Zovio Inc - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - November 5, 2014

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News Release
Contact: Paul Goodson, Associate Vice President of Investor Relations
866.475.0317 x2271
investorrelations@bridgepointeducation.com

Bridgepoint Education Reports Third Quarter 2014 Results
SAN DIEGO, (November 5, 2014) - Bridgepoint Education (NYSE:BPI), a provider of postsecondary education services, announced today its results for the three and nine months ended September 30, 2014.

Highlights for the third quarter ended September 30, 2014, are as follows:
•
Total student enrollment at period end was 59,552.
•
Revenue was $162.7 million compared with $182.8 million for the same period in 2013.
•
Operating income was $10.6 million compared with $19.5 million for the same period in 2013.
•
Net income was $6.3 million compared with $14.2 million for the same period in 2013.
•
Fully diluted earnings per share was $0.14 compared with $0.25 for the same period in 2013.

Student Enrollment
Total student enrollment at Bridgepoint Education's academic institutions, Ashford University and University of the Rockies, was 59,552 students at September 30, 2014, compared with 68,566 students at the end of the third quarter of 2013.
The twelve-month retention for students who started in the third quarter of 2013 was 65.8% as measured in the third quarter of 2014. The twelve-month retention for students who started in the third quarter of 2012 was 60.9% as measured in the third quarter of 2013.
Financial Results
Revenue for the third quarter of 2014 was $162.7 million, compared with revenue of $182.8 million for the same period in 2013. Revenue for the nine months ended September 30, 2014, was $491.4 million, compared to $589.2 million for the same period in 2013.
Operating income for the third quarter of 2014 was $10.6 million compared with operating income of $19.5 million for the same period in 2013. Operating income for the nine months ended September 30, 2014 was $25.1 million compared to $78.3 million for the same period in 2013.
Net income for the third quarter of 2014 was $6.3 million compared with net income of $14.2 million for the same period in 2013. Net income for the nine months ended September 30, 2014 was $14.9 million compared to $51.0 million for the same period in 2013.
Fully diluted earnings per share for the third quarter of 2014 was $0.14 compared with $0.25 for the same period in 2013. The results for the year to date period in 2013 included a pre-tax charge of $5.9 million for severance, which had an impact on earnings equal to $0.06 per diluted share, which did not occur in 2014. Fully diluted earnings per share for the nine months ended September 30, 2014, was $0.32 compared with $0.91 for the same period in 2013.
The Company's effective tax rate for the third quarter of 2014 was 46.1%.


Balance Sheet and Cash Flow
As of September 30, 2014, the Company had cash, restricted cash, cash equivalents and marketable securities of $357.4 million, compared with $356.4 million as of December 31, 2013. The Company generated $24.6 million of cash in operating activities in the nine months ended September 30, 2014, compared with $61.8 million for the same period in 2013.
Earnings Conference Call and Webcast
Bridgepoint Education will host a conference call at 11:30 a.m. ET (8:30 a.m. PT) today to discuss its latest financial results and recent highlights. The dial-in number for callers in the United States / Canada is 866-859-7412, and for other callers, 856-452-0684. The access code for all callers is 25687326. A live webcast will also be available on the Company's website at http://ir.bridgepointeducation.com.
A replay of the call will be available via telephone through December 6, 2014. To access the replay, dial 855-859-2056 in the United States / Canada and for other callers, 404-537-3406; then enter the access code 25687326.
About Bridgepoint Education

Bridgepoint Education, Inc. (NYSE:BPI) harnesses the latest technology to reimagine the modern student experience. Bridgepoint’s technologies, such as Waypoint Outcomes®, enhance the way people learn in the digital age. Bridgepoint owns three academic institutions - Ashford University, University of the Rockies, and Denver Learning Institute. Together, these programs, technologies, and resources represent a unique model for advancing education in the 21st century. Bridgepoint stands for greater access, social learning, and exposure to leading minds. For more information about Bridgepoint Education, call Paul Goodson, Associate Vice President of Investor Relations at 866-475-0317 x2271.
Forward-Looking Statements

This news release may contain forward-looking statements. These statements involve risks and uncertainties, and the Company's actual performance may differ materially from those expressed in or suggested by such statements. Risks and uncertainties include, without limitation:

•
any statements regarding enrollments and student retention;
•
our ability to successfully remediate the control deficiencies that constitute the material weaknesses in our internal controls;
•
Ashford University's ability to successfully operate as an accredited institution subject to the requirements of the California Bureau for Private Postsecondary Education;
•
the risk that the results of the Company’s investments and related enhancements may be different than currently anticipated;
•
failure to comply with the extensive regulatory framework applicable to the Company and its institutions, including Title IV of the Higher Education Act and its implementing regulations, the newly issued “Gainful Employment” rules and regulations, state laws and regulatory requirements, and accrediting agency requirements;
•
adverse regulatory or legislative changes affecting the Company's institutions;
•
the imposition of fines or other corrective measures against the Company or its institutions;
•
competition in the postsecondary education market and its potential impact on the Company's market share and recruiting costs; and
•
reputational and other risks related to potential compliance audits, regulatory actions, negative publicity or service disruptions.

More information on potential factors that could affect the Company's performance is included from time to time in the “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company's periodic reports filed with the SEC, including the Company's Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on March 17, 2014, and amended on August 1, 2014, and Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, to be filed with the SEC. Forward-looking statements are made on the basis of management's views and assumptions regarding future events and business performance as of the time the statements are made, and the Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates, except as required by law.



BRIDGEPOINT EDUCATION, INC.
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
Revenue
$
162,654

 
$
182,768

 
$
491,446

 
$
589,224

Costs and expenses:
 
 
 
 
 
 
 
Instructional costs and services
79,707

 
83,562

 
239,641

 
280,193

Admissions advisory and marketing
56,783

 
64,507

 
178,079

 
179,632

General and administrative
15,583

 
15,175

 
48,589

 
51,066

Total costs and expenses
152,073

 
163,244

 
466,309

 
510,891

Operating income
10,581

 
19,524

 
25,137

 
78,333

Other income, net
1,080

 
786

 
2,159

 
2,371

Income before income taxes
11,661

 
20,310

 
27,296

 
80,704

Income tax expense
5,370

 
6,099

 
12,380

 
29,712

Net income
$
6,291

 
$
14,211

 
$
14,916

 
$
50,992

Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.14

 
$
0.26

 
$
0.33

 
$
0.94

Diluted
0.14

 
0.25

 
0.32

 
0.91

Weighted average number of common shares outstanding used in computing earnings per share:
 
 
 
 
 
 
 
Basic
45,301

 
54,336

 
45,145

 
54,201

Diluted
46,474

 
56,431

 
46,495

 
55,795



BRIDGEPOINT EDUCATION, INC.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)

 
September 30,
2014
 
December 31,
2013
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
188,779

 
$
212,526

Restricted cash
24,773

 
36,946

Investments
51,074

 
65,901

Accounts receivable, net
31,375

 
22,953

Student loans receivable, net
984

 
1,043

Deferred income taxes
16,698

 
16,683

Prepaid expenses and other current assets
18,365

 
21,563

Total current assets
332,048

 
377,615

Property and equipment, net
88,098

 
91,425

Investments
92,777

 
41,062

Student loans receivable, net
9,977

 
11,785

Goodwill and intangibles, net
25,586

 
26,878

Deferred income taxes
17,441

 
18,507

Other long-term assets
2,372

 
2,740

Total assets
$
568,299

 
$
570,012

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
10,460

 
$
5,195

Accrued liabilities
48,854

 
54,290

Deferred revenue and student deposits
109,105

 
132,791

Total current liabilities
168,419

 
192,276

Rent liability
21,356

 
23,927

Other long-term liabilities
9,978

 
9,271

Total liabilities
199,753

 
225,474

Total stockholders' equity
368,546

 
344,538

Total liabilities and stockholders' equity
$
568,299

 
$
570,012



BRIDGEPOINT EDUCATION, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

 
Nine Months Ended September 30,
 
2014
 
2013
Cash flows from operating activities
 
 
 
Net income
$
14,916

 
$
50,992

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Provision for bad debts
21,961

 
31,670

Depreciation and amortization
17,914

 
15,861

Amortization of premium/discount
85

 
2,662

Deferred income taxes
1,124

 
—

Stock-based compensation
7,891

 
10,704

Excess tax benefit of option exercises
(1,171
)
 
(863
)
Loss on impairment of student loans receivable
1,466

 
790

Net gain on marketable securities
(22
)
 
(62
)
Loss on disposal of fixed assets
80

 
—

Changes in operating assets and liabilities:
 
 
 
Restricted cash
12,202

 
7,531

Accounts receivable
(30,314
)
 
(18,826
)
Prepaid expenses and other current assets
3,317

 
(155
)
Student loans receivable
763

 
218

Other long-term assets
368

 
379

Accounts payable and accrued liabilities
(532
)
 
8,960

Deferred revenue and student deposits
(23,600
)
 
(48,160
)
Other liabilities
(1,864
)
 
107

Net cash provided by operating activities
24,584

 
61,808

Cash flows from investing activities
 
 
 
Capital expenditures
(9,644
)
 
(11,737
)
Purchases of investments
(87,855
)
 
(26,724
)
Restricted cash
(29
)
 
—

Capitalized costs for intangible assets
(2,957
)
 
(3,518
)
Sales and maturities of investments
50,000

 
161,854

Net cash provided by (used in) investing activities
(50,485
)
 
119,875

Cash flows from financing activities
 
 
 
Proceeds from exercise of stock options
3,076

 
1,250

Excess tax benefit of option exercises
1,171

 
863

Proceeds from the issuance of stock under employee stock purchase plan
—

 
604

Proceeds from the exercise of warrants
—

 
8

Tax withholdings on issuance of restricted stock
(2,093
)
 
(1,080
)
Net cash provided by financing activities
2,154

 
1,645

Net increase (decrease) in cash and cash equivalents
(23,747
)
 
183,328

Cash and cash equivalents at beginning of period
212,526

 
208,971

Cash and cash equivalents at end of period
$
188,779

 
$
392,299



Zovio Inc Reports