Quantitative and Qualitative Disclosures about Market Risk
−Removed: Impact of inflation.
−Removed: We believe that inflation has not had a material impact on our results of operations for the years ended December 31, 2020, 2019, or 2018.
−Removed: There can be no assurance that future inflation will not have an adverse impact on our operating results and financial condition.
Market risk .
6 unchanged sentences
Consolidated Financial Statements and Supplementary Data
−Removed: Report of Independent Registered Public Accounting Firm
+Added: Report of Independent Registered Public Accounting Firm ( KPMG LLP , Phoenix, Arizona , Auditor Firm:
Consolidated Balance Sheets as of December 31, 2021 and 2020
44 unchanged sentences
We have served as the Company’s auditor since 2012.
−Removed: Tempe, Arizona
+Added: Phoenix, Arizona
February 16, 2022
5 unchanged sentences
Cash and cash equivalents
−Removed: Restricted cash and cash equivalents
Accounts receivable, net
29 unchanged sentences
Treasury stock, at cost, 15,915 and 6,628 shares of common stock at December 31, 2021 and December 31, 2020, respectively
+Added: ( 1,107,211 )
Additional paid-in capital
8 unchanged sentences
Service revenue
−Removed: University related revenue
−Removed: Service revenue
Costs and expenses:
4 unchanged sentences
Amortization of intangible assets
−Removed: University related expenses
Loss on transaction
17 unchanged sentences
Other comprehensive income, net of tax:
−Removed: Unrealized gains (losses) on hedging derivatives, net of taxes of $ 107 and $ 39 for the years ended December 31, 2019 and 2018, respectively
−Removed: Unrealized gains (losses) on available for sale securities, net of taxes of $ 103 for the year ended December 31, 2018
+Added: Unrealized losses on hedging derivatives, net of taxes of $ 107 for the year ended December 31, 2019
Reclassification of expired interest rate corridor to interest expense, net of taxes of $ 257 for the year ended December 31, 2019
8 unchanged sentences
Balance at December 31, 2018
−Removed: Cumulative effect from the adoption of accounting pronouncements, net of taxes of $ 390
Comprehensive income
−Removed: Adoption impact – ASU 2018-02
Common stock purchased for treasury
3 unchanged sentences
Balance at December 31, 2019
+Added: Cumulative effect from the adoption of accounting pronouncements, net of taxes of $ 1,168
Comprehensive income
4 unchanged sentences
Balance at December 31, 2020
−Removed: Cumulative effect from the adoption of accounting pronouncements, net of taxes of $ 1,168
Comprehensive income
4 unchanged sentences
Balance at December 31, 2021
+Added: ( 1,107,211 )
The accompanying notes are an integral part of these consolidated financial statements.
6 unchanged sentences
Share-based compensation
−Removed: Provision for bad debts
+Added: Reversal of credit loss reserve
Depreciation and amortization
5 unchanged sentences
Accounts receivable and interest receivable from university partners
−Removed: Accounts receivable
Right-of-use assets and lease liabilities
2 unchanged sentences
Income taxes receivable/payable
−Removed: Deferred rent
Student deposits
−Removed: Deferred revenue
+Added: Deferred rent
Net cash provided by operating activities
−Removed: Cash flows used in investing activities:
+Added: Cash flows provided by (used in) investing activities:
Capital expenditures
−Removed: Purchases of land and building improvements related to off-site development
Additions of amortizable content
Acquisition, net of cash acquired
−Removed: Funding to GCU at closing in excess of required capital
−Removed: Repayment of excess funds by GCU
Funding to GCU
2 unchanged sentences
Proceeds from sale or maturity of investments
−Removed: Net cash used in investing activities
+Added: Net cash provided by (used in) investing activities
Cash flows (used in) provided by financing activities:
13 unchanged sentences
Supplemental disclosure of non-cash investing and financing activities
−Removed: Sale transaction to GCU through Secured Note financing
Purchases of property and equipment included in accounts payable
Allowance for credit losses of $ 5,000 , net of taxes of $ 1,168 from adoption of ASU 2016-13
−Removed: Reclassification of capitalized costs - adoption of ASC 606
−Removed: Reclassification of deferred revenue – adoption of ASC 606
Lease adoption - recognition of right of use assets and lease liabilities
1 unchanged sentence
Reclassification of interest rate corridor due to expiration
−Removed: Reclassification of tax effect within accumulated other comprehensive income
The accompanying notes are an integral part of these consolidated financial statements.
6 unchanged sentences
GCE has developed significant technological solutions, infrastructure and operational processes to provide services to these institutions on a large scale.
−Removed: GCE’s most significant university partner is Grand Canyon University (“GCU”), an Arizona non-profit corporation that operates a comprehensive regionally accredited university that offers graduate and undergraduate degree programs, emphases and certificates across nine colleges both online and on ground at its campus in Phoenix, Arizona.
+Added: GCE’s most significant university partner is Grand Canyon University (“GCU”), an Arizona non-profit corporation that operates a comprehensive regionally accredited university that offers graduate and undergraduate degree programs, emphases and certificates across nine colleges both online, on ground at its campus in Phoenix, Arizona and at two off-site classroom and laboratory sites.
Prior to July 1, 2018, GCE owned and operated Grand Canyon University (the “University”).
7 unchanged sentences
See Note 3 to our consolidated financial statement for a full description of the Acquisition.
−Removed: In the healthcare field, GCE, together with Orbis Education, works in partnership with a growing number of top universities and healthcare networks across the country, offering health care related academic programs at off-campus classroom and laboratory sites located near healthcare providers and developing high-quality, career-ready graduates who enter the workforce ready to meet the demands of the healthcare industry.
+Added: Since the Acquisition, GCE, together with Orbis Education, has continued to add additional university partners.
+Added: In the healthcare field, we work in partnership with a growing number of top universities and healthcare networks across the country, offering healthcare-related academic programs at off-campus classroom and laboratory sites located near healthcare providers and developing high-quality, career-ready graduates who enter the workforce ready to meet the demands of the healthcare industry.
+Added: In addition, we have begun providing certain services to a university partner to assist them in expanding their online graduate programs.
As of December 31, 2021, GCE provides education services to 27 university partners across the Unites States .
4 unchanged sentences
The Transaction
−Removed: Asset Purchase Agreement and Related Agreements
On July 1, 2018, the Company consummated an Asset Purchase Agreement (the “Asset Purchase Agreement”) with GCU.
In conjunction with the Asset Purchase Agreement, we received a secured note from GCU as consideration for the transferred assets (the “Transferred Assets”) in the initial principal amount of $ 870,097 (the “Secured Note”).
−Removed: The Secured Note contains customary commercial credit terms, including affirmative and negative covenants applicable to GCU, and provides that the Secured Note bears interest at an annual rate of 6.0 %, has a maturity date of June 30, 2025, and is secured by all of the assets of GCU.
−Removed: The Secured Note provides for GCU to make interest only payments during the term, with all principal and accrued and unpaid interest due at maturity and also provides that we may loan additional amounts to GCU to fund approved capital expenditures during the first three years of the term.
+Added: The Secured Note contained customary commercial credit terms, including affirmative and negative covenants applicable to GCU, and provided that the Secured Note bore interest at an annual rate of 6.0 %, had a maturity date of June 30, 2025, and was secured by all of the assets of GCU.
+Added: The Secured Note provided for GCU to make interest only payments during the term, with all principal and accrued and unpaid interest due at maturity and also provides that we may loan additional amounts to GCU to fund approved capital expenditures.
+Added: As of December 31, 2021, the Secured Note receivable had been fully paid including loans for capital expenditures and all pledged assets from GCU have been released.
Grand Canyon Education, Inc.
1 unchanged sentence
(In thousands, except per share data)
−Removed: December 31, 2020, the Company had loaned $ 99,815 to GCU for capital expenditures, which is net of repayments made by GCU.
In connection with the closing of the Asset Purchase Agreement, the Company and GCU entered into a long-term master services agreement pursuant to which the Company provides identified technology and academic services, counseling services and support, marketing and communication services, and several back-office services to GCU in return for 60 % of GCU’s tuition and fee revenue.
