Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2015 | Feb. 12, 2016 | Jun. 30, 2015 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2015 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | LOPE | ||
Entity Registrant Name | GRAND CANYON EDUCATION, INC. | ||
Entity Central Index Key | 1,434,588 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 46,486,319 | ||
Entity Public Float | $ 2 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets | ||
Cash and cash equivalents | $ 23,036 | $ 65,238 |
Restricted cash, cash equivalents and investments | 75,384 | 67,840 |
Investments | 83,364 | 100,784 |
Accounts receivable, net | 8,298 | 7,605 |
Income taxes receivable | 3,952 | 1 |
Deferred income taxes | 6,448 | 6,149 |
Other current assets | 20,863 | 19,428 |
Total current assets | 221,345 | 267,045 |
Property and equipment, net | 667,483 | 478,170 |
Prepaid royalties | 3,355 | 3,650 |
Goodwill | 2,941 | 2,941 |
Other assets | 3,306 | 3,907 |
Total assets | 898,430 | 755,713 |
Current liabilities | ||
Accounts payable | 34,149 | 22,715 |
Accrued compensation and benefits | 17,895 | 23,995 |
Accrued liabilities | 13,846 | 13,533 |
Income taxes payable | 29 | 4,906 |
Student deposits | 76,742 | 69,584 |
Deferred revenue | 37,876 | 36,868 |
Due to related parties | 675 | 403 |
Current portion of capital lease obligations | 697 | 91 |
Current portion of notes payable | 6,625 | 6,616 |
Total current liabilities | 188,534 | 178,711 |
Capital lease obligations, less current portion | 788 | 406 |
Other noncurrent liabilities | 4,302 | 4,513 |
Deferred income taxes, non-current | 21,303 | 15,974 |
Notes payable, less current portion | 73,252 | 79,877 |
Total liabilities | $ 288,179 | $ 279,481 |
Commitments and contingencies | ||
Stockholders' equity | ||
Preferred stock, $0.01 par value, 10,000 shares authorized; 0 shares issued and outstanding at December 31, 2015 and 2014 | ||
Common stock, $0.01 par value, 100,000 shares authorized; 50,288 and 49,746 shares issued and 46,877 and 46,744 shares outstanding at December 31, 2015 and 2014, respectively | $ 503 | $ 497 |
Treasury stock, at cost, 3,411 and 3,002 shares of common stock at December 31, 2015 and 2014, respectively | (69,332) | (53,770) |
Additional paid-in capital | 177,167 | 158,549 |
Accumulated other comprehensive loss | (489) | (35) |
Retained earnings | 502,402 | 370,991 |
Total stockholders' equity | 610,251 | 476,232 |
Total liabilities and stockholders' equity | $ 898,430 | $ 755,713 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 50,288,000 | 49,746,000 |
Common stock, shares outstanding | 46,877,000 | 46,744,000 |
Treasury stock, shares | 3,411,000 | 3,002,000 |
Consolidated Income Statements
Consolidated Income Statements - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Statement [Abstract] | |||||||||||
Net revenue | $ 215,954 | $ 193,393 | $ 174,726 | $ 194,127 | $ 189,973 | $ 175,056 | $ 158,594 | $ 167,432 | $ 778,200 | $ 691,055 | $ 598,335 |
Costs and expenses: | |||||||||||
Instructional costs and services | 92,427 | 83,180 | 75,357 | 78,687 | 78,552 | 71,714 | 67,847 | 70,678 | 329,651 | 288,791 | 254,419 |
Admissions advisory and related, including $1,575 in 2015; $2,974 in 2014; and $3,412 in 2013, respectively, to related parties | 29,361 | 27,506 | 27,372 | 28,333 | 28,774 | 27,324 | 26,208 | 26,261 | 112,572 | 108,567 | 97,077 |
Advertising | 18,419 | 19,360 | 18,419 | 20,031 | 16,854 | 16,491 | 15,751 | 16,712 | 76,229 | 65,808 | 60,985 |
Marketing and promotional | 1,978 | 1,827 | 1,788 | 1,694 | 1,810 | 1,931 | 1,907 | 1,791 | 7,287 | 7,439 | 5,644 |
General and administrative | 10,634 | 12,536 | 9,534 | 9,396 | 10,447 | 11,640 | 8,994 | 8,554 | 42,100 | 39,635 | 36,934 |
Total costs and expenses | 152,819 | 144,409 | 132,470 | 138,141 | 136,437 | 129,100 | 120,707 | 123,996 | 567,839 | 510,240 | 455,059 |
Operating income | 63,135 | 48,984 | 42,256 | 55,986 | 53,536 | 45,956 | 37,887 | 43,436 | 210,361 | 180,815 | 143,276 |
Interest expense | (414) | (313) | (146) | (375) | (346) | (576) | (356) | (523) | (1,248) | (1,801) | (2,244) |
Interest income and other | (691) | 201 | 127 | 257 | 307 | 43 | 197 | 137 | (106) | 684 | 3,863 |
Income before income taxes | 62,030 | 48,872 | 42,237 | 55,868 | 53,497 | 45,423 | 37,728 | 43,050 | 209,007 | 179,698 | 144,895 |
Income tax expense | 23,916 | 15,530 | 16,461 | 21,689 | 20,404 | 16,407 | 14,659 | 16,762 | 77,596 | 68,232 | 56,184 |
Net income | $ 38,114 | $ 33,342 | $ 25,776 | $ 34,179 | $ 33,093 | $ 29,016 | $ 23,069 | $ 26,288 | $ 131,411 | $ 111,466 | $ 88,711 |
Earnings per share: | |||||||||||
Basic income per share | $ 0.83 | $ 0.72 | $ 0.56 | $ 0.75 | $ 0.72 | $ 0.64 | $ 0.51 | $ 0.58 | $ 2.86 | $ 2.45 | $ 1.98 |
Diluted income per share | $ 0.81 | $ 0.70 | $ 0.55 | $ 0.72 | $ 0.70 | $ 0.62 | $ 0.49 | $ 0.56 | $ 2.78 | $ 2.37 | $ 1.92 |
Basic weighted average shares outstanding | 46,035 | 46,063 | 46,012 | 45,789 | 45,652 | 45,651 | 45,598 | 45,205 | 45,975 | 45,538 | 44,731 |
Diluted weighted average shares outstanding | 47,337 | 47,320 | 47,263 | 47,201 | 47,097 | 47,051 | 46,990 | 46,841 | 47,281 | 47,006 | 46,131 |
Consolidated Income Statements
Consolidated Income Statements (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Statement [Abstract] | |||
Admissions advisory and related expenses to related parties | $ 1,575 | $ 2,974 | $ 3,412 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 131,411 | $ 111,466 | $ 88,711 |
Other comprehensive income (loss), net of tax: | |||
Unrealized (losses) gains on hedging derivatives, net of taxes of $230, $186, and $382 for the years ended December 31, 2015, 2014 and 2013, respectively | (372) | (300) | 565 |
Unrealized (losses) gains on available for sale securities, net of taxes of $50, $60 and $11 for the years ended December 31, 2015, 2014 and 2013, respectively | (82) | (93) | 16 |
Comprehensive income | $ 130,957 | $ 111,073 | $ 89,292 |
Consolidated Statements of Com7
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Statement of Comprehensive Income [Abstract] | |||
Unrealized gains (losses) on hedging derivatives, taxes | $ 230 | $ 186 | $ 382 |
Unrealized gains (losses) on available-for-sale securities, taxes | $ 50 | $ 60 | $ 11 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock [Member] | Treasury Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Retained Earnings [Member] |
Beginning Balance at Dec. 31, 2012 | $ 234,059 | $ 471 | $ (39,136) | $ 102,133 | $ (223) | $ 170,814 |
Beginning Balance, Shares at Dec. 31, 2012 | 47,136 | 2,420 | ||||
Comprehensive income | 89,292 | 581 | 88,711 | |||
Common stock purchased for treasury | (8,323) | $ (8,323) | ||||
Common stock purchased for treasury, shares | 340 | |||||
Share-based compensation | 8,950 | $ 6 | $ (973) | 9,917 | ||
Share-based compensation, Shares | 594 | 40 | ||||
Restricted shares forfeited | 0 | $ 0 | $ 0 | 0 | 0 | 0 |
Restricted shares forfeited, Shares | 45 | |||||
Exercise of stock options | 16,278 | $ 12 | 16,266 | |||
Exercise of stock options, Shares | 1,160 | |||||
Excess tax benefits | 4,588 | 4,588 | ||||
Ending Balance at Dec. 31, 2013 | 344,844 | $ 489 | $ (48,432) | 132,904 | 358 | 259,525 |
Ending Balance, Shares at Dec. 31, 2013 | 48,890 | 2,845 | ||||
Comprehensive income | 111,073 | (393) | 111,466 | |||
Common stock purchased for treasury | (1,676) | $ (1,676) | ||||
Common stock purchased for treasury, shares | 38 | |||||
Share-based compensation | 6,282 | $ 3 | $ (3,662) | 9,941 | ||
Share-based compensation, Shares | 317 | 77 | ||||
Restricted shares forfeited | 0 | $ 0 | $ 0 | 0 | 0 | 0 |
Restricted shares forfeited, Shares | 42 | |||||
Exercise of stock options | 7,825 | $ 5 | 7,820 | |||
Exercise of stock options, Shares | 539 | |||||
Excess tax benefits | 7,884 | 7,884 | ||||
Ending Balance at Dec. 31, 2014 | 476,232 | $ 497 | $ (53,770) | 158,549 | (35) | 370,991 |
Ending Balance, Shares at Dec. 31, 2014 | 49,746 | 3,002 | ||||
Comprehensive income | 130,957 | (454) | 131,411 | |||
Common stock purchased for treasury | (11,279) | $ (11,279) | ||||
Common stock purchased for treasury, shares | 3,076 | 288 | ||||
Share-based compensation | 6,989 | $ 3 | $ (4,283) | 11,269 | ||
Share-based compensation, Shares | 324 | 94 | ||||
Restricted shares forfeited | 0 | $ 0 | $ 0 | 0 | 0 | 0 |
Restricted shares forfeited, Shares | 27 | |||||
Exercise of stock options | 3,489 | $ 3 | 3,486 | |||
Exercise of stock options, Shares | 218 | |||||
Excess tax benefits | 3,863 | 3,863 | ||||
Ending Balance at Dec. 31, 2015 | $ 610,251 | $ 503 | $ (69,332) | $ 177,167 | $ (489) | $ 502,402 |
Ending Balance, Shares at Dec. 31, 2015 | 50,288 | 3,411 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows provided by operating activities: | |||
Net income | $ 131,411 | $ 111,466 | $ 88,711 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Share-based compensation | 11,257 | 9,945 | 9,936 |
Excess tax benefits from share-based compensation | (3,636) | (7,637) | (4,469) |
Provision for bad debts | 16,620 | 15,045 | 19,897 |
Depreciation and amortization | 35,675 | 29,473 | 25,437 |
Loss (gain) on note receivable | 958 | (3,646) | |
Loss on asset disposal and fixed asset impairments | 2,755 | 2,475 | |
Deferred income taxes | 4,576 | 2,651 | 5,472 |
Prepaid royalty impairment | 966 | ||
Changes in assets and liabilities: | |||
Restricted cash, cash equivalents and investments | (7,544) | (3,472) | (8,404) |
Accounts receivable | (17,313) | (15,433) | (19,163) |
Prepaid expenses and other | (2,351) | 81 | (7,316) |
Due to/from related parties | 272 | (51) | (69) |
Accounts payable | 5,002 | (2,448) | 8,563 |
Accrued liabilities | (5,772) | 2,991 | (1,756) |
Income taxes receivable/payable | (4,965) | 16,378 | (7,769) |
Deferred rent | (1,211) | (2,298) | (204) |
Deferred revenue | 1,008 | 4,052 | 4,202 |
Student deposits | 7,158 | 2,812 | 9,027 |
Net cash provided by operating activities | 173,900 | 166,996 | 118,449 |
Cash flows used in investing activities: | |||
Capital expenditures | (204,718) | (168,646) | (78,948) |
Purchases of land, building and golf course improvements related to off-site development | (13,583) | (14,542) | |
Proceeds received from note receivable | 29,187 | ||
Restricted funds held for derivative collateral and legal matter | 225 | ||
Purchases of investments | (48,122) | (114,919) | (168,953) |
Proceeds from sale or maturity of investments | 65,542 | 122,555 | 60,533 |
Net cash used in investing activities | (200,881) | (161,010) | (172,498) |
Cash flows (used in) provided by financing activities: | |||
Principal payments on notes payable and capital lease obligations | (6,784) | (6,696) | (6,689) |
Repurchase of common shares including shares withheld in lieu of income taxes | (15,562) | (5,338) | (9,296) |
Net proceeds from exercise of stock options | 3,489 | 7,825 | 16,278 |
Excess tax benefits from share-based compensation | 3,636 | 7,637 | 4,469 |
Net cash (used in) provided by financing activities | (15,221) | 3,428 | 4,762 |
Net (decrease) increase in cash and cash equivalents | (42,202) | 9,414 | (49,287) |
Cash and cash equivalents, beginning of year | 65,238 | 55,824 | 105,111 |
Cash and cash equivalents, end of year | 23,036 | 65,238 | 55,824 |
Supplemental disclosure of cash flow information | |||
Cash paid during the year for interest | 1,244 | 1,793 | 2,176 |
Cash paid during the year for income taxes | 75,587 | 48,835 | 59,892 |
Cash received for income tax refunds | 4 | 385 | 728 |
Supplemental disclosure of non-cash investing and financing activities | |||
Purchases of property and equipment included in accounts payable | 13,277 | 5,845 | 1,494 |
Purchases of equipment though capital lease obligations | 1,156 | ||
Shortfall tax expense from share-based compensation | 26 | 16 | 209 |
Tax benefit of Spirit warrant intangible | $ 253 | $ 260 | $ 267 |
Nature of Business
Nature of Business | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | 1. Nature of Business Grand Canyon Education, Inc. (together with its subsidiaries, the “University”) was formed in Delaware in November 2003 as a limited liability company, under the name Significant Education, LLC, for the purpose of acquiring the assets of Grand Canyon University from a non-profit foundation on February 2, 2004. On August 24, 2005, the University converted from a limited liability company to a corporation and changed its name to Significant Education, Inc. On May 9, 2008, the University changed its name to Grand Canyon Education, Inc. The University is a comprehensive regionally accredited university that offers approximately 200 graduate and undergraduate degree programs and certificates across eight colleges both online and on ground at our 200+ acre campus in Phoenix, Arizona, and at facilities we lease and at facilities owned by third party employers. Our undergraduate programs are designed to be innovative and to meet the future needs of employers, while providing students with the needed critical thinking and effective communication skills developed through a Christian, liberal arts foundation. We offer master and doctoral degrees in contemporary fields that are designed to provide students with the capacity for transformational leadership in their chosen industry, emphasizing the immediate relevance of theory, application, and evaluation to promote personal and organizational change. The University is accredited by the Higher Learning Commission. The University’s wholly owned subsidiaries are primarily used to facilitate expansion of the University campus. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of Grand Canyon Education, Inc. and its wholly owned subsidiaries. Intercompany transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents The University invests a portion of its cash in excess of current operating requirements in short term certificates of deposit and money market instruments. The University considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. Restricted Cash, Cash Equivalents and Investments A significant portion of the University’s revenue is received from students who participate in government financial aid assistance programs. Restricted cash, cash equivalents and investments primarily represent amounts received from the federal and state governments under various student aid grant and loan programs, such as Title IV. The University receives these funds subsequent to the completion of the authorization and disbursement process and holds them for the benefit of the student. The U.S. Department of Education (“Department of Education”) requires Title IV funds collected in advance of student billings to be restricted until the course begins. The University records all of these amounts as a current asset in restricted cash, cash equivalents and investments. The majority of these funds remain as restricted for an average of 60 to 90 days from the date of receipt. Investments The University considers its investments in municipal bond, mutual funds and municipal securities as available-for-sale securities. Available-for-sale securities are carried at fair value, determined using Level 1 and Level 2 of the hierarchy of valuation inputs, with the use of quoted market prices and inputs other than quoted prices that are observable for the assets, with unrealized gains and losses, net of tax, reported as a separate component of other comprehensive income. Unrealized losses considered to be other-than-temporary are recognized currently in earnings. Amortization of premiums, accretion of discounts, interest and dividend income and realized gains and losses are included in interest and other income. Note Receivable The University purchased a note receivable from a financial institution at fair market value in the fourth quarter of 2012 for $27,000. The note bore interest at 11%, which represented the 6% rate of the loan plus the 5% default rate. The principal and most of the interest due on the note was paid in March 2013, resulting in the full return on investment of the note receivable and an additional gain in interest income and other income of $2,187 on the loan. However, the borrower has disputed certain amounts remaining due under the note agreement, including default interest in the amount of $432, a late payment liquidated damage in the amount of $1,392, and a statutory trustee’s fee in the amount of $139. The funds disputed by the borrower, plus interest thereon, were deposited into an escrow account with the clerk of the Maricopa County Superior Court pending resolution of the disputed issues. In the third quarter of 2013, the court ruled in favor of the University with respect to the late payment liquidated damage and default interest accrued thereon. Accordingly, the University recorded interest and other income of $1,459 for the year ended December 31, 2013. The court ordered the late payment liquidated damage funds and interest thereon to be released to the University on October 28, 2013 unless prior to said date, borrower filed with the court a formal notice of appeal and simultaneously deposited an additional $344 into escrow with the clerk of the court representing continued interest accruing on the late payment liquidated damage pending an appeal. On October 28, 2013 borrower deposited with the clerk of the court the required cash bond in the amount of $344 and filed its formal notice of appeal. On January 29, 2015, the court ruled in favor of the University with respect to the remaining default interest and interest thereon. In January 2016, the Arizona Court of Appeals issued a ruling reversing the Maricopa County Superior Court’s award of the $1,392 late payment liquidated damage and the Maricopa County Superior Court released to us the remaining default interest and other fees due to the University totaling $501. Although, the University intends to appeal the late payment penalty decision to the