(Mark One)
|
|
x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
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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)
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59-3551629
(I.R.S. Employer
Identification No.)
|
Large accelerated filer
o
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Accelerated filer
x
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Non-accelerated filer
o
(Do not check if a
smaller reporting company)
|
Smaller reporting company
o
|
|
|
|
|
||
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||
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||
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||
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||
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As of
June 30, 2014 |
|
As of
December 31, 2013 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
150,490
|
|
|
$
|
212,526
|
|
Restricted cash
|
32,628
|
|
|
36,946
|
|
||
Investments
|
81,130
|
|
|
65,901
|
|
||
Accounts receivable, net
|
25,881
|
|
|
22,953
|
|
||
Student loans receivable, net
|
925
|
|
|
1,043
|
|
||
Deferred income taxes
|
16,734
|
|
|
16,683
|
|
||
Prepaid expenses and other current assets
|
23,405
|
|
|
21,563
|
|
||
Total current assets
|
331,193
|
|
|
377,615
|
|
||
Property and equipment, net
|
88,694
|
|
|
91,425
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|
||
Investments
|
77,752
|
|
|
41,062
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|
||
Student loans receivable, net
|
10,447
|
|
|
11,785
|
|
||
Goodwill and intangibles, net
|
26,232
|
|
|
26,878
|
|
||
Deferred income taxes
|
18,502
|
|
|
18,507
|
|
||
Other long-term assets
|
2,654
|
|
|
2,740
|
|
||
Total assets
|
$
|
555,474
|
|
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$
|
570,012
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LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
4,029
|
|
|
$
|
5,195
|
|
Accrued liabilities
|
46,531
|
|
|
54,290
|
|
||
Deferred revenue and student deposits
|
112,404
|
|
|
132,791
|
|
||
Total current liabilities
|
162,964
|
|
|
192,276
|
|
||
Rent liability
|
22,493
|
|
|
23,927
|
|
||
Other long-term liabilities
|
9,693
|
|
|
9,271
|
|
||
Total liabilities
|
195,150
|
|
|
225,474
|
|
||
Commitments and contingencies (see Note 12)
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
||||
Preferred stock, $0.01 par value:
|
|
|
|
||||
20,000 shares authorized; zero shares issued and outstanding at both June 30, 2014, and December 31, 2013
|
—
|
|
|
—
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|
||
Common stock, $0.01 par value:
|
|
|
|
||||
300,000 shares authorized; 62,812 issued and 45,255 outstanding at June 30, 2014; 62,331 issued and 44,774 outstanding at December 31, 2013
|
628
|
|
|
623
|
|
||
Additional paid-in capital
|
176,057
|
|
|
168,829
|
|
||
Retained earnings
|
520,732
|
|
|
512,107
|
|
||
Accumulated other comprehensive income (loss)
|
(24
|
)
|
|
48
|
|
||
Treasury stock, 17,557 shares at cost at both June 30, 2014, and December 31, 2013
|
(337,069
|
)
|
|
(337,069
|
)
|
||
Total stockholders' equity
|
360,324
|
|
|
344,538
|
|
||
Total liabilities and stockholders' equity
|
$
|
555,474
|
|
|
$
|
570,012
|
|
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Three Months Ended June 30,
|
|
Six Months Ended June 30,
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||||||||||||
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2014
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2013
|
|
2014
|
|
2013
|
||||||||
Revenue
|
$
|
171,522
|
|