−Removed: The Company was a party to a credit agreement with Bank of America, N.A.
−Removed: as Administrative Agent, and other lenders, dated December 21, 2012 and amended as of January 15, 2016.
−Removed: Effective July 1, 2018, the Company and the lenders amended the credit agreement (the “Amendment”) to release the assets pledged as collateral in order to enable GCE to sell them to GCU and complete the Transaction.
−Removed: In connection with the Amendment, GCE provided restricted cash collateral in the amount of $ 61,667 as of December 31, 2018, which was released on January 22, 2019 .
−Removed: See Note 10 to our consolidated financial statements for a full description of our credit agreement.
−Removed: Disposed Assets, previously Assets and Liabilities Held for Sale
−Removed: The Company received Board approval to consummate the Transaction on June 28, 2018, and completed the Transaction on July 1, 2018.
−Removed: As a result, the Company determined that it had met the accounting requirements to classify the assets and liabilities to be transferred in the Transaction as assets and liabilities held for sale as of June 30, 2018.
−Removed: The assets and liabilities held for sale were sold as part of the Transaction on July 1, 2018.
−Removed: Accordingly, the following balances were transferred to GCU as of July 1, 2018:
−Removed: Restricted cash and cash equivalents
−Removed: Accounts receivable, net of allowance for doubtful accounts of $ 6,093
−Removed: Property and equipment, net of accumulated depreciation of $ 166,066
−Removed: Total assets held for sale, current
−Removed: Accrued and other liabilities
−Removed: Student deposits
−Removed: Deferred revenue
−Removed: Total liabilities held for sale, current
−Removed: The Company received a Secured Note for the Transferred Assets.
−Removed: The Company also transferred cash equal to $ 34,107 representing a working capital adjustment as part of the closing.
Except for identified liabilities assumed by GCU, GCE retained responsibility for all liabilities of the business arising from pre-closing operations.
−Removed: For the year ended December 31, 2018 the Company had a loss of $ 18,370 , included in loss on transaction due to transaction costs of $ 5,765 , which includes both disposition and acquisition related transaction costs, and an asset impairment of $ 3,037 .
−Removed: In addition, the Company transferred to GCU cash of $ 9,568 to fund a deferred compensation plan for GCU employees that were formerly GCE employees (the “Transferred Employees”) and that held unvested restricted stock of GCE that was forfeited upon the Transaction.
−Removed: Included in the university related expenses for the six months ended December 31, 2018 is $ 7,880 of share-based compensation expense resulting from the modification and vesting of previously issued restricted stock grants held by Transferred Employees, employer tax expense of $ 191 related to the share-based compensation modification, net of reversals of employee related liabilities that were not part of the Transferred Assets for the Transaction of $ 1,907 .
−Removed: Grand Canyon Education, Inc.
−Removed: Notes to Consolidated Financial Statements
−Removed: (In thousands, except per share data)
−Removed: Variable Interest Entity and Related Party Considerations
−Removed: ASC 810-10-15-17 provides scope exceptions to the variable interest entity analysis that include a not-for profit entity carve out.
−Removed: GCU is not a related party to the Company in accordance with ASC Topic 850.
−Removed: The following factors were considered:
−Removed: ● Since GCU is an Arizona non-profit corporation, the Company has no ownership interest or voting rights in GCU.
−Removed: ● GCU is a separate non-profit entity under the control of an independent board of trustees, none of whose members have ever served in a management or corporate board role at the Company.
−Removed: GCU’s board of trustees has adopted bylaws and a related conflict of interest policy that, among other things, (i) prevents any trustee of GCU from attending any meeting, or voting on any matter, as to which such trustee has a conflict of interest, (ii) establishes a special committee of independent trustees to oversee on behalf of GCU all matters related to the Master Services Agreement and GCU’s relationship with the Company, and (iii) prohibits any trustee from having any financial interest in, or role with, the Company.
−Removed: Accordingly, the Company’s relationship with GCU, both pursuant to the Master Services Agreement and operationally, is no longer as owner and operator, but as a third-party service provider to an independent customer.
−Removed: While the Company believes that its relationship with GCU will remain strong, GCU’s board of trustees and management will have fiduciary and other duties that will require them to focus on the best interests of GCU and over time those interests could diverge from those of the Company.
−Removed: Mueller has served as the Chief Executive Officer of the Company since 2008 and the Chairman of the Board of the Company since 2017 and has also served as the President of the University since 2012.
−Removed: In connection with the Transaction, the Board of Directors of the Company and the board of trustees of GCU each independently determined that Mr.
−Removed: Mueller should retain those roles.
−Removed: Accordingly, Mr.
−Removed: Mueller remains the Chairman of the Board and Chief Executive Officer of the Company and continues to serve as the President of GCU.
−Removed: As noted above, however, Mr.
−Removed: Mueller is prohibited from serving on the board of trustees of GCU.
−Removed: Aside from Mr.
−Removed: Mueller, no other employee of GCU or GCE has a dual role in both organizations.
−Removed: A structure has been put in place that prevents Mr.
−Removed: Mueller from participating in operational matters involving the Company and GCU, including with respect to the Master Services Agreement.
−Removed: ● The terms of the Master Services Agreement vest in GCU and its board of trustees has full authority over decision making related to the day-to-day operations of GCU, including, without limitation, (i) selecting, hiring and firing its personnel, (ii) selecting and adopting academic programs and courses, (iii) establishing admission standards and admitting students, (iv) overseeing instruction, (v) setting credit and student performance requirements, (vi) determining graduation requirements, and (vii) conferring degrees.
−Removed: Per the terms of the MSA, GCE has no authority over GCU’s day-to-day operations.
−Removed: ● If GCU were to default under the credit agreement, the Company would be able to pursue assets of GCU, which are pledged as collateral for the Secured Note.
−Removed: However, the Company would not become the owner or operator of GCU.
−Removed: ● There is no parent entity and subsidiary relationship between the Company and GCU.
−Removed: ● The Company and GCU both engaged their own outside corporate counsel, outside regulatory counsel, and financial advisors to represent each party’s interest during the Transaction.
−Removed: Grand Canyon Education, Inc.
−Removed: Notes to Consolidated Financial Statements
−Removed: (In thousands, except per share data)
On January 22, 2019, GCE acquired Orbis Education for $ 361,184 (inclusive of closing date adjustments and net of cash acquired).
3 unchanged sentences
The fair value of the assets acquired, less the liabilities assumed exceeded the purchase price by $ 157,825 which was recorded as goodwill.
−Removed: Transaction costs for the Acquisition for the year ended December 31, 2018 were $ 808 and for the year ended December 31, 2019 were $ 3,966 , which are included in the loss on transaction in our consolidated income statement.
+Added: Transaction costs for the Acquisition for the year ended December 31, 2019 were $ 3,966 , which are included in the loss on transaction in our consolidated income statement.
The Acquisition was accounted for in accordance with the acquisition method of accounting.
20 unchanged sentences
The fair value of university partner relationships was determined using the multiple-period excess earnings method.
−Removed: Subsequent to the closing of the Acquisition, the Company revised its allocation of the purchase price by $ 9,538 during the year ended December 31, 2019, primarily as the result of the tax effect of a lower tax basis in the acquired assets.
−Removed: The Company has completed the allocation of the purchase price of the Acquisition as of December 31, 2019.
−Removed: The Company has consolidated the results of operations for Orbis Education since its Acquisition on January 22, 2019.
−Removed: Consolidated net revenue and consolidated net income for the year ended December 31, 2019 include $ 85,869 of service revenue and a loss, net of taxes, of $ 2,588 from Orbis Education, which includes $ 8,223 of amortization of
+Added: Subsequent to the closing of the Acquisition, the Company revised its allocation of the purchase price by $ 9,538 during the year ended December 31, 2019, primarily as the result of the tax effect of a lower tax basis in the
Grand Canyon Education, Inc.
1 unchanged sentence
(In thousands, except per share data)
−Removed: intangible assets.
+Added: acquired assets.
+Added: The Company has completed the allocation of the purchase price of the Acquisition as of December 31, 2019.
