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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2024-02-13 compared with 2023-02-16 · 155 added, 122 removed, 584 unchanged (32% of the section changed)

4 unchanged sentences

Interest rate risk .

We manage interest rate risk by investing excess funds in cash equivalents, BBB or higher rated municipal bonds, municipal mutual funds and commercial paper bearing variable interest rates, which are tied to various market indices or individual bond coupon rates.

We manage interest rate risk by investing excess funds in cash equivalents, BBB or higher rated corporate bonds, commercial paper, agency bonds, municipal securities, asset backed securities, municipal bonds, and collateralized mortgage obligations bearing variable interest rates, which are tied to various market indices or individual bond coupon rates.

Our future investment income may fall short of expectations due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities before their maturity date that have declined in market value due to changes in interest rates.

69 unchanged sentences

Income taxes payable

Deferred revenue

Current portion of lease liability

48 unchanged sentences

Other comprehensive income, net of tax:

Unrealized losses on available-for-sale securities, net of taxes of $ 168 for the year ended December 31, 2022

Unrealized gains (losses) on available-for-sale securities, net of taxes of $ 151 and $ 168 for the years ended December 31, 2023 and 2022, respectively

Comprehensive income

7 unchanged sentences

Balance at December 31, 2020

Cumulative effect from the adoption of accounting pronouncements, net of taxes of $ 1,168

Comprehensive income

4 unchanged sentences

Balance at December 31, 2021

( 1,107,211 )

Comprehensive income

2 unchanged sentences

Share-based compensation

Exercise of stock options

Balance at December 31, 2022

18 unchanged sentences

Deferred income taxes

Other, including fixed asset impairments

Other, including fixed asset disposals

Changes in assets and liabilities:

Accounts receivable and interest receivable from university partners

Accounts receivable from university partners

Right-of-use assets and lease liabilities

4 unchanged sentences

Net cash provided by operating activities

Cash flows (used in) provided by investing activities:

Cash flows used in investing activities:

Capital expenditures

4 unchanged sentences

Proceeds from sale or maturity of investments

Net cash (used in) provided by investing activities

Net cash used in investing activities

Cash flows used in financing activities:

3 unchanged sentences

Net cash used in financing activities

Net (decrease) increase in cash and cash equivalents and restricted cash

Net increase (decrease) in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash, beginning of period

5 unchanged sentences

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

ROU Asset and Liability recognition

Excise tax on treasury stock repurchases

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.

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 four off-site classroom and laboratory sites.

In January 2019, GCE began providing education services to numerous university partners across the United States, through our wholly owned subsidiary, Orbis Education, which we acquired, by merger on January 22, 2019 (the “Acquisition”).

Since the Acquisition, GCE, together with Orbis Education, has continued to add additional university partners.

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 ten colleges both online, on ground at its campus in Phoenix, Arizona and at six off-site classroom and laboratory sites.

In January 2019, GCE began providing education services to numerous university partners across the United States, through our wholly owned subsidiary, Orbis Education.

GCE, together with Orbis Education, has continued to add additional university partners.

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.

17 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.

As of December 31, 2022, the Company considered its investments in corporate bonds, commercial paper, municipal securities, asset backed securities, municipal bonds, and collateralized mortgage obligations as available-for-

As of December 31, 2023 and 2022, the Company considered investments in corporate bonds, commercial paper, municipal securities, asset backed securities, municipal bonds, and collateralized mortgage obligations as available-for-sale securities based on the Company’s intent for the respective securities.

Available-for-sale securities are

Grand Canyon Education, Inc.

1 unchanged sentence

(In thousands, except per share data)

sale securities based on the Company’s intent for the respective securities.

As of December 31, 2021, the Company had no investments.

Available-for-sale securities are carried at fair value, determined using Level 2 of the hierarchy of valuation inputs, with the use of inputs other than quoted prices that are observable for the assets, with unrealized gains and losses, net of tax, reported as a separate component of other comprehensive income.

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.

Unrealized investment gains and losses, net of tax, are reported as a separate component of other comprehensive income.

Unrealized losses considered to be other-than temporary are recognized currently in earnings.

28 unchanged sentences

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.

