BRIDGEPOINT EDUCATION INC, 10-K filed on 2/21/2018
Annual Report
Document and Entity Information (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Feb. 15, 2018
Jun. 30, 2017
Entity Information [Line Items]
 
 
 
Entity Registrant Name
Bridgepoint Education Inc 
 
 
Entity Central Index Key
0001305323 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Filer Category
Accelerated Filer 
 
 
Document Type
10-K 
 
 
Document Period End Date
Dec. 31, 2017 
 
 
Document Fiscal Year Focus
2017 
 
 
Document Fiscal Period Focus
FY 
 
 
Amendment Flag
false 
 
 
Entity Common Stock, Shares Outstanding
 
27,157,986 
 
Entity Well-known Seasoned Issuer
No 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Public Float
 
 
$ 274.5 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Current assets:
 
 
Cash and cash equivalents
$ 185,098 
$ 307,802 
Restricted cash
20,428 
24,533 
Investments
2,065 
49,434 
Accounts receivable, net
27,077 
26,457 
Prepaid expenses and other current assets
22,388 
23,467 
Total current assets
257,056 
431,693 
Property and equipment, net
10,434 
12,218 
Goodwill and intangibles, net
14,593 
17,419 
Other long-term assets
5,456 
2,046 
Total assets
287,539 
463,376 
Current liabilities:
 
 
Accounts payable and accrued liabilities
71,165 
77,866 
Deferred revenue and student deposits
68,207 
74,666 
Total current liabilities
139,372 
152,532 
Rent liability
7,001 
16,508 
Other long-term liabilities
12,708 
13,630 
Total liabilities
159,081 
182,670 
Commitments and contingencies
   
   
Preferred stock, $0.01 par value:
 
 
20,000 shares authorized; zero shares issued and outstanding at December 31, 2017 and 2016
Common stock, $0.01 par value:
 
 
300,000 shares authorized; 64,887 and 64,035 issued, and 27,158 and 46,478 outstanding, at December 31, 2017 and 2016, respectively
649 
641 
Additional paid-in capital
201,755 
195,854 
Retained earnings
431,818 
421,281 
Accumulated other comprehensive loss
(1)
Treasury stock, 37,729 and 17,557 shares at cost at December 31, 2017 and 2016, respectively
(505,764)
(337,069)
Total stockholders' equity
128,458 
280,706 
Total liabilities and stockholders' equity
$ 287,539 
$ 463,376 
Consolidated Balance Sheets Parenthetical (USD $)
Dec. 31, 2017
Dec. 31, 2016
Stockholders' equity:
 
 
Preferred stock, par value per share
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
20,000,000 
20,000,000 
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value per share
$ 0.01 
$ 0.01 
Common stock, shares authorized
300,000,000 
300,000,000 
Common stock, shares issued
65,000 
64,000 
Common stock, shares outstanding
27,000 
46,000 
Treasury stock, shares at cost
38,000 
18,000 
Consolidated Statements of Income (Loss) (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Income Statement [Abstract]
 
 
 
Revenue
$ 478,397 
$ 527,090 
$ 561,729 
Costs and expenses:
 
 
 
Instructional costs and services
237,248 
263,898 
281,496 
Admissions advisory and marketing
175,389 
202,206 
197,584 
General and administrative
47,381 
48,843 
56,588 
Legal settlement expense
1,845 
33,088 
Restructuring and impairment charges
8,682 
19,276 
68,356 
Total costs and expenses
470,545 
567,311 
604,024 
Operating income (loss)
7,852 
(40,221)
(42,295)
Other income, net
1,511 
2,306 
2,106 
Income (loss) before income taxes
9,363 
(37,915)
(40,189)
Income tax expense (benefit)
(1,174)
(7,875)
30,265 
Net income (loss)
$ 10,537 
$ (30,040)
$ (70,454)
Income (loss) per share:
 
 
 
Basic (in USD per share)
$ 0.33 
$ (0.65)
$ (1.54)
Diluted (in USD per share)
$ 0.32 
$ (0.65)
$ (1.54)
Weighted average number of common shares outstanding used in computing income (loss) per share:
 
 
 
Basic (in shares)
32,058 
46,228 
45,665 
Diluted (in shares)
32,794 
46,228 
45,665 
Consolidated Statements of Comprehensive Income (Loss) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Statement of Comprehensive Income [Abstract]
 
 
 
Net income (loss)
$ 10,537 
$ (30,040)
$ (70,454)
Other comprehensive gain, net of tax:
 
 
 
Unrealized gains on investments
98 
76 
Comprehensive income (loss)
$ 10,538 
$ (29,942)
$ (70,378)
Consolidated Statement of Stockholders' Equity (USD $)
In Thousands, unless otherwise specified
Total
Common Stock
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive Gain/(Loss)
Treasury Stock
Balance at Dec. 31, 2014
$ 365,881 
$ 630 
$ 180,720 
$ 521,775 
$ (175)
$ (337,069)
Balance, shares at Dec. 31, 2014
 
62,957 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Stock-based compensation
9,710 
 
9,710 
 
 
 
Exercise of stock options, shares, net
 
206 
 
 
 
 
Exercise of stock options
284 
282 
 
 
 
Excess tax shortfalls of option exercises and restricted stock, net of tax benefit
(767)
 
(767)
 
 
 
Stock issued under employee stock purchase plan, shares
 
33 
 
 
 
 
Stock issued under employee stock purchase plan
261 
261 
 
 
 
Stock issued under restricted stock plan, shares
 
211 
 
 
 
 
Stock issued under restricted stock plan, net of shares held for taxes
(1,341)
(1,343)
 
 
 
Net income (loss)
(70,454)
 
 
(70,454)
 
 
Unrealized gains (losses) on investments, net of tax
76 
 
 
 
76 
 
Balance at Dec. 31, 2015
303,650 
634 
188,863 
451,321 
(99)
(337,069)
Balance, shares at Dec. 31, 2015
 
63,407 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Stock-based compensation
7,317 
 
7,317 
 
 
 
Exercise of stock options, shares, net
 
306 
 
 
 
 
Exercise of stock options
1,331 
1,328 
 
 
 
Stock issued under employee stock purchase plan, shares
 
35 
 
 
 
 
Stock issued under employee stock purchase plan
246 
245 
 
 
 
Stock issued under restricted stock plan, shares
 
287 
 
 
 
 
Stock issued under restricted stock plan, net of shares held for taxes
(1,896)
(1,899)
 
 
 
Net income (loss)
(30,040)
 
 
(30,040)
 
 
Unrealized gains (losses) on investments, net of tax
98 
 
 
 
98 
 
Balance at Dec. 31, 2016
280,706 
641 
195,854 
421,281 
(1)
(337,069)
Balance, shares at Dec. 31, 2016
 
64,035 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Stock-based compensation
3,632 
 
3,632 
 
 
 
Exercise of stock options, shares, net
 
537 
 
 
 
 
Exercise of stock options
3,848 
3,843 
 
 
 
Stock issued under employee stock purchase plan, shares
 
34 
 
 
 
 
Stock issued under employee stock purchase plan
289 
288 
 
 
 
Stock issued under restricted stock plan, shares
 
281 
 
 
 
 
Stock issued under restricted stock plan, net of shares held for taxes
(1,860)
(1,862)
 
 
 
Repurchase of common stock
168,695 
 
 
 
 
168,695 
Net income (loss)
10,537 
 
 
10,537 
 
 
Unrealized gains (losses) on investments, net of tax
 
 
 
 
Balance at Dec. 31, 2017
$ 128,458 
$ 649 
$ 201,755 
$ 431,818 
$ 0 
$ (505,764)
Balance, shares at Dec. 31, 2017
 
64,887 
 
 
 
 
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Cash flows from operating activities
 
 
 
Net income (loss)
$ 10,537 
$ (30,040)
$ (70,454)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
 
 
 
Provision for bad debts
32,151 
32,583 
29,863 
Depreciation and amortization
8,863 
13,082 
19,578 
Amortization of premium/discount
20 
68 
475 
Deferred income taxes
(600)
28 
40,944 
Stock-based compensation
3,632 
7,317 
9,710 
Excess tax benefit of option exercises
(460)
Loss on impairment of student loans receivable
7,542 
1,328 
Net loss (gain) on marketable securities
(274)
(164)
91 
Loss on termination of leased space
5,829 
13,244 
17,047 
Loss on disposal or impairment of fixed assets
864 
3,024 
44,949 
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
(32,771)
(34,790)
(32,383)
Prepaid expenses and other current assets
280 
13,225 
(14,446)
Student loans receivable
876 
1,139 
Other long-term assets
(3,066)
3,274 
(2,845)
Accounts payable and accrued liabilities
(12,908)
4,778 
1,104 
Deferred revenue and student deposits
(6,460)
(14,078)
(19,170)
Other liabilities
(10,172)
(8,886)
(7,669)
Net cash (used in) provided by operating activities
(4,075)
11,083 
18,801 
Cash flows from investing activities
 
 
 
Capital expenditures
(3,387)
(1,925)
(2,477)
Purchases of investments
(315)
(20,260)
(20,280)
Capitalized costs for intangible assets
(553)
(830)
(2,153)
Sales of investments
214 
10,101 
Maturities of investments
47,725 
37,756 
66,096 
Net cash provided by investing activities
43,684 
14,741 
51,287 
Cash flows from financing activities
 
 
 
Proceeds from exercise of stock options
3,848 
1,331 
284 
Excess tax benefit of option exercises
460 
Proceeds from the issuance of stock under employee stock purchase plan
289 
246 
261 
Tax withholding on issuance of stock awards
(1,860)
(1,896)
(1,341)
Proceeds from failed sale-leaseback transaction
4,141 
Repurchase of common stock
168,695 
Net cash (used in) provided by financing activities
(166,418)
(319)
3,805 
Net increase (decrease) in cash, cash equivalents and restricted cash
(126,809)
25,505 
73,893 
Cash, cash equivalents and restricted cash at beginning of period
332,335 
306,830 
232,937 
Cash, cash equivalents and restricted cash at end of period
205,526 
332,335 
306,830 
Supplemental disclosure of cash flow information:
 
 
 
Cash paid for interest
65 
62 
198 
Cash paid (received) for income taxes, net
387 
(20,788)
6,136 
Supplemental disclosure of non-cash transactions:
 
 
 
Purchase of equipment included in accounts payable and accrued liabilities
379 
4,160 
Issuance of common stock for vested restricted stock units
$ 4,779 
$ 4,847 
$ 3,285 
Nature of Business
Nature of Business
Nature of Business
Bridgepoint Education, Inc. (together with its subsidiaries, the “Company”), incorporated in 1999, is a provider of postsecondary education services. Its wholly-owned subsidiaries, Ashford University® and University of the RockiesSM, are regionally accredited academic institutions, which deliver programs primarily online. Ashford University offers associate’s, bachelor’s and master’s programs, and University of the Rockies offers master’s and doctoral programs.
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Bridgepoint Education, Inc. and its wholly-owned subsidiaries. Intercompany transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the consolidated financial statements in conformity with generally accepted accounting principles in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements. Actual results could differ from those estimates.
Reclassifications
Certain reclassifications have been made to the prior financial statements to conform to the current year presentation. During 2016, the Company adopted Accounting Standards Update (“ASU”) 2016-18, Statement of Cash Flows (Topic 230) and has reclassified certain restricted cash amounts for the year ended December 31, 2015, within the consolidated statements of cash flows. These reclassifications had no effect on previously reported results of operations or retained earnings.
Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents is comprised of cash and other short-term highly liquid investments that are readily convertible into known amounts of cash. The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
The Company's restricted cash is primarily held in money market accounts, and is excluded from cash and cash equivalents on the Company's consolidated balance sheets. The majority of restricted cash represents funds held for students from Title IV financial aid programs that result in credit balances on a student’s account or funds held for students to be refunded in connection with a legal settlement. To a lesser extent, restricted cash also represents amounts held as collateral for letters of credit. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statement of cash flows.
 
As of December 31,
 
2017
 
2016
 
2015
Cash and cash equivalents
$
185,098

 
$
307,802

 
$
282,145

Restricted cash
20,428

 
24,533

 
24,685

Total cash, cash equivalents and restricted cash
$
205,526

 
$
332,335


$
306,830


Investments
The Company has historically held investments that consisted of mutual funds, corporate notes and bonds, and certificates of deposit. As of December 31, 2017, the Company held investments solely in mutual funds. The Company's investments are denominated in U.S. dollars, are investment grade and are readily marketable. The Company considers as current assets those investments which will mature or are likely to be sold in less than one year.
The Company classifies its investments as either trading, available-for-sale or held-to-maturity. Trading securities are those bought and held principally to sell in the short-term, with gains or losses from changes in fair value flowing through current earnings. Available-for-sale securities are carried at fair value as determined by quoted market prices, with unrealized gains and losses, net of tax, reported as a separate component of comprehensive income (loss) and stockholders’ equity. Held-to-maturity securities would be carried at amortized cost. Amortization of premiums, accretion of discounts, interest, and realized gains and losses are included in other income, net in the consolidated statement of income (loss).
The Company regularly monitors and evaluates the realizable value of its investments. If events and circumstances indicate that a decline in the value of these assets has occurred and is other-than-temporary, the Company would record a charge to other income, net in the consolidated statements of income (loss).
Deferred Compensation
The Company has a deferred compensation plan, into which eligible participants can defer a maximum of 80% of their regular compensation and a maximum of 100% of their incentive compensation. The amounts deferred by the participant under this plan are credited with earnings or losses based upon changes in values of participant elected notional investments. Each participant is fully vested in the participant amounts deferred. The Company may make contributions that will generally vest according to a four-year vesting schedule. After four years of service, participants become fully vested in the employer contributions upon reaching normal retirement age, death, disability or a change in control. The Company's obligations under the deferred compensation plan totaled $1.4 million and $1.3 million as of December 31, 2017 and 2016, respectively, and are included in other long-term liabilities in the consolidated balance sheets. The Company's assets relating to the deferred compensation plan totaled $2.1 million and $1.7 million as of December 31, 2017 and 2016, respectively, and are included in investments in the consolidated balance sheets.
Fair Value Measurements
The Company uses the three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: (i) Level 1, defined as observable inputs such as quoted prices in active markets; (ii) Level 2, defined as inputs other than quoted prices in active markets that are either observable directly or indirectly, through market corroboration, for substantially the full term of the financial instrument; and (iii) Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable consists of student accounts receivable, which represent amounts due for tuition, course digital materials, technology fees and other fees from currently enrolled and former students. Students generally fund their education through grants and/or loans under various Title IV programs, tuition assistance from military and corporate employers or personal funds. Generally, payments are due on the respective course start date and are considered past due dependent upon the student's payment terms. In general, an account is considered delinquent 120 days subsequent to the course start date.
Accounts receivable are stated at the amount management expects to collect from outstanding balances. For accounts receivable, an allowance for doubtful accounts is estimated by management and is principally based on historical collection experience as well as (i) an assessment of individual accounts receivable over a specific aging and amount, (ii) consideration of the nature of the receivable accounts and (iii) potential changes in the business or economic environment. The provision for bad debt is recorded within instructional costs and services in the consolidated statements of income (loss). The Company writes off uncollectable accounts receivable when the student account is deemed uncollectable.
Student Loans Receivable and Loan Loss Reserves
During 2016, the Company reached a settlement with the Consumer Financial Protection Bureau, and in accordance with the terms of the settlement, all existing student loans receivable were written off. The Company’s institutions had already ceased offering institutional loans, and no such loans were made after the year ended December 31, 2014.
Before being written off, student loans receivable were stated at the amount management expected to collect from outstanding balances. For tuition related student loan receivables, the Company had estimated an allowance for doubtful accounts, similar to that of accounts receivable, based on (i) an assessment of individual loans receivable over a specific aging and amount, (ii) consideration of the nature of the receivable accounts, (iii) potential changes in the business or economic environment and (iv) related FICO scores and other industry metrics. The related provision for bad debts for the years ended December 31, 2016 and 2015 were $0.2 million and $0.1 million, respectively, and is recorded within instructional costs and services in the consolidated statements of income (loss).
The Company had also recorded a loss reserve for the full book value of any impaired loans. For the years ended December 31, 2016, and 2015 there was $0.2 million and $1.3 million recorded for loan loss reserves, respectively. The loan loss reserve was maintained at a level deemed adequate by management based on a periodic analysis of the individual loans and is recorded within instructional costs and services in the consolidated statements of income (loss).
Property and Equipment
Property and equipment are recognized at cost less accumulated depreciation. Depreciation is computed using the straight-line method based on estimated useful lives of the related assets as follows:
Furniture and office equipment
3 - 7 years
Software
3 - 5 years
Vehicles
5 years

Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the estimated useful lives of the assets. Upon the retirement or disposition of property and equipment, the related cost and accumulated depreciation is removed and a gain or loss is recorded in the consolidated statements of income (loss). Repairs and maintenance costs are expensed in the period incurred.
Leases
Leases are evaluated and classified as either operating or capital leases. Leased property and equipment meeting certain criteria would be capitalized, and the present value of the related lease payments is recognized as a liability on the consolidated balance sheets. Amortization of capitalized leased assets is computed on the straight-line method over the term of the lease or the life of the related asset, whichever is shorter.
If the Company receives tenant allowances from the lessor for certain improvements made to the leased property, these allowances are capitalized as leasehold improvements and a long-term liability is established. The long-term liability is amortized on a straight-line basis over the corresponding lease term. The Company records rent expense on a straight-line basis over the initial term of a lease. The difference between the rent payment and the straight-line rent expense is recorded as either a short-term or long-term liability.
The Company recognizes liabilities for exit and disposal activities on non-cancelable lease obligations at fair value in the period the liability is incurred. For the non-cancelable lease obligations, the Company records the obligation when the contract is terminated.
Impairment of Long-Lived Assets
The Company assesses potential impairment to its long-lived assets when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recorded if the carrying amount of the long-lived asset is not recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Any required impairment loss is measured as the amount by which the carrying amount of a long-lived asset exceeds fair value and is recorded as a reduction in the carrying value of the related asset and an expense to operating results. For additional information, see Note 3, “Restructuring and Impairment Charges.”
Goodwill and Other Intangible Assets
The Company tests goodwill and indefinite-lived intangible assets for impairment annually in the fourth quarter of each fiscal year, or more frequently if events and circumstances warrant.
To evaluate the impairment of goodwill, the Company first assesses qualitative factors, such as deterioration in general economic conditions or negative company financial performance, to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. The Company's assessment of goodwill during the fourth quarter of fiscal 2017 indicated that it was not more likely than not that the fair value of a reporting unit is less than its carrying amount, and therefore, goodwill was not impaired. There have been no related impairment losses recognized by the Company for any periods presented. If negative qualitative indicators had been noted above, the Company would then need to assess the fair value of its reporting unit to determine whether it was greater or less than its carrying values.
To evaluate the impairment of the indefinite-lived intangible assets, the Company assessed the fair value of the assets to determine whether they were greater or less than the carrying values. Determining the fair value of indefinite-lived intangible asset is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions are inherently uncertain, and may include such items as growth rates used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and a determination of appropriate market comparables. The Company's assessment of indefinite-lived intangible assets during the fourth quarter of fiscal 2017 did not result in any impairment. There have been no impairment losses for indefinite-lived intangibles recognized by the Company for any periods presented.
The Company also has definite-lived intangible assets, which primarily consist of purchased intangibles and capitalized curriculum development costs. The definite-lived intangible assets are recognized at cost less accumulated amortization. Amortization is computed using the straight-line method based on estimated useful lives of the related assets.
Revenue and Deferred Revenue
The Company recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered or delivery has occurred, its fees or price is fixed or determinable, and collectibility is reasonably assured. The Company's revenue consists of tuition, technology fees, course digital materials and other miscellaneous fees. Tuition revenue is deferred and recognized on a straight-line basis over the applicable period of instruction net of scholarships and expected refunds, with the exception of an online student's first course per degree level at Ashford University. An online student's first course per degree level at Ashford University falls under a three-week conditional admission period in which the revenue is deferred until the student matriculates into the course.
The Company's institutions' online students generally enroll in a program that encompasses a series of five to six-week courses that are taken consecutively over the length of the program. With the exception of those students under conditional admission, the online students are billed on a payment period basis on the first day of class. Students under conditional admission are billed for the payment period upon matriculation. The Company assesses collectibility at the start of a student’s payment period for the courses in that payment period, as well as throughout the period as facts and circumstances change.
If a student's attendance in a class precedes the receipt of cash from the student's source of funding, the Company establishes an account receivable and corresponding deferred revenue in the amount of the tuition due for that payment period. Cash received either directly from the student or from the student's source of funding reduces the balance of accounts receivable due from the student. Financial aid from sources such as the federal government's Title IV programs pertains to the online student's award year and is generally divided into two disbursement periods. As such, each disbursement period may contain funding for up to four courses. Financial aid disbursements are typically received during the online student's attendance in the first or second course. Since the majority of disbursements cover more courses than for which a student is currently enrolled, the amount received in excess effectively represents a prepayment from the online student for up to four courses. At the end of each accounting period, the deferred revenue and student deposits and related account receivable balances are reduced to present amounts attributable to the current course.
Students under conditional admission are not obligated for payment until after their conditional admission period has lapsed, so there is no revenue recognized and no related refund. For all subsequent courses, the Company records a provision for expected refunds and reduces revenue for the amount that is expected to be subsequently refunded. Provisions for expected refunds have not been material to any period presented. If a student withdraws prior to a specified date, a portion of such student's tuition is refunded, subject to certain state requirements. The Company reassesses collectibility throughout the period revenue is recognized by the Company's institutions, on a student-by-student basis. The Company reassesses collectibility based upon new information and changes in facts and circumstances relevant to a student's ability to pay. For example, the Company reassesses collectibility when a student drops from the institution (i.e., is no longer enrolled) and when a student attends a course that was not included in the initial assessment of collectibility at the start of a student’s payment period.
In certain cases, the Company's institutions provide scholarships to students for various programs. Scholarships issued by the universities are recorded in association with the related specific course, term or payment period. Scholarships are generally deferred and recognized against revenue over the course term. Certain scholarships, such as the Corporate Full Tuition Grant (“FTG”) and Alumni Scholarship are recognized against revenue over the period of benefit to the student.
Ashford University records revenue from technology fee on a per course charge basis. The per course technology fee revenue for Ashford University is recognized on a straight-line basis over the applicable period of instruction. University of the Rockies records revenue from technology fees as one-time start up fees charged to each new online student (other than military, scholarship students or certain corporate reimbursement students), and then recognizes that revenue ratably over the average expected enrollment of a student. The average expected enrollment of the student was estimated each quarter based upon historical duration of attendance and qualitative factors as deemed necessary.
Other miscellaneous fees include fees for course content and textbooks and other services, such as commencements, and are recognized upon delivery of the goods or when the related service is performed.
Workers Compensation
The Company records a gross liability for estimated workers compensation claims, incurred but not yet reported, as of each balance sheet date. The Company also records the gross insurance recoverable due for individual claim amounts. This is recorded as an other asset and as an equal accrued liability. The stop-loss premium is determined annually, but invoiced and paid on a quarterly basis. The related insurance premiums are expensed ratably over the coverage period.
Income Taxes
The Company accounts for its income taxes using the asset-liability method whereby deferred tax assets and liabilities are determined based on temporary differences between the bases used for financial reporting and income tax reporting purposes. Deferred income taxes are provided based on the enacted tax rates expected to be in effect at the time such temporary differences are expected to reverse. A valuation allowance is provided for deferred tax assets if it is more-likely-than-not that the Company will not realize those tax assets through future operations.
The Company evaluates and accounts for uncertain tax positions using a two-step approach. Recognition (step one) occurs when the Company concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustained upon examination. Measurement (step two) determines the amount of benefit that is greater than 50% likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Derecognition of a tax position that was previously recognized would occur when the Company subsequently determines that a tax position no longer meets the more-likely-than-not threshold of being sustained.
Stock-Based Compensation
Stock-based compensation expense is measured at the grant date fair value of the award and is expensed over the vesting period. The Company estimates the fair value of stock options on the grant date using the Black-Scholes option pricing model. The Company estimates the fair value of its performance stock units (“PSUs”) on the grant date using a Monte Carlo simulation model. Determining the fair value of stock-based awards at the grant date under these models requires judgment, including estimating volatility, employee stock option exercise behaviors and forfeiture rates. The assumptions used in calculating the fair value of stock-based awards represent the Company's best estimates, but these estimates involve inherent uncertainties and the application of management judgment. The fair value of the Company's restricted stock units (“RSUs”) is based on the market price of the Company's common stock on the date of grant.
The amount of stock-based compensation expense recognized during a period is based on the portion of the awards that are ultimately expected to vest. The Company estimates award forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company's equity incentive plans require that stock option awards have an exercise price that equals or exceeds the closing price of the Company's common stock on the date of grant.
Stock-based compensation expense for stock-based awards is recorded in the consolidated statement of income (loss), net of estimated forfeitures, using the graded-vesting method over the requisite service periods of the respective stock awards. The requisite service period is generally the period over which an employee is required to provide service to the Company in exchange for the award.
Instructional Costs and Services
Instructional costs and services consist primarily of costs related to the administration and delivery of the Company's educational programs. These expenses include compensation for faculty and administrative personnel, curriculum and new program development costs, financial aid processing costs, technology license costs, bad debt expense and costs associated with other support groups that provide services directly to the students. Instructional costs and services also include an allocation of information technology, facility, depreciation and amortization costs.
Admissions Advisory and Marketing
Admissions advisory and marketing costs include compensation of personnel engaged in marketing and recruitment, as well as costs associated with advertising media, purchasing leads and producing marketing materials. Such costs are generally affected by the cost of advertising media and leads, the efficiency of the Company's marketing and recruiting efforts, compensation for the Company's enrollment personnel and expenditures on advertising initiatives for new and existing academic programs. Admissions advisory and marketing costs also include an allocation of information technology, facility, depreciation and amortization costs.
Advertising costs, a subset of admissions advisory and marketing costs, consists primarily of marketing leads and other branding and promotional activities. These advertising activities are expensed as incurred, or the first time the advertising takes place, depending on the type of advertising activity. Advertising costs were $75.7 million, $83.0 million and $68.4 million for the years ended December 31, 2017, 2016 and 2015, respectively.
General and Administrative
General and administrative expenses include compensation of employees engaged in corporate management, finance, human resources, legal and compliance and other corporate functions. General and administrative expenses also include professional services fees, travel and entertainment expenses and an allocation of information technology, facility, depreciation and amortization costs.
Legal Settlement Expense
Legal settlement expense is primarily comprised of (i) the cost to settle a wage and hour dispute, (ii) charges related to the cost of resolution of the previously disclosed civil investigative demands and (iii) the estimate of amounts to resolve the previously disclosed investigative subpoenas.
Restructuring and Impairment Charges
Restructuring and impairment charges are primarily comprised of i) charges related to the write off of certain fixed assets and assets abandoned, ii) student transfer agreement costs relating to the closure of the Iowa residential campus, iii) severance costs related to headcount reductions made in connection with restructuring plans and iv) estimated lease losses related to facilities vacated or consolidated under restructuring plans.
Income (Loss) Per Share
Basic income per common share is calculated by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted income per common share is calculated by dividing net income available to common stockholders by the sum of (i) the weighted average number of common shares outstanding during the period and (ii) potentially dilutive securities outstanding during the period, if the effect is dilutive. Potentially dilutive common shares consist of incremental shares of common stock issuable upon the exercise of the stock options and upon the settlement of RSUs and PSUs.
Segment Information
The Company operates in one reportable segment as a single educational delivery operation using a core infrastructure that serves the curriculum and educational delivery needs of its students regardless of geography. The Company's chief operating decision maker, its CEO and President, manages the Company's operations as a whole, and no revenue, expense or operating income information is evaluated by the chief operating decision maker on any component level.
Comprehensive Income
Comprehensive income consists of net income and other gains and losses affecting stockholders’ equity that, under GAAP, are excluded from net income. For the year ended December 31, 2017, such items consisted of unrealized gains and losses on investments. The following table summarizes the components of other comprehensive gain (loss) and the related tax effects for the years ended December 31, 2017, 2016 and 2015 (in thousands):
 
Unrealized gains (losses) on investments
Year ended:
Before-Tax Amount
 
Tax Effect
 
Net-of-Tax Amount
December 31, 2017
$
1

 
$

 
$
1

December 31, 2016
$
157

 
$
(59
)
 
$
98

December 31, 2015
$
125

 
$
(49
)
 
$
76


There were no reclassifications out of other comprehensive income, relating to the net realized gain on the sale of securities, during the years ended December 31, 2017, 2016 and 2015.
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) Topic 605, Revenue Recognition. ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The accounting guidance also requires additional disclosure regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract.
The new standard provides companies with two implementation methods. Companies can choose to adopt the standard retrospectively and apply the guidance to each prior reporting period presented. Alternatively, a modified retrospective adoption methodology is permitted, whereby the cumulative impact of all prior periods would be recorded in retained earnings or other impacted balance sheet line items as of January 1, 2018, the date of adoption. Under this method, previously presented years’ financial positions and results would not be adjusted; however, certain disclosures are required to be presented for comparability to prior years’ results. The Company plans to adopt this standard using the modified retrospective method.
Under the modified retrospective adoption method, the Company has elected to retroactively adjust only those contracts that do not meet the definition of a completed contract at the date of initial application. The Company expects this new guidance to impact the amount and timing of its revenue recognition as follows:
Deferral of revenue recognition for FTG contracts that include a material right under ASU 2014-09. This material right is deferred until the earlier of redemption or expiration under the new standard.
ASU 2014-09 does not allow for revenue to be recorded upon the receipt of cash, which may occur subsequent to a contract. As a result, revenue is accelerated as the expected value to be collected, net of any applicable price concessions and is recorded as the revenue is earned.
Under ASU 2014-09, once students are deemed to have a history of collection issues, all future revenues earned are subject to a price concession as the student has demonstrated that they will not pay the full tuition price based on past behavior.
At the date of adoption of this new guidance, the Company expects to record a cumulative adjustment to its consolidated balance sheet, including an adjustment to retained earnings, to adjust for the aggregate impact of these revenue items, as calculated under the new guidance. The cumulative-effect adjustment decreases the opening balance of retained earnings on January 1, 2018 by approximately $3.0 million. The Company finalized its evaluation of the impact on accounting policies, disclosures, and internal processes and controls the new standard has on its revenue stream.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the lease commencement date: (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. The new lease guidance simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing. Public companies should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company continues to evaluate the impact the adoption of ASU 2016-02 will have on the Company’s consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The update includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. The update was aimed at reducing the cost and complexity of the accounting for share-based payments. ASU 2016-09 became effective for public companies for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company adopted this update as of January 1, 2017. The adoption of ASU 2016-09 did not have a material impact on the Company’s consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The update simplifies the measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The annual or interim goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The update also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The update should be applied on a prospective basis. For public companies, the update is effective for any annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company early adopted ASU 2017-04 as of January 1, 2017, and there was no impact on the Company’s consolidated financial statements.
In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. The update provides clarity and reduces diversity in practice regarding the modification of the terms and conditions of a share-based payment award. The amendments in ASU 2017-09 include guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. The amendments are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The Company adopted ASU 2017-09 on January 1, 2018, and such adoption did not have a material impact on the Company’s consolidated financial statements.
Restructuring and Impairment Charges
Restructuring and Impairment Charges
Restructuring and Impairment Charges
The Company has written off certain assets and has implemented various restructuring plans to better align its resources with its business strategy. These related charges are recorded in the restructuring and impairment charges line item on the Company’s consolidated statements of income (loss).
During the years ended December 31, 2017, 2016 and 2015, the Company recognized asset impairment charges of $0.8 million, $2.2 million and $43.3 million, respectively. relating to the write-off of certain fixed assets. The charges in the years ended December 31, 2015 and 2016 related to the decision to close Ashford University’s residential campus in Clinton, Iowa during 2015, and the subsequent vacating of leased property throughout 2016. The charges in the year ended December 31, 2017 related to the discontinuation of certain software.
With the closure of the residential campus, ground-based Ashford University students were provided opportunities to continue their degrees through individual student transfer agreements. During the year ended December 31, 2015, the Company initially recorded restructuring charges relating to future cash expenditures for student transfer agreements of approximately $3.3 million. This initial estimate was based upon several assumptions that were subject to change, including assumptions related to the number of students who elected to continue to pursue their degrees through Ashford University’s online programs. For the years ended December 31, 2017 and 2016, the Company reassessed this estimate and decreased the related restructuring charges by approximately $0.1 million and $0.1 million, respectively.
The Company has also implemented various reductions in force to help better align personnel resources with the decline in enrollment. During the years ended December 31, 2017, 2016 and 2015, the Company recognized $2.2 million, $2.7 million and $4.7 million, respectively, as restructuring charges related to severance costs for wages and benefits resulting from the reductions in force. The Company anticipates the remainder of these costs will be paid out by the end of the first quarter of 2018 from existing cash on hand.
As part of its continued efforts to streamline operations, the Company vacated or consolidated properties in Denver and San Diego and reassessed its obligations on non-cancelable leases. The fair value estimate of these non-cancelable leases is based on the contractual lease costs over the remaining term, partially offset by estimated future sublease rental income. The estimated rental income considers subleases the Company has executed or expects to execute, current commercial real estate market data and conditions, comparable transaction data and qualitative factors specific to the related facilities. During the years ended December 31, 2017, 2016 and 2015, the Company recorded $5.8 million, $14.5 million and $17.0 million, respectively, as restructuring charges relating to lease exit and other costs, due to reassessment of estimates.
The following table summarizes the amounts recorded in the restructuring and impairment charges line item on the Company's consolidated statements of income (loss) for each of the periods presented (in thousands):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Asset impairment
$
798

 
$
2,215

 
$
43,328

Student transfer agreement costs
(120
)
 
(142
)
 
3,264

Severance costs
2,175

 
2,668

 
4,717

Lease exit and other costs
5,829

 
14,535

 
17,047

Total restructuring and impairment charges
$
8,682

 
$
19,276

 
$
68,356


The following table summarizes the changes in the Company's restructuring liability by type during the three-year period ended December 31, 2017 (in thousands):
 
Asset Impairment
 
Student Transfer Agreement Costs
 
Severance Costs
 
Lease Exit and Other Costs
 
Total
Balance at December 31, 2014
$

 
$

 
$
860

 
$
6,580

 
$
7,440

Restructuring and impairment charges
43,328

 
3,264

 
4,717

 
17,047

 
68,356

Payments

 
(40
)
 
(3,833
)
 
(9,706
)
 
(13,579
)
Non-cash transaction
(43,328
)
 

 

 

 
(43,328
)
Balance at December 31, 2015

 
3,224

 
1,744

 
13,921

 
18,889

Restructuring and impairment charges
2,215

 
(142
)
 
2,668

 
14,535

 
19,276

Payments

 
(1,490
)
 
(3,845
)
 
(9,999
)
 
(15,334
)
Non-cash transaction
(2,215
)
 

 

 

 
(2,215
)
Balance at December 31, 2016

 
1,592

 
567

 
18,457

 
20,616

Restructuring and impairment charges
798

 
(120
)
 
2,175

 
5,829

 
8,682

Payments

 
(878
)
 
(2,547
)
 
(13,643
)
 
(17,068
)
Non-cash transaction
(798
)
 

 

 

 
(798
)
Balance at December 31, 2017
$

 
$
594

 
$
195

 
$
10,643

 
$
11,432


The restructuring liability amounts are recorded within either (i) accounts payable and accrued liabilities account, (ii) rent liability account or (iii) other long-term liabilities account on the consolidated balance sheets.
Investments
Investments
Investments
The following tables summarize the fair value information of total investments as of December 31, 2017 and 2016, respectively (in thousands):
 
December 31, 2017
 
Level 1
 
Level 2
 
Level 3
 
Total
Mutual funds
$
2,065

 
$

 
$

 
$
2,065

Total
$
2,065

 
$

 
$

 
$
2,065

 
December 31, 2016
 
Level 1
 
Level 2
 
Level 3
 
Total
Mutual funds
$
1,688

 
$

 
$

 
$
1,688

Corporate notes and bonds

 
22,746

 

 
22,746

Certificates of deposit

 
25,000

 

 
25,000

Total
$
1,688

 
$
47,746

 
$

 
$
49,434


The table above as of December 31, 2016, includes amounts related to investments classified as other investments, such as certificates of deposit, which are carried at amortized cost. The amortized cost of such investments approximated fair value at each balance sheet date. The assumptions used in these fair value estimates are considered as other observable inputs and are therefore categorized as Level 2 measurements under the accounting guidance. The Company's Level 2 investments are valued using readily available pricing sources that utilize market observable inputs, including the current interest rate for similar types of instruments. There were no transfers between levels during the periods presented. The Company also holds money market securities within its cash and cash equivalents on the consolidated balance sheets that are classified as Level 1 securities.
As of December 31, 2017, the $2.1 million of mutual funds, representing the deferred compensation asset balances are considered to be trading securities. The following table summarizes the differences between amortized cost and fair value of investments as of December 31, 2016 (in thousands):
 
December 31, 2016
 
 
 
 
 
Gross unrealized
 
 
 
Maturities
 
Amortized Cost
 
Gain
 
Loss
 
Fair Value
Short-term
 
 
 
 
 
 
 
 
 
Corporate notes and bonds
1 year or less
 
$
22,747

 
$
2

 
$
(3
)
 
$
22,746

Certificate of deposit
1 year or less
 
25,000

 

 

 
25,000

Total
 
 
$
47,747

 
$
2

 
$
(3
)
 
$
47,746


The above table does not include $1.7 million of mutual funds for December 31, 2016, which are recorded as trading securities.
As of December 31, 2017 and 2016, respectively, there were no investments that were in an unrealized loss position for less than, or greater than, 12 months. The Company accumulates unrealized gains and losses on the available-for-sale debt securities, net of tax, in accumulated other comprehensive gain (loss) in the stockholders’ equity section of the Company's balance sheets.
Accounts Receivable, Net
Accounts Receivables, Net
Accounts Receivable, Net
Accounts receivable, net, consists of the following (in thousands):
 
As of December 31,
 
2017
 
2016
Accounts receivable
$
44,656

 
$
42,611

Less allowance for doubtful accounts
17,579

 
16,154

Accounts receivable, net
$
27,077

 
$
26,457


There are an immaterial amount of accounts receivable, net, at each balance sheet date with a payment due date of greater than one year.
The following table presents the changes in the allowance for doubtful accounts for accounts receivable for the periods indicated (in thousands):
 
Beginning
Balance
 
Charged to
Expense
 
Deductions(1)
 
Ending
Balance
Allowance for doubtful accounts receivable:
 
 
 
 
 
 
 
For the year ended December 31, 2017
$
16,154

 
$
32,151

 
$
(30,726
)
 
$
17,579

For the year ended December 31, 2016
$
10,114

 
$
32,423

 
$
(26,383
)
 
$
16,154

For the year ended December 31, 2015
$
27,567

 
$
29,782

 
$
(47,235
)
 
$
10,114

(1)
Deductions represent accounts written off, net of recoveries.
Prepaid Expense and Other Current Assets
Prepaid Expenses and Other Current Assets
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consists of the following (in thousands):
 
As of December 31,
 
2017
 
2016
Prepaid expenses
$
6,195

 
$
7,160

Prepaid licenses
4,882

 
5,183

Income tax receivable
8,889

 
7,432

Prepaid insurance
1,215

 
1,291

Insurance recoverable
665

 
702

Legal insurance recoverable
527

 
325

Interest receivable

 
142

Other current assets
15

 
1,232

Total prepaid expenses and other current assets
$
22,388

 
$
23,467

Property and Equipment, Net
Property and Equipment, Net
Property and Equipment, Net
Property and equipment, net, consists of the following (in thousands):
 
As of December 31,
 
2017
 
2016
Furniture and office equipment
$
43,330

 
$
41,528

Software
12,313

 
11,979

Leasehold improvements
5,445

 
4,332

Vehicles
22

 
22

Total property and equipment
61,110

 
57,861

Less accumulated depreciation and amortization
(50,676
)
 
(45,643
)
Total property and equipment, net
$
10,434

 
$
12,218


Depreciation and amortization expense associated with property and equipment totaled $5.5 million, $8.4 million and $13.9 million for the years ended December 31, 2017, 2016 and 2015, respectively.
Goodwill and Intangibles, Net
Goodwill and Intangibles, Net
Goodwill and Intangibles, Net
Goodwill and intangibles, net, consists of the following (in thousands):
 
December 31, 2017
Definite-lived intangible assets:
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Capitalized curriculum costs
$
21,463

 
$
(19,300
)
 
$
2,163

Purchased intangible assets
15,850

 
(5,987
)
 
9,863

  Total definite-lived intangible assets
$
37,313

 
$
(25,287
)
 