Arizona Supreme Court, the University reversed other income of $958 for the year ended December 31, 2015 due to the uncertain outcome. Property and Equipment Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method. Normal repairs and maintenance are expensed as incurred. Expenditures that materially extend the useful life of an asset are capitalized. Construction in progress represents items not yet placed in service and are not depreciated. Internally developed software represents qualifying salary and consulting costs for time spent on developing internal use software and is included in construction in progress until its completion. The University capitalizes interest using its interest rates on the specific borrowings used to finance the improvements, which approximated 1.9% in 2015, 2014, and 2013. Interest cost capitalized and incurred in the years ended December 31, 2015, 2014, and 2013 are as follows: Year Ended December 31, 2015 2014 2013 Interest incurred $ 1,962 $ 2,180 $ 2,626 Interest capitalized 714 379 382 Interest expense $ 1,248 $ 1,801 $ 2,244 Depreciation is provided using the straight-line method over the estimated useful lives of the assets. Furniture and fixtures, computer equipment, and vehicles generally have estimated useful lives of ten, four, and five years, respectively. Leasehold improvements are depreciated over the shorter of their lease term or their useful life. Land improvements and buildings are depreciated over lives ranging from 10 to 40 years. Leases The University enters into various lease agreements in conducting its business. At the inception of each lease, the University evaluates the lease agreement to determine whether the lease is an operating or capital lease. In addition, many of the lease agreements contain renewal options and tenant improvement allowances. When such items are included in a lease agreement, the University records a deferred liability on the balance sheet and records the rent expense evenly over the term of the lease. Leasehold improvements are included as investing activities and are included as additions to property, plant and equipment. For leases with renewal options, the University records rent expense and amortizes the leasehold improvement on a straight-line basis over the initial non-cancelable lease term unless it intends to exercise the renewal option. Once it extends the renewal option, the University amortizes any tenant improvement allowances over the extended lease period as well as the leasehold improvement asset (unless the extended lease term is longer than the economic life of the asset). The University expenses any additional payments under its operating leases for taxes, insurance or other operating expenses as incurred. Other Assets During 2010, the University entered into an agreement with an affiliated entity to develop a new learning management system for use by the University. Through this agreement, the University prepaid perpetual license fees, acquired source code rights for the software developed, and prepaid maintenance and service fees for at least the first seven years of use for an aggregate amount of $4,900, which was paid in full as of December 31, 2011. The University commenced utilization of this software in October 2011. Included in current other assets is the amount that will be amortized in the next twelve month cycle for maintenance and service fees and included in property and equipment is the amount that will be amortized over fifteen years for the perpetual licenses. Long-Lived Assets The University evaluates the recoverability of its long-lived assets for impairment, other than goodwill, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Prepaid Royalties In connection with the February 2004 acquisition of the assets of Grand Canyon University from a non-profit foundation, the University entered into a royalty fee arrangement with the former owner in which the University agreed to pay a stated percentage of cash revenue generated by its online programs. The University settled all future royalty obligations with the former owner in April 2008 when it finalized an agreement to pay $22,500 to the former owner. Of this payment $5,920 was considered as settlement of the future royalty payment obligation and is included in the accompanying balance sheet as a component of “Prepaid Royalty” and is being amortized over a period of 20 years. In addition, in June 2004, the University entered into a license agreement relating to the University’s use of the Ken Blanchard name for its College of Business. Under the terms of that agreement the University agreed to pay Blanchard a royalty generated on net tuition from certain programs in the University’s College of Business and to issue Blanchard shares of common stock with the actual number of shares issued to be contingent upon the University’s achievement of stated enrollment levels in its College of Business during the term of the agreement. The fair value of the shares issued to Blanchard as part of the license agreement of $3,394 was determined at the date it became probable that shares would then be earned and then adjusted until the date the shares were vested. During 2014, the University reached an agreement to cease the use of the Ken Blanchard name for its College of Business when it renamed the school the Colangelo School of Business; accordingly the remaining balance of the prepaid royalty was expensed during the year ended December 31, 2014. Goodwill Goodwill represents the excess of the cost over the fair market value of net assets acquired, including identified intangible assets. Goodwill is tested annually or more frequently if circumstances indicate potential impairment. The Financial Accounting Standards Board (“FASB”) has issued guidance that permits an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. The University performed its annual goodwill impairment test, by performing a qualitative assessment. Following this assessment, the University determined that it is more likely than not that its fair value exceeds its carrying amount. Share-Based Compensation The University measures and recognizes compensation expense for share-based payment awards made to employees, consultants and directors, including employee stock options and restricted stock awards. The University calculates the fair value of share-based awards on the date of grant. The University calculates the fair value of share-based awards to consultants on the date of vesting. The University amortizes the share-based compensation expense over the period that the awards are expected to vest, net of estimated forfeiture rates. If the actual forfeitures differ from management estimates, adjustments to compensation expense are recorded. The University reports cash flows resulting from tax deductions in excess of the compensation cost realized for those options (excess tax benefits) as financing cash flows. The University reports cash flows resulting from tax deductions that are less than the compensation cost realized for those option (tax shortfalls) as a noncash transaction in the consolidated statement of cash flows. For stock options, the University uses the Black-Scholes-Merton option pricing model to estimate fair value. The option pricing model requires the University to estimate certain key assumptions such as expected life, volatility, risk free interest rates, and dividend yield to determine the fair value of share-based awards, based on historical information and management judgment. The assumptions used in calculating the fair value of stock-based awards represent the University’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. The fair value of the University’s restricted stock awards is based on the market price of its common stock on the date of grant. Derivatives and Hedging Derivative financial instruments are recorded on the balance sheet as assets or liabilities and re-measured at fair value at each reporting date. For derivatives designated as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period or period during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. Derivative financial instruments enable the University to manage its exposure to interest rate risk. The University does not engage in any derivative instrument trading activity. Credit risk associated with the University’s derivatives is limited to the risk that a derivative counterparty will not perform in accordance with the terms of the contract. Exposure to counterparty credit risk is considered low because these agreements have been entered into with institutions with Aa or higher credit ratings, and they are expected to perform fully under the terms of the agreements. Fair Value of Financial Instruments The carrying value of cash and cash equivalents, accounts receivable, note receivable, accounts payable, accrued compensation and benefits and accrued liabilities approximate their fair value based on the liquidity or the short-term maturities of these instruments. The carrying value of notes payable approximate fair value based on its variable rate index. The carrying value of other notes payable and capital lease obligations approximate fair value based upon market interest rates available to the University for debt of similar risk and maturities. Derivative financial instruments are carried at fair value, determined using Level 2 of the hierarchy of valuation inputs as defined in the FASB Accounting Standards Codification (“Codification”), with the use of inputs other than quoted prices that are observable for the asset or liability. See Note 9, Derivative Instruments. The fair value of investments, primarily municipal securities, including municipal bond portfolios and a mutual fund holding municipal securities, were determined using Level 1 and Level 2 of the hierarchy of valuation inputs, with the use of quoted market prices and inputs other than quoted prices that are observable for the assets. The unit of account used for valuation is the individual underlying security. The municipal securities are comprised of city and county bonds related to schools, water and sewer, utilities, transportation, healthcare and housing. Because these securities are held by the University as investments, assessment of non-performance risk is not applicable as such considerations are only applicable in evaluating the fair value measurements for liabilities. The fair value of the prepaid royalty asset relating to the settlement of future royalty payment obligations to the former owner was determined using an income approach, based on management’s forecasts of revenue to be generated through its online education program using Level 3 of the hierarchy of valuation inputs. The rate utilized to discount net cash flows to their present values was 35%. This discount rate was determined after consideration of the University’s weighted average cost of capital giving effect to estimates of the University’s risk-free rate, beta coefficient, equity risk premium, small size risk premium, and company-specific risk premium. Income Taxes The University accounts for income taxes payable or refundable for the current year and deferred tax assets and liabilities for future tax consequences of events that have been recognized in the University’s consolidated financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the temporary differences are expected to be realized. The University applies a more-likely-than-not threshold for financial statement recognition and measurement of an uncertain tax position taken or expected to be taken in a tax return. The University recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2015 and 2014, the University has reserved approximately $1,706 and $0, respectively, for uncertain tax positions, including interest and penalties, which is classified within accrued liabilities on the accompanying consolidated balance sheet. The University has deferred tax assets, which are subject to periodic recoverability assessments. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized. Realization of the deferred tax assets is principally dependent upon achievement of projected future taxable income. Commitments and Contingencies The University accrues for a contingent obligation when it is probable that a liability has been incurred and the amount is reasonably estimable. When the University becomes aware of a claim or potential claim, the likelihood of any loss exposure is assessed. If it is probable that a loss will result and the amount of the loss is estimable, the University records a liability for the estimated loss. If the loss is not probable or the amount of the potential loss is not estimable, the University will disclose the claim if the likelihood of a potential loss is reasonably possible and the amount of the potential loss could be material. Estimates that are particularly sensitive to future changes include tax, legal, and other regulatory matters, which are subject to change as events evolve, and as additional information becomes available during the administrative and litigation process. The University expenses legal fees as incurred. Revenue Recognition Net revenues consist primarily of tuition and fees derived from courses taught by the University online, at its over 200+ acre campus in Phoenix, Arizona, and at facilities it leases or those of employers, as well as from related educational resources that the University provides to its students, such as access to online materials. Tuition revenue and most fees from related educational resources are recognized pro-rata over the applicable period of instruction, net of scholarships provided by the University. For the years ended December 31, 2015, 2014 and 2013, the University’s revenue was reduced by approximately $163,893, $139,962 and $111,789, respectively, as a result of scholarships that the University offered to students. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition to be refunded if a student withdraws during stated refund periods. Certain states in which students reside impose separate, mandatory refund policies, which override the University’s policy to the extent in conflict. If a student withdraws at a time when only a portion, or none of the tuition is refundable, then in accordance with its revenue recognition policy, the University continues to recognize the tuition that was not refunded pro-rata over the applicable period of instruction. However, for students that have taken out financial aid to pay their tuition and for which a return to Title IV is required as a result of his or her withdrawal, the University recognizes revenue after a student withdraws only at the time of cash collection. Sales tax collected from students is excluded from net revenues. Collected but unremitted sales tax is included as an accrued liability in our consolidated balance sheet. The University also charges online students an upfront learning management fee, which is deferred and recognized over the average expected term of a student. Costs that are direct and incremental to new online students are also deferred and recognized ratably over the average expected term of a student. Deferred revenue and student deposits in any period represent the excess of tuition, fees, and other student payments received as compared to amounts recognized as revenue on the income statement and are reflected as current liabilities in the accompanying consolidated balance sheets. The University’s educational programs have starting and ending dates that differ from its fiscal quarters. Therefore, at the end of each fiscal quarter, a portion of revenue from these programs is not yet earned. Other revenues may be recognized as sales occur or services are performed. Allowance for Doubtful Accounts The University records an allowance for doubtful accounts for estimated losses resulting from the inability, failure or refusal of its students to make required payments, which includes the recovery of financial aid funds advanced to a student for amounts in excess of the student’s cost of tuition and related fees that we may have to return under Title IV after a student drops. The University determines the adequacy of its allowance for doubtful accounts based on an analysis of its historical bad debt experience, current economic trends, and the aging of the accounts receivable and student status. The University applies reserves to its receivables based upon an estimate of the risk presented by the age of the receivables and student status. The University writes off accounts receivable balances of active students at the earlier of the time the balances were deemed uncollectible, or one year after the revenue is generated. The University accelerates the write off of inactive student accounts such that the accounts are written off by day 150. The University continues to reflect accounts receivable with an offsetting allowance as long as management believes there is a reasonable possibility of collection. Bad debt expense is recorded as an instructional costs and services expense in the consolidated income statement. Instructional Costs and Services Instructional costs and services consist primarily of costs related to the administration and delivery of the University’s educational programs. This expense category includes salaries, benefits and share-based compensation for full-time and adjunct faculty and administrative personnel, information technology costs, bad debt expense, curriculum and new program development costs (which are expensed as incurred) and costs associated with other support groups that provide services directly to the students. This category also includes an allocation of depreciation, amortization, rent, and occupancy costs attributable to the provision of educational services, primarily at the University’s Phoenix, Arizona campus. Admissions Advisory and