QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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(Zip Code)
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(Address of principal executive offices)
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Title of each class
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Trading
Symbol(s)
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Name of each exchange on which registered
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Large 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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PART I.
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2
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Item 1.
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2
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2
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4
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5
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6
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7
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9
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Item 2.
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24
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Item 3.
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38
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Item 4.
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38
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PART II.
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39 |
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Item 1.
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39 |
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Item 1A.
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39 |
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Item 2.
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39 |
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Item 3.
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40 |
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Item 4.
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40 |
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Item 5.
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40 |
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Item 6.
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41 |
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SIGNATURES | 42 |
• |
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;
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• |
the promulgation of new regulations in our industry as to which we may find compliance challenging;
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• |
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;
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• |
our ability to implement our strategic plan;
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• |
risks associated with changes in applicable federal laws and regulations including pending rulemaking by the U.S. Department of Education;
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• |
uncertainties regarding our ability to comply with federal laws and regulations regarding the 90/10 Rule and cohort January 1 rates;
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• |
risks associated with maintaining accreditation;
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• |
risks associated with opening new campuses and closing existing campuses;
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• |
risks associated with integration of acquired schools;
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• |
industry competition;
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• |
the effect of public health outbreaks, epidemics and pandemics including, without limitation, COVID-19
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• |
general economic conditions; and
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• |
risks related to other factors discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
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Item 1. |
Financial Statements
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September 30, | December 31, | |||||||
2023
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2022
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|||||||
ASSETS
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||||||||
CURRENT ASSETS:
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||||||||
Cash and cash equivalents
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$
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$
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||||
Restricted cash
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||||||||
Short-term investments
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||||||||
Accounts receivable, less allowance for credit losses of $
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Inventories
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Prepaid expenses and other current assets
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Assets held for sale
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Total current assets
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PROPERTY, EQUIPMENT AND FACILITIES - At cost, net of accumulated depreciation and amortization of $
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||||||
OTHER ASSETS:
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||||||||
Noncurrent receivables, less allowance for credit losses of $
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Deferred income taxes, net
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Operating lease right-of-use assets
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Goodwill
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Other assets, net
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Total other assets
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TOTAL ASSETS
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$
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$
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September 30, | December 31, | |||||||
2023
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2022
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|||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
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||||||||
CURRENT LIABILITIES:
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||||||||
Unearned tuition
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$
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$
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Accounts payable
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Accrued expenses
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Income taxes payable
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Current portion of operating lease liabilities
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Other short-term liabilities
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Total current liabilities
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NONCURRENT LIABILITIES:
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Pension plan liabilities
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Long-term portion of operating lease liabilities
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Total liabilities
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STOCKHOLDERS’ EQUITY:
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Common stock,
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Additional paid-in capital
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Retained earnings
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Accumulated other comprehensive loss
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(
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)
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(
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)
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Total stockholders’ equity