+Added: The Company has consolidated the results of operations for Orbis Education since its Acquisition on January 22, 2019.
+Added: Consolidated net revenue and consolidated net income for the year ended December 31, 2019 include $ 85,869 of service revenue and a loss, net of taxes, of $ 2,588 from Orbis Education, which includes $ 8,223 of amortization of intangible assets.
The following table reports pro forma information as if the Acquisition of Orbis Education had been completed at the beginning of the earliest period presented:
1 unchanged sentence
Year Ended December 31,
−Removed: The pro forma information above for the three months ended and the years ended December 31, 2019 and 2018 includes acquisition related costs in both periods, amortization of intangible assets as a result of the Acquisition, additional interest expense on the debt issued to finance the Acquisition, depreciation expense based on the estimated fair value of the assets acquired, and warrant expense and related tax effects.
−Removed: The pro forma financial information is not necessarily indicative of the results of operations that would have occurred had the transactions been consummated on January 1, 2019 and 2018.
+Added: The pro forma information above for the three months ended and the year ended December 31, 2019 includes acquisition related costs in both periods, amortization of intangible assets as a result of the Acquisition, additional interest expense on the debt issued to finance the Acquisition, depreciation expense based on the estimated fair value of the assets acquired, and warrant expense and related tax effects.
+Added: The pro forma financial information is not necessarily indicative of the results of operations that would have occurred had the transactions been consummated on January 1, 2019.
Summary of Significant Accounting Policies
4 unchanged sentences
The preparation of consolidated financial statements in conformity with U.S.
−Removed: generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes.
+Added: generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes, including the collection of accounts receivables and reserves associated with uncertain tax positions.
Actual results could differ from those estimates.
2 unchanged sentences
The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
−Removed: Restricted Cash and Cash Equivalents
−Removed: Restricted cash and cash equivalents at December 31, 2019 represents cash pledged for leased office space, which cash was released during the year ended December 31, 2020.
−Removed: At December 31, 2020 and 2019, the Company considers its investments in municipal bonds, mutual funds, municipal securities, corporate bonds, collateralized mortgage obligations, certificates of deposit and commercial paper as trading securities based on the Company’s intent for the respective security.
−Removed: Trading 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
+Added: As of December 31, 2021, the Company had no investments.
+Added: As of December 31, 2020, the Company considers its investments in municipal bonds, mutual funds, municipal securities, corporate bonds, collateralized mortgage obligations, certificates of deposit and commercial paper as trading securities based on the Company’s intent
Grand Canyon Education, Inc.
1 unchanged sentence
(In thousands, except per share data)
−Removed: inputs other than quoted prices that are observable for the assets and unrealized holding gains and losses are included in earnings.
−Removed: As of December 31, 2018, the Company transferred its investments from available-for-sale to trading, due to the Company’s decision to liquidate all investments to fund a portion of the purchase price paid in the Acquisition.
+Added: for the respective security.
+Added: Trading 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 and unrealized holding gains and losses are included in earnings.
Available-for-sale securities are carried at fair value, with unrealized gains and losses, net of tax, reported as a separate component of other comprehensive income.
1 unchanged sentence
Amortization of premiums, accretion of discounts, interest and dividend income and realized gains and losses are included in interest and other income.
−Removed: As a result of the transfer to trading, the Company recorded a loss of $ 372 in investment interest and other for the year ended December 31, 2018.
Property and Equipment
4 unchanged sentences
Construction in progress represents items not yet placed in service and are not depreciated.
−Removed: The majority of the Company’s historical capitalized interest was related to the construction of the University’s campus improvements.
−Removed: The Company capitalizes interest using its interest rates on the specific borrowings used to finance the improvements, which approximated 3.7 % in 2018.
−Removed: Interest cost capitalized and incurred in the years ended December 31, 2020, 2019, and 2018 are as follows:
−Removed: Year Ended December 31,
−Removed: Interest incurred
−Removed: Interest capitalized
−Removed: Interest expense
Depreciation is provided using the straight-line method over the estimated useful lives of the assets.
9 unchanged sentences
Once the software is placed in service, these costs are amortized over the estimated useful life of the software, which is generally three years .
−Removed: These assets are a component of our property and equipment, net in our consolidated balance sheet.
+Added: These assets are a component of our property and equipment, net in our consolidated balance sheets.
Capitalized Content Development
2 unchanged sentences
We also capitalize the creation of learning objects which are digital assets such as online demonstrations, simulations, and case studies used to obtain learning objectives.
−Removed: Grand Canyon Education, Inc.
−Removed: Notes to Consolidated Financial Statements
−Removed: (In thousands, except per share data)
Costs that are capitalized include payroll and payroll-related costs for employees who are directly associated and spend time producing content and payments to faculty and subject matter experts involved in the process.
4 unchanged sentences
As of December 31, 2021 and 2020, $ 1,168 and $ 1,198 , respectively, net of amortization, of deferred content assets are included in other assets in the Company’s consolidated balance sheets and amortization is included in technical and academic services where the costs originated.
+Added: Grand Canyon Education, Inc.
+Added: Notes to Consolidated Financial Statements
+Added: (In thousands, except per share data)
Long-Lived Assets
9 unchanged sentences
Leases primarily consist of off-campus classroom and laboratory site locations and office space.
−Removed: The Company developed its online delivery platform with a third-party and put this platform into full production in 2011.
−Removed: The Company has prepaid perpetual license fees and source code rights for the software developed, and has prepaid maintenance and service fees.
−Removed: 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.
−Removed: Prepaid Royalty
−Removed: In connection with its February 2004 acquisition of the assets of the University from a non-profit foundation, the Company recorded a future royalty payment obligation that was included in the Prepaid Royalty in the accompanying consolidated balance sheet, which was being amortized over a 20 year period.
−Removed: This asset was to be expensed over the periods that online education revenues were earned.
−Removed: At the completion of the Transaction on July 1, 2018, the remaining prepaid royalty assets were deemed impaired and $ 3,037 was expensed and included in loss on transaction in the consolidated income statement.
−Removed: Grand Canyon Education, Inc.
−Removed: Notes to Consolidated Financial Statements
−Removed: (In thousands, except per share data)
Business Combinations
5 unchanged sentences
The net assets and result of operations of an acquired entity are included on the Company's consolidated financial statements from the acquisition date.
−Removed: Goodwill and Intangible Assets
+Added: Goodwill and Amortizable Intangible Assets
Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the tangible and intangible assets acquired and liabilities assumed.
2 unchanged sentences
The Company has concluded there is one operating segment and one reporting unit for goodwill impairment consideration.
−Removed: 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.
−Removed: The Company performed its annual goodwill impairment test, by performing a qualitative assessment.
+Added: 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 quantitative goodwill impairment test.
+Added: The Company reviews goodwill at least annually or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount.
Following this assessment, the Company determined that it is more likely than not that its fair value exceeds its carrying amount.
−Removed: Finite-lived intangible assets that are acquired in business combinations are recorded at fair value on their acquisition dates and are amortized on a straight-line basis over the estimated useful life of the intangible asset.
−Removed: Finite-lived intangible assets consist of university partner relationships and trade names.
+Added: Finite-lived intangible assets that are acquired in a business combination are recorded at fair value on their acquisition dates and are amortized using a method that reflects the pattern in which the economic benefits of the intangible assets are consumed or on a straight-line basis over the estimated useful life of the intangible asset if the pattern of economic benefit cannot be reliability determined.
+Added: Finite-lived intangible assets consist of university partner
+Added: Grand Canyon Education, Inc.
+Added: Notes to Consolidated Financial Statements
+Added: (In thousands, except per share data)
+Added: relationships and trade names.
The Company reviews its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an intangible asset may not be recoverable.
−Removed: There were no indicators that the carrying amount of the finite-lived intangible assets were impaired.
+Added: There were no indicators that the carrying amount of the finite-lived intangible assets were impaired as of December 31, 2021.
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.
9 unchanged sentences
Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.
−Removed: Grand Canyon Education, Inc.