Related Admissions advisory and related expenses include salaries and benefits for admissions advisory personnel, and revenue share expense as well as an allocation of depreciation, amortization, rent and occupancy costs attributable to the admissions advisory personnel. Advertising Advertising expenses include brand advertising, marketing leads and other branding activities. Advertising costs are expensed as incurred. Marketing and Promotional Marketing and promotional expenses include salaries, benefits and share-based compensation for marketing personnel, and other promotional expenses. This category also includes an allocation of depreciation, amortization, rent, and occupancy costs attributable to marketing and promotional activities. Marketing and promotional costs are expensed as incurred. General and Administrative General and administrative expenses include salaries, and benefits and share-based compensation of employees engaged in corporate management, finance, human resources, compliance, and other corporate functions. General and administrative expenses also include an allocation of depreciation, amortization, rent, and occupancy costs attributable to the departments providing general and administrative functions. Related party expenses The University is a party to a revenue sharing arrangement (the Collaboration Agreement) with Mind Streams L.L.C. (Mind Streams), a related party, under which the University, in accordance with applicable Department of Education guidance, pays a percentage of net revenue that it receives from applicants recruited by Mind Streams that matriculate at the University. The University terminated the agreement in 2014 and the University is not accepting any new applicants recruited by Mind Streams. The expenses incurred in conjunction with the Collaboration Agreement are included in admissions advisory and related expenses on our Consolidated Income Statement. Insurance/Self-Insurance The University uses a combination of insurance and self-insurance for a number of risks, including claims related to employee health care, workers’ compensation, general liability, and business interruption. Liabilities associated with these risks are estimated based on, among other things, historical claims experience, severity factors, and other actuarial assumptions. The University’s loss exposure related to self-insurance is limited by stop loss coverage on a per occurrence and aggregate basis. Expected loss accruals are based on estimates, and while the University believes the amounts accrued are adequate, the ultimate loss may differ from the amounts provided. Concentration of Credit Risk The University believes the credit risk related to cash equivalents and investments is limited due to its adherence to an investment policy that required investments to have a minimum BB rating, depending on the type of security, by one major rating agency at the time of purchase. All of the University’s cash equivalents and investments as of December 31, 2015 and 2014 consist of investments rated BB or higher by at least one rating agency. Additionally, the University utilizes more than one financial institution to conduct initial and ongoing credit analysis on its investment portfolio to monitor and lower the potential impact of market risk associated with its cash equivalents and investment portfolio. A majority of the University’s revenues are derived from tuition financed under the Title IV programs of the Higher Education Act of 1965, as amended (the “Higher Education Act”). The financial aid and assistance programs are subject to political and budgetary considerations and are subject to extensive and complex regulations. The University’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 University. Students obtain access to federal student financial aid through a Department of Education prescribed application and eligibility certification process. Student financial aid funds are generally made available to students at prescribed intervals throughout their predetermined 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. Segment Information The University operates as a single educational delivery operation using a core infrastructure that serves the curriculum and educational delivery needs of both its ground and online students regardless of geography. The University’s Chief Executive Officer manages the University’s operations as a whole and no expense or operating income information is generated or evaluated on any component level. Recent Accounting Pronouncements In May 2014, the FASB issued “ Revenue from Contracts with Customers In April 2015, the FASB issued, “ Simplifying the Presentation of Debt Issuance Costs In April 2015, the FASB issued, “ Intangibles-Goodwill and Other-Internal-Use Software, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement In November 2015, the FASB issued, “ Income Taxes: Balance Sheet Classification of Deferred Taxes In January 2016, the FASB issued “ Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities The University has determined that no other recent accounting pronouncements apply to its operations or would otherwise have a material impact on its consolidated financial statements. |
Investments
Investments | 12 Months Ended |
Dec. 31, 2015 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | 3. Investments The following is a summary of investments as of December 31, 2015 and 2014, which includes $67,840 of restricted investments as of December 31, 2014. In 2014, the University recorded a non-cash transaction to reflect the restriction of $67,840 of investments. The University considered all investments as available for sale. As of December 31, 2015 Adjusted Cost Gross Unrealized Gains Gross Unrealized (Losses) Estimated Fair Value Municipal securities $ 83,507 $ 26 $ (169 ) $ 83,364 Municipal bond mutual fund 55,720 — (115 ) 55,605 Total restricted and unrestricted investments $ 139,227 $ 26 $ (284 ) $ 138,969 As of December 31, 2014 Adjusted Cost Gross Unrealized Gains Gross Unrealized (Losses) Estimated Fair Value Municipal securities $ 83,364 $ 51 $ (177 ) $ 83,238 Municipal bond mutual fund 85,386 — — 85,386 Total restricted and unrestricted investments $ 168,750 $ 51 $ (177 ) $ 168,624 The cash flows of municipal securities are backed by the issuing municipality’s credit worthiness. All municipal securities are due in one year or less as of December 31, 2015. For the years ended December 31, 2015 and 2014, the net unrealized losses on available-for-sale securities were $(159) and ($93), net of taxes, respectively. |
Valuation and Qualifying Accoun
Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2015 | |
Valuation and Qualifying Accounts [Abstract] | |
Valuation and Qualifying Accounts | 4. Valuation and Qualifying Accounts Balance at Charged to Deductions (1) Balance at Allowance for doubtful accounts receivable: Year ended December 31, 2015 $ 6,472 16,620 (17,955 ) $ 5,137 Year ended December 31, 2014 $ 9,678 15,045 (18,251 ) $ 6,472 Year ended December 31, 2013 $ 8,657 19,897 (18,876 ) $ 9,678 (1) Deductions represent accounts written off, net of recoveries. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 5. Property and Equipment Property and equipment consist of the following: As of December 31, 2015 2014 Land $ 103,280 $ 76,537 Land improvements 13,389 8,800 Buildings 392,754 298,124 Building and leasehold improvements 72,494 45,855 Equipment under capital leases 6,467 5,310 Computer equipment 91,225 75,990 Furniture, fixtures and equipment 51,352 38,162 Internally developed software 25,996 20,813 Other 1,099 1,099 Construction in progress 54,506 20,693 812,562 591,383 Less accumulated depreciation and amortization (145,079 ) (113,213 ) Property and equipment, net $ 667,483 $ 478,170 Depreciation and amortization expense associated with property and equipment, including assets under capital lease, totaled $34,821, $28,529, and $24,546 for the years ended December 31, 2015, 2014, and 2013, respectively. |
Notes Payable and Other Noncurr
Notes Payable and Other Noncurrent Liabilities | 12 Months Ended |
Dec. 31, 2015 | |
Payables and Accruals [Abstract] | |
Notes Payable and Other Noncurrent Liabilities | 6. Notes Payable and Other Noncurrent Liabilities In December 2012, we entered into a new credit agreement, which increased our term loan to $100 million with a maturity date of December 2019. Additionally, this facility, as amended in January 2016, provides a revolving line of credit in the amount of $150 million through December 2017 to be utilized for working capital, capital expenditures, share repurchases and other general corporate purposes. The amendment to this facility increased the revolving line of credit from $50 million to $150 million. Indebtedness under the credit facility is secured by our assets and is guaranteed by certain of our subsidiaries. The Agreement contains standard covenants that, among other things, restrict the University’s ability to incur additional debt or make certain investments, require the University to maintain compliance with certain applicable regulatory standards, and require the University to achieve certain financial ratios and maintain certain financial condition. Indebtedness under the Agreement is secured by the University’s assets and is guaranteed by certain of the University’s subsidiaries. As of December 31, 2015, the University is in compliance with its debt covenants. No amounts were drawn on the revolver as of December 31, 2015. As of December 31, 2015 2014 Notes Payable Note payable, monthly payment of $556; interest at 30 day LIBOR plus 1.75% (1.99% at December 31, 2015) through December 31, 2019 $ 79,525 $ 86,049 Annuities; quarterly payments of $34; extending through 2019; interest at 10% 352 444 79,877 86,493 Less: Current portion 6,625 6,616 $ 73,252 $ 79,877 Payments due under the notes payable obligations are as follows as of December 31, 2015: 2016 $ 6,625 2017 6,636 2018 6,691 2019 59,925 $ 79,877 Long-term deferred rent included in other noncurrent liabilities as of December 31, 2015 and 2014 was $3,502 and $4,513, respectively. |
Capital Lease Obligations
Capital Lease Obligations | 12 Months Ended |
Dec. 31, 2015 | |
Leases [Abstract] | |
Capital Lease Obligations | 7. Capital Lease Obligations Capital lease obligations consist of the following: As of 2015 2014 Capital Lease Obligations Capital leases for equipment, monthly payments totaling $33; interest rate at 2.2%, through 2019 $ 1,485 $ 497 Less: Current portion of capital lease obligations 697 91 $ 788 $ 406 Payments due under future minimum lease payments under the capital lease obligations are as follows as of December 31, 2015: 2016 $ 700 2017 290 2018 290 2019 208 1,488 Less: Portion representing interest 3 Present value of minimum lease payments $ 1,485 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 8. Commitments and Contingencies Leases The University leases certain land, buildings and equipment under non-cancelable operating leases expiring at various dates through 2022. Future minimum lease payments under operating leases due each year are as follows at December 31, 2015: 2016 $ 5,683 2017 3,935 2018 3,432 2019 3,022 2020 3,065 Thereafter 1,804 Total minimum payments $ 20,941 Total rent expense and related taxes and operating expenses under operating leases for the years ended December 31, 2015, 2014 and 2013 was $7,759, $8,409, and $7,074, respectively. Legal Matters From time to time, the University is party to various lawsuits, claims, and other legal proceedings that arise in the ordinary course of business, some of which are covered by insurance. When the University is aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, the University records a liability for the loss. If the loss is not probable or the amount of the loss cannot be reasonably estimated, the University discloses the nature of the specific claim if the likelihood of a potential loss is reasonably possible and the amount involved is material. With respect to the majority of pending litigation matters, the University’s ultimate legal and financial responsibility, if any, cannot be estimated with certainty and, in most cases, any potential losses related to those matters are not considered probable. Upon resolution of any pending legal matters, the University may incur charges in excess of presently established reserves. Management does not believe that any such charges would, individually or in the aggregate, have a material adverse effect on the University’s financial condition, results of operations or cash flows. Tax Reserves, Non-Income Tax Related From time to time the University has exposure to various non-income tax related matters that arise in the ordinary course of business. At December 31, 2015 and 2014, the University has reserved approximately $0 and $659, respectively, for tax matters where its ultimate exposure is considered probable and the potential loss can be reasonably estimated. |
Derivative Instruments
Derivative Instruments | 12 Months Ended |
Dec. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | 9. Derivative Instruments On June 30, 2009 and February 27, 2013, respectively, the University entered into an interest rate swap and an interest rate corridor to manage its 30 Day LIBOR interest exposure related to its variable rate debt. Neither of these instruments contained financing elements. The contractual terms of the University’s derivative instruments have not been structured such that net payments made by one party in the earlier periods are to be subsequently returned by the counterparty in later periods of the derivative’s term. Neither of the University’s derivative instruments have been amended or modified since their inception. The fair value of the interest rate corridor instrument as of December 31, 2015 and 2014 was $728 and $1,332, respectively, which is included in other assets. The interest rate swap was terminated upon its expiration date in April 2014. The fair values of each derivative instrument were determined using a hypothetical derivative transaction and Level 2 of the hierarchy of valuation inputs. These derivative instruments were originally designated as cash flow hedges of variable rate debt obligations. The adjustments of $602, $486, and $947 for the years ended December 31, 2015, 2014 and 2013, respectively, for the effective portion of the gain/loss on the derivatives is included as a component of other comprehensive income, net of taxes. The interest rate corridor instrument reduces variable interest rate risk starting March 1, 2013 through December 20, 2019 with a notional amount of $80,000 as of December 31, 2015. The corridor instrument’s terms permit the University to hedge its interest rate risk at several thresholds; the University pays variable interest monthly based on the 30-day LIBOR rates until that index reaches 1.5%. If 30-day LIBOR is equal to 1.5% through 3.0%, the University pays 1.5%. If 30-day LIBOR exceeds 3.0%, the University pays actual 30-day LIBOR less 1.5%. Therefore, the University has hedged its exposure to future variable rate cash flows through December 20, 2019. As of December 31, 2015 no derivative ineffectiveness was identified. Any ineffectiveness in the University’s derivative instruments designated as hedges would be reported in interest expense in the income statement. As of December 31, 2015, $2 of credit default risk interest expense was recorded in interest expense in the income statement. At December 31, 2015, the University does not expect to reclassify any gains or losses on derivative instruments from accumulated other comprehensive income (loss) into earnings during the next 12 months. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 10. Earnings Per Share Basic earnings per common share is calculated by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per common share reflects the assumed conversion of all potentially dilutive securities, consisting of stock options, for which the estimated fair value exceeds the exercise price, less shares which could have been purchased with the related proceeds, unless anti-dilutive. For employee equity awards, repurchased shares are also included for any unearned compensation adjusted for tax. The table below reflects the calculation of the weighted average number of common shares outstanding, on an as if converted basis, used in computing basic and diluted earnings per common share. Year Ended December 31, 2015 2014 2013 Denominator: Basic common shares outstanding 45,975 45,538 44,731 Effect of dilutive stock options and restricted stock 1,306 1,468 1,400 Diluted common shares outstanding 47,281 47,006 46,131 Diluted weighted average shares outstanding exclude the incremental effect of shares that would be issued upon the assumed exercise of stock options and vesting of restricted stock. For each of the years ended December 31, 2015, 2014 and 2013, approximately 385, 174 and 134, respectively, of the University’s stock options and restricted stock awards outstanding were excluded from the calculation of diluted earnings per share as their inclusion would have been anti-dilutive. These options and restricted stock awards could be dilutive in the future. |
Equity Transactions