$
12,026

Goodwill and indefinite-lived intangibles
 
 
 
 
2,567

Total goodwill and intangibles, net
 
 
 
 
$
14,593

 
 
 
 
 
 
 
December 31, 2016
Definite-lived intangible assets:
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Capitalized curriculum costs
$
21,153

 
$
(17,397
)
 
$
3,756

Purchased intangible assets
15,850

 
(4,754
)
 
11,096

  Total definite-lived intangible assets
$
37,003

 
$
(22,151
)
 
$
14,852

Goodwill and indefinite-lived intangibles
 
 
 
 
2,567

Total goodwill and intangibles, net
 
 
 
 
$
17,419


Goodwill and indefinite-lived intangibles includes the goodwill resulting from prior period acquisitions and the indefinite-lived intangibles attributable to the accreditation of the Company's institutions. Definite-lived intangibles include trademark agreements and digital course materials.
For the years ended December 31, 2017, 2016 and 2015, amortization expense was $3.4 million, $4.7 million and $5.7 million, respectively. The following table summarizes the estimated remaining amortization expense as of each fiscal year ended below (in thousands):
Year Ended December 31,
 
 
2018
$
2,497

2019
1,793

2020
1,497

2021
1,299

2022
1,236

Thereafter
3,704

Total future amortization expense
$
12,026

Accounts Payable and Accrued Liabilities
Accounts Payable and Accrued Liabilities
Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities consists of the following (in thousands):
 
As of December 31,
 
2017
 
2016
Accounts payable
$
5,619

 
$
4,519

Accrued salaries and wages
8,573

 
8,967

Accrued bonus
6,924

 
5,087

Accrued vacation
8,237

 
9,313

Accrued litigation and fees
9,886

 
13,946

Accrued expenses
16,024

 
15,793

Rent liability
12,971

 
17,232

Accrued insurance liability
2,931

 
3,009

Total accrued liabilities
$
71,165

 
$
77,866

Deferred Revenue and Student Deposits
Deferred Revenue and Student Deposits
Deferred Revenue and Student Deposits
Deferred revenue and student deposits consists of the following (in thousands):
 
As of December 31,
 
2017
 
2016
Deferred revenue
$
19,135

 
$
21,733

Student deposits
49,072

 
52,933

Total deferred revenue and student deposits
$
68,207

 
$
74,666

Other Long-Term Liabilities
Other Long-Term Liabilities
Other Long-Term Liabilities
Other long-term liabilities consists of the following (in thousands):
 
As of December 31,
 
2017
 
2016
Uncertain tax positions
$
8,893

 
$
8,216

Other long-term liabilities
3,815

 
5,414

Total other long term liabilities
$
12,708

 
$
13,630

Credit Facilities
Credit Facilities
Credit Facilities
The Company has issued letters of credit that are collateralized with cash in the aggregate amount of $8.3 million, which is included as restricted cash as of December 31, 2017.
As part of its normal business operations, the Company is required to provide surety bonds in certain states in which the Company does business. The Company has entered into a surety bond facility with an insurance company to provide such bonds when required. As of December 31, 2017, the Company's total available surety bond facility was $3.5 million and the surety had issued bonds totaling $3.2 million on the Company's behalf under such facility.
Lease Obligations
Lease Obligations
Lease Obligations
Operating leases
The Company leases certain office facilities and office equipment under non-cancelable lease arrangements that expire at various dates through 2023. The office leases contain certain renewal options. Rent expense under non-cancelable operating lease arrangements is accounted for on a straight-line basis and totaled $15.0 million, $23.3 million and $38.5 million for the years ended December 31, 2017, 2016 and 2015, respectively. Rent expense in certain periods also includes the restructuring and impairment charges recorded and therefore, may differ significantly from cash payments. For additional information, see Note 3, “Restructuring and Impairment Charges.”
The following table summarizes the future minimum rental payments under non-cancelable operating lease arrangements in effect at December 31, 2017 (in thousands):
Year Ended December 31,
 
 
2018
$
31,400

2019
20,833

2020
9,504

2021
5,112

2022
1,558

Thereafter
390

Total minimum payments
$
68,797


The Company has agreements to sublease certain portions of its office facilities, with three active subleases as of December 31, 2017. The Company is subleasing approximately 28,300 square feet of office space in San Diego, California with a commitment to lease for 28 months and a net sublease value of $1.7 million. In addition, the Company is subleasing approximately 72,000 square feet of office space in Denver, Colorado with a commitment to lease for 44 months and a net sublease value of $4.7 million.
Income (Loss) Per Share
Income (Loss) Per Share
Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing net income (loss) available to common stockholders for the period by the weighted average number of common shares outstanding for the period.
Diluted income (loss) per share is calculated by dividing net income (loss) available to common stockholders for the period by the sum of (i) the weighted average number of common shares outstanding during the period, plus (ii) potentially dilutive securities outstanding during the period, if the effect is dilutive. Potentially dilutive securities for the periods presented include incremental stock options, unvested restricted stock units (“RSUs”) and unvested performance stock units (“PSUs”).
The following table sets forth the computation of basic and diluted income (loss) per share for the periods indicated (in thousands, except per share data):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Numerator:
 
 
 
 
 
Net income (loss)
$
10,537

 
$
(30,040
)
 
$
(70,454
)
Denominator:
 
 
 
 
 
Weighted average number of common shares outstanding
32,058

 
46,228

 
45,665

Effect of dilutive options and restricted stock units
736

 

 

Diluted weighted average number of common shares outstanding
32,794

 
46,228

 
45,665

Income (loss) per share:
 
 
 
 
 
Basic
$
0.33

 
$
(0.65
)
 
$
(1.54
)
Diluted
$
0.32

 
$
(0.65
)
 
$
(1.54
)

The following table sets forth the number of stock options, RSUs and PSUs excluded from the computation of diluted loss per share for the periods indicated because their effect was anti-dilutive (in thousands):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Options
1,850

 
4,359

 
5,063

RSUs and PSUs
6

 
730

 
762

Stock-Based Compensation
Stock-Based Compensation
Stock-Based Compensation
The Company recorded $3.6 million, $7.3 million and $9.7 million of compensation expense related to equity awards for the years ended December 31, 2017, 2016 and 2015, respectively. The related income tax benefit was $1.4 million, $2.7 million and $3.6 million for the years ended December 31, 2017, 2016 and 2015, respectively. However, there was no net tax benefit recorded for the equity awards, as the Company was in a full valuation allowance position for the years ended December 31, 2017, 2016 and 2015. The Company records stock-based compensation expense over the vesting term using the graded-vesting method.
Stock Options
The Company grants stock options from its 2009 Stock Incentive Plan (the “2009 Plan”). The compensation committee of the Company's board of directors, or the full board of directors, determines eligibility, vesting schedules and exercise prices for stock options granted under the 2009 Plan. Stock options granted under the 2009 Plan typically have a maximum contractual term of 10 years, subject to the option holder's continuing service with the Company. Stock options are generally granted with a four-year vesting requirement, pursuant to which the option holder must continue providing service to the Company at the applicable vesting date. All stock options granted during the years ended December 31, 2017, 2016 and 2015 were awarded pursuant to the 2009 Plan. Under the 2009 Plan, the number of authorized shares is subject to automatic increase each January 1 through and including January 1, 2019, pursuant to a formula contained in the 2009 Plan, without the need for further approval by the Company's board of directors or stockholders.
Before the adoption of the 2009 Plan, the Company awarded stock options pursuant to the Company's Amended and Restated 2005 Stock Incentive Plan (the “2005 Plan”). Effective upon the closing of the Company's initial public offering, the 2005 Plan was terminated and no further stock options may be issued under the 2005 Plan, provided that all stock options then outstanding under the 2005 Plan will continue to remain outstanding pursuant to the terms of the 2005 Plan and the applicable award agreements.
The following table presents a summary of stock option activity during the years ended December 31, 2017, 2016 and 2015 (in thousands, except for exercise prices and contractual terms):
 
Options
Outstanding
 
Weighted-
Average
Exercise
Price
 
Weighted-
Average
Remaining
Contractual
Term
(in years)
 
Aggregate
Intrinsic Value
December 31, 2014
5,168

 
$
14.26

 
5.73
 
$
7,732

Granted
455

 
$
9.44

 
 
 
 
Exercised
(206
)
 
$
1.38

 
 
 
 
Forfeitures and expired
(764
)
 
$
18.15

 
 
 
 
December 31, 2015
4,653

 
$
13.72

 
4.84
 
$
2,556

Granted
375

 
$
10.44

 
 
 
 
Exercised
(306
)
 
$
4.35

 
 
 
 
Forfeitures and expired
(1,115
)
 
$
15.41

 
 
 
 
December 31, 2016
3,607

 
$
13.64

 
4.80
 
$
2,025

Granted
332

 
$
10.44

 
 
 
 
Exercised
(537
)
 
$
7.17

 
 
 
 
Forfeitures and expired
(502
)
 
$
15.51

 
 
 
 
December 31, 2017
2,900

 
$
14.15

 
4.23
 
$

Vested and expected to vest at December 31, 2017
2,848

 
$
14.22

 
4.15
 
$

Exercisable at December 31, 2017
2,467

 
$
14.79

 
3.46
 
$


As of December 31, 2017, the Company had 4.3 million shares of common stock reserved for issuance upon the exercise of outstanding stock options and settlement of outstanding stock awards under the Company's equity incentive plans. Shares issued upon stock option exercises and settlements of stock awards are drawn from the authorized but unissued shares of common stock.
During the year ended December 31, 2017, there were 0.5 million stock options exercised with an intrinsic value of $2.7 million. The windfall tax benefit realized from these exercises was $0.3 million. The Company also realized a total tax benefit shortfall of $1.6 million. During the year ended December 31, 2016, there were 0.3 million stock options exercised with an intrinsic value of $1.2 million. The windfall tax benefit realized from these exercises was $0.3 million. The Company also realized a total tax benefit shortfall of $3.4 million. During the year ended December 31, 2015, there were 0.2 million stock options exercised with an intrinsic value of $1.6 million. The windfall tax benefit realized from these exercises was $0.5 million. The Company also realized a total tax benefit shortfall of $1.0 million.
Approximately 0.3 million and 1.0 million stock options expired during the years ended December 31, 2017 and 2016, respectively.
The fair value of each stock option award granted during the years ended December 31, 2017, 2016 and 2015 was estimated on the date of grant using the Black-Scholes option pricing model. The Company's determination of the fair value of share-based awards is affected by the Company's common stock price as well as assumptions regarding a number of complex and subjective variables.
Below is a summary of the assumptions used for the stock options granted in the years indicated.
 
2017
 
2016
 
2015
Weighted average exercise price per share
$
10.44

 
$
10.44

 
$
9.44

Risk-free interest rate
2.1
%
 
1.4
%
 
1.6
%
Expected dividend yield

 

 

Expected volatility
47.2
%
 
49.8
%
 
50.7
%
Expected life (in years)
5.75

 
5.75

 
5.75

Forfeiture rate
11.0
%
 
9.0
%
 
7.0
%
Weighted average grant date fair value per share
$
4.76

 
$
4.91

 
$
4.52


The risk-free interest rate is based on the currently available rate on a U.S. Treasury zero-coupon issue with a remaining term equal to the expected term of the stock option converted into a continuously compounded rate. The Company has never declared or paid any cash dividends on its common stock and does not currently anticipate paying cash dividends in the future. The Company has enough historical option exercise information to compute an expected term for use as an assumption in the Black-Scholes option pricing model, and as such, its computation of expected term was calculated using its own historical data. The volatility of the Company's common stock is also based upon its own historical volatility.
As of December 31, 2017, 2016 and 2015, there was $0.9 million, $1.4 million and $1.7 million, respectively, of unrecognized compensation costs related to unvested stock options. At December 31, 2017, the unrecognized compensation costs of stock options were expected to be recognized over a weighted average period of 1.1 years.
Stock Awards
The Company also grants RSUs to its employees under the 2009 Plan. Each RSU represents the future issuance of one share of the Company's common stock contingent upon the recipient's continued service with the Company through the applicable vesting date. Upon the vesting date, RSUs are automatically settled for shares of the Company's common stock unless the applicable award agreement provides for delayed settlement. If prior to the vesting date the employee's status as a full-time employee is terminated, the unvested RSUs are automatically canceled on the employment termination date, unless otherwise specified in an employee's individual employment agreement. The fair value of an RSU is calculated based on the market value of the common stock on the grant date and is amortized over the applicable vesting period using the graded-vesting method.
During the year ended December 31, 2015, the Company had granted PSUs under the 2009 Plan to certain individuals. No PSUs were granted during either of the years ended December 31, 2017 or 2016. Each PSU represents the future issuance of one share of the Company's common stock contingent upon achievement of the applicable performance target and the recipient's continued service with the Company through the applicable vesting date. Certain of the PSUs may be earned based on the achievement of the Company's stock price, a market-based measure, and certain of the PSUs may be earned based on the the Company's diluted income per share, a performance-based measure.
With respect to each award of PSUs, vesting is based upon the achievement of the applicable performance target, and subject to the employee's continued service with the Company through the applicable vesting date. If prior to the vesting date the employee's status as a full-time employee is terminated, the unvested PSUs are automatically canceled on the employment termination date, unless otherwise specified in an employee's individual employment agreement. PSUs are amortized over the applicable vesting period using the graded-vesting method. The fair value of the portion of the PSU awards subject to earning based on the achievement of a performance-based measure was based on the Company's stock price as of the date the applicable performance target was approved by the Company's board of directors. Compensation cost for the portion of the PSU awards subject to earning based on the achievement of a performance-based measure is recorded based on the probable outcome of the performance conditions associated with the shares, as determined by management. The fair value of the portion of the PSU awards subject to earning based on the achievement of a market-based measure was estimated based on the Company's stock price as of the date of grant using a Monte Carlo simulation model.
The assumptions for the portion of the PSU awards subject to earning based on the achievement of a market-based measure are noted in the following table:
 
2015
Grant price per share
$
9.46

Risk-free interest rate
0.7
%
Expected dividend yield

Historical volatility
50.0
%
Expected life (in years)
4.0

Forfeiture rate
7.0
%
Weighted average grant date fair value per share
$
4.04


A summary of the RSU and PSU activity and related information is as follows (in thousands, except for exercise prices and contractual terms):
 
Restricted Stock Units and Performance Stock Units
 
Time-Based RSU
 
Performance-Based PSU
 
Market-Based PSU
 
Number of Shares
 
Weighted Average
Purchase Price
 
Number of Shares
 
Weighted Average
Purchase Price
 
Number of Shares
 
Weighted Average
Purchase Price
Balance at December 31, 2014
1,279

 
$
12.63

 

 

 
975

 
$
5.39

Awarded
983

 
$
9.33

 
456

 
$
9.86

 
229

 
$
4.04

Vested
(353
)
 
$
12.34

 

 

 

 

Canceled
(519
)
 
$
11.51

 
(97
)
 
$
9.86

 
(238
)
 
$
5.21

Balance at December 31, 2015
1,390

 
$
10.78

 
359

 
$
9.86

 
966

 
$
5.11

Awarded
505

 
$
10.18

 

 

 

 

Vested
(472
)
 
$
10.84

 

 

 

 

Canceled
(289
)
 
$
10.69

 
(92
)
 
$
9.86

 
(231
)
 
$
5.19

Balance at December 31, 2016
1,134

 
$
10.52

 
267

 
$
9.86

 
735

 
$
5.09

Awarded
473

 
$
10.45

 

 

 

 

Vested
(461
)
 
$
10.58

 

 

 

 

Canceled
(302
)
 
$
10.51

 
(103
)
 
$
9.86

 
(300
)
 
$
5.04

Balance at December 31, 2017
844

 
$
10.45

 
164

 
$
9.86

 
435

 
$
5.13


As of December 31, 2017 and 2016, there was $3.6 million and $4.7 million, respectively, of unrecognized compensation costs related to unvested RSUs. At December 31, 2017, the unrecognized compensation costs of RSUs were expected to be recognized over a weighted average period of 1.2 years.
During the year ended December 31, 2017, 0.5 million RSUs vested and were released with a market value of $4.8 million. The related windfall tax benefit realized was $0.1 million, and the related tax benefit shortfall realized was $0.1 million. During the year ended December 31, 2016, 0.5 million RSUs vested and were released with a market value of $4.8 million. The related windfall tax benefit realized was $0.1 million, and the related tax benefit shortfall realized from the RSUs released was $0.2 million. During the year ended December 31, 2015, 0.4 million RSUs vested and were released with a market value of $3.3 million. There was no related windfall tax benefit realized, and the related tax benefit shortfall realized from the RSUs released was $0.4 million.
As of December 31, 2017, there was $0.3 million of unrecognized compensation costs related to unvested PSUs. At December 31, 2017, the unrecognized compensation costs of PSUs were expected to be recognized over a weighted average period of 0.7 years, to the extent the applicable performance criteria are met. No PSUs vested during the years ended December 31, 2017, 2016 or 2015.
Stock Repurchase Programs
Stock Repurchase Programs
Stock Repurchase Programs
The Company's board of directors (“board”) may authorize the Company to repurchase outstanding shares of its common stock from time to time in the open market through block trades or otherwise depending on market conditions and other considerations, pursuant to the applicable rules of the Securities and Exchange Commission (“SEC”). The Company's policy is to retain these repurchased shares as treasury shares and not to retire them. The amount and timing of future share repurchases, if any, will be determined as market and business conditions warrant.
The Company did not repurchase any shares of its common stock during either of the years ended December 31, 2016 or 2015. On March 10, 2017, the Company repurchased approximately 18.1 million shares of the Company's common stock for an aggregate purchase price of approximately $152.0 million, including fees.
On November 17, 2017, the Company's board then authorized a share repurchase program of up to $20.0 million in aggregate value of shares of its common stock, over the next 12 months. The timing and extent of any repurchases will depend upon market conditions, the trading price of the Company's shares and other factors, and subject to the restrictions relating to volume, price and timing under applicable law. The Company may commence or suspend share repurchases at any time or from time to time.
Separate from the authorized repurchase program noted above, on November 21, 2017, the Company repurchased 2.1 million shares of the Company's common stock for an aggregate purchase price of approximately $16.7 million, including fees.
Income Taxes
Income Taxes
Income Taxes
The Company uses the asset-liability method to account for taxes. Under this method, deferred income tax assets and liabilities result from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements that will result in income and deductions in future years. The components of income tax expense (benefit) are as follows (in thousands):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Current:
 
 
 
 
 
Federal
$
(1,091
)
 
$
(8,433
)
 
$
(10,370
)
State
517

 
530

 
(309
)
 
(574
)
 
(7,903
)
 
(10,679
)
Deferred:
 
 
 
 
 
Federal
(605
)
 
25

 
33,482

State
5

 
3

 
7,462

 
(600
)
 
28

 
40,944

Total
$
(1,174
)
 
$
(7,875
)
 
$
30,265


On December 22, 2017, President Donald Trump signed into law H.R.1, formerly known as the Tax Cuts and Jobs Act (the “Tax Legislation”). The Tax Legislation significantly revised the U.S. tax code that will affect the Company's year ending December 31, 2018, including, but not limited to, lowering the U.S. federal corporate income tax rate from 35% to 21%; bonus depreciation that will allow for full expensing of qualified property; limitations on the deductibility of certain executive compensation and other deductions; and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017. The enactment of the Tax Legislation resulted in a one-time remeasurement of the Company's U.S. federal deferred tax assets and liabilities from 35% to the lower enacted corporate tax rate or 21%. The provisional remeasurement of the Company's deferred tax balance was primarily offset by a corresponding change in the valuation allowance.
Each reporting period, the Company assesses the likelihood that it will be able to recover its deferred tax assets, which represent timing differences in the recognition of certain tax deductions for accounting and tax purposes. The realization of deferred tax assets is dependent in part upon future taxable income. Significant judgment is required in determining any valuation allowance recorded against deferred tax assets. In assessing the need for a valuation allowance, the Company considers all available evidence, including past operating results, estimates of future taxable income given current business conditions affecting the Company, and the feasibility of ongoing tax planning strategies.
As of December 31, 2017, the Company continues to record a full valuation allowance against all net deferred tax assets, as was the case at December 31, 2016. The Company intends to maintain a valuation allowance against its deferred tax assets until sufficient positive evidence exists to support its reversal.
Deferred income tax balances reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases and are stated at enacted tax rates expected to be in effect when taxes are paid or recovered.
Significant components of the Company’s deferred tax assets and liabilities and balance sheet classifications are as follows (in thousands):
 
As of December 31,
 
2017
 
2016
Deferred tax assets:
 
 
 
Net operating loss
$
2,414

 
$
1,052

Fixed assets
(291
)
 
(1,241
)
Bad debt
1,506

 
1,979

Vacation accrual
1,880

 
3,249

Stock-based compensation
6,435

 
12,827

Deferred rent
4,818

 
12,687

State tax
1,520

 
2,534

Bonus accrual
1,372

 
1,873

Accrued expenses
3,711

 
5,994

Revenue reserves
104

 
135

Other
766

 
760

Total deferred tax assets
24,235

 
41,849

Valuation allowance
(23,891
)
 
(41,849
)
Net deferred tax assets
344

 

Deferred tax liabilities:
 
 
 
Indefinite-lived intangibles
(517
)
 
(773
)
Total deferred tax liabilities
(517
)
 
(773
)
Total net deferred tax assets (liabilities)
$
(173
)
 
$
(773
)

At December 31, 2017, the Company had federal net operating loss carryforwards of $5.5 million, which are available to offset future taxable income. The federal net operating loss carryforwards will begin to expire in 2021. The Company’s utilization of net operating loss carryforwards may be subject to annual limitations due to ownership change provisions of Section 382 of Internal Revenue Code of 1986, as amended.
The following table presents a reconciliation of the income tax expense (benefit) computed using the federal statutory tax rate of 35% and the Company's provision for income taxes (in thousands):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Computed expected federal tax expense
$
3,277

35.0
 %
 
$
(13,270
)
35.0
 %
 
$
(14,066
)
35.0
 %
State taxes, net of federal benefit
321

3.4

 
(551
)
1.5

 
(655
)
1.6

Permanent differences
(362
)
(3.8
)
 
341

(0.9
)
 
1,033

(2.6
)
Penalty


 
2,800

(7.4
)
 


Uncertain tax positions
677

7.2

 
346

(1.0
)
 
480

(1.2
)
Credits
(466
)
(4.9
)
 
(402
)
1.1

 
(206
)
0.5

Stock compensation
1,277

13.6

 
116

(0.3
)
 
1,246

(3.1
)
Federal tax rate change
11,974

127.9

 


 


Valuation allowance
(17,958
)
(191.8
)
 
2,708

(7.1
)
 
42,419

(105.5
)
Other
86

0.9

 
37

(0.1
)
 
14


Income tax expense (benefit)
$
(1,174
)
(12.5
)%
 
$
(7,875
)
20.8
 %
 
$
30,265

(75.3
)%

The following table presents a reconciliation of the beginning and ending amount of unrecognized tax benefits (in thousands):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Unrecognized tax benefits at beginning of period
$
20,248

 
$
20,589

 
$
20,877

Gross increases-tax positions in prior period
427

 
176

 
169

Gross decreases-tax positions in prior period
(1,354
)
 
(517
)
 
(2
)
Gross increases-current period tax positions

 

 

Settlements

 

 
(455
)
Lapse of statute of limitations
(452
)
 

 

Unrecognized tax benefits at end of period
$
18,869

 
$
20,248

 
$
20,589


Included in the amount of unrecognized tax benefits at December 31, 2017 and 2016 is $14.8 million and $13.2 million, respectively, of tax benefits that, if recognized, would affect the Company's effective tax rate. Also included in the balance of unrecognized tax benefits at December 31, 2017 and 2016 is $3.9 million and $7.1 million, respectively, of tax benefits that, if recognized, would result in adjustments to other tax accounts, primarily deferred tax assets. It is reasonably possible that the total amount of the unrecognized tax benefit will change during the next 12 months; however, the Company does not expect the potential change to have a material effect on the results of operations or financial position in the next year.
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. At December 31, 2017 and 2016, the Company had approximately $2.7 million and $2.4 million, respectively, of accrued interest, before any tax benefit, related to uncertain tax positions.
The Company has analyzed filing positions in all of the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. The tax years 2001 through 2016 are open to examination by major taxing jurisdictions to which the Company is subject.
The Company is currently under Internal Revenue Service audit examinations of the Company’s income and payroll tax returns for the years 2013 through 2016.
The Company’s income tax returns are being audited by the California Franchise Tax Board for the years 2008 through 2015. The Company was notified by the Franchise Tax Board in March 2017 that they are continuing to challenge the Company’s filing position. The Company continues to work toward resolution, and based on all available information the Company has accrued for any uncertain tax positions that may be addressed in the audit.
The Company’s income tax returns are being audited by the Oregon Department of Revenue for the years 2012 through 2014. In January 2017, the Oregon Department of Revenue issued Notices of Deficiencies, which were appealed by the Company. The Company does not expect any significant adjustments to amounts already reserved.
Regulatory
Regulatory
Regulatory
The Company is subject to extensive regulation by federal and state governmental agencies and accrediting bodies. In particular, the Higher Education Act of 1965, as amended (the “Higher Education Act”), and the regulations promulgated thereunder by the U.S. Department of Education (the “Department”) subject the Company to significant regulatory scrutiny on the basis of numerous standards that institutions of higher education must satisfy in order to participate in the various federal student financial aid programs under Title IV of the Higher Education Act (“Title IV programs”).
Ashford University is regionally accredited by WASC Senior College and University Commission (“WSCUC”) and University of the Rockies is regionally accredited by the Higher Learning Commission (“HLC”).
Department of Education Open Program Review of Ashford University
On July 7, 2016, Ashford University was notified by the Department that an off-site program review had been scheduled to assess Ashford’s administration of the Title IV programs in which it participates. The off-site program review commenced on July 25, 2016 and covered students identified in the 2009-2012 calendar year data previously provided by Ashford to the Department in response to a request for information received from the Multi-Regional and Foreign School Participation Division of the Department’s Office of Federal Student Aid (the “FSA”) on December 10, 2015, but may be expanded if appropriate.
On December 9, 2016, the Department informed Ashford that it intended to continue the program review on-site at Ashford. The on-site program review commenced on January 23, 2017 and initially covers the 2015-2016 and 2016-2017 award years, but may be expanded if appropriate. To date, the Company has not received a draft report or any notice of deficiencies from the Department.
Program Participation Agreement for Ashford University
On October 20, 2017, Ashford University received an updated Program Participation Agreement from the U.S. Department of Education (“Department”). Based on the updated Program Participation Agreement, Ashford University is provisionally certified to participate in Federal Student Financial Aid Programs until December 31, 2018. Ashford University was previously eligible to participate on a month-to-month basis while its reapplication for certification was pending with the Department. As a result of the updated Program Participation Agreement, Ashford University’s pending educational programs have been approved and Ashford University is required to submit its reapplication for continued certification by September 30, 2018.
WSCUC Accreditation of Ashford University
In July 2013, WSCUC granted Initial Accreditation to Ashford University for five years, until July 15, 2018. In December 2013, Ashford effected its transition to WSCUC accreditation and designated its San Diego, California facilities as its main campus and its Clinton, Iowa campus as an additional location. As part of a continuing monitoring process, Ashford hosted a visiting team from WSCUC in a special visit in April 2015. In July 2015, Ashford received an Action Letter from WSCUC outlining the findings arising out of its visiting team's special visit. The Action Letter stated that the WSCUC visiting team found evidence that Ashford continues to make progress in all six areas recommended by WSCUC in 2013. As part of its institutional review process, WSCUC will conduct a comprehensive review of Ashford scheduled to commence with an off-site review in spring 2018, followed by an on-site review in fall 2018.
The “90/10” Rule
Under the Higher Education Act, a proprietary institution loses eligibility to participate in Title IV programs if the institution derives more than 90% of its revenues from Title IV program funds for two consecutive fiscal years, as calculated in accordance with Department regulations. This rule is commonly referred to as the “90/10 rule.” Any institution that violates the 90/10 rule for two consecutive fiscal years becomes ineligible to participate in Title IV programs for at least two fiscal years. In addition, an institution whose rate exceeds 90% for any single fiscal year is placed on provisional certification and may be subject to other enforcement measures. In September 2016, the Department issued new audit standards, for financial statement audits of proprietary institutions for fiscal years ending June 30, 2017 or later, which include a requirement that institutions must determine Title IV and non-Title IV revenue on a student by student basis. On the basis of this calculation, during the fiscal year ended December 31, 2017, Ashford University derived 80.8%, and University of the Rockies derived 86.1%, of their respective cash revenues from Title IV program funds. As previously reported, for fiscal years ended December 31, 2016 and 2015, Ashford University derived 81.2% and 80.9%, respectively, and University of the Rockies derived 86.5% and 86.6%, respectively, of their respective cash revenues from Title IV program funds.
Cohort Default Rate
For each federal fiscal year, the Department calculates a rate of student defaults over a three-year measuring period for each educational institution, which is known as a “cohort default rate.” An institution may lose eligibility to participate in the William D. Ford Federal Direct Loan Program and the Federal Pell Grant Program if, for each of the three most recent federal fiscal years, 30% or more of its students who became subject to a repayment obligation in that federal fiscal year defaulted on such obligation by the end of the following federal fiscal year.
The most recent official three-year cohort default rates for Ashford University for the 2014, 2013 and 2012 federal fiscal years, were 14.9%, 14.5% and 15.3%, respectively. The most recent official three-year cohort default rates for University of the Rockies for the 2014, 2013 and 2012 federal fiscal years, were 5.5%, 3.8% and 4.3%, respectively.
Financial Responsibility
The Department calculates an institution's composite score for financial responsibility based on its (i) equity ratio, which measures the institution's capital resources, ability to borrow and financial viability; (ii) primary reserve ratio, which measures the institution's ability to support current operations from expendable resources; and (iii) net income ratio, which measures the institution's ability to operate at a profit. An institution that does not meet the Department's minimum composite score of 1.5 may demonstrate its financial responsibility by posting a letter of credit in favor of the Department and possibly accepting other conditions on its participation in the Title IV programs.
For the fiscal year ended December 31, 2016, the consolidated composite score calculated was 2.0, satisfying the composite score requirement of the Department's financial responsibility test, which institutions must satisfy in order to participate in Title IV programs. For the fiscal year ended December 31, 2017, the Company expects the consolidated composite score to be 2.5. However, the consolidated calculation is subject to determination by the Department once it receives and reviews the Company's audited financial statements for the year ended December 31, 2017. Additionally, for the year ended December 31, 2017, the composite score at each of the Company's institutions is higher than the consolidated score.
Return of Title IV funds for students who withdraw
If a student who has received Title IV funds withdraws, the institution must determine the amount of Title IV program funds the student has earned pursuant to applicable regulations. If the student withdraws during the first 60% of any payment period (which, for undergraduate online students, is typically a 20-week term consisting of four five-week courses), the amount of Title IV funds that the student has earned is equal to a pro rata portion of the funds the student received or for which the student would otherwise be eligible for the payment period. If the student withdraws after the 60% threshold, then the student is deemed to have earned 100% of the Title IV funds received. If the student has not earned all of the Title IV funds disbursed, the institution must return the unearned funds to the appropriate lender or the Department in a timely manner, which is generally no later than 45 days after the date the institution determined that the student withdrew. If an institution's annual financial aid compliance audit in either of its two most recently completed fiscal years determines that 5% or more of such returns were not timely made, the institution may be required to submit a letter of credit in favor of the Department equal to 25% of the amount of unearned Title IV funds the institution was required to return for its most recently completed fiscal year. For the fiscal year ended December 31, 2017, the Company's institutions did not exceed the 5% threshold for late refunds sampled.
Substantial Misrepresentation
The Higher Education Act prohibits an institution participating in Title IV programs from engaging in substantial misrepresentation regarding the nature of its educational programs, its financial charges or the employability of its graduates. Under the Department’s rules, a “misrepresentation” is any false, erroneous or misleading statement an institution, one of its representatives or any ineligible institution, organization or person with whom the institution has an agreement to provide educational programs or marketing, advertising, recruiting, or admissions services makes directly or indirectly to a student, prospective student or any member of the public, or to an accrediting agency, a state agency or the Department. The Department’s rules define a “substantial misrepresentation” as any misrepresentation on which the person to whom it was made could reasonably be expected to rely, or has reasonably relied, to that person’s detriment. For-profit educational institutions are also subject to the general deceptive practices jurisdiction of the Federal Trade Commission and the Consumer Financial Protection Bureau (the “CFPB”).
On December 10, 2015, Ashford University received a request for information from the Multi-Regional and Foreign School Participation Division of the FSA for (i) advertising and marketing materials provided to prospective students regarding the transferability of certain credits, (ii) documents produced in response to the August 10, 2015 Civil Investigative Demand from the CFPB related to the CFPB’s investigation to determine whether for-profit postsecondary education companies or other unnamed persons have engaged in or are engaging in unlawful acts or practices related to the advertising, marketing or origination of private student loans, (iii) certain documents produced in response to subpoenas and interrogatories issued by the Attorney General of the State of California (the “CA Attorney General”) and (iv) records created between 2009 and 2012 related to the disbursement of certain Title IV funds. The FSA is investigating representations made by Ashford University to potential and enrolled students, and has asked the Company and Ashford to assist in its assessment of Ashford’s compliance with the prohibition on substantial misrepresentations. The Company and Ashford University are cooperating fully with the FSA with a view toward demonstrating the compliant nature of their practices.
The Department is currently conducting a program review to assess Ashford University’s administration of the Title IV programs in which it participates. For additional information, see “Department of Education Open Program Review of Ashford University” above.
If the Department determines that one of the Company’s institutions has engaged in substantial misrepresentation, the Department may (i) revoke the institution’s program participation agreement, if the institution is provisionally certified, (ii) impose limitations on the institution’s participation in Title IV programs, if the institution is provisionally certified, (iii) deny participation applications made on behalf of the institution or (iv) initiate proceedings to fine the institution or to limit, suspend or terminate the participation of the institution in Title IV programs. Because Ashford University is provisionally certified, if the Department determined that Ashford has engaged in substantial misrepresentation, the Department may take the actions set forth in clauses (i) and (ii) above in addition to any other actions taken by the Department.
GI Bill Benefits
On May 20, 2016, the Company received a letter from the Iowa Department of Education (the “Iowa DOE”) indicating that, as a result of the planned closure of the Clinton Campus, the Iowa State Approving Agency (the “ISAA”) would no longer continue to approve Ashford University’s programs for GI Bill benefits after June 30, 2016, and recommending Ashford seek approval through the State Approving Agency of jurisdiction for any location that meets the definition of a “main campus” or “branch campus”. Ashford began the process of applying for approval through the State Approving Agency in California (“CSAAVE”), and the Company subsequently disclosed that on June 20, 2016 it received a second letter from the Iowa DOE indicating that the Iowa DOE had issued a stay of the ISAA’s withdrawal of approval of Ashford’s programs for GI Bill benefits effective immediately until the earlier of (i) 90 days from June 20, 2016 or (ii) the date on which CSAAVE completed its review and issued a decision regarding the approval of Ashford in California. Ashford received communication from CSAAVE indicating that additional information and documentation would be required before Ashford’s application could be considered for CSAAVE approval. Ashford subsequently withdrew the CSAAVE application and continued working with the U.S. Department of Veterans Affairs (“VA”), the Iowa DOE and the ISAA to obtain continued approval of Ashford’s programs for GI Bill benefits and to prevent any disruption of educational benefits to Ashford’s veteran students.
On September 15, 2016, in response to a Petition for Declaratory and Injunctive Relief (the “Petition”) filed by Ashford University, the Iowa District Court for Polk County entered a written order (the “Order”) staying the Iowa DOE’s announced intention to withdraw the approval of Ashford as a GI Bill eligible institution until the entry of a final and appealable order and judgment in the action. On June 23, 2017, the Iowa District Court held a hearing on Ashford’s Petition and on July 17, 2017, the Court ruled in favor of the Iowa DOE and denied the petition. Ashford filed a motion for reconsideration of this ruling, which was denied on August 17, 2017. On August 23, 2017, Ashford filed a Petition to Vacate or Modify the Iowa District Court’s July 17, 2017 ruling, based on material evidence, newly discovered, which could not with reasonable diligence have been previously discovered by Ashford (the “Petition to Vacate”). The Petition to Vacate is pending. On September 18, 2017, Ashford posted an appeal bond, which stays this matter pending resolution of Ashford’s appeal, and as a result, Ashford’s approval was not withdrawn, and Ashford’s programs remain approved for GI Bill purposes. The Assistant Attorney General handling this matter on behalf of the Iowa DOE also advised Ashford that the Iowa DOE would take no action pending the post-ruling motions and appeal. On October 12, 2017, the Iowa District Court judge that issued the July 17, 2017 ruling filed a Disclosure Statement revealing family ties to the Iowa Attorney General’s Office, and following a motion by Ashford for recusal, the judge recused herself from further proceedings concerning the Petition to Vacate on October 20, 2017. On October 24, 2017, Ashford moved to vacate the July 17, 2017 ruling and all other material orders entered by the judge, or in the alternative, for a limited remand of this matter. This motion is pending.
On July 6, 2017, Ashford University received approval from the Arizona State Approving Agency (“ASAA”)to provide GI Bill benefits to its students. On September 13, 2017, the VA accepted the ASAA’s approval, subject to Ashford’s compliance with the approval requirements and the University subsequently received a facility code from the VA. On November 9, 2017, the VA informed Ashford University that the ASAA had not provided sufficient evidence to establish that it has jurisdictional authority over Ashford’s online programs. The VA stated that they intend to suspend payment of educational assistance and approval of new student enrollments and student re-enrollments for Ashford University’s online programs in 60 days unless corrective action was taken.
On November 17, 2017, Ashford University filed a petition for review in the United States Court of Appeals for the Federal Circuit challenging the VA’s actions.  In response to that petition, the VA agreed to stay the actions with respect to suspension and reenrollment it had announced on November 9, 2017 through the entry of judgment in the Federal Circuit case, on the condition that Ashford request and submit an application for approval to CSAAVE on or before January 8, 2018. Ashford University submitted an application to CSAAVE for approval on January 5, 2018, which is currently pending with that agency. Although the Company cannot predict the eventual outcome of this litigation, the Company believes that in approving Ashford for GI Bill benefits, Arizona took all appropriate actions, followed correct procedures, and acted within the authority clearly delegated to the states by Congress. For additional information, see “Part II, Item 9B - Other information.”
Retirement Plans
Retirement Plans
Retirement Plans
The Company maintains an employee savings plan (the “401(k) Plan”) that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code of 1986, as amended. Under the 401(k) Plan, participating employees may contribute a portion of their pre-tax earnings up to the Internal Revenue Service annual contribution limit. Additionally, the Company may elect to make matching contributions into the 401(k) Plan in its sole discretion. The Company's total expense related to the 401(k) Plan was $2.9 million, $3.1 million and $3.4 million for the years ended December 31, 2017, 2016 and 2015, respectively.
Commitments and Contingencies
Commitments and Contingencies
Commitments and Contingencies
Litigation
From time to time, the Company is a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. When the Company becomes aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. In accordance with GAAP, the Company records loss contingencies in its financial statements only for matters in which losses are probable and can be reasonably estimated. Where a range of loss can be reasonably estimated, the best estimate within that range should be accrued. If no estimate is better than another, the Company records the minimum estimated liability in the range. If the loss is not probable or the amount of the loss cannot be reasonably estimated, the Company discloses the nature of the specific claim if the likelihood of a potential loss is reasonably possible and the amount involved could be material. The Company continuously assesses the potential liability related to the Company’s pending litigation and revises its estimates when additional information becomes available. Below is a list of material legal proceedings to which the Company or its subsidiaries is a party.
California Attorney General Investigation of For-Profit Educational Institutions
In January 2013, the Company received from the Attorney General of the State of California (the “CA Attorney General”) an Investigative Subpoena relating to the CA Attorney General’s investigation of for-profit educational institutions. Pursuant to the Investigative Subpoena, the CA Attorney General requested documents and detailed information for the time period March 1, 2009 to present. On July 24, 2013, the CA Attorney General filed a petition to enforce certain categories of the Investigative Subpoena related to recorded calls and electronic marketing data. On September 25, 2013, the Company reached an agreement with the CA Attorney General to produce certain categories of the documents requested in the petition and stipulated to continue the hearing on the petition to enforce from October 3, 2013 to January 9, 2014. On January 13, 2014 and June 19, 2014, the Company received additional Investigative Subpoenas from the CA Attorney General each requesting additional documents and information for the time period March 1, 2009 through the current date.
Representatives from the Company met with representatives from the CA Attorney General’s office on several occasions to discuss the status of the investigation, additional information requests, and specific concerns related to possible unfair business practices in connection with the Company’s recruitment of students and debt collection practices.
The parties also discussed a potential resolution involving injunctive relief, other non-monetary remedies and a payment to the CA Attorney General and the Company recorded an expense of $8.0 million related to the cost of resolution of this matter.
The parties did not reach a resolution and on November 29, 2017, the CA Attorney General filed suit against Ashford University and Bridgepoint Education. The Company intends to vigorously defend this case and emphatically denies the allegations made by the CA Attorney General that it ever deliberately misled its students, falsely advertised its programs, or in any way were not fully accurate in its statements to investors. However, the outcome of this legal proceeding is uncertain at this point because of the many questions of fact and law that may arise. At, present, the Company cannot reasonably estimate any updated range of loss for this action based on currently available information and as such, the prior accrual remains.
Massachusetts Attorney General Investigation of Bridgepoint Education, Inc. and Ashford University
On July 21, 2014, the Company and Ashford University received from the Attorney General of the State of Massachusetts (the “MA Attorney General”) a Civil Investigative Demand (the “MA CID”) relating to the MA Attorney General's investigation of for-profit educational institutions and whether the university's business practices complied with Massachusetts consumer protection laws. Pursuant to the MA CID, the MA Attorney General has requested from the Company and Ashford University documents and information for the time period January 1, 2006 to present. The Company is cooperating with the investigation and cannot predict the eventual scope, duration or outcome of the investigation at this time. The Company has not accrued any liability associated with this action.
Department of Justice Civil Investigative Demand
On July 7, 2016, the Company received from the U.S. Department of Justice (the “DOJ”) a Civil Investigative Demand (the “DOJ CID”) related to the DOJ's investigation concerning allegations that the Company may have misstated Title IV refund revenue or overstated revenue associated with private secondary loan programs and thereby misrepresented its compliance with the 90/10 rule of the Higher Education Act. Pursuant to the DOJ CID, the DOJ has requested from the Company documents and information for fiscal years 2011-2015. The Company is cooperating with the DOJ and cannot predict the eventual scope, duration or outcome of the investigation at this time. The Company has not accrued any liability associated with this action.
Securities Class Actions
Zamir v. Bridgepoint Education, Inc., et al.
On February 24, 2015, a securities class action complaint was filed in the U.S. District Court for the Southern District of California by Nelda Zamir naming the Company, Andrew Clark and Daniel Devine as defendants. The complaint asserts violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, claiming that the defendants made false and materially misleading statements and failed to disclose material adverse facts regarding the Company's business, operations and prospects, specifically regarding the Company’s improper application of revenue recognition methodology to assess collectability of funds owed by students. The complaint asserts a putative class period stemming from August 7, 2012 to May 30, 2014 and seeks unspecified monetary relief, interest and attorneys' fees. On July 15, 2015, the Court granted plaintiff's motion for appointment as lead plaintiff and for appointment of lead counsel.
On September 18, 2015, the plaintiff filed a substantially similar amended complaint that asserts a putative class period stemming from March 12, 2013 to May 30, 2014. The amended complaint also names Patrick Hackett, Adarsh Sarma, Warburg Pincus & Co., Warburg Pincus LLC, Warburg Pincus Partners LLC, and Warburg Pincus Private Equity VIII, L.P. as additional defendants. On November 24, 2015, all defendants filed motions to dismiss. On July 25, 2016, the Court granted the motions to dismiss and granted plaintiff leave to file an amended complaint within 30 days. Plaintiffs subsequently filed a second amended complaint and the Company filed a second motion to dismiss on October 24, 2016, which was granted by the Court with leave to amend. Plaintiffs filed a third amended complaint on April 19, 2017 and the defendants filed a third motion to dismiss, which is currently pending with the court. The outcome of this legal proceeding is uncertain at this point because of the many questions of fact and law that may arise. The Company has not accrued any liability associated with this action.
Shareholder Derivative Actions
In re Bridgepoint, Inc. Shareholder Derivative Action
On July 24, 2012, a shareholder derivative complaint was filed in California Superior Court by Alonzo Martinez. In the complaint, the plaintiff asserts a derivative claim on the Company's behalf against certain of its current and former officers and directors. The complaint is captioned Martinez v. Clark, et al. and generally alleges that the individual defendants breached their fiduciary duties of candor, good faith and loyalty, wasted corporate assets and were unjustly enriched. The lawsuit seeks unspecified monetary relief and disgorgement on behalf of the Company, as well as other equitable relief and attorneys' fees. On September 28, 2012, a substantially similar shareholder derivative complaint was filed in California Superior Court by David Adolph-Laroche. In the complaint, the plaintiff asserts a derivative claim on the Company's behalf against certain of its current and former officers and directors. The complaint is captioned Adolph-Laroche v. Clark, et al. and generally alleges that the individual defendants breached their fiduciary duties of candor, good faith and loyalty, wasted corporate assets and were unjustly enriched.
On October 11, 2012, the Adolph-Laroche action was consolidated with the Martinez action and the case is now captioned In re Bridgepoint, Inc. Shareholder Derivative Action. A consolidated complaint was filed on December 18, 2012 and the defendants filed a motion to stay the case while the underlying securities class action is pending. The motion was granted by the Court on April 11, 2013. A status conference was held on October 10, 2013, during which the Court ordered the stay continued for the duration of discovery in the underlying securities class action, but permitted the plaintiff to receive copies of any discovery responses served in the underlying securities class action. The stay was lifted following the settlement of the underlying securities class action and all defendants filed demurrers on October 3, 2016, which were granted with leave to amend on October 6, 2017. On October 17, 2017, the plaintiff submitted a litigation demand to the Company's Board of Directors, which appointed a working group to evaluate the demand.
Reardon v. Clark, et al.
On March 18, 2015, a shareholder derivative complaint was filed in the Superior Court of the State of California in San Diego. The complaint asserts derivative claims on the Company's behalf against certain of its current and former officers and directors. The complaint is captioned Reardon v. Clark, et al. and generally alleges that the individual defendants breached their fiduciary duties of candor, good faith and loyalty, wasted corporate assets and were unjustly enriched. The lawsuit seeks unspecified monetary relief and disgorgement, as well as other equitable relief and attorneys’ fees. Pursuant to a stipulation among the parties, on May 27, 2015, the Court ordered the case stayed during discovery in the underlying Zamir securities class action, but permitted the plaintiff to receive copies of any discovery conducted in the underlying Zamir securities class action.
Larson v. Hackett, et al.
On January 19, 2017, a shareholder derivative complaint was filed in the Superior Court of the State of California in San Diego. The complaint asserts derivative claims on the Company's behalf against certain of its current and former officers and directors. The complaint is captioned Larson v. Hackett, et al. and generally alleges that the individual defendants breached their fiduciary duties of candor, good faith and loyalty, wasted corporate assets and were unjustly enriched. The lawsuit seeks unspecified monetary relief and disgorgement, as well as other equitable relief and attorneys’ fees. The parties have not yet responded to the complaint, but will most likely seek to have the case stayed during discovery in the underlying Zamir securities class action.
Nieder v. Ashford University, LLC
On October 4, 2016, Dustin Nieder filed a purported class action against Ashford University in the Superior Court of the State of California in San Diego. The complaint is captioned Dustin Nieder v. Ashford University, LLC and generally alleges various wage and hour claims under California law for failure to pay overtime, failure to pay minimum wages and failure to provide rest and meal breaks. The lawsuit seeks back pay, the cost of benefits, penalties and interest on behalf of the putative class members, as well as other equitable relief and attorneys' fees. On January 5, 2018, the parties reached a mediated agreement to settle the case, subject to court approval. Accordingly, the Company has accrued a liability of $1.8 million associated with this action.
Concentration of Risk
Concentration of Risk
Concentration of Risk
Concentration of Revenue
In 2017, Ashford University derived 80.8% and University of the Rockies derived 86.1% of their respective cash revenues from students whose source of funding is through Title IV programs, as calculated in accordance with Department regulations. See Note 18, “Regulatory - The “90/10” Rule.” Revenue derived from government tuition assistance for military personnel, including veterans, is not considered federal student aid for purposes of calculations under the 90/10 rule.
Title IV programs are subject to political and budgetary considerations and are subject to extensive and complex regulations. The Company's administration of these programs is periodically reviewed by various regulatory agencies. Any regulatory violation could be the basis for the initiation of potentially adverse actions including a suspension, limitation or termination proceeding, which could have a material adverse effect on the Company's enrollments, revenues and results of operations. Students obtain access to federal student financial aid through a Department-prescribed application and eligibility certification process. Student financial aid funds are generally made available to students at prescribed intervals throughout their expected length of study. Students typically apply the funds received from the federal financial aid programs first to pay their tuition and fees. Any remaining funds are distributed directly to the student, if requested.
Concentration of Credit Risk
The Company maintains its cash and cash equivalents accounts in financial institutions. Accounts at these institutions are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. The Company performs ongoing evaluations of these institutions to limit its concentration risk exposure.
Concentration of Sources of Supply
The Company is dependent on a third-party provider for its online platform, which includes a learning management system that stores, manages and delivers course content, enables assignment uploading, provides interactive communication between students and faculty, and supplies online assessment tools. The partial or complete loss of this source may have an adverse effect on enrollments, revenues and results of operations.
Quarterly Results of Operations (Unaudited)
Quarterly Results of Operations (Unaudited)
Quarterly Results of Operations (Unaudited)
The following tables set forth unaudited results of operations and certain operating results for each quarter during the years ended December 31, 2017 and 2016. The Company believes the information reflects all adjustments necessary to present fairly the information below. Basic and diluted income (loss) per share are computed independently for each of the quarters presented. Therefore, the sum of quarterly basic and diluted income (loss) per share information may not equal annual basic and diluted income (loss) per share.
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
 
