XML 29 R13.htm IDEA: XBRL DOCUMENT
v3.19.1

Leases | 3 Months Ended
--- | ---
Mar. 31, 2019
Leases [Abstract] |
Leases | 7. LEASES We lease most of our administrative and educational facilities under non-cancelable operating leases expiring at various dates through 2028. Lease terms generally range from five to ten years with one to four renewal options for extended terms. In most cases, we are required to make additional payments under facility operating leases for taxes, insurance and other operating expenses incurred during the operating lease period, which are typically variable in nature. We determine if a contract contains a lease when the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. Upon identification and commencement of a lease, we establish a right of use (“ROU”) asset and a lease liability. Contract components A lease component is defined as an asset within the lease contract that a lessee can benefit from the use of and is not highly dependent or interrelated with other assets in the arrangement. A lease contract may contain multiple lease components. A non-lease component is defined as a component of the lease that transfers a good or service for the underlying asset, such as maintenance services. We have determined that all of our leases contain one lease component related to the building and land. We have determined that treating the land together with the building as one lease component would not result in a significant difference from accounting for them as separate lease components. Additionally, we have elected the practical expedient to include both the lease component and the non-lease component as a single component when accounting for each lease and calculating the resulting lease liability and ROU asset. Any remaining contract consideration, such as property taxes and insurance, that does not meet the definition of a lease component or non-lease component would be allocated to the single lease component based on our election. Lease liability and ROU asset The lease liability represents future lease payments for lease and non-lease components discounted for present value. Lease payments that may be included in the lease liability include fixed payments, variable lease payments that are based on an index or rate and payments for penalties for terminating the lease if the lessee is reasonably certain to utilize a termination option, among others. Certain of our leases contain rent escalation clauses that are specifically stated in the lease and these are included in the calculation of the lease liability. Variable lease payments for lease and non-lease components which are not based on an index or rate are excluded from the calculation of the lease liability and are recognized in the statement of income and comprehensive income during the period incurred. The ROU asset consists of the amount of the initial measurement of the lease liability and adjusted for any lease incentives, including rent abatements and tenant improvement allowances, and any initial direct costs incurred by the lessee. The ROU asset is amortized over the remaining lease term on a straight-line basis and recorded within educational services and facilities on our unaudited condensed consolidated statements of income and comprehensive income. Lease term The lease term is determined by taking into account the initial period as stated in the lease contract and adjusted for any renewal options that the company is reasonably certain to exercise as well as any period of time that the lessee has control of the space before the stated initial term of the lease. If we determine that we are reasonably certain to exercise a termination option, the lease term is then adjusted to account for the expected termination date. Quantitative lease information Quantitative information related to leases is presented in the following table (dollars in thousands):
|  | For the Quarter Ended March 31, 2019 |
Lease expenses (1) |  |  |  |
Fixed lease expenses - operating (1) |  | $ | 3,370 |
Variable lease expenses - operating (1) |  |  | 2,386 |
Sublease income (1) |  |  | (1,108 | )
Total lease expenses (1) |  |  | 4,648 |
Other information |  |  |  |
Gross operating cash flows for operating leases (2) |  | $ | (10,100 | )
Operating cash flows from subleases (2) |  |  | 1,250 |
Weighted average remaining lease term (in months) – operating leases |  |  | 70 |
Weighted average discount rate – operating leases |  |  | 5.4 | %
__________________
| (1) | Lease expense and sublease income represent the amount recorded within our unaudited condensed consolidated statement of income and comprehensive income. Variable lease amounts represent expenses recognized as incurred which are not included in the lease liability. Fixed lease expenses and sublease income are recorded on a straight-line basis over the lease term and therefore are not necessarily representative of cash payments during the same period.
| (2) | Cash flows are presented on a consolidated basis, including continuing and discontinued operations, and represent cash payments for fixed and variable lease costs.
Gross Lease Obligations As of March 31, 2019, future minimum lease payments under operating leases which are included in lease liabilities on our condensed consolidated balance sheet for continuing operations are as follows (dollars in thousands):
|  | Operating Leases Total |
2019 (1) |  | $ | 15,549 |
2020 |  |  | 17,605 |
2021 |  |  | 11,985 |
2022 |  |  | 8,652 |
2023 and thereafter |  |  | 22,365 |
Total |  | $ | 76,156 |
Less: imputed interest |  |  | 14,233 |
Present value of future minimum lease payments |  |  | 61,923 |
Less: current lease liabilities |  |  | 14,595 |
Non-current lease liabilities |  | $ | 47,328 |
__________________ (1) Amounts provided are for April 2019 through December 2019. As of December 31, 2018, future minimum lease payments under operating leases for continuing and discontinued operations were as follows (dollars in thousands):
|  | Operating Leases |  |  |  |  |
|  | Continuing Operations |  |  | Discontinued Operations |  |  | Total |
2019 (1) |  | $ | 21,076 |  |  | $ | 808 |  |  | $ | 21,884 |
2020 |  |  | 17,728 |  |  |  | - |  |  |  | 17,728 |
2021 |  |  | 12,070 |  |  |  | - |  |  |  | 12,070 |
2022 |  |  | 8,638 |  |  |  | - |  |  |  | 8,638 |
2023 and thereafter |  |  | 22,298 |  |  |  | - |  |  |  | 22,298 |
Total |  | $ | 81,810 |  |  | $ | 808 |  |  | $ | 82,618 |
__________________
(1) | Amounts include payments due associated with executed early terminations of real estate leases and represent payments for the full year 2019.
Subleases For certain of our leased locations, primarily those related to our closed campuses, we have vacated the facility and have fully or partially subleased the space or are marketing the space for sublet. For each sublease that has been entered into, we remain the guarantor under the lease and therefore become the intermediate lessor. We have 14 subleases within 9 leased facilities with terms ranging from 2 to 6 years. We have recognized sublease income of $1.1 million for the quarter ended March 31, 2019 as on offset to lease expense on our unaudited condensed consolidated statement of income and comprehensive income. As of March 31, 2019, future minimum sublease rental income under operating leases, which will decrease our future minimum lease payments presented above, is as follows (dollars in thousands):
|  | Operating Subleases Total |
2019 (1) |  | $ | 2,615 |
2020 |  |  | 2,751 |
2021 |  |  | 1,075 |
2022 |  |  | 777 |
2023 and thereafter |  |  | 330 |
Total |  | $ | 7,548 |
_____________________
(1) | Amounts provided are for April 2019 through December 2019.
Significant Judgments and Assumptions We utilize discount rates to determine the net present value of our gross lease obligations when calculating the lease liability and related ROU asset. In cases in which the rate implicit in the lease is readily determinable, we utilize that discount rate for purposes of the net present value calculation. In most cases, our lease agreements do not have a discount rate that is readily determinable and therefore we utilize an estimate of our incremental borrowing rate. Our incremental borrowing rate is determined at lease commencement or lease modification and represents the rate of interest we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Of our nine leases related to our ongoing operations which consist of administrative offices and university locations, we are not reasonably certain that we will extend or terminate any of those leases. For the 11 remaining leases that have been vacated related to our closed campuses, we are not reasonably certain to exercise any options to extend or terminate any leases. Transition to ASC 842 Upon transition to ASC 842 as of January 1, 2019, the following beginning balances were restated within our condensed consolidated balance sheet (dollars in thousands):
|  | December 31, 2018 |  |  | Impact of Modified Retrospective Adoption of ASC 842 |  |  | January 1, 2019 Post ASC 842 Adoption |
Prepaid expenses (1) |  | $ | 7,771 |  |  | $ | (1,502 | ) |  | $ | 6,269 |
Right of use asset |  |  | - |  |  |  | 45,963 |  |  |  | 45,963 |
Deferred income tax assets, net |  |  | 81,628 |  |  |  | (325 | ) |  |  | 81,303 |
Assets of discontinued operations, non-current |  |  | 178 |  |  |  | 57 |  |  |  | 235 |
Lease liability - operating, current |  |  | - |  |  |  | 18,656 |  |  |  | 18,656 |
Other accrued expenses, current (1) |  |  | 19,668 |  |  |  | (5,950 | ) |  |  | 13,718 |
Liabilities of discontinued operations, current |  |  | 536 |  |  |  | 57 |  |  |  | 593 |
Lease liability - operating, non-current |  |  | - |  |  |  | 48,238 |  |  |  | 48,238 |
Deferred rent obligations (1) |  |  | 12,745 |  |  |  | (12,745 | ) |  |  | - |
Other liabilities, non-current (1) |  |  | 17,493 |  |  |  | (5,098 | ) |  |  | 12,395 |
Accumulated deficit (2) |  |  | (52,946 | ) |  |  | 1,035 |  |  |  | (51,911 | )
__________________
(1) | Balances as of December 31, 2018 that related to prepaid rent, remaining lease obligations for vacated spaces and deferred rent obligations were offset with the ROU asset as of January 1, 2019.
(2) | Certain leases resulted in a negative ROU asset upon transition to ASC 842 related to vacated spaces that had liabilities previously established. Those leases that resulted in a negative ROU asset were recorded as an adjustment, net of tax, to accumulated deficit within stockholders equity on our condensed consolidated balance sheet as of January 1, 2019.
We elected to adopt the relief provisions under ASC 842. ASC 842 offers relief from implementing the transition provisions by permitting an entity to elect not to reassess:
| • | whether any expired or existing contract is a lease or contains a lease,
| • | the lease classification of any expired or existing leases, and
| • | initial direct costs for any existing leases.

X
- References No definition available. + Details
Name: | us-gaap_LeasesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
Name: | us-gaap_LesseeOperatingLeasesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration