☒ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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New Jersey
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57-1150621
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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Title of each class
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Name of exchange on which registered
|
|||
Common Stock, no par value per share
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The NASDAQ Stock Market LLC
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company ☒
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Emerging growth company ☐
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EXPLANATORY NOTE
This Amendment No. 1 on Form 10-K/A (“Amendment No. 1”) amends the Annual Report of Lincoln Educational Services Corporation (the “Company”) on Form 10-K for the fiscal year ended December 31, 2018, as filed with the Securities and Exchange Commission on March 13, 2019 (the “Original Filing”).
This Amendment No. 1 is being filed to include the auditor tenure statement in Deloitte & Touche LLP's audit report contained in Part II, Item 8 which was omitted in the Original Filing
due to an administrative filing error in the Edgarizing process. New currently dated certifications from the Company's principal executive officer and principal financial officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of
2002 are attached hereto as Exhibits 31.1, 31.2 and 32.
Except as described above, this Amendment No.1 does not amend or update any other information contained in the Original Filing. The Company has included a complete copy of the Original Filing, as amended per above, in this filing.
PART I.
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1
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ITEM 1.
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1
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ITEM 1A.
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18
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ITEM 1B.
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26
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||
ITEM 2.
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27
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ITEM 3.
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27
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ITEM 4.
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27
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PART II.
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27
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ITEM 5.
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27
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||
ITEM 6.
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31
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||
ITEM 7.
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32
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||
ITEM 7A.
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49
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||
ITEM 8
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49
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ITEM 9.
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49
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||
ITEM 9A.
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49
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ITEM 9B.
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50
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PART III.
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52
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ITEM 10.
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52
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ITEM 11.
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52
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||
ITEM 12.
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52
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||
ITEM 13.
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52
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||
ITEM 14.
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52
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||
PART IV.
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53
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||
ITEM 15.
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53
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· |
our failure to comply with the extensive existing regulatory framework applicable to our industry or our failure to obtain timely regulatory approvals in connection with
a change of control of our company or acquisitions;
|
· |
the promulgation of new regulations in our industry as to which we may find compliance challenging;
|
· |
our success in updating and expanding the content of existing programs and developing new programs in a cost-effective manner or on a timely basis;
|
· |
our ability to implement our strategic plan;
|
· |
risks associated with changes in applicable federal laws and regulations including pending rulemaking by the U.S. Department of Education;
|
· |
uncertainties regarding our ability to comply with federal laws and regulations regarding the 90/10 rule and cohort default rates;
|
· |
risks associated with maintaining accreditation
|
· |
risks associated with opening new campuses and closing existing campuses;
|
· |
risks associated with integration of acquired schools;
|
· |
industry competition;
|
· |
conditions and trends in our industry;
|
· |
general economic conditions; and
|
· |
other factors discussed under the headings “Business,” “Risk Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations.”
|
· |
Expand Existing Areas of Study and Existing Facilities. We
believe we can leverage our operations to expand our program offerings in existing areas of study and expand into new high-demand areas of study in the Transportation and Skilled Trades segment to capitalize on demand from students
and employers in our target markets. Whenever possible, we seek to replicate programs across our campuses.
|
· |
Maximize Utilization of Existing Facilities. We are focused
on improving capacity utilization of existing facilities through increased enrollments, the introduction of new programs and partnerships with industry.
|
· |
Expand Market. We believe that we can enter new markets and
broaden the Lincoln brand by partnering with nationally recognized brands to provide the skills needed to train our nation’s workforce. We continue to expand our industry relationships both to attract new students and to offer our
graduates more employment opportunities. We continue to establish partnerships with companies like BMW, Chrysler (FCA), Hussmann, Volkswagen and Audi that will enable graduates to receive higher wages. We expect to continue investing
in marketing, recruiting and retention resources to increase enrollment.
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Current Programs Offered
|
||||
Area of Study
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Associate's Degree
|
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Diploma and Certificate
|
|
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Automotive
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Automotive Service Management, Collision Repair & Refinishing Service Management, Diesel & Truck Service Management
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Automotive Mechanics, Automotive Technology, Automotive Technology with Audi, Automotive Technology with BMW FastTrack, Automotive
Technology with Mopar X-Press, Automotive Technology with High Performance, Automotive Technology with Volkswagon, Collision Repair and Refinishing Technology, Diesel & Truck Mechanics, Diesel & Truck Technology, Diesel &
Truck Technology with Alternate Fuel Teechnology, Diesel & Truck Technology with Transport Refrigeration, Diesel & Truck with Automotive Technology, Heavy Equipment Maintenance Technology, Heavy Equipment and Truck Technology
|
|
|
|
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Skilled Trades
|
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Electronic Engineering Technology, HVAC, Electronics Systems Service Management
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Electrical Technology, Electrical & Electronics Systems Technician, HVAC, Welding Technology, Welding with Introduction to
Pipefitting, CNC
|
|
|
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Health Sciences
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Medical Assisting Technology, Medical Office Management
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Medical Office Assistant, Medical Assistant, Patient Care Technician, Medical Coding & Billing, Dental Assistant, Licensed Practical
Nursing
|
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Hospitality Services
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Culinary Arts, Cosmetology, Aesthetics, International Baking and Pastry, Nail Technolgy, Therapeutic Massage & Bodywork Technician
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Information Technology
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Computer Networking and Support
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Computer & Network Support Technician
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School
|
Last Accreditation Letter
|
Next Accreditation
|
Type of Accreditation
|
|||
Philadelphia, PA2
|
November 26, 2018
|
May 1, 2023
|
National
|
|||
Union, NJ1
|
May 29, 2014
|
February 1, 20194
|
National
|
|||
Mahwah, NJ1
|
March 11, 2015
|
August 1, 2019
|
National
|
|||
Melrose Park, IL2
|
March 13, 2015
|
November 1, 2019
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National
|
|||
Denver, CO1
|
June 14, 2016
|
February 1, 2021
|
National
|
|||
Columbia, MD
|
March 8, 2017
|
February 1, 2022
|
National
|
|||
Grand Prairie, TX1
|
June 20, 2017
|
August 1, 2021
|
National
|
|||
Allentown, PA2
|
March 8, 2017
|
February 1, 2022
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National
|
|||
Nashville, TN1
|
September 6, 2017
|
May 1, 2022
|
National
|
|||
Indianapolis, IN
|
May 15, 2018
|
November 1, 2021
|
National
|
|||
New Britain, CT
|
June 5, 2018
|
January 1, 2023
|
National
|
|||
Shelton, CT2
|
March 5, 2014
|
September 1, 20184
|
National
|
|||
Queens, NY1
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September 4, 2018
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June 1, 2023
|
National
|
|||
East Windsor, CT2
|
October 17, 2017
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February 1, 2023
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National
|
|||
South Plainfield, NJ1
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September 2, 2014
|
August 1, 2019
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National
|
|||
Iselin, NJ
|
May 15, 2018
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May 15, 2023
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National
|
|||
Moorestown, NJ3
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May 15, 2018
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May 15, 2023
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National
|
|||
Paramus, NJ3
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May 15, 2018
|
May 15, 2023
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National
|
|||
Lincoln, RI3
|
May 15, 2018
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May 15, 2023
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National
|
|||
Somerville, MA3
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May 15, 2018
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May 15, 2023
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National
|
|||
Summerlin, NV3
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May 15, 2018
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May 15, 2023
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National
|
|||
Marietta, GA3
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May 15, 2018
|
May 15, 2022
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National
|
1 |
Branch campus of main campus in Indianapolis, IN
|
2 |
Branch campus of main campus in New Britain, CT
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3 |
Branch campus of main campus in Iselin, NJ
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4 |
Campus undergoing re-accreditation. Campus has received written confirmation that it remains accredited pending consideration of its application for reaccreditation.
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Main Institution/Campus(es)
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Additional Location(s)
|
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Iselin, NJ
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Moorestown, NJ
|
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Paramus, NJ
|
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Somerville, MA
|
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Lincoln, RI
|
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Marietta, GA
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Las Vegas, NV (Summerlin)
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New Britain, CT
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Shelton, CT
|
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Philadelphia, PA
|
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East Windsor, CT
|
||
Melrose Park, IL
|
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Allentown, PA
|
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Indianapolis, IN
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Grand Prairie, TX
|
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Nashville, TN
|
||
Denver, CO
|
||
Union, NJ
|
||
Mahwah, NJ
|
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Queens, NY
|
||
South Plainfield, NJ
|
||
Columbia, MD
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Institution
|
Expiration Date of Current
Program Participation
Agreement
|
|
Columbia, MD
|
March 31, 2020
|
|
Iselin, NJ
|
September 30, 2020
|
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Indianapolis, IN
|
December 31, 20181,2
|
|
New Britain, CT
|
March 31, 2020
|
1 |
Provisionally certified.
|
2 |
Institution is on a month-to-month approval during the re-certification process.
|
Reporting Segment
|
Passing
Programs
|
Zone
Programs
|
Failing
Programs
|
|||||||||
Transportation
|
92.9
|
%
|
7.1
|
%
|
0.0
|
%
|
||||||
HOPS
|
96.1
|
%
|
3.9
|
%
|
0.0
|
%
|
Reporting Segment
|
Zone
Programs
|
Failing
Programs
|
||||||
Transportation
|
$
|
7,800,000
|
$
|
-
|
||||
HOPS
|
$
|
2,400,000
|
$
|
1,000,000
|
|
GE Program Code
|
|
|
|
||
Reporting Segment
|
OPEID
|
CIP Code
|
Credential Level
|
GE Program Name
|
GE Classification
|
Actions implemented
|
Transportation
|
007936
|
120503
|
Certificate
|
Culinary Arts/Chef Training
|
Zone
|
Teachout, Program Modification, Tuition Reduction
|
Transportation
|
007938
|
470603
|
Certificate
|
Autobody/Collision And Repair
Technology/Technician |
Zone
|
Program Modification,
Tuition Reducation |
Transportation
|
007936
|
470604
|
Certificate
|
Automobile/Automotive Mechanices
Technology/Technician |
Zone
|
Program Modification,
Tuition Reducation |
HOPS
|
012461
|
120401
|
Certificate
|
Cosmetology/Cosmetologist General
|
Zone
|
Program Modification
|
HOPS
|
007303
|
120503
|
Certificate
|
Culinary Arts/Chef Training
|
Fail
|
Appeal, Teachout, Program Modification,
Tuition Reducation |
HOPS
|
007303
|
120599
|
Certificate
|
Culinary Arts and Related Services, Other
|
Zone
|
Teachout
|
HOPS
|
0012461
|
470101
|
Certificate
|
Electrical/ Electronics Equipment Installation
And Repair, General |
Fail
|
Teachout, Program Modification
|
HOPS
|
0012461
|
470101
|
Associate Degree
|
Electrical/ Electronics Equipment Installation
And Repair, General |
Zone
|
Program Modification
|
HOPS
|
0012461
|
510713
|
Associate Degree
|
Medical Insurance Coding Specialist/Coder
|
Zone
|
Teachout
|
Transitional
|
0012461
|
120503
|
Certificate
|
Culinary Arts/Chef Training
|
Zone
|
Teachout
|
Transitional
|
0012461
|
120503
|
Certificate
|
Culinary Arts/Chef Training
|
Zone
|
Teachout
|
Transitional
|
0012461
|
470201
|
Certificate
|
Heating, Air Conditioning, Ventilation
And Refrigeration Maintenance Technology/Technician |
Fail
|
Teachout
|
Transitional
|
0012461
|
470604
|
Certificate
|
Automobile/Automotive Mechanices
Technology/Technician |
Fail
|
Teachout
|
Transitional
|
0012461
|
470604
|
Associate Degree
|
Automobile/Automotive Mechanics
Technology/Technician |
Zone
|
Teachout
|
Transitional
|
0012461
|
510716
|
Associate Degree
|
Medical Administrative/Executive Assistant
And Medical Secretory |
Zone
|
Teachout
|
Transitional
|
0012461
|
510801
|
Associate Degree
|
Medical/Clinical Assistant
|
Zone
|
Teachout
|
· |
establishing new processes, and updating existing processes, for enabling borrowers to obtain from the DOE a discharge of some or all of their federal student loans
based on circumstances such as certain acts or omissions of the institution and for the DOE to impose and collect liabilities against the institution following the loan discharges;
|
· |
establishing expanded standards of financial responsibility (see “Regulatory Environment – Financial Responsibility Standards”);
|
· |
requiring institutions to make disclosures to current and prospective students regarding the existence of certain of the circumstances identified in the expanded
standards of financial responsibility;
|
· |
calculating a loan repayment rate for each proprietary institution under standards established by the regulations and requiring institutions to provide warnings to
current and prospective students if the institution has a loan repayment rate below specified thresholds;
|
· |
prohibiting certain contractual provisions imposed by or on behalf of schools on students regarding arbitration, dispute resolution, and participation in class actions;
and
|
· |
expanding the existing definition of misrepresentations that could result in grounds for discharge of student loans and in liabilities and sanctions against the
institution, including, without limitation, potential loss of Title IV eligibility.
|
·
|
The equity ratio, which measures the institution's capital resources, ability to borrow and financial viability;
|
· |
The primary reserve ratio, which measures the institution's ability to support current operations from
expendable resources; and
|
· |
The net income ratio, which measures the institution's ability to operate at a profit.
|
· |
Posting a letter of credit in an amount equal to at least 50% of the total Title IV Program funds received
by the institution during the institution's most recently completed fiscal year; or
|
· |
Posting a letter of credit in an amount equal to at least 10% of the Title IV Program funds received by the
institution during its most recently completed fiscal year accepting provisional certification; complying with additional DOE monitoring requirements and agreeing to receive Title IV Program funds under an arrangement other than the
DOE's standard advance funding arrangement
|
· |
Comply with all applicable federal student financial aid requirements;
|
· |
Have capable and sufficient personnel to administer the federal student Title IV Programs;
|
· |
Administer Title IV Programs with adequate checks and balances in its system of internal controls over financial reporting;
|
· |
Divide the function of authorizing and disbursing or delivering Title IV Program funds so that no office has the responsibility for both functions;
|
· |
Establish and maintain records required under the Title IV Program regulations;
|
· |
Develop and apply an adequate system to identify and resolve discrepancies in information from sources regarding a student’s application for financial aid under the Title
IV Program;
|
· |
Have acceptable methods of defining and measuring the satisfactory academic progress of its students;
|
· |
Refer to the Office of the Inspector General any credible information indicating that any applicant, student, employee, third party servicer or other agent of the school
has been engaged in any fraud or other illegal conduct involving Title IV Programs;
|
· |
Not be, and not have any principal or affiliate who is, debarred or suspended from federal contracting or
engaging in activity that is cause for debarment or suspension;
|
· |
Provide adequate financial aid counseling to its students;
|
· |
Submit in a timely manner all reports and financial statements required by the Title IV Program regulations; and
|
· |
Not otherwise appear to lack administrative capability.
|
· |
establishing new processes, and updating existing processes, for enabling borrowers to obtain from the DOE a discharge of some or all of their federal student loans
based on circumstances such as certain acts or omissions of the institution and for the DOE to impose and collect liabilities against the institution following the loan discharges;
|
· |
establishing expanded standards of financial responsibility (see “Financial Responsibility Standards”);
|
· |
requiring institutions to make disclosures to current and prospective students regarding the existence of certain of the circumstances identified in the expanded
standards of financial responsibility;
|
· |
calculating a loan repayment rate for each proprietary institution under standards established by the regulations and requiring institutions to provide warnings to
current and prospective students if the institution has a loan repayment rate below specified thresholds;
|
· |
prohibiting certain contractual provisions imposed by or on behalf of schools on students regarding arbitration, dispute resolution, and participation in class actions;
and
|
· |
expanding the existing definition of misrepresentations that could result in grounds for discharge of student loans and in liabilities and sanctions against the
institution, including, without limitation, potential loss of Title IV eligibility.
|
· |
Student dissatisfaction with our programs and services;
|
· |
Diminished access to high school student populations;
|
· |
Our failure to maintain or expand our brand or other factors related to our marketing or advertising
practices; and
|
· |
Our inability to maintain relationships with employers in the automotive, diesel, skilled trades and IT
services industries.
|
· |
authorize the issuance of blank check preferred stock that could be issued by our board of directors to
thwart a takeover attempt;
|
· |
prohibit cumulative voting in the election of directors, which would otherwise allow holders of less than a
majority of stock to elect some directors;
|
· |
require super-majority voting to effect amendments to certain provisions of our amended and restated
certificate of incorporation;
|
· |
limit who may call special meetings of both the board of directors and stockholders;
|
· |
prohibit stockholder action by non-unanimous written consent and otherwise require all stockholder actions
to be taken at a meeting of the stockholders;
|
· |
establish advance notice requirements for nominating candidates for election to the board of directors or for proposing matters that can be acted upon by stockholders at
stockholders' meetings; and
|
· |
require that vacancies on the board of directors, including newly created directorships, be filled only by a majority vote of directors then in office.
|
· |
general economic conditions;
|
· |
general conditions in the for-profit, post-secondary education industry;
|
· |
negative media coverage of the for-profit, post-secondary education industry;
|
· |
failure of certain of our schools or programs to maintain compliance under the gainful employment regulation, 90-10 Rule or with financial responsibility standards;
|
· |
the impact of DOE rulemaking and other changes in the highly regulated environment in which we operate;
|
· |
the initiation, pendency or outcome of litigation, accreditation reviews and regulatory reviews, inquiries and investigations;
|
· |
loss of key personnel;
|
· |
quarterly variations in our operating results;
|
· |
our ability to meet or exceed, or changes in, expectations of investors and analysts, or the extent of analyst coverage of us; and
|
· |
decisions by any significant investors to reduce their investment in our common stock.
|
Location
|
Brand
|
Approximate Square Footage
|
||
Las Vegas, Nevada
|
Euphoria Institute
|
19,000
|
||
Southington, Connecticut
|
Former Lincoln College of New England
|
113,000
|
||
Columbia, Maryland
|
Lincoln College of Technology
|
110,000
|
||
Denver, Colorado
|
Lincoln College of Technology
|
212,000
|
||
Grand Prairie, Texas
|
Lincoln College of Technology
|
146,000
|
||
Indianapolis, Indiana
|
Lincoln College of Technology
|
189,000
|
||
Marietta, Georgia
|
Lincoln College of Technology
|
30,000
|
||
Melrose Park, Illinois
|
Lincoln College of Technology
|
88,000
|
||
Allentown, Pennsylvania
|
Lincoln Technical Institute
|
26,000
|
||
East Windsor, Connecticut
|
Lincoln Technical Institute
|
289,000
|
||
Iselin, New Jersey
|
Lincoln Technical Institute
|
32,000
|
||
Lincoln, Rhode Island
|
Lincoln Technical Institute
|
39,000
|
||
Mahwah, New Jersey
|
Lincoln Technical Institute
|
79,000
|
||
Moorestown, New Jersey
|
Lincoln Technical Institute
|
35,000
|
||
New Britain, Connecticut
|
Lincoln Technical Institute
|
35,000
|
||
Paramus, New Jersey
|
Lincoln Technical Institute
|
30,000
|
||
Philadelphia, Pennsylvania
|
Lincoln Technical Institute
|
29,000
|
||
Queens, New York
|
Lincoln Technical Institute
|
48,000
|
||
Shelton, Connecticut
|
Lincoln Technical Institute and Lincoln Culinary Institute
|
47,000
|
||
Somerville, Massachusetts
|
Lincoln Technical Institute
|
33,000
|
||
South Plainfield, New Jersey
|
Lincoln Technical Institute
|
60,000
|
||
Union, New Jersey
|
Lincoln Technical Institute
|
56,000
|
||
Nashville, Tennessee
|
Lincoln College of Technology
|
281,000
|
||
West Orange, New Jersey
|
Corporate Office
|
52,000
|
||
Plymouth Meeting, Pennsylvania
|
Corporate Office
|
4,000
|
||
Suffield, Connecticut
|
Former Lincoln Technical Institute
|
132,000
|
Plan Category
|
Number of
Securities to be
issued upon
exercise of
outstanding
options,
warrants and
rights
|
Weighted-
average
exercise
price of
outstanding
options,
warrants and
rights
|
Number of
securities
remaining
available for
future issuance
under equity
compensation
plans (excluding
securities
reflected in
column (a))
|
|||||||||
(a)
|
||||||||||||
Equity compensation plans approved by security holders
|
139,000
|
$
|
12.14
|
2,050,638
|
||||||||
Equity compensation plans not approved by security holders
|
-
|
-
|
-
|
|||||||||
Total
|
139,000
|
$
|
12.14
|
2,050,638
|
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||||||||
(In thousands, except per share amounts)
|
||||||||||||||||||||
Statement of Operations Data, Year Ended December 31:
|
||||||||||||||||||||
Revenue
|
$
|
263,200
|
$
|
261,853
|
$
|
285,559
|
$
|
306,102
|
$
|
325,022
|
||||||||||
Cost and expenses:
|
||||||||||||||||||||
Educational services and facilities
|
125,373
|
129,413
|
144,426
|
151,647
|
164,352
|
|||||||||||||||
Selling, general and administrative
|
141,244
|
138,779
|
148,447
|
151,797
|
168,441
|
|||||||||||||||
Loss (gain) on sale of assets
|
537
|
(1,623
|
)
|
233
|
1,738
|
(58
|
)
|
|||||||||||||
Impairment of goodwill and long-lived assets
|
-
|
-
|
21,367
|
216
|
40,836
|
|||||||||||||||
Total costs and expenses
|
267,154
|
266,569
|
314,473
|
305,398
|
373,571
|
|||||||||||||||
Operating (loss) income
|
(3,954
|
)
|
(4,716
|
)
|
(28,914
|
)
|
704
|
(48,549
|
)
|
|||||||||||
Other:
|
||||||||||||||||||||
Interest income
|
31
|
56
|
155
|
52
|
153
|
|||||||||||||||
Interest expense
|
(2,422
|
)
|
(7,098
|
)
|
(6,131
|
)
|
(8,015
|
)
|
(5,613
|
)
|
||||||||||
Other income
|
-
|
-
|
6,786
|
4,151
|
297
|
|||||||||||||||
Loss from continuing operations before income taxes
|
(6,345
|
)
|
(11,758
|
)
|
(28,104
|
)
|
(3,108
|
)
|
(53,712
|
)
|
||||||||||
Provision (benefit) for income taxes
|
200
|
(274
|
)
|
200
|
242
|
(4,225
|
)
|
|||||||||||||
Loss from continuing operations
|
(6,545
|
)
|
(11,484
|
)
|
(28,304
|
)
|
(3,350
|
)
|
(49,487
|
)
|
||||||||||
Loss from discontinued operations, net of income taxes
|
-
|
-
|
-
|
-
|
(6,646
|
)
|
||||||||||||||
Net loss
|
$
|
(6,545
|
)
|
$
|
(11,484
|
)
|
$
|
(28,304
|
)
|
$
|
(3,350
|
)
|
$
|
(56,133
|
)
|
|||||
Basic
|
||||||||||||||||||||
Loss per share from continuing operations
|
$
|
(0.27
|
)
|
$
|
(0.48
|
)
|
$
|
(1.21
|
)
|
$
|
(0.14
|
)
|
$
|
(2.17
|
)
|
|||||
Loss per share from discontinued operations
|
-
|
-
|
-
|
-
|
(0.29
|
)
|
||||||||||||||
Net loss per share
|
$
|
(0.27
|
)
|
$
|
(0.48
|
)
|
$
|
(1.21
|
)
|
$
|
(0.14
|
)
|
$
|
(2.46
|
)
|
|||||
Diluted
|
||||||||||||||||||||
Loss per share from continuing operations
|
$
|
(0.27
|
)
|
$
|
(0.48
|
)
|
$
|
(1.21
|
)
|
$
|
(0.14
|
)
|
$
|
(2.17
|
)
|
|||||
Loss per share from discontinued operations
|
-
|
-
|
-
|
-
|
(0.29
|
)
|
||||||||||||||
Net loss per share
|
$
|
(0.27
|
)
|
$
|
(0.48
|
)
|
$
|
(1.21
|
)
|
$
|
(0.14
|
)
|
$
|
(2.46
|
)
|
|||||
Weighted average number of common shares outstanding:
|
||||||||||||||||||||
Basic
|
24,423
|
23,906
|
23,453
|
23,167
|
22,814
|
|||||||||||||||
Diluted
|
24,423
|
23,906
|
23,453
|
23,167
|
22,814
|
|||||||||||||||
Other Data:
|
||||||||||||||||||||
Capital expenditures
|
$
|
4,697
|
$
|
4,755
|
$
|
3,596
|
$
|
2,218
|
$
|
7,472
|
||||||||||
Depreciation and amortization from continuing operations
|
8,421
|
8,702
|
11,066
|
14,506
|
19,201
|
|||||||||||||||
Number of campuses
|
22
|
23
|
28
|
31
|
31
|
|||||||||||||||
Average student population from continuing operations
|
10,591
|
10,772
|
11,864
|
12,981
|
14,010
|
|||||||||||||||
Cash dividend declared per common share
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
0.18
|
||||||||||
Balance Sheet Data, At December 31:
|
||||||||||||||||||||
Cash, cash equivalents and restricted cash
|
$
|
45,946
|
$
|
54,554
|
$
|
47,715
|
$
|
61,041
|
$
|
42,299
|
||||||||||
Working (deficit) capital (1)
|
(7,470
|
)
|
(2,766
|
)
|
(1,733
|
)
|
33,818
|
29,585
|
||||||||||||
Total assets
|
146,038
|
155,213
|
163,207
|
210,279
|
213,707
|
|||||||||||||||
Total debt (2)
|
48,769
|
52,593
|
41,957
|
58,224
|
65,181
|
|||||||||||||||
Total stockholders' equity
|
39,866
|
45,813
|
54,926
|
80,997
|
83,010
|
· |
Our internal financing is provided to students only after all other funding resources have been exhausted; thus, by the time this funding is available, students have
completed approximately two-thirds of their curriculum and are more likely to graduate;
|
· |
Funding for students who interrupt their education is typically covered by Title IV funds as long as they have been properly packaged for financial aid; and
|
· |
Creditworthy criteria to demonstrate a student’s ability to pay.
|
· |
Educational services and facilities. Major components of educational services and facilities expenses include faculty compensation and benefits, expenses of books and tools, facility rent, maintenance, utilities, depreciation and amortization of
property and equipment used in the provision of education services and other costs directly associated with teaching our programs excluding student services which is included in selling, general and administrative expenses.
|
· |
Selling, general and administrative. Selling, general and administrative expenses include compensation and benefits of employees who are not directly associated with the provision of educational services (such as executive management
and school management, finance and central accounting, legal, human resources and business development), marketing and student enrollment expenses (including compensation and benefits of personnel employed in sales and marketing and
student admissions), costs to develop curriculum, costs of professional services, bad debt expense, rent for our corporate headquarters, depreciation and amortization of property and equipment that is not used in the provision of
educational services and other costs that are incidental to our operations. Selling, general and administrative expenses also includes the cost of all student services including financial aid and career services. All marketing and
student enrollment expenses are recognized in the period incurred.
|
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Revenue
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||
Costs and expenses:
|
||||||||||||
Educational services and facilities
|
47.6
|
%
|
49.4
|
%
|
50.6
|
%
|
||||||
Selling, general and administrative
|
53.7
|
%
|
53.0
|
%
|
52.0
|
%
|
||||||
(Gain) loss on sale of assets
|
0.2
|
%
|
-0.6
|
%
|
0.1
|
%
|
||||||
Impairment of goodwill and long-lived assets
|
0.0
|
%
|
0.0
|
%
|
7.5
|
%
|
||||||
Total costs and expenses
|
101.5
|
%
|
101.8
|
%
|
110.2
|
%
|
||||||
Operating (loss) income
|
-1.5
|
%
|
-1.8
|
%
|
-10.2
|
%
|
||||||
Interest expense, net
|
-0.9
|
%
|
-2.7
|
%
|
-2.0
|
%
|
||||||
Other income
|
0.0
|
%
|
0.0
|
%
|
2.4
|
%
|
||||||
Loss from operations before income taxes
|
-2.4
|
%
|
-4.5
|
%
|
-9.8
|
%
|
||||||
Provision (benefit) for income taxes
|
0.1
|
%
|
-0.1
|
%
|
0.1
|
%
|
||||||
Net loss
|
-2.5
|
%
|
-4.4
|
%
|
-9.9
|
%
|
Twelve Months Ended December 31,
|
||||||||||||
2018
|
2017
|
% Change
|
||||||||||
Revenue:
|
||||||||||||
Transportation and Skilled Trades
|
$
|
185,263
|
$
|
181,328
|
2.2
|
%
|
||||||
Healthcare and Other Professions
|
72,135
|
63,641
|
13.3
|
%
|
||||||||
Transitional
|
5,802
|
16,884
|
-65.6
|
%
|
||||||||
Total
|
$
|
263,200
|
$
|
261,853
|
0.5
|
%
|
||||||
Operating
Income (Loss):
|
||||||||||||
Transportation and Skilled Trades
|
$
|
17,661
|
$
|
17,795
|
-0.8
|
%
|
||||||
Healthcare and Other Professions
|
6,469
|
3,937
|
64.3
|
%
|
||||||||
Transitional
|
(5,994
|
)
|
(6,926
|
)
|
13.5
|
%
|
||||||
Corporate
|
(22,090
|
)
|
(19,522
|
)
|
-13.2
|
%
|
||||||
Total
|
$
|
(3,954
|
)
|
$
|
(4,716
|
)
|
16.2
|
%
|
||||
Starts:
|
||||||||||||
Transportation and Skilled Trades
|
8,294
|
7,763
|
6.8
|
%
|
||||||||
Healthcare and Other Professions
|
4,023
|
3,673
|
9.5
|
%
|
||||||||
Transitional
|
140
|
363
|
-61.4
|
%
|
||||||||
Total
|
12,457
|
11,799
|
5.6
|
%
|
||||||||
Average
Population:
|
||||||||||||
Transportation and Skilled Trades
|
7,042
|
6,961
|
1.2
|
%
|
||||||||
Healthcare and Other Professions
|
3,312
|
3,024
|
9.5
|
%
|
||||||||
Transitional
|
237
|
787
|
-69.9
|
%
|
||||||||
Total
|
10,591
|
10,772
|
-1.7
|
%
|
||||||||
End of
Period Population:
|
||||||||||||
Transportation and Skilled Trades
|
6,988
|
6,626
|
5.5
|
%
|
||||||||
Healthcare and Other Professions
|
3,537
|
3,136
|
12.8
|
%
|
||||||||
Transitional
|
-
|
397
|
-100.0
|
%
|
||||||||
Total
|
10,525
|
10,159
|
3.6
|
%
|
· |
Revenue increased by $3.9 million to $185.3 million for the year ended December 31, 2018, as compared to $181.3 million in the prior year comparable period. The increase
in revenue was primarily driven by five consecutive quarters of start growth, most notably a 6.8% increase in student starts, during the year ended December 31, 2018 in addition to a 1% increase in average revenue per student
primarily due to tuition rate increases partially offset by changes in program mix from longer to shorter programs. The increase in revenue was despite starting the year with 278 fewer students than that of the prior year.
|
· |
Educational services and facilities expense increased by $1.0 million, or 1.1%, to $85.4 million for the year ended December 31, 2018 from $84.4 million in the prior year
comparable period. This increase was driven by $1.2 million in additional books and tools expense partially. Increased books and tools expense was a collaboration between a growing number of program offerings requiring laptops in
addition to a growing student population. Reductions in facilities expense was a result of fully depreciated assets.
|
· |
Selling general and administrative expense increased by $3.0 million, primarily resulting from a $2.4 million increase in bad debt expense in addition to a $1.4 million
increase in marketing investment as detailed in the consolidated results of operations. Partially offsetting the costs were savings of $1.2 million in salaries and benefits expense resulting from operational efficiencies.
|
· |
Revenue increased $8.5 million, or 13.3%, to $72.1 million for the year ended December 31, 2018 as compared to $63.6 million in the prior year comparable period. The
increase in revenue was driven by a 9.5% increase in average student population in combination with a 3.4% increase in average revenue per student resulting from tuition increases.
|
· |
Educational services and facilities expense increased by $2.6 million to $34.7 million for the year ended
December 31, 2018 from $32.1 million in the prior year comparable period. This increase was primarily driven by increased instructional expense and books and tools expense resulting from a 9.5% increase in average student
population.
|
· |
Selling general and administrative expenses increased by $3.4 million, or 12.2%, to $30.9 million for the
year ended December 31, 2018 as compared to $27.6 million in the prior year comparable period. This increase was primarily driven by additional bad debt expense and marketing expense as detailed in the consolidated results of
operations.
|
Campus
|
Date Closed
|
Southington, Connecticut
|
December 31, 2018
|
Northeast Philadelphia, Pennsylvania
|
September 30, 2017
|
Center City Philadelphia, Pennsylvania
|
August 31, 2017
|
West Palm Beach, Florida
|
September 30, 2017
|
Brockton, Massachusetts
|
December 31, 2017
|
Lowell, Massachusetts
|
December 31, 2017
|
Twelve Months Ended December 31,
|
||||||||||||
2017
|
2016
|
% Change
|
||||||||||
Revenue:
|
||||||||||||
Transportation and Skilled Trades
|
$
|
181,328
|
$
|
182,276
|
-0.5
|
%
|
||||||
Healthcare and Other Professions
|
63,641
|
62,870
|
1.2
|
%
|
||||||||
Transitional
|
16,884
|
40,413
|
-58.2
|
%
|
||||||||
Total
|
$
|
261,853
|
$
|
285,559
|
-8.3
|
%
|
||||||
Operating
Income (Loss):
|
||||||||||||
Transportation and Skilled Trades
|
$
|
17,795
|
$
|
21,578
|
-17.5
|
%
|
||||||
Healthcare and Other Professions
|
3,937
|
(9,392
|
)
|
-141.9
|
%
|
|||||||
Transitional
|
(6,926
|
)
|
(16,995
|
)
|
59.2
|
%
|
||||||
Corporate
|
(19,522
|
)
|
(24,105
|
)
|
19.0
|
%
|
||||||
Total
|
$
|
(4,716
|
)
|
$
|
(28,914
|
)
|
83.7
|
%
|
||||
Starts:
|
||||||||||||
Transportation and Skilled Trades
|
7,763
|
7,892
|
-1.6
|
%
|
||||||||
Healthcare and Other Professions
|
3,673
|
3,543
|
3.7
|
%
|
||||||||
Transitional
|
363
|
1,791
|
-79.7
|
%
|
||||||||
Total
|
11,799
|
13,226
|
-10.8
|
%
|
||||||||
Average
Population:
|
||||||||||||
Transportation and Skilled Trades
|
6,961
|
7,072
|
-1.6
|
%
|
||||||||
Healthcare and Other Professions
|
3,024
|
2,939
|
2.9
|
%
|
||||||||
Transitional
|
787
|
1,853
|
-57.5
|
%
|
||||||||
Total
|
10,772
|
11,864
|
-9.2
|
%
|
||||||||
End of
Period Population:
|
||||||||||||
Transportation and Skilled Trades
|
6,626
|
6,904
|
-4.0
|
%
|
||||||||
Healthcare and Other Professions
|
3,136
|
2,935
|
6.8
|
%
|
||||||||
Transitional
|
397
|
1,396
|
-71.6
|
%
|
||||||||
Total
|
10,159
|
11,235
|
-9.6
|
%
|
· |
Revenue decreased to $181.3 million for the year ended December 31, 2017, as compared to $182.3 million in
the comparable prior year period. The slight decrease in revenue was primarily driven by a 1.6% decrease in average student population, partially offset by a 1.1% increase in average revenue per student.
|
· |
Educational services and facilities expense decreased by $1.2 million, or 1.4%, mainly due to reductions in
depreciation expense attributable to assets that have fully depreciated.
|
· |
Selling, general and administrative expense increased by $4.2 million, primarily resulting from $1.4
million of additional bad debt expense resulting from higher student accounts, higher account write-off’s, and timing of Title IV Program receipts and a $1.5 million increase in marketing expense. The increase in marketing expense
is part of a strategic effort to increase student population and increase brand awareness. As mentioned previously, the increased marketing spend targeted at the adult demographic has resulted in slightly higher starts year over
year. This progress has been offset by lower than expected high school starts.
|
· |
Revenue increased to $63.6 million for the year ended December 31, 2017, as compared to $62.9 million in
the prior year comparable period. The increase in revenue is mainly attributable to a 2.9% increase in average population, partially offset by a lower carry in population year over year and a 1.6% decline in average revenue per student due to tuition decreases at certain campuses.
|
· |
Educational services and facilities expense remained essentially flat at $32.1 million and $32 million for the years ended December 31, 2017 and 2016, respectively.
|
· |
Selling, general and administrative expenses increased by $1.5 million, or 5.9%, mainly due to a $1.2
million increase in sales and marketing expense as a result of increased spending in an effort to increase student population and brand awareness and a $0.2 million increase in administrative expense as a result of increased
salaries and benefits. Increased salaries and benefits resulted from the addition of administrative staff to accommodate newly transferred students from our Northeast Philadelphia, Pennsylvania and Center City Philadelphia,
Pennsylvania campuses, which were closed in August 2017.
|
· |
Impairment of goodwill and long lived asset decreased by $14.3 million as a result of non-cash, pre-tax charges during the year ended December 31, 2016.
|
Campus
|
Date Closed
|
Southington, Connecticut
|
December 31, 2018
|
Center City Philadelphia, Pennsylvania
|
August 31, 2017
|
Center City Philadelphia, Pennsylvania
|
August 31, 2017
|
West Palm Beach, Florida
|
September 30, 2017
|
Brockton, Massachusetts
|
December 31, 2017
|
Lowell, Massachusetts
|
December 31, 2017
|
Fern Park, Florida
|
March 31, 2016
|
Hartford, Connecticut
|
December 31, 2016
|
Henderson (Green Valley), Nevada
|
December 31, 2016
|
Cash Flow Summary
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
(In thousands)
|
||||||||||||
Net cash used in operating activities
|
$
|
(1,694
|
)
|
$
|
(11,321
|
)
|
$
|
(6,107
|
)
|
|||
Net (cash used) provided by in investing activities
|
$
|
(2,349
|
)
|
$
|
10,707
|
$
|
(3,145
|
)
|
||||
Net (cash used) provided by in financing activities
|
$
|
(4,565
|
)
|
$
|
7,453
|
$
|
(4,074
|
)
|
As of December 31,
|
||||||||
2018
|
2017
|
|||||||
Credit agreement
|
$
|
49,301
|
$
|
53,400
|
||||
Deferred financing fees
|
(532
|
)
|
(807
|
)
|
||||
Subtotal
|
48,769
|
52,593
|
||||||
Less current maturities
|
(15,000
|
)
|
-
|
|||||
Total long-term debt
|
$
|
33,769
|
$
|
52,593
|
Payments Due by Period
|
||||||||||||||||||||
Total
|
Less than
1 year
|
1-3 years
|
3-5 years
|
More
than 5
years
|
||||||||||||||||
Credit facility
|
$
|
49,301
|
*
|
$
|
15,000
|
$
|
34,301 |
$
|
- |
$
|
- | |||||||||
Operating leases
|
73,431
|
16,939
|
24,891
|
13,991
|
17,610
|
|||||||||||||||
Total contractual cash obligations
|
$
|
122,732
|
$
|
31,939
|
$
|
59,192
|
$
|
13,991
|
$
|
17,610
|
1. |
Financial Statements
|
2. |
Financial Statement Schedule
|
3. |
Exhibits Required by Securities and Exchange Commission Regulation S-K
|
Exhibit
Number
|
Description
|
2.1
|
Purchase and Sale Agreement, dated March 14, 2017, between New England Institute of Technology at Palm Beach, Inc. and Tambone Companies, LLC,
as amended by First Amendment to Purchase and Sale Agreement dated as of April 18, 2017, and as further amended by Second Amendment to Purchase and Sale Agreement dated as of May 12, 2017 (incorporated by reference to the Company’s
Form 8-K filed August 16, 2017).
|
3.1
|
Amended and Restated Certificate of Incorporation of the Company (incorporated
by reference to the Company’s Registration Statement on Form S-1/A (Registration No. 333-123644) filed June 7, 2005).
|
3.2*
|
Bylaws of the Company, as amended on March 8, 2019
|
4.1
|
Specimen Stock Certificate evidencing shares of common stock (Incorporated by reference to the Company’s Registration Statement on Form S-1/A
(Registration No. 333-123644) filed June 21, 2005).
|
10.1
|
Credit Agreement, dated as of March 31, 2017, among the Company, Lincoln Technical Institute, Inc. and its subsidiaries, and Sterling National
Bank (Incorporated by reference to the Company’s Form 8-K filed April 6, 2017).
|
10.2
|
Credit Agreement, dated as of April 28, 2017, among the Company, Lincoln Technical Institute, Inc. and its subsidiaries, and Sterling National
Bank (Incorporated by reference to the Company’s Form 8-K filed May 4, 2017).
|
10.3
|
First Amendment to Credit Agreement, dated as of November 29, 2017, among the Company, Lincoln Technical Institute, Inc. and its subsidiaries,
and Sterling National Bank (Incorporated by reference to the Company’s Form 8-K filed December 1, 2017)
|
10.4
|
Second Amendment to Credit Agreement, dated as of February 23, 2018, among the Company, Lincoln Technical Institute, Inc. and its subsidiaries,
and Sterling National Bank (Incorporated by reference to the Company’s Form 8-K filed February 26, 2018)
|
10.5
|
Third Amendment to Credit Agreement, dated as of July 11, 2018, among the Company, Lincoln Technical Institute, Inc. and its subsidiaries, and
Sterling National Bank (Incorporated by reference to the Company’s Form 8-K filed July 13, 2018).
|
10.6*
|
Fourth Amendment to Credit Agreement, dated as of March 6, 2019, among the Company, Lincoln Technical Institute, Inc. and its subsidiaries, and
Sterling National Bank
|
10.7
|
Commercial Contract, dated as of July 9, 2018, between New England Institute of Technology at Palm Beach, Inc. and Elite Property Enterprise,
LLC (Incorporated by reference to the Company’s Form 8-K filed July 13, 2018).
|
10.8 |
Employment Agreement, dated as of November 8, 2017, between the Company and Scott M. Shaw (Incorporated by reference to the Company’s Quarterly
Report on Form 10-Q filed November 13, 2017).
|
10.9
|
Employment Agreement, dated as of November 7, 2018, between the Company and Scott M. Shaw (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed November 9, 2018).
|
10.10
|
Employment Agreement, dated as of November 8, 2017, between the Company and
Brian K. Meyers (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed November 13, 2017).
|
10.11
|
Employment Agreement, dated as of November 7, 2018, between the Company and Brian K. Meyers (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed November 9, 2018).
|
10.12
|
Change in Control Agreement, dated as of November 8, 2017, between the Company and Deborah Ramentol (Incorporated by reference to the
Company’s Quarterly Report on Form 10-Q filed November 13, 2017).
|
10.13
|
Change in Control Agreement, dated as of November 7, 2018, between the Company and Stephen M. Buchenot (Incorporated by reference to the
Company’s Quarterly Report on Form 10-Q filed November 9, 2018).
|
10.14
|
Lincoln Educational Services Corporation Amended and Restated 2005 Long-Term Incentive Plan (Incorporated by reference to the Company’s Form
8-K filed May 6, 2013).
|
10.15
|
Lincoln Educational Services Corporation Amended and Restated 2005 Non-Employee Directors Restricted Stock Plan (Incorporated by reference to
the Company’s Registration Statement on Form S-8 (Registration No. 333-211213) filed May 6, 2016).
|
10.16
|
Lincoln Educational Services Corporation 2005 Deferred Compensation Plan (Incorporated by reference to the Company’s Registration Statement
on Form S-1 (Registration No. 333-123644) filed March 29, 2005).
|
10.17
|
Form of Stock Option Agreement under our 2005 Long-Term Incentive Plan (Incorporated by reference to the Company’s Annual Report on Form 10-K
for the year ended December 31, 2007).
|
10.18
|
Form of Restricted Stock Agreement under our 2005 Long-Term Incentive Plan (Incorporated by reference to the Company’s Annual Report on Form
10-K for the year ended December 31, 2012).
|
10.19
|
Form of Performance-Based Restricted Stock Award Agreement under our Amended & Restated 2005 Long-Term Incentive Plan (Incorporated by
reference to the Company’s Form 8-K filed May 5, 2011).
|
21.1*
|
Subsidiaries of the Company.
|
23*
|
Consent of Independent Registered Public Accounting Firm.
|
24
|
Power of Attorney (included on the Signatures page of the Company's Annual Report on Form 10-K filed March 13, 2019).
|
31.1 *
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2 *
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32 *
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
101**
|
The following financial statements from Lincoln Educational Services Corporation’s Annual Report on Form 10-K for the year ended December 31,
2018, formatted in XBRL: (i) Consolidated Statements of Operations, (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Cash Flows, (iv) Consolidated Statements of Comprehensive (Loss) Income, (v) Consolidated
Statement of Changes in Stockholders’ Equity and (vi) the Notes to Consolidated Financial Statements, tagged as blocks of text and in detail.
|
* |
Filed herewith.
|
**
|
As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933
and Section 18 of the Securities Exchange Act of 1934
|
Date: April 24, 2019
|
|||
LINCOLN EDUCATIONAL SERVICES CORPORATION
|
|||
By:
|
/s/ Brian Meyers
|
||
Brian Meyers
|
|||
Executive Vice President, Chief Financial Officer and Treasurer
|
|||
(Principal Accounting and Financial Officer)
|
Signature
|
Title
|
Date
|
||
*
|
Chief Executive Officer and Director
|
April 24, 2019
|
||
Scott M. Shaw | ||||
/s/ Brian K. Meyers
|
Executive Vice President, Chief Financial Officer and Treasurer (Principal Accounting and Financial Officer)
|
April 24, 2019
|
||
Brian K. Meyers
|
||||
*
|
Director
|
April 24, 2019
|
||
Alvin O. Austin
|
||||
*
|
Director
|
April 24, 2019
|
||
Peter S. Burgess
|
||||
*
|
Director
|
April 24, 2019
|
||
James J. Burke, Jr.
|
||||
*
|
Director
|
April 24, 2019
|
||
Celia H. Currin
|
||||
*
|
Director
|
April 24, 2019
|
||
Ronald E. Harbour
|
|
|
||
*
|
Director
|
April 24, 2019
|
||
J. Barry Morrow
|
*By:
|
/s/ Brian K. Meyers |
|
Brian K. Meyers
|
||
(Attorney-in-Fact) |
Page Number
|
|
Reports of Independent Registered Public Accounting Firm
|
F-2
|
Consolidated Balance Sheets as of December 31, 2018 and 2017
|
F-4
|
Consolidated Statements of Operations for the years ended December 31, 2018, 2017 and 2016
|
F-6
|
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2018, 2017 and 2016
|
F-7
|
Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2018, 2017 and 2016
|
F-8
|
Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016
|
F-9
|
Notes to Consolidated Financial Statements
|
F-11
|
Schedule II-Valuation and Qualifying Accounts
|
F-33
|
December 31,
|
||||||||
2018
|
2017
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$
|
17,571
|
$
|
14,563
|
||||
Restricted cash
|
16,775
|
7,189
|
||||||
Accounts receivable, less allowance of $15,590 and $12,806 at December 31, 2018 and 2017, respectively
|
18,675
|
15,791
|
||||||
Inventories
|
1,451
|
1,657
|
||||||
Prepaid income taxes and income taxes receivable
|
178
|
207
|
||||||
Assets held for sale
|
-
|
2,959
|
||||||
Prepaid expenses and other current assets
|
2,461
|
2,352
|
||||||
Total current assets
|
57,111
|
44,718
|
||||||
PROPERTY, EQUIPMENT AND FACILITIES - At cost, net of accumulated depreciation and amortization of $171,109 and $163,946 at December 31, 2018 and 2017, respectively
|
49,292
|
52,866
|
||||||
OTHER ASSETS:
|
||||||||
Noncurrent restricted cash
|
11,600
|
32,802
|
||||||
Noncurrent receivables, less allowance of $1,403 and $978 at December 31, 2018 and 2017, respectively
|
12,175
|
8,928
|
||||||
Deferred income taxes, net
|
424
|
424
|
||||||
Goodwill
|
14,536
|
14,536
|
||||||
Other assets, net
|
900
|
939
|
||||||
Total other assets
|
39,635
|
57,629
|
||||||
TOTAL
|
$
|
146,038
|
$
|
155,213
|
December 31,
|
||||||||
2018
|
2017
|
|||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Current portion of credit agreement
|
$
|
15,000
|
$
|
-
|
||||
Unearned tuition
|
22,545
|
24,647
|
||||||
Accounts payable
|
14,107
|
10,508
|
||||||
Accrued expenses
|
10,605
|
11,771
|
||||||
Other short-term liabilities
|
2,324
|
558
|
||||||
Total current liabilities
|
64,581
|
47,484
|
||||||
NONCURRENT LIABILITIES:
|
||||||||
Long-term credit agreement
|
33,769
|
52,593
|
||||||
Pension plan liabilities
|
4,271
|
4,437
|
||||||
Accrued rent
|
3,410
|
4,338
|
||||||
Other long-term liabilities
|
141
|
548
|
||||||
Total liabilities
|
106,172
|
109,400
|
||||||
COMMITMENTS AND CONTINGENCIES
|
||||||||
STOCKHOLDERS' EQUITY:
|
||||||||
Preferred stock, no par value - 10,000,000 shares authorized, no shares issued and outstanding at December 31, 2018 and 2017
|
-
|
-
|
||||||
Common stock, no par value - authorized 100,000,000 shares at December 31, 2018 and 2017, issued and
outstanding 30,552,333 shares at December 31, 2018 and 30,624,407 shares at December 31, 2017
|
141,377
|
141,377
|
||||||
Additional paid-in capital
|
29,484
|
29,334
|
||||||
Treasury stock at cost - 5,910,541 shares at December 31, 2018 and 2017
|
(82,860
|
)
|
(82,860
|
)
|
||||
Accumulated deficit
|
(44,073
|
)
|
(37,528
|
)
|
||||
Accumulated other comprehensive loss
|
(4,062
|
)
|
(4,510
|
)
|
||||
Total stockholders' equity
|
39,866
|
45,813
|
||||||
TOTAL
|
$
|
146,038
|
$
|
155,213
|
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
REVENUE
|
$
|
263,200
|
$
|
261,853
|
$
|
285,559
|
||||||
COSTS AND EXPENSES:
|
||||||||||||
Educational services and facilities
|
125,373
|
129,413
|
144,426
|
|||||||||
Selling, general and administrative
|
141,244
|
138,779
|
148,447
|
|||||||||
Loss (gain) on sale of assets
|
537
|
(1,623
|
)
|
233
|
||||||||
Impairment of goodwill and long-lived assets
|
-
|
-
|
21,367
|
|||||||||
Total costs and expenses
|
267,154
|
266,569
|
314,473
|
|||||||||
OPERATING LOSS
|
(3,954
|
)
|
(4,716
|
)
|
(28,914
|
)
|
||||||
OTHER:
|
||||||||||||
Interest income
|
31
|
56
|
155
|
|||||||||
Interest expense
|
(2,422
|
)
|
(7,098
|
)
|
(6,131
|
)
|
||||||
Other income
|
-
|
-
|
6,786
|
|||||||||
LOSS BEFORE INCOME TAXES
|
(6,345
|
)
|
(11,758
|
)
|
(28,104
|
)
|
||||||
PROVISION (BENEFIT) FOR INCOME TAXES
|
200
|
(274
|
)
|
200
|
||||||||
NET LOSS
|
$
|
(6,545
|
)
|
$
|
(11,484
|
)
|
$
|
(28,304
|
)
|
|||
Basic
|
||||||||||||
Net loss per share
|
$
|
(0.27
|
)
|
$
|
(0.48
|
)
|
$
|
(1.21
|
)
|
|||
Diluted
|
||||||||||||
Net loss per share
|
$
|
(0.27
|
)
|
$
|
(0.48
|
)
|
$
|
(1.21
|
)
|
|||
Weighted average number of common shares outstanding:
|
||||||||||||
Basic
|
24,423
|
23,906
|
23,453
|
|||||||||
Diluted
|
24,423
|
23,906
|
23,453
|
December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Net loss
|
$
|
(6,545
|
)
|
$
|
(11,484
|
)
|
$
|
(28,304
|
)
|
|||
Other comprehensive income
|
||||||||||||
Employee pension plan adjustments
|
448
|
1,591
|
971
|
|||||||||
Comprehensive loss
|
$
|
(6,097
|
)
|
$
|
(9,893
|
)
|
$
|
(27,333
|
)
|
Retained
|
Accumulated
|
|||||||||||||||||||||||||||
Additional
|
Earnings
|
Other
|
||||||||||||||||||||||||||
Common Stock
|
Paid-in
|
Treasury
|
(Accumulated
|
Comprehensive
|
||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Stock
|
Deficit)
|
Loss
|
Total
|
||||||||||||||||||||||
BALANCE - January 1, 2016
|
29,727,555
|
$
|
141,377
|
$
|
27,292
|
$
|
(82,860
|
)
|
$
|
2,260
|
$
|
(7,072
|
)
|
$
|
80,997
|
|||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
(28,304
|
)
|
-
|
(28,304
|
)
|
|||||||||||||||||||
Employee pension plan adjustments
|
-
|
-
|
-
|
-
|
-
|
971
|
971
|
|||||||||||||||||||||
Stock-based compensation
expense Restricted stock
|
1,029,267
|
-
|
1,440
|
-
|
-
|
-
|
1,440
|
|||||||||||||||||||||
Net share settlement for equity-based compensation
|
(71,805
|
)
|
-
|
(178
|
)
|
-
|
-
|
-
|
(178
|
)
|
||||||||||||||||||
BALANCE - December 31, 2016
|
30,685,017
|
141,377
|
28,554
|
(82,860
|
)
|
(26,044
|
)
|
(6,101
|
)
|
54,926
|
||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
(11,484
|
)
|
-
|
(11,484
|
)
|
|||||||||||||||||||
Employee pension plan adjustments
|
-
|
-
|
-
|
-
|
-
|
1,591
|
1,591
|
|||||||||||||||||||||
Stock-based compensation expense Restricted stock
|
128,810
|
-
|
1,220
|
-
|
-
|
-
|
1,220
|
|||||||||||||||||||||
Net share settlement for equity-based compensation
|
(189,420
|
)
|
-
|
(440
|
)
|
-
|
-
|
-
|
(440
|
)
|
||||||||||||||||||
BALANCE - December 31, 2017
|
30,624,407
|
141,377
|
29,334
|
(82,860
|
)
|
(37,528
|
)
|
(4,510
|
)
|
45,813
|
||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
(6,545
|
)
|
-
|
(6,545
|
)
|
|||||||||||||||||||
Employee pension plan adjustments
|
-
|
-
|
-
|
-
|
-
|
448
|
448
|
|||||||||||||||||||||
Stock-based compensation expense
|
||||||||||||||||||||||||||||
Restricted stock
|
135,568
|
-
|
522
|
-
|
-
|
-
|
522
|
|||||||||||||||||||||
Net share settlement for equity-based compensation
|
(207,642
|
)
|
-
|
(372
|
)
|
-
|
-
|
-
|
(372
|
)
|
||||||||||||||||||
BALANCE - December 31, 2018
|
30,552,333
|
$
|
141,377
|
$
|
29,484
|
$
|
(82,860
|
)
|
$
|
(44,073
|
)
|
$
|
(4,062
|
)
|
$
|
39,866
|
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net loss
|
$
|
(6,545
|
)
|
$
|
(11,484
|
)
|
$
|
(28,304
|
)
|
|||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||||||
Depreciation and amortization
|
8,421
|
8,702
|
11,066
|
|||||||||
Amortization of deferred finance costs
|
369
|
583
|
949
|
|||||||||
Write-off of deferred finance charges
|
-
|
2,161
|
-
|
|||||||||
Deferred income taxes
|
-
|
(424
|
)
|
-
|
||||||||
Loss (gain) on disposition of assets
|
537
|
(1,623
|
)
|
223
|
||||||||
Gain on capital lease termination, net
|
-
|
-
|
(6,710
|
)
|
||||||||
Impairment of goodwill and long-lived assets
|
-
|
-
|
21,367
|
|||||||||
Fixed asset donation
|
-
|
(19
|
)
|
(123
|
)
|
|||||||
Provision for doubtful accounts
|
17,705
|
13,720
|
14,592
|
|||||||||
Stock-based compensation expense
|
522
|
1,220
|
1,440
|
|||||||||
Deferred rent
|
(958
|
)
|
(1,312
|
)
|
(489
|
)
|
||||||
(Increase) decrease in assets:
|
||||||||||||
Accounts receivable
|
(23,836
|
)
|
(15,733
|
)
|
(15,700
|
)
|
||||||
Inventories
|
206
|
30
|
201
|
|||||||||
Prepaid income taxes and income taxes receivable
|
29
|
55
|
87
|
|||||||||
Prepaid expenses and current assets
|
(109
|
)
|
532
|
412
|
||||||||
Other assets
|
(191
|
)
|
(1,163
|
)
|
(1,701
|
)
|
||||||
Increase (decrease) in liabilities:
|
||||||||||||
Accounts payable
|
3,753
|
(3,193
|
)
|
742
|
||||||||
Accrued expenses
|
(1,136
|
)
|
(3,613
|
)
|
1,195
|
|||||||
Unearned tuition
|
(2,102
|
)
|
(131
|
)
|
(6,854
|
)
|
||||||
Other liabilities
|
1,641
|
371
|
1,500
|
|||||||||
Total adjustments
|
4,851
|
163
|
22,197
|
|||||||||
Net cash used in operating activities
|
(1,694
|
)
|
(11,321
|
)
|
(6,107
|
)
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Capital expenditures
|
(4,697
|
)
|
(4,755
|
)
|
(3,596
|
)
|
||||||
Proceeds from sale of property and equipment
|
2,348
|
15,462
|
451
|
|||||||||
Net cash (used in) provided by investing activities
|
(2,349
|
)
|
10,707
|
(3,145
|
)
|
|||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Proceeds from borrowings
|
31,000
|
75,900
|
-
|
|||||||||
Payments on borrowings
|
(35,099
|
)
|
(66,766
|
)
|
(387
|
)
|
||||||
Payment of deferred finance fees
|
(94
|
)
|
(1,241
|
)
|
(645
|
)
|
||||||
Net share settlement for equity-based compensation
|
(372
|
)
|
(440
|
)
|
(178
|
)
|
||||||
Payments under capital lease obligations
|
-
|
-
|
(2,864
|
)
|
||||||||
Net cash (used in) provided by financing activities
|
(4,565
|
)
|
7,453
|
(4,074
|
)
|
|||||||
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
(8,608
|
)
|
6,839
|
(13,326
|
)
|
|||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of year
|
54,554
|
47,715
|
61,041
|
|||||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of year
|
$
|
45,946
|
$
|
54,554
|
$
|
47,715
|
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
||||||||||||
Cash paid during the year for:
|
||||||||||||
Interest
|
$
|
2,030
|
$
|
2,790
|
$
|
5,265
|
||||||
Income taxes
|
$
|
191
|
$
|
139
|
$
|
150
|
||||||
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||||||
Liabilities accrued for or noncash purchases of fixed assets
|
$
|
265
|
$
|
1,447
|
$
|
2,048
|
1. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
2.
|
FINANCIAL AID AND REGULATORY COMPLIANCE
|
· |
Posting a letter of credit in an amount determined by the DOE equal to at least 50% of the total Title
IV Program funds received by the institution during the institution's most recently completed fiscal year;
|
· |
Posting a letter of credit in an amount determined by the DOE equal to at least 10% of such prior
year's Title IV Program funds, accepting provisional certification, complying with additional DOE monitoring requirements and agreeing to receive Title IV Program funds under an arrangement other than the DOE's standard advance
funding arrangement.
|
3.
|
WEIGHTED AVERAGE COMMON SHARES
|
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Basic shares outstanding
|
24,423,479
|
23,906,395
|
23,453,427
|
|||||||||
Dilutive effect of stock options
|
-
|
-
|
-
|
|||||||||
Diluted shares outstanding
|
24,423,479
|
23,906,395
|
23,453,427
|
4.
|
REVENUE RECOGNITION
|
Year ended December 31, 2018
|
||||||||||||||||
Transportation and
Skilled Trades
Segment
|
Healthcare and
Other Professions
Segment
|
Transitional
Segment
|
Consolidated
|
|||||||||||||
Timing of Revenue Recognition
|
||||||||||||||||
Services transferred at a point in time
|
$
|
10,351
|
$
|
3,834
|
$
|
72
|
$
|
14,257
|
||||||||
Services transferred over time
|
174,912
|
68,301
|
5,730
|
248,943
|
||||||||||||
Total revenues
|
$
|
185,263
|
$
|
72,135
|
$
|
5,802
|
$
|
263,200
|
Year ended December 31, 2017
|
||||||||||||||||
Transportation and
Skilled Trades
Segment
|
Healthcare and
Other Professions
Segment
|
Transitional
Segment
|
Consolidated
|
|||||||||||||
Timing of Revenue Recognition
|
||||||||||||||||
Services transferred at a point in time
|
$
|
8,987
|
$
|
2,860
|
$
|
28
|
$
|
11,875
|
||||||||
Services transferred over time
|
172,341
|
60,781
|
16,856
|
249,978
|
||||||||||||
Total revenues
|
$
|
181,328
|
$
|
63,641
|
$
|
16,884
|
$
|
261,853
|
Year ended December 31, 2016
|
||||||||||||||||
Transportation and
Skilled Trades
Segment
|
Healthcare and
Other Professions
Segment
|
Transitional
Segment
|
Consolidated
|
|||||||||||||
Timing of Revenue Recognition
|
||||||||||||||||
Services transferred at a point in time
|
$
|
8,856
|
$
|
2,765
|
$
|
556
|
$
|
12,177
|
||||||||
Services transferred over time
|
173,421
|
60,105
|
39,856
|
273,382
|
||||||||||||
Total revenues
|
$
|
182,277
|
$
|
62,870
|
$
|
40,412
|
$
|
285,559
|
5.
|
GOODWILL
|
Gross
Goodwill
Balance
|
Accumulated
Impairment
Losses
|
Net
Goodwill
Balance
|
||||||||||
Balance as of January 1, 2017
|
$
|
117,176
|
$
|
102,640
|
$
|
14,536
|
||||||
Adjustments
|
-
|
-
|
-
|
|||||||||
Balance as of December 31, 2017
|
117,176
|
102,640
|
14,536
|
|||||||||
Adjustments
|
-
|
-
|
-
|
|||||||||
Balance as of December 31, 2018
|
$
|
117,176
|
$
|
102,640
|
$
|
14,536
|
6.
|
PROPERTY, EQUIPMENT AND FACILITIES
|
Useful life
(years)
|
At December 31,
|
|||||||||||
2018
|
2017
|
|||||||||||
Land
|
-
|
$
|
6,969
|
$
|
6,969
|
|||||||
Buildings and improvements
|
1-25
|
128,431
|
127,027
|
|||||||||
Equipment, furniture and fixtures
|
1-7
|
83,766
|
81,772
|
|||||||||
Vehicles
|
3
|
916
|
883
|
|||||||||
Construction in progress
|
-
|
319
|
161
|
|||||||||
220,401
|
216,812
|
|||||||||||
Less accumulated depreciation and amortization
|
(171,109
|
)
|
(163,946
|
)
|
||||||||
$
|
49,292
|
$
|
52,866
|
7.
|
ACCRUED EXPENSES
|
At December 31,
|
||||||||
2018
|
2017
|
|||||||
Accrued compensation and benefits
|
$
|
4,337
|
$
|
3,114
|
||||
Accrued rent and real estate taxes
|
3,057
|
3,151
|
||||||
Other accrued expenses
|
3,211
|
5,506
|
||||||
$
|
10,605
|
$
|
11,771
|
8.
|
LONG-TERM DEBT
|
At December 31,
|
||||||||
2018
|
2017
|
|||||||
Credit agreement
|
$
|
49,301
|
$
|
53,400
|
||||
Deferred financing fees
|
(532
|
)
|
(807
|
)
|
||||
48,769
|
52,593
|
|||||||
Less current maturities
|
(15,000
|
)
|
-
|
|||||
$
|
33,769
|
$
|
52,593
|
Year ending December 31,
|
||||
2019
|
$
|
15,000
|
*
|
|
2020
|
33,769 |
|||
2021
|
-
|
|||
2022
|
-
|
|||
2023
|
-
|
|||
Thereafter
|
-
|
|||
$
|
48,769
|
9.
|
STOCKHOLDERS' EQUITY
|
Shares
|
Weighted
Average Grant
Date Fair Value
Per Share
|
|||||||
Nonvested restricted stock outstanding at December 31, 2016
|
1,143,599
|
$
|
1.89
|
|||||
Granted
|
181,208
|
2.58
|
||||||
Cancelled
|
(52,398
|
)
|
5.63
|
|||||
Vested
|
(664,415
|
)
|
1.77
|
|||||
Nonvested restricted stock outstanding at December 31, 2017
|
607,994
|
1.90
|
||||||
Granted
|
135,568
|
1.60
|
||||||
Cancelled
|
-
|
-
|
||||||
Vested
|
(707,654
|
)
|
1.82
|
|||||
Nonvested restricted stock outstanding at December 31, 2018
|
35,908
|
2.23
|
Shares
|
Weighted
Average
Exercise Price
Per Share
|
Weighted
Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic Value
|
||||||||||
Outstanding January 1, 2016
|
246,167
|
$
|
12.52
|
3.98 years
|
$
|
-
|
|||||||
Cancelled
|
(28,000
|
)
|
15.76
|
-
|
|||||||||
Outstanding December 31, 2016
|
218,167
|
12.11
|
3.33 years
|
-
|
|||||||||
Cancelled
|
(50,500
|
)
|
12.09
|
-
|
|||||||||
Outstanding December 31, 2017
|
167,667
|
12.11
|
2.97 years
|
-
|
|||||||||
Cancelled
|
(28,667
|
)
|
11.98
|
||||||||||
Outstanding December 31, 2018
|
139,000
|
12.14
|
2.53 years
|
-
|
|||||||||
Vested as of December 31, 2018
|
139,000
|
12.14
|
2.53 years
|
-
|
|||||||||
Exercisable as of December 31, 2018
|
139,000
|
12.14
|
2.53 years
|
-
|
At December 31, 2018
|
||||||||||||||||||||||
Stock Options Outstanding
|
Stock Options Exercisable
|
|||||||||||||||||||||
Range of Exercise Prices
|
Shares
|
Contractual
Weighted
Average life
(years)
|
Weighted
Average Exercise
Price
|
Shares
|
Weighted
Average Exercise
Price
|
|||||||||||||||||
$
|
4.00-$13.99
|
91,000
|
3.17
|
$
|
7.79
|
91,000
|
$
|
7.79
|
||||||||||||||
$
|
14.00-$19.99
|
17,000
|
0.84
|
19.98
|
17,000
|
19.98
|
||||||||||||||||
$
|
20.00-$25.00
|
31,000
|
1.59
|
20.62
|
31,000
|
20.62
|
||||||||||||||||
139,000
|
2.53
|
12.14
|
139,000
|
12.14
|
10. |
PENSION PLAN
|
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
CHANGES IN BENEFIT OBLIGATIONS:
|
||||||||||||
Benefit obligation-beginning of year
|
$
|
23,492
|
$
|
22,916
|
$
|
23,341
|
||||||
Service cost
|
28
|
29
|
28
|
|||||||||
Interest cost
|
755
|
840
|
888
|
|||||||||
Actuarial (gain) loss
|
(1,951
|
)
|
721
|
(255
|
)
|
|||||||
Benefits paid
|
(1,219
|
)
|
(1,014
|
)
|
(1,086
|
)
|
||||||
Benefit obligation at end of year
|
21,105
|
23,492
|
22,916
|
|||||||||
CHANGE IN PLAN ASSETS:
|
||||||||||||
Fair value of plan assets-beginning of year
|
19,055
|
17,548
|
17,792
|
|||||||||
Actual return on plan assets
|
(1,000
|
)
|
2,521
|
842
|
||||||||
Benefits paid
|
(1,220
|
)
|
(1,014
|
)
|
(1,086
|
)
|
||||||
Fair value of plan assets-end of year
|
16,835
|
19,055
|
17,548
|
|||||||||
BENEFIT OBLIGATION IN EXCESS OF FAIR VALUE FUNDED STATUS:
|
$
|
(4,270
|
)
|
$
|
(4,437
|
)
|
$
|
(5,368
|
)
|
At December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Noncurrent liabilities
|
$
|
(4,270
|
)
|
$
|
(4,437
|
)
|
$
|
(5,368
|
)
|
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Accumulated loss
|
$
|
(6,428
|
)
|
$
|
(6,876
|
)
|
$
|
(8,467
|
)
|
|||
Deferred income taxes
|
2,366
|
2,366
|
2,366
|
|||||||||
Accumulated other comprehensive loss
|
$
|
(4,062
|
)
|
$
|
(4,510
|
)
|
$
|
(6,101
|
)
|
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
COMPONENTS OF NET PERIODIC BENEFIT COST
|
||||||||||||
Service cost
|
$
|
28
|
$
|
29
|
$
|
28
|
||||||
Interest cost
|
755
|
840
|
888
|
|||||||||
Expected return on plan assets
|
(1,104
|
)
|
(1,058
|
)
|
(1,118
|
)
|
||||||
Recognized net actuarial loss
|
601
|
850
|
991
|
|||||||||
Net periodic benefit cost
|
$
|
280
|
$
|
661
|
$
|
789
|
Quoted Prices in
Active Markets
for Identical
Assets
|
Significant Other
Observable Inputs
|
Significant
Unobservable
Inputs
|
||||||||||||||
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
|||||||||||||
Equity securities
|
$
|
5,428
|
$
|
-
|
$
|
-
|
$
|
5,428
|
||||||||
Fixed income
|
5,852
|
-
|
-
|
5,852
|
||||||||||||
International equities
|
3,734
|
-
|
-
|
3,734
|
||||||||||||
Real estate
|
795
|
-
|
-
|
795
|
||||||||||||
Cash and equivalents
|
1,026
|
-
|
-
|
1,026
|
||||||||||||
Balance at December 31, 2018
|
$
|
16,835
|
$
|
-
|
$
|
-
|
$
|
16,835
|
Quoted Prices in
Active Markets
for Identical
Assets |
Significant Other
Observable Inputs
|
Significant
Unobservable
Inputs
|
||||||||||||||
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
|||||||||||||
Equity securities
|
$
|
6,856
|
$
|
-
|
$
|
-
|
$
|
6,856
|
||||||||
Fixed income
|
6,818
|
-
|
-
|
6,818
|
||||||||||||
International equities
|
3,490
|
-
|
-
|
3,490
|
||||||||||||
Real estate
|
1,133
|
-
|
-
|
1,133
|
||||||||||||
Cash and equivalents
|
758
|
-
|
-
|
758
|
||||||||||||
Balance at December 31, 2017
|
$
|
19,055
|
$
|
-
|
$
|
-
|
$
|
19,055
|
2018
|
2017
|
|||||||
Equity securities
|
32
|
%
|
36
|
%
|
||||
Fixed income
|
35
|
%
|
36
|
%
|
||||
International equities
|
22
|
%
|
18
|
%
|
||||
Real estate
|
5
|
%
|
6
|
%
|
||||
Cash and equivalents
|
6
|
%
|
4
|
%
|
||||
Total
|
100
|
%
|
100
|
%
|
2018
|
2017
|
2016
|
||||||||||
Discount rate
|
4.01
|
%
|
3.36
|
%
|
3.81
|
%
|
||||||
Rate of compensation increase
|
2.50
|
%
|
2.50
|
%
|
2.50
|
%
|
2018
|
2017
|
2016
|
||||||||||
Discount rate
|
4.01
|
%
|
3.36
|
%
|
3.81
|
%
|
||||||
Rate of compensation increase
|
2.50
|
%
|
2.50
|
%
|
2.50
|
%
|
||||||
Long-term rate of return
|
6.25
|
%
|
6.00
|
%
|
6.25
|
%
|
Year Ending December 31,
|
||||
2019
|
$
|
1,335
|
||
2020
|
1,347
|
|||
2021
|
1,350
|
|||
2022
|
1,368
|
|||
2023
|
1,382
|
|||
Years 2024-2028
|
6,859
|
11.
|
INCOME TAXES
|
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Current:
|
||||||||||||
Federal
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
State
|
200
|
150
|
200
|
|||||||||
Total
|
200
|
150
|
200
|
|||||||||
Deferred:
|
||||||||||||
Federal
|
-
|
(424
|
)
|
-
|
||||||||
State
|
-
|
-
|
-
|
|||||||||
Total
|
-
|
(424
|
)
|
-
|
||||||||
Total (benefit) provision
|
$
|
200
|
$
|
(274
|
)
|
$
|
200
|
Year Ended December 31,
|
||||||||||||||||||||||||
2018
|
2017
|
2016
|
||||||||||||||||||||||
Loss before taxes
|
$
|
(6,345
|
)
|
$
|
(11,758
|
)
|
$
|
(28,104
|
)
|
|||||||||||||||
Expected tax benefit
|
$
|
(1,332
|
)
|
21.0
|
%
|
$
|
(4,115
|
)
|
35.0
|
%
|
$
|
(9,836
|
)
|
35.0
|
%
|
|||||||||
State tax benefit (net of federal)
|
200
|
(3.2
|
)
|
150
|
(1.3
|
)
|
200
|
(0.7
|
)
|
|||||||||||||||
Valuation allowance
|
1,230
|
(19.4
|
)
|
(13,920
|
)
|
118.4
|
9,726
|
(34.6
|
)
|
|||||||||||||||
Federal tax reform - deferred rate change
|
49
|
(0.8
|
)
|
17,671
|
(150.3
|
)
|
-
|
-
|
||||||||||||||||
Other
|
53
|
(0.8
|
)
|
(60
|
)
|
0.5
|
110
|
(0.4
|
)
|
|||||||||||||||
Total
|
$
|
200
|
(3.2
|
%)
|
$
|
(274
|
)
|
2.3
|
%
|
$
|
200
|
(0.7
|
%)
|
At December 31,
|
||||||||
2018
|
2017
|
|||||||
Gross noncurrent deferred tax assets (liabilities)
|
||||||||
Allowance for bad debts
|
$
|
4,828
|
$
|
3,792
|
||||
Accrued rent
|
1,833
|
1,723
|
||||||
Accrued benefits
|
-
|
105
|
||||||
Stock-based compensation
|
18
|
387
|
||||||
163J interest limitation
|
19
|
-
|
||||||
Depreciation
|
16,259
|
15,520
|
||||||
Goodwill
|
(98
|
)
|
594
|
|||||
Other intangibles
|
211
|
291
|
||||||
Pension plan liabilities
|
1,163
|
1,221
|
||||||
Net operating loss carryforwards
|
17,927
|
17,367
|
||||||
AMT credit
|
424
|
424
|
||||||
Gross noncurrent deferred tax assets, net
|
42,584
|
41,424
|
||||||
Less valuation allowance
|
(42,160
|
)
|
(41,000
|
)
|
||||
Noncurrent deferred tax assets, net
|
$
|
424
|
$
|
424
|
12.
|
FAIR VALUE
|
December 31, 2018
|
||||||||||||||||||||
Carrying
|
Quoted Prices in
Active Markets
for Identical
Assets
|
Significant Other
Observable Inputs
|
Significant
Unobservable
Inputs
|
|||||||||||||||||
Amount
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
||||||||||||||||
Financial Assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
17,571
|
$
|
17,571
|
$
|
-
|
$
|
-
|
$
|
17,571
|
||||||||||
Restricted cash
|
28,375
|
28,375
|
-
|
-
|
28,375
|
|||||||||||||||
Prepaid expenses and other current assets
|
2,461
|
-
|
2,461
|
-
|
2,461
|
|||||||||||||||
Financial Liabilities:
|
||||||||||||||||||||
Accrued expenses
|
$
|
10,605
|
$
|
-
|
$
|
10,605
|
$
|
-
|
$
|
10,605
|
||||||||||
Other short term liabilities
|
2,324
|
-
|
2,324
|
-
|
2,324
|
|||||||||||||||
Credit facility
|
48,769
|
-
|
43,096
|
-
|
43,096
|
December 31, 2017
|
||||||||||||||||||||
Carrying
|
Quoted Prices in
Active Markets
for Identical
Assets
|
Significant Other
Observable Inputs
|
Significant
Unobservable
Inputs |
|||||||||||||||||
Amount
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
||||||||||||||||
Financial Assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
14,563
|
$
|
14,563
|
$
|
-
|
$
|
-
|
$
|
14,563
|
||||||||||
Restricted cash
|
39,991
|
39,991
|
-
|
-
|
39,991
|
|||||||||||||||
Prepaid expenses and other current assets
|
2,352
|
-
|
2,352
|
-
|
2,352
|
|||||||||||||||
Financial Liabilities:
|
||||||||||||||||||||
Accrued expenses
|
$
|
11,771
|
$
|
-
|
$
|
11,771
|
$
|
-
|
$
|
11,771
|
||||||||||
Other short term liabilities
|
558
|
-
|
558
|
-
|
558
|
|||||||||||||||
Credit facility
|
52,593
|
-
|
47,200
|
-
|
47,200
|
13.
|
SEGMENT REPORTING
|
For the Year Ended December 31,
|
||||||||||||||||||||||||||||||||||||
Revenue
|
Operating (Loss) Income
|
|||||||||||||||||||||||||||||||||||
2018
|
% of
Total
|
2017
|
% of
Total
|
2016
|
% of
Total
|
2018
|
2017
|
2016
|
||||||||||||||||||||||||||||
Transportation and Skilled Trades
|
$
|
185,263
|
70.4
|
%
|
$
|
181,328
|
69.2
|
%
|
$
|
182,276
|
63.8
|
%
|
$
|
17,661
|
$
|
17,795
|
$
|
21,578
|
||||||||||||||||||
Healthcare and Other Professions
|
72,135
|
27.4
|
%
|
63,641
|
24.3
|
%
|
62,870
|
22.0
|
%
|
6,469
|
3,937
|
(9,392
|
)
|
|||||||||||||||||||||||
Transitional
|
5,802
|
2.3
|
%
|
16,884
|
6.4
|
%
|
40,413
|
14.2
|
%
|
(5,994
|
)
|
(6,926
|
)
|
(16,995
|
)
|
|||||||||||||||||||||
Corporate
|
-
|
0.0
|
%
|
-
|
0.0
|
%
|
-
|
0.0
|
%
|
(22,090
|
)
|
(19,522
|
)
|
(24,105
|
)
|
|||||||||||||||||||||
Total
|
$
|
263,200
|
100
|
%
|
$
|
261,853
|
100
|
%
|
$
|
285,559
|
100
|
%
|
$
|
(3,954
|
)
|
$
|
(4,716
|
)
|
$
|
(28,914
|
)
|
Total Assets
|
||||||||
December 31, 2018
|
December 31, 2017
|
|||||||
Transportation and Skilled Trades
|
$
|
92,070
|
$
|
81,751
|
||||
Healthcare and Other Professions
|
14,078
|
8,297
|
||||||
Transitional
|
527
|
4,812
|
||||||
Corporate
|
39,363
|
60,353
|
||||||
Total
|
$
|
146,038
|
$
|
155,213
|
14.
|
COMMITMENTS AND CONTINGENCIES
|
Year Ending December 31,
|
Operating
Leases
|
|||
2019
|
$
|
16,939
|
||
2020
|
14,183
|
|||
2021
|
10,708
|
|||
2022
|
8,180
|
|||
2023
|
5,811
|
|||
Thereafter
|
17,610
|
|||
$
|
73,431
|
15.
|
RELATED PARTY
|
16.
|
UNAUDITED QUARTERLY FINANCIAL INFORMATION
|
Quarter
|
||||||||||||||||
2018
|
First
|
Second
|
Third
|
Fourth
|
||||||||||||
Revenue
|
$
|
61,889
|
$
|
61,120
|
$
|
70,078
|
$
|
70,113
|
||||||||
Net (loss) income
|
(6,874
|
)
|
(4,104
|
)
|
(600
|
)
|
5,033
|
|||||||||
Basic
|
||||||||||||||||
Net (loss) earnings per share
|
$
|
(0.28
|
)
|
$
|
(0.17
|
)
|
$
|
(0.02
|
)
|
$
|
0.21
|
|||||
Diluted
|
||||||||||||||||
Net (loss) earnings per share
|
$
|
(0.28
|
)
|
$
|
(0.17
|
)
|
$
|
(0.02
|
)
|
$
|
0.20
|
|||||
Weighted average number of common shares outstanding:
|
||||||||||||||||
Basic
|
24,138
|
24,486
|
24,533
|
24,533
|
||||||||||||
Diluted
|
24,138
|
24,486
|
24,533
|
24,562
|
Quarter
|
||||||||||||||||
2017
|
First
|
Second
|
Third
|
Fourth
|
||||||||||||
Revenue
|
$
|
65,279
|
$
|
61,865
|
$
|
67,308
|
$
|
67,401
|
||||||||
Net (loss) income
|
(10,929
|
)
|
(6,771
|
)
|
(1,490
|
)
|
7,707
|
|||||||||
Basic
|
||||||||||||||||
Net (loss) earnings per share
|
$
|
(0.46
|
)
|
$
|
(0.28
|
)
|
$
|
(0.06
|
)
|
$
|
0.32
|
|||||
Diluted
|
||||||||||||||||
Net (loss) earnings per share
|
$
|
(0.46
|
)
|
$
|
(0.28
|
)
|
$
|
(0.06
|
)
|
$
|
0.31
|
|||||
Weighted average number of common shares outstanding:
|
||||||||||||||||
Basic
|
23,609
|
23,962
|
24,024
|
24,025
|
||||||||||||
Diluted
|
23,609
|
23,962
|
24,024
|
24,590
|
Description
|
Balance at
Beginning
of Period
|
Charged to
Expense
|
Accounts
Written-off
|
Balance at
End of
Period
|
||||||||||||
Allowance accounts for the year ended:
|
||||||||||||||||
December 31, 2018 Student receivable allowance
|
$
|
13,784
|
$
|
17,705
|
$
|
(14,496
|
)
|
$
|
16,993
|
|||||||
December 31, 2017 Student receivable allowance
|
$
|
14,794
|
$
|
13,720
|
$
|
(14,730
|
)
|
$
|
13,784
|
|||||||
December 31, 2016 Student receivable allowance
|
$
|
14,074
|
$
|
14,592
|
$
|
(13,872
|
)
|
$
|
14,794
|
Exhibit Index
|
|
Exhibit
Number
|
Description
|
Purchase and Sale Agreement, dated March 14, 2017, between New England Institute of Technology at Palm Beach, Inc. and Tambone Companies, LLC,
as amended by First Amendment to Purchase and Sale Agreement dated as of April 18, 2017, and as further amended by Second Amendment to Purchase and Sale Agreement dated as of May 12, 2017 (incorporated by reference to the Company’s
Form 8-K filed August 16, 2017).
|
|
Amended and Restated Certificate of Incorporation of the Company (incorporated
by reference to the Company’s Registration Statement on Form S-1/A (Registration No. 333-123644) filed June 7, 2005).
|
|
Bylaws of the Company, as amended on March 8, 2019
|
|
Specimen Stock Certificate evidencing shares of common stock (Incorporated by reference to the Company’s Registration Statement on Form S-1/A
(Registration No. 333-123644) filed June 21, 2005).
|
|
Credit Agreement, dated as of March 31, 2017, among the Company, Lincoln Technical Institute, Inc. and its subsidiaries, and Sterling National
Bank (Incorporated by reference to the Company’s Form 8-K filed April 6, 2017).
|
|
Credit Agreement, dated as of April 28, 2017, among the Company, Lincoln Technical Institute, Inc. and its subsidiaries, and Sterling National
Bank (Incorporated by reference to the Company’s Form 8-K filed May 4, 2017).
|
|
First Amendment to Credit Agreement, dated as of November 29, 2017, among the Company, Lincoln Technical Institute, Inc. and its subsidiaries,
and Sterling National Bank (Incorporated by reference to the Company’s Form 8-K filed December 1, 2017)
|
|
Second Amendment to Credit Agreement, dated as of February 23, 2018, among the Company, Lincoln Technical Institute, Inc. and its subsidiaries,
and Sterling National Bank (Incorporated by reference to the Company’s Form 8-K filed February 26, 2018)
|
|
Third Amendment to Credit Agreement, dated as of July 11, 2018, among the Company, Lincoln Technical Institute, Inc. and its subsidiaries, and
Sterling National Bank (Incorporated by reference to the Company’s Form 8-K filed July 13, 2018).
|
|
Fourth Amendment to Credit Agreement, dated as of March 6, 2019, among the Company, Lincoln Technical Institute, Inc. and its subsidiaries, and
Sterling National Bank
|
|
Commercial Contract, dated as of July 9, 2018, between New England Institute of Technology at Palm Beach, Inc. and Elite Property Enterprise,
LLC (Incorporated by reference to the Company’s Form 8-K filed July 13, 2018).
|
|
Employment Agreement, dated as of November 8, 2017, between the Company and Scott M. Shaw (Incorporated by reference to the Company’s Quarterly
Report on Form 10-Q filed November 13, 2017).
|
|
Employment Agreement, dated as of November 7, 2018, between the Company and Scott M. Shaw (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed November 9, 2018).
|
|
Employment Agreement, dated as of November 8, 2017, between the Company and Brian
K. Meyers (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed November 13, 2017).
|
|
Employment Agreement, dated as of November 7, 2018, between the Company and Brian K. Meyers (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed November 9, 2018).
|
|
Change in Control Agreement, dated as of November 8, 2017, between the Company and Deborah Ramentol (Incorporated by reference to the Company’s
Quarterly Report on Form 10-Q filed November 13, 2017).
|
|
Change in Control Agreement, dated as of November 7, 2018, between the Company and Stephen M. Buchenot (Incorporated by reference to the
Company’s Quarterly Report on Form 10-Q filed November 9, 2018).
|
|
Lincoln Educational Services Corporation Amended and Restated 2005 Long-Term Incentive Plan (Incorporated by reference to the Company’s Form
8-K filed May 6, 2013).
|
Lincoln Educational Services Corporation Amended and Restated 2005 Non-Employee Directors Restricted Stock Plan (Incorporated by reference to
the Company’s Registration Statement on Form S-8 (Registration No. 333-211213) filed May 6, 2016).
|
|
Lincoln Educational Services Corporation 2005 Deferred Compensation Plan (Incorporated by reference to the Company’s Registration Statement
on Form S-1 (Registration No. 333-123644) filed March 29, 2005).
|
|
Form of Stock Option Agreement under our 2005 Long-Term Incentive Plan (Incorporated by reference to the Company’s Annual Report on Form 10-K
for the year ended December 31, 2007).
|
|
Form of Restricted Stock Agreement under our 2005 Long-Term Incentive Plan (Incorporated by reference to the Company’s Annual Report on Form
10-K for the year ended December 31, 2012).
|
|
Form of Performance-Based Restricted Stock Award Agreement under our Amended & Restated 2005 Long-Term Incentive Plan (Incorporated by
reference to the Company’s Form 8-K filed May 5, 2011).
|
|
Subsidiaries of the Company.
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
Power of Attorney (included on the Signatures page of the Company's Annual Report on Form 10-K filed March 13, 2019).
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
|
101**
|
The following financial statements from Lincoln Educational Services Corporation’s Annual Report on Form 10-K for the year ended December 31,
2018, formatted in XBRL: (i) Consolidated Statements of Operations, (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Cash Flows, (iv) Consolidated Statements of Comprehensive (Loss) Income, (v) Consolidated
Statement of Changes in Stockholders’ Equity and (vi) the Notes to Consolidated Financial Statements, tagged as blocks of text and in detail.
|
* |
Filed herewith.
|
**
|
As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 and 12 of the Securities
Act of 1933 and Section 18 of the Securities Exchange Act of 1934
|