Equity Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Equity Transactions | 11. Equity Transactions Preferred Stock As of December 31, 2015 and 2014, the University had 10,000 shares of authorized but unissued and undesignated preferred stock. The University’s charter provides that the board of directors has authority to issue preferred stock, with voting powers, designations, preferences, and special rights, qualifications, limitation, or restrictions as permitted by law as determined by the board of directors, without stockholder approval. The board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of the common stock. Treasury Stock The Board of Directors has authorized the University to repurchase up to $75,000 in aggregate of common stock, from time to time, depending on market conditions and other considerations. The expiration date on the repurchase authorization has been extended to September 30, 2016. Repurchases occur at the University’s discretion. Repurchases may be made in the open market or in privately negotiated transactions, pursuant to the applicable Securities and Exchange Commission rules. The amount and timing of future share repurchases, if any, will be made as market and business conditions warrant. Since its approval of the share repurchase plan, the University has purchased 3,076 shares of common stock at an aggregate cost of $60,414, which includes 288 shares of common stock at an aggregate cost of $11,279 during the year ended December 31, 2015, which are recorded at cost in the accompanying December 31, 2015 consolidated balance sheet and statement of stockholders’ equity. At December 31, 2015, there remained $14,586 available under its current share repurchase authorization. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 12. Income Taxes The University has deferred tax assets and liabilities that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets are subject to periodic recoverability assessments. Realization of the deferred tax assets, net of deferred tax liabilities is principally dependent upon achievement of projected future taxable income. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more-likely-than-not that the University will realize the benefits of these deductible differences. The University has no valuation allowance at December 31, 2015 and 2014. The components of income tax expense (benefit) are as follows: Year Ended December 31, 2015 2014 2013 Current: Federal $ 63,481 $ 50,980 $ 40,949 State 5,222 6,216 5,540 68,703 57,196 46,489 Deferred: Federal 4,473 2,734 4,209 State 557 418 898 5,030 3,152 5,107 Tax expense recorded as an increase of paid-in capital 3,863 7,884 4,588 $ 77,596 $ 68,232 $ 56,184 A reconciliation of income tax computed at the U.S. statutory rate to the effective income tax rate is as follows: Year Ended December 31, 2015 2014 2013 Statutory U.S. federal income tax rate 35.0 % 35.0 % 35.0 % State income taxes, net of federal tax benefit 3.3 4.3 5.5 State tax credits, net of federal effect (1.2 ) (1.5 ) (1.8 ) Nondeductible expenses 0.1 0.1 0.3 Other (0.1 ) 0.1 (0.2 ) Effective income tax rate 37.1 % 38.0 % 38.8 % Significant components of the University’s deferred income tax assets and liabilities are as follows: As of December 31, 2015 2014 Deferred tax assets: Allowance for doubtful accounts $ 2,051 $ 2,654 Share-based compensation 9,330 8,487 Deferred tuition revenue 1,336 610 Deferred scholarship 1,091 959 Deferred rent 1,078 1,290 Intangibles 1,778 3,312 Other 3,482 2,871 Deferred tax assets 20,146 20,183 Deferred tax liability: Property and equipment (33,710 ) (28,203 ) Other (1,291 ) (1,805 ) Deferred tax liability (35,001 ) (30,008 ) Net deferred tax liability $ (14,855 ) $ (9,825 ) The deferred tax amounts above have been classified in the University’s balance sheets as follows: As of December 31, 2015 2014 Deferred income taxes, current $ 6,448 $ 6,149 Deferred income taxes, non-current (21,303 ) (15,974 ) Net deferred tax liability $ (14,855 ) $ (9,825 ) The University recognizes the impact of a tax position in its financial statements if that position is more-likely-than-not to be sustained on audit, based on the technical merits of the position. The University discloses all unrecognized tax benefits, which includes the reserves recorded for uncertain tax positions on filed tax returns and the unrecognized portion of affirmative claims. The University recognizes interest and penalties related to uncertain tax positions in income tax expense. Unrecognized tax benefits as of December 31, 2015 and 2014 were not significant. The University is subject to taxation in the United States, in states with an income tax and in several local jurisdictions. During the second quarter ended June 30, 2014, the Internal Revenue Service (“IRS”) commenced an examination of the University’s 2011 income tax return. The IRS concluded its audit of the University’s 2011 income tax return with no changes to our reported tax or tax liability. Additionally, we are currently under audit by several state taxing authorities. We do not anticipate any material adjustments as a result of these audits. As of December 31, 2015, the earliest tax year still subject to examination for federal and state purposes is 2012 and 2011, respectively. |
Regulatory
Regulatory | 12 Months Ended |
Dec. 31, 2015 | |
Text Block [Abstract] | |
Regulatory | 13. Regulatory The University is subject to extensive regulation by federal and state governmental agencies and accrediting bodies. In particular, the Higher Education Act and the regulations promulgated thereunder by the Department of Education, subject the University to significant regulatory scrutiny on the basis of numerous standards that schools must satisfy in order to participate in the various federal student financial assistance programs under Title IV. To participate in the Title IV programs, an institution must be authorized to offer its programs of instruction by the relevant agency of the state in which it is located, accredited by an accrediting agency recognized by the Department of Education and certified as eligible by the Department of Education. The Department of Education will certify an institution to participate in the Title IV programs only after the institution has demonstrated compliance with the Higher Education Act and the Department of Education’s extensive regulations regarding institutional eligibility. An institution must also demonstrate its compliance to the Department of Education on an ongoing basis. As of December 31, 2015, management believes the University is in compliance with the applicable regulations in all material respects. Because the University operates in a highly regulated industry, it, like other industry participants, may be subject from time to time to investigations, claims of non-compliance, or lawsuits by governmental agencies or third parties, which allege statutory violations, regulatory infractions, or common law causes of action. While there can be no assurance that regulatory agencies or third parties will not undertake investigations or make claims against the University, or that such claims, if made, will not have a material adverse effect on the University’s business, results of operations or financial condition, management believes the University is in compliance with applicable regulations in all material respects. In connection with its administration of the Title IV federal student financial aid programs, the Department of Education periodically conducts program reviews at selected schools that receive Title IV funds. In July 2010, the Department of Education initiated a program review of the University covering the 2008-2009 and 2009-2010 award years. On September 27, 2013, the University and the Department of Education entered into an agreement that fully resolved the findings in the preliminary program review report and closed the program review. In connection with this closure, the University paid a total of $7,387, the majority of which consisted of returns of Title IV funds to the lenders of our students, related to the inadequate procedures related to non-passing grade finding. Although when the University makes a return to Title IV the applicable student is obligated to repay the University for the amounts returned, the University agreed that it would not seek reimbursement from these students. A second program review, focused on the University’s administration of the Title IV programs in which it participates, its administration of the Clery Act and related regulations, and its compliance with the requirements of the Drug-Free Schools and Communities Act for the 2012-2013 and 2013-2014 award years, was initiated in April 2014. The final program review determination letter received in June 2014 sets forth three findings, each of which involved individual student-specific information gathering and/or reporting errors and all of which the University promptly corrected to the Department of Education’s satisfaction. Accordingly, the final program review determination letter concluded that the University had taken all corrective actions necessary to resolve the findings and that the program review had been closed with no further action required. On October 28, 2013, the University received a new program participation agreement with full certification from the Department of Education, which gives the University the ability to participate in the Title IV programs through September 30, 2017. 90/10 Disclosure The University derives a substantial portion of its revenues from student financial aid received by its students under the Title IV programs administered by the Department of Education pursuant to the Higher Education Act. To continue to participate in the student financial aid programs the University must comply with the regulations promulgated under the Higher Education Act. The regulations restrict the proportion of cash receipts for tuition and fees from eligible programs to not more than 90 percent from Title IV programs (the “90/10 revenue test”). If an institution fails to satisfy the test for one year, its participation status becomes provisional for two consecutive fiscal years. If the test is not satisfied for two consecutive years, eligibility to participate in Title IV programs is lost for at least two fiscal years. Using the Department of Education’s cash-basis, regulatory formula under the 90/10 Rule as currently in effect, for its 2015, 2014, and 2013 fiscal years, the University derived 74.8%, 76.5%, and 78.5%, respectively, for its 90/10 revenue from Title IV program funds. |
Share-Based Compensation Plans
Share-Based Compensation Plans | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation Plans | 14. Share-Based Compensation Plans Adoption of Equity Plans On September 27, 2008 the University’s shareholders approved the adoption of the 2008 Equity Incentive Plan (“Incentive Plan”) and the 2008 Employee Stock Purchase (“ESPP”). A total of 4,200 shares of the University’s common stock was originally authorized for issuance under the Incentive Plan. On January 1 of each subsequent year in accordance with the terms of the Incentive Plan, the number of shares authorized for issuance under the Incentive Plan automatically increases by 2.5% of the number of shares of common stock issued and outstanding on the applicable December 31, unless the Compensation Committee of our Board of Directors elects to decline the increase or chooses a lower increase. The Compensation Committee elected to decline the increase that would have gone into effect as of January 1, 2016, leaving the number of shares of common stock authorized for issuance under the Incentive Plan at 12,167. Although the ESPP has not yet been implemented, a total of 1,050 shares of the University’s common stock have been authorized for sale under the ESPP. Incentive Plan Restricted Stock During fiscal year 2015, 2014, and 2013, the University granted 315, 308 and 575 shares of common stock, respectively, with a service vesting condition to certain of its executives, officers, faculty and employees. The restricted shares have voting rights and vest evenly at 20% over each of the next five years. Upon vesting, shares will be held in lieu of taxes equivalent to the minimum statutory tax withholding required to be paid when the restricted stock vests. In 2015, 2014, and 2013, the University granted 9, 9, and 11 shares of common stock, respectively, to certain of the non-employee members of the University’s board of directors. The restricted shares have voting rights and vest within one year of the date of grant. In addition, in 2013 the University granted 8 shares of common stock to a consultant. The restricted shares have voting rights and vest evenly at a rate of 20% per year over each of the next five years. A summary of the activity related to restricted stock granted under the University’s Incentive Plan is as follows: Total Weighted Outstanding as of December 31, 2012 553 $ 17.04 Granted 594 $ 24.44 Vested (119 ) $ 17.13 Forfeited, canceled or expired (45 ) $ 20.57 Outstanding as of December 31, 2013 983 $ 21.34 Granted 317 $ 46.02 Vested (225 ) $ 21.27 Forfeited, canceled or expired (42 ) $ 27.36 Outstanding as of December 31, 2014 1,033 $ 28.75 Granted 324 $ 45.66 Vested (274 ) $ 27.18 Forfeited, canceled or expired (27 ) $ 30.27 Outstanding as of December 31, 2015 1,056 $ 34.30 As of December 31, 2015, there was approximately $27,778 of total unrecognized share-based compensation cost, net of estimated forfeitures, related to unvested restricted stock awards. These costs are expected to be recognized over a weighted average period of 2.10 years. Stock Options No options were granted in 2015 and 2014. During 2013, the University granted time vested options to purchase shares of common stock with an exercise price equal to the fair market value on the date of grant to an employee. The time vested options vest ratably over a period of four years and expire ten years from the date of grant. Prior to 2012, the University granted time vested options to purchase shares of common stock with an exercise price equal to the fair market value on the date of grant to employees. These time vested options vest ratably over a period of five years and expire ten years from the date of grant. A summary of the activity related to stock options granted under the University’s Incentive Plan is as follows: Summary of Stock Options Outstanding Total Weighted Weighted Aggregate Outstanding as of December 31, 2012 4,229 $ 14.57 Granted 25 $ 24.97 Exercised (1,160 ) $ 14.03 Forfeited, canceled or expired (71 ) $ 17.22 Outstanding as of December 31, 2013 3,023 $ 14.80 Granted — $ — Exercised (539 ) $ 14.51 Forfeited, canceled or expired (32 ) $ 16.93 Outstanding as of December 31, 2014 2,452 $ 14.83 Granted — $ — Exercised (218 ) $ 15.97 Forfeited, canceled or expired (14 ) $ 16.08 Outstanding as of December 31, 2015 2,220 $ 14.71 3.83 $ 56,398 Exercisable as of December 31, 2015 2,013 $ 14.59 3.68 $ 51,392 Available for issuance as of December 31, 2015 1,893 (1) Aggregate intrinsic value represents the value of the University’s closing stock price on December 31, 2015 ($40.12) in excess of the exercise price multiplied by the number of options outstanding or exercisable. As of December 31, 2015, there was approximately $323 of total unrecognized share-based compensation cost, net of estimated forfeitures, related to unvested stock options. These costs are expected to be recognized over a weighted average period of 0.35 years. The following table summarizes information related to stock options exercised for years ended December 31, 2015, 2014 and 2013: 2015 2014 2013 Amounts related to options exercised: Intrinsic value realized by optionee $ 18,069 $ 27,499 $ 20,364 Actual tax benefit realized by the University for tax deductions $ 7,228 $ 11,000 $ 8,145 Cash received from stock option exercises during fiscal year 2015, 2014 and 2013 totaled approximately $3,489, $7,825 and $16,278, respectively. Share-based Compensation Share-based Compensation Expense Assumptions – Restricted Stock Awards The University measures and recognizes compensation expense for share-based payment awards made to employees, consultants and directors. The University calculates the fair value of share-based awards on the date of grant for employees and directors. The University calculates the fair value of share-based awards to consultants on the date of vesting. Stock-based compensation expense related to restricted stock grants is expensed over the vesting period using the straight-line method for University employees, the University’s board of directors and the consultant, net of estimated forfeitures. The restricted shares have voting rights. Share-based Compensation Expense Assumptions – Stock Options The University granted stock options in 2013. No stock options were granted in 2015 or 2014. Fair Value. Year Ended December 31, 2013 Weighted average fair value $ 8.20 Expected volatility 39.86 % Expected life (years) 4.25 Risk-free interest rate 0.65 % Dividend yield 0 % Expected Volatility. Expected Life (years). Risk-Free Interest Rate. Dividend Yield. Forfeitures. Expected Vesting Period. The table below outlines share-based compensation expense for the fiscal years ended December 31, 2015, 2014 and 2013 related to restricted stock and stock options granted: 2015 2014 2013 Instructional costs and services $ 6,779 $ 5,921 $ 5,246 Admissions advisory and related 192 166 134 Marketing and promotional 130 220 229 General and administrative 4,156 3,638 4,327 Share-based compensation expense included in operating expenses 11,257 9,945 9,936 Tax effect of share-based compensation (4,503 ) (3,978 ) (3,974 ) Share-based compensation expense, net of tax $ 6,754 $ 5,967 $ 5,962 401(k) Plan The University has established a 401(k) Defined Contribution Benefit Plan (the “Plan”). The Plan provides eligible employees, upon date of hire, with an opportunity to make tax-deferred contributions into a long-term investment and savings program. All employees over the age of 21 are eligible to participate in the plan. The Plan allows eligible employees to contribute to the Plan subject to Internal Revenue Code restrictions and the Plan allows the University to make discretionary matching contributions. The University plans to make a matching contribution to the Plan of approximately $1,800 for the year ended December 31, 2015. The University made discretionary matching contributions to the Plan of $1,508 and $1,298 for the years ended December 31, 2014 and 2013, respectively. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 15. Related Party Transactions Related party transactions include transactions between the University and certain of its affiliates. The following transactions were in the normal course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed to by the parties. As of and for the years ended December 31, 2015, 2014, and 2013, related party transactions consisted of the following: Affiliates Mind Streams, LLC (“Mind Streams”) — — LOPE Kingdom Fund (“LKF”) — |