(In thousands, except per share data)
2017
 
 
 
 
 
 
 
Revenue
$
129,490

 
$
124,581

 
$
119,367

 
$
104,959

Operating income (loss)
9,662

 
6,180

 
(1,503
)
 
(6,487
)
Net income (loss)
9,869

 
6,314

 
39

 
(5,685
)
Income (loss) per share:
 
 
 
 
 
 
 
Basic
$
0.23

 
$
0.22

 
$
0.00

 
$
(0.20
)
Diluted
$
0.23

 
$
0.21

 
$
0.00

 
$
(0.20
)
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
 
(In thousands, except per share data)
2016
 
 
 
 
 
 
 
Revenue
$
133,002

 
$
137,970

 
$
136,583

 
$
119,535

Operating income (loss)
(16,299
)
 
3,357

 
(8,823
)
 
(18,456
)
Net income (loss)
(10,112
)
 
3,338

 
(9,477
)
 
(13,789
)
Income (loss) per share:
 
 
 
 
 
 
 
Basic
$
(0.22
)
 
$
0.07

 
$
(0.20
)
 
$
(0.30
)
Diluted
$
(0.22
)
 
$
0.07

 
$
(0.20
)
 
$
(0.30
)
Summary of Significant Accounting Policies (Policies)
Principles of Consolidation
The consolidated financial statements include the accounts of Bridgepoint Education, Inc. and its wholly-owned subsidiaries. Intercompany transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the consolidated financial statements in conformity with generally accepted accounting principles in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements. Actual results could differ from those estimates.
Reclassifications
Certain reclassifications have been made to the prior financial statements to conform to the current year presentation. During 2016, the Company adopted Accounting Standards Update (“ASU”) 2016-18, Statement of Cash Flows (Topic 230) and has reclassified certain restricted cash amounts for the year ended December 31, 2015, within the consolidated statements of cash flows. These reclassifications had no effect on previously reported results of operations or retained earnings.
Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents is comprised of cash and other short-term highly liquid investments that are readily convertible into known amounts of cash. The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
The Company's restricted cash is primarily held in money market accounts, and is excluded from cash and cash equivalents on the Company's consolidated balance sheets. The majority of restricted cash represents funds held for students from Title IV financial aid programs that result in credit balances on a student’s account or funds held for students to be refunded in connection with a legal settlement. To a lesser extent, restricted cash also represents amounts held as collateral for letters of credit. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statement of cash flows.
 
As of December 31,
 
2017
 
2016
 
2015
Cash and cash equivalents
$
185,098

 
$
307,802

 
$
282,145

Restricted cash
20,428

 
24,533

 
24,685

Total cash, cash equivalents and restricted cash
$
205,526

 
$
332,335


$
306,830

Investments
The Company has historically held investments that consisted of mutual funds, corporate notes and bonds, and certificates of deposit. As of December 31, 2017, the Company held investments solely in mutual funds. The Company's investments are denominated in U.S. dollars, are investment grade and are readily marketable. The Company considers as current assets those investments which will mature or are likely to be sold in less than one year.
The Company classifies its investments as either trading, available-for-sale or held-to-maturity. Trading securities are those bought and held principally to sell in the short-term, with gains or losses from changes in fair value flowing through current earnings. Available-for-sale securities are carried at fair value as determined by quoted market prices, with unrealized gains and losses, net of tax, reported as a separate component of comprehensive income (loss) and stockholders’ equity. Held-to-maturity securities would be carried at amortized cost. Amortization of premiums, accretion of discounts, interest, and realized gains and losses are included in other income, net in the consolidated statement of income (loss).
The Company regularly monitors and evaluates the realizable value of its investments. If events and circumstances indicate that a decline in the value of these assets has occurred and is other-than-temporary, the Company would record a charge to other income, net in the consolidated statements of income (loss).
Deferred Compensation
The Company has a deferred compensation plan, into which eligible participants can defer a maximum of 80% of their regular compensation and a maximum of 100% of their incentive compensation. The amounts deferred by the participant under this plan are credited with earnings or losses based upon changes in values of participant elected notional investments. Each participant is fully vested in the participant amounts deferred. The Company may make contributions that will generally vest according to a four-year vesting schedule. After four years of service, participants become fully vested in the employer contributions upon reaching normal retirement age, death, disability or a change in control. The Company's obligations under the deferred compensation plan totaled $1.4 million and $1.3 million as of December 31, 2017 and 2016, respectively, and are included in other long-term liabilities in the consolidated balance sheets.
Fair Value Measurements
The Company uses the three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: (i) Level 1, defined as observable inputs such as quoted prices in active markets; (ii) Level 2, defined as inputs other than quoted prices in active markets that are either observable directly or indirectly, through market corroboration, for substantially the full term of the financial instrument; and (iii) Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable consists of student accounts receivable, which represent amounts due for tuition, course digital materials, technology fees and other fees from currently enrolled and former students. Students generally fund their education through grants and/or loans under various Title IV programs, tuition assistance from military and corporate employers or personal funds. Generally, payments are due on the respective course start date and are considered past due dependent upon the student's payment terms. In general, an account is considered delinquent 120 days subsequent to the course start date.
Accounts receivable are stated at the amount management expects to collect from outstanding balances. For accounts receivable, an allowance for doubtful accounts is estimated by management and is principally based on historical collection experience as well as (i) an assessment of individual accounts receivable over a specific aging and amount, (ii) consideration of the nature of the receivable accounts and (iii) potential changes in the business or economic environment. The provision for bad debt is recorded within instructional costs and services in the consolidated statements of income (loss). The Company writes off uncollectable accounts receivable when the student account is deemed uncollectable.
Student Loans Receivable and Loan Loss Reserves
During 2016, the Company reached a settlement with the Consumer Financial Protection Bureau, and in accordance with the terms of the settlement, all existing student loans receivable were written off. The Company’s institutions had already ceased offering institutional loans, and no such loans were made after the year ended December 31, 2014.
Before being written off, student loans receivable were stated at the amount management expected to collect from outstanding balances. For tuition related student loan receivables, the Company had estimated an allowance for doubtful accounts, similar to that of accounts receivable, based on (i) an assessment of individual loans receivable over a specific aging and amount, (ii) consideration of the nature of the receivable accounts, (iii) potential changes in the business or economic environment and (iv) related FICO scores and other industry metrics. The related provision for bad debts for the years ended December 31, 2016 and 2015 were $0.2 million and $0.1 million, respectively, and is recorded within instructional costs and services in the consolidated statements of income (loss).
The Company had also recorded a loss reserve for the full book value of any impaired loans. For the years ended December 31, 2016, and 2015 there was $0.2 million and $1.3 million recorded for loan loss reserves, respectively. The loan loss reserve was maintained at a level deemed adequate by management based on a periodic analysis of the individual loans and is recorded within instructional costs and services in the consolidated statements of income (loss).
Property and Equipment
Property and equipment are recognized at cost less accumulated depreciation. Depreciation is computed using the straight-line method based on estimated useful lives of the related assets as follows:
Furniture and office equipment
3 - 7 years
Software
3 - 5 years
Vehicles
5 years

Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the estimated useful lives of the assets. Upon the retirement or disposition of property and equipment, the related cost and accumulated depreciation is removed and a gain or loss is recorded in the consolidated statements of income (loss). Repairs and maintenance costs are expensed in the period incurred.
Leases
Leases are evaluated and classified as either operating or capital leases. Leased property and equipment meeting certain criteria would be capitalized, and the present value of the related lease payments is recognized as a liability on the consolidated balance sheets. Amortization of capitalized leased assets is computed on the straight-line method over the term of the lease or the life of the related asset, whichever is shorter.
If the Company receives tenant allowances from the lessor for certain improvements made to the leased property, these allowances are capitalized as leasehold improvements and a long-term liability is established. The long-term liability is amortized on a straight-line basis over the corresponding lease term. The Company records rent expense on a straight-line basis over the initial term of a lease. The difference between the rent payment and the straight-line rent expense is recorded as either a short-term or long-term liability.
The Company recognizes liabilities for exit and disposal activities on non-cancelable lease obligations at fair value in the period the liability is incurred. For the non-cancelable lease obligations, the Company records the obligation when the contract is terminated.
Impairment of Long-Lived Assets
The Company assesses potential impairment to its long-lived assets when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recorded if the carrying amount of the long-lived asset is not recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Any required impairment loss is measured as the amount by which the carrying amount of a long-lived asset exceeds fair value and is recorded as a reduction in the carrying value of the related asset and an expense to operating results.
Goodwill and Other Intangible Assets
The Company tests goodwill and indefinite-lived intangible assets for impairment annually in the fourth quarter of each fiscal year, or more frequently if events and circumstances warrant.
To evaluate the impairment of goodwill, the Company first assesses qualitative factors, such as deterioration in general economic conditions or negative company financial performance, to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. The Company's assessment of goodwill during the fourth quarter of fiscal 2017 indicated that it was not more likely than not that the fair value of a reporting unit is less than its carrying amount, and therefore, goodwill was not impaired. There have been no related impairment losses recognized by the Company for any periods presented. If negative qualitative indicators had been noted above, the Company would then need to assess the fair value of its reporting unit to determine whether it was greater or less than its carrying values.
To evaluate the impairment of the indefinite-lived intangible assets, the Company assessed the fair value of the assets to determine whether they were greater or less than the carrying values. Determining the fair value of indefinite-lived intangible asset is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions are inherently uncertain, and may include such items as growth rates used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and a determination of appropriate market comparables. The Company's assessment of indefinite-lived intangible assets during the fourth quarter of fiscal 2017 did not result in any impairment. There have been no impairment losses for indefinite-lived intangibles recognized by the Company for any periods presented.
The Company also has definite-lived intangible assets, which primarily consist of purchased intangibles and capitalized curriculum development costs. The definite-lived intangible assets are recognized at cost less accumulated amortization. Amortization is computed using the straight-line method based on estimated useful lives of the related assets.
Revenue and Deferred Revenue
The Company recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered or delivery has occurred, its fees or price is fixed or determinable, and collectibility is reasonably assured. The Company's revenue consists of tuition, technology fees, course digital materials and other miscellaneous fees. Tuition revenue is deferred and recognized on a straight-line basis over the applicable period of instruction net of scholarships and expected refunds, with the exception of an online student's first course per degree level at Ashford University. An online student's first course per degree level at Ashford University falls under a three-week conditional admission period in which the revenue is deferred until the student matriculates into the course.
The Company's institutions' online students generally enroll in a program that encompasses a series of five to six-week courses that are taken consecutively over the length of the program. With the exception of those students under conditional admission, the online students are billed on a payment period basis on the first day of class. Students under conditional admission are billed for the payment period upon matriculation. The Company assesses collectibility at the start of a student’s payment period for the courses in that payment period, as well as throughout the period as facts and circumstances change.
If a student's attendance in a class precedes the receipt of cash from the student's source of funding, the Company establishes an account receivable and corresponding deferred revenue in the amount of the tuition due for that payment period. Cash received either directly from the student or from the student's source of funding reduces the balance of accounts receivable due from the student. Financial aid from sources such as the federal government's Title IV programs pertains to the online student's award year and is generally divided into two disbursement periods. As such, each disbursement period may contain funding for up to four courses. Financial aid disbursements are typically received during the online student's attendance in the first or second course. Since the majority of disbursements cover more courses than for which a student is currently enrolled, the amount received in excess effectively represents a prepayment from the online student for up to four courses. At the end of each accounting period, the deferred revenue and student deposits and related account receivable balances are reduced to present amounts attributable to the current course.
Students under conditional admission are not obligated for payment until after their conditional admission period has lapsed, so there is no revenue recognized and no related refund. For all subsequent courses, the Company records a provision for expected refunds and reduces revenue for the amount that is expected to be subsequently refunded. Provisions for expected refunds have not been material to any period presented. If a student withdraws prior to a specified date, a portion of such student's tuition is refunded, subject to certain state requirements. The Company reassesses collectibility throughout the period revenue is recognized by the Company's institutions, on a student-by-student basis. The Company reassesses collectibility based upon new information and changes in facts and circumstances relevant to a student's ability to pay. For example, the Company reassesses collectibility when a student drops from the institution (i.e., is no longer enrolled) and when a student attends a course that was not included in the initial assessment of collectibility at the start of a student’s payment period.
In certain cases, the Company's institutions provide scholarships to students for various programs. Scholarships issued by the universities are recorded in association with the related specific course, term or payment period. Scholarships are generally deferred and recognized against revenue over the course term. Certain scholarships, such as the Corporate Full Tuition Grant (“FTG”) and Alumni Scholarship are recognized against revenue over the period of benefit to the student.
Ashford University records revenue from technology fee on a per course charge basis. The per course technology fee revenue for Ashford University is recognized on a straight-line basis over the applicable period of instruction. University of the Rockies records revenue from technology fees as one-time start up fees charged to each new online student (other than military, scholarship students or certain corporate reimbursement students), and then recognizes that revenue ratably over the average expected enrollment of a student. The average expected enrollment of the student was estimated each quarter based upon historical duration of attendance and qualitative factors as deemed necessary.
Other miscellaneous fees include fees for course content and textbooks and other services, such as commencements, and are recognized upon delivery of the goods or when the related service is performed.
Workers Compensation
The Company records a gross liability for estimated workers compensation claims, incurred but not yet reported, as of each balance sheet date. The Company also records the gross insurance recoverable due for individual claim amounts. This is recorded as an other asset and as an equal accrued liability. The stop-loss premium is determined annually, but invoiced and paid on a quarterly basis. The related insurance premiums are expensed ratably over the coverage period.
Income Taxes
The Company accounts for its income taxes using the asset-liability method whereby deferred tax assets and liabilities are determined based on temporary differences between the bases used for financial reporting and income tax reporting purposes. Deferred income taxes are provided based on the enacted tax rates expected to be in effect at the time such temporary differences are expected to reverse. A valuation allowance is provided for deferred tax assets if it is more-likely-than-not that the Company will not realize those tax assets through future operations.
The Company evaluates and accounts for uncertain tax positions using a two-step approach. Recognition (step one) occurs when the Company concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustained upon examination. Measurement (step two) determines the amount of benefit that is greater than 50% likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Derecognition of a tax position that was previously recognized would occur when the Company subsequently determines that a tax position no longer meets the more-likely-than-not threshold of being sustained.
Stock-Based Compensation
Stock-based compensation expense is measured at the grant date fair value of the award and is expensed over the vesting period. The Company estimates the fair value of stock options on the grant date using the Black-Scholes option pricing model. The Company estimates the fair value of its performance stock units (“PSUs”) on the grant date using a Monte Carlo simulation model. Determining the fair value of stock-based awards at the grant date under these models requires judgment, including estimating volatility, employee stock option exercise behaviors and forfeiture rates. The assumptions used in calculating the fair value of stock-based awards represent the Company's best estimates, but these estimates involve inherent uncertainties and the application of management judgment. The fair value of the Company's restricted stock units (“RSUs”) is based on the market price of the Company's common stock on the date of grant.
The amount of stock-based compensation expense recognized during a period is based on the portion of the awards that are ultimately expected to vest. The Company estimates award forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company's equity incentive plans require that stock option awards have an exercise price that equals or exceeds the closing price of the Company's common stock on the date of grant.
Stock-based compensation expense for stock-based awards is recorded in the consolidated statement of income (loss), net of estimated forfeitures, using the graded-vesting method over the requisite service periods of the respective stock awards. The requisite service period is generally the period over which an employee is required to provide service to the Company in exchange for the award.
Instructional Costs and Services
Instructional costs and services consist primarily of costs related to the administration and delivery of the Company's educational programs. These expenses include compensation for faculty and administrative personnel, curriculum and new program development costs, financial aid processing costs, technology license costs, bad debt expense and costs associated with other support groups that provide services directly to the students. Instructional costs and services also include an allocation of information technology, facility, depreciation and amortization costs.
Admissions Advisory and Marketing
Admissions advisory and marketing costs include compensation of personnel engaged in marketing and recruitment, as well as costs associated with advertising media, purchasing leads and producing marketing materials. Such costs are generally affected by the cost of advertising media and leads, the efficiency of the Company's marketing and recruiting efforts, compensation for the Company's enrollment personnel and expenditures on advertising initiatives for new and existing academic programs. Admissions advisory and marketing costs also include an allocation of information technology, facility, depreciation and amortization costs.
Advertising costs, a subset of admissions advisory and marketing costs, consists primarily of marketing leads and other branding and promotional activities. These advertising activities are expensed as incurred, or the first time the advertising takes place, depending on the type of advertising activity. Advertising costs were $75.7 million, $83.0 million and $68.4 million for the years ended December 31, 2017, 2016 and 2015, respectively.
General and Administrative
General and administrative expenses include compensation of employees engaged in corporate management, finance, human resources, legal and compliance and other corporate functions. General and administrative expenses also include professional services fees, travel and entertainment expenses and an allocation of information technology, facility, depreciation and amortization costs.
Legal Settlement Expense
Legal settlement expense is primarily comprised of (i) the cost to settle a wage and hour dispute, (ii) charges related to the cost of resolution of the previously disclosed civil investigative demands and (iii) the estimate of amounts to resolve the previously disclosed investigative subpoenas.
Restructuring and Impairment Charges
Restructuring and impairment charges are primarily comprised of i) charges related to the write off of certain fixed assets and assets abandoned, ii) student transfer agreement costs relating to the closure of the Iowa residential campus, iii) severance costs related to headcount reductions made in connection with restructuring plans and iv) estimated lease losses related to facilities vacated or consolidated under restructuring plans
Income (Loss) Per Share
Basic income per common share is calculated by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted income per common share is calculated by dividing net income available to common stockholders by the sum of (i) the weighted average number of common shares outstanding during the period and (ii) potentially dilutive securities outstanding during the period, if the effect is dilutive. Potentially dilutive common shares consist of incremental shares of common stock issuable upon the exercise of the stock options and upon the settlement of RSUs and PSUs.
Segment Information
The Company operates in one reportable segment as a single educational delivery operation using a core infrastructure that serves the curriculum and educational delivery needs of its students regardless of geography. The Company's chief operating decision maker, its CEO and President, manages the Company's operations as a whole, and no revenue, expense or operating income information is evaluated by the chief operating decision maker on any component level.
Comprehensive Income
Comprehensive income consists of net income and other gains and losses affecting stockholders’ equity that, under GAAP, are excluded from net income. For the year ended December 31, 2017, such items consisted of unrealized gains and losses on investments. The following table summarizes the components of other comprehensive gain (loss) and the related tax effects for the years ended December 31, 2017, 2016 and 2015 (in thousands):
 
Unrealized gains (losses) on investments
Year ended:
Before-Tax Amount
 
Tax Effect
 
Net-of-Tax Amount
December 31, 2017
$
1

 
$

 
$
1

December 31, 2016
$
157

 
$
(59
)
 
$
98

December 31, 2015
$
125

 
$
(49
)
 
$
76


There were no reclassifications out of other comprehensive income, relating to the net realized gain on the sale of securities, during the years ended December 31, 2017, 2016 and 2015
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) Topic 605, Revenue Recognition. ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The accounting guidance also requires additional disclosure regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract.
The new standard provides companies with two implementation methods. Companies can choose to adopt the standard retrospectively and apply the guidance to each prior reporting period presented. Alternatively, a modified retrospective adoption methodology is permitted, whereby the cumulative impact of all prior periods would be recorded in retained earnings or other impacted balance sheet line items as of January 1, 2018, the date of adoption. Under this method, previously presented years’ financial positions and results would not be adjusted; however, certain disclosures are required to be presented for comparability to prior years’ results. The Company plans to adopt this standard using the modified retrospective method.
Under the modified retrospective adoption method, the Company has elected to retroactively adjust only those contracts that do not meet the definition of a completed contract at the date of initial application. The Company expects this new guidance to impact the amount and timing of its revenue recognition as follows:
Deferral of revenue recognition for FTG contracts that include a material right under ASU 2014-09. This material right is deferred until the earlier of redemption or expiration under the new standard.
ASU 2014-09 does not allow for revenue to be recorded upon the receipt of cash, which may occur subsequent to a contract. As a result, revenue is accelerated as the expected value to be collected, net of any applicable price concessions and is recorded as the revenue is earned.
Under ASU 2014-09, once students are deemed to have a history of collection issues, all future revenues earned are subject to a price concession as the student has demonstrated that they will not pay the full tuition price based on past behavior.
At the date of adoption of this new guidance, the Company expects to record a cumulative adjustment to its consolidated balance sheet, including an adjustment to retained earnings, to adjust for the aggregate impact of these revenue items, as calculated under the new guidance. The cumulative-effect adjustment decreases the opening balance of retained earnings on January 1, 2018 by approximately $3.0 million. The Company finalized its evaluation of the impact on accounting policies, disclosures, and internal processes and controls the new standard has on its revenue stream.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the lease commencement date: (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. The new lease guidance simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing. Public companies should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company continues to evaluate the impact the adoption of ASU 2016-02 will have on the Company’s consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The update includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. The update was aimed at reducing the cost and complexity of the accounting for share-based payments. ASU 2016-09 became effective for public companies for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company adopted this update as of January 1, 2017. The adoption of ASU 2016-09 did not have a material impact on the Company’s consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The update simplifies the measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The annual or interim goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The update also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The update should be applied on a prospective basis. For public companies, the update is effective for any annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company early adopted ASU 2017-04 as of January 1, 2017, and there was no impact on the Company’s consolidated financial statements.
In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. The update provides clarity and reduces diversity in practice regarding the modification of the terms and conditions of a share-based payment award. The amendments in ASU 2017-09 include guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. The amendments are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The Company adopted ASU 2017-09 on January 1, 2018, and such adoption did not have a material impact on the Company’s consolidated financial statements.
Summary of Significant Accounting Policies (Tables)
 
As of December 31,
 
2017
 
2016
 
2015
Cash and cash equivalents
$
185,098

 
$
307,802

 
$
282,145

Restricted cash
20,428

 
24,533

 
24,685

Total cash, cash equivalents and restricted cash
$
205,526

 
$
332,335


$
306,830

Property and equipment are recognized at cost less accumulated depreciation. Depreciation is computed using the straight-line method based on estimated useful lives of the related assets as follows:
Furniture and office equipment
3 - 7 years
Software
3 - 5 years
Vehicles
5 years
Property and equipment, net, consists of the following (in thousands):
 
As of December 31,
 
2017
 
2016
Furniture and office equipment
$
43,330

 
$
41,528

Software
12,313

 
11,979

Leasehold improvements
5,445

 
4,332

Vehicles
22

 
22

Total property and equipment
61,110

 
57,861

Less accumulated depreciation and amortization
(50,676
)
 
(45,643
)
Total property and equipment, net
$
10,434

 
$
12,218

The following table summarizes the components of other comprehensive gain (loss) and the related tax effects for the years ended December 31, 2017, 2016 and 2015 (in thousands):
 
Unrealized gains (losses) on investments
Year ended:
Before-Tax Amount
 
Tax Effect
 
Net-of-Tax Amount
December 31, 2017
$
1

 
$

 
$
1

December 31, 2016
$
157

 
$
(59
)
 
$
98

December 31, 2015
$
125

 
$
(49
)
 
$
76

Restructuring and Impairment Charges (Tables)
The following table summarizes the amounts recorded in the restructuring and impairment charges line item on the Company's consolidated statements of income (loss) for each of the periods presented (in thousands):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Asset impairment
$
798

 
$
2,215

 
$
43,328

Student transfer agreement costs
(120
)
 
(142
)
 
3,264

Severance costs
2,175

 
2,668

 
4,717

Lease exit and other costs
5,829

 
14,535

 
17,047

Total restructuring and impairment charges
$
8,682

 
$
19,276

 
$
68,356

The following table summarizes the changes in the Company's restructuring liability by type during the three-year period ended December 31, 2017 (in thousands):
 
Asset Impairment
 
Student Transfer Agreement Costs
 
Severance Costs
 
Lease Exit and Other Costs
 
Total
Balance at December 31, 2014
$

 
$

 
$
860

 
$
6,580

 
$
7,440

Restructuring and impairment charges
43,328

 
3,264

 
4,717

 
17,047

 
68,356

Payments

 
(40
)
 
(3,833
)
 
(9,706
)
 
(13,579
)
Non-cash transaction
(43,328
)
 

 

 

 
(43,328
)
Balance at December 31, 2015

 
3,224

 
1,744

 
13,921

 
18,889

Restructuring and impairment charges
2,215

 
(142
)
 
2,668

 
14,535

 
19,276

Payments

 
(1,490
)
 
(3,845
)
 
(9,999
)
 
(15,334
)
Non-cash transaction
(2,215
)
 

 

 

 
(2,215
)
Balance at December 31, 2016

 
1,592

 
567

 
18,457

 
20,616

Restructuring and impairment charges
798

 
(120
)
 
2,175

 
5,829

 
8,682

Payments

 
(878
)
 
(2,547
)
 
(13,643
)
 
(17,068
)
Non-cash transaction
(798
)
 

 

 

 
(798
)
Balance at December 31, 2017
$

 
$
594

 
$
195

 
$
10,643

 
$
11,432

Investments (Tables)
The following tables summarize the fair value information of total investments as of December 31, 2017 and 2016, respectively (in thousands):
 
December 31, 2017
 
Level 1
 
Level 2
 
Level 3
 
Total
Mutual funds
$
2,065

 
$

 
$

 
$
2,065

Total
$
2,065

 
$

 
$

 
$
2,065

 
December 31, 2016
 
Level 1
 
Level 2
 
Level 3
 
Total
Mutual funds
$
1,688

 
$

 
$

 
$
1,688

Corporate notes and bonds

 
22,746

 

 
22,746

Certificates of deposit

 
25,000

 

 
25,000

Total
$
1,688

 
$
47,746

 
$

 
$
49,434

The following table summarizes the differences between amortized cost and fair value of investments as of December 31, 2016 (in thousands):
 
December 31, 2016
 
 
 
 
 
Gross unrealized
 
 
 
Maturities
 
Amortized Cost
 
Gain
 
Loss
 
Fair Value
Short-term
 
 
 
 
 
 
 
 
 
Corporate notes and bonds
1 year or less
 
$
22,747

 
$
2

 
$
(3
)
 
$
22,746

Certificate of deposit
1 year or less
 
25,000

 

 

 
25,000

Total
 
 
$
47,747

 
$
2

 
$
(3
)
 
$
47,746


The above table does not include $1.7 million of mutual funds for December 31, 2016, which are recorded as trading securities.
Accounts Receivable, Net (Tables)
Accounts receivable, net, consists of the following (in thousands):
 
As of December 31,
 
2017
 
2016
Accounts receivable
$
44,656

 
$
42,611

Less allowance for doubtful accounts
17,579

 
16,154

Accounts receivable, net
$
27,077

 
$
26,457

The following table presents the changes in the allowance for doubtful accounts for accounts receivable for the periods indicated (in thousands):
 
Beginning
Balance
 
Charged to
Expense
 
Deductions(1)
 
Ending
Balance
Allowance for doubtful accounts receivable:
 
 
 
 
 
 
 
For the year ended December 31, 2017
$
16,154

 
$
32,151

 
$
(30,726
)
 
$
17,579

For the year ended December 31, 2016
$
10,114

 
$
32,423

 
$
(26,383
)
 
$
16,154

For the year ended December 31, 2015
$
27,567

 
$
29,782

 
$
(47,235
)
 
$
10,114

(1)
Deductions represent accounts written off, net of recoveries.
Prepaid Expense and Other Current Assets (Tables)
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consists of the following (in thousands):
 
As of December 31,
 
2017
 
2016
Prepaid expenses
$
6,195

 
$
7,160

Prepaid licenses
4,882

 
5,183

Income tax receivable
8,889

 
7,432

Prepaid insurance
1,215

 
1,291

Insurance recoverable
665

 
702

Legal insurance recoverable
527

 
325

Interest receivable

 
142

Other current assets
15

 
1,232

Total prepaid expenses and other current assets
$
22,388

 
$
23,467

Property and Equipment, Net (Tables)
Property and Equipment
Property and equipment are recognized at cost less accumulated depreciation. Depreciation is computed using the straight-line method based on estimated useful lives of the related assets as follows:
Furniture and office equipment
3 - 7 years
Software
3 - 5 years
Vehicles
5 years
Property and equipment, net, consists of the following (in thousands):
 
As of December 31,
 
2017
 
2016
Furniture and office equipment
$
43,330

 
$
41,528

Software
12,313

 
11,979

Leasehold improvements
5,445

 
4,332

Vehicles
22

 
22

Total property and equipment
61,110

 
57,861

Less accumulated depreciation and amortization
(50,676
)
 
(45,643
)
Total property and equipment, net
$
10,434

 
$
12,218

Goodwill and Intangibles, Net (Tables)
Goodwill and intangibles, net, consists of the following (in thousands):
 
December 31, 2017
Definite-lived intangible assets:
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Capitalized curriculum costs
$
21,463

 
$
(19,300
)
 
$
2,163

Purchased intangible assets
15,850

 
(5,987
)
 
9,863

  Total definite-lived intangible assets
$
37,313

 
$
(25,287
)
 
$
12,026

Goodwill and indefinite-lived intangibles
 
 
 
 
2,567

Total goodwill and intangibles, net
 
 
 
 
$
14,593

 
 
 
 
 
 
 
December 31, 2016
Definite-lived intangible assets:
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Capitalized curriculum costs
$
21,153

 
$
(17,397
)
 
$
3,756

Purchased intangible assets
15,850

 
(4,754
)
 
11,096

  Total definite-lived intangible assets
$
37,003

 
$
(22,151
)
 
$
14,852

Goodwill and indefinite-lived intangibles
 
 
 
 
2,567

Total goodwill and intangibles, net
 
 
 
 
$
17,419

The following table summarizes the estimated remaining amortization expense as of each fiscal year ended below (in thousands):
Year Ended December 31,
 
 
2018
$
2,497

2019
1,793

2020
1,497

2021
1,299

2022
1,236

Thereafter
3,704

Total future amortization expense
$
12,026

Accounts Payable and Accrued Liabilities (Tables)
Accrued Liabilities
Accounts payable and accrued liabilities consists of the following (in thousands):
 
As of December 31,
 
2017
 
2016
Accounts payable
$
5,619

 
$
4,519

Accrued salaries and wages
8,573

 
8,967

Accrued bonus
6,924

 
5,087

Accrued vacation
8,237

 
9,313

Accrued litigation and fees
9,886

 
13,946

Accrued expenses
16,024

 
15,793

Rent liability
12,971

 
17,232

Accrued insurance liability
2,931

 
3,009

Total accrued liabilities
$
71,165

 
$
77,866

Deferred Revenue and Student Deposits (Tables)
Deferred Revenue and Student Deposits
Deferred revenue and student deposits consists of the following (in thousands):
 
As of December 31,
 
2017
 
2016
Deferred revenue
$
19,135

 
$
21,733

Student deposits
49,072

 
52,933

Total deferred revenue and student deposits
$
68,207

 
$
74,666

Other Long-Term Liabilities (Tables)
Schedule of Other Long-Term Liabilities
Other long-term liabilities consists of the following (in thousands):
 
As of December 31,
 
2017
 
2016
Uncertain tax positions
$
8,893

 
$
8,216

Other long-term liabilities
3,815

 
5,414

Total other long term liabilities
$
12,708

 
$
13,630

Lease Obligations (Tables)
Future Minimum Rental Payments Under Non-Cancelable Operating Leases
The following table summarizes the future minimum rental payments under non-cancelable operating lease arrangements in effect at December 31, 2017 (in thousands):
Year Ended December 31,
 
 
2018
$
31,400

2019
20,833

2020
9,504

2021
5,112

2022
1,558

Thereafter
390

Total minimum payments
$
68,797

Income (Loss) Per Share (Tables)
The following table sets forth the computation of basic and diluted income (loss) per share for the periods indicated (in thousands, except per share data):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Numerator:
 
 
 
 
 
Net income (loss)
$
10,537

 
$
(30,040
)
 
$
(70,454
)
Denominator:
 
 
 
 
 
Weighted average number of common shares outstanding
32,058

 
46,228

 
45,665

Effect of dilutive options and restricted stock units
736

 

 

Diluted weighted average number of common shares outstanding
32,794

 
46,228

 
45,665

Income (loss) per share:
 
 
 
 
 
Basic
$
0.33

 
$
(0.65
)
 
$
(1.54
)
Diluted
$
0.32

 
$
(0.65
)
 
$
(1.54
)
The following table sets forth the number of stock options, RSUs and PSUs excluded from the computation of diluted loss per share for the periods indicated because their effect was anti-dilutive (in thousands):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Options
1,850

 
4,359

 
5,063

RSUs and PSUs
6

 
730

 
762

Stock-Based Compensation (Tables)
The following table presents a summary of stock option activity during the years ended December 31, 2017, 2016 and 2015 (in thousands, except for exercise prices and contractual terms):
 
Options
Outstanding
 
Weighted-
Average
Exercise
Price
 
Weighted-
Average
Remaining
Contractual
Term
(in years)
 
Aggregate
Intrinsic Value
December 31, 2014
5,168

 
$
14.26

 
5.73
 
$
7,732

Granted
455

 
$
9.44

 
 
 
 
Exercised
(206
)
 
$
1.38

 
 
 
 
Forfeitures and expired
(764
)
 
$
18.15

 
 
 
 
December 31, 2015
4,653

 
$
13.72

 
4.84
 
$
2,556

Granted
375

 
$
10.44

 
 
 
 
Exercised
(306
)
 
$
4.35

 
 
 
 
Forfeitures and expired
(1,115
)
 
$
15.41

 
 
 
 
December 31, 2016
3,607

 
$
13.64

 
4.80
 
$
2,025

Granted
332

 
$
10.44

 
 
 
 
Exercised
(537
)
 
$
7.17

 
 
 
 
Forfeitures and expired
(502
)
 
$
15.51

 
 
 
 
December 31, 2017
2,900

 
$
14.15

 
4.23
 
$

Vested and expected to vest at December 31, 2017
2,848

 
$
14.22

 
4.15
 
$

Exercisable at December 31, 2017
2,467

 
$
14.79

 
3.46
 
$

Below is a summary of the assumptions used for the stock options granted in the years indicated.
 