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$
|
193,470
|
|
|
$
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328,792
|
|
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$
|
406,456
|
|
Costs and expenses:
|
|
|
|
|
|
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||||||||
Instructional costs and services
|
76,853
|
|
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99,603
|
|
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159,934
|
|
|
196,631
|
|
||||
Admissions advisory and marketing
|
55,518
|
|
|
57,582
|
|
|
121,296
|
|
|
115,125
|
|
||||
General and administrative
|
16,737
|
|
|
17,152
|
|
|
33,006
|
|
|
35,891
|
|
||||
Total costs and expenses
|
149,108
|
|
|
174,337
|
|
|
314,236
|
|
|
347,647
|
|
||||
Operating income
|
22,414
|
|
|
19,133
|
|
|
14,556
|
|
|
58,809
|
|
||||
Other income, net
|
712
|
|
|
748
|
|
|
1,079
|
|
|
1,585
|
|
||||
Income before income taxes
|
23,126
|
|
|
19,881
|
|
|
15,635
|
|
|
60,394
|
|
||||
Income tax expense
|
10,171
|
|
|
7,767
|
|
|
7,010
|
|
|
23,613
|
|
||||
Net income
|
$
|
12,955
|
|
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$
|
12,114
|
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$
|
8,625
|
|
|
$
|
36,781
|
|
Earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.29
|
|
|
$
|
0.22
|
|
|
$
|
0.19
|
|
|
$
|
0.68
|
|
Diluted
|
0.28
|
|
|
0.22
|
|
|
0.19
|
|
|
0.66
|
|
||||
Weighted average number of common shares outstanding used in computing earnings per share:
|
|
|
|
|
|
|
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||||||||
Basic
|
45,233
|
|
|
54,136
|
|
|
45,066
|
|
|
54,132
|
|
||||
Diluted
|
46,503
|
|
|
55,634
|
|
|
46,524
|
|
|
55,488
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net income
|
$
|
12,955
|
|
|
$
|
12,114
|
|
|
$
|
8,625
|
|
|
$
|
36,781
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Unrealized losses on investments
|
(36
|
)
|
|
(154
|
)
|
|
(72
|
)
|
|
(203
|
)
|
||||
Comprehensive income
|
$
|
12,919
|
|
|
$
|
11,960
|
|
|
$
|
8,553
|
|
|
$
|
36,578
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated Other
Comprehensive
Income (Loss)
|
|
Treasury
Stock
|
|
|
|||||||||||||||
|
Shares
|
|
Par Value
|
|
Total
|
|||||||||||||||||||||
Balance at December 31, 2013
|
62,331
|
|
|
$
|
623
|
|
|
$
|
168,829
|
|
|
$
|
512,107
|
|
|
$
|
48
|
|
|
$
|
(337,069
|
)
|
|
$
|
344,538
|
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
5,058
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,058
|
|
||||||
Exercise of stock options
|
346
|
|
|
4
|
|
|
2,960
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,964
|
|
||||||
Excess tax benefit of option exercises and restricted stock, net of tax shortfall
|
—
|
|
|
—
|
|
|
415
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
415
|
|
||||||
Stock issued under restricted stock plan, net of shares held for taxes
|
135
|
|
|
1
|
|
|
(1,205
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,204
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
8,625
|
|
|
—
|
|
|
—
|
|
|
8,625
|
|
||||||
Unrealized losses on investments, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(72
|
)
|
|
—
|
|
|
(72
|
)
|
||||||
Balance at June 30, 2014
|
62,812
|
|
|
$
|
628
|
|
|
$
|
176,057
|
|
|
$
|
520,732
|
|
|
$
|
(24
|
)
|
|
$
|
(337,069
|
)
|
|
$
|
360,324
|
|
|
Six Months Ended June 30,
|
||||||
|
2014
|
|
2013
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net income
|
$
|
8,625
|
|
|
$
|
36,781
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
||||
Provision for bad debts
|
12,921
|
|
|
24,403
|
|
||
Depreciation and amortization
|
11,972
|
|
|