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
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$
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$
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Three Months Ended | Nine Months Ended | |||||||||||||||
September 30,
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September 30,
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|||||||||||||||
2023
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2022
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2023
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2022
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|||||||||||||
REVENUE
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$
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$
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$
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$
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||||||||
COSTS AND EXPENSES:
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||||||||||||||||
Educational services and facilities
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Selling, general and administrative
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Loss (gain) on sale of assets
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( |
) | ( |
) | ||||||||||||
Impairment of goodwill and long-lived assets
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Total costs & expenses
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OPERATING INCOME
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OTHER:
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Interest income | ||||||||||||||||
Interest expense
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(
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)
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(
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)
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(
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)
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(
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)
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||||||||
INCOME BEFORE INCOME TAXES
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||||||||||||
PROVISION FOR INCOME TAXES
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NET INCOME
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$
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$
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$
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$
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||||||||
PREFERRED STOCK DIVIDENDS
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||||||||||||
INCOME AVAILABLE TO COMMON SHAREHOLDERS
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$
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$
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$
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$
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||||||||
Basic
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||||||||||||||||
Net income per common share
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$
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$
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$
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$
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||||||||
Diluted | ||||||||||||||||
Net income per common share
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$ | $ | $ | $ | ||||||||||||
Weighted average number of common shares outstanding:
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Basic
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||||||||||||
Diluted
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Three Months Ended | Nine Months Ended | |||||||||||||||
September 30,
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September 30,
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|||||||||||||||
2023
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2022
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2023
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2022
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|||||||||||||
Net income
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$
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$
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$
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$
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||||||||
Other comprehensive loss
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||||||||||||||||
Employee pension plan adjustments, net of taxes ()
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(
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)
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(
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)
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(
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)
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(
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)
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||||||||
Comprehensive income
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$
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$
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$
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$
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Stockholders’ Equity
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||||||||||||||||||||||||||||||||||||
Accumulated | Series A | |||||||||||||||||||||||||||||||||||
Additional | Other | Convertible | ||||||||||||||||||||||||||||||||||
Common Stock
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Paid-in
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Treasury
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Retained
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Comprehensive
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Preferred Stock
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|||||||||||||||||||||||||||||||
Shares
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Amount
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Capital
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Stock
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Earnings
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Loss
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Total
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Shares
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Amount
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||||||||||||||||||||||||||||
BALANCE - January 1, 2023
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$
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$
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$
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$
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$
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(
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)
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$
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$
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|||||||||||||||||||
Net cumulative effect from adoption of (a)
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(
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)
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(
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)
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|||||||||||||||||||||||||
Net loss | - | ( |
) | ( |
) | - | ||||||||||||||||||||||||||||||
Employee pension plan adjustments
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-
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(
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)
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(
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)
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-
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|||||||||||||||||||||||||