The Company starts capitalizing content costs when it begins to develop or to convert a particular course, resources have

Grand Canyon Education, Inc.

1 unchanged sentence

(In thousands, except per share data)

Company starts capitalizing content costs when it begins to develop or to convert a particular course, resources have been assigned and a timeline has been set.

been assigned and a timeline has been set.

The content asset is placed in service when all work is complete and the curriculum could be used for instruction.

13 unchanged sentences

Leases primarily consist of off-campus classroom and laboratory site locations and office space.

Business Combinations

The purchase price of an acquisition is allocated to the assets acquired, including tangible and intangible assets, and liabilities assumed, based on their respective fair values at the acquisition date.

The excess of the fair value of the purchase price over the fair values of these identifiable assets and liabilities is recorded as goodwill.

Transaction costs associated with business combinations are expensed as incurred and are recorded in the loss on transaction in the consolidated financial statements.

The determination of the value and useful lives of the intangible assets acquired involves certain judgments and estimates.

These judgments can include, but are not limited to, the cash flows that an asset is expected to generate in the future and the appropriate weighted average cost of capital.

The net assets and result of operations of an acquired entity are included on the Company’s consolidated financial statements from the acquisition date.

Goodwill and Amortizable Intangible Assets

3 unchanged sentences

The Company has concluded there is one operating segment and one reporting unit for goodwill impairment consideration.

The Financial Accounting Standards Board (“FASB”) has issued guidance that permits an entity to first

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

assess qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test.

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.

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.

5 unchanged sentences

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the assets.

If such intangible assets are not recoverable, a potential impairment loss is recognized to the extent the carrying amounts of the assets exceeds the fair value of the assets.

On January 22, 2019, GCE acquired Orbis Education for $ 361,184 (inclusive of closing date adjustments and net of cash acquired).

The Acquisition was accounted for in accordance with the acquisition method of accounting.

Under this method the cost of the target is allocated to the identifiable assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition.

The estimated fair values of current assets and liabilities were based upon their historical costs on the date of acquisition due to their short-term nature.

The majority of property and equipment were also estimated based upon historical costs as they approximated fair value.

Identified intangible assets of $ 210,280 consisted primarily of university partner relationships that were valued at $ 210,000 .

The fair value of university partner relationships was determined using the multiple-period excess earnings method.

The fair value of the assets acquired, less the liabilities assumed, exceeded the purchase price by $ 157,825 , which was recorded as goodwill.

If such intangible assets are not recoverable,

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

a potential impairment loss is recognized to the extent the carrying amounts of the assets exceeds the fair value of the assets.

Share-Based Compensation

9 unchanged sentences

-Level 1 – inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

-Level 2 – inputs are quoted prices for similar instruments in active markets;

11 unchanged sentences

Realization of the deferred tax assets is principally dependent upon achievement of projected future taxable income.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

Commitments and Contingencies

10 unchanged sentences

The single performance obligation is delivered as our partners receive and consume benefits, which occurs ratably over a series of distinct service periods (daily or semester).

Service revenue is recognized over time using the output method of measuring progress towards complete satisfaction of

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

the single performance obligation.

Service revenue is recognized over time using the output method of measuring progress towards complete satisfaction of the single performance obligation.

The output method provides a faithful depiction of the performance toward complete satisfaction of the performance obligation and can be tied to the time elapsed which is consumed evenly over the service period and is a direct measurement of the value provided to our partners.

14 unchanged sentences

Our unbilled revenue of $ 188 and $ 5,560 as of December 31, 2023 and 2022, respectively, are included in accounts receivable in our consolidated balance sheets.

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.

Deferred revenue represents the excess of amounts received as

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

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.

We generally receive payments for our services billed within 30 days of invoice.

14 unchanged sentences

The Company will continue to actively monitor other factors on expected credit losses.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

Technology and Academic Services

10 unchanged sentences

This expense category includes salaries, benefits and share-based compensation for marketing and communication personnel, brand advertising, marketing leads and other promotional and communication expenses.

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.

This category also includes an allocation of depreciation, amortization, lease expense, and

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

occupancy costs attributable to the provision of these services, primarily at the Company’s Phoenix, Arizona and Indianapolis, Indiana locations.

Advertising costs are expensed as incurred.

9 unchanged sentences

There may be differences between actual settlement amounts and recorded reserves and any resulting adjustments are included in expense once a probable amount is known.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

Concentration of Credit Risk

12 unchanged sentences

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.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

Recent Accounting Pronouncements

The Company has determined that no recent accounting pronouncements apply to its operations or could otherwise have a material impact on its consolidated financial statements.

As of December 31, 2022, the Company had investments of $ 61,295 , classified as available-for sale securities.

As of December 31, 2021, the Company had no investments.

In November 20233, the FASB issued ASU No.

2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosure,” effective for fiscal years beginning after December 15, 2023, with early adoption permitted.

The ASU adds disclosure requirements for segment expense information.

The ASU clarifies that single reportable segment entities are subject to Topic 280 in its entirety.

The Company does not expect the adoption of this guidance to have a material impact on the Company’s financial condition, results of operations or statements of cash flows.

In December 2023, the FASB issued ASU No.

2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” The ASU includes amendments requiring enhanced income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction.

The guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and should be applied either prospectively or retrospectively.

The Company does not expect the adoption of this guidance to have a material impact on the Company’s financial condition, results of operations or statements of cash flows.

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.

As of December 31, 2023 and 2022, the Company had investments of $ 98,031 and $ 61,295 , respectively, classified as available-for sale securities.

As of December 31, 2023, the Company had available-for-sale investments comprised of the following:

2 unchanged sentences

Total investments

For the year ended December 31, 2022, the net unrealized losses were $ 533 , net of taxes.

For the year ended December 31, 2023 and 2022, the net unrealized gains and losses were $ 476 and $ 533 , respectively, net of taxes.

Available-for-sale securities are carried at fair value on the consolidated balance sheets.

The Company estimates the lifetime expected credit losses for all available-for-sale debt securities in an unrealized loss position.

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

Available-for-sale securities maturing as of December 31:

Grand Canyon Education, Inc.

1 unchanged sentence

(In thousands, except per share data)

consolidated income statements.

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.

Available-for-sale securities maturing as of December 31:

Allowance for Credit Losses

4 unchanged sentences

Year ended December 31, 2021

(1) Amount in the year ended December 31, 2020 represents the cumulative effect of the adoption of ASU No.

2016-13 on the Secured Note receivable.

(1) Represents the cumulative effect of the adoption of ASU No.

2016-13 on the Secured Note receivable, which was recorded during the year ended December 31, 2020.

(2) In the fourth quarter of 2021, the Secured Note receivable was paid off in full and the credit loss reserve of $ 5,000 was reversed .

12 unchanged sentences

Depreciation expense associated with property and equipment totaled $ 23,106 , $ 22,115 and $ 21,441 for the years ended December 31, 2023, 2022, and 2021, respectively.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

Intangible Assets

Identified intangible assets of $ 210,280 consisted primarily of university partner relationships that were valued at $ 210,000 , which arose in connection with the 2019 Acquisition.

Amortizable intangible assets consist of the following as of:

4 unchanged sentences

Total amortizable intangible assets, net

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

Amortization expense for university partner relationships and trade names for the years ending December 31:

The Company has operating leases for off-campus classroom and laboratory site locations, office space, office equipment, and optical fiber communication lines.

These leases have terms that range from two months to ten years and eight months.

These leases have terms that range from five months to 10 years and five months.

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.

1 unchanged sentence

The Company has operating lease costs of $ 13,496 , $ 10,666 and $ 9,723 for the years ended December 31, 2023, 2022 and 2021, respectively.

As of December 31, 2022, the Company had $ 23,310 of non-cancelable operating lease commitments for four off-campus classroom and laboratory sites and $ 192 for optical fiber communication lines that had not yet commenced.

As of December 31, 2023, the Company had $ 23,758 of non-cancelable operating lease commitments for five off-campus classroom and laboratory sites and $ 192 for optical fiber communication lines that had not yet commenced.

The Company’s weighted-average remaining lease term relating to its operating leases is 8.02 years, with a weighted-average discount rate of 3.88 % .

