What changed in this filing

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Item 7. Management’s Discussion and Analysis

2021-03-01 compared with 2020-03-02 · 224 added, 148 removed, 190 unchanged (66% of the section changed)

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(“SEI,” “we”, “us” or “our”) is an education services company that seeks to provide the most direct path between learning and employment through campus-based and online post-secondary education offerings and through programs to develop job-ready skills for high-demand markets.

We operate primarily through our wholly-owned subsidiaries Strayer University and Capella University, both accredited post-secondary institutions of higher education.

Our operations also include certain non-degree programs, mainly focused on software and application development.

We operate primarily through our wholly-owned subsidiaries Strayer University and Capella University, both accredited post-secondary institutions of higher education located in the United States, as well as Torrens University, an accredited post-secondary institution of higher education located in Australia.

Our operations also include certain non-degree programs, mainly focused on software and application development, and other vocational and training programs in a variety of fields.

Company Response to COVID-19

The ongoing COVID-19 pandemic has caused significant volatility and disruption to the global economy.

SEI took early action to protect the health and well-being of our students and employees in accordance with government mandates and informed by guidance from the Centers for Disease Control and Prevention.

Specifically, we instituted a work-from-home policy for the vast majority of our workforce, closed physical campus locations, moved our on-ground courses at Strayer University online, postponed large events such as graduation ceremonies, and prohibited non-essential employee travel.

We are taking measures to provide financial relief to our students and employer partners negatively affected by the COVID-19 crisis.

Measures include payment flexibility, scholarship opportunities, and other pricing relief.

We expect that these measures will enable more students to continue pursuing their education during and after the COVID-19 crisis.

In addition, we paused planned 2020 new campus expansion for campus projects that had not yet started, although we completed or executed leases on roughly half of the originally planned eight to twelve new campuses for 2020.

In the third quarter of 2020, we began implementing a restructuring plan that includes both voluntary and involuntary employee terminations in an effort to reduce ongoing operating costs to align with changes in enrollment.

The headcount reductions are expected to result in a 5% decrease to SEI's total workforce.

This restructuring also includes the closure of underutilized campus and corporate office space.

Of the planned campus closures, the majority have an alternative location within relative proximity to support students as campus interactions are needed.

As the pandemic has continued, we have seen deterioration in overall demand, which has impacted our total enrollment results for the third and fourth quarters.

The weakness has been most pronounced at Strayer University, where total enrollments for the third and fourth quarters declined 1% and 9%, respectively.

While it is not possible to predict the magnitude or persistence of this deterioration, enrollment weakness that started in 2010, following the recession in 2008, impacted Strayer University's student enrollment for several quarters.

Enrollment at Capella University and Torrens University also has been impacted by the pandemic, though not as severely as at Strayer University.

As a result of the near-term enrollment trends we have enhanced our cost management efforts to offset lower than expected revenue, and these efforts may continue in 2021.

We believe our current financial position and expected operating results, and ability to further control costs are sufficient to support the ongoing operation of SEI in a manner that protects the health and well-being of our employees, students, and partners.

Acquisition of Torrens University and related assets in Australia and New Zealand

On November 3, 2020, we completed the acquisition of Torrens University and related assets in Australia and New Zealand ("ANZ"), pursuant to the sale and purchase agreement dated July 29, 2020 (the "Purchase Agreement").

ANZ includes Torrens University Australia, Think Education, and Media Design School, which together provide diversified student curricula to over 19,000 students across five industry verticals, including business, hospitality, health, education, creative technology and design.

We believe ANZ represents an attractive portfolio of institutions with a similar focus on innovation, academic outcomes, improved affordability and career advancement as us.

We also believe that ANZ provides an attractive platform for future growth, driven by Australia’s status as an attractive destination for international students, as well as the potential to use ANZ as a platform for expansion across the ASEAN region.

Pursuant to the Purchase Agreement, the aggregate consideration paid was approximately $658.4 million in cash, which reflected the original agreed upon purchase price of $642.7 million, plus a $15.7 million adjustment reflecting an estimated $11.0 million of net cash at close, and an estimated $4.7 million related to higher net working capital.

These estimated adjustments are subject to a final true-up of net cash and net working capital, based on the actual closing accounts to be finalized by both parties.

The aggregate consideration paid in the transaction was funded using cash on hand and borrowings under our revolving credit facility.

Our financial results for any periods ended prior to November 3, 2020 do not include the financial results of ANZ and are therefore not directly comparable.

In 2019, ANZ's revenues were $191.1 million, and its income from continuing operations was $3.8 million.

During the year ended December 31, 2020, we incurred $7.7 million in expenses related to this acquisition, primarily related to legal, financial, and accounting support services.

Acquisition of Capella Education Company

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Our financial results for any periods ended prior to August 1, 2018 do not include the financial results of CEC, and are therefore not directly comparable.

In 2017, CEC’s revenues were $440.4 million, and its income from continuing operations was $23.4 million.

During the years ended December 31, 2019 and 2018 , we incurred $21.9 million and $45.7 million , respectively, in expenses related to the merger, primarily attributable to financial advisory fees, consulting costs, legal fees, personnel, and other integration costs.

During the years ended December 31, 2020 and 2019, we incurred $6.1 million and $21.9 million, respectively, in expenses related to the CEC merger, primarily attributable to financial advisory fees, consulting costs, legal fees, personnel, and other integration costs.

During the fourth quarter of 2020, following the acquisition of ANZ, the Company revised its reportable segments to add ANZ to conform to the current period presentation.

As of December 31, 2020, SEI had the following reportable segments:

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• Strayer University is an institution of higher learning that offers undergraduate and graduate degree programs in business administration, accounting, information technology, education, health services administration, public administration, and criminal justice at 64 physical campuses, predominantly located in the eastern United States, and online.

Strayer University is accredited by the Middle States Commission on Higher Education (hereinafter referred to as “Middle States” or “Middle States Commission”), one of the seven regional collegiate accrediting agencies recognized by the Department.

Strayer University is accredited by the Middle States Commission on Higher Education (hereinafter referred to as “Middle States” or “Middle States Commission”), an institutional collegiate accrediting agency recognized by the Department of Education.

By offering its programs both online and in physical classrooms, Strayer University provides its working adult students flexibility and convenience.

• The Jack Welch Management Institute (“JWMI”) offers an executive MBA online and is a Top 25 Princeton Review ranked online MBA program.

• DevMountain is a software development program offering affordable, high-quality, leading-edge software coding education at multiple campus locations and online.

• Hackbright Academy is a software engineering school for women.

Its primary offering is an intensive 12-week accelerated software development program, together with placement services and coaching.

• In 2020, Strayer University's average total enrollment increased 2% to 52,167 students compared to 51,395 students in 2019.

New student enrollment for the period increased 6.6%.

Student enrollment at Strayer University is more volatile in the current economic environment due to Strayer’s mostly undergraduate student mix, which includes many first-time college students.

In the first quarter of 2020, Strayer University adopted a new enrollment reporting census date, which occurs approximately two weeks following the start of the academic term.

Previously the Strayer University enrollment census date coincided with the end of the University’s “drop-add” period, approximately one week following the

start of the academic term.

The new census date is consistent with the approach employed by Capella University.

All historical enrollment data included in this Form 10-K has been revised using the new census date.

Year-over-year percentage change in enrollment for the new census date does not differ significantly from the prior approach.

Capella University Segment

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public service leadership, nursing and health sciences, social and behavioral sciences, business and technology, education, and undergraduate studies.

Capella University focuses on master's and doctoral degrees, with 68% of its learners enrolled in a master’s or doctoral degree program.

Capella University focuses on master's and doctoral degrees, with approximately 70% of its students enrolled in a master’s or doctoral degree program.

Capella University's academic offerings are built with competency-based curricula and are delivered in an online format that is convenient and flexible.

Capella University designs its offerings to help working adult learners develop specific competencies they can apply in

their workplace.

Capella University is accredited by the Higher Learning Commission, one of the seven regional collegiate accrediting agencies recognized by the Department.

Capella University designs its offerings to help working adult students develop specific competencies they can apply in their workplace.

Capella University is accredited by the Higher Learning Commission, an institutional collegiate accrediting agency recognized by the Department of Education.

• Sophia Learning is an innovative company which leverages technology and high quality academic content to provide self-paced online courses recommended by the American Council on Education for college credit.

• In 2020, Capella University's average total enrollment increased 3% to 40,471 students compared to 39,203 students in 2019.

New student enrollment for the period increased 8.9%.

Non-Degree Programs Segment

DevMountain is a software development program offering affordable, high-quality, leading-edge software coding education at multiple campus locations and online.

Hackbright Academy is a software engineering school for women.

Its primary offering is an intensive 12-week accelerated software development program, together with placement services and coaching.

Sophia Learning is an innovative company which leverages technology and high quality academic content to provide self-paced online courses eligible for transfer credit into over 2,000 colleges and universities.

In the first quarter of 2020, Capella University consolidated two different enrollment reporting census dates into a single date, which occurs approximately two weeks following the start of the academic term.

All historical enrollment data included in this Form 10-K has been revised using the new census date.

Year-over-year percentage change in enrollment for the new census date does not differ significantly from the prior approach.

Australia/New Zealand Segment

• Torrens University is the only investor-funded University in Australia.

Torrens University offers undergraduate and graduate courses primarily in five fields of study:

business, design and creative technology, health, hospitality, and education.

Courses are offered both online and on physical campuses.

Torrens University is registered with the Tertiary Education Quality and Standards Agency ("TEQSA"), the regulator for higher education providers and universities throughout Australia, as an Australian University that is authorized to self-accredit its courses.

• Think Education is a vocational registered training organization and accredited higher education provider in Australia.

Think Education delivers education at several campuses in Sydney, Melbourne, Brisbane, and Adelaide as well as through online study.

Think Education and its colleges are accredited in Australia by the TEQSA and the Australian Skills Quality Authority, the regulator for vocational education and training organizations that operate in Australia.

• Media Design School is a private tertiary institution for creative and technology qualifications in New Zealand.

Media Design School offers industry-endorsed courses in 3D animation and visual effects, game art, game programming, graphic and motion design, digital media artificial intelligence, and creative advertising.

Media Design School is accredited in New Zealand by the New Zealand Qualifications Authority, responsible for the quality assurance of non-university tertiary training providers.

We believe we have the right operating strategies in place to provide the most direct path between learning and employment for our students.

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“Management’s Discussion and Analysis of Financial Condition and Results of Operations” discusses our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.

The preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosures of contingent assets and liabilities.

On an ongoing basis, management evaluates its estimates and judgments related to its allowance for doubtful accounts;

assets and liabilities.

On an ongoing basis, management evaluates its estimates and judgments related to its allowance for credit losses;

income tax provisions;

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redemption rates for scholarship programs and valuation of contract liabilities;

fair value of future contractual operating lease obligations for facilities that have been closed;

fair value of right-of-use lease assets for facilities that have been vacated;

incremental borrowing rates;

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Management believes that the following critical accounting policies are its more significant judgments and estimates used in the preparation of its consolidated financial statements.

Revenue recognition — Like many traditional institutions, Strayer University and Capella University offer educational programs primarily on a quarter system having four academic terms, which generally coincide with our quarterly financial reporting periods.

Revenue recognition — Like many traditional institutions in the United States, Strayer University and Capella University offer educational programs primarily on a quarter system having four academic terms, which generally coincide with our quarterly financial reporting periods.

Torrens University offers the majority of its education programs on a trimester system having three primary academic terms, which all occur within one calendar year.

Approximately 96% of our revenues during the year ended December 31, 2020 consisted of tuition revenue.

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Tuition revenue is shown net of any refunds, withdrawals, corporate discounts, scholarships, and employee tuition discounts.

The Universities also derive revenue from other sources such as textbook-related income, certificate revenue, certain academic fees, licensing revenue, and other income, which are all recognized when earned.

The Universities also derive revenue from other sources such as textbook-related income, certificate revenue, certain academic fees, licensing revenue, accommodation revenue, food and beverage fees, and other income, which are all recognized when earned.

In accordance with ASC 606, materials provided to students in connection with their enrollment in a course are recognized as revenue when control of those materials transfers to the student.

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Any cash received prior to the start of an academic term or program is recorded as a contract liability.

Students of the Universities finance their education in a variety of ways, and historically about three quarters of our students have participated in one or more financial aid programs provided through Title IV of the Higher Education Act.

Students at Strayer University and Capella University finance their education in a variety of ways, and historically about three quarters of our students have participated in one or more financial aid program provided through Title IV of the Higher Education Act.

In addition, many of our working adult students finance their own education or receive full or partial tuition reimbursement from their employers.

Those students who are veterans or active duty military personnel have access to various additional government-funded educational benefit programs.

In Australia, domestic students attending an ANZ institution finance their education themselves or by taking a loan through the government’s Higher Education Loan Program or Vocational Student Loan Program.

In New Zealand, domestic students may utilize government loans to fund tuition, and in addition may be eligible for a period of ‘fees free’ study funded by the government.

International students attending an ANZ institution are not eligible for funding from the Australian or New Zealand government.

A typical class is offered in weekly increments over a six- to twelve-week period, depending on the University and course type, and is followed by an exam.

Students who withdraw from a course may be eligible for a refund of tuition charges based on the timing of the withdrawal.

We use the student’s last date of attendance for this purpose.

Student attendance is based on physical presence in class for on-ground classes.

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If a student withdraws from a course prior to completion, a portion of the tuition may be refundable depending on when the withdrawal occurs.

Our specific refund policies vary across Universities and non-degree programs.

We use the student’s withdrawal date or last date of attendance for this purpose.

Our specific refund policies vary across the Universities and non-degree programs.

For students attending Strayer University, our refund policy typically permits students who complete less than half of a course to receive a partial refund of tuition for that course.

For learners attending Capella University, our refund policy varies based on course format.

GuidedPath learners are allowed a 100% refund through the first five days of the course, a 75% refund from six to twelve days, and 0% refund for the remainder of the period.

FlexPath learners receive a 100% refund through the 12th calendar day of the course for their first billing session only and a 0% refund after that date and for all subsequent billing sessions.

For students attending Capella University, our refund policy varies based on course format.

GuidedPath students are allowed a 100% refund through the first five days of the course, a 75% refund from six to twelve days, and 0% refund for the remainder of the period.

FlexPath students receive a 100% refund through the 12th calendar day of the course for their first billing session only and a 0% refund after that date and for all subsequent billing sessions.

For domestic students attending an ANZ institution, refunds are typically provided to students that withdraw within the first 20% of a course term.

For international students attending an ANZ institution, refunds are provided to students that withdraw prior to the course commencement date.

In limited circumstances refunds to student attending an ANZ institution may be granted after these cut-offs subject to an application for special consideration by the student and approval of that application by the institution.

Refunds reduce the tuition revenue that otherwise would have been recognized for that student.

Since the Universities’ academic terms coincide with our financial reporting periods for most programs, nearly all refunds are processed and recorded in the same quarter as the corresponding revenue.

For certain programs where courses may overlap a quarter-end date, the Company estimates a refund rate and does not recognize the related revenue until the uncertainty related to the refund is resolved.

Since the academic terms coincide with our financial reporting periods

for most programs, nearly all refunds are processed and recorded in the same quarter as the corresponding revenue.

For certain programs where courses may overlap a quarter-end date, the Company estimates a refund or withdrawal rate and does not recognize the related revenue until the uncertainty related to the refund is resolved.

The portion of tuition revenue refundable to students may vary based on the student’s state of residence.

For students who withdraw from all their courses during the quarter of instruction, we reassess collectibility of tuition and fees for revenue recognition purposes.

For students who withdraw from all their courses during the period of instruction, we reassess collectibility of tuition and fees for revenue recognition purposes.

In addition, we cease revenue recognition when a student fully withdraws from all of his or her courses in the academic term.

Tuition charges billed in accordance with our billing schedule may be greater than the pro rata revenue amount, but the additional amounts are not recognized as revenue unless they are collected in cash and the term is complete.

For students who receive funding under Title IV and withdraw, funds are subject to return provisions as defined by the Department of Education.

students who receive funding under Title IV and withdraw, funds are subject to return provisions as defined by the Department of Education.

The university is responsible for returning Title IV funds to the Department and then may seek payment from the withdrawn student of prorated tuition or other amounts charged to him or her.

Loss of financial aid eligibility during an academic term is rare and would normally coincide with the student’s withdrawal from the institution.

As discussed above, we cease revenue recognition upon a student’s withdrawal from all of his or her classes in an academic term until cash is received and the term is complete.

New students at Strayer University registering in credit-bearing courses in any undergraduate program for the summer 2013 term (fiscal third quarter) and subsequent terms qualify for the Graduation Fund, whereby qualifying students earn tuition credits that are redeemable in the final year of a student’s course of study if he or she successfully remains in the program.

When a student withdraws from all of their courses, we consider it to be a contract modification and reassess collectibility at that time.

As a result of this reassessment, we cease revenue recognition as our historical experience has shown that amounts outstanding for this group of students are not collectible.

In Australia and New Zealand, government funding for eligible students is provided directly to the institution on an estimated basis annually.

The amount of government funding provided is based on a course-by-course forecast of enrollments that the institution submits for the upcoming calendar year.

Using the enrollment forecast provided as well as the requesting institution's historical enrollment trends, the government approves a fixed amount, which is then funded to the institution evenly on a monthly basis.

Periodic reconciliation and true-ups are undertaken between the relevant government authority and the institution based on actual eligible enrollments, which may result in a net amount being due to or from the government.

Students at Strayer University registering in credit-bearing courses in any undergraduate program beginning in the summer 2013 term or graduate program beginning in the summer 2020 term (fiscal third quarter), and subsequent terms qualify for the Graduation Fund, whereby qualifying students earn tuition credits that are redeemable in the final year of a student’s course of study if he or she successfully remains in the program.

Students must meet all of the University’s admission requirements and not be eligible for any previously offered scholarship program.

Our employees and their dependents are not eligible for the program.

To maintain eligibility, students must be enrolled in a bachelor’s degree program.

To maintain eligibility, students must be enrolled in a bachelor’s or master's degree program.

Students who have more than one consecutive term of non-attendance lose any Graduation Fund credits earned to date, but may earn and accumulate new credits if the student is reinstated or readmitted by the University in the future.

In their final academic year, qualifying students will receive one free course for every three courses that were successfully completed in prior years.

The performance obligation associated with free courses that may be redeemed in the future is valued based on a systematic and rational allocation of the cost of honoring the benefit earned to each of the underlying revenue transactions that result in progress by the student toward earning the benefit.

In response to the COVID-19 pandemic, Strayer University is temporarily allowing students to miss two consecutive terms without losing their Graduation Fund credits.

In their final academic year, qualifying students will receive one free course for every three courses that the student successfully completed in prior years.

Strayer University's performance obligation associated with free courses that may be redeemed in the future is valued based on a systematic and rational allocation of the cost of honoring the benefit earned to each of the underlying revenue transactions that result in progress by the student toward earning the benefit.

The estimated value of awards under the Graduation Fund that will be recognized in the future is based on historical experience of students’ persistence in completing their course of study and earning a degree and the tuition rate in effect at the time it was associated with the transaction.

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However, if actual persistence or redemption rates change, adjustments to the reserve may be necessary and could be material.

Tuition receivable — We record estimates for our allowance for doubtful accounts for tuition receivable from students primarily based on our historical collection rates by age of receivable, net of recoveries, and consideration of other relevant factors.

Our experience is that payment of outstanding balances is influenced by whether the student returns to the institution,

as we require students to make payment arrangements for their outstanding balances prior to enrollment.

Tuition receivable — We record estimates for our allowance for credit losses related to tuition receivable from students primarily based on our historical collection rates by age of receivable and adjusted for reasonable expectations of future collection performance, net of recoveries.

Our experience is that payment of outstanding balances is influenced by whether the student returns to the institution, as we require students to make payment arrangements for their outstanding balances prior to enrollment.

Therefore, we monitor outstanding tuition receivable balances through subsequent terms, increasing the reserve on such balances over time as the likelihood of returning to the institution diminishes and our historical experience indicates collection is less likely.

We periodically assess our methodologies for estimating bad debts in consideration of actual experience.

If the financial condition of our students were to deteriorate, resulting in evidence of impairment of their ability to make required payments for tuition payable to us, additional allowances or write-offs may be required.

We periodically assess our methodologies for estimating credit losses in consideration of actual experience.

If the financial condition of our students were to deteriorate based on current or expected future events resulting in evidence of impairment of their ability to make required payments for tuition payable to us, additional allowances or write-offs may be required.

During 2019 and 2020, our bad debt expense was 4.9% and 4.8% of revenue, respectively.

A change in our allowance for doubtful accounts of 1% of gross tuition receivable as of December 31, 2019 would have changed our income from operations by approximately $0.8 million .

A change in our allowance for credit losses of 1% of gross tuition receivable as of December 31, 2020 would have changed our income from operations by approximately $1.0 million.

Business combinations - We account for business combinations using the acquisition method of accounting, which requires that once control is obtained, the purchase price be allocated to all tangible assets and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date.

Any excess purchase price over the fair value of the net assets acquired is recorded as goodwill.

The determination of the fair value of assets acquired and liabilities assumed requires many estimates and assumption with respect to the timing and amounts of cash flow projections, revenue growth rates, earnings before interest and taxes margins, student attrition rates, royalty rates, discount rates, and useful lives.

These estimates are based on assumptions believed to be reasonable, and when appropriate, include assistance from independent third-party valuation firms.

During the measurement period, which is up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with corresponding offsets to goodwill.

The Company applied the acquisition method of accounting to its merger with CEC in 2018 and its acquisition of ANZ in 2020.

Refer to Note 3, Business Combinations, within the footnotes to the consolidated financial statements for additional information.

Goodwill and intangible assets — Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the assets acquired and liabilities assumed.

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Management identifies its reporting units by assessing whether the components of its operating segments constitute businesses for which discrete financial information is available and management regularly reviews the operating results of those components.

Through our acquisition of CEC in 2018, we had significant additions to goodwill and tradename intangible assets.

The acquired goodwill was allocated to the Strayer University and Capella University reporting units.

Goodwill and indefinite-lived intangible assets are assessed at least annually for impairment.

In connection with the goodwill in our Capella University and JWMI reporting units as well as our indefinite-lived intangible assets, we performed a qualitative impairment assessment, consistent with ASC 350, to evaluate the recoverability of the related amounts.

We had significant additions to goodwill and tradename intangible assets related to our acquisitions of ANZ in 2020 and CEC in 2018.

Goodwill and indefinite-lived intangible assets are assessed at least annually for impairment, or more frequently if events occur or circumstances change between annual tests that would more likely than not reduce the fair value of the respective reporting unit below its carrying amount.

In 2020, we performed a qualitative impairment assessment, consistent with ASC 350, of goodwill and indefinite-lived intangible assets assigned to our reporting units to evaluate the recoverability of the related amounts.

The qualitative factors considered included macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, and any other factors that have a significant bearing on fair value.

In connection with the goodwill in our Strayer University reporting unit, we elected to perform a quantitative impairment assessment, consistent with ASC 350.

We used an income-based approach to determine the fair value of the Strayer University reporting unit.

The income approach consisted of a discounted cash flow model that included projections of future cash flows for the Strayer University reporting unit, calculating a terminal value, and discounting such cash flows by a risk-adjusted rate of return.

Based on the qualitative and quantitative impairment assessments performed, we concluded that no impairments had been incurred during the year ended December 31, 2019 .

During the year ended December 31, 2018, we fully impaired the New York Code and Design Academy, Inc.

("NYCDA") goodwill and tradename balances, resulting in total impairment charges of $19.6 million.

Refer to Note 10 – Goodwill and Intangible Assets – within the footnotes to the consolidated financial statements for additional information.

No goodwill or indefinite-lived intangible asset impairments were recorded during the years ended December 31, 2019 or 2020.

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 asset.

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No impairment charges related to finite-lived intangible assets were recorded during the years ended December 31, 2019 or 2020.

Other estimates — We record estimates for certain of our accrued expenses and income tax liabilities.

Other estimates — We record estimates for certain of our accrued expenses and for income tax liabilities.

We estimate the useful lives of our property and equipment and intangible assets and periodically review our assumed forfeiture rates and ability to achieve performance targets for stock-based awards and adjust them as necessary.

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Results of Operations

As discussed above, we completed our merger with CEC on August 1, 2018.

Our results of operations include the results of CEC from the merger date.

Periods prior to August 1, 2018 do not include the financial results of CEC.

As discussed above, we completed our merger with CEC on August 1, 2018 and our acquisition of ANZ on November 3, 2020.

Our results of operations include the results of CEC and the results of ANZ from their respective acquisition dates.

Periods prior to August 1, 2018 do not include the financial results of CEC, and periods prior to November 3, 2020 do not include the financial results of ANZ.

Accordingly, the financial results of each period presented are not directly comparable.

This discussion will highlight changes largely in the Strayer University segment, as those results are included in full in each period.

In 2020, we generated $1,027.7 million in revenue compared to $997.1 million in 2019.

Our income from operations was $110.5 million in 2019 compared to a loss from operations of $22.7 million in 2018 , due primarily to the inclusion of a full year of CEC's results in our consolidated results of operations as well as higher revenues due to enrollment growth and lower merger and integration costs and impairment charges.

Our net income in 2019 was $81.1 million compared to a net loss of $15.7 million in 2018 .

Diluted earnings per share was $3.67 in 2019 compared to a loss per share of $1.03 in 2018 .

In the accompanying analysis of financial information for 2019 and 2018 , we use certain financial measures including Adjusted Revenue, Adjusted Total Costs and Expenses, Adjusted Operating Income, Adjusted Net Income, and Adjusted Diluted Earnings per Share that are not required by or prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Our income from operations decreased to $109.4 million in 2020 compared to $110.5 million in 2019, principally due to the inclusion of ANZ, which generated a $13.3 million loss from operations following the acquisition as well as restructuring costs incurred in 2020, partially offset by a decrease in merger and integration related costs and an increase in Strayer University and Capella University revenue due to enrollment growth.

Our net income in 2020 was $86.3 million compared to $81.1 million in 2019.

Diluted earnings per share was $3.77 in 2020 compared to $3.67 in 2019.

In the accompanying analysis of financial information for 2020 and 2019, we use certain financial measures including Adjusted Revenue, Adjusted Total Costs and Expenses, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Income Before Income Taxes, Adjusted Net Income, and Adjusted Diluted Earnings per Share that are not required by or prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

These measures, which are considered “non-GAAP financial measures” under SEC rules, are defined by us to exclude the following:

a purchase accounting adjustment to record Capella University contract liabilities at fair value as a result of the Company's merger with Capella Education Company,

amortization and depreciation expense related to intangible assets and software assets acquired through the Company’s merger with Capella Education Company,

transaction and integration costs associated with the Company’s merger with Capella Education Company,

fair value adjustments to the value of contingent consideration, impairment charges for intangible assets related to the Company's acquisition of The New York Code and Design Academy, and adjustments to reserves for leases on facilities no longer in use,

• purchase accounting adjustments to record acquired contract liabilities at fair value as a result of the Company's merger with Capella Education Company in 2018 and the Company's acquisition of Torrens University and related assets in Australia and New Zealand in 2020,

• amortization and depreciation expense related to intangible assets and software assets acquired through the Company’s merger with Capella Education Company and the Company's acquisition of Torrens University and related assets in Australia and New Zealand,

• transaction and integration expenses associated with the Company’s merger with Capella Education Company, and the Company's acquisition of Torrens University and related assets in Australia and New Zealand,

• severance costs and right-of-use lease asset impairment charges associated with the Company's restructuring

• impairment charges for intangible assets related to the Company's acquisition of The New York Code and Design Academy,

• income from partnership and other investments that are not part of our core operations, and

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Adjusted net income was $152.7 million in 2020 compared to $147.3 million in 2019, and adjusted diluted earnings per share was $6.68 in 2020 compared to $6.67 in 2019.

Reconciliation of Reported to Adjusted Results of Operations for the year ended December 31, 2019

Reconciliation of Reported to Adjusted Results of Operations for the year ended December 31, 2020 (in thousands, except per share data)

Non-GAAP Adjustments

As Reported (GAAP)

As Reported (GAAP) Contract

adjustment (1)

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Merger and integration costs (3)

Fair value adjustments

and impairment of

Restructuring costs (4)

Impairment of

intangible assets (5)

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As Adjusted (Non-

Revenues $ 1,027,653 $ 11,296 $ — $ — $ — $ — $ — $ — $ 1,038,949

Total costs and expenses 918,269 — (64,225) (13,770) (12,382) — — — 827,892

Operating income

Income from operations 109,384 11,296 64,225 13,770 12,382 — — — 211,057

Operating margin 10.6% 20.3%

Income before income taxes 113,957 11,296 64,225 13,770 12,382 — (2,094) — 213,536

Net income $ 86,268 $ 11,296 $ 64,225 $ 13,770 $ 12,382 $ — $ (2,094) $ (33,141) $ 152,706

Diluted earnings per share $ 3.77 $ 6.68

Weighted average diluted shares outstanding 22,860 22,860

Reconciliation of Reported to Adjusted Results of Operations for the year ended December 31, 2018

Reconciliation of Reported to Adjusted Results of Operations for the year ended December 31, 2019 (in thousands, except per share data)

Non-GAAP Adjustments

As Reported (GAAP)

As Reported (GAAP) Contract

adjustment (1)

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Merger and integration costs (3)

Fair value adjustments

and impairment of

Restructuring costs (4)

Impairment of

intangible assets (5)

2 unchanged sentences

As Adjusted (Non-

Revenues $ 997,137 $ — $ — $ — $ — $ — $ — $ — $ 997,137

Total costs and expenses 886,605 — (61,667) (21,923) — — — — 803,015

Operating income (loss)

Income from operations 110,532 — 61,667 21,923 — — — — 194,122

Operating margin 11.1% 19.5%

Net income (loss)

Diluted earnings (loss) per share

Income before income taxes 123,724 — 61,667 21,923 — — (3,446) — 203,868

Net income $ 81,138 $ — $ 61,667 $ 21,923 $ — $ — $ (3,446) $ (14,001) $ 147,281

Diluted earnings per share $ 3.67 $ 6.67

Weighted average diluted shares outstanding 22,097 22,097

Reconciliation of Reported to Adjusted Results of Operations for the year ended December 31, 2017

Reconciliation of Reported to Adjusted Results of Operations for the year ended December 31, 2018 (in thousands, except per share data)

Non-GAAP Adjustments

As Reported (GAAP)

As Reported (GAAP) Contract

adjustment (1)

2 unchanged sentences

Merger and integration costs (3)

Fair value adjustments

and impairment of

Restructuring costs (4)

Impairment of

intangible assets (5)

2 unchanged sentences

As Adjusted (Non-

Revenues $ 634,185 $ 28,748 $ — $ — $ — $ — $ — $ — $ 662,933

Total costs and expenses 656,925 — (25,694) (45,745) — (19,909) — — 565,577

Operating income

Income (loss) from operations (22,740) 28,748 25,694 45,745 — 19,909 — — 97,356

Operating margin -3.6% 14.7%

Diluted earnings per share

Income (loss) before income taxes (19,139) 28,748 25,694 45,745 — 19,909 — — 100,957

Net income (loss) $ (15,671) $ 28,748 $ 25,694 $ 45,745 $ — $ 19,909 $ — $ (29,348) $ 75,077

Diluted earnings (loss) per share $ (1.03) $ 4.75

Weighted average diluted shares outstanding 15,190 15,801

___________________________________________________

Reflects a purchase accounting adjustment to record Capella University contract liabilities at fair value as a result of the Company’s merger with CEC.

Reflects amortization and depreciation expense of intangible assets and software assets acquired through the Company’s merger with CEC.

Reflects transaction and integration charges associated with the Company's merger with CEC.

Reflects adjustments to the value of contingent consideration in 2017, and an impairment of goodwill and intangible assets in 2018, related to the Company's acquisition of the New York Code and Design Academy.

(1) Reflects purchase accounting adjustments to record acquired contract liabilities at fair value as a result of the Company’s merger with CEC in 2018 and the Company's acquisition of ANZ in 2020.

(2) Reflects amortization and depreciation expense of intangible assets and software assets acquired through the Company’s merger with CEC and the Company's acquisition of ANZ.

(3) Reflects transaction and integration expenses associated with the Company's merger with CEC and acquisition of ANZ.

(4) Reflects severance costs and right-of-use lease asset impairment charges associated with the Company's restructuring.

(5) Reflects impairment of goodwill and intangible assets in 2018 related to the Company's acquisition of the New York Code and Design Academy.

(6) Reflects income recognized from the Company's investments in partnership interests and other investments.

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Year Ended December 31, 2020 Compared To Year Ended December 31, 2019

The increase in consolidated revenues compared to the same period in the prior year was primarily related to the acquisition of ANZ in November 2020.

Near term revenue growth at our U.S.

based Universities is expected to be impacted negatively by the ongoing COVID-19 pandemic with weaker demand and higher scholarships and discounts.

In the Strayer University segment for the year ended December 31, 2020, total enrollment grew 2% to 52,167 from 51,395 in the prior year.

Revenue increased 0.1% to $537.6 million compared to $537.0 million in 2019 as a result of enrollment growth, partially offset by a decline in revenue per student due to higher scholarships and discounts we are offering in response to the COVID-19 pandemic.

In the Capella University segment for the year ended December 31, 2020, total enrollment grew 3% to 40,471 from 39,203 in 2019.

Capella University segment revenue increased 1.4% to $466.6 million in 2020, compared to $460.2 million in 2019 as a result of the increase in enrollment, partially offset by lower revenue per student due to a mix shift to enrollment from corporate sponsored students who receive discounted tuition.

Revenues for the Australia/New Zealand segment were $23.4 million, following our acquisition of ANZ in November 2020, and included an $11.3 million purchase accounting reduction related to contract liabilities acquired in the acquisition.

Instructional and support costs.

Consolidated instructional and support costs increased to $532.7 million in 2020, compared to $530.6 million in 2019, principally due to the inclusion of $19.7 million of instructional and support costs related to ANZ, partially offset by significant savings from the impact of the COVID-19 pandemic, which included lower expenses associated with travel, events, and facilities costs.

Consolidated instructional and support costs as a percentage of revenues decreased to 51.8% in 2020, from 53.2% in 2019.

General and administration expenses.

Consolidated general and administration expenses increased to $295.2 million in 2020 compared to $272.4 million in 2019, principally due to the inclusion of $17.0 million of general and administration expenses related to ANZ, as well as increased investments in brand initiatives and partnerships with brand ambassadors.

Consolidated general and administration expenses as a percentage of revenues increased to 28.7% in 2020 from 27.3% in 2019.

Amortization of intangible assets.

Amortization expense of intangible assets increased to $64.2 million in 2020 compared to $61.7 million in 2019, due to the additional amortization expense of intangible assets acquired in the acquisition of ANZ in November 2020.

Merger and integration costs.

Merger and integration costs decreased to $13.8 million in 2020 compared to $21.9 million in 2019, as a result of lower expenses for integration support services and severance costs related to the merger with CEC, partially offset by transaction and integration expenses associated with the acquisition of ANZ.

Restructuring costs.

Restructuring costs include severance and other personnel-related expenses from voluntary and involuntary employee terminations as well as early lease termination costs and impairments of right-of-use lease assets associated with vacating leased space in connection with a restructuring plan implemented in 2020.

Income from operations .

Consolidated income from operations decreased to $109.4 million in 2020 compared to $110.5 million in 2019, principally due to the inclusion of ANZ, which generated a loss from operations following acquisition as well as restructuring costs incurred in 2020, partially offset by a decrease in merger and integration related costs and an increase in Strayer University and Capella University revenue due to enrollment growth.

Strayer University segment income from operations increased 16.4% to $120.4 million in 2020, compared to $103.4 million in 2019, primarily due to expense savings related to campus closures during the COVID-19 pandemic, as well as lower marketing expense.

Capella University segment income from operations increased 2.1% to $92.6 million in 2020, compared to $90.7 million in 2019, primarily due higher revenues as a result of enrollment growth.

Loss from operations for the Australia/New Zealand segment was $13.3 million in 2020, following our acquisition of ANZ in November 2020.

Other income.

Other income decreased to $4.6 million in 2020 compared to $13.2 million in 2019, as a result of lower yields on money markets and marketable securities due to reductions in interest rates as a result of the COVID-19 crisis and a decrease in investment income from our limited partnerships and other investments.

Other income is net of interest expense, which was $1.4 million and $0.8 million in 2020 and 2019, respectively.

The increase in interest expense in 2020 is due to borrowing $141.8 million on our revolving credit facility to partially fund the ANZ acquisition in November 2020.

Provision for income taxes.

Income tax expense was $27.7 million in 2020 compared to $42.6 million in 2019.

Our effective tax rate for 2020 was 24.3%, compared to 34.4% in 2019.

The tax rate in 2019 was unfavorably impacted by changes in previously deferred compensation arrangements, resulting in a discrete charge of $11.5 million to reduce the Company's deferred tax asset related to these arrangements.

The tax rate for both periods reflects favorable discrete adjustments, primarily related to tax windfalls recognized through share-based payment arrangements.

Our effective tax rate, excluding these and other discrete tax adjustments, was 28.5% for 2020.

Net income was $86.3 million in 2020 compared to $81.1 million in 2019 due to the factors discussed above.

Year Ended December 31, 2019 Compared To Year Ended December 31, 2018

The increase in consolidated revenues compared to the same period in the prior year was primarily related to the inclusion of CEC revenue for the full year.

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Revenue grew 12.4% to $537.0 million compared to $477.8 million in 2018 as a result of the increase in enrollment.

In 2019, one of Strayer University's largest corporate partners changed its tuition benefits policy, which may negatively impact future enrollment and revenue growth.

Capella University segment

revenue was $455.3 million compared to $154.9 million in the prior year, which reflects activity after the completion of the CEC merger on August 1, 2018, and includes a $28.7 million purchase accounting reduction to the value of contract liabilities acquired in the merger.

Non-Degree Programs segment revenues were $14.8 million in 2019 , compared to $8.2 million in 2018 .

The increase in revenue was primarily attributable to incremental revenues generated from the operations of Hackbright, DevMountain, and Sophia Learning, which were acquired in the CEC merger.

Capella University segment revenue was $460.2 million in 2019 compared to $156.3 million in the prior year, which reflects activity after the completion of the CEC merger on August 1, 2018, and includes a $28.7 million purchase accounting reduction to the value of contract liabilities acquired in the merger.

Instructional and support costs.

Consolidated instruction and educational support expenses increased to $530.6 million in 2019 , compared to $371.5 million in 2018 , principally due to the inclusion of instructional and support costs of CEC.

Consolidated instructional and support costs increased to $530.6 million in 2019, compared to $371.5 million in 2018, principally due to the inclusion of instructional and support costs of CEC.

Consolidated instructional and support costs as a percentage of revenues decreased to 53.2% in 2019 from 58.6% in 2018 due to cost synergies realized as a result of the CEC merger.

General and administration expenses.

Consolidated general and administration expenses increased to $272.4 million in 2019 compared to $194.0 million in 2018 , principally due to the inclusion of general and administration expenses of CEC, as well as increased investments in branding initiatives and partnerships with brand ambassadors.

Consolidated general and administration expenses increased to $272.4 million in 2019, from $194.0 million in 2018, principally due to the inclusion of general and administration expenses of CEC, as well as increased investments in branding initiatives and partnerships with brand ambassadors.

Consolidated general and administration expenses as a percentage of revenues decreased to 27.3% in 2019 from 30.6% in 2018 due to cost synergies realized as a result of the CEC merger.

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In 2019, merger and integration costs also includes $6.0 million of right-of-use lease asset impairment charges related to redundant leased space that was vacated during the year.

Fair value adjustments and impairment of intangible assets.

Impairment of intangible assets.

In 2018, we recorded a goodwill impairment loss of $13.9 million and an intangible asset impairment loss of $5.7 million based on analyses performed during the year with respect to our acquisition of NYCDA.

2 unchanged sentences

Income (loss) from operations.

Income from operations was $110.5 million in 2019 compared to a loss from operations of $22.7 million in 2018 , principally due to higher revenues due to enrollment growth and lower merger and integration costs and impairment charges than in 2018 .

Consolidated income from operations was $110.5 million in 2019 compared to a loss from operations of $22.7 million in 2018, principally due to higher revenues due to enrollment growth and lower merger and integration costs and impairment charges than in 2018.

Other income.

1 unchanged sentence

Other income is net of interest expense, which was $0.8 million and $0.7 million in 2019 and 2018, respectively.

We had $250.0 million available under our amended revolving credit facility and no borrowings outstanding as of 2019 .

Provision (benefit) for income taxes.

3 unchanged sentences

This charge is offset by favorable adjustments related to tax windfalls recognized through share-based payment arrangements.

Our effective tax rate, excluding these and other discrete tax adjustments, was 27.8% for 2019 .

Our effective tax rate, excluding these and other discrete tax adjustments, was 27.8% in 2019.

Net income (loss).

Net income was $81.1 million in 2019 compared to a net loss of $15.7 million in 2018 due to the factors discussed above.

Year Ended December 31, 2018 Compared To Year Ended December 31, 2017

The increase in consolidated revenues compared to the same period in the prior year was primarily related to the inclusion of CEC revenue since the August 1, 2018 acquisition date.

In the Strayer University segment for the year ended December 31, 2018 , enrollment grew 8.1% to 47,733 from 44,155 in the prior year.

Revenue grew 4.8% to $471.1 million compared to $449.5 million in 2017 as a result of the increase in enrollment, partially offset by lower revenue per student.

Capella University segment revenue was $154.9 million, which included a $28.7 million purchase accounting reduction related to contract liabilities acquired in the merger.

Non-Degree Programs segment revenues were $8.2 million in 2018, compared to $5.3 million in 2017.

The increase in revenue was primarily attributable to incremental revenues generated from the operations of Hackbright and DevMountain, which were acquired in the CEC merger during the third quarter of 2018.

Instructional and support costs.

Consolidated instructional and support costs increased to $371.5 million in 2018, compared to $268.9 million in 2017, principally due to the inclusion of instructional and support costs of CEC, as well as increases in Strayer student materials costs, depreciation expense following recent infrastructure investments, and bad debt expense.

Consolidated instructional and support costs as a percentage of revenues decreased to 58.6% in 2018 from 59.1% in 2017.

General and administration expenses.

Consolidated general and administration expenses increased to $194.0 million in 2018, from $129.3 million in 2017, principally due to the inclusion of general and administration expenses of CEC, as well as increased investments in branding initiatives and partnerships with brand ambassadors for Strayer.

Consolidated marketing expenses as a percentage of revenues increased to 30.6% in 2018 from 28.4% in 2017.

Amortization of intangible assets .

In 2018, we recorded $25.7 million in amortization expense related to intangible assets acquired in the merger with CEC.

Merger and integration costs.

Merger costs were $45.7 million in 2018 compared to $11.9 million in 2017, and reflect expenses for legal, accounting, integration support services, and severance costs incurred in connection with the merger with CEC.

Fair value adjustments and impairment of intangible assets.

In addition, we recognized a $0.3 million charge to increase our liability for leases on facilities no longer in use in 2018.

In 2017, we recorded a benefit of $7.8 million to reduce the value of contingent consideration payable to the sellers of NYCDA, offset by a charge of $0.3 million to increase our liability for leases on facilities no longer in use.

Income (loss) from operations.

Loss from operations was $22.7 million in 2018 compared to income from operations of $52.2 million in 2017.

The decline was primarily due to amortization expense, merger costs, and impairments to the NYCDA trade name and goodwill incurred during the year and discussed above.

Other income.

Other income increased to $3.6 million in 2018 compared to $0.4 million in 2017, as a result of higher yields on money markets and marketable securities and an increase in our cash balance.

Other income is net of interest expense, which was $0.7 million and $0.6 million in 2018 and 2017, respectively.

We had $250.0 million available under our amended revolving credit facility and no borrowings outstanding as of December 31, 2018.

Provision (benefit) for income taxes.

We recorded a benefit for income taxes of $3.5 million in 2018, compared to a provision for income taxes of $32.0 million in 2017.

Our effective tax rate for 2018 was 18.1%.

The benefit for income taxes in 2018 reflects the lower federal income tax rate in effect in 2018, accelerated deductions enabled by the 2017 tax law, and the tax benefits associated with the vesting of restricted stock, offset by certain nondeductible charges associated with the merger and for the impairment of NYCDA goodwill.

Our effective tax rate, excluding these and other discrete tax adjustments, was 25.6% for 2018.

Net income (loss).

Net loss was $15.7 million in 2018 compared to net income of $20.6 million in 2017 due to the factors discussed above.

Liquidity and Capital Resources

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Most of our cash was held in demand deposit accounts at high credit quality financial institutions.

On August 1, 2018, the Company entered into an amended credit facility (the “Amended Credit Facility”), which provides for a senior secured revolving credit facility (the “Revolver”) in an aggregate principal amount of up to $250 million.

The Amended Credit Facility provides the Company with an option, under certain conditions, to increase the commitments under the Revolver or establish one or more incremental term loans (each, an “Incremental Facility”) in an amount up to the sum of (x) $150 million and (y) if such Incremental Facility is incurred in connection with a permitted acquisition, any amount so long as the Company’s leverage ratio (calculated on a trailing four-quarter basis) on a pro forma basis will be no greater than 1.75:1.00.

Borrowings under the Amended Credit Facility bear interest at LIBOR or a base rate, plus a margin ranging from 1.50% to 2.00%, depending on our leverage ratio.

An unused commitment fee ranging from 0.20% to 0.30%, depending on our leverage ratio, accrues on unused amounts.

During the years ended December 31, 2019 and December 31, 2018 , we paid unused commitment fees of $0.5 million and $0.4 million , respectively.

We were in compliance with all applicable covenants

related to the Amended Credit Facility as of December 31, 2019 .

We had no borrowings outstanding during each of the years ended December 31, 2019 and December 31, 2018 .

Our net cash provided by operating activities increased in 2019 to $202.1 million , as compared to $46.9 million for the same period in 2018 .

The increase in net cash from operating activities was largely due to the increase in income from operations following the merger with CEC, together with adjustments for non-cash charges for depreciation and amortization expense.

On November 3, 2020, we entered into an amended credit facility ("Amended Credit Facility"), which provides for a senior secured revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal amount of up to $350 million.

The Amended Credit Facility provides us with an option, subject to obtaining additional loan commitments and satisfaction of certain conditions, to increase the commitments under the Revolving Credit Facility or establish one or more incremental term loans (each, an “Incremental Facility”) in the future in an aggregate amount of up to the sum of (x) the greater of (A) $300 million and (B) 100% of the Company’s consolidated EBITDA (earnings before interest, taxes, depreciation, amortization, and noncash charges, such as stock-based compensation) calculated on a trailing four-quarter basis and on a pro forma basis, and (y) if such Incremental Facility is incurred in connection with a permitted acquisition or other permitted investment, any amounts so long as the Company's leverage ratio (calculated on a trailing four-quarter basis) on a pro forma basis will be no greater than 1.75:1.00.

In addition, the Amended Credit Facility provides for a subfacility for borrowings in certain foreign currencies in an amount equal to the U.S.

dollar equivalent of $150 million.

Borrowings under the Revolving Credit Facility bear interest at a per annum rate equal to LIBOR or a base rate, plus a margin ranging from 1.50% to 2.00% depending on our leverage ratio.

An unused commitment fee ranging from 0.20% to 0.30% per annum, depending on our leverage ratio, accrues on unused amounts.

We were in compliance with all applicable covenants related to the Amended Credit Facility as of December 31, 2020.

At December 31, 2020, we had $141.8 million outstanding on our Revolving Credit Facility.

We had no borrowings outstanding as of December 31, 2019.

During the years ended December 31, 2019 and 2020, we paid $0.5 million and $1.0 million, respectively, of interest and unused commitment fees related to our Revolving Credit Facility.

Our net cash provided by operating activities decreased in 2020 to $142.9 million, as compared to $202.1 million for the same period in 2019.

The decrease in net cash from operating activities was primarily driven by a decrease in working capital as a result of several one-time events, including a $25.3 million payment in the fourth quarter to acquire a full license to continue using the Jack Welch name and likeness for the Jack Welch Management Institute.

Capital expenditures were $46.8 million for the year ended December 31, 2020, compared to $38.7 million for 2019.

Capital expenditures for the year ending December 31, 2021 are expected to be between 4%-5% of revenue.

The Board of Directors declared a quarterly cash dividend of $0.50 per common share in the first, second, and third quarters of 2019 and a quarterly cash dividend of $0.60 per common share in the fourth quarter of 2019 .

In August 2020, we completed a public offering of 2,185,000 shares of our common stock for total cash proceeds of $220.2 million, net of underwriting discounts and offering costs of $9.2 million.

The funds from the stock offering were used to acquire Torrens University and related assets in Australia and New Zealand.

The Board of Directors declared an annual cash dividend of $2.40 per common share, payable in equal parts quarterly.

During the year ended December 31, 2020, we paid a total of $56.0 million in cash dividends on our common stock.

For the year ended December 31, 2019 , we did not repurchase any shares of common stock and, at December 31, 2019 , had $70 million in repurchase authorization to use through December 31, 2020.

We believe that existing cash and cash equivalents, cash generated from operating activities, and if necessary, cash borrowed under our Amended Credit Facility will be sufficient to meet our requirements for at least the next 12 months.

During the year ended December 31, 2020, we invested $0.2 million to repurchase 1,769 shares of common stock.

At December 31, 2020, we had $250 million in repurchase authorization to use through December 31, 2021.

We believe that existing cash and cash equivalents, cash generated from operating activities, and if necessary, cash available under our Amended Credit Facility will be sufficient to meet our requirements for at least the next 12 months.

Currently, we maintain our cash primarily in demand deposit bank accounts and money market funds, which are included in cash and cash equivalents at December 31, 2020 and 2019.

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Payments Due By Period

Total Less than 1

Years More than

Lease liabilities (1)

$ 159,988 $ 40,336 $ 50,231 $ 34,523 $ 34,898

__________________________________________________________

(1) Excludes $60.0 million of legally binding minimum payments for leases signed but not yet commenced.

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As of December 31, 2020, we do not have any off-balance sheet arrangements as defined by Item 303(a)(4) of the Securities Exchange Commission Regulation S-K.

Recently Issued Accounting Standards

Refer to Note 2, Significant Accounting Policies, within the footnotes to the consolidated financial statements for recently issued accounting standards.

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 7. Management’s Discussion and Analysis