Stock-based compensation expense
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||||||||||||||||||||||||||||||||||||
Restricted stock
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|||||||||||||||||||||||||||
Share repurchase
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( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
Net share settlement for equity-based compensation
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(
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)
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(
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)
|
|
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(
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)
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||||||||||||||||||||||||
BALANCE - March 31, 2023
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(
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)
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||||||||||||||||||||||||||
Net income | - | - | ||||||||||||||||||||||||||||||||||
Employee pension plan adjustments | - | ( |
) | ( |
) | - | ||||||||||||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||
Restricted stock
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||||||||||||||||||||||||||||||||||||
Share repurchase
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( |
) | ( |
) | ( |
) | - | |||||||||||||||||||||||||||||
Net share settlement for equity-based compensation | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
BALANCE - June 30, 2023 | ( |
) | ||||||||||||||||||||||||||||||||||
Net income
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-
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-
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|||||||||||||||||||||||||||
Employee pension plan adjustments
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-
|
|
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(
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)
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(
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)
|
-
|
|
|||||||||||||||||||||||||
Stock-based compensation expense
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||||||||||||||||||||||||||||||||||||
Restricted stock
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|
|
|
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|
|
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|
|||||||||||||||||||||||||||
BALANCE - September 30, 2023
|
|
$
|
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$
|
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$
|
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$
|
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$
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(
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)
|
$
|
|
|
$
|
|
Stockholders’ Equity
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||||||||||||||||||||||||||||||||||||
Accumulated | Series A | |||||||||||||||||||||||||||||||||||
Additional | Other | Convertible | ||||||||||||||||||||||||||||||||||
|
Common Stock
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Paid-in
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Treasury
|
Retained
|
Comprehensive
|
Preferred Stock
|
||||||||||||||||||||||||||||||
Shares
|
Amount
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Capital
|
Stock
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Earnings
|
Loss
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Total
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Shares
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Amount
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||||||||||||||||||||||||||||
BALANCE - January 1, 2022
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
|
$
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|
||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
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-
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|
|||||||||||||||||||||||||||
Preferred stock dividend | - | ( |
) | ( |
) | - | ||||||||||||||||||||||||||||||
Employee pension plan adjustments
|
-
|
|
|
|
|
(
|
)
|
(
|
)
|
-
|
|
|||||||||||||||||||||||||
Stock-based compensation expense
|
||||||||||||||||||||||||||||||||||||
Restricted stock
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Net share settlement for equity-based compensation
|
(
|
)
|
|
(
|
)
|
|
|
|
(
|
)
|
|
|
||||||||||||||||||||||||
BALANCE - March 31, 2022
|
|
|
|
(
|
)
|
|
(
|
)
|
|
|
$ |
|
||||||||||||||||||||||||
Net income | - | - | ||||||||||||||||||||||||||||||||||
Preferred stock dividend
|
- | ( |
) | ( |
) | - | ||||||||||||||||||||||||||||||
Employee pension plan adjustments | - | ( |
) | ( |
) | - | ||||||||||||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||
Restricted stock | ||||||||||||||||||||||||||||||||||||
Treasury stock cancellation |
- | ( |
) | - | ||||||||||||||||||||||||||||||||
Share repurchase |
( |
) | ( |
) | ( |
) | - | |||||||||||||||||||||||||||||
BALANCE - June 30, 2022 | ( |
) | $ | |||||||||||||||||||||||||||||||||
Net income
|
-
|
|
|
|
|
|
-
|
|
||||||||||||||||||||||||||||
Preferred stock dividends | - | ( |
) | ( |
) | - | ||||||||||||||||||||||||||||||
Employee pension plan adjustments
|
-
|
|
|
|
(
|
)
|
(
|
)
|
-
|
|
||||||||||||||||||||||||||
Stock-based compensation expense
|
||||||||||||||||||||||||||||||||||||
Restricted stock
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
Share Repurchase |
( |
) | ( |
) | ( |
) | - |
|||||||||||||||||||||||||||||
BALANCE - September 30, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
Nine Months Ended | ||||||||
September 30,
|
||||||||
2023
|
2022
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income
|
$
|
|
$
|
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
|
|
||||||
Deferred income taxes
|
|
|
||||||
Gain on sale of assets
|
( |
) | ( |
) | ||||
Impairment of goodwill and long-lived assets
|
||||||||
Fixed asset donations
|
(
|
)
|
(
|
)
|
||||
Provision for credit losses
|
|
|
||||||
Stock-based compensation expense
|
|
|
||||||
(Increase) decrease in assets:
|
||||||||
Accounts receivable
|
(
|
)
|
(
|
)
|
||||
Inventories
|
(
|
)
|
|
|||||
Prepaid income taxes and income taxes payable
|
|
(
|
)
|
|||||
Prepaid expenses and current assets
|
(
|
)
|
|
|||||
Other assets, net
|
|
|
||||||
Increase (decrease) in liabilities:
|
||||||||
Accounts payable
|
|
|
||||||
Accrued expenses
|
|
(
|
)
|
|||||
Unearned tuition
|
(
|
)
|
(
|
)
|
||||
Other liabilities
|
(
|
)
|
(
|
)
|
||||
Total adjustments
|
(
|
)
|
(
|
)
|
||||
Net cash provided by operating activities
|
|
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Capital expenditures
|
(
|
)
|
(
|
)
|
||||
Proceeds from sale of property and equipment
|
|
|
||||||
Proceeds from short-term investment
|
||||||||
Purchase of short-term investment
|
( |
) | ||||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Dividend payment for preferred stock
|
|
(
|
)
|
|||||
Share repurchase
|
( |
) | ( |
) | ||||
Net share settlement for equity-based compensation
|
(
|
)
|
(
|
)
|
||||
Net cash used in financing activities
|
(
|
)
|
(
|
)
|
||||
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
(
|
)
|
(
|
)
|
||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period
|
|
|
||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of period
|
$
|
|
$
|
|
Nine Months Ended | ||||||||
September 30,
|
||||||||
2023
|
2022
|
|||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
||||||||
Cash paid for:
|
||||||||
Interest
|
$
|
|
$
|
|
||||
Income taxes
|
$
|
|
$
|
|
||||
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||
Liabilities accrued for or noncash additions of fixed assets
|
$
|
|
$
|
|
1. |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
|
2. |
NET INCOME PER COMMON SHARE
|
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
(in thousands, except share data)
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Numerator:
|
||||||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Less: preferred stock dividend
|
|
(
|
)
|
|