The cash paid for operating lease liabilities was $ 11,391 for the year ended December 31, 2023.

As of December 31, 2023, the Company had no financing leases.

4 unchanged sentences

Present value of lease liabilities

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

Notes Payable and Other Noncurrent Liabilities

The Company upon its receipt of the paydown of $ 500,000 on the Secured Note 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

4 unchanged sentences

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.

With respect to the majority of pending litigation matters, the Company’s ultimate legal and financial responsibility, if any, cannot be estimated with certainty and, in most cases, any potential losses related to those matters are not considered probable.

With respect to the majority of

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

pending litigation matters, the Company’s ultimate legal and financial responsibility, if any, cannot be estimated with certainty and, in most cases, any potential losses related to those matters are not considered probable.

Upon resolution of any pending legal matters, the Company may incur charges in excess of presently established reserves.

Management does not believe that any such charges would, individually or in the aggregate, have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

Pending Litigation Matters

Shareholder Litigation.

On May 12, 2020, a securities class action complaint was filed in the U.S.

District Court for the District of Delaware by the City of Hialeah Employees’ Retirement System naming the Company, Brian E.

Mueller and Daniel E.

Bachus as defendants for allegedly making false and materially misleading statements regarding the circumstances surrounding the Company’s sale of Grand Canyon University (the “University”) to a non-profit entity on July 1, 2018 and the subsequent decision of the U.S.

Department of Education to continue to treat the University as a for-profit institution for education regulatory purposes (collectively, the “Conversion”).

The complaint asserted a putative class period stemming from January 5, 2018, the date when the Company announced that it had applied to the University’s accreditor for approval of the Conversion, to January 27, 2020, the date prior to the publication of a short-seller report focused on the Conversion.

A substantially similar complaint was filed in the same court by Grant Walsh on June 12, 2020 making similar allegations against the Company, Mr.

Mueller and Mr.

Both complaints alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder and sought unspecified monetary relief, interest, and attorneys’ fees.

On August 13, 2020, the two cases were consolidated and the Fire and Police Association of Colorado, the Oakland County Employees’ Retirement System and the Oakland County Voluntary Employees’ Beneficiary Association Trust were appointed as lead plaintiffs.

Thereafter, the plaintiffs filed a consolidated amended complaint on October 20, 2020 and the Company filed a motion to dismiss on December 21, 2020.

On August 23, 2021, the Court granted the Company’s motion to dismiss in its entirety but permitted plaintiffs to file a further amended complaint to correct deficiencies in the initial complaint.

The plaintiffs filed further amended complaints on September 28, 2021 and January 21, 2022, and the Company filed a further motion to dismiss on March 15, 2022.

On March 28, 2023, the Company’s motion to dismiss was denied.

On January 5, 2024, plaintiffs moved for class certification and the briefing on plaintiffs’ motion is ongoing.

On December 22, 2023, the Company was named as a nominal defendant and certain of the Company’s current and former directors and officers were named as defendants in a shareholder derivative lawsuit filed in the Delaware Court of Chancery related to, among other things, the allegations in the aforementioned securities class action.

The complaint asserts claims for breach of fiduciary duty, unjust enrichment, aiding and abetting breach of fiduciary duty, and corporate waste against all defendants.

There is no pending deadline for Defendants to answer or move to dismiss the complaint.

The Company intends to defend itself in these legal proceedings vigorously.

The outcome of these legal proceedings is uncertain at this point.

At present, the Company cannot reasonably estimate a range of loss for these actions based on the information available to the Company.

Accordingly, the Company has not accrued any liability associated with these actions.

FTC Complaint.

On December 27, 2023, a complaint was filed in the U.S.

District Court for the District of Arizona by the Federal Trade Commission (“FTC”) naming GCU, GCE, and Brian E.

Mueller, our Chief Executive Officer, as defendants for allegedly (i) violating Section 5(a) of the FTC Act by making false and deceptive statements regarding GCU’s status as a non-profit university and the cost to complete certain of GCU’s doctoral programs, and (ii) violating the FTC’s Telemarketing Sales Rule by making the alleged false and deceptive statements in connection with the telemarketing of education services, and making telemarketing sales calls to persons who have opted out of receiving telemarketing sales calls from GCU or GCE or who are otherwise listed on the national “do not call” registry.