Quarterly Results of Operations
Quarterly Results of Operations (Unaudited) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Results of Operations (Unaudited) | 16. Quarterly Results of Operations (Unaudited) The following table summarizes the unaudited quarterly results of operations for 2015 and 2014 and should be read in conjunction with other information included in the accompanying consolidated financial statements. 2015 First Quarter Second Quarter Third Quarter Fourth Quarter Net revenue $ 194,127 $ 174,726 $ 193,393 $ 215,954 Costs and expenses: Instructional costs and services 78,687 75,357 83,180 92,427 Admissions advisory and related 28,333 27,372 27,506 29,361 Advertising 20,031 18,419 19,360 18,419 Marketing and promotional 1,694 1,788 1,827 1,978 General and administrative 9,396 9,534 12,536 10,634 Total costs and expenses 138,141 132,470 144,409 152,819 Operating income 55,986 42,256 48,984 63,135 Interest expense (375 ) (146 ) (313 ) (414 ) Interest income and other 257 127 201 (691 ) Income before income taxes 55,868 42,237 48,872 62,030 Income tax expense 21,689 16,461 15,530 23,916 Net income $ 34,179 $ 25,776 $ 33,342 $ 38,114 Earnings per share: Basic income per share(1) $ 0.75 $ 0.56 $ 0.72 $ 0.83 Diluted income per share(1) $ 0.72 $ 0.55 $ 0.70 $ 0.81 Basic weighted average shares outstanding 45,789 46,012 46,063 46,035 Diluted weighted average shares outstanding 47,201 47,263 47,320 47,337 (1) The sum of quarterly income per share may not equal annual income per share due to rounding. 2014 First Quarter Second Quarter Third Quarter Fourth Quarter Net revenue $ 167,432 $ 158,594 $ 175,056 $ 189,973 Costs and expenses: Instructional costs and services 70,678 67,847 71,714 78,552 Admissions advisory and related 26,261 26,208 27,324 28,774 Advertising 16,712 15,751 16,491 16,854 Marketing and promotional 1,791 1,907 1,931 1,810 General and administrative 8,554 8,994 11,640 10,447 Total costs and expenses 123,996 120,707 129,100 136,437 Operating income 43,436 37,887 45,956 53,536 Interest expense (523 ) (356 ) (576 ) (346 ) Interest income and other 137 197 43 307 Income before income taxes 43,050 37,728 45,423 53,497 Income tax expense 16,762 14,659 16,407 20,404 Net income $ 26,288 $ 23,069 $ 29,016 $ 33,093 Earnings per share: Basic income per share(1) $ 0.58 $ 0.51 $ 0.64 $ 0.72 Diluted income per share(1) $ 0.56 $ 0.49 $ 0.62 $ 0.70 Basic weighted average shares outstanding 45,205 45,598 45,651 45,652 Diluted weighted average shares outstanding 46,841 46,990 47,051 47,097 (1) The sum of quarterly income per share may not equal annual income per share due to rounding. |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Grand Canyon Education, Inc. and its wholly owned subsidiaries. Intercompany transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The University invests a portion of its cash in excess of current operating requirements in short term certificates of deposit and money market instruments. The University considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. |
Restricted Cash, Cash Equivalents and Investments | Restricted Cash, Cash Equivalents and Investments A significant portion of the University’s revenue is received from students who participate in government financial aid assistance programs. Restricted cash, cash equivalents and investments primarily represent amounts received from the federal and state governments under various student aid grant and loan programs, such as Title IV. The University receives these funds subsequent to the completion of the authorization and disbursement process and holds them for the benefit of the student. The U.S. Department of Education (“Department of Education”) requires Title IV funds collected in advance of student billings to be restricted until the course begins. The University records all of these amounts as a current asset in restricted cash, cash equivalents and investments. The majority of these funds remain as restricted for an average of 60 to 90 days from the date of receipt. |
Investments | Investments The University considers its investments in municipal bond, mutual funds and municipal securities as available-for-sale securities. Available-for-sale securities are carried at fair value, determined using Level 1 and Level 2 of the hierarchy of valuation inputs, with the use of quoted market prices and inputs other than quoted prices that are observable for the assets, with unrealized gains and losses, net of tax, reported as a separate component of other comprehensive income. Unrealized losses considered to be other-than-temporary are recognized currently in earnings. Amortization of premiums, accretion of discounts, interest and dividend income and realized gains and losses are included in interest and other income. |
Note Receivable | Note Receivable The University purchased a note receivable from a financial institution at fair market value in the fourth quarter of 2012 for $27,000. The note bore interest at 11%, which represented the 6% rate of the loan plus the 5% default rate. The principal and most of the interest due on the note was paid in March 2013, resulting in the full return on investment of the note receivable and an additional gain in interest income and other income of $2,187 on the loan. However, the borrower has disputed certain amounts remaining due under the note agreement, including default interest in the amount of $432, a late payment liquidated damage in the amount of $1,392, and a statutory trustee’s fee in the amount of $139. The funds disputed by the borrower, plus interest thereon, were deposited into an escrow account with the clerk of the Maricopa County Superior Court pending resolution of the disputed issues. In the third quarter of 2013, the court ruled in favor of the University with respect to the late payment liquidated damage and default interest accrued thereon. Accordingly, the University recorded interest and other income of $1,459 for the year ended December 31, 2013. The court ordered the late payment liquidated damage funds and interest thereon to be released to the University on October 28, 2013 unless prior to said date, borrower filed with the court a formal notice of appeal and simultaneously deposited an additional $344 into escrow with the clerk of the court representing continued interest accruing on the late payment liquidated damage pending an appeal. On October 28, 2013 borrower deposited with the clerk of the court the required cash bond in the amount of $344 and filed its formal notice of appeal. On January 29, 2015, the court ruled in favor of the University with respect to the remaining default interest and interest thereon. In January 2016, the Arizona Court of Appeals issued a ruling reversing the Maricopa County Superior Court’s award of the $1,392 late payment liquidated damage and the Maricopa County Superior Court released to us the remaining default interest and other fees due to the University totaling $501. Although, the University intends to appeal the late payment penalty decision to the Arizona Supreme Court, the University reversed other income of $958 for the year ended December 31, 2015 due to the uncertain outcome. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method. Normal repairs and maintenance are expensed as incurred. Expenditures that materially extend the useful life of an asset are capitalized. Construction in progress represents items not yet placed in service and are not depreciated. Internally developed software represents qualifying salary and consulting costs for time spent on developing internal use software and is included in construction in progress until its completion. The University capitalizes interest using its interest rates on the specific borrowings used to finance the improvements, which approximated 1.9% in 2015, 2014, and 2013. Interest cost capitalized and incurred in the years ended December 31, 2015, 2014, and 2013 are as follows: Year Ended December 31, 2015 2014 2013 Interest incurred $ 1,962 $ 2,180 $ 2,626 Interest capitalized 714 379 382 Interest expense $ 1,248 $ 1,801 $ 2,244 Depreciation is provided using the straight-line method over the estimated useful lives of the assets. Furniture and fixtures, computer equipment, and vehicles generally have estimated useful lives of ten, four, and five years, respectively. Leasehold improvements are depreciated over the shorter of their lease term or their useful life. Land improvements and buildings are depreciated over lives ranging from 10 to 40 years. |
Leases | Leases The University enters into various lease agreements in conducting its business. At the inception of each lease, the University evaluates the lease agreement to determine whether the lease is an operating or capital lease. In addition, many of the lease agreements contain renewal options and tenant improvement allowances. When such items are included in a lease agreement, the University records a deferred liability on the balance sheet and records the rent expense evenly over the term of the lease. Leasehold improvements are included as investing activities and are included as additions to property, plant and equipment. For leases with renewal options, the University records rent expense and amortizes the leasehold improvement on a straight-line basis over the initial non-cancelable lease term unless it intends to exercise the renewal option. Once it extends the renewal option, the University amortizes any tenant improvement allowances over the extended lease period as well as the leasehold improvement asset (unless the extended lease term is longer than the economic life of the asset). The University expenses any additional payments under its operating leases for taxes, insurance or other operating expenses as incurred. |
Other Assets | Other Assets During 2010, the University entered into an agreement with an affiliated entity to develop a new learning management system for use by the University. Through this agreement, the University prepaid perpetual license fees, acquired source code rights for the software developed, and prepaid maintenance and service fees for at least the first seven years of use for an aggregate amount of $4,900, which was paid in full as of December 31, 2011. The University commenced utilization of this software in October 2011. Included in current other assets is the amount that will be amortized in the next twelve month cycle for maintenance and service fees and included in property and equipment is the amount that will be amortized over fifteen years for the perpetual licenses. |
Long-Lived Assets | Long-Lived Assets The University evaluates the recoverability of its long-lived assets for impairment, other than goodwill, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. |
Prepaid Royalties | Prepaid Royalties In connection with the February 2004 acquisition of the assets of Grand Canyon University from a non-profit foundation, the University entered into a royalty fee arrangement with the former owner in which the University agreed to pay a stated percentage of cash revenue generated by its online programs. The University settled all future royalty obligations with the former owner in April 2008 when it finalized an agreement to pay $22,500 to the former owner. Of this payment $5,920 was considered as settlement of the future royalty payment obligation and is included in the accompanying balance sheet as a component of “Prepaid Royalty” and is being amortized over a period of 20 years. In addition, in June 2004, the University entered into a license agreement relating to the University’s use of the Ken Blanchard name for its College of Business. Under the terms of that agreement the University agreed to pay Blanchard a royalty generated on net tuition from certain programs in the University’s College of Business and to issue Blanchard shares of common stock with the actual number of shares issued to be contingent upon the University’s achievement of stated enrollment levels in its College of Business during the term of the agreement. The fair value of the shares issued to Blanchard as part of the license agreement of $3,394 was determined at the date it became probable that shares would then be earned and then adjusted until the date the shares were vested. During 2014, the University reached an agreement to cease the use of the Ken Blanchard name for its College of Business when it renamed the school the Colangelo School of Business; accordingly the remaining balance of the prepaid royalty was expensed during the year ended December 31, 2014. |
Goodwill | Goodwill Goodwill represents the excess of the cost over the fair market value of net assets acquired, including identified intangible assets. Goodwill is tested annually or more frequently if circumstances indicate potential impairment. The Financial Accounting Standards Board (“FASB”) has issued guidance that permits an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. The University performed its annual goodwill impairment test, by performing a qualitative assessment. Following this assessment, the University determined that it is more likely than not that its fair value exceeds its carrying amount. |
Share-Based Compensation | Share-Based Compensation The University measures and recognizes compensation expense for share-based payment awards made to employees, consultants and directors, including employee stock options and restricted stock awards. The University calculates the fair value of share-based awards on the date of grant. The University calculates the fair value of share-based awards to consultants on the date of vesting. The University amortizes the share-based compensation expense over the period that the awards are expected to vest, net of estimated forfeiture rates. If the actual forfeitures differ from management estimates, adjustments to compensation expense are recorded. The University reports cash flows resulting from tax deductions in excess of the compensation cost realized for those options (excess tax benefits) as financing cash flows. The University reports cash flows resulting from tax deductions that are less than the compensation cost realized for those option (tax shortfalls) as a noncash transaction in the consolidated statement of cash flows. For stock options, the University uses the Black-Scholes-Merton option pricing model to estimate fair value. The option pricing model requires the University to estimate certain key assumptions such as expected life, volatility, risk free interest rates, and dividend yield to determine the fair value of share-based awards, based on historical information and management judgment. The assumptions used in calculating the fair value of stock-based awards represent the University’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. The fair value of the University’s restricted stock awards is based on the market price of its common stock on the date of grant. |
Derivatives and Hedging | Derivatives and Hedging Derivative financial instruments are recorded on the balance sheet as assets or liabilities and re-measured at fair value at each reporting date. For derivatives designated as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period or period during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. Derivative financial instruments enable the University to manage its exposure to interest rate risk. The University does not engage in any derivative instrument trading activity. Credit risk associated with the University’s derivatives is limited to the risk that a derivative counterparty will not perform in accordance with the terms of the contract. Exposure to counterparty credit risk is considered low because these agreements have been entered into with institutions with Aa or higher credit ratings, and they are expected to perform fully under the terms of the agreements. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying value of cash and cash equivalents, accounts receivable, note receivable, accounts payable, accrued compensation and benefits and accrued liabilities approximate their fair value based on the liquidity or the short-term maturities of these instruments. The carrying value of notes payable approximate fair value based on its variable rate index. The carrying value of other notes payable and capital lease obligations approximate fair value based upon market interest rates available to the University for debt of similar risk and maturities. Derivative financial instruments are carried at fair value, determined using Level 2 of the hierarchy of valuation inputs as defined in the FASB Accounting Standards Codification (“Codification”), with the use of inputs other than quoted prices that are observable for the asset or liability. See Note 9, Derivative Instruments. The fair value of investments, primarily municipal securities, including municipal bond portfolios and a mutual fund holding municipal securities, were determined using Level 1 and Level 2 of the hierarchy of valuation inputs, with the use of quoted market prices and inputs other than quoted prices that are observable for the assets. The unit of account used for valuation is the individual underlying security. The municipal securities are comprised of city and county bonds related to schools, water and sewer, utilities, transportation, healthcare and housing. Because these securities are held by the University as investments, assessment of non-performance risk is not applicable as such considerations are only applicable in evaluating the fair value measurements for liabilities. The fair value of the prepaid royalty asset relating to the settlement of future royalty payment obligations to the former owner was determined using an income approach, based on management’s forecasts of revenue to be generated through its online education program using Level 3 of the hierarchy of valuation inputs. The rate utilized to discount net cash flows to their present values was 35%. This discount rate was determined after consideration of the University’s weighted average cost of capital giving effect to estimates of the University’s risk-free rate, beta coefficient, equity risk premium, small size risk premium, and company-specific risk premium. |