−Removed: Notes to Consolidated Financial Statements
−Removed: (In thousands, except per share data)
Although the Company currently does not have any derivative financial instruments, derivative financial instruments have been used in the past to manage its exposure to interest rate risk.
4 unchanged sentences
Fair value of the Secured Note was estimated based upon average yields of similar debt arrangements in the marketplace.
−Removed: As of December 31, 2019, the Secured Note approximated fair market value since it was recently negotiated in the Transaction at the fair market value.
−Removed: The carrying value of notes payable approximate fair value based on its variable rate index.
−Removed: 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.
−Removed: See Note 12, Derivative Instruments.
+Added: As of December 31, 2020 the carrying value of notes payable approximate fair value based on its variable rate index.
The fair value of investments was determined using Level 1 and Level 2 of the hierarchy of valuation inputs, with the use of inputs other than quoted prices that are observable for the assets.
3 unchanged sentences
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.
+Added: Grand Canyon Education, Inc.
+Added: Notes to Consolidated Financial Statements
+Added: (In thousands, except per share data)
The Company 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.
11 unchanged sentences
The Company expenses legal fees as incurred.
−Removed: Grand Canyon Education, Inc.
−Removed: Notes to Consolidated Financial Statements
−Removed: (In thousands, except per share data)
Revenue Recognition
−Removed: University related revenue – prior to July 1, 2018
−Removed: On January 1, 2018, the Company adopted “Revenue from Contracts with Customers” using the modified retrospective method applied to all contracts.
−Removed: Prior to the Transaction on July 1, 2018, net revenues consisted primarily of tuition, net of scholarships, and fees derived from courses taught by the University online, on ground, and at facilities it leased or those of employers, as well as from related educational resources that the University provided to its students, such as access to online materials.
−Removed: Tuition revenue was recognized pro-rata over the applicable period of instruction.
−Removed: A contract was entered into with a student and covered a course or semester.
−Removed: Revenue recognition occurred once a student started attending a course.
−Removed: The University also charged online students an upfront learning management fee, which was deferred and recognized over the initial course.
−Removed: The University had no costs that were capitalized to obtain or to fulfill a contract with a customer.
−Removed: Ancillary revenues included housing and fee revenues that were recognized over the period the services were provided and also included revenues from sales and services such as food and beverage, merchandise, hotel, golf and arena events that were recognized as sales occurred or services were performed as these services were transferred at a point in time.
−Removed: For the six months ended June 30, 2018, the Company’s revenue was reduced by approximately $ 101,176 as a result of scholarships that the Company offered to students.
−Removed: Sales tax collected from students is excluded from net revenues.
−Removed: Collected but unremitted sales tax is included as an accrued liability in our consolidated balance sheet.
−Removed: The following table presents our revenues disaggregated by the nature of transfer of services for the six months ended June 30, 2018:
−Removed: Tuition revenues
−Removed: Ancillary revenues (housing, meals, fees, golf, hotel, arena, other)
−Removed: Total revenues
−Removed: The Company’s receivables represented unconditional rights to consideration from its contracts with students;
−Removed: accordingly, students were not billed until they started attending a course and the revenue recognition process had commenced.
−Removed: Once a student had been invoiced, payment was due immediately.
−Removed: Included in each invoice to the student were all educational related items including tuition, net of scholarships, housing, educational materials, fees, etc.
−Removed: The Company did not have any contract assets.
−Removed: The Company’s contract liabilities were reported as deferred revenue and student deposits in the consolidated balance sheets.
−Removed: Deferred revenue and student deposits in any period represented the excess of tuition, fees, and other student payments received as compared to amounts recognized as revenue on the consolidated income statement and were reflected as current liabilities in the accompanying consolidated balance sheets.
−Removed: The Company’s education programs had starting and ending dates that differ from its fiscal quarters.
−Removed: Therefore, at the end of each fiscal quarter, a portion of revenue from these programs was not yet earned.
−Removed: The majority of the University’s traditional ground students did not attend courses during the summer months (May through August), which affected our results for our second and third fiscal quarters.
−Removed: The Company had identified a performance obligation associated with the provision of its educational instruction and other educational services, housing services, and other academic related services and used the output measure for recognition as the period of time over which the services were provided to our students.
−Removed: The Company had identified performance obligations related to its hotel, golf course, restaurants, sale of branded promotional items and other ancillary activities and recognized revenue at the point in time goods or services were provided to its customers.
−Removed: The Company maintained an institutional tuition refund policy, which provided for all or a portion of tuition to be refunded if a student withdrew during stated refund periods.
−Removed: Certain states in which students reside impose separate, mandatory refund policies, which overrode the Company’s policy to the extent in conflict.
−Removed: If a student withdrew at a time when only a portion, or none of the tuition was refundable, then in accordance with its revenue recognition policy, the Company
−Removed: Grand Canyon Education, Inc.
−Removed: Notes to Consolidated Financial Statements
−Removed: (In thousands, except per share data)
−Removed: continued to recognize the tuition that was not refunded pro-rata over the applicable period of instruction.
−Removed: The Company did not record revenue on amounts that may be refunded.
−Removed: However, for students that had taken out financial aid to pay their tuition and for which a return of such money to ED under Title IV was required as a result of his or her withdrawal, the Company reassessed collectability for these students each quarter for the estimated revenue that will be returned and recognized the revenue in future periods when payment was received.
−Removed: The Company had elected the short-term contract exemption with respect to its performance obligations under its contracts with students as all such contracts had original terms of less than one year.
−Removed: Service revenue commenced July 1, 2018
−Removed: Starting July 1, 2018, the Company generates all of its revenue through services agreements with its university partners (“Services Agreements”), pursuant to which the Company provides integrated technology and academic services, marketing and communication services, and back office services to its university partners in return for a percentage of tuition and fee revenue.
+Added: The Company generates all of its revenue through services agreements with its university partners (“Services Agreements”), pursuant to which the Company provides integrated technology and academic services, marketing and communication services, and back-office services to its university partners in return for a percentage of tuition and fee revenue.
The Company’s Services Agreements have initial terms ranging from 7 - 15 years , subject to renewal options, although certain agreements may give the university partners the right to terminate early if certain conditions are met.
10 unchanged sentences
There are no refunds or return rights under the Services Agreements.
+Added: Grand Canyon Education, Inc.
+Added: Notes to Consolidated Financial Statements
+Added: (In thousands, except per share data)
The Company’s receivables represent unconditional rights to consideration from our Services Agreements with our university partners.
7 unchanged sentences
Deferred revenue represents the excess of amounts received as compared to amounts recognized in revenue on our consolidated statements of income as of the end of the reporting period, and such amounts are reflected as a current liability on our consolidated balance sheets.
−Removed: We generally receive
−Removed: Grand Canyon Education, Inc.
−Removed: Notes to Consolidated Financial Statements
−Removed: (In thousands, except per share data)
−Removed: payments for our services billed within 30 days of invoice.
+Added: We generally receive payments for our services billed within 30 days of invoice.
These payments are recorded as deferred revenue until the services are delivered and revenue is recognized.
Allowance for Credit Losses
−Removed: The Company records its accounts receivable and Secured Note receivable at the net amount expected to be collected.
+Added: The Company records its accounts receivable and previously had recorded its Secured Note receivable at the net amount expected to be collected.
Our accounts receivable are derived through education services provided to university partners.
2 unchanged sentences
The Company determines the adequacy of the allowance by periodically evaluating each university partner’s balance, considering their financial condition and credit history, and considering current and forecasted economic conditions.
−Removed: Since our transition to an education services company on July 1, 2018 through December 31, 2019, and continued growth to 25 university partners, the Company has no credit losses with any of our university partners.
In the first quarter of 2020, the Company adopted ASU 2016-13, Financial Instruments – Credit Losses:
4 unchanged sentences
Bad debt expense is recorded as a technology and academic services expense in the consolidated income statement.
−Removed: The Company will continue to actively monitor the impact of the COVID-19 pandemic on expected credit losses.
+Added: In the fourth quarter of 2021, the Secured Note receivable was paid off and the credit loss reserve of $ 5,000 was reversed.
+Added: The Company will continue to actively monitor the impact of the COVID-19 pandemic as well as other factors on expected credit losses.