The complaint followed upon the previously disclosed civil investigative demands that that the FTC issued to the Company in May 2022 and January 2023 seeking information regarding our marketing services and related services that we provide to GCU.

The complaint seeks a permanent injunction against the defendants to prevent further violations of the

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

FTC Act and the Telemarketing Sales Rule, monetary civil penalties, and other relief.

The Company intends to defend itself vigorously in this legal proceeding.

The outcome of this legal proceeding is uncertain at this point.

At present, the Company cannot reasonably estimate a range of loss for this action based on the information available to the Company.

Accordingly, the Company has not accrued any liability associated with this action.

False Claims Act Matter .

In May 2020, we were served with a qui tam lawsuit that had been filed against us in 2019 in the U.S.

District Court for the District of Massachusetts by a former employee on behalf of the federal government.

All proceedings in the lawsuit had been under seal until February 2020, when the U.S.

government decided to not intervene in the lawsuit, and the complaint was then unsealed by the court.

The suit, United States ex rel Mackillop v.

Grand Canyon Education, Inc.

, alleges that we violated the False Claims Act by improperly compensating certain of our enrollment counselors in violation of the Title IV law governing compensation of such employees (the “incentive compensation rule”), and as a result, improperly received Title IV program funds.

In response to a second amended complaint filed in September 2020, we filed a motion to dismiss and a motion to transfer the matter to the U.S.

District Court for the District of Arizona.

In December 2020, the court granted our motion to dismiss as to one of three counts and granted the motion to transfer but only upon conclusion of pretrial proceedings.

In September 2021, we filed a motion for summary judgment which the Massachusetts court denied in September 2022.

Subsequently, the matter was transferred to the Arizona court, and we filed a motion for reconsideration of the summary judgment ruling in September 2023;

that motion remains pending.

Subject to the ruling on our motion for reconsideration, the matter is scheduled to go to trial in late April 2024.

We believe that the compensation practices at issue in the complaint, which were developed with the guidance of outside regulatory counsel specifically to comply with Title IV and its regulations and relevant case law interpreting the incentive compensation rule, do not violate applicable law.

The Company intends to defend itself vigorously in this legal proceeding.

The outcome of this legal proceeding is uncertain at this point.

At present, the Company cannot reasonably estimate a range of loss for this action based on the information available to the Company.

Accordingly, the Company has not accrued any liability associated with this action.

Tax Reserves, Non-Income Tax Related

10 unchanged sentences

Diluted weighted average shares outstanding

Diluted weighted average shares outstanding excludes the incremental effect of unvested restricted stock and shares that would be issued upon the assumed exercise of stock options in accordance with the treasury stock method.

For each of the years ended December 31, 2022, 2021 and 2020, approximately 58 , 79 , and 142 , respectively, of the Company’s restricted stock awards outstanding were excluded from the calculation of diluted earnings per share as their inclusion would have been anti-dilutive.

These restricted stock awards could be dilutive in the future.

Grand Canyon Education, Inc.

1 unchanged sentence

(In thousands, except per share data)

For each of the years ended December 31, 2023, 2022 and 2021, approximately 52 , 58 , and 79 , respectively, of the Company’s restricted stock awards outstanding were excluded from the calculation of diluted earnings per share as their inclusion would have been anti-dilutive.

These restricted stock awards could be dilutive in the future.

Equity Transactions

4 unchanged sentences

Treasury Stock

In January 2021, July 2021, January 2022 and October 2022 the Board of Directors increased the authorization under its existing stock repurchase program by $ 100,000 , $ 970,000 , $ 175,000 and $ 200,000 , respectively, reflecting an aggregate authorization for share repurchases since the initiation of our program of $ 1,845,000 .

The expiration date on the repurchase authorization is December 31, 2023 .

In January 2021, July 2021, January 2022, October 2022 and October 2023 the Board of Directors increased the authorization under its existing stock repurchase program by $ 100,000 , $ 970,000 , $ 175,000 , $ 200,000 and $ 200,000 , respectively, reflecting an aggregate authorization for share repurchases since the initiation of our program of $ 2,045,000 .