Income Taxes | Income Taxes The University accounts for income taxes payable or refundable for the current year and deferred tax assets and liabilities for future tax consequences of events that have been recognized in the University’s consolidated financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the temporary differences are expected to be realized. The University applies a more-likely-than-not threshold for financial statement recognition and measurement of an uncertain tax position taken or expected to be taken in a tax return. The University recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2015 and 2014, the University has reserved approximately $1,706 and $0, respectively, for uncertain tax positions, including interest and penalties, which is classified within accrued liabilities on the accompanying consolidated balance sheet. The University has deferred tax assets, which are subject to periodic recoverability assessments. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized. Realization of the deferred tax assets is principally dependent upon achievement of projected future taxable income. |
Commitments and Contingencies | Commitments and Contingencies The University accrues for a contingent obligation when it is probable that a liability has been incurred and the amount is reasonably estimable. When the University becomes aware of a claim or potential claim, the likelihood of any loss exposure is assessed. If it is probable that a loss will result and the amount of the loss is estimable, the University records a liability for the estimated loss. If the loss is not probable or the amount of the potential loss is not estimable, the University will disclose the claim if the likelihood of a potential loss is reasonably possible and the amount of the potential loss could be material. Estimates that are particularly sensitive to future changes include tax, legal, and other regulatory matters, which are subject to change as events evolve, and as additional information becomes available during the administrative and litigation process. The University expenses legal fees as incurred. |
Revenue Recognition | Revenue Recognition Net revenues consist primarily of tuition and fees derived from courses taught by the University online, at its over 200+ acre campus in Phoenix, Arizona, and at facilities it leases or those of employers, as well as from related educational resources that the University provides to its students, such as access to online materials. Tuition revenue and most fees from related educational resources are recognized pro-rata over the applicable period of instruction, net of scholarships provided by the University. For the years ended December 31, 2015, 2014 and 2013, the University’s revenue was reduced by approximately $163,893, $139,962 and $111,789, respectively, as a result of scholarships that the University offered to students. The University maintains an institutional tuition refund policy, which provides for all or a portion of tuition to be refunded if a student withdraws during stated refund periods. Certain states in which students reside impose separate, mandatory refund policies, which override the University’s policy to the extent in conflict. If a student withdraws at a time when only a portion, or none of the tuition is refundable, then in accordance with its revenue recognition policy, the University continues to recognize the tuition that was not refunded pro-rata over the applicable period of instruction. However, for students that have taken out financial aid to pay their tuition and for which a return to Title IV is required as a result of his or her withdrawal, the University recognizes revenue after a student withdraws only at the time of cash collection. Sales tax collected from students is excluded from net revenues. Collected but unremitted sales tax is included as an accrued liability in our consolidated balance sheet. The University also charges online students an upfront learning management fee, which is deferred and recognized over the average expected term of a student. Costs that are direct and incremental to new online students are also deferred and recognized ratably over the average expected term of a student. Deferred revenue and student deposits in any period represent the excess of tuition, fees, and other student payments received as compared to amounts recognized as revenue on the income statement and are reflected as current liabilities in the accompanying consolidated balance sheets. The University’s educational programs have starting and ending dates that differ from its fiscal quarters. Therefore, at the end of each fiscal quarter, a portion of revenue from these programs is not yet earned. Other revenues may be recognized as sales occur or services are performed. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The University records an allowance for doubtful accounts for estimated losses resulting from the inability, failure or refusal of its students to make required payments, which includes the recovery of financial aid funds advanced to a student for amounts in excess of the student’s cost of tuition and related fees that we may have to return under Title IV after a student drops. The University determines the adequacy of its allowance for doubtful accounts based on an analysis of its historical bad debt experience, current economic trends, and the aging of the accounts receivable and student status. The University applies reserves to its receivables based upon an estimate of the risk presented by the age of the receivables and student status. The University writes off accounts receivable balances of active students at the earlier of the time the balances were deemed uncollectible, or one year after the revenue is generated. The University accelerates the write off of inactive student accounts such that the accounts are written off by day 150. The University continues to reflect accounts receivable with an offsetting allowance as long as management believes there is a reasonable possibility of collection. Bad debt expense is recorded as an instructional costs and services expense in the consolidated income statement. |
Instructional Costs and Services | Instructional Costs and Services Instructional costs and services consist primarily of costs related to the administration and delivery of the University’s educational programs. This expense category includes salaries, benefits and share-based compensation for full-time and adjunct faculty and administrative personnel, information technology costs, bad debt expense, curriculum and new program development costs (which are expensed as incurred) and costs associated with other support groups that provide services directly to the students. This category also includes an allocation of depreciation, amortization, rent, and occupancy costs attributable to the provision of educational services, primarily at the University’s Phoenix, Arizona campus. |
Admissions Advisory and Related | Admissions Advisory and Related Admissions advisory and related expenses include salaries and benefits for admissions advisory personnel, and revenue share expense as well as an allocation of depreciation, amortization, rent and occupancy costs attributable to the admissions advisory personnel. |
Advertising | Advertising Advertising expenses include brand advertising, marketing leads and other branding activities. Advertising costs are expensed as incurred. |
Marketing and Promotional | Marketing and Promotional Marketing and promotional expenses include salaries, benefits and share-based compensation for marketing personnel, and other promotional expenses. This category also includes an allocation of depreciation, amortization, rent, and occupancy costs attributable to marketing and promotional activities. Marketing and promotional costs are expensed as incurred. |
General and Administrative | General and Administrative General and administrative expenses include salaries, and benefits and share-based compensation of employees engaged in corporate management, finance, human resources, compliance, and other corporate functions. General and administrative expenses also include an allocation of depreciation, amortization, rent, and occupancy costs attributable to the departments providing general and administrative functions. |
Related party expenses | Related party expenses The University is a party to a revenue sharing arrangement (the Collaboration Agreement) with Mind Streams L.L.C. (Mind Streams), a related party, under which the University, in accordance with applicable Department of Education guidance, pays a percentage of net revenue that it receives from applicants recruited by Mind Streams that matriculate at the University. The University terminated the agreement in 2014 and the University is not accepting any new applicants recruited by Mind Streams. The expenses incurred in conjunction with the Collaboration Agreement are included in admissions advisory and related expenses on our Consolidated Income Statement. |
Insurance/Self-Insurance | Insurance/Self-Insurance The University uses a combination of insurance and self-insurance for a number of risks, including claims related to employee health care, workers’ compensation, general liability, and business interruption. Liabilities associated with these risks are estimated based on, among other things, historical claims experience, severity factors, and other actuarial assumptions. The University’s loss exposure related to self-insurance is limited by stop loss coverage on a per occurrence and aggregate basis. Expected loss accruals are based on estimates, and while the University believes the amounts accrued are adequate, the ultimate loss may differ from the amounts provided. |
Concentration of Credit Risk | Concentration of Credit Risk The University believes the credit risk related to cash equivalents and investments is limited due to its adherence to an investment policy that required investments to have a minimum BB rating, depending on the type of security, by one major rating agency at the time of purchase. All of the University’s cash equivalents and investments as of December 31, 2015 and 2014 consist of investments rated BB or higher by at least one rating agency. Additionally, the University utilizes more than one financial institution to conduct initial and ongoing credit analysis on its investment portfolio to monitor and lower the potential impact of market risk associated with its cash equivalents and investment portfolio. A majority of the University’s revenues are derived from tuition financed under the Title IV programs of the Higher Education Act of 1965, as amended (the “Higher Education Act”). The financial aid and assistance programs are subject to political and budgetary considerations and are subject to extensive and complex regulations. The University’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 University. Students obtain access to federal student financial aid through a Department of Education prescribed application and eligibility certification process. Student financial aid funds are generally made available to students at prescribed intervals throughout their predetermined 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. |
Segment Information | Segment Information The University operates as a single educational delivery operation using a core infrastructure that serves the curriculum and educational delivery needs of both its ground and online students regardless of geography. The University’s Chief Executive Officer manages the University’s operations as a whole and no expense or operating income information is generated or evaluated on any component level. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued “ Revenue from Contracts with Customers In April 2015, the FASB issued, “ Simplifying the Presentation of Debt Issuance Costs In April 2015, the FASB issued, “ Intangibles-Goodwill and Other-Internal-Use Software, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement In November 2015, the FASB issued, “ Income Taxes: Balance Sheet Classification of Deferred Taxes In January 2016, the FASB issued “ Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities The University has determined that no other recent accounting pronouncements apply to its operations or would otherwise have a material impact on its consolidated financial statements. |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Interest Cost Capitalized and Incurred | Interest cost capitalized and incurred in the years ended December 31, 2015, 2014, and 2013 are as follows: Year Ended December 31, 2015 2014 2013 Interest incurred $ 1,962 $ 2,180 $ 2,626 Interest capitalized 714 379 382 Interest expense $ 1,248 $ 1,801 $ 2,244 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Investments, Debt and Equity Securities [Abstract] | |
Summary of Investments Including Restricted Investments | The following is a summary of investments as of December 31, 2015 and 2014, which includes $67,840 of restricted investments as of December 31, 2014. In 2014, the University recorded a non-cash transaction to reflect the restriction of $67,840 of investments. The University considered all investments as available for sale. As of December 31, 2015 Adjusted Cost Gross Unrealized Gains Gross Unrealized (Losses) Estimated Fair Value Municipal securities $ 83,507 $ 26 $ (169 ) $ 83,364 Municipal bond mutual fund 55,720 — (115 ) 55,605 Total restricted and unrestricted investments $ 139,227 $ 26 $ (284 ) $ 138,969 As of December 31, 2014 Adjusted Cost Gross Unrealized Gains Gross Unrealized (Losses) Estimated Fair Value Municipal securities $ 83,364 $ 51 $ (177 ) $ 83,238 Municipal bond mutual fund 85,386 — — 85,386 Total restricted and unrestricted investments $ 168,750 $ 51 $ (177 ) $ 168,624 |
Valuation and Qualifying Acco29
Valuation and Qualifying Accounts (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Valuation and Qualifying Accounts [Abstract] | |
Schedule of Valuation and Qualifying Accounts | Balance at Beginning of Year Charged to Expense Deductions (1) Balance at End of Year Allowance for doubtful accounts receivable: Year ended December 31, 2015 $ 6,472 16,620 (17,955 ) $ 5,137 Year ended December 31, 2014 $ 9,678 15,045 (18,251 ) $ 6,472 Year ended December 31, 2013 $ 8,657 19,897 (18,876 ) $ 9,678 (1) Deductions represent accounts written off, net of recoveries. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property and Equipment | Property and equipment consist of the following: As of December 31, 2015 2014 Land $ 103,280 $ 76,537 Land improvements 13,389 8,800 Buildings 392,754 298,124 Building and leasehold improvements 72,494 45,855 Equipment under capital leases 6,467 5,310 Computer equipment 91,225 75,990 Furniture, fixtures and equipment 51,352 38,162 Internally developed software 25,996 20,813 Other 1,099 1,099 Construction in progress 54,506 20,693 812,562 591,383 Less accumulated depreciation and amortization (145,079 ) (113,213 ) Property and equipment, net $ 667,483 $ 478,170 |
Notes Payable and Other Noncu31
Notes Payable and Other Noncurrent Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Payables and Accruals [Abstract] | |
Notes Payable | As of December 31, 2015, the University is in compliance with its debt covenants. No amounts were drawn on the revolver as of December 31, 2015. As of December 31, 2015 2014 Notes Payable Note payable, monthly payment of $556; interest at 30 day LIBOR plus 1.75% (1.99% at December 31, 2015) through December 31, 2019 $ 79,525 $ 86,049 Annuities; quarterly payments of $34; extending through 2019; interest at 10% 352 444 79,877 86,493 Less: Current portion 6,625 6,616 $ 73,252 $ 79,877 |
Payments Due under Notes Payable | Payments due under the notes payable obligations are as follows as of December 31, 2015: 2016 $ 6,625 2017 6,636 2018 6,691 2019 59,925 $ 79,877 |
Capital Lease Obligations (Tabl
Capital Lease Obligations (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Leases [Abstract] | |
Components of Capital Lease Obligations | Capital lease obligations consist of the following: As of 2015 2014 Capital Lease Obligations Capital leases for equipment, monthly payments totaling $33; interest rate at 2.2%, through 2019 $ 1,485 $ 497 Less: Current portion of capital lease obligations 697 91 $ 788 $ 406 |
Payments Due under Future Minimum Lease Payments under Capital Lease Obligations | Payments due under future minimum lease payments under the capital lease obligations are as follows as of December 31, 2015: 2016 $ 700 2017 290 2018 290 2019 208 1,488 Less: Portion representing interest 3 Present value of minimum lease payments $ 1,485 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future Minimum Lease Payments under Operating Leases | Future minimum lease payments under operating leases due each year are as follows at December 31, 2015: 2016 $ 5,683 2017 3,935 2018 3,432 2019 3,022 2020 3,065 Thereafter 1,804 Total minimum payments $ 20,941 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |
Summary of Weighted Average Number of Common Shares Outstanding | The table below reflects the calculation of the weighted average number of common shares outstanding, on an as if converted basis, used in computing basic and diluted earnings per common share. Year Ended December 31, 2015 2014 2013 Denominator: Basic common shares outstanding 45,975 45,538 44,731 Effect of dilutive stock options and restricted stock 1,306 1,468 1,400 Diluted common shares outstanding 47,281 47,006 46,131 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Components of Income Tax Expense (Benefit) | The components of income tax expense (benefit) are as follows: Year Ended December 31, 2015 2014 2013 Current: Federal $ 63,481 $ 50,980 $ 40,949 State 5,222 6,216 5,540 68,703 57,196 46,489 Deferred: Federal 4,473 2,734 4,209 State 557 418 898 5,030 3,152 5,107 Tax expense recorded as an increase of paid-in capital 3,863 7,884 4,588 $ 77,596 $ 68,232 $ 56,184 |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of income tax computed at the U.S. statutory rate to the effective income tax rate is as follows: Year Ended December 31, 2015 2014 2013 Statutory U.S. federal income tax rate 35.0 % 35.0 % 35.0 % State income taxes, net of federal tax benefit 3.3 4.3 5.5 State tax credits, net of federal effect (1.2 ) (1.5 ) (1.8 ) Nondeductible expenses 0.1 0.1 0.3 Other (0.1 ) 0.1 (0.2 ) Effective income tax rate 37.1 % 38.0 % 38.8 % |
Significant Components of Deferred Income Tax Assets and Liabilities | Significant components of the University’s deferred income tax assets and liabilities are as follows: As of December 31, 2015 2014 Deferred tax assets: Allowance for doubtful accounts $ 2,051 $ 2,654 Share-based compensation 9,330 8,487 Deferred tuition revenue 1,336 610 Deferred scholarship 1,091 959 Deferred rent 1,078 1,290 Intangibles 1,778 3,312 Other 3,482 2,871 Deferred tax assets 20,146 20,183 Deferred tax liability: Property and equipment (33,710 ) (28,203 ) Other (1,291 ) (1,805 ) Deferred tax liability (35,001 ) (30,008 ) Net deferred tax liability $ (14,855 ) $ (9,825 ) The deferred tax amounts above have been classified in the University’s balance sheets as follows: As of December 31, 2015 2014 Deferred income taxes, current $ 6,448 $ 6,149 Deferred income taxes, non-current (21,303 ) (15,974 ) Net deferred tax liability $ (14,855 ) $ (9,825 ) |
Share-Based Compensation Plans
Share-Based Compensation Plans (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Activity Related to Restricted Stock Granted under Incentive Plan | A summary of the activity related to restricted stock granted under the University’s Incentive Plan is as follows: Total Weighted Outstanding as of December 31, 2012 553 $ 17.04 Granted 594 $ 24.44 Vested (119 ) $ 17.13 Forfeited, canceled or expired (45 ) $ 20.57 Outstanding as of December 31, 2013 983 $ 21.34 Granted 317 $ 46.02 Vested (225 ) $ 21.27 Forfeited, canceled or expired (42 ) $ 27.36 Outstanding as of December 31, 2014 1,033 $ 28.75 Granted 324 $ 45.66 Vested (274 ) $ 27.18 Forfeited, canceled or expired (27 ) $ 30.27 Outstanding as of December 31, 2015 1,056 $ 34.30 |
Summary of Activity Related to Stock Options Granted under Company's Incentive Plan | A summary of the activity related to stock options granted under the University’s Incentive Plan is as follows: Summary of Stock Options Outstanding Total Weighted Weighted Aggregate Outstanding as of December 31, 2012 4,229 $ 14.57 Granted 25 $ 24.97 Exercised (1,160 ) $ 14.03 Forfeited, canceled or expired (71 ) $ 17.22 Outstanding as of December 31, 2013 3,023 $ 14.80 Granted — $ — Exercised (539 ) $ 14.51 Forfeited, canceled or expired (32 ) $ 16.93 Outstanding as of December 31, 2014 2,452 $ 14.83 Granted — $ — Exercised (218 ) $ 15.97 Forfeited, canceled or expired (14 ) $ 16.08 Outstanding as of December 31, 2015 2,220 $ 14.71 3.83 $ 56,398 Exercisable as of December 31, 2015 2,013 $ 14.59 3.68 $ 51,392 Available for issuance as of December 31, 2015 1,893 (1) Aggregate intrinsic value represents the value of the University’s closing stock price on December 31, 2015 ($40.12) in excess of the exercise price multiplied by the number of options outstanding or exercisable. |
Amounts Related to Options Exercised | The following table summarizes information related to stock options exercised for years ended December 31, 2015, 2014 and 2013: 2015 2014 2013 Amounts related to options exercised: Intrinsic value realized by optionee $ 18,069 $ 27,499 $ 20,364 Actual tax benefit realized by the University for tax deductions $ 7,228 $ 11,000 $ 8,145 |
Fair Value of Options as of Grant Dates Using Weighted Average Assumptions | The University uses the Black-Scholes-Merton option pricing model to estimate the fair value of the University’s options as of the grant dates using the following weighted average assumptions: Year Ended December 31, 2013 Weighted average fair value $ 8.20 Expected volatility 39.86 % Expected life (years) 4.25 Risk-free interest rate 0.65 % Dividend yield 0 % |
Share-Based Compensation Expense | The table below outlines share-based compensation expense for the fiscal years ended December 31, 2015, 2014 and 2013 related to restricted stock and stock options granted: 2015 2014 2013 Instructional costs and services $ 6,779 $ 5,921 $ 5,246 Admissions advisory and related 192 166 134 Marketing and promotional 130 220 229 General and administrative 4,156 3,638 4,327 Share-based compensation expense included in operating expenses 11,257 9,945 9,936 Tax effect of share-based compensation (4,503 ) (3,978 ) (3,974 ) Share-based compensation expense, net of tax $ 6,754 $ 5,967 $ 5,962 |
Quarterly Results of Operatio37
Quarterly Results of Operations (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Summarizes the Unaudited Quarterly Results of Operations | The following table summarizes the unaudited quarterly results of operations for 2015 and 2014 and should be read in conjunction with other information included in the accompanying consolidated financial statements. 2015 First Quarter Second Quarter Third Quarter Fourth Quarter Net revenue $ 194,127 $ 174,726 $ 193,393 $ 215,954 Costs and expenses: Instructional costs and services 78,687 75,357 83,180 92,427 Admissions advisory and related 28,333 27,372 27,506 29,361 Advertising 20,031 18,419 19,360 18,419 Marketing and promotional 1,694 1,788 1,827 1,978 General and administrative 9,396 9,534 12,536 10,634 Total costs and expenses 138,141 132,470 144,409 152,819 Operating income 55,986 42,256 48,984 63,135 Interest expense (375 ) (146 ) (313 ) (414 ) Interest income and other 257 127 201 (691 ) Income before income taxes 55,868 42,237 48,872 62,030 Income tax expense 21,689 16,461 15,530 23,916 Net income $ 34,179 $ 25,776 $ 33,342 $ 38,114 Earnings per share: Basic income per share(1) $ 0.75 $ 0.56 $ 0.72 $ 0.83 Diluted income per share(1) $ 0.72 $ 0.55 $ 0.70 $ 0.81 Basic weighted average shares outstanding 45,789 46,012 46,063 46,035 Diluted weighted average shares outstanding 47,201 47,263 47,320 47,337 (1) The sum of quarterly income per share may not equal annual income per share due to rounding. 2014 First Quarter Second Quarter Third Quarter Fourth Quarter Net revenue $ 167,432 $ 158,594 $ 175,056 $ 189,973 Costs and expenses: Instructional costs and services 70,678 67,847 71,714 78,552 Admissions advisory and related 26,261 26,208 27,324 28,774 Advertising 16,712 15,751 16,491 16,854 Marketing and promotional 1,791 1,907 1,931 1,810 General and administrative 8,554 8,994 11,640 10,447 Total costs and expenses 123,996 120,707 129,100 136,437 Operating income 43,436 37,887 45,956 53,536 Interest expense (523 ) (356 ) (576 ) (346 ) Interest income and other 137 197 43 307 Income before income taxes 43,050 37,728 45,423 53,497 Income tax expense 16,762 14,659 16,407 20,404 Net income $ 26,288 $ 23,069 $ 29,016 $ 33,093 Earnings per share: Basic income per share(1) $ 0.58 $ 0.51 $ 0.64 $ 0.72 Diluted income per share(1) $ 0.56 $ 0.49 $ 0.62 $ 0.70 Basic weighted average shares outstanding 45,205 45,598 45,651 45,652 Diluted weighted average shares outstanding 46,841 46,990 47,051 47,097 (1) The sum of quarterly income per share may not equal annual income per share due to rounding. |
Nature of Business - Additional
Nature of Business - Additional Information (Detail) | 12 Months Ended |
Dec. 31, 2015DegreesColleges | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of area of the company's campus in Phoenix, Arizona | 200+ acre campus |
Number of colleges in Phoenix, Arizona | Colleges | 8 |
Number of degree programs and certificates | Degrees | 200 |
Summary of Significant Accoun39
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||||||
Apr. 30, 2008 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2011 | Jan. 30, 2016 | Oct. 28, 2013 | Dec. 31, 2012 | |
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Average days from the date of receipt in which funds remain as restricted cash and cash equivalents | 60 to 90 days | |||||||
Note receivable from a financial institution at fair market value | $ 27,000 | |||||||
Interest rate on notes | 11.00% | |||||||
Interest rate on loan | 6.00% | |||||||
Default rate | 5.00% | |||||||
Interest income and other income on the loan | $ 2,187 | $ 1,459 | ||||||
Default interest amount | 432 | |||||||
Late payment liquidated damage amount | 1,392 | |||||||
Statutory trustee's fee amount | $ 139 | |||||||
Additional amount deposited in escrow | $ 344 | |||||||
Date of order for late payment liquidated damage amount | Oct. 28, 2013 | |||||||
Other income | $ 958 | |||||||
Capitalized interest rate on borrowings to finance improvements | 1.90% | 1.90% | 1.90% | |||||
Agreement to pay former owner royalty amount | $ 22,500 | |||||||
Settlement of future royalty payment obligation | $ 5,920 | |||||||
Royalty amortization period | 20 years | |||||||
Fair value of the shares issued of the license agreement | $ 3,394 | |||||||
Discount net cash flows | 35.00% | |||||||
Reserve for uncertain tax positions including interest and penalties | $ 1,706 | $ 0 | ||||||
Description of area of the company's campus in Phoenix, Arizona | 200+ acre campus | |||||||
Reduction in revenue due to scholarships offered to students | $ 163,893 | $ 139,962 | $ 111,789 | |||||
Period for write off of inactive student accounts | 150 days | |||||||
Other Assets [Member] | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Property and equipment, useful life | 15 years | |||||||
Prepaid maintenance and service fees | $ 4,900 | |||||||
Amortization of other current assets | Next twelve month | |||||||
Subsequent Event [Member] | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Default interest and other fees payable | $ 501 | |||||||
Furniture, Fixtures and Equipment [Member] | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Property and equipment, useful life | 10 years | |||||||
Computer Equipment [Member] | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Property and equipment, useful life | 4 years | |||||||
Vehicles [Member] | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Property and equipment, useful life | 5 years | |||||||
Minimum [Member] | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Number of days from the date of receipt in which funds remain as restricted cash and cash equivalents | 60 days | |||||||
Minimum [Member] | Other Assets [Member] | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Agreement period of acquired source code rights for the software developed, prepaid maintenance and service fee | 7 years | |||||||
Minimum [Member] | Land Improvements and Buildings [Member] | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Property and equipment, useful life | 10 years | |||||||
Maximum [Member] | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Number of days from the date of receipt in which funds remain as restricted cash and cash equivalents | 90 days | |||||||
Maximum [Member] | Land Improvements and Buildings [Member] | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Property and equipment, useful life | 40 years |
Summary of Significant Accoun40
Summary of Significant Accounting Policies - Interest Cost Capitalized and Incurred (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Accounting Policies [Abstract] | |||||||||||
Interest incurred | $ 1,962 | $ 2,180 | $ 2,626 | ||||||||
Interest capitalized | 714 | 379 | 382 | ||||||||
Interest expense | $ 414 | $ 313 | $ 146 | $ 375 | $ 346 | $ 576 | $ 356 | $ 523 | $ 1,248 | $ 1,801 | $ 2,244 |
Investments - Additional Inform
Investments - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Schedule of Available-for-sale Securities [Line Items] | ||
Amount of restricted investments | $ 67,840 | |
Unrealized net (losses) gains on available-for-sale securities | $ (159) | $ (93) |
Municipal Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Maturity period of investments | One year or less |
Investments - Summary of Invest
Investments - Summary of Investments Including Restricted Investments (Detail) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Schedule of Available-for-sale Securities [Line Items] | ||
Adjusted Cost | $ 139,227 | $ 168,750 |
Gross Unrealized Gains | 26 | 51 |
Gross Unrealized (Losses) | (284) | (177) |
Estimated Fair Value | 138,969 | 168,624 |
Municipal Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Adjusted Cost | 83,507 | 83,364 |
Gross Unrealized Gains | 26 | 51 |
Gross Unrealized (Losses) | (169) | (177) |
Estimated Fair Value | 83,364 | 83,238 |
Municipal Bond Mutual Fund [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Adjusted Cost | 55,720 | 85,386 |
Gross Unrealized (Losses) | (115) | |
Estimated Fair Value | $ 55,605 | $ 85,386 |
Valuation and Qualifying Acco43
Valuation and Qualifying Accounts - Schedule of Valuation and Qualifying Accounts (Detail) - Allowance for Doubtful Accounts Receivable [Member] - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Balance at Beginning of Year | $ 6,472 | $ 9,678 | $ 8,657 |
Charged to Expense | 16,620 | 15,045 | 19,897 |
Deductions | (17,955) | (18,251) | (18,876) |
Balance at End of Year | $ 5,137 | $ 6,472 | $ 9,678 |
Property and Equipment - Summar
Property and Equipment - Summary of Property and Equipment (Detail) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 812,562 | $ 591,383 |
Less accumulated depreciation and amortization | (145,079) | (113,213) |
Property and equipment, net | 667,483 | 478,170 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 103,280 | 76,537 |
Land Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 13,389 | 8,800 |
Buildings [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 392,754 | 298,124 |
Building and Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 72,494 | 45,855 |
Equipment under Capital Leases [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 6,467 | 5,310 |
Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 91,225 | 75,990 |
Furniture, Fixtures and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 51,352 | 38,162 |
Internally Developed Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 25,996 | 20,813 |
Other [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 1,099 | 1,099 |
Construction in Progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 54,506 | $ 20,693 |
Property and Equipment - Additi
Property and Equipment - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation and amortization expense including assets under capital lease | $ 34,821 | $ 28,529 | $ 24,546 |
Notes Payable and Other Noncu46
Notes Payable and Other Noncurrent Liabilities - Additional Information (Detail) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2012 | Dec. 31, 2014 | |
Debt Disclosure [Abstract] | |||
Increase in Term Loan | $ 100,000,000 | ||
Revolving line of credit facility, expiration date | Dec. 31, 2017 | Dec. 31, 2019 | |
Amount withdrawn from line of credit | $ 0 | ||
Amount of revolving line of credit | 150,000,000 | $ 50,000,000 | |
Long-term deferred rent | $ 3,502,000 | $ 4,513,000 |
Notes Payable and Other Noncu47
Notes Payable and Other Noncurrent Liabilities - Notes Payable (Detail) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Line of Credit Facility [Line Items] | ||
Less: Current portion | $ 6,625 | $ 6,616 |
Notes Payable, Non-current | 73,252 | 79,877 |
Notes payable | 79,877 | 86,493 |
Notes Payable through December 2019 [Member] | ||
Line of Credit Facility [Line Items] | ||
Notes payable | 79,525 | 86,049 |
Annuities Extending through 2019 [Member] | ||
Line of Credit Facility [Line Items] | ||
Notes payable | $ 352 | $ 444 |
Notes Payable and Other Noncu48
Notes Payable and Other Noncurrent Liabilities - Notes Payable (Parenthetical) (Detail) $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Notes Payable through December 2019 [Member] | |
Line of Credit Facility [Line Items] | |
Monthly payment of notes payable | $ 556 |
Number of days of bank operating rate to calculate interest on notes payable | 30 days |
Interest rate of notes payable, Minimum | 1.99% |
Annuities Extending through 2019 [Member] | |
Line of Credit Facility [Line Items] | |
Quarterly payment of notes payable | $ 34 |
Interest rate of notes payable, Minimum | 10.00% |
LIBOR [Member] | Notes Payable through December 2019 [Member] | |
Line of Credit Facility [Line Items] | |
Interest rate of notes payable | 1.75% |
Notes Payable and Other Noncu49
Notes Payable and Other Noncurrent Liabilities - Payments Due under Notes Payable (Detail) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Debt Disclosure [Abstract] | ||
2,016 | $ 6,625 | |
2,017 | 6,636 | |
2,018 | 6,691 | |
2,019 | 59,925 | |
Notes Payable, Total | $ 79,877 | $ 86,493 |