10,338
|
|
||
Amortization of premium/discount
|
(89
|
)
|
|
2,165
|
|
||
Stock-based compensation
|
5,058
|
|
|
7,443
|
|
||
Excess tax benefit of option exercises
|
(986
|
)
|
|
—
|
|
||
Loss on impairment of student loans receivable
|
1,189
|
|
|
292
|
|
||
Loss on disposal of fixed assets
|
52
|
|
|
—
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Restricted cash
|
4,518
|
|
|
6,451
|
|
||
Accounts receivable
|
(15,755
|
)
|
|
(13,222
|
)
|
||
Prepaid expenses and other current assets
|
(1,766
|
)
|
|
(4,110
|
)
|
||
Student loans receivable
|
480
|
|
|
3
|
|
||
Other long-term assets
|
86
|
|
|
801
|
|
||
Accounts payable and accrued liabilities
|
(8,842
|
)
|
|
5,400
|
|
||
Deferred revenue and student deposits
|
(20,292
|
)
|
|
(39,996
|
)
|
||
Other liabilities
|
(1,012
|
)
|
|
1,975
|
|
||
Net cash provided by (used in) operating activities
|
(3,841
|
)
|
|
38,724
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Capital expenditures
|
(6,203
|
)
|
|
(6,778
|
)
|
||
Purchases of investments
|
(72,426
|
)
|
|
(26,689
|
)
|
||
Restricted cash
|
(200
|
)
|
|
—
|
|
||
Capitalized costs for intangible assets
|
(2,112
|
)
|
|
(2,353
|
)
|
||
Sales and maturities of investments
|
20,000
|
|
|
109,916
|
|
||
Net cash provided by (used in) investing activities
|
(60,941
|
)
|
|
74,096
|
|
||
Cash flows from financing activities
|
|
|
|
||||
Proceeds from exercise of stock options
|
2,964
|
|
|
183
|
|
||
Excess tax benefit of option exercises
|
986
|
|
|
—
|
|
||
Proceeds from the issuance of stock under employee stock purchase plan
|
—
|
|
|
604
|
|
||
Tax withholdings on issuance of restricted stock
|
(1,204
|
)
|
|
—
|
|
||
Net cash provided by financing activities
|
2,746
|
|
|
787
|
|
||
Net increase (decrease) in cash and cash equivalents
|
(62,036
|
)
|
|
113,607
|
|
||
Cash and cash equivalents at beginning of period
|
212,526
|
|
|
208,971
|
|
||
Cash and cash equivalents at end of period
|
$
|
150,490
|
|
|
$
|
322,578
|
|
Supplemental disclosure of non-cash transactions:
|
|
|
|
||||
Purchase of equipment included in accounts payable and accrued liabilities
|
$
|
468
|
|
|
$
|
1,416
|
|
|
As of June 30, 2014
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Demand notes
|
$
|
—
|
|
|
$
|
951
|
|
|
$
|
—
|
|
|
$
|
951
|
|
Corporate notes and bonds
|
—
|
|
|
52,923
|
|
|
—
|
|
|
52,923
|
|
||||
U.S. government and agency securities
|
—
|
|
|
35,008
|
|
|
—
|
|
|
35,008
|
|
||||
Certificates of deposit
|
—
|
|
|
70,000
|
|
|
—
|
|
|
70,000
|
|
||||
Total
|
$
|
—
|
|
|
$
|
158,882
|
|
|
$
|
—
|
|
|
$
|
158,882
|
|
|
As of December 31, 2013
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Demand notes
|
$
|
—
|
|
|
$
|
719
|
|
|
$
|
—
|
|
|
$
|
719
|
|
Corporate notes and bonds
|
—
|
|
|
16,244
|
|
|
—
|
|
|
16,244
|
|
||||
Certificates of deposit
|
—
|
|
|
90,000
|
|
|
—
|
|
|
90,000
|
|
||||
Total
|
$
|
—
|
|
|
$
|
106,963
|
|
|
$
|
—
|
|
|
$
|
106,963
|
|
|
As of
June 30, 2014 |
|
As of
December 31, 2013 |
||||
Accounts receivable
|
$
|
51,748
|
|
|
$
|
49,854
|
|
Less allowance for doubtful accounts
|
(25,867
|
)
|
|
(26,901
|
)
|
||
Accounts receivable, net
|
$
|
25,881
|
|
|
$
|
22,953
|
|
|
Beginning
Balance
|
|
Charged to
Expense
|
|
Deductions(1)
|
|
Ending
Balance
|
||||||||
Allowance for doubtful accounts receivable:
|
|
|
|
|
|
|
|
||||||||
For the six months ended June 30, 2014
|
$
|
(26,901
|
)
|
|
$
|
12,872
|
|
|
$
|
(13,906
|
)
|
|
$
|
(25,867
|
)
|
For the six months ended June 30, 2013
|
(31,466
|
)
|
|
24,423
|
|
|
(19,718
|
)
|
|
(36,171
|
)
|
(1)
|
Deductions represent accounts written off, net of recoveries.
|
Short-term:
|
As of
June 30, 2014 |
|
As of
December 31, 2013 |
||||
Student loans receivable (non-tuition related)
|
$
|
520
|
|
|
$
|
587
|
|
Student loans receivable (tuition related)
|
512
|
|
|
621
|
|
||
Current student loans receivable
|
1,032
|
|
|
1,208
|
|
||
Less allowance for doubtful accounts
|
(107
|
)
|
|
(165
|
)
|
||
Student loans receivable, net
|
$
|
925
|
|
|
$
|
1,043
|
|
Long-term:
|
As of
June 30, 2014 |
|
As of
December 31, 2013 |
||||
Student loans receivable (non-tuition related)
|
$
|
6,219
|
|
|
$
|
7,347
|
|
Student loans receivable (tuition related)
|
6,314
|
|
|
6,417
|
|
||
Non-current student loans receivable
|
12,533
|
|
|
13,764
|
|
||
Less allowance for doubtful accounts
|
(2,086
|
)
|
|
(1,979
|
)
|
||
Student loans receivable, net
|
$
|
10,447
|
|
|
$
|
11,785
|
|
|
Beginning
Balance
|
|
Charged to
Expense
|
|
Deductions(1)
|
|
Ending
Balance
|
||||||||
Allowance for student loans receivable (tuition related):
|
|
|
|
|
|
|
|
||||||||
For the six months ended June 30, 2014
|
$
|
(2,144
|
)
|
|
$
|
49
|
|
|
$
|
—
|
|
|
$
|
(2,193
|
)
|
For the six months ended June 30, 2013
|
(1,895
|
)
|
|
(20
|
)
|
|
—
|
|
|
(1,875
|
)
|
(1)
|
Deductions represent accounts written off, net of recoveries.
|
Less than 120 days
|
$
|
16,144
|
|
From 120 - 269 days
|
2,422
|
|
|
Greater than 270 days
|
1,181
|
|
|
Total gross student loans receivable
|
19,747
|
|
|
Less: Amounts reserved or impaired
|
(5,379
|
)
|
|
Less: Discount on student loans receivable
|
(2,996
|
)
|
|
Total student loans receivable, net
|
$
|
11,372
|
|
|
As of
June 30, 2014 |
|
As of
December 31, 2013 |
||||
Prepaid expenses
|
$
|
10,480
|
|
|
$
|
10,814
|
|
Prepaid licenses
|
3,861
|
|
|
5,833
|
|
||
Prepaid income taxes
|
4,898
|
|
|
195
|
|
||
Prepaid insurance
|
761
|
|
|
1,131
|
|
||
Interest receivable
|
368
|
|
|
86
|
|
||
Insurance recoverable
|
2,189
|
|
|
2,814
|
|
||
Other current assets
|
848
|
|
|
690
|
|
||
Total prepaid expenses and other current assets
|
$
|
23,405
|
|
|
$
|
21,563
|
|
|
As of
June 30, 2014 |
|
As of
December 31, 2013 |
||||
Land
|
$
|
7,091
|
|
|
$
|
7,091
|
|
Buildings and building improvements
|
29,040
|
|
|
28,916
|
|
||
Furniture and office equipment
|
87,879
|
|
|
84,852
|
|
||
Software
|
13,257
|
|
|
10,075
|
|
||
Leasehold improvements
|
24,421
|
|
|
24,360
|
|
||
Vehicles
|
147
|
|
|
147
|
|
||
Total property and equipment
|
161,835
|
|
|
155,441
|
|
||
Less accumulated depreciation and amortization
|
(73,141
|
)
|
|
(64,016
|
)
|
||
Total property and equipment, net
|
$
|
88,694
|
|
|
$
|
91,425
|
|
|
June 30, 2014
|
||||||||||
Definite-lived intangible assets:
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
Capitalized curriculum costs
|
$
|
16,652
|
|
|
$
|
(7,173
|
)
|
|
$
|
9,479
|
|
Purchased intangible assets
|
15,850
|
|
|
(1,664
|
)
|
|
14,186
|
|
|||
Total definite-lived intangible assets
|
$
|
32,502
|
|
|
$
|
(8,837
|
)
|
|
$
|
23,665
|
|
Goodwill and indefinite-lived intangibles
|
|
|
|
|
2,567
|
|
|||||
Total goodwill and intangibles, net
|
|
|
|
|
$
|
26,232
|
|
||||
|
|
|
|
|
|
||||||
|
December 31, 2013
|
||||||||||
Definite-lived intangible assets:
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
Capitalized curriculum costs
|
$
|
14,540
|
|
|
$
|
(5,035
|
)
|
|
$
|
9,505