2017
 
2016
 
2015
Weighted average exercise price per share
$
10.44

 
$
10.44

 
$
9.44

Risk-free interest rate
2.1
%
 
1.4
%
 
1.6
%
Expected dividend yield

 

 

Expected volatility
47.2
%
 
49.8
%
 
50.7
%
Expected life (in years)
5.75

 
5.75

 
5.75

Forfeiture rate
11.0
%
 
9.0
%
 
7.0
%
Weighted average grant date fair value per share
$
4.76

 
$
4.91

 
$
4.52

The assumptions for the portion of the PSU awards subject to earning based on the achievement of a market-based measure are noted in the following table:
 
2015
Grant price per share
$
9.46

Risk-free interest rate
0.7
%
Expected dividend yield

Historical volatility
50.0
%
Expected life (in years)
4.0

Forfeiture rate
7.0
%
Weighted average grant date fair value per share
$
4.04

A summary of the RSU and PSU activity and related information is as follows (in thousands, except for exercise prices and contractual terms):
 
Restricted Stock Units and Performance Stock Units
 
Time-Based RSU
 
Performance-Based PSU
 
Market-Based PSU
 
Number of Shares
 
Weighted Average
Purchase Price
 
Number of Shares
 
Weighted Average
Purchase Price
 
Number of Shares
 
Weighted Average
Purchase Price
Balance at December 31, 2014
1,279

 
$
12.63

 

 

 
975

 
$
5.39

Awarded
983

 
$
9.33

 
456

 
$
9.86

 
229

 
$
4.04

Vested
(353
)
 
$
12.34

 

 

 

 

Canceled
(519
)
 
$
11.51

 
(97
)
 
$
9.86

 
(238
)
 
$
5.21

Balance at December 31, 2015
1,390

 
$
10.78

 
359

 
$
9.86

 
966

 
$
5.11

Awarded
505

 
$
10.18

 

 

 

 

Vested
(472
)
 
$
10.84

 

 

 

 

Canceled
(289
)
 
$
10.69

 
(92
)
 
$
9.86

 
(231
)
 
$
5.19

Balance at December 31, 2016
1,134

 
$
10.52

 
267

 
$
9.86

 
735

 
$
5.09

Awarded
473

 
$
10.45

 

 

 

 

Vested
(461
)
 
$
10.58

 

 

 

 

Canceled
(302
)
 
$
10.51

 
(103
)
 
$
9.86

 
(300
)
 
$
5.04

Balance at December 31, 2017
844

 
$
10.45

 
164

 
$
9.86

 
435

 
$
5.13

Income Taxes (Tables)
The components of income tax expense (benefit) are as follows (in thousands):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Current:
 
 
 
 
 
Federal
$
(1,091
)
 
$
(8,433
)
 
$
(10,370
)
State
517

 
530

 
(309
)
 
(574
)
 
(7,903
)
 
(10,679
)
Deferred:
 
 
 
 
 
Federal
(605
)
 
25

 
33,482

State
5

 
3

 
7,462

 
(600
)
 
28

 
40,944

Total
$
(1,174
)
 
$
(7,875
)
 
$
30,265

Deferred income tax balances reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases and are stated at enacted tax rates expected to be in effect when taxes are paid or recovered.
Significant components of the Company’s deferred tax assets and liabilities and balance sheet classifications are as follows (in thousands):
 
As of December 31,
 
2017
 
2016
Deferred tax assets:
 
 
 
Net operating loss
$
2,414

 
$
1,052

Fixed assets
(291
)
 
(1,241
)
Bad debt
1,506

 
1,979

Vacation accrual
1,880

 
3,249

Stock-based compensation
6,435

 
12,827

Deferred rent
4,818

 
12,687

State tax
1,520

 
2,534

Bonus accrual
1,372

 
1,873

Accrued expenses
3,711

 
5,994

Revenue reserves
104

 
135

Other
766

 
760

Total deferred tax assets
24,235

 
41,849

Valuation allowance
(23,891
)
 
(41,849
)
Net deferred tax assets
344

 

Deferred tax liabilities:
 
 
 
Indefinite-lived intangibles
(517
)
 
(773
)
Total deferred tax liabilities
(517
)
 
(773
)
Total net deferred tax assets (liabilities)
$
(173
)
 
$
(773
)
The following table presents a reconciliation of the income tax expense (benefit) computed using the federal statutory tax rate of 35% and the Company's provision for income taxes (in thousands):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Computed expected federal tax expense
$
3,277

35.0
 %
 
$
(13,270
)
35.0
 %
 
$
(14,066
)
35.0
 %
State taxes, net of federal benefit
321

3.4

 
(551
)
1.5

 
(655
)
1.6

Permanent differences
(362
)
(3.8
)
 
341

(0.9
)
 
1,033

(2.6
)
Penalty


 
2,800

(7.4
)
 


Uncertain tax positions
677

7.2

 
346

(1.0
)
 
480

(1.2
)
Credits
(466
)
(4.9
)
 
(402
)
1.1

 
(206
)
0.5

Stock compensation
1,277

13.6

 
116

(0.3
)
 
1,246

(3.1
)
Federal tax rate change
11,974

127.9

 


 


Valuation allowance
(17,958
)
(191.8
)
 
2,708

(7.1
)
 
42,419

(105.5
)
Other
86

0.9

 
37

(0.1
)
 
14


Income tax expense (benefit)
$
(1,174
)
(12.5
)%
 
$
(7,875
)
20.8
 %
 
$
30,265

(75.3
)%
The following table presents a reconciliation of the beginning and ending amount of unrecognized tax benefits (in thousands):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Unrecognized tax benefits at beginning of period
$
20,248

 
$
20,589

 
$
20,877

Gross increases-tax positions in prior period
427

 
176

 
169

Gross decreases-tax positions in prior period
(1,354
)
 
(517
)
 
(2
)
Gross increases-current period tax positions

 

 

Settlements

 

 
(455
)
Lapse of statute of limitations
(452
)
 

 

Unrecognized tax benefits at end of period
$
18,869

 
$
20,248

 
$
20,589

Quarterly Results of Operations (Unaudited) (Tables)
Schedule of Quarterly Financial Information
The following tables set forth unaudited results of operations and certain operating results for each quarter during the years ended December 31, 2017 and 2016. The Company believes the information reflects all adjustments necessary to present fairly the information below. Basic and diluted income (loss) per share are computed independently for each of the quarters presented. Therefore, the sum of quarterly basic and diluted income (loss) per share information may not equal annual basic and diluted income (loss) per share.
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
 
(In thousands, except per share data)
2017
 
 
 
 
 
 
 
Revenue
$
129,490

 
$
124,581

 
$
119,367

 
$
104,959

Operating income (loss)
9,662

 
6,180

 
(1,503
)
 
(6,487
)
Net income (loss)
9,869

 
6,314

 
39

 
(5,685
)
Income (loss) per share:
 
 
 
 
 
 
 
Basic
$
0.23

 
$
0.22

 
$
0.00

 
$
(0.20
)
Diluted
$
0.23

 
$
0.21

 
$
0.00

 
$
(0.20
)
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
 
(In thousands, except per share data)
2016
 
 
 
 
 
 
 
Revenue
$
133,002

 
$
137,970

 
$
136,583

 
$
119,535

Operating income (loss)
(16,299
)
 
3,357

 
(8,823
)
 
(18,456
)
Net income (loss)
(10,112
)
 
3,338

 
(9,477
)
 
(13,789
)
Income (loss) per share:
 
 
 
 
 
 
 
Basic
$
(0.22
)
 
$
0.07

 
$
(0.20
)
 
$
(0.30
)
Diluted
$
(0.22
)
 
$
0.07

 
$
(0.20
)
 
$
(0.30
)
Summary of Significant Accounting Policies (Narrative) (Details) (USD $)
12 Months Ended
Dec. 31, 2017
segment
disbursement
Dec. 31, 2016
Dec. 31, 2015
Jan. 1, 2018
Financing Receivable, Impaired [Line Items]
 
 
 
 
Deferred compensation, maximum employee contribution, percentage of regular compensation
80.00% 
 
 
 
Deferred compensation, maximum employee contribution, percentage of incentive compensation
100.00% 
 
 
 
Deferred compensation, requisite service period
4 years 
 
 
 
Company obligations under deferred compensation plan
$ 1,400,000 
$ 1,300,000 
 
 
Bad debts
 
200,000 
100,000 
 
Loss on impairment of student loans receivable
7,542,000 
1,328,000 
 
Number of disbursement periods for financial aid
 
 
 
Advertising costs
75,700,000 
83,000,000 
68,400,000 
 
Number of reportable segments
 
 
 
Cumulative Effect on Retained Earnings, Net of Tax
 
 
 
3,000,000 
Allowance for Losses on Finance Receivables
 
 
 
 
Financing Receivable, Impaired [Line Items]
 
 
 
 
Loss on impairment of student loans receivable
$ 200,000 
$ 1,300,000 
 
 
Maximum
 
 
 
 
Financing Receivable, Impaired [Line Items]
 
 
 
 
Number of courses covered by each disbursement
 
 
 
Summary of Significant Accounting Policies (Cash, cash equivalents and restricted cash) (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Cash, cash equivalents and restricted cash [Abstract]
 
 
 
 
Cash and cash equivalents
$ 185,098 
$ 307,802 
$ 282,145 
 
Restricted cash
20,428 
24,533 
24,685 
 
Total cash, cash equivalents and restricted cash
$ 205,526 
$ 332,335 
$ 306,830 
$ 232,937 
Summary of Significant Accounting Policies (Property and Equipment) (Details)
12 Months Ended
Dec. 31, 2017
Furniture and office equipment |
Minimum
 
Property, Plant and Equipment [Line Items]
 
Property and equipment, estimated useful lives
3 years 
Furniture and office equipment |
Maximum
 
Property, Plant and Equipment [Line Items]
 
Property and equipment, estimated useful lives
7 years 
Software |
Minimum
 
Property, Plant and Equipment [Line Items]
 
Property and equipment, estimated useful lives
3 years 
Software |
Maximum
 
Property, Plant and Equipment [Line Items]
 
Property and equipment, estimated useful lives
5 years 
Vehicles
 
Property, Plant and Equipment [Line Items]
 
Property and equipment, estimated useful lives
5 years 
Summary of Significant Accounting Policies (Comprehensive Income) (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Accounting Policies [Abstract]
 
 
 
Unrealized losses on investments, before-tax amount
$ 1 
$ 157 
$ 125 
Unrealized losses on investments, tax benefit
(59)
(49)
Unrealized losses on investments, net-of-tax amount
$ 1 
$ 98 
$ 76 
Restructuring and Impairment Charges - Impairment Charges (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring and impairment charges
$ 8,682 
$ 19,276 
$ 68,356 
Asset impairment
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring and impairment charges
798 
2,215 
43,328 
Student transfer agreement costs
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring and impairment charges
(120)
(142)
3,264 
Severance costs
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring and impairment charges
2,175 
2,668 
4,717 
Lease exit and other costs
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring and impairment charges
$ 5,829 
$ 14,535 
$ 17,047 
Restructuring and Impairment Charges - Restructuring Reserve (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Restructuring Reserve [Roll Forward]
 
 
 
Restructuring reserve beginning of period
$ 20,616 
$ 18,889 
$ 7,440 
Restructuring and impairment charges
8,682 
19,276 
68,356 
Payments
(17,068)
(15,334)
(13,579)
Adjustments
(798)
(2,215)
(43,328)
Restructuring reserve end of period
11,432 
20,616 
18,889 
Asset impairment
 
 
 
Restructuring Reserve [Roll Forward]
 
 
 
Restructuring reserve beginning of period
Restructuring and impairment charges
798 
2,215 
43,328 
Payments
Adjustments
(798)
(2,215)
(43,328)
Restructuring reserve end of period
Student transfer agreement costs
 
 
 
Restructuring Reserve [Roll Forward]
 
 
 
Restructuring reserve beginning of period
1,592 
3,224 
Restructuring and impairment charges
(120)
(142)
3,264 
Payments
(878)
(1,490)
(40)
Adjustments
Restructuring reserve end of period
594 
1,592 
3,224 
Severance costs
 
 
 
Restructuring Reserve [Roll Forward]
 
 
 
Restructuring reserve beginning of period
567 
1,744 
860 
Restructuring and impairment charges
2,175 
2,668 
4,717 
Payments
(2,547)
(3,845)
(3,833)
Adjustments
Restructuring reserve end of period
195 
567 
1,744 
Lease exit and other costs
 
 
 
Restructuring Reserve [Roll Forward]
 
 
 
Restructuring reserve beginning of period
18,457 
13,921 
6,580 
Restructuring and impairment charges
5,829 
14,535 
17,047 
Payments
(13,643)
(9,999)
(9,706)
Adjustments
Restructuring reserve end of period
$ 10,643 
$ 18,457 
$ 13,921 
Investments (Fair Value Information) (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2017
position
Dec. 31, 2016
position
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities
 
$ 47,746 
Investments
2,065 
49,434 
Number of investments in an unrealized loss position for less than 12 months
Level 1
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Investments
2,065 
1,688 
Level 2
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Investments
47,746 
Level 3
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Investments
Mutual funds
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Trading Securities
2,065 
1,688 
Mutual funds |
Level 1
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Trading Securities
2,100 
1,688 
Mutual funds |
Level 2
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Trading Securities
Mutual funds |
Level 3
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Trading Securities
Corporate notes and bonds
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities
 
22,746 
Corporate notes and bonds |
Level 1
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities
 
Corporate notes and bonds |
Level 2
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities
 
22,746 
Corporate notes and bonds |
Level 3
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities
 
Certificates of deposit
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities
 
25,000 
Certificates of deposit |
Level 1
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities
 
Certificates of deposit |
Level 2
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities
 
25,000 
Certificates of deposit |
Level 3
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities
 
$ 0 
Investments (Differences Between Amortized Cost and Fair Value of Investments) (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2017
position
Dec. 31, 2016
position
Dec. 31, 2017
Mutual funds
Dec. 31, 2016
Mutual funds
Dec. 31, 2016
Corporate notes and bonds
Dec. 31, 2016
Certificates of deposit
Dec. 31, 2017
Level 1
Mutual funds
Dec. 31, 2016
Level 1
Mutual funds
Dec. 31, 2016
Level 1
Corporate notes and bonds
Dec. 31, 2016
Level 1
Certificates of deposit
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
 
 
 
 
 
 
Trading Securities
 
 
$ 2,065 
$ 1,688 
 
 
$ 2,100 
$ 1,688 
 
 
Amortized cost
 
47,747 
 
 
22,747 
25,000 
 
 
 
 
Gross unrealized gain
 
 
 
 
 
 
 
Gross unrealized loss
 
(3)
 
 
(3)
 
 
 
 
Available-for-sale securities
 
$ 47,746 
 
 
$ 22,746 
$ 25,000 
 
 
$ 0 
$ 0 
Maturities in years
 
 
 
 
1 year 
1 year 
 
 
 
 
Number of investments in an unrealized loss position for less than 12 months
 
 
 
 
 
 
 
 
Accounts Receivable, Net (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Receivables [Abstract]
 
 
Accounts receivable
$ 44,656 
$ 42,611 
Less allowance for doubtful accounts
17,579 
16,154 
Accounts receivable
$ 27,077 
$ 26,457 
Accounts Receivable, Net (Valuation Accounts) (Details) (Allowance for Doubtful Accounts Receivable, USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Allowance for Doubtful Accounts Receivable
 
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
 
Beginning Balance
$ 16,154 
$ 10,114 
$ 27,567 
Charged to Expense
32,151 
32,423 
29,782 
Deductions(1)
(30,726)1
(26,383)1
(47,235)1
Ending Balance
$ 17,579 
$ 16,154 
$ 10,114 
Prepaid Expense and Other Current Assets (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
 
 
Prepaid expenses
$ 6,195 
$ 7,160 
Prepaid licenses
4,882 
5,183 
Income tax receivable
8,889 
7,432 
Prepaid insurance
1,215 
1,291 
Insurance recoverable
665 
702 
Legal insurance recoverable
527 
325 
Interest receivable
142 
Other current assets
15 
1,232 
Total prepaid expenses and other current assets
$ 22,388 
$ 23,467 
Property and Equipment, Net (Details) (USD $)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Property, Plant and Equipment [Line Items]
 
 
 
Property and equipment, gross
$ 61,110,000 
$ 57,861,000 
 
Less accumulated depreciation and amortization
(50,676,000)
(45,643,000)
 
Total property and equipment, net
10,434,000 
12,218,000 
 
Depreciation and amortization associated with property and equipment, including assets under capital lease
5,500,000 
8,400,000 
13,900,000 
Furniture and office equipment
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property and equipment, gross
43,330,000 
41,528,000 
 
Software
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property and equipment, gross
12,313,000 
11,979,000 
 
Leasehold improvements
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property and equipment, gross
5,445,000 
4,332,000 
 
Vehicles
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property and equipment, gross
$ 22,000 
$ 22,000 
 
Goodwill and Intangibles, Net (Details) (USD $)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Goodwill and Intangibles, Net:
 
 
 
Gross carrying amount
$ 37,313,000 
$ 37,003,000 
 
Accumulated amortization
(25,287,000)
(22,151,000)
 
Net carrying amount
12,026,000 
14,852,000 
 
Goodwill and indefinite-lived intangibles
2,567,000 
2,567,000 
 
Total goodwill and intangibles, net
14,593,000 
17,419,000 
 
Amortization expense
3,400,000 
4,700,000 
5,700,000 
Estimated Remaining Amortization Expense as of Each Fiscal Year:
 
 
 