The expiration date on the repurchase authorization is March 1, 2025 .

Repurchases occur at the Company’s discretion.

1 unchanged sentence

The amount and timing of future share repurchases, if any, will be made as market and business conditions warrant.

On March 10, 2021, the Company entered into an accelerated share repurchase (“ASR”) agreement with Morgan Stanley & Co.

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.

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.

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 capital of $ 7,000 .

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.

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.

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.

The ASR agreement resulted in a total of 322 shares repurchased at an average cost of $ 108.76 .

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.

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.

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 .

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.

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.

The ASR agreement resulted in a total of 558 shares repurchased at an average cost of $ 89.68 .

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

During the year ended December 31, 2023, the Company repurchased 1,170 shares of common stock at an aggregate cost of $ 130,793 .

8 unchanged sentences

As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted though income tax expense.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

The components of income tax expense (benefit) are as follows:

11 unchanged sentences

Effective income tax rate

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

Significant components of the Company’s deferred income tax assets and liabilities, included in Deferred income taxes, non-current on the consolidated balance sheets are as follows:

9 unchanged sentences

Net deferred tax liability

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

The net deferred tax liability on the accompanying consolidated balance sheet is comprised of the following:

15 unchanged sentences

Unrecognized tax benefits, end of year

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

As of December 31, 2023 and 2022, the unrecognized tax benefit recorded of $ 13,631 and $ 15,862 , respectively, if reversed, would impact the effective tax rate.

7 unchanged sentences

As of December 31, 2023, 1,081 shares were available for grants under the 2017 Plan.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

Restricted Stock

8 unchanged sentences

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.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

A summary of the activity related to restricted stock granted under the Company’s Incentive Plan is as follows:

13 unchanged sentences

Prior to 2012, the Company granted time vested options to purchase shares of common stock with an exercise price equal to the fair market value on the date of grant to employees.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

These time vested options vested ratably over a period of five years and expire ten years from the date of grant.

4 unchanged sentences

Outstanding as of December 31, 2021

Forfeited, canceled or expired

Outstanding as of December 31, 2021

Share-based Compensation

1 unchanged sentence

The Company measures and recognizes compensation expense for share-based payment awards made to employees and directors.

The fair value of the Company’s restricted stock awards is based on the market price of its

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

common stock on the date of grant.

The fair value of the Company’s restricted stock awards is based on the market price of its common stock on the date of grant.

Stock-based compensation expense related to restricted stock grants is expensed over the vesting period using the straight-line method for Company employees and the Company’s board of directors.

15 unchanged sentences

The Company made discretionary matching contributions to the Plan of $ 2,744 and $ 2,345 for the years ended December 31, 2022 and 2021, respectively.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

Related Party Transactions

3 unchanged sentences

GCE Community Fund (“GCECF”) - GCECF was initially formed in 2014.

GCECF makes grants for charitable, educational, literary, religious or scientific purposes within the meaning of Section 501(c ) (3) of the Internal Revenue Code, including for such purposes as the making of distributions to organizations that qualify as exempt organizations under Section 501 (c ) (3) of the Code.

The Company’s CEO and Director serves as the president of GCECF.

All of the board seats are taken by Company executives.

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.

The Company contributed $ 1,150 and $ 1,100 for the years ended December 31, 2022 and 2020, respectively, of which no amounts were owed as of December 31, 2022 and 2020.

GCECF makes grants for charitable, educational, literary, religious or scientific purposes within the meaning of Section 501(c ) (3) of the Internal Revenue Code (the “Code”), including for such purposes as the making of distributions to organizations that qualify as exempt organizations under Section 501 (c ) (3) of the Code.

The Company’s Chief Executive Officer serves as the president of GCECF and GCECF’s board of directors is comprised entirely of Company executives.

The Company is not the primary beneficiary of GCECF, and accordingly, the Company does not consolidate GCECF’s activities with its financial results.

The Company made voluntary charitable contributions of $ 1,650 and $ 1,150 for each of the years ended December 31, 2023 and 2022, respectively, of which no amounts were owed as of December 31, 2023 and 2022.

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.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk