|
||||||
Instructional and support costs
|
268,943
|
|
|
371,542
|
|
|
530,604
|
|
|||
General and administration
|
129,332
|
|
|
194,035
|
|
|
272,411
|
|
|||
Amortization of intangible assets
|
—
|
|
|
25,694
|
|
|
61,667
|
|
|||
Merger and integration costs
|
11,879
|
|
|
45,745
|
|
|
21,923
|
|
|||
Fair value adjustments and impairment of intangible assets
|
(7,512
|
)
|
|
19,909
|
|
|
—
|
|
|||
Total costs and expenses
|
402,642
|
|
|
656,925
|
|
|
886,605
|
|
|||
Income (loss) from operations
|
52,209
|
|
|
(22,740
|
)
|
|
110,532
|
|
|||
Other income
|
437
|
|
|
3,601
|
|
|
13,192
|
|
|||
Income (loss) before income taxes
|
52,646
|
|
|
(19,139
|
)
|
|
123,724
|
|
|||
Provision (benefit) for income taxes
|
32,034
|
|
|
(3,468
|
)
|
|
42,586
|
|
|||
Net income (loss)
|
$
|
20,612
|
|
|
$
|
(15,671
|
)
|
|
$
|
81,138
|
|
Earnings (loss) per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
1.93
|
|
|
$
|
(1.03
|
)
|
|
$
|
3.73
|
|
Diluted
|
$
|
1.84
|
|
|
$
|
(1.03
|
)
|
|
$
|
3.67
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
10,678
|
|
|
15,190
|
|
|
21,725
|
|
|||
Diluted
|
11,199
|
|
|
15,190
|
|
|
22,097
|
|
|
For the Year Ended
December 31, |
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
Net income (loss)
|
$
|
20,612
|
|
|
$
|
(15,671
|
)
|
|
$
|
81,138
|
|
Other comprehensive income:
|
|
|
|
|
|
||||||
Unrealized gains on marketable securities, net of tax
|
—
|
|
|
32
|
|
|
201
|
|
|||
Comprehensive income (loss)
|
$
|
20,612
|
|
|
$
|
(15,639
|
)
|
|
$
|
81,339
|
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Retained Earnings
|
|
Accumulated
Other Comprehensive Income
|
|
Total
|
|||||||||||||
|
Shares
|
|
Par Value
|
|
|
|
|
|||||||||||||||
Balance at December 31, 2016
|
11,093,489
|
|
|
$
|
111
|
|
|
$
|
35,453
|
|
|
$
|
152,810
|
|
|
$
|
—
|
|
|
$
|
188,374
|
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
11,627
|
|
|
—
|
|
|
—
|
|
|
11,627
|
|
|||||
Issuance of restricted stock, net
|
73,936
|
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Common stock dividends ($1.00 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,416
|
)
|
|
—
|
|
|
(11,416
|
)
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
20,612
|
|
|
—
|
|
|
20,612
|
|
|||||
Balance at December 31, 2017
|
11,167,425
|
|
|
$
|
112
|
|
|
$
|
47,079
|
|
|
$
|
162,006
|
|
|
$
|
—
|
|
|
$
|
209,197
|
|
Impact of adoption of new accounting standard
|
—
|
|
|
—
|
|
|
—
|
|
|
(171
|
)
|
|
—
|
|
|
(171
|
)
|
|||||
Issuance of stock in connection with the acquisition of Capella Education Company
|
10,263,775
|
|
|
103
|
|
|
1,236,858
|
|
|
—
|
|
|
—
|
|
|
1,236,961
|
|
|||||
Filing fee related to new stock issuance
|
—
|
|
|
—
|
|
|
(148
|
)
|
|
—
|
|
|
—
|
|
|
(148
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
14,994
|
|
|
—
|
|
|
—
|
|
|
14,994
|
|
|||||
Exercise of stock options, net
|
156,424
|
|
|
1
|
|
|
8,647
|
|
|
—
|
|
|
—
|
|
|
8,648
|
|
|||||
Issuance of restricted stock, net
|
155,874
|
|
|
1
|
|
|
(777
|
)
|
|
—
|
|
|
—
|
|
|
(776
|
)
|
|||||
Common stock dividends ($1.50 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,842
|
)
|
|
—
|
|
|
(27,842
|
)
|
|||||
Unrealized gains on marketable securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|
32
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,671
|
)
|
|
—
|
|
|
(15,671
|
)
|
|||||
Balance at December 31, 2018
|
21,743,498
|
|
|
$
|
217
|
|
|
$
|
1,306,653
|
|
|
$
|
118,322
|
|
|
$
|
32
|
|
|
$
|
1,425,224
|
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
12,033
|
|
|
83
|
|
|
—
|
|
|
12,116
|
|
|||||
Exercise of stock options, net
|
103,364
|
|
|
2
|
|
|
(1,775
|
)
|
|
—
|
|
|
—
|
|
|
(1,773
|
)
|
|||||
Issuance of restricted stock, net
|
117,947
|
|
|
1
|
|
|
(7,473
|
)
|
|
—
|
|
|
—
|
|
|
(7,472
|
)
|
|||||
Common stock dividends ($2.10 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(46,724
|
)
|
|
—
|
|
|
(46,724
|
)
|
|||||
Unrealized gains on marketable securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
201
|
|
|
201
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
81,138
|
|
|
—
|
|
|
81,138
|
|
|||||
Balance at December 31, 2019
|
21,964,809
|
|
|
$
|
220
|
|
|
$
|
1,309,438
|
|
|
$
|
152,819
|
|
|
$
|
233
|
|
|
$
|
1,462,710
|
|
|
2017
|
|
2018
|
|
2019
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
20,612
|
|
|
$
|
(15,671
|
)
|
|
$
|
81,138
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Amortization of gain on sale of assets
|
(133
|
)
|
|
—
|
|
|
—
|
|
|||
Amortization of deferred financing costs
|
262
|
|
|
292
|
|
|
333
|
|
|||
Amortization of investment discount/premium
|
—
|
|
|
298
|
|
|
296
|
|
|||
Depreciation and amortization
|
18,733
|
|
|
54,543
|
|
|
104,861
|
|
|||
Deferred income taxes
|
6,429
|
|
|
(16,322
|
)
|
|
(8,037
|
)
|
|||
Stock-based compensation
|
11,627
|
|
|
15,532
|
|
|
12,160
|
|
|||
Fair value adjustments and impairment of intangible assets
|
(7,512
|
)
|
|
19,909
|
|
|
—
|
|
|||
Impairment of right-of-use lease assets
|
—
|
|
|
—
|
|
|
6,046
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Tuition receivable, net
