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Revenue Recognition | 6 Months Ended
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Jun. 30, 2018
Revenue From Contract With Customer [Abstract] |
Revenue Recognition | 5. REVENUE RECOGNITION Disaggregation of Revenue The following tables disaggregate our revenue by major source (dollars in thousands):
|  | For the Quarter Ended June 30, 2018 |  |  | For the Year to Date Ended June 30, 2018 |
|  | CTU |  |  | AIU |  |  | All Other Campuses |  |  | Total |  |  | CTU |  |  | AIU |  |  | All Other Campuses |  |  | Total |
Tuition |  | $ | 89,291 |  |  | $ | 46,654 |  |  | $ | 160 |  |  | $ | 136,105 |  |  | $ | 180,025 |  |  | $ | 97,785 |  |  | $ | 491 |  |  | $ | 278,301 |
Technology fees |  |  | 2,857 |  |  |  | 1,784 |  |  |  | - |  |  |  | 4,641 |  |  |  | 5,731 |  |  |  | 3,624 |  |  |  | - |  |  |  | 9,355 |
Other miscellaneous fees(1) |  |  | 489 |  |  |  | 90 |  |  |  | 19 |  |  |  | 598 |  |  |  | 989 |  |  |  | 190 |  |  |  | 19 |  |  |  | 1,198 |
Total tuition and fees |  |  | 92,637 |  |  |  | 48,528 |  |  |  | 179 |  |  |  | 141,344 |  |  |  | 186,745 |  |  |  | 101,599 |  |  |  | 510 |  |  |  | 288,854 |
Other revenue(2) |  |  | 629 |  |  |  | 51 |  |  |  | 12 |  |  |  | 692 |  |  |  | 1,128 |  |  |  | 101 |  |  |  | 18 |  |  |  | 1,247 |
Total revenue |  | $ | 93,266 |  |  | $ | 48,579 |  |  | $ | 191 |  |  | $ | 142,036 |  |  | $ | 187,873 |  |  | $ | 101,700 |  |  | $ | 528 |  |  | $ | 290,101 |
|  | For the Quarter Ended June 30, 2017 |  |  | For the Year to Date Ended June 30, 2017 |
|  | CTU |  |  | AIU |  |  | All Other Campuses |  |  | Total |  |  | CTU |  |  | AIU |  |  | All Other Campuses |  |  | Total |
Tuition |  | $ | 87,355 |  |  | $ | 44,436 |  |  | $ | 8,697 |  |  | $ | 140,488 |  |  | $ | 177,560 |  |  | $ | 96,655 |  |  | $ | 22,406 |  |  | $ | 296,621 |
Technology fees |  |  | 2,769 |  |  |  | 1,597 |  |  |  | - |  |  |  | 4,366 |  |  |  | 5,562 |  |  |  | 3,455 |  |  |  | - |  |  |  | 9,017 |
Other miscellaneous fees(1) |  |  | 526 |  |  |  | 117 |  |  |  | 10 |  |  |  | 653 |  |  |  | 1,022 |  |  |  | 205 |  |  |  | 19 |  |  |  | 1,246 |
Total tuition and fees |  |  | 90,650 |  |  |  | 46,150 |  |  |  | 8,707 |  |  |  | 145,507 |  |  |  | 184,144 |  |  |  | 100,315 |  |  |  | 22,425 |  |  |  | 306,884 |
Other revenue(2) |  |  | 554 |  |  |  | 65 |  |  |  | 96 |  |  |  | 715 |  |  |  | 1,095 |  |  |  | 153 |  |  |  | 199 |  |  |  | 1,447 |
Total revenue |  | $ | 91,204 |  |  | $ | 46,215 |  |  | $ | 8,803 |  |  | $ | 146,222 |  |  | $ | 185,239 |  |  | $ | 100,468 |  |  | $ | 22,624 |  |  | $ | 308,331 |
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| (1) | Other miscellaneous fees include graduation fees, laboratory fees and activity fees.
| (2) | Other revenue primarily includes contract training revenue and bookstore and laptop sales.
Performance Obligations Our revenue, which is derived primarily from academic programs taught to students who attend our institutions, is generally segregated into two categories: (1) tuition and fees and (2) other. Tuition and fees represent costs to our students for educational services provided by our institutions. Our institutions charge tuition and fees at varying amounts, depending on the institution, the type of program and specific curriculum. Our institutions bill students a single charge that covers tuition, fees and required program materials, such as textbooks and supplies, which we treat as a single performance obligation. Generally, we bill student tuition at the beginning of each academic term, and recognize the tuition as revenue on a straight-line basis over the academic term, which includes any applicable externship period. As part of a student’s course of instruction, certain fees, such as technology fees, graduation fees and laboratory fees, are billed to students. These fees are earned over the applicable term and are not considered separate performance obligations. Other revenue, which consists primarily of contract training revenue and bookstore sales, is billed and recognized as goods are delivered or services are performed. Contract training revenue results from individual training courses that are stand-alone courses and not part of a degree or certificate program. Bookstore sales are primarily initiated by the student and are not included in the enrollment agreement at the onset of a student’s entrance to the institution. These types of sales constitute a separate performance obligation from classroom instruction. Our institutions’ academic year is generally at least 30 weeks in length but varies both by institution and program of study and is divided by academic terms or payment periods. Academic terms or payment periods are determined by regulatory requirements mandated by the federal government and/or applicable accrediting body, which also vary by institution and program. Academic terms are determined by start dates, which vary by institution and program and are generally 10 – 11 weeks in length. Contract Assets Prior to the adoption of ASC Topic 606, we offset our student receivable balances with deferred revenue on a student by student basis. Deferred revenue was previously stated net of outstanding student receivables on a student-by-student basis as of the end of each reporting period. Upon adoption of ASC Topic 606, we determined that a portion of the student receivable balance which was previously offset with deferred revenue now meets the definition of student receivables and is not considered a contract asset and therefore is no longer offset with deferred revenue. The previously reported balances along with the adjustment and beginning January 1, 2018 balances are provided below (dollars in thousands).
|  | December 31, 2017 |  |  | Impact of Modified Retrospective Adoption of ASC 606 |  |  | January 1, 2018 Post ASC 606 Adoption |
Student receivables, net of allowance for doubtful accounts, current |  | $ | 18,875 |  |  | $ | 6,663 |  |  | $ | 25,538 |
Deferred revenue |  | $ | 22,897 |  |  | $ | 6,663 |  |  | $ | 29,560 |
For each term, the portion of tuition and fee payments received from students but not yet earned is recorded as deferred revenue and reported as a current liability on our condensed consolidated balance sheets, as we expect to earn these revenues within the next year. A contract asset is recorded for each student for the current term for which they are enrolled for the amount charged for the current term that has not yet been received as payment and to which we do not have the unconditional right to receive payment because the student has not reached the point in the student’s current academic term at which the amount billed is no longer refundable to the student. On a student by student basis, the contract asset is offset against the deferred revenue balance for the current term and the net deferred revenue balance is reflected within current liabilities on our condensed consolidated balance sheets. Due to the short-term nature of our academic terms, the contract asset balance which exists at the beginning of each quarter will no longer be a contract asset at the end of that quarter. The decrease in contract asset balances are a result of one of the following: it becomes a student receivable balance once a student reaches the point in a student’s academic term where the amount billed is no longer refundable to the student; a refund to withdrawn students for the portion entitled to be refunded under each institutions’ refund policy; or a student makes a change in the number of classes they are enrolled which may cause an adjustment to their previously billed amount. As of the end of each quarter, a new contract asset is determined on a student by student basis based on the most recently started term and a student’s progress within that term as compared to the date at which the student is no longer entitled to a refund under each institution’s refund policy. The amount of contract assets which are being offset with deferred revenue balances as of January 1, 2018 and June 30, 2018 were as follows (dollars in thousands):
|  | As of |
|  | January 1, 2018 |  |  | June 30, 2018 |
Gross deferred revenue |  | $ | 39,544 |  |  | $ | 37,260 |
Gross contract assets |  |  | (9,984 | ) |  |  | (14,210 | )
Deferred revenue, net |  | $ | 29,560 |  |  | $ | 23,050 |
Deferred Revenue Changes in our deferred revenue balances for the quarter and year to date ended June 30, 2018 were as follows (dollars in thousands):
|  | For the Quarter Ended June 30, 2018 |
|  | CTU |  |  | AIU |  |  | All Other Campuses |  |  | Total |
Gross deferred revenue, April 1, 2018 |  | $ | 24,025 |  |  | $ | 21,415 |  |  | $ | 142 |  |  | $ | 45,582 |
Revenue earned from balances existing as of April 1, 2018 |  |  | (22,347 | ) |  |  | (18,420 | ) |  |  | (142 | ) |  |  | (40,909 | )
Billings during period(1) |  |  | 92,201 |  |  |  | 40,457 |  |  |  | 99 |  |  |  | 132,757 |
Revenue earned for new billings during the period |  |  | (70,290 | ) |  |  | (30,108 | ) |  |  | (37 | ) |  |  | (100,435 | )
Other adjustments |  |  | 165 |  |  |  | 92 |  |  |  | 8 |  |  |  | 265 |
Gross deferred revenue, June 30, 2018 |  | $ | 23,754 |  |  | $ | 13,436 |  |  | $ | 70 |  |  | $ | 37,260 |
|  | For the Year to Date Ended June 30, 2018 |
|  | CTU |  |  | AIU |  |  | All Other Campuses |  |  | Total |
Gross deferred revenue, January 1, 2018 |  | $ | 23,933 |  |  | $ | 15,507 |  |  | $ | 104 |  |  | $ | 39,544 |
Revenue earned from balances existing as of January 1, 2018 |  |  | (22,210 | ) |  |  | (14,310 | ) |  |  | (104 | ) |  |  | (36,624 | )
Billings during period(1) |  |  | 186,097 |  |  |  | 99,392 |  |  |  | 495 |  |  |  | 285,984 |
Revenue earned for new billings during the period |  |  | (164,535 | ) |  |  | (87,289 | ) |  |  | (406 | ) |  |  | (252,230 | )
Other adjustments |  |  | 469 |  |  |  | 136 |  |  |  | (19 | ) |  |  | 586 |
Gross deferred revenue, June 30, 2018 |  | $ | 23,754 |  |  | $ | 13,436 |  |  | $ | 70 |  |  | $ | 37,260 |
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| (1) | Billings during period includes adjustments for prior billings.
Cash Receipts Our students finance costs through a variety of funding sources, including, among others, federal loan and grant programs, institutional payment plans, employer reimbursement, Veterans’ Administration and other military funding and grants, private and institutional scholarships and cash payments. Cash receipts from government related sources are typically received during the current academic term. We typically receive funds after the end of an academic term for students who receive employer reimbursements. Students who have not applied for any type of financial aid generally set up a payment plan with the institution and make payments on a monthly basis per the terms of the payment plan. If a student withdraws from one of our institutions prior to the completion of the academic term or program period, we refund the portion of tuition and fees already paid that, pursuant to our refund policy and applicable federal and state law and accrediting agency standards, we are not entitled to retain. Generally, the amount to be refunded to a student is calculated based upon the percent of the term attended and the amount of tuition and fees paid by the student as of their withdrawal date. In certain circumstances, we have recognized revenue for students who have withdrawn that we are not entitled to retain. We have estimated a reserve for these limited circumstances based on historical evidence in the amount of $1.0 million as of June 30, 2018. Students are typically entitled to a partial refund through approximately halfway of their term. Pursuant to each institution’s policy, once a student reaches the point in the term where no refund is given, the student would not have a refund due if withdrawing from the institution subsequent to that date. Management reassesses collectability when a student withdraws from the institution and has unpaid tuition charges for the current term which the institution is entitled to retain per the applicable refund policy. Such unpaid charges do not meet the threshold of reasonably collectible and are recognized as revenue in accordance with ASC Topic 606 when cash is received and the contract is terminated and neither party has further performance obligations. We have no remaining performance obligations for students who have withdrawn from our institutions, and once the refund calculation is performed and funds are returned to the student, if applicable under our refund policy, no further consideration is due back to the student. We recognized $0.3 million of revenue for each of the quarters ended June 30, 2018 and 2017 and $0.7 million and $0.8 million for the years to date ended June 30, 2018 and June 30, 2017, respectively, for payments received from withdrawn students. Significant Judgments We analyze revenue recognition on a portfolio approach under ASC Topic 606. Significant judgment is utilized in determining the appropriate portfolios to assess for meeting the criteria to recognize revenue under ASC Topic 606. We have determined that all of our students can be grouped into one portfolio. Based on our past experience, students at different campuses, in different programs or with different funding all behave similarly. Enrollment agreements all contain similar terms, refund policies are similar across all institutions and all students work with the campus to obtain some type of funding, for example, Title IV Program funds, Veterans Administration funds, military funding, employer reimbursement or self-pay. We have significant historical data for our students which allows us to analyze collectability. We do not expect that revenue earned for the portfolio is significantly different as compared to revenue that would be earned if we were to assess each student contract separately. Significant judgment is also required to assess collectability, particularly as it relates to students seeking funding under Title IV Programs. Because students are required to provide documentation, and in some cases extensive documentation, to the Department of Education to be eligible and approved for funding, the timeframe for this process can sometimes span between 90 to 120 days. We monitor the progress of students through the eligibility and approval process and assess collectability for the portfolio each reporting period to monitor that the collectability threshold is met. For the quarters and years to date ended June 30, 2018 and 2017, we received a majority of our institutions’ cash receipts for tuition payments from various government agencies as well as our corporate partnerships which represents a substantial portion of our consolidated revenues and are all low risk of collectability.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
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