|
|
Purchased intangible assets
|
15,857
|
|
|
(1,051
|
)
|
|
14,806
|
|
|||
Total definite-lived intangible assets
|
$
|
30,397
|
|
|
$
|
(6,086
|
)
|
|
$
|
24,311
|
|
Goodwill and indefinite-lived intangibles
|
|
|
|
|
2,567
|
|
|||||
Total goodwill and intangibles, net
|
|
|
|
|
$
|
26,878
|
|
Year Ended December 31,
|
|
|
||
2014
|
$
|
2,742
|
|
|
2015
|
4,447
|
|
||
2016
|
2,693
|
|
||
2017
|
1,327
|
|
||
2018
|
1,232
|
|
||
Thereafter
|
11,224
|
|
||
Total future amortization expense
|
$
|
23,665
|
|
|
As of
June 30, 2014 |
|
As of
December 31, 2013 |
||||
Accrued salaries and wages
|
$
|
7,384
|
|
|
$
|
12,790
|
|
Accrued bonus
|
3,267
|
|
|
2,277
|
|
||
Accrued vacation
|
10,227
|
|
|
9,696
|
|
||
Accrued litigation and fees
|
750
|
|
|
8,000
|
|
||
Accrued expenses
|
18,788
|
|
|
15,079
|
|
||
Rent liability
|
2,607
|
|
|
2,446
|
|
||
Worker's compensation liability
|
3,508
|
|
|
4,002
|
|
||
Total accrued liabilities
|
$
|
46,531
|
|
|
$
|
54,290
|
|
|
As of
June 30, 2014 |
|
As of
December 31, 2013 |
||||
Deferred revenue
|
$
|
28,502
|
|
|
$
|
29,279
|
|
Student deposits
|
83,902
|
|
|
103,512
|
|
||
Total deferred revenue and student deposits
|
$
|
112,404
|
|
|
$
|
132,791
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
12,955
|
|
|
$
|
12,114
|
|
|
$
|
8,625
|
|
|
$
|
36,781
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares outstanding
|
45,233
|
|
|
54,136
|
|
|
45,066
|
|
|
54,132
|
|
||||
Effect of dilutive options and restricted stock units
|
1,270
|
|
|
1,402
|
|
|
1,458
|
|
|
1,261
|
|
||||
Effect of dilutive warrants
|
—
|
|
|
96
|
|
|
—
|
|
|
95
|
|
||||
Diluted weighted average number of common shares outstanding
|
46,503
|
|
|
55,634
|
|
|
46,524
|
|
|
55,488
|
|
||||
Earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share
|
$
|
0.29
|
|
|
$
|
0.22
|
|
|
$
|
0.19
|
|
|
$
|
0.68
|
|
Diluted earnings per share
|
$
|
0.28
|
|
|
$
|
0.22
|
|
|
$
|
0.19
|
|
|
$
|
0.66
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
(in thousands)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Options
|
2,769
|
|
|
3,850
|
|
|
2,351
|
|
|
3,649
|
|
Restricted stock units
|
—
|
|
|
22
|
|
|
—
|
|
|
11
|
|
•
|
our ability to successfully remediate the control deficiencies that constitute the material weaknesses in our internal controls discussed in “Item 4. Controls and Procedures”
|
•
|
Ashford University's operation of an accredited institution subject to the requirements of the California Bureau for Private Postsecondary Education (“BPPE”);
|
•
|
our ability to comply with changing regulatory requirements;
|
•
|
expectations regarding financial position, results of operations, liquidity and enrollment at our institutions;
|
•
|
projections, predictions, expectations, estimates or forecasts as to our business, financial and operational results and future economic performance;
|
•
|
new initiatives focused on student success and academic quality;
|
•
|
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,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Consolidated Statement of Income Data:
|
(unaudited)
|
||||||||||||||
Revenue
|
$
|
171,522
|
|
|
$
|
193,470
|
|
|
$
|
328,792
|
|
|
$
|
406,456
|
|
Operating Income
|
22,414
|
|
|
19,133
|
|
|
14,556
|
|
|
58,809
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Consolidated Other Data:
|
|
|
|
|
|
|
|
||||||||
Period end enrollment (1)
|
|
|
|
|
|
|
|
||||||||
Online
|
60,477
|
|
|
70,866
|
|
|
60,477
|
|
|
70,866
|
|
||||
Campus
|
640
|
|
|
819
|
|
|
640
|
|
|
819
|
|
||||
Total
|
61,117
|
|
|
71,685
|
|
|
61,117
|
|
|
71,685
|
|
(1)
|
We define enrollments as the number of active students on the last day of the financial reporting period. A student is considered active if the student 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 a notice of withdrawal.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Revenue
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Costs and expenses:
|
|
|
|
|
|
|
|
||||
Instructional costs and services
|
44.8
|
|
|
51.5
|
|
|
48.6
|
|
|
48.4
|
|
Admissions advisory and marketing
|
32.4
|
|
|
29.8
|
|
|
36.9
|
|
|
28.3
|
|
General and administrative
|
9.8
|
|
|
8.9
|
|
|
10.0
|
|
|
8.8
|
|
Total costs and expenses
|
87.0
|
|
|
90.2
|
|
|
95.5
|
|
|
85.5
|
|
Operating income
|
13.0
|
|
|
9.8
|
|
|
4.5
|
|
|
14.5
|
|
Other income, net
|
0.4
|
|
|
0.4
|
|
|
0.3
|
|
|
0.3
|
|
Income before income taxes
|
13.4
|
|
|
10.2
|
|
|
4.8
|
|
|
14.8
|
|
Income tax expense
|
5.8
|
|
|
3.9
|
|
|
2.2
|
|
|
5.8
|
|
Net income
|
7.6
|
%
|
|
6.3
|
%
|
|
2.6
|
%
|
|
9.0
|
%
|
•
|
a failure to remediate the control deficiencies that constitute the material weaknesses in our internal controls discussed in “Item 4. Controls and Procedures”;
|
•
|
developments regarding the accreditation or state licensing of our academic institutions, particularly Ashford University;
|
•
|
our quarterly or annual earnings or those of other companies in our industry;
|
•
|
public reaction to our press releases, corporate communications and SEC filings;
|
•
|
changes in earnings estimates or recommendations by research analysts who track our common stock or the stocks of other companies in our industry;
|
•
|
seasonal variations in our student enrollment;
|
•
|
new laws or regulations or new interpretations of laws or regulations applicable to our industry or business;
|
•
|
negative publicity, including government hearings and other public lawmaker or regulator criticism, regarding our industry or business;
|
•
|
changes in enrollment;
|
•
|
changes in accounting standards, policies, guidance, interpretations or principles;
|
•
|
litigation involving our company or investigations or audits by regulators into the operations of our company or our competitors;
|
•
|
sales of common stock by our directors, executive officers and significant stockholders; and
|
•
|
changes in general conditions in the United States and global economies or financial markets, including those resulting from war, incidents of terrorism or responses to such events.
|
Exhibit
|
|
|
Description
|
3.1
|
|
|
Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Form 10-Q filed on May 21, 2009).
|
3.2
|
|
|
Second Amended and Restated Bylaws (incorporated by reference to Exhibit 3.4 to the Form S-1 filed on March 20, 2009).
|
4.1
|
|
|
Specimen of Stock Certificate (incorporated by reference to Exhibit 4.1 to the Form S-1 filed on March 30, 2009).
|
4.2
|
|
|
Second Amended and Restated Registration Rights Agreement (incorporated by reference to Exhibit 4.4 to the Form S-1 filed on September 4, 2009).
|
10.1
|
|
†
|
Addendum to Software License Agreement with Campus Management Corp. dated April 1, 2014.
|
10.2
|
|
†
|
Addendum to CampusCare Support Agreement dated April 1, 2014 with Campus Management Corp.
|
31.1
|
|
|
Certification of Andrew S. Clark, President and Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-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 Daniel J. Devine, Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-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 Daniel J. Devine, 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 our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014, filed with the SEC on August 7, 2014, formatted in Extensible Business Reporting Language (“XBRL”): (i) the Condensed Consolidated Balance Sheets as of June 30, 2014, and December 31, 2013; (ii) the Condensed Consolidated Statements of Income for the three and six months ended June 30, 2014 and 2013; (iii) the Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2014 and 2013; (iv) the Condensed Consolidated Statement of Stockholder's Equity for the six months ended June 30, 2014; (v) the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2014 and 2013; and (vi) Notes to Condensed Consolidated Financial Statements.
|
†
|
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 7, 2014
|
/s/ DANIEL J. DEVINE
|
|
Daniel J. Devine
Chief Financial Officer
(Principal financial officer and duly authorized to
sign on behalf of the registrant)
|
1.
|
Customer is hereby converting the Licensed Programs previously licensed by Customer (“Legacy Licensed Program”) to the new Licensed Program, CampusNexus Suite, pursuant to the license scope set forth in the attached Exhibit A-1. Accordingly, Customer shall pay the License Fees pursuant to the attached Exhibit A-2.
|
2.
|
From and after the effective date hereof, the definition of “Licensed Program” shall be expanded to include the CampusNexus Suite as set forth in Exhibit A-1.
|
3.
|
Any subsequent License Fee due or payable shall be for the Licensed Program. No further License Fees will be due for the Legacy Licensed Program.
|
4.
|
The pricing and terms in this Addendum are valid through March 31, 2014.
|
BRIDGEPOINT EDUCATION, INC.
|
|
CAMPUS MANAGEMENT CORP.
|
||||
|
|
|
|
|
|
|
By:
|
|
/s/ Daniel Devine
|
|
By:
|
|
/s/ Anders Nessen
|
|
|
|
|
|
|
|
Print:
|
|
Daniel Devine
|
|
Print:
|
|
Anders Nessen
|
|
|
|
|
|
|
|
Title:
|
|
CFO
|
|
Title:
|
|
CFO
|
|
|
|
|
|
|
|
Date:
|
|
4/1/14
|
|
Date:
|
|
4/1/14
|
|
|
|
|
|
|
|
1.
|
Admissions/Recruiting
|
2.
|
Academic Records
|
3.
|
Student Accounts
|
4.
|
Financial Aid
|
5.
|
Student Services
|
6.
|
Contact Manager
|
7.
|
Career Services
|
8.
|
Loan Management
|
9.
|
Housing
|
10.
|
Financial Aid Automation Foundations
|
11.
|
Real-Time Integration with CampusNexus CRM
|
12.
|
Financial Aid Automation
|
1.
|
Contact Manager
|
2.
|
Document Management
|
3.
|
Authentication & Security
|
4.
|
Admissions
|
5.
|
Curriculum Management
|
6.
|
Enrollment and Life Cycle Management
|
7.
|
Student Services & Advising
|
8.
|
Financial Management
|
9.
|
Housing
|
10.
|
Utilities
|
1.
|
Employer Portal with SharePoint
®
|
2.
|
Staff Portal with SharePoint
|
3.
|
Applicant Portal with SharePoint
|
4.
|
Student Portal with SharePoint
|
1.
|
Higher Education Object Pack
|
2.
|
Campaigns with Print Letters
|
3.
|
Territory Assignment
|
4.
|
Data Management Utility
|
5.
|
Constituent Interaction Hub
|
6.
|
Event Management
|
7.
|
Reactive Chat
|
8.
|
CRM Portal
|
9.
|
Application Management
|
10.
|
SMS Gateway integration
|
11.
|
Real-Time Integration with CampusNexus Student
|
12.
|
Web Client
|
13.
|
Mobile Client
|
1.
|
Contact
|
2.
|
Account
|
3.
|
Interaction
|
4.
|
COF
|
5.
|
Report
|
6.
|
Portal
|
7.
|
Higher Education Foundation
|
8.
|
Utilities
|
1.
|
Automated Job for Extracting Transactional Data from CampusNexus Student into warehouse
|
2.
|
Automated Job for Extracting Transactional Data from CampusNexus CRM into warehouse
|
3.
|
Microsoft
®
SQL 2012 Database for warehouse reporting
|
1.
|
API for subscribing to events
|
2.
|
Exposed Events from CampusNexus CRM
|
3.
|
Exposed Events from Forms Builder*
|
4.
|
Exposed Events from CampusNexus Student
|
1.
|
A visual interface for orchestrating business processes
|
2.
|
Activities for CampusNexus CRM
|
3.
|
Activities for Forms Builder*
|
4.
|
Activities for CampusNexus Student
|
1.
|
Request for Information Form Creator
|
2.
|
Application Creator
|
3.
|
Adaptors for CampusNexus Student and CampusNexus CRM
|
4.
|
eSignature capability with DocuSign
®
|
Institution
|
Address
|
Bridgepoint Education, Inc.
|
13500 Evening Creek Drive, Suite 600
San Diego, CA 92128
|
Ashford University (AU-TR)
|
400 North Bluff Road
Clinton, IA 52732
|
Ashford University Online (AUO) (AU-AC)
|
400 North Bluff Road
Clinton, IA 52732
|
University of the
Rockies
-
Online
|
13500 Evening Creek Drive, Suite 600
San Diego, CA 92128
|
Institution
|
Address
|
Ashford University
-
Evening Accelerated (AU-EA)
|
400 North Bluff Road
Clinton, IA 52732
|
Ashford Audit
|
13500 Evening Creek Drive, Suite 600
San Diego, CA 92128
|
Instructor Campus
|
13500 Evening Creek Drive, Suite 600
San Diego, CA 92128
|
University of the
Rockies (TR)
|
555 East Pikes Peak Ave.
Colorado Springs, CO 80903
|
University of the Rockies -
Denver Campus
|
1201 16th Street, Suite 350
Denver, CO 80202
|
Licensed Program
|
License Fees
|
CampusNexus
TM
Suite
|
$[***]
|
Additional Campus Locations (8)
|
|
TOTAL LICENSE FEES
|
$[***]
|
1.
|
Contemporaneously with this Addendum, Customer is executing the Addendum to the License Agreement in order to convert the Licensed Programs previously licensed by Customer (“Legacy Licensed Program”) to the new Licensed Program, CampusNexus Suite, for [***] ASRs and Users. Accordingly, Customer shall receive CampusCare Support for the CampusNexus Suite pursuant the CampusCare Agreement.
|
BRIDGEPOINT EDUCATION, INC.
|
|
CAMPUS MANAGEMENT CORP.
|
||||
|
|
|
|
|
|
|
By:
|
|
/s/ Daniel Devine
|
|
By:
|
|
/s/ Anders Nessen
|
|
|
|
|
|
|
|
Print:
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Daniel Devine
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Print:
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Anders Nessen
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Title:
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CFO
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Title:
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CFO
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Date:
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4/1/14
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Date:
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4/1/14
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Bridgepoint Education, Inc.;
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2.
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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;
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3.
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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;
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4.
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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:
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a.
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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;
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b.
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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;
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c.
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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
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d.
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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
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5.
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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):
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a.
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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
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b.
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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.
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/s/ ANDREW S. CLARK
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Andrew S. Clark
President and Chief Executive Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Bridgepoint Education, Inc.;
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2.
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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;
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3.
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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;
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4.
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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:
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a.
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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;
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b.
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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;
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c.
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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
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d.
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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
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5.
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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):
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a.
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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
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b.
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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.
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/s/ DANIEL J. DEVINE
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Daniel J. Devine
Chief Financial Officer
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1.
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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
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ ANDREW S. CLARK
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Andrew S. Clark,
President and Chief Executive Officer
(Principal Executive Officer)
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/s/ DANIEL J. DEVINE
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Daniel J. Devine,
Chief Financial Officer
(Principal Financial Officer)
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