Capital Lease Obligations - Com
Capital Lease Obligations - Components of Capital Lease Obligations (Detail) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Leases [Abstract] | ||
Capital leases for equipment | $ 1,485 | $ 497 |
Less: Current portion of capital lease obligations | 697 | 91 |
Capital lease obligations, less current portion | $ 788 | $ 406 |
Capital Lease Obligations - C51
Capital Lease Obligations - Components of Capital Lease Obligations (Parenthetical) (Detail) $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Leases [Abstract] | |
Monthly payments on capital leases | $ 33 |
Implicit interest rate on capital leases, maximum | 2.20% |
Capital Lease Obligations - Pay
Capital Lease Obligations - Payments Due under Future Minimum Lease Payments under Capital Lease Obligations (Detail) $ in Thousands | Dec. 31, 2015USD ($) |
Leases [Abstract] | |
2,016 | $ 700 |
2,017 | 290 |
2,018 | 290 |
2,019 | 208 |
Total | 1,488 |
Less: Portion representing interest | 3 |
Present value of minimum lease payments | $ 1,485 |
Commitments and Contingencies -
Commitments and Contingencies - Future Minimum Lease Payments under Operating Leases (Detail) $ in Thousands | Dec. 31, 2015USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,016 | $ 5,683 |
2,017 | 3,935 |
2,018 | 3,432 |
2,019 | 3,022 |
2,020 | 3,065 |
Thereafter | 1,804 |
Total minimum payments | $ 20,941 |
Commitments and Contingencies54
Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Total rent expense and related taxes and operating expenses, under operating leases | $ 7,759 | $ 8,409 | $ 7,074 |
Tax reserves, non-income tax related | $ 0 | $ 659 |
Derivative Instruments - Additi
Derivative Instruments - Additional Information (Detail) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Derivative [Line Items] | |||
Period of LIBOR interest rate | 30 days | ||
Effective portion of gain/loss on derivatives included as a component of other comprehensive income, net of taxes | $ (372,000) | $ (300,000) | $ 565,000 |
Other Assets [Member] | |||
Derivative [Line Items] | |||
Fair values of interest rate corridor instrument | 728,000 | 1,332,000 | |
Interest Rate Corridor [Member] | |||
Derivative [Line Items] | |||
Notional amount of derivative instrument | $ 80,000,000 | ||
Description of interest rate risk hedge at several thresholds | The University pays variable interest monthly based on the 30-day LIBOR rates until that index reaches 1.5%. If 30-day LIBOR is equal to 1.5% through 3.0%, the University pays 1.5%. If 30-day LIBOR exceeds 3.0%, the University pays actual 30-day LIBOR less 1.5%. | ||
Interest expense on derivatives related to credit risk | $ 2,000 | ||
Interest Rate Corridor [Member] | LIBOR [Member] | |||
Derivative [Line Items] | |||
Maximum percentage of variable interest rates based on LIBOR | 1.50% | ||
Percentage of amount paid by University | 1.50% | ||
Minimum percentage of LIBOR | 1.50% | ||
Maximum percentage of LIBOR | 3.00% | ||
Percentage deducted from LIBOR for actual payment | 1.50% | ||
Interest Rate Swap [Member] | |||
Derivative [Line Items] | |||
Fair value of the interest rate swap liability expiration date | 2014-04 | ||
Cash Flow Hedging [Member] | |||
Derivative [Line Items] | |||
Effective portion of gain/loss on derivatives included as a component of other comprehensive income, net of taxes | $ 602,000 | $ 486,000 | $ 947,000 |
Earnings Per Share - Summary of
Earnings Per Share - Summary of Weighted Average Number of Common Shares Outstanding (Detail) - shares shares in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Denominator: | |||||||||||
Basic common shares outstanding | 46,035 | 46,063 | 46,012 | 45,789 | 45,652 | 45,651 | 45,598 | 45,205 | 45,975 | 45,538 | 44,731 |
Effect of dilutive stock options and restricted stock | 1,306 | 1,468 | 1,400 | ||||||||
Diluted common shares outstanding | 47,337 | 47,320 | 47,263 | 47,201 | 47,097 | 47,051 | 46,990 | 46,841 | 47,281 | 47,006 | 46,131 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Stock Option And Restricted Stock Awards [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
University's stock options and restricted stock awards outstanding were excluded from the calculation of diluted earnings | 385 | 174 | 134 |
Equity Transactions - Additiona
Equity Transactions - Additional Information (Detail) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Stockholders Equity [Line Items] | |||
Preferred stock authorized but unissued and undesignated | 10,000,000 | 10,000,000 | |
Expiration date on repurchase authorizations | Sep. 30, 2016 | ||
Aggregate cost shares of common stock | $ 11,279,000 | $ 1,676,000 | $ 8,323,000 |
Common stock acquired, shares | 288,000 | ||
Maximum [Member] | |||
Stockholders Equity [Line Items] | |||
Authorization amount for repurchase of common stock | $ 75,000,000 | ||
Common Stock [Member] | |||
Stockholders Equity [Line Items] | |||
Common stock acquired, shares | 3,076,000 | ||
Since Approval of Share Repurchase Plan [Member] | |||
Stockholders Equity [Line Items] | |||
Aggregate cost shares of common stock | $ 60,414,000 | ||
Remaining authorized repurchase amount | $ 14,586,000 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Income Tax Disclosure [Abstract] | ||
Valuation allowance | $ 0 | $ 0 |
Income Taxes - Components of In
Income Taxes - Components of Income Tax Expense (Benefit) (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Current: | |||||||||||
Federal | $ 63,481 | $ 50,980 | $ 40,949 | ||||||||
State | 5,222 | 6,216 | 5,540 | ||||||||
Current Income Tax Expense (Benefit), Total | 68,703 | 57,196 | 46,489 | ||||||||
Deferred: | |||||||||||
Federal | 4,473 | 2,734 | 4,209 | ||||||||
State | 557 | 418 | 898 | ||||||||
Deferred Income Tax Expense (Benefit) | 5,030 | 3,152 | 5,107 | ||||||||
Tax expense recorded as an increase of paid-in capital | 3,863 | 7,884 | 4,588 | ||||||||
Income Tax Expense (Benefit), Total | $ 23,916 | $ 15,530 | $ 16,461 | $ 21,689 | $ 20,404 | $ 16,407 | $ 14,659 | $ 16,762 | $ 77,596 | $ 68,232 | $ 56,184 |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Detail) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | |||
Statutory U.S. federal income tax rate | 35.00% | 35.00% | 35.00% |
State income taxes, net of federal tax benefit | 3.30% | 4.30% | 5.50% |
State tax credits, net of federal effect | (1.20%) | (1.50%) | (1.80%) |
Nondeductible expenses | 0.10% | 0.10% | 0.30% |
Other | (0.10%) | 0.10% | (0.20%) |
Effective income tax rate | 37.10% | 38.00% | 38.80% |
Income Taxes - Significant Comp
Income Taxes - Significant Components of Deferred Income Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred tax assets: | ||
Allowance for doubtful accounts | $ 2,051 | $ 2,654 |
Share-based compensation | 9,330 | 8,487 |
Deferred tuition revenue | 1,336 | 610 |
Deferred scholarship | 1,091 | 959 |
Deferred rent | 1,078 | 1,290 |
Intangibles | 1,778 | 3,312 |
Other | 3,482 | 2,871 |
Deferred tax assets | 20,146 | 20,183 |
Deferred tax liability: | ||
Property and equipment | (33,710) | (28,203) |
Other | (1,291) | (1,805) |
Deferred tax liability | (35,001) | (30,008) |
Net deferred tax liability | $ (14,855) | $ (9,825) |
Income Taxes - Significant Co63
Income Taxes - Significant Components of Deferred Income Tax Assets and Liabilities Classified (Detail) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Income Tax Disclosure [Abstract] | ||
Deferred income taxes, current | $ 6,448 | $ 6,149 |
Deferred income taxes, non-current | (21,303) | (15,974) |
Net deferred tax liability | $ (14,855) | $ (9,825) |
Regulatory - Additional Informa
Regulatory - Additional Information (Detail) - USD ($) $ in Thousands | Sep. 27, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Regulated Operations [Abstract] | ||||
University paid | $ 7,387 | |||
Revenue from Title IV program funds | 74.80% | 76.50% | 78.50% |
Share-Based Compensation Plan65
Share-Based Compensation Plans - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2011 | Sep. 27, 2008 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Cash received from stock option exercises | $ 3,489 | $ 7,825 | $ 16,278 | ||
Dividend yield assumption | 0.00% | 0.00% | 0.00% | ||
Minimum eligible age to participate in the plan | 21 years | ||||
University made discretionary matching contributions | $ 1,800 | $ 1,508 | $ 1,298 | ||
Restricted Stock Grants [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares granted | 324,000 | 317,000 | 594,000 | ||
Unrecognized share-based compensation cost | $ 27,778 | ||||
Costs are expected to be recognized over a weighted average period | 2 years 1 month 6 days | ||||
Restricted Stock Grants [Member] | Executive Officers [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares granted | 315,000 | 308,000 | 575,000 | ||
Vesting period | 5 years | ||||
Restricted Stock Grants [Member] | Executive Officers [Member] | Share-based Compensation Award, Tranche One [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting right percentage, Year Five | 20.00% | ||||
Restricted Stock Grants [Member] | Executive Officers [Member] | Share-based Compensation Award, Tranche Two [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting right percentage, Year Five | 20.00% | ||||
Restricted Stock Grants [Member] | Executive Officers [Member] | Share-based Compensation Award, Tranche Three [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting right percentage, Year Five | 20.00% | ||||
Restricted Stock Grants [Member] | Executive Officers [Member] | Sharebased Compensation Award Tranche Four [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting right percentage, Year Five | 20.00% | ||||
Restricted Stock Grants [Member] | Executive Officers [Member] | Sharebased Compensation Award Tranche Five [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting right percentage, Year Five | 20.00% | ||||
Restricted Stock Grants [Member] | Non-employee [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares granted | 9,000 | 9,000 | 11,000 | ||
Vesting period | 1 year | ||||
Restricted Stock Grants [Member] | Consultant [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares granted | 8,000 | ||||
Employee Stock Option [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting period | 4 years | 5 years | |||
Unrecognized share-based compensation cost | $ 323 | ||||
Costs are expected to be recognized over a weighted average period | 4 months 6 days | ||||
Expiration period of options | 10 years | 10 years | |||
Options granted | 0 | 0 | 25,000 | ||
Incentive Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Common stock authorized | 12,167,000 | 4,200,000 | |||
Percentage increase in the number of shares authorized for issuance under the Incentive Plan | 2.50% | ||||
Employee Stock Purchase Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Common stock authorized | 1,050,000 |
Share-Based Compensation Plan66
Share-Based Compensation Plans - Summary of Activity Related to Restricted Stock Granted under Incentive Plan (Detail) - Restricted Stock Grants [Member] - $ / shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total Shares, Outstanding, Beginning Balance | 1,033 | 983 | 553 |
Total Shares, Granted | 324 | 317 | 594 |
Total Shares, Vested | (274) | (225) | (119) |
Total Shares, Forfeited, canceled or expired | (27) | (42) | (45) |
Total Shares, Outstanding, Ending Balance | 1,056 | 1,033 | 983 |
Weighted Average Grant Date Fair Value, Beginning Balance | $ 28.75 | $ 21.34 | $ 17.04 |
Weighted Average Grant Date Fair Value, Granted | 45.66 | 46.02 | 24.44 |
Weighted Average Grant Date Fair Value, Vested | 27.18 | 21.27 | 17.13 |
Weighted Average Grant Date Fair Value, Forfeited, cancelled or expired | 30.27 | 27.36 | 20.57 |
Weighted Average Grant Date Fair Value, Ending Balance | $ 34.30 | $ 28.75 | $ 21.34 |
Share-Based Compensation Plan67
Share-Based Compensation Plans - Summary of Activity Related to Stock Options Granted under Company's Incentive Plan (Detail) - Employee Stock Option [Member] - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total Shares outstanding, Beginning balance | 2,452,000 | 3,023,000 | 4,229,000 |
Total Shares, Granted | 0 | 0 | 25,000 |
Total Shares, Exercised | (218,000) | (539,000) | (1,160,000) |
Total Shares, Forfeited, canceled or expired | (14,000) | (32,000) | (71,000) |
Total Shares outstanding, Ending balance | 2,220,000 | 2,452,000 | 3,023,000 |
Weighted Average Exercise Price per Share Outstanding, Beginning balance | $ 14.83 | $ 14.80 | $ 14.57 |
Total Shares, Exercisable | 2,013,000 | ||
Weighted Average Exercise Price per Share, Granted | 24.97 | ||
Total Shares, Available for issuance | 1,893,000 | ||
Weighted Average Exercise Price per Share, Exercised | $ 15.97 | 14.51 | 14.03 |
Weighted Average Exercise Price per Share, Forfeited, canceled or expired | 16.08 | 16.93 | 17.22 |
Weighted Average Exercise Price per Share Outstanding, Ending balance | 14.71 | $ 14.83 | $ 14.80 |
Weighted Average Exercise Price per Share, Exercisable | $ 14.59 | ||
Weighted Average Remaining Contractual Term (Years), Outstanding | 3 years 9 months 29 days | ||
Weighted Average Remaining Contractual Term (Years), Exercisable | 3 years 8 months 5 days | ||
Aggregate Intrinsic Value, Outstanding | $ 56,398 | ||
Aggregate Intrinsic Value, Exercisable | $ 51,392 |
Share-Based Compensation Plan68
Share-Based Compensation Plans - Summary of Activity Related to Stock Options Granted under Company's Incentive Plan (Parenthetical) (Detail) | Dec. 31, 2015$ / shares |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Value of closing stock price | $ 40.12 |
Share-Based Compensation Plan69
Share-Based Compensation Plans - Amounts Related to Options Exercised (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Amounts related to options exercised: | |||
Intrinsic value realized by optionee | $ 18,069 | $ 27,499 | $ 20,364 |
Actual tax benefit realized by the University for tax deductions | $ 7,228 | $ 11,000 | $ 8,145 |
Share-Based Compensation Plan70
Share-Based Compensation Plans - Fair Value of Options as of Grant Dates Using Weighted Average Assumptions (Detail) - $ / shares | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Weighted average fair value | $ 8.20 | ||
Expected volatility | 39.86% | ||
Expected life (years) | 4 years 3 months | ||
Risk-free interest rate | 0.65% | ||
Dividend yield | 0.00% | 0.00% | 0.00% |
Share-Based Compensation Plan71
Share-Based Compensation Plans - Share-Based Compensation Expense (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | $ 11,257 | $ 9,945 | $ 9,936 |
Tax effect of share-based compensation | (4,503) | (3,978) | (3,974) |
Share-based compensation expense, net of tax | 6,754 | 5,967 | 5,962 |
Instructional Costs and Services [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 6,779 | 5,921 | 5,246 |
Admissions Advisory and Related [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 192 | 166 | 134 |
Marketing and Promotional [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 130 | 220 | 229 |
General and Administrative [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | $ 4,156 | $ 3,638 | $ 4,327 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Related Party Transaction [Line Items] | ||
Amounts owed to related party | $ 675 | $ 403 |
LKF [Member] | ||
Related Party Transaction [Line Items] | ||
Contribution by University | 500 | 500 |
Amounts owed to related party | $ 500 | $ 0 |
Quarterly Results of Operatio73
Quarterly Results of Operations (Unaudited) - Summarizes the Unaudited Quarterly Results of Operations (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Statement [Abstract] | |||||||||||
Net revenue | $ 215,954 | $ 193,393 | $ 174,726 | $ 194,127 | $ 189,973 | $ 175,056 | $ 158,594 | $ 167,432 | $ 778,200 | $ 691,055 | $ 598,335 |
Costs and expenses: | |||||||||||
Instructional costs and services | 92,427 | 83,180 | 75,357 | 78,687 | 78,552 | 71,714 | 67,847 | 70,678 | 329,651 | 288,791 | 254,419 |
Admissions advisory and related | 29,361 | 27,506 | 27,372 | 28,333 | 28,774 | 27,324 | 26,208 | 26,261 | 112,572 | 108,567 | 97,077 |
Advertising | 18,419 | 19,360 | 18,419 | 20,031 | 16,854 | 16,491 | 15,751 | 16,712 | 76,229 | 65,808 | 60,985 |
Marketing and promotional | 1,978 | 1,827 | 1,788 | 1,694 | 1,810 | 1,931 | 1,907 | 1,791 | 7,287 | 7,439 | 5,644 |
General and administrative | 10,634 | 12,536 | 9,534 | 9,396 | 10,447 | 11,640 | 8,994 | 8,554 | 42,100 | 39,635 | 36,934 |
Total costs and expenses | 152,819 | 144,409 | 132,470 | 138,141 | 136,437 | 129,100 | 120,707 | 123,996 | 567,839 | 510,240 | 455,059 |
Operating income | 63,135 | 48,984 | 42,256 | 55,986 | 53,536 | 45,956 | 37,887 | 43,436 | 210,361 | 180,815 | 143,276 |
Interest expense | (414) | (313) | (146) | (375) | (346) | (576) | (356) | (523) | (1,248) | (1,801) | (2,244) |
Interest income and other | (691) | 201 | 127 | 257 | 307 | 43 | 197 | 137 | (106) | 684 | 3,863 |
Income before income taxes | 62,030 | 48,872 | 42,237 | 55,868 | 53,497 | 45,423 | 37,728 | 43,050 | 209,007 | 179,698 | 144,895 |
Income tax expense | 23,916 | 15,530 | 16,461 | 21,689 | 20,404 | 16,407 | 14,659 | 16,762 | 77,596 | 68,232 | 56,184 |
Net income | $ 38,114 | $ 33,342 | $ 25,776 | $ 34,179 | $ 33,093 | $ 29,016 | $ 23,069 | $ 26,288 | $ 131,411 | $ 111,466 | $ 88,711 |
Earnings per share: | |||||||||||
Basic income per share | $ 0.83 | $ 0.72 | $ 0.56 | $ 0.75 | $ 0.72 | $ 0.64 | $ 0.51 | $ 0.58 | $ 2.86 | $ 2.45 | $ 1.98 |
Diluted income per share | $ 0.81 | $ 0.70 | $ 0.55 | $ 0.72 | $ 0.70 | $ 0.62 | $ 0.49 | $ 0.56 | $ 2.78 | $ 2.37 | $ 1.92 |
Basic weighted average shares outstanding | 46,035 | 46,063 | 46,012 | 45,789 | 45,652 | 45,651 | 45,598 | 45,205 | 45,975 | 45,538 | 44,731 |
Diluted weighted average shares outstanding | 47,337 | 47,320 | 47,263 | 47,201 | 47,097 | 47,051 | 46,990 | 46,841 | 47,281 | 47,006 | 46,131 |