Technology and Academic Services
6 unchanged sentences
This expense category includes salaries, benefits and share-based compensation, and other costs such as dues, fees and subscriptions and travel costs.
−Removed: This category also includes an allocation of depreciation, amortization, rent, and occupancy costs attributable to the provision of these services, primarily at the Company’s Phoenix, Arizona and Indianapolis, Indiana locations.
+Added: This category also
+Added: Grand Canyon Education, Inc.
+Added: Notes to Consolidated Financial Statements
+Added: (In thousands, except per share data)
+Added: includes an allocation of depreciation, amortization, rent, and occupancy costs attributable to the provision of these services, primarily at the Company’s Phoenix, Arizona and Indianapolis, Indiana locations.
Marketing and Communication
3 unchanged sentences
Advertising costs are expensed as incurred.
−Removed: Grand Canyon Education, Inc.
−Removed: Notes to Consolidated Financial Statements
−Removed: (In thousands, except per share data)
General and Administrative
1 unchanged sentence
This category also includes an allocation of depreciation, amortization, lease expense, and occupancy costs attributable to the provision of these services, primarily at the Company’s Phoenix, Arizona and Indianapolis, Indiana locations.
−Removed: University related expenses
−Removed: University related expenses represent the costs that were transferred to GCU in the Transaction and that are no longer incurred by the Company.
Insurance/Self-Insurance
9 unchanged sentences
Additionally, the Company 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.
−Removed: The Company is also subject to credit risk for its accounts receivable balance and its Secured Note.
+Added: Our cash balances are primarily invested in money market funds or on deposit at high credit quality financial institutions in the U.S.
+Added: These deposits are typically in excess of insured limits.
+Added: The Company is also subject to credit risk for its accounts receivable balance.
The Company has not experienced any losses on accounts receivables since July 1, 2018, the date the Company transitioned to an education service company.
To manage accounts receivable risk, the Company maintains an allowance for doubtful accounts, if needed.
−Removed: The Company monitors the credit risk exposure of the counterparty of the Secured Note to determine whether an adjustment to allowance for credit loss is necessary.
−Removed: A significant deterioration in the financial viability of our counterparty and corresponding decline in the fair value of the collateralized assets could impact the collectability risk of the Secured Note.
−Removed: Our dependence on our largest university partner, which is also the counterparty to the Secured Note, with 86.8 % and 89.0 % of total service revenue for the years ended December 31, 2020 and 2019, respectively, subjects us to the risk that declines in our customer’s operations would result in a sustained reduction in service revenue and interest income on Secured Note for the Company.
−Removed: Segment Information
−Removed: The Company operates as a single education services company using a core infrastructure that serves the curriculum and educational delivery needs of its university partners.
−Removed: The Company’s Chief Executive Officer manages the Company’s operations as a whole and no expense or operating income information is generated or evaluated on any component level.
+Added: Our dependence on our largest university partner, with 85.9 % and 86.8 % of total service revenue for the years ended December 31, 2021 and 2020, respectively, subjects us to the risk that declines in our customer’s operations would result in a sustained reduction in service revenue for the Company.
Grand Canyon Education, Inc.
1 unchanged sentence
(In thousands, except per share data)
+Added: Segment Information
+Added: The Company operates as a single education services company using a core infrastructure that serves the curriculum and educational delivery needs of its university partners.
+Added: The Company’s Chief Executive Officer manages the Company’s operations as a whole and no expense or operating income information is generated or evaluated on any component level.
Accounting Pronouncements Adopted in 2021
−Removed: In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses:
−Removed: Measurement of Credit Losses on Financial Instruments .
−Removed: Under this guidance, the Company is required to utilize an “expected credit loss model” on certain financial instruments, including receivables and the Secured note receivable.
−Removed: This model requires consideration of a broader range of reasonable and supportable information and requires the Company to estimate expected credit losses including a measure of the expected risk of credit loss even if that risk is remote over the lifetime of the asset.
−Removed: The standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019.
−Removed: Accordingly, the standard was adopted by the Company as of January 1, 2020 using a modified retrospective approach.
−Removed: Upon adoption, the Company recorded a reserve of $ 5,000 on its long-term Secured Note receivable.
−Removed: The cumulative effect for the Company upon adoption of this new standard was $ 3,832 , net of tax.
−Removed: The adoption of this guidance did not have a material impact on the Company’s financial condition, results of operations or statements of cash flows.
−Removed: The Company will continue to actively monitor the impact of the COVID-19 pandemic on expected credit losses.
−Removed: In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments .
−Removed: The amendments in the ASU improve the Codification by eliminating inconsistencies and providing clarifications.
−Removed: Under this guidance, the Company made an election not to measure an allowance for credit losses on its accrued interest receivable amounts earned on the Secured Note receivable.
−Removed: The Company will write off any uncollectible accrued interest in a timely manner.
−Removed: The adoption of this guidance did not have a material impact on the Company’s financial condition, results of operations or statements of cash flows.
−Removed: In January 2017, the FASB issued ASU No.
−Removed: 2017-04, Intangibles-Goodwill and Other (Topic 350);
−Removed: Simplifying the Test for Goodwill Impairment , which eliminated step two from the goodwill impairment test and requires an entity to recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value, up to the amount of goodwill allocated to that reporting unit.
−Removed: The amendments in this standard are effective for fiscal years beginning after December 15, 2019, with early adoption permitted.
−Removed: Accordingly, the standard was adopted by us as of January 1, 2020.
−Removed: The adoption of this guidance did not have a material impact on the Company’s financial condition, results of operations or statements of cash flows.
−Removed: Recent Accounting Pronouncements
In December 2019, the FASB issued ASU No.
3 unchanged sentences
ASU 2019-12 is effective for annual periods beginning after December 15, 2020 and interim periods within those annual periods, with early adoption permitted.
−Removed: An entity that elects early adoption must adopt all the amendments in the same period.
+Added: Accordingly, the standard was adopted by the Company as of January 1, 2021.
Most amendments within this ASU are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis.
−Removed: The Company is currently evaluating the impact of the new standard on our consolidated financial statements and related disclosures.
−Removed: In March 2020, the FASB issued ASU No.
−Removed: 2020-04, Reference Rate Reform (Topic 848):
−Removed: Facilitation of the Effects of Reference Rate Reform on Financial Reporting .
−Removed: The amendments in this update provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effect of) reference rate reform on financial reporting.
−Removed: It provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.
−Removed: The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022.
−Removed: The Company plans to elect the optional expedient for its credit facility by prospectively adjusting the effective interest rate if the cessation of the London Interbank Offered Rate (LIBOR) occurs.
−Removed: The Company does not believe the adoption
−Removed: Grand Canyon Education, Inc.
−Removed: Notes to Consolidated Financial Statements
−Removed: (In thousands, except per share data)
−Removed: of the reference rate reform will have a material impact on the Company’s financial condition, results of operations or statements of cash flows.
+Added: The adoption of this guidance did not have a material impact on the Company’s financial condition, results of operations or statements of cash flows.
+Added: Recent Accounting Pronouncements
The Company has determined that no other recent accounting pronouncements apply to its operations or could otherwise have a material impact on its consolidated financial statements.
−Removed: The Company classifies its investments as trading.
−Removed: At December 31, 2020 and 2019, the Company had $ 10,840 and $ 21,601 , respectively, of investments.
−Removed: These investments were held in municipal and corporate securities as of December 31, 2020 and 2019.
−Removed: The cash flows of municipal securities are backed by the issuing municipality’s credit worthiness.
−Removed: All municipal securities and certificate of deposit are due in one year or less as of December 31, 2020.
+Added: As of December 31, 2020, the Company had investments of $ 10,840 classified as trading.
+Added: The trading investments were held in municipal and corporate securities.
+Added: The cash flows of municipal securities were backed by the issuing municipality’s creditworthiness.
+Added: As of December 31, 2021, there were no unrealized gains or losses for available-for sale debt securities as all matured or were sold by December 31, 2021.
+Added: Available-for-sale debt securities are carried at fair value on the consolidated balance sheets.
+Added: The Company estimates the lifetime expected credit losses for all available-for sale debt securities in an unrealized loss position.
+Added: If our assessment indicates that an expected credit loss exists, we determine the portion of the unrealized loss attributable to credit deterioration and record a reserve for the expected credit loss in the allowance for credit losses in technology and academic services in our consolidated income statements.
+Added: The Company had no investments as of December 31, 2021.
Allowance for Credit Losses
7 unchanged sentences
(2) Deductions represent accounts written off, net of recoveries.
−Removed: (3) $ 6,093 included in the deductions column for the year ended December 31, 2018, represents the allowance that was transferred to GCU with other educational assets and liabilities on July 1, 2018.
+Added: Grand Canyon Education, Inc.
+Added: Notes to Consolidated Financial Statements
+Added: (In thousands, except per share data)
Property and Equipment
10 unchanged sentences
Depreciation expense associated with property and equipment totaled $ 21,441 , $ 20,830 and $ 18,393 for the years ended December 31, 2021, 2020 and 2019, respectively.
−Removed: Depreciation and amortization expense associated with property and equipment, including assets under capital lease, totaled $ 35,525 for the year ended December 31, 2018.
−Removed: Grand Canyon Education, Inc.
−Removed: Notes to Consolidated Financial Statements
−Removed: (In thousands, except per share data)
Intangible Assets
7 unchanged sentences
The Company has operating leases for off-campus classroom and laboratory site locations, office space, office equipment, and optical fiber communication lines.
−Removed: These leases have terms that range from 1.5 years to 11 years .
+Added: These leases have terms that range from 4 months to 10.75 years.
At lease inception, we determine the lease term by assuming no exercises of renewal options, due to the Company’s constantly changing geographical needs for its university partners.
−Removed: Leases with an initial term of 12 months or less are not recorded in the consolidated balance sheets and we recognize lease expense for these leases on a straight-line basis over the lease term.
+Added: Leases with an initial term of 12 months or less are not recorded in the consolidated balance sheets and we recognize lease expense for these leases on a straight-line basis
+Added: Grand Canyon Education, Inc.
+Added: Notes to Consolidated Financial Statements
+Added: (In thousands, except per share data)
+Added: over the lease term.
The Company has operating lease costs of $ 9,723 , $ 7,594 and $ 4,084 for the years ended December 31, 2021, 2020 and 2019, respectively.
−Removed: The consolidated financial statements for years before January 1, 2019 are not presented on the same accounting basis with respect to leases.
−Removed: There was an immaterial amount of future lease obligations as of December 31, 2018.
−Removed: The majority of leases that existed for the year ended December 31, 2018 were assigned to GCU in the Transaction that occurred on July 1, 2018.
+Added: As of December 31, 2021, the Company had $5,672 of non-cancelable operating lease commitments for two off-campus classroom and laboratory sites that had not yet commenced.
The Company’s weighted-average remaining lease term relating to its operating leases is 7.95 years, with a weighted-average discount rate of 3.06 % .
5 unchanged sentences
Present value of lease liabilities
−Removed: Grand Canyon Education, Inc.
−Removed: Notes to Consolidated Financial Statements
−Removed: (In thousands, except per share data)
Notes Payable and Other Noncurrent Liabilities
−Removed: We entered into an amended and restated credit agreement dated January 22, 2019 and two related amendments dated January 31, 2019 and dated February 1, 2019, respectively, that together provide a credit facility of $ 325,000 comprised of a term loan facility of $ 243,750 and a revolving credit facility of $ 81,250 , both with a five-year maturity date.
−Removed: The term facility is subject to quarterly amortization of principal, commencing with the fiscal quarter ended June 30, 2019, in equal installments of 5 % of the principal amount of the term facility per quarter.
−Removed: Both the term loan and revolver have monthly interest payments currently at 30 Day LIBOR plus an applicable margin of 2 % .
+Added: We entered into an amended and restated credit agreement dated January 22, 2019 and two related amendments dated January 31, 2019 and dated February 1, 2019, respectively, that together provided a credit facility of $ 325,000 comprised of a term loan facility of $ 243,750 and a revolving credit facility of $ 81,250 , both with a five-year maturity date.
The proceeds of the term loan, together with $ 6,250 drawn under the revolver and operating cash on hand were used to complete the Acquisition.
Concurrent with the amendment of the credit agreement and Acquisition, we repaid our existing term loan of $ 59,850 and our cash collateral of $ 61,667 was released.
−Removed: The Company concluded that the amended and restated credit agreement is considered a loan modification.
−Removed: Accordingly, the Company allocated the costs paid to the bank consortium based on the borrowing dollars and has recorded an asset of $ 596 and a contra liability of $ 1,639 , which are related to our revolver and term loan, respectively, that is being amortized to interest expense over the five-year maturity date.
+Added: The Company concluded that the amended and restated credit agreement was considered a loan modification.
+Added: Accordingly, the Company allocated the costs paid to the bank consortium based on the borrowing dollars and recorded an asset of $ 596 and a contra liability of $ 1,639 , which was related to a revolver and term loan, respectively, that was being amortized to interest expense over the five-year maturity date.
Additionally, the Company expensed $ 150 of third-party costs in the first quarter 2019 related to this loan modification.
1 unchanged sentence
This amendment increased the revolving commitment by $ 68,750 to $ 150,000 , while reducing the term loan by the same $ 68,750 to $ 150,625 .
−Removed: The Company concluded that this amendment is considered a loan modification.
−Removed: The amended and restated credit agreement contains standard covenants that, among other things, restrict the Company’s ability to incur additional debt or make certain investments, and require the Company to achieve certain financial ratios and maintain certain financial conditions.
−Removed: The Company’s obligations under the credit facility are secured by its assets, including all rights, benefits and payments under the Secured Note and the Services Agreements.
−Removed: As of December 31, 2020, the Company is in compliance with its debt covenants.
−Removed: As of December 31,
−Removed: As of December 31,
−Removed: Notes Payable
−Removed: Note payable, quarterly payment of $ 8,368 starting December 31, 2019;
−Removed: interest at 30-Day LIBOR plus 2.00 % ( 2.15 % at December 31, 2020) through January 22, 2024
−Removed: Revolving line of credit;
−Removed: interest at 30-Day LIBOR plus 2.0 % ( 2.15 % at December 31, 2020)
−Removed: Current portion
−Removed: Payments due under the notes payable obligations are as follows as of December 31, 2020:
−Removed: Grand Canyon Education, Inc.
−Removed: Notes to Consolidated Financial Statements
−Removed: (In thousands, except per share data)
+Added: The Company concluded that this amendment was a loan modification.
+Added: The Company upon its receipt of the proceeds from GCU of $ 500 million in October 2021 repaid all amounts due under the outstanding term loan and revolving credit facilities, terminated the credit agreement and expensed all remaining capitalized loan costs of $ 1,028 to interest expense.
Commitments and Contingencies
2 unchanged sentences
When the Company is aware of a claim or potential claim, it assesses the likelihood of any loss or exposure.
−Removed: If it is probable that a loss will result and the amount of the loss can be reasonably estimated, the Company records a liability for the loss.
+Added: If it is probable that a loss will result and the amount of
+Added: Grand Canyon Education, Inc.
+Added: Notes to Consolidated Financial Statements
+Added: (In thousands, except per share data)
+Added: the loss can be reasonably estimated, the Company records a liability for the loss.
If the loss is not probable or the amount of the loss cannot be reasonably estimated, the Company discloses the nature of the specific claim if the likelihood of a potential loss is reasonably possible and the amount involved is material.
4 unchanged sentences
In March 2020, the World Health Organization declared COVID-19 a global pandemic.
−Removed: This contagious outbreak and the related adverse public health developments, including orders to shelter-in-place, travel restrictions and mandated non-essential business closures, have adversely affected our business, primarily through reduced room and board and other ancillary revenue at our most significant partner, GCU and as a result of certain other partner institutions’ students deferring the start of their program in the Summer and Fall semesters.
−Removed: The pandemic could result in further reductions in education service revenue, operating income and margins in the Spring of 2021.
+Added: This contagious outbreak and the related adverse public health developments, including orders to shelter-in-place, travel restrictions and mandated non-essential business closures, have adversely affected our business in a number of ways.
+Added: The pandemic continues to result in reductions in education service revenue, operating income and margins in the Spring of 2022.
At this time there remains considerable uncertainty around the duration of the COVID-19 pandemic.
−Removed: If some of our university partners are not able to allow their students to return to their campus locations in the Spring of 2021 this will have a further impact on our service revenue, operating income and margins.
−Removed: These factors, and/or material changes in the fair value of the collateral underlying our Secured Note receivable and accounts receivable, could also materially impact the allowance for expected credit losses on our Secured Note receivable and our accounts receivable.
+Added: These factors, and/or material changes in the fair value of our accounts receivable, could also materially impact the allowance for expected credit losses on our accounts receivable.
However, the related financial impact and duration of the COVID-19 pandemic cannot be reasonably estimated at this time.
10 unchanged sentences
In December 2019 this cash flow hedge expired, and $ 1,100 was reclassified from accumulated other comprehensive income into interest expense in the consolidated income statement.
−Removed: The fair value of the derivative
−Removed: Grand Canyon Education, Inc.
−Removed: Notes to Consolidated Financial Statements
−Removed: (In thousands, except per share data)
−Removed: instrument was determined using a hypothetical derivative transaction and Level 2 of the hierarchy of valuation inputs.
−Removed: The adjustments of $ 497 and $ 157 for the years ended December 31, 2019 and 2018, respectively, for the effective portion of the gain/loss on the derivative are included as a component of other comprehensive income, net of taxes.
+Added: The fair value of the derivative instrument was determined using a hypothetical derivative transaction and Level 2 of the hierarchy of valuation inputs.
+Added: The adjustments of $ 497 for the year ended December 31, 2019, for the effective portion of the gain/loss on the derivative are included as a component of other comprehensive income, net of taxes.
The interest rate corridor instrument reduced variable interest rate risk starting March 1, 2013 through December 20, 2019.
4 unchanged sentences
Therefore, the Company hedged its exposure to future variable rate cash flows through December 20, 2019.
+Added: Grand Canyon Education, Inc.
+Added: Notes to Consolidated Financial Statements
+Added: (In thousands, except per share data)
Earnings Per Share
16 unchanged sentences
Treasury Stock
−Removed: In July 2020, December 2020 and January 2021, the Board of Directors increased the authorization under our existing stock repurchase program by $ 50,000 , $ 100,000 and $ 100,000 , respectively, reflecting an aggregate authorization for share repurchases since the initiation of our program of $ 500,000 .
+Added: In January 2021, July 2021, and January 2022 the Board of Directors increased the authorization under its existing stock repurchase program by $ 100,000 , $ 970,000 and $ 175,000 , respectively, reflecting an aggregate authorization for share repurchases since the initiation of our program of $ 1,645,000 .
The expiration date on the repurchase authorization is December 31, 2022 .
Repurchases occur at the Company’s discretion.
−Removed: Repurchases may be
+Added: Repurchases may be made in the open market or in privately negotiated transactions, pursuant to the applicable Securities and Exchange Commission rules.
+Added: The amount and timing of future share repurchases, if any, will be made as market and business conditions warrant.
+Added: On March 10, 2021, the Company entered into an accelerated share repurchase (“ASR”) agreement with Morgan Stanley & Co.
+Added: LLC (“Morgan Stanley”) to repurchase up to $ 35,000 of its outstanding shares of common stock as part of the Company’s share repurchase program.
+Added: Under the ASR agreement, the Company received initial delivery of approximately 276 shares of common stock, representing approximately 80 % of the number of shares of common stock initially underlying the ASR agreement based on the closing price of the common stock of $ 101.49 , on March 9, 2021.
+Added: At inception of the ASR agreement, the Company recognized the initial delivery of shares as treasury stock of $ 28,000 , and recognized the remaining amount underlying the ASR agreement as a reduction of additional paid in
Grand Canyon Education, Inc.
1 unchanged sentence
(In thousands, except per share data)
−Removed: made in the open market.
−Removed: or in privately negotiated transactions, pursuant to the applicable Securities and Exchange Commission rules.
−Removed: The amount and timing of future share repurchases, if any, will be made as market and business conditions warrant.
−Removed: During the year ended December 31, 2020 the Company repurchased 1,602 shares of common stock at an aggregate cost of $ 129,045 .
−Removed: At December 31, 2020, there remained $ 148,271 available under its current share repurchase authorization (which authorization was increased to $ 248,271 in January 2021).
+Added: capital of $ 7,000 .
+Added: The total number of shares that the Company repurchased under the ASR program was based on the volume-weighted average price of the common stock during the term of the ASR agreement, less a discount, and subject to potential adjustments pursuant to the terms and conditions of the ASR agreement.
+Added: The final settlement of the share repurchases under the ASR agreement was completed on May 4, 2021 with additional delivery of 46 shares of common stock.
+Added: At settlement of the ASR agreement, the Company recognized an increase to additional paid in capital and a decrease in treasury stock of $ 7,000 related to the remaining delivery of shares.
+Added: The ASR agreement resulted in a total of 322 shares repurchased at an average cost of $ 108.76 .
+Added: On May 14, 2021, the Company entered into an ASR agreement with Morgan Stanley to repurchase up to $ 50,000 of its outstanding shares of common stock as part of the Company’s share repurchase program.
+Added: Under the ASR agreement, the Company received initial delivery on May 17, 2021 of approximately 418 shares of common stock, representing approximately 80 % of the number of shares of common stock initially underlying the ASR agreement based on the closing price of the common stock of $ 95.63 , on May 14, 2021.
+Added: At inception of the ASR agreement, the Company recognized the initial delivery of shares as treasury stock of $ 40,000 , and recognized the remaining amount underlying the ASR agreement as a reduction to additional paid in capital of $ 10,000 .
+Added: The total number of shares that the Company repurchased under the ASR program was based on the volume-weighted average price of the common stock during the term of the ASR agreement, less a discount, and subject to potential adjustments pursuant to the terms and conditions of the ASR agreement.
+Added: The final settlement of the share repurchases under the ASR agreement was completed on August 13, 2021 with additional delivery of 139 shares of common stock.
+Added: At settlement of the ASR agreement, the Company recognized an increase to additional paid in capital and a decrease in treasury stock of $ 10,000 related to the remaining delivery of shares.
+Added: The ASR agreement resulted in a total of 558 shares repurchased at an average cost of $ 89.68 .
+Added: During the year ended December 31, 2021 the Company repurchased 9,199 shares of common stock, which includes shares received as of December 31, 2021 under the ASR on March 10, 2021 and shares received under the ASR on May 17, 2021, at an aggregate cost of $ 797,838 .
+Added: As of December 31, 2021, there remained $ 420,433 available under its current share repurchase authorization (which authorization was increased to $ 595,433 in January 2022) .
Shares repurchased in lieu of taxes are not included in the repurchase plan totals as they were approved in conjunction with the restricted share awards.
4 unchanged sentences
The Company has no valuation allowance at December 31, 2021 and 2020.
−Removed: On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed into law.
−Removed: For businesses, the Act reduces the corporate federal tax rate from a maximum of 35 % to a flat 21 % rate.
−Removed: The rate reduction took effect on January 1, 2018.
−Removed: The Company concluded that the Act caused the Company’s deferred tax assets and liabilities to be revalued.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted though income tax expense.
−Removed: The components of income tax expense (benefit) are as follows:
−Removed: Year Ended December 31,
−Removed: Tax expense recorded as an increase of paid-in capital
Grand Canyon Education, Inc.
1 unchanged sentence
(In thousands, except per share data)
+Added: The components of income tax expense (benefit) are as follows:
+Added: Year Ended December 31,
+Added: Tax expense recorded as an increase of paid-in capital
A reconciliation of income tax computed at the U.S.
20 unchanged sentences
Net deferred tax liability
+Added: Grand Canyon Education, Inc.