|
(3,250
|
)
|
|
7,880
|
|
|
1,770
|
|
|||
Other current assets
|
(526
|
)
|
|
3,768
|
|
|
(1,589
|
)
|
|||
Other assets
|
1,582
|
|
|
(135
|
)
|
|
(540
|
)
|
|||
Accounts payable and accrued expenses
|
4,468
|
|
|
1,140
|
|
|
245
|
|
|||
Income taxes payable and income taxes receivable
|
(629
|
)
|
|
(516
|
)
|
|
1,198
|
|
|||
Contract liabilities
|
8,212
|
|
|
(19,329
|
)
|
|
7,716
|
|
|||
Other long-term liabilities
|
(3,718
|
)
|
|
(4,522
|
)
|
|
(3,451
|
)
|
|||
Net cash provided by operating activities
|
56,157
|
|
|
46,867
|
|
|
202,146
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Net cash acquired in acquisition
|
—
|
|
|
167,859
|
|
|
—
|
|
|||
Purchases of property and equipment
|
(18,051
|
)
|
|
(27,547
|
)
|
|
(38,689
|
)
|
|||
Purchases of marketable securities
|
—
|
|
|
(25,304
|
)
|
|
(40,481
|
)
|
|||
Maturities of marketable securities
|
—
|
|
|
16,367
|
|
|
43,762
|
|
|||
Other investments
|
—
|
|
|
(1,238
|
)
|
|
(2,658
|
)
|
|||
Net cash provided by (used in) investing activities
|
(18,051
|
)
|
|
130,137
|
|
|
(38,066
|
)
|
|||
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Common dividends paid
|
(11,416
|
)
|
|
(27,842
|
)
|
|
(46,625
|
)
|
|||
Net payments for stock awards
|
—
|
|
|
7,789
|
|
|
(9,195
|
)
|
|||
Payment of deferred financing costs
|
—
|
|
|
(1,162
|
)
|
|
—
|
|
|||
Net cash used in financing activities
|
(11,416
|
)
|
|
(21,215
|
)
|
|
(55,820
|
)
|
|||
Net increase in cash, cash equivalents, and restricted cash
|
26,690
|
|
|
155,789
|
|
|
108,260
|
|
|||
Cash, cash equivalents, and restricted cash — beginning of period
|
129,758
|
|
|
156,448
|
|
|
312,237
|
|
|||
Cash, cash equivalents, and restricted cash — end of period
|
$
|
156,448
|
|
|
$
|
312,237
|
|
|
$
|
420,497
|
|
Noncash transactions:
|
|
|
|
|
|
||||||
Purchases of property and equipment included in accounts payable
|
$
|
1,734
|
|
|
$
|
1,029
|
|
|
$
|
3,406
|
|
|
New Classification
|
||||||||||||||
|
December 31, 2017
|
|
December 31, 2018
|
||||||||||||
Prior Classification
|
I&SC
|
|
G&A
|
|
I&SC
|
|
G&A
|
||||||||
Instruction and educational support
|
$
|
249,939
|
|
|
$
|
—
|
|
|
$
|
340,076
|
|
|
$
|
—
|
|
Admissions advisory
|
19,004
|
|
|
—
|
|
|
31,466
|
|
|
—
|
|
||||
Marketing
|
—
|
|
|
82,540
|
|
|
—
|
|
|
136,979
|
|
||||
General and administration
|
—
|
|
|
46,792
|
|
|
—
|
|
|
57,056
|
|
||||
Total reclassified costs and expenses(1)
|
$
|
268,943
|
|
|
$
|
129,332
|
|
|
$
|
371,542
|
|
|
$
|
194,035
|
|
(1)
|
This amount excludes the amortization of intangible assets, merger and integration costs, and fair value adjustments and impairment of intangible assets expense line items on the consolidated statements of income as those expense line items were not impacted by the operating expense reclassification.
|
|
As of December 31,
|
||||||
|
2018
|
|
2019
|
||||
Cash and cash equivalents
|
$
|
311,732
|
|
|
$
|
419,693
|
|
Restricted cash included in other current assets
|
5
|
|
|
304
|
|
||
Restricted cash included in other assets
|
500
|
|
|
500
|
|
||
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows
|
$
|
312,237
|
|
|
$
|
420,497
|
|
|
December 31, 2018
|
|
December 31, 2019
|
||||
Tuition receivable
|
$
|
84,151
|
|
|
$
|
82,454
|
|
Allowance for doubtful accounts
|
(28,457
|
)
|
|
(30,931
|
)
|
||
Tuition receivable, net
|
$
|
55,694
|
|
|
$
|
51,523
|
|
|
2017
|
|
2018
|
|
2019
|
||||||
Allowance for doubtful accounts, beginning of period
|
$
|
10,201
|
|
|
$
|
12,687
|
|
|
$
|
28,457
|
|
Additions charged to expense
|
21,751
|
|
|
37,704
|
|
|
49,072
|
|
|||
Additions from merger
|
—
|
|
|
6,601
|
|
|
2,207
|
|
|||
Write-offs, net of recoveries
|
(19,265
|
)
|
|
(28,535
|
)
|
|
(48,805
|
)
|
|||
Allowance for doubtful accounts, end of period
|
$
|
12,687
|
|
|
$
|
28,457
|
|
|
$
|
30,931
|
|
•
|
Level 1 assets or liabilities use quoted prices in active markets for identical assets or liabilities as of the measurement date;
|
•
|
Level 2 assets or liabilities use observable inputs, other than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities; and
|
•
|
Level 3 assets or liabilities use unobservable inputs that are supported by little or no market activity.
|
|
2017
|
|
2018
|
|
2019
|
|||
Weighted average shares outstanding used to compute basic earnings per share
|
10,678
|
|
|
15,190
|
|
|
21,725
|
|
Incremental shares issuable upon the assumed exercise of stock options
|
39
|
|
|
—
|
|
|
54
|
|
Unvested restricted stock and restricted stock units
|
482
|
|
|
—
|
|
|
318
|
|
Shares used to compute diluted earnings (loss) per share
|
11,199
|
|
|
15,190
|
|
|
22,097
|
|
Fair value of Company common stock issued in exchange for CEC outstanding shares(1)
|
$
|
1,209,483
|
|
Fair value of Company equity-based awards issued in exchange for CEC equity-based awards
|
27,478
|
|
|
Total fair value of consideration transferred
|
$
|
1,236,961
|
|
(1)
|
The Company issued 10,263,775 common shares at a market price of $117.84 in exchange for each issued and outstanding share of CEC common stock.