2018
2,497,000 
 
 
2019
1,793,000 
 
 
2020
1,497,000 
 
 
2021
1,299,000 
 
 
2022
1,236,000 
 
 
Thereafter
3,704,000 
 
 
Total future amortization expense
12,026,000 
 
 
Capitalized curriculum costs
 
 
 
Goodwill and Intangibles, Net:
 
 
 
Gross carrying amount
21,463,000 
21,153,000 
 
Accumulated amortization
(19,300,000)
(17,397,000)
 
Net carrying amount
2,163,000 
3,756,000 
 
Purchased intangible assets
 
 
 
Goodwill and Intangibles, Net:
 
 
 
Gross carrying amount
15,850,000 
15,850,000 
 
Accumulated amortization
(5,987,000)
(4,754,000)
 
Net carrying amount
$ 9,863,000 
$ 11,096,000 
 
Accounts Payable and Accrued Liabilities (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Accrued Liabilities [Abstract]
 
 
Accounts payable
$ 5,619 
$ 4,519 
Accrued salaries and wages
8,573 
8,967 
Accrued bonus
6,924 
5,087 
Accrued vacation
8,237 
9,313 
Accrued litigation and fees
9,886 
13,946 
Accrued expenses
16,024 
15,793 
Rent liability
12,971 
17,232 
Accrued insurance liability
2,931 
3,009 
Total accrued liabilities
$ 71,165 
$ 77,866 
Deferred Revenue and Student Deposits (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Deferred Revenue Disclosure [Abstract]
 
 
Deferred revenue
$ 19,135 
$ 21,733 
Student deposits
49,072 
52,933 
Total deferred revenue and student deposits
$ 68,207 
$ 74,666 
Other Long-Term Liabilities (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Other Liabilities, Noncurrent [Abstract]
 
 
Uncertain tax positions
$ 8,893 
$ 8,216 
Other long-term liabilities
3,815 
5,414 
Total other long term liabilities
$ 12,708 
$ 13,630 
Credit Facilities (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Debt Disclosure [Abstract]
 
Letters of credit outstanding, amount
$ 8.3 
Surety Bond Facility [Abstract]
 
Surety bond facility, available amount
3.5 
Surety bond facility, issued amount
$ 3.2 
Lease Obligations (Details) (USD $)
12 Months Ended
Dec. 31, 2017
sublease
Dec. 31, 2016
Dec. 31, 2015
Operating Leased Assets [Line Items]
 
 
 
Rent expense under non-cancelable operating lease arrangements
$ 15,000,000 
$ 23,300,000 
$ 38,500,000 
Number of active subleases
 
 
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
 
 
 
2018
31,400,000 
 
 
2019
20,833,000 
 
 
2020
9,504,000 
 
 
2021
5,112,000 
 
 
2022
1,558,000 
 
 
Thereafter
390,000 
 
 
Total minimum payments
68,797,000 
 
 
California
 
 
 
Operating Leased Assets [Line Items]
 
 
 
Area of Real Estate Property
28,000 
 
 
Length of sublease period
28 months 
 
 
Operating leases, future minimum payments due, future minimum sublease rentals
1,700,000 
 
 
Colorado
 
 
 
Operating Leased Assets [Line Items]
 
 
 
Area of Real Estate Property
72,000 
 
 
Length of sublease period
44 months 
 
 
Operating leases, future minimum payments due, future minimum sublease rentals
$ 4,700,000 
 
 
Income (Loss) Per Share (Basic and Diluted) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Numerator:
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
$ (5,685)
$ 39 
$ 6,314 
$ 9,869 
$ (13,789)
$ (9,477)
$ 3,338 
$ (10,112)
$ 10,537 
$ (30,040)
$ (70,454)
Denominator:
 
 
 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding (in shares)
 
 
 
 
 
 
 
 
32,058 
46,228 
45,665 
Effect of dilutive options and restricted stock units (in shares)
 
 
 
 
 
 
 
 
736 
Diluted weighted average number of common shares outstanding (in shares)
 
 
 
 
 
 
 
 
32,794 
46,228 
45,665 
Earnings per share:
 
 
 
 
 
 
 
 
 
 
 
Basic earnings (loss) per share (in USD per share)
$ (0.20)
$ 0.00 
$ 0.22 
$ 0.23 
$ (0.30)
$ (0.20)
$ 0.07 
$ (0.22)
$ 0.33 
$ (0.65)
$ (1.54)
Diluted earnings (loss) per share (in USD per share)
$ (0.20)
$ 0.00 
$ 0.21 
$ 0.23 
$ (0.30)
$ (0.20)
$ 0.07 
$ (0.22)
$ 0.32 
$ (0.65)
$ (1.54)
Income (Loss) Per Share (Anti-Dilutive Securities) (Details)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Stock Options
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
Anti-dilutive securities
1,850 
4,359 
5,063 
RSUs and PSUs
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
Anti-dilutive securities
730 
762 
Stock-Based Compensation (Narrative) (Details) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Stock-based compensation expense
$ 3.6 
$ 7.3 
$ 9.7 
Income tax benefit of stock-based compensation expense
1.4 
2.7 
3.6 
Shares of common stock represented by each RSU
 
 
Granted (in shares)
332,000 
375,000 
455,000 
Stock Options
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Award expiration period
10 years 
 
 
Award vesting period
4 years 
 
 
Number of common shares reserved for issuance upon exercise of stock options and settlement of RSUs
4,300,000 
 
 
Exercise of stock options, shares
537,000 
306,000 
206,000 
Intrinsic value of exercised options
2.7 
1.2 
1.6 
Employee service share-based compensation, tax benefit from exercise of stock options
0.3 
0.3 
0.5 
Tax benefit (shortfall) related to share-based compensation activity
1.6 
3.4 
1.0 
Option expirations in period
272,000 
1,018,000 
 
Unrecognized compensation cost
0.9 
1.4 
1.7 
Unrecognized compensation cost, period for recognition
1 year 1 month 24 days 
 
 
Restricted Stock Units (RSUs)
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Unrecognized compensation cost
3.6 
4.7 
 
Unrecognized compensation cost, period for recognition
1 year 2 months 12 days 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period
460,616 
472,091 
353,126 
RSUs vested in period
4.8 
4.8 
3.3 
Tax windfall realized from RSU
0.1 
0.1 
Tax shortfall realized from RSU
0.1 
0.2 
0.4 
Performance Shares
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Unrecognized compensation cost
$ 0.3 
 
 
Unrecognized compensation cost, period for recognition
8 months 12 days 
 
 
Share-based compensation award, tranche one |
Performance Shares
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Granted (in shares)
 
Stock-Based Compensation (Stock Option Activity) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
 
 
 
 
Balance, beginning of period (in shares)
3,607 
4,653 
5,168 
 
Granted (in shares)
332 
375 
455 
 
Forfeitures and expired (in shares)
(502)
(1,115)
(764)
 
Balance, end of period (in shares)
2,900 
3,607 
4,653 
5,168 
Vested and expected to vest (in shares)
2,848 
 
 
 
Exercisable (in shares)
2,467 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
 
 
 
 
Balance, beginning of period, weighted-average exercise price (in USD per share)
$ 13.64 
$ 13.72 
$ 14.26 
 
Granted, weighted-average exercise price (in USD per share)
$ 10.44 
$ 10.44 
$ 9.44 
 
Exercised, weighted-average exercise price (in USD per share)
$ 7.17 
$ 4.35 
$ 1.38 
 
Forfeitures, weighted-average exercise price (in USD per share)
$ 15.51 
$ 15.41 
$ 18.15 
 
Balance, end of period, weighted-average exercise price (in USD per share)
$ 14.15 
$ 13.64 
$ 13.72 
$ 14.26 
Vested and expected to vest
$ 14.22 
 
 
 
Exercisable
$ 14.79 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
 
 
 
 
Balance, weighted-average remaining contractual term
4 years 2 months 24 days 
4 years 9 months 20 days 
4 years 10 months 2 days 
5 years 8 months 22 days 
Vested and expected to vest, weighted-average remaining contractual term
4 years 1 month 24 days 
 
 
 
Exercisable, weighted-average remaining contractual term
3 years 5 months 14 days 
 
 
 
Balance, aggregate intrinsic value
$ 0 
$ 2,025 
$ 2,556 
$ 7,732 
Vested and expected to vest, aggregate intrinsic value
 
 
 
Exercisable, aggregate intrinsic value
$ 0 
 
 
 
Stock-Based Compensation (Option Valuation Assumptions) (Details)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Weighted average exercise price per share (in USD per share)
$ 10.44 
$ 10.44 
$ 9.44 
Weighted average grant date fair value per share (in USD per share)
$ 4.76 
$ 4.91 
$ 4.52 
Stock Options
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Risk-free interest rate
2.10% 
1.40% 
1.60% 
Expected dividend yield
0.00% 
0.00% 
0.00% 
Expected volatility
47.20% 
49.80% 
50.70% 
Expected life (in years)
5 years 9 months 
5 years 9 months 
5 years 9 months 
Forfeiture rate
11.00% 
9.00% 
7.00% 
Stock-Based Compensation (Restricted Stock Unit Activity) (Details) (USD $)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
 
 
 
Weighted average exercise price per share (in USD per share)
$ 10.44 
$ 10.44 
$ 9.44 
Weighted average grant date fair value per share (in USD per share)
$ 4.76 
$ 4.91 
$ 4.52 
Performance Shares
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
 
 
 
Weighted average exercise price per share (in USD per share)
 
 
$ 9.46 
Risk-free interest rate
 
 
0.70% 
Expected dividend yield
 
 
0.00% 
Expected volatility
 
 
50.00% 
Expected life (in years)
 
 
4 years 
Forfeiture rate
 
 
7.00% 
Weighted average grant date fair value per share (in USD per share)
 
 
$ 4.04 
Restricted Stock Units (RSUs)
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
 
 
 
Balance, beginning of period (in shares)
1,133,923 
1,390,011 
1,279,089 
Awarded (in shares)
472,520 
504,770 
983,473 
Vested and released (in shares)
(460,616)
(472,091)
(353,126)
Canceled (in shares)
(301,525)
(288,767)
(519,425)
Balance, end of period (in shares)
844,302 
1,133,923 
1,390,011 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
 
 
 
Balance, beginning of period, weighted average grant date fair value (in USD per share)
$ 10.52 
$ 10.78 
$ 12.63 
Awarded, weighted average grant date fair value (in USD per share)
$ 10.45 
$ 10.18 
$ 9.33 
Vested and released, weighted average grant date fair value (in USD per share)
$ 10.58 
$ 10.84 
$ 12.34 
Canceled, weighted average grant date fair value (in USD per share)
$ 10.51 
$ 10.69 
$ 11.51 
Balance, end of period, weighted average grant date fair value (in USD per share)
$ 10.45 
$ 10.52 
$ 10.78 
Performance-based measure [Member] |
Performance Shares
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
 
 
 
Weighted average grant date fair value per share (in USD per share)
$ 0.00 
$ 0.00 
$ 9.86 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
 
 
 
Balance, beginning of period (in shares)
267,000 
359,000 
Awarded (in shares)
455,765 
Canceled (in shares)
(102,817)
(92,028)
(96,621)
Balance, end of period (in shares)
164,000 
267,000 
359,000 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
 
 
 
Balance, beginning of period, weighted average grant date fair value (in USD per share)
$ 9.86 
$ 9.86 
$ 0.00 
Canceled, weighted average grant date fair value (in USD per share)
$ 9.86 
$ 9.86 
$ 9.86 
Balance, end of period, weighted average grant date fair value (in USD per share)
$ 9.86 
$ 9.86 
$ 9.86 
Market-based measure [Member] |
Performance Shares
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
 
 
 
Weighted average grant date fair value per share (in USD per share)
$ 0.00 
$ 0.00 
$ 4.04 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
 
 
 
Balance, beginning of period (in shares)
735,000 
966,000 
975,295 
Awarded (in shares)
229,017 
Canceled (in shares)
(299,905)
(231,290)
(238,084)
Balance, end of period (in shares)
435,000 
735,000 
966,000 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
 
 
 
Balance, beginning of period, weighted average grant date fair value (in USD per share)
$ 5.09 
$ 5.11 
$ 5.39 
Canceled, weighted average grant date fair value (in USD per share)
$ 5.04 
$ 5.19 
$ 5.21 
Balance, end of period, weighted average grant date fair value (in USD per share)
$ 5.13 
$ 5.09 
$ 5.11 
Stock Repurchase Programs (Details) (USD $)
0 Months Ended 12 Months Ended
Nov. 21, 2017
Mar. 10, 2017
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Nov. 17, 2017
Class of Stock Disclosures [Abstract]
 
 
 
 
 
 
Shares repurchased (in shares)
2,100,000 
18,100,000 
 
 
Repurchase of common stock
$ 16,700,000 
$ 152,000,000 
$ 168,695,000 
$ 0 
$ 0 
 
Stock Repurchase Program, Authorized Amount
 
 
 
 
 
$ 20,000,000.0 
Income Taxes (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended 12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2017
Internal Revenue Service (IRS)
Dec. 31, 2018
Forecast
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
Operating Loss Carryforwards
 
 
 
$ 5.5 
 
Computed expected federal tax expense
35.00% 
35.00% 
35.00% 
 
21.00% 
Gross unrecognized tax benefits that would impact effective tax rate if recognized
14.8 
13.2 
 
 
 
Unrecognized tax benefits that would result in adjustments to other tax accounts
3.9 
7.1 
 
 
 
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued
$ 2.7 
$ 2.4 
 
 
 
Income Taxes (Components of Income Tax Expense) (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Current:
 
 
 
Federal
$ (1,091)
$ (8,433)
$ (10,370)
State
517 
530 
(309)
Current income tax expense (benefit)
(574)
(7,903)
(10,679)
Deferred:
 
 
 
Federal
(605)
25 
33,482 
State
7,462 
Deferred income tax expense (benefit)
(600)
28 
40,944 
Total
$ (1,174)
$ (7,875)
$ 30,265 
Income Taxes (Deferred Tax Assets and Liabilities) (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Deferred tax assets:
 
 
Net operating loss
$ 2,414 
$ 1,052 
Fixed assets
(291)
(1,241)
Bad debt
1,506 
1,979 
Vacation accrual
1,880 
3,249 
Stock-based compensation
6,435 
12,827 
Deferred rent
4,818 
12,687 
State tax
1,520 
2,534 
Bonus accrual
1,372 
1,873 
Accrued expenses
3,711 
5,994 
Revenue reserves
104 
135 
Other
766 
760 
Total deferred tax assets
24,235 
41,849 
Valuation allowance
(23,891)
(41,849)
Net deferred tax assets
344 
Deferred tax liabilities:
 
 
Indefinite-lived intangibles
(517)
(773)
Total deferred tax liabilities
(517)
(773)
Total net deferred tax assets (liabilities)
$ (173)
$ (773)
Income Taxes (Income Tax Reconciliation) (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Income Tax Reconciliation, Amount:
 
 
 
Computed expected federal tax expense
$ 3,277 
$ (13,270)
$ (14,066)
State taxes, net of federal benefit
321 
(551)
(655)
Permanent differences
(362)
341 
1,033 
Penalty
2,800 
Uncertain tax positions
677 
346 
480 
Credits
(466)
(402)
(206)
Stock compensation
1,277 
116 
1,246 
Federal tax rate change
11,974 
Valuation allowance
(17,958)
2,708 
42,419 
Other
86 
37 
14 
Total
$ (1,174)
$ (7,875)
$ 30,265 
Income Tax Reconciliation, Percent:
 
 
 
Computed expected federal tax expense
35.00% 
35.00% 
35.00% 
State taxes, net of federal benefit
3.40% 
1.50% 
1.60% 
Permanent differences
(3.80%)
(0.90%)
(2.60%)
Penalty
0.00% 
(7.40%)
0.00% 
Uncertain tax positions
7.20% 
(1.00%)
(1.20%)
Credits
(4.90%)
1.10% 
0.50% 
Stock compensation
13.60% 
(0.30%)
(3.10%)
Federal tax rate change
127.90% 
0.00% 
0.00% 
Valuation allowance
(191.80%)
(7.10%)
(105.50%)
Other
0.90% 
(0.10%)
0.00% 
Income tax expense (benefit)
(12.50%)
20.80% 
(75.30%)
Income Taxes (Unrecognized Tax Benefits) (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
 
 
 
Unrecognized tax benefits, beginning of period
$ 20,248 
$ 20,589 
$ 20,877 
Gross increases-tax positions in prior period
427 
176 
169 
Gross decreases-tax positions in prior period
(1,354)
(517)
(2)
Gross increases-current period tax positions
Settlements
(455)
Lapse of statute of limitations
(452)
Unrecognized tax benefits, end of period
$ 18,869 
$ 20,248 
$ 20,589 
Regulatory (Details)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2017
Ashford University
Dec. 31, 2016
Ashford University
Dec. 31, 2015
Ashford University
Dec. 31, 2017
University of the Rockies
Dec. 31, 2016
University of the Rockies
Dec. 31, 2015
University of the Rockies
Sep. 30, 2014
Three-year cohort default rate
Ashford University
Sep. 30, 2013
Three-year cohort default rate
Ashford University
Sep. 30, 2012
Three-year cohort default rate
Ashford University
Sep. 30, 2014
Three-year cohort default rate
University of the Rockies
Sep. 30, 2013
Three-year cohort default rate
University of the Rockies
Sep. 30, 2012
Three-year cohort default rate
University of the Rockies
Dec. 31, 2017
Minimum
The 90-10 Rule:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Title IV eligibility, maximum allowable percentage of revenue from Title IV programs over two consecutive years
90.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Title IV eligibility, minimum term of ineligibility once noncompliant
2 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Title IV eligibility, maximum allowable percentage of revenue from Title IV programs in any single year
90.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Actual percentage of revenue from Title IV programs
 
 
80.80% 
81.20% 
80.90% 
86.10% 
86.50% 
86.60% 
 
 
 
 
 
 
 
Accreditation, Regulatory Compliance, Cohort Default Term
3 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accreditation, Regulatory Terms, Maximum Cohort Default Rate over Prior Three Years
30.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accreditation, Regulatory Compliance, Cohort Default Rate
 
 
 
 
 
 
 
 
14.90% 
14.50% 
15.30% 
5.50% 
3.80% 
4.30% 
 
Composite score
 
2.0 
 
 
 
 
 
 
 
 
 
 
 
 
1.5 
Estimated composite score
2.5 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retirement Plans (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Retirement Benefits [Abstract]
 
 
 
Expense related to 401(k) plan
$ 2.9 
$ 3.1 
$ 3.4 
Commitments and Contingencies (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Obligation with Joint and Several Liability Arrangement [Line Items]
 
Settlement Liabilities, Current
$ 1.8 
California
 
Obligation with Joint and Several Liability Arrangement [Line Items]
 
Estimated Litigation Liability
$ 8.0 
Concentration of Risk (Details) (USD $)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Concentration Risk [Line Items]
 
 
 
Cash and cash equivalents, FDIC insurance limit
$ 250,000 
 
 
Ashford University
 
 
 
Concentration Risk [Line Items]
 
 
 
Actual percentage of revenue from Title IV programs
80.80% 
81.20% 
80.90% 
University of the Rockies
 
 
 
Concentration Risk [Line Items]
 
 
 
Actual percentage of revenue from Title IV programs
86.10% 
86.50% 
86.60% 
Quarterly Results of Operations (Unaudited) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Quarterly Financial Information Disclosure [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Revenue
$ 104,959 
$ 119,367 
$ 124,581 
$ 129,490 
$ 119,535 
$ 136,583 
$ 137,970 
$ 133,002 
$ 478,397 
$ 527,090 
$ 561,729 
Operating income (loss)
(6,487)
(1,503)
6,180 
9,662 
(18,456)
(8,823)
3,357 
(16,299)
7,852 
(40,221)
(42,295)
Net income (loss)
$ (5,685)
$ 39 
$ 6,314 
$ 9,869 
$ (13,789)
$ (9,477)
$ 3,338 
$ (10,112)
$ 10,537 
$ (30,040)
$ (70,454)
Basic (in USD per share)
$ (0.20)
$ 0.00 
$ 0.22 
$ 0.23 
$ (0.30)
$ (0.20)
$ 0.07 
$ (0.22)
$ 0.33 
$ (0.65)
$ (1.54)
Diluted (in USD per share)
$ (0.20)
$ 0.00 
$ 0.21 
$ 0.23 
$ (0.30)
$ (0.20)
$ 0.07 
$ (0.22)
$ 0.32 
$ (0.65)
$ (1.54)