+Added: Notes to Consolidated Financial Statements
+Added: (In thousands, except per share data)
The net deferred tax liability on the accompanying consolidated balance sheet is comprised of the following:
8 unchanged sentences
Unrecognized tax benefits as of December 31, 2021 and 2020 were $ 14,108 and $ 11,318 , respectively.
−Removed: Grand Canyon Education, Inc.
−Removed: Notes to Consolidated Financial Statements
−Removed: (In thousands, except per share data)
The reconciliation of the beginning and ending balance of unrecognized tax benefits at December 31, is as follows:
12 unchanged sentences
Incentive Plans
−Removed: Prior to June 2017, the Company made grants of restricted stock and stock options under its 2008 Equity Incentive Plan (the “2008 Plan”).
−Removed: In January 2017, the Board of Directors of the Company approved, and at the Company’s 2017 annual meeting of stockholders held on June 14, 2017, the Company’s stockholders adopted a 2017 Equity Incentive Plan (the “2017 Plan”) under which a maximum of 3,000 shares may be granted.
+Added: The Company makes equity incentive grants pursuant to our 2017 Equity Incentive Plan (the “2017 Plan”) under which a maximum of 3,000 shares may be granted.
As of December 31, 2021, 1,414 shares were available for grants under the 2017 Plan.
−Removed: All grants of equity incentives made after June 2017 have been made from the 2017 Plan.
Restricted Stock
During fiscal years 2021, 2020, and 2019, the Company granted 180 , 164 , and 149 shares of common stock, respectively, with a service vesting condition to certain of its executives, officers, and employees.
−Removed: The restricted shares have voting rights and vest evenly at 20 % over each of the next five years .
+Added: The restricted shares
+Added: Grand Canyon Education, Inc.
+Added: Notes to Consolidated Financial Statements
+Added: (In thousands, except per share data)
+Added: 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 statutory tax withholding required to be paid when the restricted stock vests.
2 unchanged sentences
The restricted shares granted to these directors have voting rights and vest on the earlier of (a) the one year anniversary of the date of grant or (b) immediately prior to the following year’s annual stockholders’ meeting.
+Added: Included in the 2021 amount is an initial award of shares that was granted to a newly appointed non-employee director pursuant to the Company’s compensation program.
+Added: The 2021 newly appointed non-employee director also received an annual grant of restricted shares.
+Added: The initial award of shares that were granted in 2021 to the newly appointed non-employee director have voting rights and vest on the one year anniversary of the date of grant.
Included in the 2019 amount are shares of common stock granted in August 2019 to two new non-employee members of the Company’s Board of Directors.
The restricted shares granted to these directors have voting rights and vest on the one year anniversary of the date of grant.
−Removed: Grand Canyon Education, Inc.
−Removed: Notes to Consolidated Financial Statements
−Removed: (In thousands, except per share data)
−Removed: In conjunction with the GCU Transaction, the Compensation Committee of the Company’s Board of Directors decided to modify the vesting condition for certain restricted stock awards for approximately 100 Transferred Employees who transferred employment from GCE to GCU, with the acceleration being contingent upon the closing of the Transaction on July 1, 2018.
−Removed: Refer to Note 2 for further discussion on the Transaction.
−Removed: As a result, the incremental share-based compensation expense from the modification on 82 restricted stock awards for the accelerated vesting date was $ 7,880 and is included in the university related expenses in the consolidated income statement.
−Removed: Additionally, the Company transferred cash to GCU totaling $ 9,568 to fund a deferred compensation plan in an amount equal to the value of the 86 shares forfeited by the Transferred Employees at the closing of the Transaction.
−Removed: This amount is included in the loss on transaction in the consolidated income statement.
A summary of the activity related to restricted stock granted under the Company’s Incentive Plan is as follows:
16 unchanged sentences
(In thousands, except per share data)
−Removed: These time vested options vest ratably over a period of five years and expire ten years from the date of grant.
+Added: These time vested options vested 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 Company’s Incentive Plan is as follows:
Summary of Stock Options Outstanding
−Removed: Value ($) (1)
Outstanding as of December 31, 2018
6 unchanged sentences
Exercisable as of December 31, 2021
−Removed: (1) Aggregate intrinsic value represents the value of the Company’s closing stock price on December 31, 2020 ( $ 93.11 ) in excess of the exercise price multiplied by the number of options outstanding or exercisable.
Share-based Compensation
5 unchanged sentences
The restricted shares have voting rights.
−Removed: Grand Canyon Education, Inc.
−Removed: Notes to Consolidated Financial Statements
−Removed: (In thousands, except per share data)
The table below outlines share-based compensation expense for the fiscal years ended December 31, 2021, 2020 and 2019 related to restricted stock and stock options granted:
3 unchanged sentences
General and administrative
−Removed: University related expenses
Share-based compensation expense included in operating expenses
4 unchanged sentences
All employees over the age of 21 are eligible to participate in the plan.
−Removed: The Plan allows eligible employees to contribute to the Plan subject to Internal Revenue Code restrictions and the Plan allows the Company to make discretionary matching contributions.
+Added: The Plan allows
+Added: Grand Canyon Education, Inc.
+Added: Notes to Consolidated Financial Statements
+Added: (In thousands, except per share data)
+Added: eligible employees to contribute to the Plan subject to Internal Revenue Code restrictions and the Plan allows the Company to make discretionary matching contributions.
The Company plans to make a matching contribution to the Plan of approximately $ 2,389 for the year ended December 31, 2021.
9 unchanged sentences
The Company is not the primary beneficiary of GCECF, and accordingly, the Company does not consolidate GCECF’s statement of activities with its financial results.
−Removed: The Company contributed $ 1,100 for the year ended December 31, 2020, of which no amounts were owed at December 31, 2020.
−Removed: Grand Canyon Education, Inc.
−Removed: Notes to Consolidated Financial Statements
−Removed: (In thousands, except per share data)
−Removed: Quarterly Results of Operations (Unaudited)
−Removed: The following table summarizes the unaudited quarterly results of operations for 2020 and 2019 and should be read in conjunction with other information included in the accompanying consolidated financial statements.
−Removed: First Quarter
−Removed: Second Quarter
−Removed: Third Quarter
−Removed: Fourth Quarter
−Removed: Service revenue
−Removed: Costs and expenses:
−Removed: Technology and academic services
−Removed: Counseling services and support
−Removed: Marketing and communication
−Removed: General and administrative
−Removed: Amortization of intangible assets
−Removed: Loss on transaction
−Removed: Total costs and expenses
−Removed: Operating income
−Removed: Interest income on Secured Note
−Removed: Interest expense
−Removed: Investment interest and other
−Removed: Income before income taxes
−Removed: Income tax expense
−Removed: Earnings per share:
−Removed: Basic income per share (1)
−Removed: Diluted income per share (1)
−Removed: Basic weighted average shares outstanding
−Removed: Diluted weighted average shares outstanding
−Removed: (1) The sum of quarterly income per share may not equal annual income per share due to rounding.
−Removed: Grand Canyon Education, Inc.
−Removed: Notes to Consolidated Financial Statements
−Removed: (In thousands, except per share data)
−Removed: First Quarter
−Removed: Second Quarter
−Removed: Third Quarter
−Removed: Fourth Quarter
−Removed: Service revenue
−Removed: Costs and expenses:
−Removed: Technology and academic services
−Removed: Counseling services and support
−Removed: Marketing and communication
−Removed: General and administrative
−Removed: Amortization of intangible assets
−Removed: Loss on transaction
−Removed: Total costs and expenses
−Removed: Operating income
−Removed: Interest income on Secured Note
−Removed: Interest expense
−Removed: Investment interest and other
−Removed: Income before income taxes
−Removed: Income tax expense
−Removed: Earnings per share:
−Removed: Basic income per share (1)
−Removed: Diluted income per share (1)
−Removed: Basic weighted average shares outstanding
−Removed: Diluted weighted average shares outstanding
−Removed: (1) The sum of quarterly income per share may not equal annual income per share due to rounding.
+Added: The Company contributed $ 1,100 for the year ended December 31, 2020, of which no amounts were owed as of December 31, 2020.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.