|
Cash and cash equivalents
|
$
|
167,859
|
|
Marketable securities
|
31,419
|
|
|
Tuition receivable
|
36,716
|
|
|
Income tax receivable
|
163
|
|
|
Other current assets
|
9,041
|
|
|
Marketable securities, non-current
|
34,700
|
|
|
Property and equipment, net
|
53,182
|
|
|
Other assets
|
14,556
|
|
|
Intangible assets
|
349,800
|
|
|
Goodwill
|
725,275
|
|
|
Total assets acquired
|
1,422,711
|
|
|
Accounts payable and accrued expenses
|
(48,103
|
)
|
|
Contract liabilities
|
(39,000
|
)
|
|
Deferred income taxes
|
(96,320
|
)
|
|
Other long-term liabilities
|
(2,327
|
)
|
|
Total liabilities assumed
|
(185,750
|
)
|
|
Total consideration
|
$
|
1,236,961
|
|
|
Fair Value
|
|
Weighted Average
Useful Life in Years
|
||
Trade names
|
$
|
183,800
|
|
|
Indefinite
|
Student relationships
|
166,000
|
|
|
3
|
|
|
$
|
349,800
|
|
|
|
•
|
Intangible assets - To determine the fair value of the trade name, the Company used the relief from royalty approach. The excess earnings method was used to estimate the fair value of student relationships.
|
•
|
Property and equipment - Included in property and equipment is course content of $14.0 million, valued using the relief from royalty approach, and internally developed software of $5.0 million, valued using the cost approach. Each will be amortized over three years. All other property and equipment was valued at estimated cost.
|
•
|
Contract liabilities - The Company estimated the fair value of contract liabilities using the cost build-up method, which represents the cost to deliver the services plus a normal profit margin.
|
•
|
Other current and noncurrent assets and liabilities - The carrying value of all other assets and liabilities approximated fair value at the time of acquisition.
|
•
|
The allocation of purchase price and related adjustments, including the adjustments to amortization expense related to the fair value of intangible assets acquired;
|
•
|
The exclusion of acquisition-related costs incurred during the years ended December 31, 2017 and 2018;
|
•
|
Associated tax-related impacts of adjustments; and
|
•
|
Changes to align accounting policies.
|
|
Pro Forma Combined
|
||||||
|
Year Ended December 31, 2017
|
|
Year Ended December 31, 2018
|
||||
Revenue
|
$
|
895,262
|
|
|
$
|
923,945
|
|
Net Income
|
16,364
|
|
|
41,058
|
|
|
2017
|
|
2018
|
|
2019
|
||||||
Strayer University Segment
|
|
|
|
|
|
|
|
|
|||
Tuition, net of discounts, grants and scholarships
|
$
|
433,938
|
|
|
$
|
451,646
|
|
|
$
|
508,734
|
|
Other(1)
|
15,609
|
|
|
19,458
|
|
|
18,298
|
|
|||
Total Strayer University Segment
|
449,547
|
|
|
471,104
|
|
|
527,032
|
|
|||
|
|
|
|
|
|
||||||
Capella University Segment
|
|
|
|
|
|
||||||
Tuition, net of discounts, grants and scholarships
|
—
|
|
|
147,138
|
|
|
435,185
|
|
|||
Other(1)
|
—
|
|
|
7,780
|
|
|
20,135
|
|
|||
Total Capella University Segment
|
—
|
|
|
154,918
|
|
|
455,320
|
|
|||
|
|
|
|
|
|
||||||
Non-Degree Programs Segment(2)
|
5,304
|
|
|
8,163
|
|
|
14,785
|
|
|||
|
|
|
|
|
|
||||||
Consolidated revenue
|
$
|
454,851
|
|
|
$
|
634,185
|
|
|
$
|
997,137
|
|
(1)
|
Other revenue is primarily comprised of academic fees, sales of textbooks, other course materials, and other revenue streams.
|
(2)
|
Non-Degree Programs revenue is primarily comprised of tuition revenue and placement fee revenue.
|
|
December 31, 2018
|
|
December 31, 2019
|
||||
Balance at beginning of period
|
$
|
37,400
|
|
|
$
|
43,329
|
|
Revenue deferred
|
27,349
|
|
|
30,071
|
|
||
Benefit redeemed
|
(21,420
|
)
|
|
(23,759
|
)
|
||
Balance at end of period
|
$
|
43,329
|
|
|
$
|
49,641
|
|
|
Lease and Related Costs, Net
|
|
Severance and Other Employee Separation Costs
|
|
Total
|
||||||
Balance at December 31, 2016
|
$
|
11,985
|
|
|
$
|
—
|
|
|
$
|
11,985
|
|
Restructuring and other charges(1)
|
—
|
|
|
3,414
|
|
|
3,414
|
|
|||
Payments
|
(3,623
|
)
|
|
(3,414
|
)
|
|
(7,037
|
)
|
|||
Adjustments(2)
|
419
|
|
|
—
|
|
|
419
|
|
|||
Balance at December 31, 2017
|
8,781
|
|
|
—
|
|
|
8,781
|
|
|||
Restructuring and other charges(1)
|
—
|
|
|
16,319
|
|
|
16,319
|
|
|||
Payments
|
(2,684
|
)
|
|
(1,972
|
)
|
|
(4,656
|
)
|
|||
Adjustments(2)
|
443
|
|
|
—
|
|
|
443
|
|
|||
Balance at December 31, 2018(3)
|
6,540
|
|
|
14,347
|
|
|
20,887
|
|
|||
Restructuring and other charges(1)
|
—
|
|
|
3,920
|
|
|
3,920
|
|
|||
Payments
|
—
|
|
|
(9,984
|
)
|
|
(9,984
|
)
|
|||
Adjustments(2)
|
(6,540
|
)
|
|
—
|
|
|
(6,540
|
)
|
|||
Balance at December 31, 2019(3)
|
$
|
—
|
|
|
$
|
8,283
|
|
|
$
|
8,283
|
|
(1)
|
Restructuring and other charges were $3.4 million, $16.3 million, and $3.9 million for the years ended December 31, 2017, 2018, and 2019, respectively. Restructuring and other charges are included in Merger and integration costs on the consolidated statements of income.
|
(2)
|
For the years ended December 31, 2017 and 2018, adjustments include accretion of interest on lease costs, partially offset by changes in the timing and expected income from subleases. For the year ended December 31, 2019, adjustments represent the impact of adopting ASC 842 on January 1, 2019. In accordance with ASC 842, the lease related restructuring liability balance as of December 31, 2018 was netted against the initial ROU lease asset recognized upon adoption. Asset retirement obligations related to these restructured properties are also included in the adjustments amount.
|
(3)
|
The current portion of restructuring liabilities was $9.8 million and $6.4 million as of December 31, 2018 and December 31, 2019, respectively, which are included in accounts payable and accrued expenses. The long-term portion is included in other long-term liabilities.
|
|
Amortized Cost
|
|
Gross Unrealized Gain
|
|
Gross Unrealized (Losses)
|
|
Estimated Fair Value
|
||||||||
Corporate debt securities
|
$
|
42,584
|
|
|
$
|
165
|
|
|
$
|
(40
|
)
|
|
$
|
42,709
|
|
Tax-exempt municipal securities
|
23,301
|
|
|
112
|
|
|
(215
|
)
|
|
23,198
|
|
||||
Variable rate demand notes
|
5,600
|
|
|
—
|
|
|
—
|
|
|
5,600
|
|
||||
Total
|
$
|
71,485
|
|
|
$
|
277
|
|
|
$
|
(255
|
)
|
|
$
|
71,507
|
|
|
Amortized Cost
|
|
Gross Unrealized Gain
|
|
Gross Unrealized (Losses)
|
|
Estimated Fair Value
|
||||||||
Corporate debt securities
|
$
|
48,202
|
|
|
$
|
12
|
|
|
$
|
(284
|
)
|
|
$
|
47,930
|
|
Tax-exempt municipal securities
|
22,858
|
|
|
45
|
|
|
(34
|
)
|
|
22,869
|
|
||||
Variable rate demand notes
|
4,000
|
|
|
—
|
|
|
—
|
|
|
4,000
|
|
||||
Total
|
$
|
75,060
|
|
|
$
|
57
|
|
|
$
|
(318
|
)
|
|
$
|
74,799
|
|
|
December 31, 2018
|
|
December 31, 2019
|
||||
Due within one year
|
$
|
37,121
|
|
|
$
|
34,874
|
|
Due after one year through five years
|
37,678
|
|
|
36,633
|
|
||
Total
|
$
|
74,799
|
|
|
$
|
71,507
|
|
|
2018
|
|
2019
|
|
Estimated useful
life (years)
|
|||||
Land
|
$
|
7,138
|
|
|
$
|
7,138
|
|
|
—
|
|
Buildings and improvements
|
20,883
|
|
|
21,143
|
|
|
5-40
|
|
||
Furniture and office equipment
|
76,856
|
|
|
73,457
|
|
|
5-7
|
|
||
Computer hardware
|
13,546
|
|
|
10,173
|
|
|
3-7
|
|
||
Computer software
|
129,519
|
|
|
137,150
|
|
|
3-10
|
|
||
Leasehold improvements
|
44,215
|
|
|
49,241
|
|
|
3-10
|
|
||
Construction in progress
|
8,354
|
|
|
7,808
|
|
|
—
|
|
||
|
300,511
|
|
|
306,110
|
|
|
|
|||
Accumulated depreciation and amortization
|
(177,834
|
)
|
|
(189,081
|
)
|
|
|
|||
|
$
|
122,677
|
|
|
$
|
117,029
|
|
|
|
|
Year ended
December 31, 2019 |
||
Lease cost:
|
|
||
Operating lease cost(1)
|
$
|
35,335
|
|
Short-term lease cost
|
885
|
|
|
Sublease income
|
(2,696
|
)
|
|
Total lease costs
|
$
|
33,524
|
|
(1)
|
Operating lease cost includes a $6.0 million of right-of-use lease asset impairment charge, which is included in Merger and integration costs on the consolidated statements of income, related to redundant leased space that was vacated during the year.
|
|
As of December 31, 2019
|
|
Weighted-average remaining lease term (years)
|
5.7
|
|
Weighted-average discount rate
|
4.15
|
%
|
|
Year ended
December 31, 2019 |
||
Cash paid for amounts included in the measurement of lease liabilities
|
$
|
32,883
|
|
Right-of-use assets obtained in exchange for operating lease liabilities
|
$
|
4,431
|
|
Leasehold improvements obtained in exchange for TIAs paid directly to third parties
|
$
|
2,156
|
|
Year Ending December 31,
|
|
||
2020
|
$
|
29,178
|
|
2021
|
24,351
|
|
|
2022
|
15,479
|
|
|
2023
|
12,376
|
|
|
2024
|
10,692
|
|
|
Thereafter
|
27,592
|
|
|
Total lease payments(1)
|
119,668
|
|
|
Less: interest
|
(13,827
|
)
|
|
Present value of lease liabilities
|
$
|
105,841
|
|
(1)
|
Excludes $6.5 million of legally binding minimum payments for leases signed but not yet commenced.
|
|
Minimum
Rental
Commitments(1)
|
||
2019
|
$
|
33,600
|
|
2020
|
28,399
|
|
|
2021
|
23,485
|
|
|
2022
|
13,770
|
|
|
2023
|
10,316
|
|
|
Thereafter
|
32,745
|
|
|
Total
|
$
|
142,315
|
|
(1)
|
Amounts are based on the accounting guidance in ASC 840, Leases, that was superseded upon the Company's adoption of ASC 842 on January 1, 2019.
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
|
December 31,
2019 |
|
Quoted Prices in
Active Markets
for Identical
Assets/Liabilities
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
30,693
|
|
|
$
|
30,693
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
42,709
|
|
|
—
|
|
|
42,709
|
|
|
—
|
|
||||
Tax-exempt municipal securities
|
23,198
|
|
|
—
|
|
|
23,198
|
|
|
—
|
|
||||
Variable rate demand notes
|
5,600
|
|
|
—
|
|
|
5,600
|
|
|
—
|
|
||||
Total assets at fair value on a recurring basis
|
$
|
102,200
|
|
|
$
|
30,693
|
|
|
$
|
71,507
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Deferred payments
|
$
|
3,257
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,257
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
|
December 31,
2018 |
|
Quoted Prices in
Active Markets
for Identical
Assets/Liabilities
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
1,791
|
|
|
$
|
1,791
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
48,430
|
|
|
—
|
|
|
48,430
|
|
|
—
|
|
||||
Tax-exempt municipal securities
|
22,869
|
|
|
—
|
|
|
22,869
|
|
|
—
|
|
||||
Variable rate demand notes
|
4,000
|
|
|
—
|
|
|
4,000
|
|
|
—
|
|
||||
Total assets at fair value on a recurring basis
|
$
|
77,090
|
|
|
$
|
1,791
|
|
|
$
|
75,299
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Deferred payments
|
$
|
4,120
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,120
|
|
•
|
Money market funds — Classified in Level 1 is excess cash the Company holds in both taxable and tax-exempt money market funds, which are included in cash and cash equivalents in the accompanying consolidated balance sheets. The Company records any net unrealized gains and losses for changes in fair value as a component of accumulated other comprehensive income in stockholders’ equity. The Company’s cash and cash equivalents held at December 31, 2018 and 2019, approximate fair value and are not disclosed in the above tables because of the short-term nature of the financial instruments.
|
•
|
Marketable securities – Classified in Level 2 and valued using readily available pricing sources for comparable instruments utilizing observable inputs from active markets. The Company does not hold securities in inactive markets.
|
•
|
Deferred payments — The Company acquired certain assets and entered into deferred payment arrangements with the sellers in transactions that occurred in 2011 and 2016. The deferred payments are classified within Level 3 as there is no liquid market for similarly priced instruments and are valued using discounted cash flow models that encompass significant unobservable inputs. The assumptions used to prepare the discounted cash flows include estimates for interest rates, enrollment growth, retention rates, and pricing strategies. These assumptions are subject to change as the underlying data sources evolve and the programs mature. The short-term portion of deferred payments was $1.6 million as of December 31, 2019 and is included in accounts payable and accrued expense.
|
|
December 31, 2018
|
|
December 31, 2019
|
||||
Balance as of the beginning of period
|
$
|
4,514
|
|
|
$
|
4,120
|
|
Amounts paid
|
(1,412
|
)
|
|
(1,579
|
)
|
||
Other adjustments to fair value
|
1,018
|
|
|
716
|
|
||
Balance at end of period
|
$
|
4,120
|
|
|
$
|
3,257
|
|
|
Strayer University
|
|
Capella University
|
|
Non-Degree Programs
|
|
Total
|
||||||||
Balance as of December 31, 2017
|
$
|
6,800
|
|
|
$
|
—
|
|
|
$
|
13,944
|
|
|
$
|
20,744
|
|
Additions
|
330,581
|
|
|
393,348
|
|
|
—
|
|
|
723,929
|
|
||||
Impairments
|
—
|
|
|
—
|
|
|
(13,944
|
)
|
|
(13,944
|
)
|
||||
Adjustments
|
—
|
|
|
1,811
|
|
|
—
|
|
|
1,811
|
|
||||
Balance as of December 31, 2018
|
337,381
|
|
|
395,159
|
|
|
—
|
|
|
732,540
|
|
||||
Additions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Impairments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Adjustments
|
—
|
|
|
(465
|
)
|
|
—
|
|
|
(465
|
)
|
||||
Balance as of December 31, 2019
|
$
|
337,381
|
|
|
$
|
394,694
|
|
|
$
|
—
|
|
|
$
|
732,075
|
|
|
December 31, 2018
|
|
December 31, 2019
|
||||||||||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net
|
||||||||||||
Subject to amortization
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Student relationships
|
$
|
166,000
|
|
|
$
|
(23,056
|
)
|
|
$
|
142,944
|
|
|
$
|
166,000
|
|
|
$
|
(78,389
|
)
|
|
$
|
87,611
|
|
Not subject to amortization
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trade names
|
185,400
|
|
|
—
|
|
|
185,400
|
|
|
185,400
|
|
|
—
|
|
|
185,400
|
|
||||||
Total
|
$
|
351,400
|
|
|
$
|
(23,056
|
)
|
|
$
|
328,344
|
|
|
$
|
351,400
|
|
|
$
|
(78,389
|
)
|
|
$
|
273,011
|
|
2020
|
$
|
55,333
|
|
2021
|
32,278
|
|
|
2022
|
—
|
|
|
2023
|
—
|
|
|
2024
|
—
|
|
|
2025 and thereafter
|
—
|
|
|
Total
|
$
|
87,611
|
|
|
2018
|
|
2019
|
||||
Trade payables
|
$
|
36,566
|
|
|
$
|
47,503
|
|
Accrued compensation and benefits
|
35,844
|
|
|
33,924
|
|
||
Accrued student obligations
|
4,284
|
|
|
4,580
|
|
||
Real estate liabilities
|
5,156
|
|
|
751
|
|
||
Other
|
4,129
|
|
|
4,070
|
|
||
Accounts payable and accrued liabilities
|
$
|
85,979
|
|
|
$
|
90,828
|
|
•
|
A leverage ratio of not greater than 2 to 1. Leverage ratio is defined as the ratio of total debt to trailing four-quarter EBITDA (earnings before interest, taxes, depreciation, amortization, and noncash charges, such as stock-based compensation).
|
•
|
A coverage ratio of not less than 1.75 to 1. Coverage ratio is defined as the ratio of trailing four-quarter EBITDA and rent expense to trailing four-quarter interest and rent expense.
|
•
|
A U.S. Department of Education (“Department” or "Department of Education") Financial Responsibility Composite Score of not less than 1.5.
|
|
Number of
shares or units
|
|
Weighted-
average
grant price
|
|||
Balance, December 31, 2016
|
727,100
|
|
|
$
|
97.53
|
|
Grants
|
75,140
|
|
|
82.18
|
|
|
Vested shares
|
(84,908
|
)
|
|
66.60
|
|
|
Forfeitures
|
(1,204
|
)
|
|
62.28
|
|
|
Balance, December 31, 2017
|
716,128
|
|
|
99.65
|
|
|
Grants
|
159,005
|
|
|
93.30
|
|
|
Awards assumed through acquisition of CEC
|
136,324
|
|
|
118.29
|
|
|
Vested shares
|
(236,164
|
)
|
|
76.78
|
|
|
Forfeitures
|
(37,343
|
)
|
|
83.69
|
|
|
Balance, December 31, 2018
|
737,950
|
|
|
114.43
|
|
|
Grants
|
158,748
|
|
|
128.87
|
|
|
Vested shares
|
(393,588
|
)
|
|
141.75
|
|
|
Forfeitures
|
(34,160
|
)
|
|
79.02
|
|
|
Balance, December 31, 2019
|
468,950
|
|
|
$
|
98.98
|
|
|
Number of
shares
|
|
Weighted-
average
exercise price
|
|
Weighted-
average
remaining
contractual
life (years)
|
|
Aggregate
intrinsic value(1)
(in thousands)
|
|||||
Balance, December 31, 2016
|
100,000
|
|
|
$
|
51.95
|
|
|
4.1
|
|
$
|
2,868
|
|
Grants
|
—
|
|
|
—
|
|
|
|
|
|
|||
Exercises
|
—
|
|
|
—
|
|
|
|
|
|
|||
Forfeitures
|
—
|
|
|
—
|
|
|
|
|
|
|||
Balance, December 31, 2017
|
100,000
|
|
|
51.95
|
|
|
3.1
|
|
3,763
|
|
||
Grants
|
—
|
|
|
—
|
|
|
|
|
|
|||
Awards assumed through acquisition of CEC
|
319,846
|
|
|
66.98
|
|
|
|
|
|
|||
Exercises
|
(162,831
|
)
|
|
58.11
|
|
|
|
|
|
|||
Forfeitures
|
(769
|
)
|
|
51.96
|
|
|
|
|
|
|||
Balance, December 31, 2018
|
256,246
|
|
|
66.80
|
|
|
7.0
|
|
11,947
|
|
||
Grants
|
—
|
|
|
—
|
|
|
|
|
|
|||
Exercises
|
(208,114
|
)
|
|
67.61
|
|
|
|
|
|
|||
Forfeitures/Expirations
|
(2,036
|
)
|
|
58.38
|
|
|
|
|
|
|||
Balance, December 31, 2019
|
46,096
|
|
|
$
|
63.49
|
|
|
5.2
|
|
$
|
4,398
|
|
Exercisable, December 31, 2019
|
24,246
|
|
|
$
|
60.27
|
|
|
4.0
|
|
$
|
2,391
|
|
(1)
|
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the respective trading day and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holder had all options been exercised on the respective trading day. The amount of intrinsic value will change based on the fair market value of the Company’s common stock.
|
|
2017
|
|
2018
|
|
2019
|
||||||
Instructional and support costs
|
$
|
1,943
|
|
|
$
|
2,588
|
|
|
$
|
3,823
|
|
General and administration
|
9,684
|
|
|
10,702
|
|
|
7,970
|
|
|||
Merger and integration costs
|
—
|
|
|
2,242
|
|
|
367
|
|
|||
Stock-based compensation expense included in operating expense
|
11,627
|
|
|
15,532
|
|
|
12,160
|
|
|||
Tax benefit
|
4,593
|
|
|
3,922
|
|
|
3,126
|
|
|||
Stock-based compensation expense, net of tax
|
$
|
7,034
|
|
|
$
|
11,610
|
|
|
$
|
9,034
|
|
|
2018
|
|
2019
|
||||
Contract liabilities, net of current portion
|
$
|
23,880
|
|
|
$
|
30,925
|
|
Deferred payments related to acquisitions
|
5,904
|
|
|
4,963
|
|
||
Deferred rent and other facility costs
|
6,837
|
|
|
1,961
|
|
||
Employee separation costs
|
6,800
|
|
|
1,838
|
|
||
Loss on facilities not in use
|
4,332
|
|
|
—
|
|
||
Lease incentives
|
2,300
|
|
|
—
|
|
||
Other
|
1,263
|
|
|
1,764
|
|
||
Other long-term liabilities
|
$
|
51,316
|
|
|
$
|
41,451
|
|
|
Shares
purchased
|
|
Average price
per share
|
|||
2017
|
4,718
|
|
|
$
|
77.05
|
|
2018
|
4,647
|
|
|
$
|
100.34
|
|
2019
|
4,918
|
|
|
$
|
126.83
|
|
|
2017
|
|
2018
|
|
2019
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
21,156
|
|
|
$
|
9,069
|
|
|
$
|
37,878
|
|
State
|
4,477
|
|
|
3,785
|
|
|
11,584
|
|
|||
Total current
|
25,633
|
|
|
12,854
|
|
|
49,462
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Change in federal tax rate due to the 2017 Act
|
11,375
|
|
|
—
|
|
|
—
|
|
|||
Federal
|
(3,193
|
)
|
|
(13,381
|
)
|
|
(7,009
|
)
|
|||
State
|
(1,781
|
)
|
|
(2,941
|
)
|
|
133
|
|
|||
Total deferred
|
6,401
|
|
|
(16,322
|
)
|
|
(6,876
|
)
|
|||
Total provision (benefit) for income taxes
|
$
|
32,034
|
|
|
$
|
(3,468
|
)
|
|
$
|
42,586
|
|
|
2018
|
|
2019
|
||||
Deferred leasing costs
|
$
|
1,673
|
|
|
$
|
27,074
|
|
Allowance for doubtful accounts
|
7,943
|
|
|
8,884
|
|
||
Contract liabilities
|
6,107
|
|
|
8,139
|
|
||
Stock-based compensation
|
19,834
|
|
|
6,322
|
|
||
Capital loss carryforward
|
4,174
|
|
|
4,459
|
|
||
Other
|
3,650
|
|
|
1,955
|
|
||
Other facility-related costs
|
2,080
|
|
|
489
|
|
||
Intangible assets
|
(82,022
|
)
|
|
(65,777
|
)
|
||
Right-of-use lease assets
|
—
|
|
|
(21,673
|
)
|
||
Property and equipment
|
(18,441
|
)
|
|
(13,120
|
)
|
||
Valuation allowance
|
(4,356
|
)
|
|
(4,694
|
)
|
||
Net deferred tax asset (liability)
|
$
|
(59,358
|
)
|
|
$
|
(47,942
|
)
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
Beginning unrecognized tax benefits
|
$
|
—
|
|
|
$
|
624
|
|
Additions for tax positions taken in the prior year
|
—
|
|
|
845
|
|
||
Additions from merger
|
687
|
|
|
—
|
|
||
Reductions for tax positions taken in prior years
|
(63
|
)
|
|
(304
|
)
|
||
Ending unrecognized tax benefits
|
$
|
624
|
|
|
$
|
1,165
|
|
|
2017
|
|
2018
|
|
2019
|
|||
Statutory federal rate
|
35.0
|
%
|
|
21.0
|
%
|
|
21.0
|
%
|
State income taxes, net of federal benefits
|
4.2
|
|
|
(1.4
|
)
|
|
4.6
|
|
Adjustment to deferred tax assets as a result of the 2017 Act
|
21.8
|
|
|
—
|
|
|
—
|
|
Termination of deferred compensation arrangements
|
—
|
|
|
—
|
|
|
9.2
|
|
Transaction costs
|
5.2
|
|
|
(6.2
|
)
|
|
—
|
|
Adjustments to contingent consideration
|
(5.0
|
)
|
|
—
|
|
|
—
|
|
Excess tax benefit on share-based compensation
|
—
|
|
|
15.5
|
|
|
(2.6
|
)
|
Impairment of intangible assets
|
—
|
|
|
(15.3
|
)
|
|
—
|
|
Acceleration of deductions due to change in tax law
|
—
|
|
|
6.4
|
|
|
—
|
|
Other
|
(0.4
|
)
|
|
(1.9
|
)
|
|
2.2
|
|
Effective tax rate
|
60.8
|
%
|
|
18.1
|
%
|
|
34.4
|
%
|
|
2018
|
|
2019
|
||||
Limited partnership investments, beginning of period
|
$
|
—
|
|
|
$
|
13,449
|
|
Additions from merger
|
12,803
|
|
|
—
|
|
||
Capital contributions
|
737
|
|
|
1,035
|
|
||
Pro-rata share in the net income of limited partnerships
|
(91
|
)
|
|
2,337
|
|
||
Distributions
|
—
|
|
|
(1,026
|
)
|
||
Limited partnership investments, end of period
|
$
|
13,449
|
|
|
$
|
15,795
|
|
|
2017
|
|
2018
|
|
2019
|
||||||
Revenues
|
|
|
|
|
|
||||||
Strayer University
|
$
|
449,547
|
|
|
$
|
471,104
|
|
|
$
|
527,032
|
|
Capella University
|
—
|
|
|
154,918
|
|
|
455,320
|
|
|||
Non-Degree Programs
|
5,304
|
|
|
8,163
|
|
|
14,785
|
|
|||
Consolidated revenues
|
$
|
454,851
|
|
|
$
|
634,185
|
|
|
$
|
997,137
|
|
Income (loss) from operations
|
|
|
|
|
|
||||||
Strayer University
|
$
|
64,801
|
|
|
$
|
68,188
|
|
|
$
|
106,132
|
|
Capella University
|
—
|
|
|
6,340
|
|
|
88,981
|
|
|||
Non-Degree Programs
|
(8,225
|
)
|
|
(5,920
|
)
|
|
(991
|
)
|
|||
Amortization of intangible assets
|
—
|
|
|
(25,694
|
)
|
|
(61,667
|
)
|
|||
Merger and integration costs
|
(11,879
|
)
|
|
(45,745
|
)
|
|
(21,923
|
)
|
|||
Fair value adjustments and impairment of intangible assets
|
7,512
|
|
|
(19,909
|
)
|
|
—
|
|
|||
Consolidated income (loss) from operations
|
$
|
52,209
|
|
|
$
|
(22,740
|
)
|
|
$
|
110,532
|
|
|
2017
|
|
2018
|
|
2019
|
||||||
Depreciation and amortization
|
|
|
|
|
|
||||||
Strayer University
|
$
|
18,268
|
|
|
$
|
19,997
|
|
|
$
|
23,790
|
|
Capella University
|
—
|
|
|
7,382
|
|
|
18,006
|
|
|||
Non-Degree Programs
|
465
|
|
|
741
|
|
|
997
|
|
|||
Amortization of intangible assets
|
—
|
|
|
25,694
|
|
|
61,667
|
|
|||
Merger and integration costs
|
—
|
|
|
729
|
|
|
401
|
|
|||
Consolidated depreciation and amortization
|
$
|
18,733
|
|
|
$
|
54,543
|
|
|
$
|
104,861
|
|
Stock-Based compensation
|
|
|
|
|
|
||||||
Strayer University
|
$
|
11,627
|
|
|
$
|
11,602
|
|
|
$
|
5,611
|
|
Capella University
|
—
|
|
|
1,495
|
|
|
5,799
|
|
|||
Non-Degree Programs
|
—
|
|
|
193
|
|
|
383
|
|
|||
Merger and integration costs
|
—
|
|
|
2,242
|
|
|
367
|
|
|||
Consolidated stock-based compensation
|
$
|
11,627
|
|
|
$
|
15,532
|
|
|
$
|
12,160
|
|
|
Quarter
|
||||||||||||||
2018
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
Revenues
|
$
|
116,469
|
|
|
$
|
114,668
|
|
|
$
|
160,945
|
|
|
$
|
242,103
|
|
Income from operations
|
11,328
|
|
|
4,184
|
|
|
(57,127
|
)
|
|
18,875
|
|
||||
Net income (loss)
|
9,467
|
|
|
5,188
|
|
|
(52,781
|
)
|
|
22,455
|
|
||||
Net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.88
|
|
|
$
|
0.48
|
|
|
$
|
(2.97
|
)
|
|
$
|
1.05
|
|
Diluted
|
$
|
0.84
|
|
|
$
|
0.46
|
|
|
$
|
(2.97
|
)
|
|
$
|
1.02
|
|
|
Quarter
|
||||||||||||||
2019
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
Revenues
|
$
|
246,508
|
|
|
$
|
245,110
|
|
|
$
|
241,747
|
|
|
$
|
263,772
|
|
Income from operations
|
25,723
|
|
|
27,596
|
|
|
20,000
|
|
|
37,213
|
|
||||
Net income
|
11,500
|
|
|
24,409
|
|
|
16,692
|
|
|
28,537
|
|
||||
Net income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.53
|
|
|
$
|
1.12
|
|
|
$
|
0.77
|
|
|
$
|
1.31
|
|
Diluted
|
$
|
0.52
|
|
|
$
|
1.10
|
|
|
$
|
0.75
|
|
|
$
|
1.29
|
|
Item 9.
|
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers, and Corporate Governance
|
Name
|
Age
|
Position
|
Directors:
|
|
|
Robert S. Silberman
|
62
|
Executive Chairman
|
J. Kevin Gilligan
|
65
|
Vice Chairman
|
Robert R. Grusky
|
62
|
Presiding Independent Director
|
Dr. Charlotte F. Beason
|
72
|
Director
|
Rita D. Brogley
|
54
|
Director
|
Dr. John T. Casteen III
|
76
|
Director
|
H. James Dallas
|
61
|
Director
|
Nathaniel C. Fick
|
42
|
Director
|
Karl McDonnell
|
53
|
Director, Chief Executive Officer
|
Todd A. Milano
|
67
|
Director
|
G. Thomas Waite, III
|
68
|
Director
|
|
|
|
Executive Officers:
|
|
|
Daniel W. Jackson
|
45
|
Executive Vice President and Chief Financial Officer
|
Lizette B. Herraiz
|
45
|
Senior Vice President and General Counsel
|
Andrew E. Watt
|
42
|
Senior Vice President, Chief Operating Officer
|
Christa E. Hokenson
|
49
|
Senior Vice President, Chief Human Resources Officer
|
Thomas J. Aprahamian
|
51
|
Senior Vice President, Controller and Chief Accounting Officer
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accounting Fees and Services
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
Exhibit
Number
|
|
Description
|
|
|
|
|
|
3.1
|
|
|
|
|
|
|
|
3.2
|
|
|
|
|
|
|
|
4.1
|
|
|
|
|
|
|
|
4.2*
|
|
|
|
|
|
|
|
10.1
|
|
|
|
|
|
|
|
10.2
|
|
|
|
|
|
|
|
10.3
|
|
|
|
|
|
|
|
10.4
|
|
|
|
|
|
|
|
10.5†
|
|
|
|
|
|
|
|
10.6†
|
|
|
|
|
|
|
|
10.7†
|
|
|
|
|
|
|
|
10.8†
|
|
|
|
|
|
|
|
10.9†
|
|
|
|
|
|
|
|
10.10†
|
|
|
|
|
|
|
|
10.11†
|
|
|
|
|
|
|
|
10.12†
|
|
|
|
|
|
|
|
10.13†
|
|
|
|
|
|
|
10.14†
|
|
|
|
|
|
|
|
10.15†
|
|
|
|
|
|
|
|
10.16†
|
|
|
|
|
|
|
|
10.17†
|
|
|
|
|
|
|
|
10.18†
|
|
|
|
|
|
|
|
10.19†
|
|
|
|
|
|
|
|
10.20†
|
|
|
|
|
|
|
|
10.21†
|
|
|
|
|
|
|
|
10.22†
|
|
|
|
|
|
|
|
10.23†
|
|
|
|
|
|
|
|
21.1*
|
|
|
|
|
|
|
|
23.1*
|
|
|
|
|
|
|
|
24.1*
|
|
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
|
|
32.1**
|
|
|
|
|
|
|
|
32.2**
|
|
|
|
|
|
|
|
101.INS*
|
|
|
XBRL Instance Document
|
101.SCH*
|
|
|
XBRL Schema Document
|
101.CAL*
|
|
|
XBRL Calculation Linkbase Document
|
101.LAB*
|
|
|
XBRL Labels Linkbase Document
|
101.PRE*
|
|
|
XBRL Presentation Linkbase Document
|
101.DEF*
|
|
|
XBRL Definition Linkbase Document
|
104*
|
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
†
|
Denotes management contract or compensation plan or arrangement.
|
Item 16.
|
Item 10-K Summary
|
|
STRATEGIC EDUCATION, INC.
|
|
|
|
|
|
By:
|
/s/ Karl McDonnell
|
|
|
Karl McDonnell
|
|
|
Chief Executive Officer
|
SIGNATURES
|
|
TITLE
|
|
DATE
|
|
|
|
|
|
/s/ Robert S. Silberman
|
|
Executive Chairman
|
|
March 2, 2020
|
Robert S. Silberman
|
|
|
|
|
|
|
|
|
|
/s/ J. Kevin Gilligan
|
|
Vice Chairman
|
|
March 2, 2020
|
J. Kevin Gilligan
|
|
|
|
|
|
|
|
|
|
/s/ Karl McDonnell
|
|
Chief Executive Officer and Director
|
|
March 2, 2020
|
Karl McDonnell
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Daniel W. Jackson
|
|
Chief Financial Officer
|
|
March 2, 2020
|
Daniel W. Jackson
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/ Thomas J. Aprahamian
|
|
Controller and Chief Accounting Officer
|
|
March 2, 2020
|
Thomas J. Aprahamian
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Charlotte F. Beason
|
|
Director
|
|
March 2, 2020
|
Charlotte F. Beason
|
|
|
|
|
|
|
|
|
|
/s/ Rita D. Brogley
|
|
Director
|
|
March 2, 2020
|
Rita D. Brogley
|
|
|
|
|
|
|
|
|
|
/s/ John T. Casteen, III
|
|
Director
|
|
March 2, 2020
|
John T. Casteen, III
|
|
|
|
|
|
|
|
|
|
/s/ H. James Dallas
|
|
Director
|
|
March 2, 2020
|
H. James Dallas
|
|
|
|
|
|
|
|
|
|
/s/ Nathaniel C. Fick
|
|
Director
|
|
March 2, 2020
|
Nathaniel C. Fick
|
|
|
|
|
|
|
|
|
|
/s/ Robert R. Grusky
|
|
Director
|
|
March 2, 2020
|
Robert R. Grusky
|
|
|
|
|
|
|
|
|
|
/s/ Todd A. Milano
|
|
Director
|
|
March 2, 2020
|
Todd A. Milano
|
|
|
|
|
|
|
|
|
|
/s/ G. Thomas Waite, III
|
|
Director
|
|
March 2, 2020
|
G. Thomas Waite, III
|
|
|
|
|
•
|
provide that a special meeting of stockholders will be called only at the request of stockholders entitled to cast a majority of the votes entitled to be cast at the meeting;
|
•
|
reserve for itself the right to fix the number of directors;
|
•
|
provide that a director may be removed only by the vote of the holders of at least two-thirds of the stock entitled to vote;
|
•
|
retain for itself sole authority to fill vacancies created by the death, removal or resignation of a director; and
|
•
|
provide that all vacancies on the board of directors may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum.
|
|
|
Jurisdiction of Incorporation
|
Strayer University, LLC
|
|
Maryland
|
Capella Education Company
|
|
Delaware
|
Sophia Learning, LLC
|
|
Minnesota
|
Capella Learning Solutions, LLC
|
|
Delaware
|
Hackbright Academy, Inc.
|
|
Delaware
|
Capella University, LLC
|
|
Minnesota
|
Workforce Edge, LLC
|
|
Delaware
|
1.
|
I have reviewed this annual report on Form 10-K of Strategic Education, Inc. (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
/s/ Karl McDonnell
|
|
|
|
|
Karl McDonnell
|
|
|
|
|
Chief Executive Officer
|
|
|
1.
|
I have reviewed this annual report on Form 10-K of Strategic Education, Inc. (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
/s/ Daniel W. Jackson
|
|
|
|
|
Daniel W. Jackson
|
|
|
|
|
Executive Vice President and
Chief Financial Officer
|
|
|
/s/ Karl McDonnell
|
Karl McDonnell
|
Chief Executive Officer
|
/s/ Daniel W. Jackson
|
Daniel W. Jackson
|
Executive Vice President and Chief Financial Officer
|